Carney's Davos Address: A Call for Honesty and Collective Action
In a powerful address to the World Economic Forum in Davos, Canadian Prime Minister Mark Carney delivered a stark assessment of the current global landscape while outlining a bold path forward for middle powers like Canada. Speaking on 20 January 2026, Carney argued that the comfortable fiction of a functioning rules-based international order has ended, replaced by a harsh reality of great power rivalry where economic integration has become a weapon of coercion.
The End of Pleasant Fictions
Carney began by confronting what he described as "a rupture in the world order" rather than a mere transition. He noted that for decades, countries like Canada prospered under what they called the rules-based international order, participating in its institutions and benefiting from its predictability while largely avoiding calling out the gaps between rhetoric and reality. "This bargain no longer works," Carney stated bluntly, pointing to how great powers now use tariffs as leverage, financial infrastructure as coercion, and supply chains as vulnerabilities to be exploited.
The Canadian leader drew inspiration from Czech dissident Václav Havel's essay "The Power of the Powerless," which described how communist systems sustained themselves through ordinary people's participation in rituals they privately knew to be false. Carney argued that countries have been similarly "living within a lie" regarding the international order, and that it was time for companies and countries to "take their signs down."
The Middle Power Dilemma
Carney acknowledged the understandable impulse for countries to develop greater strategic autonomy in energy, food, critical minerals, finance, and supply chains. "A country that can't feed itself, fuel itself or defend itself has few options," he noted. However, he warned against retreating into national fortresses, arguing that such a world would be "poorer, more fragile and less sustainable."
The central challenge for middle powers, according to Carney, is not whether to adapt to the new reality – they must – but how to adapt. "The question is whether we adapt by simply building higher walls, or whether we can do something more ambitious," he told the Davos audience.
Canada's Value-Based Realism
Carney outlined Canada's new strategic approach, which he described as "value-based realism" – being both principled in commitment to fundamental values like sovereignty, territorial integrity, and human rights, while pragmatic in recognising that progress is often incremental and interests diverge. "We actively take on the world as it is, not wait around for a world we wish to be," he explained.
To support this approach, Canada is building strength at home through significant policy changes and investments:
- Cutting taxes on incomes, capital gains, and business investment
- Removing all federal barriers to interprovincial trade
- Fast-tracking a trillion dollars of investments in energy, AI, critical minerals, and new trade corridors
- Doubling defence spending by the end of the decade while building domestic industries
Strategic Diversification and Coalition Building
Internationally, Canada is pursuing what Carney called "variable geometry" – different coalitions for different issues based on common values and interests. Recent initiatives include:
- A comprehensive strategic partnership with the EU, including joining European defence procurement arrangements
- Twelve other trade and security deals on four continents in six months
- New strategic partnerships with China and Qatar
- Ongoing free trade negotiations with India, ASEAN, Thailand, the Philippines, and Mercosur
Carney emphasised that middle powers must act together because "if we're not at the table, we're on the menu." He warned against competing with each other for favour from great powers, arguing that this represents "the performance of sovereignty while accepting subordination" rather than genuine sovereignty.
Living the Truth in International Relations
The Canadian prime minister outlined what it means for middle powers to "live the truth" in the current global context:
- Naming reality: Stop invoking a rules-based international order as though it still functions as advertised and acknowledge it as a system of intensifying great power rivalry
- Acting consistently: Applying the same standards to allies and rivals rather than criticising economic intimidation from one direction while staying silent about it from another
- Building what we claim to believe in: Creating institutions and agreements that function as described rather than waiting for the old order to be restored
- Reducing vulnerability: Building strong domestic economies to decrease leverage that enables coercion
Carney concluded with a confident assessment of Canada's position: "Canada has what the world wants. We are an energy superpower. We hold vast reserves of critical minerals. We have the most educated population in the world. Our pension funds are among the world's largest and most sophisticated investors."
He emphasised that Canada represents a pluralistic society that works, with a commitment to sustainability and long-term relationship building. "We are taking the sign out of the window," Carney declared. "We know the old order is not coming back. We shouldn't mourn it. Nostalgia is not a strategy."
The prime minister ended with a call to action: "The powerful have their power. But we have something too – the capacity to stop pretending, to name reality, to build our strength at home and to act together." He presented this as Canada's chosen path, one "wide open to any country willing to take it with us."
