Canadian Prime Minister Mark Carney delivered a pointed speech at the World Economic Forum 2026 in Davos, declaring that decades of reliance on the rules-based international order have become untenable. The geopolitical rupture, he said, demands a new strategy grounded in pragmatism, not outdated assumptions.
“We are in the midst of a rupture, not a transition,” Carney stated, signaling Canada’s recognition that American hegemony—which once provided public goods like open sea lanes and collective security—is withdrawing protection as it increasingly weaponizes economic integration.
The Rules-Based Order Is Fading
Carney invoked Václav Havel’s 1978 essay “The Power of the Powerless” to frame the current moment. Just as Communist regimes sustained themselves through collective participation in transparent falsehoods, Carney argued, countries like Canada have participated in rituals around a rules-based order they privately knew was incomplete.
“The strongest would exempt themselves when convenient. Trade rules were enforced asymmetrically. International law applied with varying rigor depending on the identity of the accused or victim,” Carney said, acknowledging what diplomats have long understood privately but rarely state publicly.
The shift he described is structural: great powers now deploy tariffs as leverage, weaponize financial infrastructure, and exploit supply chains. When economic integration becomes a tool of subordination rather than mutual benefit, the middle powers—lacking the military and market capacity to go it alone—face a strategic choice: compete individually for favor from hegemons or combine to create alternative pathways.
“Value-Based Realism”: Canada’s New Doctrine
Carney outlined what he termed “value-based realism,” borrowed from Finnish President Alexander Stubb’s framework. The approach balances principle—commitment to sovereignty, territorial integrity, human rights, and prohibitions on force—with pragmatism about how change actually happens and whose interests diverge.
Operationally, this means variable geometry: assembling different coalitions for different issues based on common interests rather than universal alignment. On Ukraine, Canada remains a core NATO contributor. On Arctic sovereignty, it stands with Denmark and Greenland. On trade, it is negotiating free trade agreements with India, ASEAN nations, and Mercosur—diversifying away from singular dependence.
Since taking office, Carney’s government has cut taxes on income, capital gains, and business investment; removed interprovincial trade barriers; committed $1 trillion to energy, AI, and critical minerals; and is doubling defense spending by decade’s end.
Strategic Autonomy vs. Fortress Isolation
Carney warned against one outcome of his analysis: a fragmented world of defensive fortresses that would be “poorer, more fragile, and less sustainable.” Collective investments in resilience are cheaper than individual fortification. Shared standards reduce fragmentation. Complementarities among allies remain positive-sum.
The risk of pure transactionalism is that hegemons cannot continuously monetize relationships without losing allies, who will inevitably diversify to hedge uncertainty and rebuild sovereignty.
The Stakes for Middle Powers
Carney argued that middle powers—a category that includes Canada but extends to EU members, Australia, and others—have leverage only when they act collectively. “When we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what’s offered. We compete with each other to be the most accommodating.”
His closing message pivoted to what remains in a fragmenting world: the power of legitimacy, integrity, and shared rules if wielded together. “Stop invoking rules-based international order as though it still functions as advertised,” he urged. Middle powers must name reality, apply consistent standards to allies and rivals, build institutions that actually function, and reduce vulnerabilities that enable coercion.
Canada’s assets—energy reserves, critical minerals, human capital, sophisticated pension funds, and stable governance—position it as an attractive partner in this reconfigured world. But Carney’s core message was directed beyond Canada: The old order will not return. Middle powers must act now to shape what replaces it.
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