Larry (00:00):
So the puck is going next in the global economy, which makes this a fitting moment to introduce a former hockey player, the prime minister of Canada, Mark Carney. The ability to remain calm in fast moving high pressure moments has defined Mark's career. In 2008, he led the Bank of Canada and helped steer his economy through the worst market turmoil in all our lives in our generation. In the aftermath of Brexit, he became the first non-Brit to serve as a governor of the Bank of England. And last year, he was elected very deservingly as prime minister for Canada in what may be the one of the most pivotal moments in modern Canadian history.
(01:03)
Today, Prime Minister Carney is focused on making Canada a place where it's easier to build, simpler to trade, smarter to invest in, and build more unity across its nation. For 41 million Canadians, the world's 10th largest economy, he is a steady and thoughtful leader, and I am proud to call him a friend. Please join me in welcoming Prime Minister of Canada, Mark Carney.
Mark Carney (01:44):
Thank you very much, Larry. I'm going to start in French and then I'll switch back to English.
Translator (01:53):
It is both a pleasure and a duty to be with you tonight in this pivotal moment that Canada and the world's going through. Today, I will talk about a rupture in the world order. The end of a pleasant fiction and the beginning of a harsh reality where geopolitics, where the large main power geopolitics is submitted to no limits, no constraints. On the other hand, I would like to tell you that the other countries, especially intermediate powers like Canada, are not powerless. They have the capacity to build a new order that encompasses our values, such as respect for human rights, sustainable development, solidarity, sovereignty, and territorial integrity of the various states. The power of the less power starts with honesty.
Mark Carney (03:03):
It seems that every day we're reminded that we live in an era of great power rivalry, that the rules-based order is fading, that the strong can do what they can and the weak must suffer what they must. And this aphorism of Thucydities is presented as inevitable, as the natural logic of international relations reasserting itself. And faced with this logic, there is a strong tendency for countries to go along to get along, to accommodate, to avoid trouble, to hope that compliance will buy safety.
(03:48)
Well, it won't. So what are our options? In 1978, the Czech dissident Vaclav Havel, later president, wrote an essay called The Power of the Powerless. And in it, he asked a simple question, how did the communist system sustain itself? And his answer began with the green grocer. Every morning, the shopkeeper places a sign in his window. Workers of the world unite. He doesn't believe it. No one does. But he places the sign anyway to avoid trouble, to signal compliance to get along.
(04:28)
And because every shopkeeper on every street does the same, the system persists. Not through violence alone, but through the participation of ordinary people in rituals they privately know to be false. Havel called this living within a lie. The system's power comes not from its truth, but from everyone's willingness to perform as if it were true. And its fragility comes from the same source. When even one person stops performing, when the green grocer removes his sign, the illusion begins to crack.
(05:07)
Friends, it is time for companies and countries to take their signs down. For decades, for decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, we praised its principles we benefited from its predictability. And because of that, we could pursue values-based foreign policies under its protection. We knew the story of the international rules-based order was partially false, that the strongest would exempt themselves when convenient, that trade rules were enforced asymmetrically. And we knew that international law applied with varying rigor depending on the identity of the accused or the victim.
(06:03)
This fiction was useful. An American hegemony in particular helped provide public goods, open sea lanes, a stable financial system, collective security, and support for frameworks for resolving disputes. So we placed the sign in the window. We participated in the rituals and we largely avoided calling out the gaps between rhetoric and reality. This bargain no longer works. Let me be direct. We are in the midst of a rupture, not a transition.
(06:38)
Over the past two decades, a series of crises in finance, health, energy, and geopolitics have laid bare the risks of extreme global integration. But more recently, great powers have begun using economic integration as weapons, tariffs as leverage, financial infrastructure as coercion, supply chains as vulnerabilities to be exploited. You cannot live within the lie of mutual benefit through integration when integration becomes the source of your subordination.
(07:13)
The multilateral institutions on which the middle powers have relied, the WTO, the UN, the COP, the architecture, the very architecture of collective problem solving are under threat. And as a result, many countries are drawing the same conclusions that they must develop greater strategic autonomy in energy, food, critical minerals, in finance and supply chains. And this impulse is understandable. A country that can't feed itself, fuel itself, or defend itself has few options. When the rules no longer protect you, you must protect yourself. But let's be clear-eyed about where this leads. A world of fortresses will be poorer, more fragile, and less
Mark Carney (08:00):
... sustainable. And there's another truth. If great powers abandon even the pretense of rules and values for the unhindered pursuit of their power and interests, the gains from transactionalism will become harder to replicate. Hegemons cannot continually monetize their relationships. Allies will diversify to hedge against uncertainty. They'll buy insurance, increase options in order to rebuild sovereignty, sovereignty that was once grounded in rules, but will increasingly be anchored in the ability to withstand pressure.
(08:43)
This room knows this is classic risk management. Risk management comes at a price, but that cost of strategic autonomy, of sovereignty can also be shared. Collective investments in resilience are cheaper than everyone building their own fortresses. Shared standards reduce fragmentations. Complementarities are a positive sum. And the question for middle powers, like Canada, is not whether to adapt to the new reality, we must. The question is whether we adapt by simply building higher walls or whether we can do something more ambitious?
(09:26)
Now, Canada was amongst the first to hear the wake-up call, leading us to fundamentally shift our strategic posture. Canadians know that our old comfortable assumptions that our geography and alliance memberships automatically conferred prosperity and security, that assumption is no longer valid. And our new approach rests on what Alexander Stubb, the president of Finland, has termed value-based realism. Or to put another way, we aim to be both principled and pragmatic. Principled in our commitment to fundamental values, sovereignty, territorial integrity, the prohibition of the use of force, except when consistent with the UN Charter and respect for human rights. And pragmatic in recognizing the progress is often incremental, that interests diverge that not every partner will share all of our values.
(10:22)
So, we're engaging broadly, strategically, with open eyes. We actively take on the world as it is not wait around for world we wish to be. We are calibrating our relationships so their depth reflects our values. And we're prioritizing broad engagement to maximize our influence and given the fluidity of the world at the moment, the risks that this poses and the stakes for what comes next. And we are no longer just relying on the strength of our values, but also the value of our strength. We are building that strength at home.
(11:02)
Since my government took office, we have cut taxes on incomes, on capital gains and business investment. We have removed all federal barriers to interprovincial trade. We are fast tracking $8 trillion of investments in energy, AI, critical minerals, new trade corridors and beyond. We're doubling our defense spending by the end of this decade, and we're doing so in ways that build our domestic industries. And we are rapidly diversifying abroad. We've agreed a comprehensive strategic partnership with the EU, including joining SAFE, the European defense procurement arrangements. We have signed 12 other trade and security deals on four continents in six months.
(11:44)
In the past few days, we've concluded new strategic partnerships with China and Qatar. We're negotiating free trade packs with India, ASEAN, Thailand, Philippines, and Mercosur.
(11:57)
We're doing something else. To help solve global problems, we're pursuing variable geometry. In other words, different coalitions for different issues based on common values and interests. So, on Ukraine, we're a core member of the Coalition of the Willing and one of the largest per capita contributors to its defense and security. On Arctic sovereignty, we stand firmly with Greenland and Denmark and fully support their unique right to determine Greenland's future. Our commitment to NATO's Article 5 is unwavering.
(12:41)
So, we're working with our NATO allies, including the Nordic-Baltic Eight, to further secure the alliance's northern and western flanks, including through Canada's unprecedented investments in over-the-horizon radar, in submarines, in aircraft and boots on the ground, boots on the ice. Canada strongly opposes tariffs over Greenland and calls for focused talks to achieve our shared objectives of security and prosperity in the Arctic.
(13:16)
On plurilateral trade, we're championing efforts to build a bridge between the Transpacific Partnership and the European Union, which would create a new training block of 1.5 billion people. On critical minerals, we're forming buyer's clubs anchored in the G7, so that the world can diversify away from concentrated supply. And on AI, we're cooperating with like-minded democracies to ensure that we won't ultimately be forced to choose between hegemons and hyperscalers.
(13:48)
This is not naive multilateralism, nor is it relying on their institutions. It's building coalitions that work issues by issue with partners who share enough common ground to act together. In some cases, this will be the vast majority of nations. What it's doing is creating a dense web of connections across trade investment culture on which we can draw for future challenges and opportunities. I argue the middle powers must act together because if we're not at the table, we're on the menu. But I'd also say that great powers can afford for now to go it alone. They have the market size, the military capacity and the leverage to dictate terms, middle powers do not.
(14:41)
But 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. This is not sovereignty. It's the performance of sovereignty while accepting subordination. In a world of great power rivalry, the countries in between have a choice, compete with each other for favor or to combine to create a third path with impact. We shouldn't allow the rise of hard power to blind us to the fact that the power of legitimacy, integrity, and rules will remain strong if we choose to wield them together, which brings me back to Havel. What does it mean for middle powers to live the truth? Well, first, it means naming reality. Stop invoking rules-based international order as though it still functions as advertised. Call it what it is, a system of intensifying great power rivalry, where the most powerful pursue their interests using economic integration as coercion. It means acting consistently, applying the same standards to allies and rivals.
Mark Carney (16:00):
When middle powers criticize economic intimidation from one direction, but stay silent when it comes from another, we are keeping the sign in the window. It means building what we claim to believe in. Rather than waiting for the old order to be restored, it means creating institutions and agreements that function as described, and it means reducing the leverage that enables coercion. That's building a strong domestic economy. It should be every government's immediate priority. And diversification internationally is not just economic prudence; it's a material foundation for honest foreign policy, because countries earn the right to principled stands by reducing their vulnerability to retaliation.
(16:48)
So, Canada. 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 amongst the world's largest and most sophisticated investors. In other words, we have capital, talent. We also have a government with immense fiscal capacity to act decisively. And we have the values to which many others aspire. Canada is a pluralistic society that works. Our public square is loud, diverse, and free. Canadians remain committed to sustainability. We are a stable and reliable partner in a world that is anything but. A partner that builds and values relationships for the long term. And we have something else. We have a recognition of what's happening and a determination to act accordingly. We understand that this rupture calls for more than adaptation. It calls for honesty about the world as it is.
(17:55)
We are taking the sign out of the window. We know the old order is not coming back. We shouldn't mourn it. Nostalgia is not a strategy. But we believe that from the fracture, we can build something bigger, better, stronger, more just. This is the task of the middle powers: the countries that have the most to lose from a world of fortresses and the most to gain from genuine cooperation. 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. That is Canada's path. We choose it openly and confidently, and it is a path wide open to any country willing to take it with us.
(18:50)
Thank you very much.
Gideon Rachman (18:51):
Thank you, Prime Minister. I don't think I've seen many standing ovations at Davos, so that was interesting.
(19:20)
There was a phrase in your speech where you said, "Sovereignty now is the ability to withstand pressure." Isn't Canada almost uniquely vulnerable to pressure because of the extent of your trade dependence on the United States?
Mark Carney (19:34):
Well, the proof is that we have been able to withstand the pressure, and there has been considerable pressure. I'll give you a couple of facts. We've actually created more jobs since the tariffs were put on than the United States in absolute number. Economies growing at the second-fastest rate within the G7. There are pockets of extreme pressure, without question, in Canada. But headline, we're reacting.
(20:01)
The second thing, and it's a fundamental point, is the recognition that we can give ourselves far more than any foreign country can take away. There's lots of efficiencies in having one Canadian market, the trillion dollars of domestic investment, and building these partnerships abroad, all of which are bigger returns than what's been lost. That's not to say we would rather not lose it, but we can withstand the pressure, and we are.
Gideon Rachman (20:29):
And I was interested that you said, basically, "The old world's not coming back." So, you're not seeing this as a period where you just have to get through a normalcy or return.
Mark Carney (20:37):
I think that is our view. And we regret it, but we're not going to sit around and mourn it. We're acting. And we're acting in a way, both that's in our interests, but we believe in a way with others that's building, imperfectly, in steps, a new system.
(20:59)
I'll give you one example on handback, which is we are members of trade agreements that comprise, already, 1.4 billion people around the world. So, we have the most extensive network. We are trying, with others, to bring some of those networks together. The most prominent example is the Trans-Pacific Partnership in the EU, acting of a bridge. It's not a direct benefit for Canada, but it is a benefit for Canada that these groups come together. Ngozi is here, consistent with the WTO rules, both of which are. And in that way, we're building back out amongst willing partners.
Gideon Rachman (21:37):
And you talked about the need not to put the sign in the window anymore, to pretend that things are still the same. Do you think...
(21:48)
To put it directly, that the NATO alliance is still doing that. Still pretending it's the old Transatlantic Partnership, when it's really kind of going.
Mark Carney (21:57):
I think, clearly, NATO is experiencing a test right now. And the first response to that test has to be to respond in a way that ensures the security of the Arctic in a robust way, for all possibilities. This is actually a point that we have been making in recent years. It's a point that I made at the NATO summit back in June, which seemed like a pledging summit, but also was to get NATO policies in the right direction. So I think in the immediate term, one of the imperatives is to reinforce things that Canada's doing, Nordic-Baltic Eight are doing, the UK are doing, other NATO partners, France included, in a comprehensive way that provides much greater security in the Arctic.
(22:49)
This is the test. And so I wouldn't say the NATO sign stays in the window, but we've got to meet the moment of that.
Gideon Rachman (22:57):
Also, a big theme of your speech was the need for middle powers to work together, but you've just been to the other great power, to China. And I think people are very intrigued by seeing that meeting. And some people say that's a mistake, really, because you're going to make yourself more dependent on China. They're not that benign either. The US will be very annoyed.
(23:21)
What's the defense of what you're doing, and what do you hope to get out of it?
Mark Carney (23:24):
Well, the first thing is to say it's not a defense. It's a... I know the way you frame the question, but it's offense. It's building out. It's something positive as opposed to against. We're for something as opposed to being against.
(23:38)
The second is there are very clear guardrails in that relationship. I spoke of calibration of relationships in my remarks. That's what I mean by it. But within those clear guardrails are huge opportunities in energy, both clean and conventional, obviously in motor vehicles, in agriculture, in financial service, all of which is mutually beneficial. So, it's
Mark Carney (24:00):
It's additive, and look, it's the second largest economy and it's our second-largest trading partner. We should have a strategic partnership with them within those guardrails, and that's what we've achieved.
Gideon Rachman (24:11):
And it is an interesting reversal though, because I think certainly during the Biden administration, there was this sense that the Western world was trying to decouple from China or de risk at least. And is now in this new world, that really going to go into reverse and de risking from China because there are other risks is less of a thing.
Mark Carney (24:30):
You need... Again, many in this room, this is their livelihood, you need a web of connections. And to miss out in that web some of the largest ones, United States, we already have that. China, India, Mercosur or European Union, that's a mistake. That's not managing your relationships properly. That makes you stronger. It makes you more resilient. And then on top of that, I'll give you again, I'll appeal since it's in the headlines to the Nordics. Nordics plus Canada, it's 20% of global GDP. It's not the first thing people would realize. But, that relationship, which is deepening for security reasons because we're like-minded, those are the types of partnerships that I think we'll see more of.
Gideon Rachman (25:12):
And you've got a round of applause when you said something strong about standing on principle on Greenland. Do you think we can find an off-ramp on that? I'm sure you'll speak of it, but put it this way, if there isn't an off-ramp, where does this go?
Mark Carney (25:29):
I strongly believe that there's a better outcome that come from the discussions that have been catalyzed in an unusual way, admittedly. And we absolutely stand by the principles that I referenced. That solution starts with security and a security, yes, of Greenland, but more broadly of the Arctic. Canada is four square contributing to that. We're at the start of a major ramp up above and beyond, so we'll be a major contributor to that. NATO has to deliver on that. We're working intensively in order to do it. As well, prosperity for the people of Greenland. In the end, it comes back to the people there. And there are opportunities to do that in ways that would strengthen all of the alliance.
Gideon Rachman (26:21):
And when President Trump says, "Oh, Greenland's under threat from Russia, even from China." Is that for real?
Mark Carney (26:30):
I would say that there are threat... Russia is without question a threat in the Arctic, without question. Russia does lots of horrible things. And I'll take the opportunity to condemn their unjustified and horrific assault on Ukraine almost at its fourth year. They are a real threat in the Arctic, one against we need to protect. Which is why we have 365 day air, sea, and land presence. It's why we're adding to our submarine fleet, adding to our air fighter fleet, why we're building out over the horizon radar to protect from Russian missile threats and others, and why we will work with our NATO partners. The threat is more perspective than actual at this stage in terms of actual activity in the Arctic, and we intend to keep it that way.
Gideon Rachman (27:28):
Another big issue that's going to come up this week is this Board of Peace that President Trump is keen on. I'm not sure whether it's for Gaza or for the entire world, but apparently Canada's been invited. Are you going to join?
Mark Carney (27:41):
We have been invited. And let me start by... I think we should recognize the progress that has been made in at least getting towards the end of the first phase of this process. And the activation, if I can put it that way, of the process to set up the Board of Peace is the start of phase two. Our view is... And that's to be welcomed, and this is a positive vehicle. Our view is we need to work on the actual structure of the vehicle. You just referenced, "Is it for Gaza?" Well, the UN Resolution, Security Council Resolution 2803 references a board of peace for Gaza. That's where we see it becoming immediately operative. And it needs to be, in our view, it's better to be designed in that way for the immediate needs there. There are many other needs around the world. First point. Second point, it needs to coincide with the immediate full flow of humanitarian aid into Gaza.
(28:45)
We are still not where we need to be, conditions still are horrific. So, that needs to come alongside. We think there's aspects of the governance and the decision making process that could be improved. But, we will work with others, obviously work with the United States, because we will do anything that we can to improve the situation, the horrific situation there, and to move onto a path to a true two state solution.
Gideon Rachman (29:14):
There's a suggestion you can get permanent membership of the Board of Peace by ponying up a billion dollars. You going to write a check for that?
Mark Carney (29:22):
We would write checks and deliver in kind to improve the welfare of the people of Palestine. But, we want to see it deliver direct to those outcomes, those outcomes promoting peace, and so the mechanics and how it works that way.
Gideon Rachman (29:40):
Okay. Final question. President Trump and a lot of people who agree with him condemn globalism a lot. And I suspect you would be the kind of epitome of a globalist. You worked for Goldman Sachs, I believe, you were a central banker, you're comfortable and lived in several countries. Is globalism, first of all, is it a thing and is it over?
Mark Carney (30:08):
I think... Look, understanding how the world works, having appreciation for other cultures, understanding the connections, and being able to, or at least appreciating ways that how we connect, whether it's through technology, trade, investment, culture, can enrich our lives. And that's a good thing, and also help solve problems. Being detached from where you live and the broader needs of society, there is an epithet for that. I don't know that the "G" word is the one. There's certainly what we're finding, to go back to the points I was making, is that there are a number of like-minded countries that want to work through partnership to achieve those goals for their citizens and for the world more broadly. The call is for more to recognize what's really going on right now and to pool their resources to the benefit of citizens. So, it won't be global, it won't cover the globe, but it will be more powerful.
Gideon Rachman (31:21):
Okay. Prime Minister, thank you very much indeed.
Mark Carney (31:22):
[inaudible 00:31:23].