Strategic Shift at the Davos Forum: Canadian Prime Minister Carney Reshapes the Global Role of a Middle Power

In January 2026, on the stage of the World Economic Forum in Davos, Switzerland, Canadian Prime Minister Mark Carney addressed global political and business elites with a speech that The Guardian described as potentially one of the defining speeches of our time. The former Governor of the Bank of England and current Canadian leader used no diplomatic language, directly declaring that the world order is broken and that the Western liberal order can no longer be imposed beyond the boundaries of the collective West. Even more strikingly, he explicitly called for middle powers to unite and act, because if we are not at the table, we are on the menu. The very next day after his speech, U.S. President Trump threatened to impose 100% tariffs on Canada if Ottawa reached a trade deal with China. This confrontation at the Alpine resort marked a broader geopolitical reality: against the backdrop of intensifying U.S.-China strategic competition and the return of American unilateralism, traditional middle powers are being forced to redefine their international roles and survival strategies.

The Strategic Context and Core Arguments of the Kannida Davos Speech

Mark Carney's speech was not an impromptu piece. This technocrat, born in the small town of Fort Smith in Canada's Northwest Territories and holding economics degrees from Harvard and Oxford, had already built nearly two decades of reputation in international finance before assuming the role of interim Prime Minister in March 2025. His Davos address was built upon two interrelated observations: a fundamental shift in the global power structure and the failure of the existing international governance system.

From a data perspective, Carney pointed out the structural contradictions within the International Monetary and Financial System (IMFS). In his speech at the 2019 Jackson Hole Symposium, he had already warned that the dominance of the US dollar was increasingly misaligned with the reality of a multipolar global economy. Data at the time showed that the US accounted for only 10% of global trade and 15% of global GDP, yet nearly 70% of countries used the US dollar as their anchor currency. By 2026, this asymmetry had further intensified: the US share in global merchandise trade had fallen to approximately 8.5%, while its share of global GDP measured by purchasing power parity remained around 14-15%. However, the US dollar's share in global official foreign exchange reserves had declined from two-thirds to about 58%, yet its role as the system's core reference currency had not correspondingly weakened. In Carney's view, this gap between economic weight and monetary influence is precisely the micro-level manifestation of the old order's failure.

Carney's speech skillfully referenced the 1978 essay "The Power of the Powerless" by Czech dissident Václav Havel. He likened the West to a shopkeeper in a communist country who displays the slogan "Workers of the world, unite!" in the window—continuing to showcase symbols of an order that has lost its systemic effectiveness, merely to maintain the illusion that the system is still functioning. The sharpness of this analogy lies in its origin from a former guardian of the Western financial system. In essence, Carney was saying that the U.S.-centered liberal international order can no longer enforce itself beyond its own borders and is even decaying from within.

The deeper reason is that the United States no longer has the time or willingness to wrap its geopolitical agenda in the legitimizing cloak of liberalism, nor will it seek European participation through persuasion. Instead, Washington will increasingly demand that third parties—whether allies or rivals—choose sides. For medium-sized powers like Canada, whose economy is highly dependent on the United States (approximately 75% of exports go to the U.S. market) yet which strive to maintain strategic autonomy, this pressure to pick a side is becoming an existential challenge.

The Strategic Dilemma of Middle Powers and Carney's Five-Pillar Framework

Prior to his speech in Davos, Carney had just completed a meticulously arranged diplomatic shuttle. In mid-January 2026, he visited Beijing, marking the first official visit to China by a Canadian Prime Minister since 2017. Both sides announced the establishment of a new strategic partnership focused on energy, trade, and investment, and reached an agreement on reducing tariffs for key products. Subsequently, he visited Doha, Qatar, where a new strategic partnership was also established with the Gulf nation. This series of actions provided substantial context for his Davos narrative.

Based on these diplomatic practices, Carney proposed a five-pillar strategic framework for middle powers. The first is the diversification of economic and trade policies, aimed at reducing vulnerability to strategic bottlenecks and limiting the risk of economic coercion. Canada's economy heavily relies on international trade, with its export structure being highly geographically concentrated. Using China as a comparable alternative market is a key measure to reduce structural dependence on a single market.

Second, establish a mutually beneficial bilateral trade framework. Taking energy trade as an example, Carney noted: Both Canada and the United States are net exporters of natural gas, with their liquefied natural gas production and export capacities growing significantly. This creates room for market diversification, while maintaining the interconnection of cross-border pipeline infrastructure means the natural gas markets of the two countries remain linked. Therefore, Canada can export more liquefied natural gas to Asia in the coming years while preserving its energy ties with the United States.

Third is the pursuit of balanced relations with major powers, avoiding excessive reliance on any single pole of power. When asked at Davos whether deepening ties with China would affect Canada-U.S. relations, Carney emphasized the need to build a network of partnerships encompassing all major international actors, while noting that the United States remains Canada's primary trading partner.

Fourth is the principle of non-alignment. Middle powers should avoid taking sides, resist becoming battlegrounds for major power competition, and maintain strategic flexibility to prevent structural dependency.

Fifth is the substantive cooperation among middle powers. Enhancing their bargaining chips in the international system when facing major powers through collective action. The warning by Carney, "If we are not at the table, we will be on the menu," vividly illustrates this pillar.

The director of the McGill Institute for the Study of Canada, Daniel Béland, noted that Carney's approach can sometimes be described as center-right. He talks about pragmatism but comes from the financial world, and his rhetoric is not as progressive as Justin Trudeau's. Compared to his predecessor, Carney emphasizes economic issues over social ones. He is essentially a technocratic economist. This pragmatic inclination is evident in Carney's policy choices: despite having served as the UN Special Envoy for Climate Action, he suspended the fossil fuel emissions cap after becoming Prime Minister; he repealed the tax targeting large tech companies and paused almost all tariffs enacted in response to Trump's offensive.

The Breakdown of Canada-U.S. Relations and the Realistic Choices of Middle Powers

The developments following Carney's speech validated his concerns. Trump wrote on Truth Social: If Prime Minister Carney thinks he can turn Canada into a 'transit hub' for China to ship goods and products to the United States, he is gravely mistaken. China would devour Canada alive, completely swallowing it, including destroying their businesses, social structures, and general way of life. This blatant threat is consistent with Trump's previous claim about making Canada the 51st state.

Nobel laureate in economics Paul Krugman wrote in his blog that Carney's speech was a courageous stance. He analyzed: Canada is right next to the United States, and the U.S. economy is over ten times larger than Canada's... Natural conditions tend to closely link Canada and the United States. Therefore, Canada may be more vulnerable to Trump-style anger than any other country.

However, Carney's response was equally resolute. After a cabinet meeting in Quebec, he stated: Canada does not exist because of the United States. Canada prospers because we are Canadians. We are masters of our own home. This is our credibility, our future, and our choice. This declaration of defending sovereignty forms a strategic loop with his call for middle powers to unite at Davos.

Canadian political analyst Paul Wells interpreted: I believe this is Carney beginning to acknowledge the limitations of appeasement... He said the return of great power politics—essentially Russia, China, and the United States doing as they please—mocks any claim that we live in a rules-based international order. The returns on clinging to this fiction are rapidly diminishing.

Real-world data supports this assessment. Although the Carney government has suspended most retaliatory tariffs and attempted to reach an agreement with Washington to end the trade war, Canada remains the only member of the G7 that has not yet signed a trade agreement with the United States. At the same time, through domestic measures such as significantly reducing interprovincial business barriers, emphasizing the goal of making Canada a leader in energy production, and promoting the simplification of large-scale infrastructure project approvals, Carney has sought to reduce dependence on its southern neighbor.

Prospects of Middle-Power Alliances in the Restructuring of the Global Order

Carney's discourse is not an isolated phenomenon. Economic historian Adam Tooze points out that Carney's speech at Davos is far from the strongest response we have seen so far from government leaders to the crisis in international relations within the Western world triggered by President Trump's aggression. However, he acknowledges that the Canadian leader's analytical framework provides a strategic blueprint for medium-sized powers to navigate the era of non-Western international politics.

From a broader perspective, the repositioning of middle powers reflects structural shifts in the global distribution of power. The tension between the relative decline of the United States' economic weight and its willingness to maintain global military and financial hegemony, the rise of China as an alternative market and source of capital, Russia's assertive return in the Middle East and Eastern Europe, and Europe's oscillation between strategic autonomy and transatlantic solidarity—all these factors are squeezing the strategic space traditionally available to middle powers.

For countries like Australia, South Korea, Brazil, and Indonesia, Carney's framework offers a kind of roadmap. They neither wish to fully align with a major power nor can they individually cope with systemic pressures. Establishing issue-based alliances among middle powers—coordinating positions in specific areas such as trade, climate, public health, or digital governance—could become a viable path to enhance collective bargaining power.

However, the challenges remain formidable. There are significant differences among middle powers in terms of security interests, economic structures, and political values. South Korea and Australia rely on the United States for security, while Brazil and Indonesia emphasize their non-aligned traditions more strongly. On issues such as human rights and environmental standards, Canada's stance may differ sharply from that of Saudi Arabia or Vietnam. Carney himself has also faced criticism for often avoiding human rights issues in the international agenda.

Applause at the Davos Forum—a rare standing ovation from attendees—reflects the widespread anxiety among the global elite over the failure of the old order. However, applause does not automatically translate into effective collective action. The alliance of middle powers requires concrete institutional arrangements, sustained coordination mechanisms, and, most importantly, the willingness to support each other in times of crisis.

Mark Carney's speech may prove to be a watershed moment. It signifies a technocrat from the core of the Western financial system publicly acknowledging the limitations of the U.S.-centric international order and providing a survival manual for countries that are neither superpowers nor small states. On that cold winter day in the Alps, the Canadian Prime Minister was not only defending his own country's interests but also redrawing the blueprint for the role of middle powers in an increasingly multipolar world. As great power politics returns and rules are replaced by power, the choice for middle countries is no longer whether to participate in the game, but how to ensure they are not swallowed by it. Carney's answer is clear: either unite to secure a place at the table or become a dish on someone else's plate. This choice will determine the direction of reshaping the global order in the coming decade.