Reactions to Mark Carney’s Davos Speech.

Yesterday Mark Carney, a former central banker and now Prime Minister of Canada, gave a remarkable speech (video, transcript) at the World Economic Forum in Davos.

It is an attack on the ‘international rules-based order’, the concept that the imperial Western nations have promoted and used to justify their myriad deviations from, and abuses of international law:

For decades, countries like Canada prospered under what we called the rules-based international order. We joined its institutions, praised its principles, and benefited from its predictability. 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 that international law applied with varying rigour depending on the identity of the accused or the victim.

This fiction was useful, and 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 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.

The concept of the rules-based order, a lie in itself, was useful for the proxy forces and vassals of the global hegemon as long as they themselves were not threatened by its consequences.

But as that hegemon has turned on those vassals who supported it, the concept has become dangerous and must be discarded:

Over the past two decades, a series of crises in finance, health, energy, and geopolitics laid bare the risks of extreme global integration.

More recently, great powers began 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.
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And there is another truth: if great powers abandon even the pretence of rules and values for the unhindered pursuit of their power and interests, the gains from “transactionalism” become harder to replicate. Hegemons cannot continually monetize their relationships.

Allies will diversify to hedge against uncertainty. Buy insurance. Increase options. This rebuilds sovereignty – sovereignty that was once grounded in rules, but will be increasingly anchored in the ability to withstand pressure.

As I said, such classic 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 fortress. Shared standards reduce fragmentation. Complementarities are positive sum.

The question for middle powers, like Canada, is not whether to adapt to this new reality. We must. The question is whether we adapt by simply building higher walls – or whether we can do something more ambitious.

Carney is not arguing for a full return to the rule of law. He is not calling for international law to be applied equally to all nations. He is arguing for a collaboration of ‘middle powers’ to resist the hegemon.  Unsaid is that such a club would likely continue to plunder the rest of the world:

Middle powers must act together because if you are not at the table, you are on the menu.

Great powers can afford to go it alone. They have the market size, the military capacity, the leverage to dictate terms. Middle powers do not. But when we only negotiate bilaterally with a hegemon, we negotiate from weakness. We accept what is offered. We compete with each other to be the most accommodating.

This is not sovereignty. It is the performance of sovereignty while accepting subordination.

In a world of great power rivalry, the countries in between have a choice: to compete with each other for favour or to combine to create a third path with impact.

We should not 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 it together.

Carney is pleading to the vassals of the hegemon to collectively resist its power. He is providing a recipe for doing this (emphasis in original):

It means naming reality. Stop invoking the “rules-based international order” as though it still functions as advertised. Call the system what it is: a period of intensifying great power rivalry, where the most powerful pursue their interests using economic integration as a weapon of coercion.

It means acting consistently. Apply the same standards to allies and rivals. When middle powers criticise 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, create institutions and agreements that function as described.

And it means reducing the leverage that enables coercion. Building a strong domestic economy should always be every government’s priority. Diversification internationally is not just economic prudence; it is the material foundation for honest foreign policy. Countries earn the right to principled stands by reducing their vulnerability to retaliation.

Carney is appealing to ‘middle powers’ to join Canada in the new club:

We understand that this rupture calls for more than adaptation. It calls for honesty about the world as it is. …

According to the NY Times the speech, which Carney had written himself, was greeted with standing ovations.

Arnaud Bertrand comments and argues that the speech is an important one:

Make no mistake, Carney’s speech at Davos may prove to be one of THE most important speeches made by any global leader over the past 30 years. This is genuinely epochal stuff.

More than anything, what it means is that, to the extent it even existed at all, the West irremediably lost the Second Cold War: a Cold War requires two competing systems. Carney just announced that one of them simply no longer exists.

I won’t go as far as that claim. The new ‘middle power’ club that Carney envisioned has yet to gain members.

It will be difficult and take time for the political ‘elites’ of vassal countries to change their mindset from being the presumed beneficiaries of the imaginary rules-based order to become opposed to it. Their interests vary and finding common ground for some new, even if only informal, entity, will need a lot of talks and negotiations.

To discard the ‘rules-based order’, to expose it as the lie that it has always been, is a good step into the right direction. It is a fundamental change of viewing the world.

But we also have to mindful not to fall into The Standing Ovation Trap because such fundamental changes can be abused.

Keep in mind that the ‘liberals’, like Carney, who suddenly preach adherence to international law when Trump tries to snatch Greenland, are the same ones who still run cover for every Zionist breach of international law in Palestine:

The same leaders who decry US threats to annex Greenland have enabled and encouraged Israel to impose a ‘security line’ which has resulted in the effective annexation of 60% of Gaza. Israel also continues to annex land in the West Bank and Syria, all with the support of liberal leaders who now tell us territorial integrity is paramount.

These leaders have also repeatedly invoked the necessity for engagement and dialogue with the US to avoid conflict over Greenland. This newfound enthusiasm for dialogue comes after cutting Russia out of every conceivable international forum and pushing Europe to the brink of a major war by refusing for years to discuss the future of Ukraine in the same manner they now wish to discuss the future of Greenland.

The hypocrisy, absurdity and dangerousness of the situation can’t be overstated.

The ‘rules-based international order’ was useful for some until it wasn’t. As it has now been declared dead, one wonders what other fictional concept will be invented to avoid a full return to adherence to international law.