#davos

Unvarnished truth

Overnight in Davos, Switzerland, Canadian Prime Minister Mark Carney delivered what I suspect will be recorded in future history text books as an era defining speech. It is profound, accurate, and very relevant to another "Middle Power" like Australia.

Here is the full text of that speech. I urge you to read it in its entirety:

"It’s a pleasure – and a duty – to be with you at this turning point for Canada and for the world.

Today, I’ll talk about the rupture in the world order, the end of a nice story, and the beginning of a brutal reality where geopolitics among the great powers is not subject to any constraints.

But I also submit to you that other countries, particularly middle powers like Canada, are not powerless. They have the capacity to build a new order that embodies our values, like respect for human rights, sustainable development, solidarity, sovereignty, and territorial integrity of states.

The power of the less powerful begins with honesty.

Every day we are reminded that we live in an era of great power rivalry. That the rules-based order is fading. That the strong do what they can, and the weak suffer what they must.

This aphorism of Thucydides is presented as inevitable – 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.

It won’t.

So, what are our options?

In 1978, the Czech dissident Václav Havel wrote an essay called The Power of the Powerless. In it, he asked a simple question: how did the communist system sustain itself?

His answer began with a greengrocer. Every morning, this shopkeeper places a sign in his window: “Workers of the world, unite!” He does not believe it. No one believes it. But he places the sign anyway – to avoid trouble, to signal compliance, to get along. 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 greengrocer removes his sign — the illusion begins to crack.

It is time for companies and countries to take their signs down.

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.

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.

The multilateral institutions on which middle powers relied— the WTO, the UN, the COP – the architecture of collective problem solving – are greatly diminished.

As a result, many countries are drawing the same conclusions. They must develop greater strategic autonomy: in energy, food, critical minerals, in finance, and supply chains.

This impulse is understandable. A country that cannot feed itself, fuel itself, or defend itself has few options. When the rules no longer protect you, you must protect yourself.

But let us be clear-eyed about where this leads. A world of fortresses will be poorer, more fragile, and less sustainable.

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.

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 assumption that our geography and alliance memberships automatically conferred prosperity and security is no longer valid.

Our new approach rests on what Alexander Stubb has termed “values-based realism” – or, to put it another way, we aim to be principled and pragmatic.

Principled in our commitment to fundamental values: sovereignty and territorial integrity, the prohibition of the use of force except when consistent with the UN Charter, respect for human rights.

Pragmatic in recognising that progress is often incremental, that interests diverge, that not every partner shares our values. We are engaging broadly, strategically, with open eyes. We actively take on the world as it is, not wait for a world we wish to be.

Canada is calibrating our relationships so their depth reflects our values. We are prioritising broad engagement to maximise our influence, given the fluidity of the world order, the risks that this poses, and the stakes for what comes next.

We are no longer relying on just the strength of our values, but also on the value of our strength.

We are building that strength at home.

Since my government took office, we have cut taxes on incomes, capital gains and business investment, we have removed all federal barriers to interprovincial trade, and we are fast-tracking a trillion dollars of investment in energy, AI, critical minerals, new trade corridors, and beyond.

We are doubling our defence spending by 2030 and are doing so in ways that builds our domestic industries.

We are rapidly diversifying abroad. We have agreed a comprehensive strategic partnership with the European Union, including joining SAFE, Europe’s defence procurement arrangements.

We have signed twelve other trade and security deals on four continents in the last six months.

In the past few days, we have concluded new strategic partnerships with China and Qatar.

We are negotiating free trade pacts with India, ASEAN, Thailand, Philippines, Mercosur.

To help solve global problems, we are pursuing variable geometry— different coalitions for different issues, based on values and interests.

On Ukraine, we are a core member of the Coalition of the Willing and one of the largest per-capita contributors to its defence 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 Article 5 is unwavering.

On plurilateral trade, we are championing efforts to build a bridge between the Trans-Pacific Partnership and the European Union, creating a new trading block of 1.5 billion people.

On critical minerals, we are forming buyer’s clubs anchored in the G7 so that the world can diversify away from concentrated supply.

On AI, we are cooperating with like-minded democracies to ensure we will not ultimately be forced to choose between hegemons and hyperscalers.

This is not naive multilateralism. Nor is it relying on diminished institutions. It is building the coalitions that work, issue by issue, with partners who share enough common ground to act together. In some cases, this will be the vast majority of nations.

And it is creating a dense web of connections across trade, investment, culture on which we can draw for future challenges and opportunities.

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.

Which brings me back to Havel.

What would it mean for middle powers to “live in truth”?

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.

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. We have capital, talent, and a government with the 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, reliable partner—in a world that is anything but—a partner that builds and values relationships for the long term.

Canada has something else: a recognition of what is 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.

We are taking the sign out of the window.

The old order is not coming back. We should not mourn it. Nostalgia is not a strategy.

But from the fracture, we can build something better, stronger, and more just.

This is the task of the middle powers, who have the most to lose from a world of fortresses and the most to gain from a world of 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."

https://www.reuters.com/world/us/lutnick-heckled-davos-dinner-hosted-by-blackrocks-fink-ft-reports-2026-01-21/

So, this is something I haven't seen discussed on Tumblr.com, and as the self-appointed Economy Side of Tumblr, I cannot let this stand. Or sit. Let's not even talk about letting it lie there in a slutty, slutty pose.

I'm usually in favour of slutty, slutty poses, as is proper of a Frenchman, but not in this case.

So, for those that do not feel the need to click on links to articles, let me summarize :

The World Economic Forum was held recently at Davos. It's kind of a big thing for the world economy. Like, a really big thing. It's also a mostly understated event for geopolitics, it's not out there and confrontational. Most of the time we hear about it because remarkably ineffectual anticapitalist groups with outlandish demands organise demonstration and their demands are so outlandish they're the only ones the press talks about. In this particular instance however, we heard about it a LOT, at least in Europe, because it was directly related to the on-going-but-only-kind-of-but-also-still-a-thing crisis about Greenland.

During this WEF, the CEO of Blackrock, who is also the co-chair of the WEF, organized a dinner for people with a big weight in the world economy. This kind of event tends to be fairly understated, quiet, but important, the kind of backroom events where softly-spoken but tremendously important deals are made.

During this diner one Mister Howard Lutnick, Secretary of Commerce of the USA, decided to make a speech where he bashed the EU and Europe in general. I will take this occasion to remind you that Davos is in Switzerland. In Europe. Not in the EU, but still very much interlinked economically with it. Mayhaps not the best choice of venue for this kind of talk.

As if to exemplify how poor Mister Lutnick's grasp of "there is a time and place" is, he got his ass heckled. Now, this may not seem important but, I assure you : IT FUCKING IS. These events are formal, dignified, there's a decorum, an etiquette. soft-spoken is the rule. And despite this socio-cultural context, Lutnick got his ass BOO'D. I cannot emphasize enough how out of the ordinary this is.

Christine Lagarde, president of the fucking EUROPEAN CENTRAL BANK, the single most important financial institution in the entire continent of Europe (why the fuck did he think it was a good idea to spew his bile against Europe in a room with HER?) decided to GET UP and WALK OFF. Let me repeat : the woman at the helm of the organization that controls the monetary policy of the entire fucking Euro-zone, who issues loans to EU states, whose organisation if the Single Biggest Deal for European economies ... got up and left. And she was followed by a bunch of people. This is beyond unprecedented. If point 4 was out of the ordinary, this is straight up iconoclastic, it's the equivalent, for that social circle, of flipping the table and calling Lutnick's mother a whore.

Blackrock called off the dinner before they got to the dessert.

Now, why is this important ? Several reasons.

First off, it means that the ECB is not willing to be diplomatic with Trump's bullshit anymore. Considering how important it is for the EU economies, that opens a rather worrying question for the US : next time they issue treasury bonds ... will Europe buy any ? That's a bit of an issue considering how much they rely on us buying their bonds, and it's made worse by the fact private European funds are apparently starting to divest. If I worked in the Fed or any related US administration, I would be getting nervous.

Second, Blackrock calling off the event means they didn't think it was salvageable. Which means that either they needed Lagarde and co present for important negociations over fine wine and cake, or they were humiliated by this to such a degree they'd rather cut their losses and avoid any risk of further humiliation, or both. I must insist on a point : the catering for those events is EXPENSIVE, like, obscenely so, it's a decadent rich people event, so Blackrock giving up on it midway through is, in economy term, a giant fucking deal.

Furthermore, like I pointed out, this was organized by the CEO of Blackrock and co-chair of the entire World Economic Forum. This is, to put it mildly, a sizeable setback for Blackrock. Effectively, Lutnick spewed so much shit they ruined THE flagship event Blackrock organized for this WEF. It's a slap in the face followed by a kick to the balls for Blackrock. And Blackrock isn't a small company, it has power and influence. And they got humiliated because Lutnick spewed so much shit that the most important lady for the European economy said "fuck this shit, I'm out" and walked out in front of several hundred of the most important people for the world economy. I suspect Blackrock is at least rather miffed.

Third, this is symptomatic of a greater loss of patience in Europe, even among the economic sector. It means that the economic sector of Europe is increasingly convinced that any profit they could make buying from and selling to the US is not worth the diplomatic hastle. This ... is a big fucking deal. It's one more sector with a growing Trump-branded rift between the US and Europe. And the economic sector was the one that clung to the US the most, since those transatlantic relations allowed for a load of business. So if the European business world is turning away from the US, and becoming willing to eat the economic pain this would cause ... well, that's rather bad for the US' economic prospect in the medium and long term.

Now, I must underline that the macro-economic situation is not something that changes at blazing speed usually, there's always a degree of inertia, or rejection of change in favour of tried and true methods, alliances and relations ... but holy fuck did a lot change in a single year ! Because yes, it's only been one (1), singular, unique year since Trump took office. When I make predictions, I tend to remain vague, because making long term economic predictions that are anything but vague is incredibly difficult, but with the speed at which Trump pushes things, I'm not even going to try to make predictions. Will NATO be a thing in a year ? Will economic relations between the US and the EU still exist ? Will they improve ? Worsen ? Shatter ? Stabilize ? Who fucking knows !

At this point, we even have people very seriously ask what we do if/when Trump invades Greenland. It's not taken as mere diplomatic theatre, it is being studied in our military HQs. And for those already reaching for the notes to say stuff like "took you long enough" or something to that effect : shut. We're talking about international diplomacy, where there is ALWAYS inertia to some degree. The fact in a single fucking year Trump took the invasion of Greenland from lalaland fantasy conspiracy troll bullshit from Russia to real and credible threat is the diplomatic equivalent of going 120kph in a zone limited at 20. Adjusting your trajectory is goddamn difficult when the lunatic coming at you is doing so at 6 times the speed limit.

Notice how I didn't even talk about Trump's renewed tarriff threats and how they destabilize things even more.

So, yeah, shit's fucked, I'm not sure where we'll be next year, everything's getting unpredictable and Trump is a nutjob.

I'll be in OTTAWA TOMORROW (Jan 28) at Perfect Books and in TORONTO with Tim Wu on FRIDAY (Jan 30).

I blame novelists: it's only in prose that we get the illusion of telepathy, of being inside the mind of another. No wonder novelistic tales of political transformation focus on the moral fortitude of individual leaders.

The problem is, it's a destructive lie.

Sure, leaders sometimes exhibit moral fortitude and courage. But we can't rely on our leaders to be perfect – or even pretty good. The only reliable way to get the leadership we deserve is to force our leaders to follow us, by organizing in political blocs that mete out severe punishments when they betray us.

Say what you will about the Tea Party, but boy, did they understand this. During the Obama years, any Republican that wavered from the party line was mercilessly tormented by Tea Party activists, who flooded their offices with calls and emails, showed up at their town halls, and at restaurants when they were trying to have dinner, and then they backed their primary opponents. The Tea Party years were a winnowing function for the GOP, and the only Republican politicians who survived were the ones who refused to compromise. This worked for them in world-historic ways. It was thanks to the Tea Party that the GOP was able to steal two Supreme Court seats, for example.

Corporate Democrats use the Tea Party as an example of why we can't let the public into progressive politics. After all, corporate Dems already have control over Democratic politicians, and so any organized rank-and-file bloc threatens their ability to push elected politicians to pursue grotesque policies like supporting genocide in Gaza or showering billions on ICE:

https://www.msn.com/en-us/news/politics/seven-democrats-just-voted-to-approve-ice-funding-full-list/ar-AA1ULAn7

The seven Dems who voted to fund ICE knew that they were doing something that would be wildly unpopular with the voters who sent them to DC, but they did it anyway, because they aren't afraid of those voters. They treat their voters as ambulatory wallets to be terrorized into donating small sums via relentless text messages about the impending end of democracy in America, even as they vote for the impending end of democracy in America.

These seven lawmakers don't just need to be primaried: they need to be made an example of. Their names must be a curse. They must be confronted in public – long after they are out of office – by voters brandishing pictures of the people ICE murdered after receiving the funds they voted for. They must be haunted for this decision for the rest of their days. As Voltaire said, "Sometimes you must execute an admiral to encourage the others."

Here are their names:

Tom Suozzi (New York)

Henry Cuellar (Texas)

Don Davis (North Carolina)

Laura Gillen (New York)

Jared Golden (Maine)

Vicente Gonzalez (Texas)

Marie Glusenkamp Perez (Washington)

https://www.msn.com/en-us/news/politics/seven-democrats-just-voted-to-approve-ice-funding-full-list/ar-AA1ULAn7

Politicians – even the most unhinged and narcissistic ones – go through life attuned to public rage. Even Trump. Why else would Trump have ordered ICE Obergruppenführer Gregory Bovino "home with his tail between his legs"?

https://prospect.org/2026/01/27/ice-greg-bovino-minneapolis-one-battle-after-another-sean-penn/

Counting on politicians to do the right thing out of principle is a loser's bet. Far more reliable is to bet on them doing the right thing because they're afraid of being cursed and humiliated and haunted by their betrayal to the end of their days.

Don't be fooled by politicians and pearl-clutchers insisting that the norms fairy and "comity" are the only way to get things done. We are not in an era of reaching across the aisle in a spirit of public service. We are in the era of fascist goons murdering our neighbors in the street and then dancing a celebratory jig. We arrived at this juncture in large part because we accepted glaring bullshit about "comity":

https://pluralistic.net/2021/01/30/meme-stocks/#comity

This isn't merely frustrated militancy on my part. I'm hoping that you will join me in this understanding of politics: that good leadership is downstream of politicians being terrified of betraying their duty to the public, and we need not rely on moral perfection to make progress.

Prime Minister of Canada Mark Carney speech at Davos. It was a good one. This is how he ended it, but it is worth watching in full, including the Q&A afterward.

“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 realities, to build our strength at home, and to act together.

Not exactly reassuring words from Bessent in Davos today: