Mark Carney delivered the speech for the times at Davos. It is a brilliant description of the challenges facing the international order in times of intensifying great-power rivalry, due to a declining hegemon and a rising superpower, and articulates a prudent yet values-based way forward.
It is highly relevant to middle powers like India.
The speech hangs on Vaclav Havel’s analogy of the greengrocer’s myth to explain how the communist system sustained itself, and how the rules-based international order has sustained itself so far despite its obvious observed deficiencies.
Every morning, this shopkeeper places a sign in his window: ‘Workers of the world unite’. He doesn’t believe it, no-one does, but he places a sign anyway to avoid trouble, to signal compliance, to get along. And because every shopkeeper on every street does the same, the system persist – 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. Friends, it is time for companies and countries to take their signs down.
Carney describes the rules-based international order as a similar lie, a fig-leaf for countries to “pursue values-based foreign policy”, though they knew that the “strongest would exempt themselves when convenient”, “trade rules were enforced asymmetrically”, and “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 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.
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.
The speech makes the case for building alliances to preserve strategic autonomy and sovereignty, but one underpinned by shared values.
Collective investments in resilience are cheaper than everyone building their own fortresses. Shared standards reduce fragmentations. Complementarities are 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… 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 and recognizing that progress is often incremental, that interests diverge, that not every partner will share all of our values.
So, we’re engaging broadly, strategically with open eyes. We actively take on the world as it is, not wait around for a 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, given 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…
To help solve global problems, we’re pursuing variable geometry, in other words, different coalitions for different issues based on common values and interests… 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… 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. Argue, the middle powers must act together, because if we’re not at the table, we’re on the menu.
This is a summary of the way forward
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 favour, or combine to create a third path with impact… It means acting consistently, applying the same standards to allies and rivals. 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… 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.
There is no disputing the need for middle-powers to build alliances and coalitions. Apart from the innate coordination problems with building such alliances, there are at least three other challenges with the pursuit of such a foreign policy.
First, there’s a difference between the pursuit of such policies that are built predominantly on opportunism and less on shared values. Therefore, for example, it should not be about embracing principles on anti-terrorism, or the inviolability of national borders, or the promotion of free trade, or the protection of human rights, but only when convenient, and condoning their egregious violation otherwise. There’s a difference between realpolitik and values-based realism. The big powers can pursue the former (they are expected to), but when practised by the middle-powers, the hypocrisy becomes too evident. And in the repeat game of international politics, it erodes national credibility. Non-alignment may have been a good example of values-based realism.
Second, such alliances and coalitions are built on accommodation involving mutual give and take. It’s about “shared sovereignty”. Core interests cannot be compromised, but secondary interests can be. Compromise is also not a binary choice, but in shades of grey and white. In any case, a country cannot share in the benefits of an alliance without a willingness to assume its costs. China’s hypocrisy on international trade becomes egregious since it only wants a one-way street - access to export markets while systemically restricting and disincentivising imports.
Finally, such values-based accommodation becomes impossible when foreign policy becomes another instrument for projecting nationalism and populism. A fundamental tension envelopes when this genie is out of the bottle. Populist rhetoric constrains an already limited policy choice space available for diplomats and makes any kind of accommodation an acknowledgement of weakness, provoking accusations of being a traitor. There’s a reason why foreign policy has traditionally been pursued outside the glare of publicity. However, if the genie is out of the bottle, it might well be impossible to put it back in for some time.
Middle powers must take cognisance of these challenges and tailor foreign policies and their contexts accordingly.
In a more realpolitik sense, it is also prudent for middle powers, for generally everyone other than the big powers, to follow Chinese President Jiang Zemin’s dictum that China adhered to for a long time, “hide your strength, bide your time” (Taoguang Yanghui).
PS: While Mark Carney was statesmanly and his extraordinary speech rightly went viral, Belgian Prime Minister Bart De Wever was equally forthright and brave:
“So many red lines have been crossed [by Trump] . . . Being a happy vassal is one thing. Being a miserable slave is another. If you back down now, you are going to lose your dignity and that is probably the most valuable thing you can have in a democracy.”
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