The Rupture

Mark Carney nails it. We have to "stop pretending"

A note on who I am: I’m an investigative journalist who’s spent a decade reporting on the collision of technology and democracy including exposing the Facebook/Cambridge Analytica scandal for the Guardian and the New York Times. Two years ago, I called the alliance of Trump, Silicon Valley and a global axis of autocracy: a tech bro oligarchy, aka the Broligarchy. Please help me continue to expose it.

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A rupture, not a transition

Mark Carney’s speech at Davos yesterday really is worth your time. It made some of the front pages today but the news cycle moves so fast that it’s already yesterday’s news. Part of the challenge of this moment - and I believe the job of journalists - is to focus on the signal, not the noise. And if you have time to take in one thing properly, this week, I’d suggest it’s this.

It does what a great speech should do: it gives us the language to process and understand what is happening. It does so from a position of moral clarity. And it includes a call to action to what remains of the liberal world.

It’s a huge relief to have a world leader simply naming what’s happening. That is the first step. But, it actually goes further in that it calls out the “lie” of the “rules-based order” that the “rules” were for some but not all.

That’s been so abundantly proved by the global response to what’s happening in Gaza but it’s also not an outlier. America has been the world’s policeman and sometimes that’s looked less like a Victorian bobby on the beat and more like a beat-the-shit-out-of-you ICE officer and calling that out is a refreshing blast of honesty.

He begins it with the story of a shopkeeper living under Communism from a book by Vaclav Havel, the Czech writer and dissident turned President. The news reports focussed on what Carney said about NATO’s article five but it’s what he has to say about truth that’s even more urgent and important.

“Every morning, the shopkeeper places a sign in his window: “Workers of the world unite.” He doesn’t believe in it. No one does. 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.

“Friends, 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 join 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 varied rigor, 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.”

The end of the speech includes a call back to the Havel story:

“We are taking a 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 realities, to build our strength at home, and to act together.”

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“The powerful have their power. But we have something too: the capacity to stop pretending…”

I lived in then-Czechoslavakia in 1990. It was less than a year after the Velvet Revolution, and inevitably I read a lot of Havel. I’ve been thinking about that time recently, not least because of the great historical fortune I had to be young and free in a hugely exciting moment in which the world was literally opening up before us.

So exciting that I took a year out of my degree to go and teach English to a bunch of sports journalists who worked for the newspaper affiliated with Havel’s party.

It’s why I found Carney’s choice of story so interesting because I suspect that the book that this is taken from, The Power of the Powerless, is a text that is going to increasingly speak to us in the months and years to come.

Words matter.

That’s one of the central points of Havel’s essay. And also the outcome of it. After its publication in 1978, his idea that “living in truth” was both a radical and an achievable act reverberated across Eastern and Central Europe. This account, published by the Hannah Arendt Center for Politics and Humanities, describes its direct galavanizing impact on Polish factory workers:

We can’t respond and act to this hugely consequential geopolitical moment if we are complicit in the denial of our leaders and media. This is a week in which the world we have known has swung on its axis. We cannot simply carry on as if it’s business as normal.

It’s why Starmer’s underplayed reaction is so deeply dangerous. We can all understand why, we see the reasons clearly, but not speaking the truth, now, is deeply corrosive. That is the subtext of Carney’s speech. And there is a deep and dark hinterland behind it.

We’ve been lucky through a golden age of peace and prosperity but as he so clearly articulates, that age is gone. Ahead lies dragons.

It’s why we have to listen to these voices from the past. In my newsletter on Monday, I said that the most powerful and on point thing I’d read or heard was an interview in the New Yorker by the conservative historian Robert Kagan.

Given the inadequacy of the UK response, I emailed Robert to see if he’d speak to me about what we should be doing in this moment.

This is the impromptu Zoom call I had with him which we published in The Nerve yesterday. It’s a quick watch or listen - 17 minutes - (or there’s a transcript here) but like Carney he names what’s happening and he’s very very clear on the risks: to both the US and Europe.

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Full text of Mark Carney speech, World Economic Forum, January 20, 2026

Thank you very much, Larry. I’m going to start in French, and then I’ll switch back to English.

(IN FRENCH)

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 Thucydides 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, get along to accommodate, to avoid trouble, to hope that compliance will buy safety.

Well, it won’t. So what are our options?

In 1978, the Czech dissident Václav 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 a greengrocer.

Every morning, the shopkeeper places a sign in his window: “Workers of the world unite.” He doesn’t believe in it. No one does. 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.

Friends, 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 join 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 varied rigor, 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 multilateral institutions on which the middle powers have relied — the WTO, the UN, the COP, the very architecture of collective problem solving — are under threat. 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 cannot 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 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.

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 positive sum.

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.

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 it 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 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 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. 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 $1 trillion of investments in energy, AI, critical minerals, new trade corridors and beyond. We’re doubling our defence 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 to a comprehensive strategic partnership with the EU, including joining SAFE, the European defence procurement arrangements. We have signed 12 other trade and security deals on four continents in six months.

In the past few days, we’ve concluded new strategic partnerships with China and Qatar. We’re negotiating free trade pacts with India, ASEAN, Thailand, Philippines and Mercosur.

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 defence and security.

On Arctic sovereignty, we stand firmly with Greenland and Denmark and fully support their unique right to determine Greenland’s future.

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Our commitment to NATO’s Article 5 is unwavering, 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.

On plurilateral trade, we’re championing efforts to build a bridge between the Trans-Pacific partnership and the European Union, which would create a new trading bloc of 1.5 billion people on critical minerals.

We’re forming buyer’s clubs anchored in the G7 so 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.

This is not naïve multilateralism, nor is it relying on their institutions. It’s building 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. 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.

Our view is 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. 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 favour, or 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 it together.

Which brings me back to Havel. What does it mean for middle powers to live the truth?

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. 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.

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 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 a 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 realities, 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.

Thank you very much.