The Carney Doctrine Can Be More Than a Davos Speech

At the World Economic Forum in Davos, Switzerland, last month, Canadian Prime Minister Mark Carney delivered a strategic emancipation proclamation. The international order is rupturing, he candidly assessed, forcing small and midsize countries to make hard and undignified choices as they struggle to survive in a world of bullying great powers. The imagined community sustained by universal rules, international law, and multilateral institutions never fully constrained these giants, but now even the pretense that it can is in tatters.

“The world has changed. Washington has changed. There is almost nothing normal now in the United States,” Carney told Canada’s House of Commons at the end of a particularly stormy January.

The two-time former central bank chief’s proposed solution is to broaden the base of middle powers’ security and prosperity away from overdependence on an unreliable hegemon and hobbled multilateral organizations.

Now dubbed the “Carney Doctrine,” his concept of “variable geometry” diplomacy addresses a fundamental contradiction in legacy institutions such as NATO: a United States frustrated that its allies never do enough to help deter Russia or constrain China as middle powers chafing under the structure of institutions designed by Washington to ensure its own primacy, inculcate dependence, and discourage independent strategic options—while the United States itself only selectively follows the norms it forces on others.

Without credibly enforced rules, interdependence with systemic rivals increases the risk of coercion. Complying with big powers’ demands doesn’t buy safety, Carney warned. It only spurs them to come back for more. But his case, based on his articles and speeches and on my conversations on background with people close to him, is bigger than just that. Rather than revealing weakness by accommodating norm-violating behavior, Carney argues, middle powers must take more responsibility for defending their own sovereignty. Stability and progress come not through confrontation or moral absolutism but by preserving limited cooperation while pragmatically adapting to material realities. The liberal principle that systems bound by rules can reduce the payoffs from thuggery is still valid, but the mechanisms need updating. In a world in which power dynamics are constantly tested and renegotiated, where adversaries probe and allies hedge, flexibility is a virtue.

Smaller, more adaptable groups of trusted partners already exist, of course. Carney’s strategy would invest more in them to provide collective resilience against coercion and better manage economic relations. It’s the logic of Davos Man—that systems can be repaired through deeper participation—rebooted for a harsher era.

These networks would have thicker ties based on shared values and interests, on reciprocity and mutual respect, and on the prospect of collective leverage. This plurilateral approach is less universal than the old liberal order but more institutionally legitimate than spheres of influence or concerts of powers. It’s certainly better for small states than making lopsided bilateral transactions with exploitative big ones.

One possible network would be connecting the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to create a large fair trade bloc that bypasses a paralyzed World Trade Organization. The EU already has bilateral agreements with 10 of the CPTPP’s 12 members, and a formal dialogue on deeper integration began last November.

Interested countries could supplement that broad rules-based coalition with sector-specific agreements that impose conditions on market access and supply chains for sensitive goods such as critical minerals, electric vehicles, batteries, and dual-use technologies. The hard test will be whether members of these agreements are willing to coordinate industrial policies and impose consistent barriers to blunt China’s massive, destabilizing subsidies and export surplus.

For economic security, the doctrine’s central implication is that if smaller countries don’t want to be bullied, they have to band together and make coercion not only economically unprofitable but strategically costly. Coordinated mechanisms, perhaps modeled on the EU’s Anti-Coercion Instrument, could enable rapid collective retaliation when a member state gets picked on. Pooled commodity insurance, export credit guarantees, and emergency financing for vulnerable sectors such as agriculture, rare earths, and energy could absorb and redirect supply and provide compensation. But like negotiating with a gun on the table, the coalition would need to back mechanisms with the political resolve to use them.

Despite its potential, however, a Carney Doctrine faces two acute challenges. Unless they’re accurately assessed and overcome, they could doom the entire enterprise.

The first impediment to Lilliputian middle powers binding great-power Gullivers is that authoritarian regimes can learn, adapt, and colonize networks. Globalization’s hope that even autocratic Russian and Chinese elites would accept rule-bound cooperation in exchange for greater prosperity misread their incentives. The primordial concern of corrupt oligarchies is losing the control that enables their rent-seeking. Genuine rule of law, transparency, and enforceable constraints threaten their power, which depends on personal loyalty, patronage, and arbitrary authority. A bloc such as the EU—with its shared and globally influential regulations, independent enforcement, and collective leverage—represents an existential threat.

Vladimir Putin and Donald Trump openly reject the constraints that the EU and Carney’s vision imply. Xi Jinping is more subtle, professing support for multilateralism while exploiting and weaponizing its rules, complying selectively, and hollowing institutions from within.

Beijing presents itself as a predictable, stable, and results-oriented source of global visions while quietly fragmenting coalitions and undermining liberal norms. And the unfortunate reality in a largely bipolar world is that the further that smaller powers distance themselves from the United States, the greater their risk of subordination to China. Those in the middle still risk the wrath of both sides.

New coordination mechanisms must be designed to work regardless of whether autocrats cooperate. Instead of persuasion, they should condition participation on behavior and concentrate their efforts on exclusion and insulation. The focus should be not on binding the Gullivers but on bypassing them and increasing leverage when negotiating with them. Control of chokepoints in finance, logistics, and standard-setting could help.

The second obstacle is collective action problems. The constraints Mancur Olson identified in The Logic of Collective Action still apply: Coalitions tend to hold only when participants bear real costs and face real consequences for breaking ranks. Effective coordination can make coercion costly—but only if enough participants are willing to suffer pain and subordinate their own narrow interests for common goals.

The temptation to defect and bandwagon with a big power is perennial. Bilateral relief agreements, such as Canada’s own “canola for EVs” deal with China, undermine coalition discipline. Carney’s own comportment in Beijing, and his subsequent narrative in a domestic speech in Quebec City, implied a pragmatic view that survival sometimes requires that the weak accommodate the demands of the strong. This can work as a temporizing tactic if limited to nonsensitive sectors and reversible agreements, but if it becomes a habit, the accumulating loss of dignity and credibility can erode a government’s legitimacy.

Ultimately, deterring illiberal monsters without the backing of a liberal leviathan will require more resolute reciprocal commitments. Under the Biden administration, the U.S. State Department established a unit that helped smaller countries victimized by Beijing’s coercion. In December 2024, the White House announced a Countering Economic Coercion Task Force.

Could coalitions of smaller powers do the same? Perhaps, but the countries Carney hopes will band together include the same ones that sheltered under U.S. security guarantees and—from Washington’s perspective—underinvested in sustaining the post-Cold War order. Until incentives and constraints make solidarity more than optional, coercion will be normalized as diplomatic “friction” rather than stigmatized as a threat to be met with collective deterrence.

Leadership by vanguard groups with the most skin in the game also will be critical. Drawing inspiration from minilateral groups such as the Five Eyes and the trilateral security partnership between Australia, the United Kingdom, and the United States, these alliances would balance deeper commitments with higher entry standards and impose material penalties for bilateral defection. Punishment could range from reduced or delayed access to benefits to loss of leadership roles to ultimately sanctions.

Automatic mechanisms that activate when a member is targeted, without need for new political decisions, are crucial because they avoid the typical diplomatic pathologies: risk-averse hesitation masked as time-consuming consultations, domestic lobbies seeking exceptions, and the illusory safety of doing nothing while someone else takes the pain. An automatic response such as NATO’s Article 5, which treats an attack on one as an attack on all, is the most famous example. Others include the International Energy Agency’s commitment to maintain strategic petroleum reserves; the EU’s Single Market infringement procedure, which triggers legal proceedings; International Monetary Fund lending facilities with pre-agreed-on conditions; and OPEC production quotas. By combining triggers, reserves, financial backstops, and regulatory enforcement, new agreements, for example on critical minerals, could shift the strategic calculus by making responses immediate and the costs of coercion and aggression high and predictable.

As security analyst Matt Turpin has noted, a contemporary example would be for the G-7, NATO, and the Quadrilateral Security Dialogue to respond to Beijing’s recent attempt to coerce Tokyo with measures such as expanding market access and credit facilities for affected Japanese companies and conditioning further economic and leader-level engagement with China on an end to its measures.

With strategic levels of organization and commitments rooted in shared values, networks of smaller countries can survive without a superpower patron. But building a new patchwork order would be much more feasible with the United States playing a central role, at least in the coalitions and networks that align with its interests. A team plays better with a captain; every tug of war needs an anchor. So middle powers should keep trying to get the United States to reengage constructively and not assume that Trumpism is forever. This will require persistent engagement with the many Americans across government, civil society, and business who still share their vision.

Finally, given smaller states’ modest hard power, the strategic narratives they deploy—or acquiesce to—are not just rhetorical decoration. They mobilize stakeholders and define geopolitical reality. To realize Carney’s vision, he and like-minded leaders must communicate effectively and consistently. That requires naming and calling out unacceptable actions, aligning political signals with coalition objectives, and avoiding language that normalizes relations without accountability for wrongdoing. Carney’s Davos rhetoric was correct: Moral clarity is a form of power. But like a Greek chorus, it requires multiple voices.

Chinese mercantilism, Russian imperialism, and American Trumpism are driving smaller states toward realism; nationalism and populism are punishing liberalism and elitism. Cheering Carney’s rhetorical counter to this geopolitical anarchy was the easy part.

Anyone seeking to build more just, inclusive, effective, resilient, and networked orders must harden themselves to opposition from tyrants, extremists, and captured elites and treat their countermeasures as a sign the strategies are working. When dealing with bullies, the measures of success are not superficial harmony and temporary relief but rather reduced payoffs for coercion, increased costs for subversion, and more risks from escalation.

Without clear enforcement, a Carney Doctrine risks becoming what the Canadian prime minister’s Davos speech condemned: another collectively performed story, only with new slogans. But matched with robust commitment mechanisms, it could become a blueprint for a suite of workable, enforceable middle-power strategies. One day, a different Washington might even come to embrace some of them as more equitable and democratic means of realizing its own, original vision of order.

Patricia Xavier assisted with research.