From Davos To The G7: Mark Carney’s Middle-power Moment

When Mark Carney arrived in Davos in January and warned that “middle powers” risked ending up “on the menu” of the “hegemons,” he sounded like a Canadian prime minister on the hunt for a foreign policy.

Six months later, diplomats across Europe and Asia are still quoting the speech.

“He said what was needed to be said. At that time, the main crisis was not yet Iran, it was Greenland,” said Stéphane Dion, who recently retired as Canada’s special envoy to the European Union. “It has been well received through the world.”

As G7 leaders prepare to gather in France, Carney's call for closer cooperation among middle powers is more than a talking point — it’s a working theory for how to navigate a world in which Washington is no longer a reliable force.

In mainstream European circles, Carney is regarded as something of a hero for the way he has stood up to President Donald Trump and used his Davos speech to articulate the scale of upheaval in the world order.

The rallying call came at the height of Trump’s threats to take the sovereign Danish island of Greenland and to rip up international trade, security and diplomatic principles that have underpinned transatlantic relations for decades.

“I think Carney has been quite an important figure,” said one European Union diplomat, who, like others in this story, was granted anonymity to speak candidly about sensitive matters. “He was threatened by the Trump administration, like Europe has been, and he said we need to change gear and think in different ways. He gave European leaders courage and inspired them."

Even in Washington, the speech still resonates in a diplomatic community battered by the aggressive foreign and trade policy of Trump 2.0. The feeling is largely mutual in G7 capitals and diplomatic missions — and beyond — as Carney works to turn Canada into an energy superpower and build trade ties beyond the United States. But as POLITICO discovered in conversations and interviews in Canada, the U.S., Europe and Australia, few were willing to say so publicly for fear of angering Trump ahead of the summit that opens Monday in Évian-les-Bains, France.

On Friday, during a press conference in Paris, Carney was asked to reflect on the effect of his Davos address.

“If you look at the speech, I've never advocated that all of a sudden there was going to be a band of middle powers — you know, the M20, or something like that,” Carney said.

“One element of Davos … is we talk in terms of variable geometry — so different partnerships with different groups of countries for different issues.”

A transatlantic hug

Although Ottawa is 3,500 miles from Brussels, Carney’s influence could clearly be felt in the way European Union leaders responded to Trump, taking a firm line on Greenland and the Iran war. In particular, officials point to Carney’s proposal for “middle powers” to find new alliances and work together to make the most of a world dominated by superpowers that can do what they want.

Two diplomats said Carney offered Europeans something of the leadership they have been missing in recent years, since Angela Merkel stepped down as German chancellor.

The current leaders of Germany, France and the U.K. — Europe's biggest economies — are all damaged by unpopularity and political strife at home.

“There is a sense of Carney as the adult in the room,” a second EU diplomat said. “He was the first to say we need to see [the impact of Trump] as a rupture, a new era.”

Carney’s interests and political outlook often align with those of European centrists. For example, his emphasis on seeking to maximize opportunities to deepen and diversify trading relationships with the likes of China and India fits perfectly with the traditions of Northern European free trading nations like Sweden, the U.K. and the Netherlands.

A joke started doing the rounds at summits and in some public debates about Canada perhaps joining the EU as a full member one day.

Geneviève Tuts, the EU ambassador to Canada, said Canada’s geography may rule out EU membership but not a deeper transatlantic bond.

“Our partnerships matter more than ever,” Tuts told a Senate foreign affairs committee in Ottawa. “The EU and Canada must stand together in support of open markets, fair competition, and rules-based trading.”

Carney has a history in Europe himself. Before serving as Bank of England governor at the time of the Brexit vote, Carney studied at Oxford University in the early 1990s before moving to Goldman Sachs in London as its co-head of sovereign risk from 1995 to 1998. That experience gives him some much-needed expertise in dealing with “irrational” political scenarios that defy established economic wisdom — like Brexit, and also like many of Trump’s trade interventions, the first diplomat said.

“He knows his stuff, and that is very important at this moment in time,” one diplomat said.

Reigniting the French connection

On Friday, Carney paid a presummit visit to French President Emmanuel Macron, whose government is walking on eggshells to craft a Trump-proof agenda for the G7 it is about to host.

The tête-à-tête illustrated how in a little over a year in power, Carney has evolved from rookie politician to a global statesman — and has caught the ear and imagination of countries coping with an increasingly unpredictable Washington.

Dion, Canada’s former EU envoy, said he expects Carney to do everything he can to help Macron have a successful summit, but it won’t be easy.

In French political circles, Carney’s Davos speech was feted and seen to vindicate France’s push toward more European sovereignty and less dependence on the U.S. and China. It helped that the messenger was a central banker and didn’t have the baggage of an anti-American Gaullist.

“Macron and Mark Carney will be the best at steering the conversation at the G7, because they both have theorized middle-power status, … a pragmatic approach to the U.S,” said a former French official.

Carney “has spent a lot of time on the telephone, a lot of time on the road, pursuing the trade diversification and the partnership diversification agenda,” a senior Canadian government official told POLITICO during a briefing on the prime minister’s travel. “One year out, the prime minister is probably feeling closer to the other G7 leaders than he did a year ago.”

In May, Carney traveled to Armenia for the European Political Community Summit, the first participation of a non-European leader. He has also crisscrossed the globe, building alliances outside the G7 and seeking deeper trade and investment in Asia and the Persian Gulf.

The G7 summit is not expected to produce a final communiqué, though there will be stand-alone statements on various issues. The official played down the significance of that, dismissing the notion that the G7 was a relic of the past.

“I wouldn’t ever say something is over,” they said, in an apparent nod to Carney’s declaration on national television last year that Canada’s traditional relationship with the U.S. was indeed “over.”

“There are themes on which it is quite difficult to reach a consensus. So we are trying to find the wording, the concepts to show the G7 is united on complex issues facing the world at present,” the official added.

Beyond the G7, beyond Europe

One European diplomat said the French government is bending over backward to craft statements that closely align with previously stated “America First” foreign policy pronouncements.

But another European diplomat said the lack of a consensus on a final communiqué was not in any way fatal to the future of the G7, saying that all seven members, including the U.S., could find a route to crafting stand-alone statements.

“Common ground does not always mean lowest common denominator,” the diplomat said.

The diplomat acknowledged that they were seeing evidence that Carney’s call for middle-power solidarity was bearing fruit and extending well beyond the G7 to South Korea and Australia.

In Japan, the G7’s only Asian member country, Carney’s speech is appreciated because of the punitive tariff barrage and the wrenching negotiations that frog-marched Tokyo into a trade deal that requires them to invest $550 billion into the U.S. industrial base.

Tokyo is trying to be congenially compliant with the Trump administration, with greater success than most thanks to the charisma and chutzpah of newly elected Prime Minister Sanae Takaichi.

“Middle powers coming together to build their own resilience ultimately serves the interest of the United States,” said a Japanese official. “The United States really does not want weak allies or friends. It’s good for Canada. It’s good for Japan. It’s good for the United States.”

Reaching down under

Carney’s speech is resonating beyond the G7. It was welcome in Australia, where leaders have long believed many of the same things but just couldn’t capture the global imagination. And the support for him spans the political spectrum.

Prime Minister Anthony Albanese said in a speech introducing Carney to his joint address to the Australian Parliament in March that the two countries need to “back each other” in a changing world.

Penny Wong, Australia’s foreign minister, told POLITICO, “We are both assertive middle powers who seek to work in existing and new coalitions because we know we cannot rely on all the old assumptions.”

Angus Taylor, Australia’s conservative opposition leader, said he witnessed Carney’s political awakening at Oxford after first meeting his fellow Canadian student in an economics post-graduate course in 1991.

“Middle powers cannot simply build higher walls and retreat behind them. We must work together,” he told the Australian Parliament in March. “We must act together, closer than ever, on defense, on secure supply chains and sovereign capabilities, on maintaining free trade.”

But Carney’s middle powers pitch hasn’t led to new mini-lateral groupings, including with the likes of Australia, and so far the Albanese government has not pushed for a new forum of middle-power solidarity.

Still, Albanese did identify two areas of underrecognized strength for both Canada and Australia: their critical minerals and massive pension funds, both of which give them leverage with super-powers.

“None of us is strong enough to stand alone,” the Australian prime minister said. “Canadian rebels with bold ideas have always been welcome here in Australia.”

Others appreciate Carney's work on the international stage but acknowledge the challenge still facing the middle powers.

“It's the most engaged Canada has been in 10 years,” said a person in Berlin with knowledge of the German government's foreign policy. “But Canada still needs to deal with the United States, as we do, and Canada cannot replace the United States as a partner.”

Clea Caulcutt in Paris, Phelim Kine in Washington and James Rothwell of The Telegraph in Berlin contributed to this report.