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The Davos Speech

The central theme of Carney’s Davos speech was to define what exactly is happening in the world’s economic sphere. His delivery was frank and brutal, tearing away the veil of uncertainty. Carney offered his explanation of the ‘rupture’ in the world economic order. Philosophers call it an epistemological break. It best defines the scope of the break Carney is referring to. Although President Trump was not named, the break extends to, but is not limited to, the worsening state of Canadian-American economic relations. It is more than that. According to Carney, the break is not a temporary phenomenon, meaning that nostalgia for the old-world order will not provide answers on how to move forward. A return to the past multilateralism will not occur. This stark conclusion was written on the faces of the attendees: America has become an unpredictable and unreliable partner. Trade diversification is required for Canada to pull away from too much dependence on the United States. Before arriving in Davos, PM Carney visited China in an effort to patch up relations that had been strained under the Trudeau regime. Trade diversification was discussed. The Chinese gave way on a few key agricultural products that had been subject to huge tariffs. The old ‘quid pro quo’ on the importation of Chinese electric vehicles was put on its head. Canada agreed to import 49,000 EVs. At the conclusion of the visit, one could sense a warming of relations, although there was no full-blown free trade deal.

International Reaction (A Star Is Born)

On the international level, Carney’s Davos speech thrust him into the spotlight. The appeal he made to middle powers in Europe and Asia, in particular, has won him praise from many world leaders. Despite early positive indications, the Trump administration has now changed course and seeks to marginalize Carney’s consequential message.

National Level (clear skies)

The national parliament in Ottawa features little opposition to Carney’s Liberals. There have even been some floor crossings to add to the Liberal minority government, several seats away from a majority. The main opposition party has been outflanked and outgunned by Carney. Their leader is facing a leadership review soon.

The Provinces (Carney’s Achilles Heel)

It is on the provincial level that Carney faces the most serious challenges. First, Carney must juggle the different and sometimes conflicting interests of the provinces. This was evident during the recent trip to China. Some relief was found in the agricultural sector. Carney’s decision to let a limited number of Chinese EVs into the country has angered Ontario Premier Doug Ford and his allies in the automotive sector. It looks as if that crisis is temporarily over, but the potential for further unrest remains a concern.

Alberta

Alberta is mounting an independence referendum this year. At this time, polls indicate that the independence option would fail if the referendum were held now. Both the Alberta and a potential third referendum in Québec could be subject to election interference from the United States, using their diplomatic missions as forward bases. American interest in Alberta’s oil fields is undoubtedly a consideration in this regard. Suddenly, Trump’s ‘idle talk’ about Canada becoming the 51st state becomes a real proposition. Is Alberta’s independence a prelude to joining the USA, or will it become an independent state in its own right? It is in the interests of the Alberta separatist movement to keep these two threats alive as plausible options in any future negotiations with the central government.

Québec

After Davos, Carney returned home to Québec. At the very site of the Battle of the Plains of Abraham, Carney delivered a speech to foster Canadian unity and explain how the 1763 battle paved the way for French-English cooperation, the future basis of Confederation in 1867. The reaction in French Québec was swift and bipartisan. Carney’s questionable interpretation of this event was strongly criticized as being patronizing, historically incorrect, and pro-English. Carney’s rejoinder in halting French did nothing to quell the anger. In Québec, events are moving fast. Québec Premier François Legault, a former separatist minister whose aim was to increase Québec provincial autonomy, has resigned amidst desperate polling numbers. A Parti Québécois separatist victory in October of this year now appears likely, heralding a third referendum on independence and adding more tension to already strained federal-provincial relations.

Renewal of CUSMA (waning hopes)

Prior to Davos, the Carney government sent several emissaries to Washington to seek to eliminate sectoral tariffs on products such as aluminum and steel and to prepare the ground for the renewal of CUSMA. More than 80% of Canadian goods delivered to the USA are CUSMA-compliant and tariff-free. At the end of the first year of Trump’s second mandate, no clear path towards that goal has been identified. CUSMA, an economic accord, is the basis of Canada-US bilateral relations. Such a rupture, despite Canada’s best intentions and efforts at renewal, would be a logical reflection of Carney’s Davos message. The Canadian people have responded to the situation by boycotting US goods and suspending visits to Uncle Sam. Anxiety over threats of annexation is rife. That sentiment is captured allegorically in a clip from a popular sixties movie: Soon after the Allied victory at El Alamein during World War II, Winston Churchill remarked that ‘Now this is not the end. It is not even the beginning of the end. But it is perhaps the end of the beginning.’ Carney’s Davos message will endure.