What is Canada’s place in this fragmented new world?

Kevin Yin is a contributing columnist for The Globe and Mail and an economics doctoral student at the University of California, Berkeley.

Venezuela’s Nicolás Maduro, captured by the United States on Jan. 3, was a brutal dictator with a long record of crimes against humanity and political repression, and few tears will be shed for his regime in the West. Moreover, Venezuelans may genuinely benefit from an influx of foreign direct investment in its oil sector. But while it is tempting to view American actions in Caracas as a mere extension of its global policing in places like Iraq or Kosovo, this would be a misread.

The underlying strategy is a shift toward regional spheres of influence rather than a global liberal order, and thus, its implications for Canada differ dramatically.

The capture of Mr. Maduro signals that the U.S. now cares primarily about its own backyard over, for example, Ukraine, or perhaps even Taiwan, and it delegitimizes Western support for autonomy in those places. More broadly, it is a symptom of the far more fragmented world that Canadians now face.

The United States has dealt a crippling blow to the free-trade consensus, which was once thought to bring countries closer. Foreign direct investment is increasingly divided amongst geopolitical blocs. China is more assertive beyond its own arena and ascendant across industries like tech, electric vehicles and critical minerals. Russia is running circles around our European allies, who control 10 times its GDP yet have failed to co-ordinate to stand up for their collective interests in Ukraine and cohere into a serious global defender of liberal ideals. In this setting, Canada needs to reflect on its position.

We must ask ourselves from scratch: What are Canada’s capabilities, its interests and its obligations to the world? And once defined, how do we use the first to achieve the latter?

The answer, in my view, is that Canada must adopt a doctrine of “lead by example.”

Canada is a middle power, meaning it is neither large enough to act unilaterally, nor small enough to eschew responsibilities. It has the standard set of national interests that are essential to its flourishing, like opening new markets for trade and asserting its sovereignty in places like the Arctic. But as a liberal democracy, we would also like to nurture and protect places where democratic values have blossomed. As the U.S. withdraws into its own hemisphere and many European countries face internal challenges, there will be a dearth of countries advancing the latter cause.

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In the past, we have erred on the side of caution, and Canadian foreign policy has fallen to neglect. But being realistic about Canada’s capacity to shape the world should not make us ignorant of the tools at our disposal to make both ourselves, and others around the world, better off. “Lead by example” is exactly the right unifying framework for doing this within the constraints we face.

Simply put, Canada’s objective should be to demonstrate the full benefits of being a pragmatic liberal democracy by first succeeding at home. It can do this by pursuing clean economic growth, bold solutions to social ailments like homelessness and drug addiction, and grand projects across technology and infrastructure – solving precisely those problems that skeptical watchers from autocratic countries no longer believe we are capable of.

Secondly, it should market itself and its way of life aggressively among sympathetic countries, while proposing and leading multilateral solutions to global challenges. Canada should take a front-line role in the ad hoc coalitions that will be necessary to stand up for liberal values, in both funding and political leadership.

This does not mean abandoning a realist’s view of international relations but rather demonstrating that a stable world order is to people’s benefit within that framework, and manoeuvring to make it so.

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Under a “lead by example” framework, the distinction between economic policy and foreign policy becomes blurred. A strong economy, the foundation of domestic political unity, is paramount to our influence abroad and vice versa.

We need to show the world that democracy, rule of law and human rights still work, and do not conflict with our capacity to build great things and uplift our most disadvantaged. This means that we cannot ignore innovation and productivity challenges at home, while also being above reproach on protecting our most marginalized groups.

It should not be enough that other countries want what we have, as the Prime Minister has touted, but that they are enticed to live the way we live, without coercion.

This would be no small feat. Solving the growth and distributional problems that plague nearly all advanced economies would be unprecedented. But Canada has a number of advantages here.

Our fiscal room is larger than France or Britain right now, as measured by debt to GDP. We do not suffer from the same degree of anti-immigrant fervour that many European countries do (or the strict refusal of Asian allies like Japan and Korea), meaning we don’t face the same demographic headwinds that erode power. We have substantial endowments of natural resources, a history of excellence in basic research and development, and relatively dynamic labour markets.

In other words, with smart policies that leverage these advantages, it is possible. And it is necessary if Canada is to have the requisite soft power to take on a greater role in the free world.

As Canada becomes a more dynamic and equitable economy, it will have the international standing to fill some (reasonable) portion of the vacuum left by an erratic United States and a struggling European Union.

Here too Canada is positioned better than most. Canada has shown it does not tilt as easily into far-right populism as say, France, Britain, or Germany, meaning our government has room to make strategic choices.

Moreover, the belligerence of the United States has scrambled Europe but has made Canada more united than ever. We have a seat at the G7 and proximity to Asia for trade and co-operation, a key strategic arena for the coming decades. As such, Canada need not sit on the sidelines of international affairs.

What this looks like in practice is initiating formal multilateral coalitions among like-minded countries to stand up for shared values and interests.

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It means reaching out to Britain, Germany, Japan and other willing partners for supporting Ukraine as we have done, but also issuing joint statements of condemnation when necessary. It means opening up the possibility for limited, co-operative military operations without the direct leadership of the United States (though as experts point out, in the medium term Canada will still depend heavily on American capabilities).

We should develop agreements where violations of our sovereignty are forcefully condemned by our closest allies, in return for the promise of doing the same.

Countries much larger than Canada will seek to undermine our interests – but those interests are shared with many other countries that can co-ordinate to prevent such actions.

Canada must demonstrate to the world the tangible benefits of its values and aim to position itself as a first among equals within the Western-aligned countries. We may not be able to lead by force, but we can still lead by example.

Prosperity’s Path