Deputy Prime Minister and Finance Minister Chrystia Freeland speaks after announcing sanctions on Iran, in Ottawa, on Oct. 7.Adrian Wyld/The Canadian Press
Veteran Canadian trade expert Robert Wolfe was having a quiet late afternoon Tuesday when he got a message from a friend – telling him to drop everything and go to a livestream on the Brookings Institution website.
“She sent me an e-mail saying, ‘URGENT! Start listening to this speech!’” the Queen’s University professor emeritus recounted.
Deputy Prime Minister Chrystia Freeland was addressing a modest-sized crowd at the policy think tank’s auditorium in Washington; but really, her audience was the top-level international economic leaders gathered in the U.S. capital for this week’s annual meetings of the International Monetary Fund and the World Bank. For anyone interested in the future of the global trade and economic order, this speech was a doozy.
Ms. Freeland declared that Russia’s invasion of Ukraine had brought to a brutal end a three-decade era of globalization and multilateral co-operation that had begun with the fall of the Berlin Wall. She called on Western democracies to shape a new order that will help them thrive and defend their economic interests, and laid out a rough strategy to get there.
It includes something akin to an economic NATO – in which nations with shared democratic values actively deepen their common trade and supply chain ties, distance their economies from autocracies with competing interests, and defend each other from hostile actions of autocratic governments that wield trade and access to critical supplies as weapons.
“A commitment to support each other in the face of such economic strong-arming is the best way to ensure it doesn’t happen again,” Ms. Freeland said.
“We need to understand that authoritarian regimes are fundamentally hostile to us,” she said. “It is wishful thinking for Western governments and Western companies to believe we can do business with dictatorships on the same terms we do business with democracies.”
What’s more, during the Q&A period after her speech, Ms. Freeland said emphatically that Russia has no business participating in the G20 as long as it’s waging war on Ukraine.
“I don’t think Russia should be at that table right now. Full stop. This is a country that is committing war crimes as we speak. Whose leaders are all complicit. I don’t feel it’s appropriate to sit down over a convivial, ministerial meal with people who are doing that,” she said.
This was not wallflower stuff. This was a call to action. Goldy Hyder, president and chief executive officer of the Business Council of Canada, who was in the audience, dubbed it “the Freeland Doctrine.” As far as speeches from the second-in-command at a middling economic power go, this is one we might be talking about for a while.
This was not the first time Ms. Freeland has talked about some of these issues. In a speech in June, she lamented the end of the post-Cold War era of globalization and multilateralism. In a joint news conference with U.S. Treasury Secretary Janet Yellen in Toronto later that month, both officials discussed “friendshoring” – a term Ms. Yellen has popularized to describe the deepening trade ties and supply chain links with allies who are friendly, trustworthy, and share economic and democratic values.
And, indeed, the crumbling of the old order was under way well before Russia invaded Ukraine last February. China and the United States, the world’s two biggest economies, were already in the grips of an escalating trade war. Britain was already committed to a messy and costly divorce from the European Union. The World Trade Organization’s dispute-resolutions mechanisms had, effectively, ceased to function.
But for anyone still clinging to the dream that those deep cracks in globalization could be repaired, Russia’s war in Ukraine has been a very loud wake-up call. After nearly eight months of war, Ms. Freeland’s message to Canada’s allies – one that we can expect her to start delivering more strongly here at home, too – is that we need to roll up our sleeves and start building a new normal that we can live with.
“It was a serious speech for a serious time,” Mr. Hyder said. “I’m glad it was delivered in Washington, as it was important for our closest allies to get a clear sense of where Canada stands.”
But it won’t be easy to build a new global economic structure, to move from a globalized world to a friendshored one, to distance China and Russia economically while still engaging them on key global issues such as climate change (as Ms. Freeland insists we must do).
Prof. Wolfe argues that isolating Russia economically won’t, ultimately, be the biggest challenge. Russia may be a key supplier of fossil fuels to Europe, but its economy is smaller than Canada’s, representing less than 2 per cent of world gross domestic product.
“From the standpoint of the world economy, [Vladimir Putin] hardly matters,” he said. “And he’s going to have less influence on the world economy in the future, because who will trust him?”
But China is the world’s second-biggest economy, and its biggest exporter. Trying to deal with China in an entirely new way – one in which the world relies less on and removing it from the rest of the world’s economic conversation – is much more complicated.
“To be really clear-eyed, they’re not our friends. But they’re a huge part of the world trading system,” he said. “We can’t just pretend they’re not there.”