Russell C. Leffingwell Lecture With Prime Minister Mark Carney of Canada

Prime Minister Mark Carney discusses Canada's foreign policy priorities and the new global economy.

Inaugurated in 1969, the Russell C. Leffingwell Lecture was named for Russell C. Leffingwell, a charter member of the Council who served as its president from 1944 to 1946 and as its chairman from 1946 to 1953. The lecture is given by distinguished foreign officials, who are invited to address Council members on a topic of major international significance.

FROMAN: Good afternoon, everybody. Welcome. And welcome to the Russell C. Leffingwell Lecture. I’m Mike Froman, president of the Council. It’s great to have you all here. And we are privileged to have Prime Minister Mark Carney of Canada here.

Inaugurated in 1969, this lecture was named for a charter member of CFR, who served as its president—very important role—from 1944 to 1946, and as chairman from 1946 to 1953. And it’s a lecture each year given by a distinguished foreign official who’s invited to address CFR on a topic of major international significance. I can’t think of anyone better than Prime Minister Carney for that role.

I’d like to thank the Leffingwell family for the generosity in endowing this lecture, especially Tom and Ted Leffingwell Pulling. And we’re grateful to have a number of members of the family here with us or online—Diana (sp), Derek, and Ted, as well as Thomas Pulling who’s tuned in virtually. We’re also delighted to have a distinguished delegation from Canada. Bob Rae, the ambassador and perm rep of Canada to the United Nations, Michael Gort, ambassador and deputy perm rep of Canada to the United Nations, David Lametti, the incoming U.N. ambassador from Canada. And Tom Clark, the consul general. So thank you all for joining us.

Mark—(applause)—yes. That’s worthy of—Mark Carney serves as Canada’s twenty-fourth prime minister. He was elected leader of the Liberal Party of Canada, sworn in in March 2025. You all know his biography. One of the most eclectic biographies in politics, including having been the governor of the Bank of England, a distinguished member in the private sector. Spends a lot of time in New York as well.

The prime minister is going to come up and come up and give remarks for a few minutes. And then we’ll have a conversation, he and I, and then we’ll open it up to the membership as usual. So with that, please join me in welcoming Prime Minister Carney. (Applause.)

CARNEY: Thank you. Thank you very much, Mike. You see I’m armed with all our ambassadorial corps. Hi, Bob. Bob Hormats there. Fantastic to see you. Saw Bob Rubin—I saw Bob Rubin on the way in here, who taught me—Bob taught me everything about foreign relations. Bob Rubin taught me how to make decisions under uncertainty. Unfortunately, those two—(laughter)—are coming together at the same time. I will do my best. And I’m looking forward to—looking forward to the discussion, your questions, and counsel.

You know, what I propose to do in ten minutes is just to say a few words about how a middle power, like Canada, can deal with the situation where the rules-based order is eroding, great-power rivalry is intensifying, and authoritarian models are hardening. I mean, that’s a simplified version of the—of what’s going on. And I’ll start by admitting up front that we prospered under the old system. We would like the old system back. Can we have the old system back? (Laughter.) Is that going to happen? We prospered under the old system. And we had—we were able to pursue a values-based foreign policy, based on—or, anchored on a rules-based multilateral trading system, an open global financial system.

We had collective security anchored in NATO, our geography—which hasn’t changed, but the facts around the geography have changed. We had enviable geography. It gave us privileged access to the world’s largest and most dynamic economy. And it distanced us from the major state and nonstate threats. We also subscribe to an expectation that perhaps in the past, at the Council for Foreign Relations it was also the case for some, an expectation that nonmarket authoritarian countries would converge over time through engagement to free markets, open societies, and even democratic values. And this meant, for a country with a values-based foreign policy, that our engagement with those countries could be justified by the expectation of progress. In fact, the very engagement helped with that progress. And alignment of values was merely delayed, not compromised.

So, a few things have changed. Certainly, that convergence of values has proved elusive. The economic strategy of the United States has clearly changed, from the support for the multilateral system to a more transactional and managed bilateral trade and investment approach. Global power is moving, you can debate how much or how far this will go, from American hegemony to great-power rivalry. And technological change is shrinking that geographic advantage that we had and expanding the fields of conflict from the virtual to the extraterrestrial. All of this is reducing—I kind of have to observe this during U.N. week—reducing the effectiveness of our multilateral institutions from the WTO to the U.N. on which middle powers like Canada have greatly relied.

So, what do we do about it? And I’m going to give you a punchline, which is we think we can thrive—and I choose that word advisedly, “thrive”—in this new—this new non-system or the system that’s evolving for three reasons.

And the first is we have what the world wants. Take on the energy side. We are an energy superpower. That is going to become increasingly evident. Eighty-five percent of our energy is clean. We’re one of the world’s largest LNG exporters, one of the largest reserves of oil and gas. We measure additions to our grid in ten-gigawatt chunks, to put it in perspective, and you will see that with time. We are top five in ten of the world’s most important critical minerals. Forty percent of the world’s listed mining companies are in Canada, to give a perspective there. We are a leading developer of AI. And our research universities are some of the biggest producers in volume of AI, computing, and quantum talent in the world. Unfortunately, most of them go to the United States. (Laughter.) I understand you’re changing your visa policy, I hear, so—(laughter)—going to hang onto a few of those. We have capital. Our pension funds are some of if not THE most sophisticated infrastructure investors in the world, with all due respect to Larry Fink. And our government—we were talking about him earlier. I have lots of respect for Larry Fink, I should say, though. (Laughter.) And we have a government that still has fiscal capacity to act decisively at a moment when governments need to act decisively.

Now, the second reason why I’d say we have good prospects—not assured prospects, but good prospects—is we have values to which much of the world—not all of the world; much of the world—still aspires. We’re a pluralistic society that works. Our cities are amongst the most diverse in the world. Public square is loud, diverse, and free. By the nature of our federation, we have to practice collaboration and partnership. And it’s a country that is still committed to sustainability.

And I—the third reason why I’m going to argue we can—we can thrive in this time is we recognize what’s going on. This is not a transition; this is a rupture. This is a sharp change in a short period of time driven by a variety of factors. We have a determination to rise up and meet this.

And this is going to—I’m going to give you one last set of threes, and then we’ll have our conversation. Our response to this is to build strength at home, to build resilience by diversifying abroad, and pursue a variable geography to defend our values and pursue our interests.

So just on strength at home, I can understand if you were distracted by events down here and you haven’t followed exactly everything we’ve been doing in the last four months, but while you—while you were otherwise occupied we’ve cut taxes on incomes and capital gains. We have removed all federal barriers to interprovincial trade. We have passed landmark legislation to fast-track literally hundreds of billions of dollars of projects in energy, in AI, in critical minerals, in new trade corridors. We are doubling our defense spending by 2030. Our core capabilities with respect to defense, AI, quantum, cyber, critical minerals provide unique opportunities for dual-use and economic benefit, and we intend to fully exploit those.

We are diversifying our trading relationships and our security partnerships. We signed the most comprehensive agreement with the European Union from a non-European Union member, the Economic and Security Partnership with the EU. We signed that at the end of June. We’re working on fleshing that out now. We will be—or, we are on track; I should choose my words more diplomatically—we are on track to be a full member of SAFE, the European defense arrangement, which allows us to diversify and accelerate our defense procurement. Last week—no, this week? What day is it? Monday. Last week, yes. I seem to have missed the weekend in the middle. But we—(laughter)—agreed a comprehensive approach within the context of USMCA, but a comprehensive approach with Mexico to deepen our bilateral trading relationships. And we are pursuing more aggressive strategies throughout Asia.

My last of my threes is around that variable geography. I’ll just give a couple of examples of where we’re active. The coalition of the willing for Ukraine, we are the largest contributor on a per-capita basis to Ukraine. OK. (Applause.) And we—I won’t go into more detail. We can talk about Ukraine if you wish. When you think about our Arctic sovereignty, we are cooperating very closely with the Nordic-Baltic Eight for physical protection up there, economic development, and also defending NATO’s western flank. We are active with likeminded parties in efforts to promote a two-state solution and Middle East peace, easiest—not the easiest thing to do I know.

And I’ll make one other point on critical minerals. We, out of the G-7, are forming a buyers’ club for critical minerals so that the world can diversify away from Chinese dominance from them. So it’s not just the supply, but it’s having that secure access to—or, an offtake, basically, so these can be developed.

And I—you know, I’ll just say a word before I finish that, having chaired the G-7 this year—I came into government six weeks before it was there, so we had to—and we didn’t have Mike Froman. We had a very good sherpa, but we didn’t have Mike Froman so we had a lot of work to do. It was a very interesting—and this is a variable-geometry (sic) support point. When we had two days, the first day core G-7 focused on a variety of issues, very productive. President Trump was there for that day. And these were good meetings. These were good discussions or good meeting(s). There was progress made. Not everything landed, but it’s never the case that everything lands. It was fairly narrowly focused, though, on economics, with Iran thrown in—there’s always a crisis—Iran thrown in as well.

The next day, with the leaders of most of the BRICS countries, some of the largest emerging economies, Australia as well—not an emerging economy, but others like those—the focus was on what this room would recognize as old multilateralism: global commons, where we’re cooperating on energy, what we can do to actually develop on critical minerals, financing for development, what’s going to happen at COP. Lula was there as well. That doesn’t mean that’s the way the world’s working. I’m not naïve about that. But there is a substantial proportion of the world that focuses on these issues. A country like Canada is one of them, and it’s one that we will—it’s something we will continue to do because it comes back into our strengths.

Look, I’ll just—I’ll sum up. I would ask you to, when you think about Canada—think about Canada, actually. That’s my request: Think about Canada—(laughter)—as a strong, sovereign independent nation. Think about Canada as that. But there is a—there is a big opportunity in this—in this shifting in Canada. We understand what’s going on. We understand the scale of the responses required. We have the resources the world needs. We have the talent to turn that potential into growth. We’re a reliable partner. We’re connected more than anyone else through trading relationships with any other part of the world. And we’re no longer reliant on just the strength of our values, but the value of our strength, with your help.

So thank you very much, and I look forward to the discussion. (Applause.)

FROMAN: Well—

CARNEY: All right, boss. Bienvenue. Merci. (Laughter.)

FROMAN: Welcome to the United States of America. (Laughter.) Sorry, I didn’t mean that as a point on sovereignty; I just meant, did you get through customs OK? Did they recognize the Canadian passport still? (Laughter.)

CARNEY: Still working.

FROMAN: Still working. Excellent.

CARNEY: Yeah.

FROMAN: Let me—let me pick up on a couple of the points that you made. You talked about diversification and the strengths within Canada. Canada has been so reliant on the U.S. economy, has been so integrated. I think something like two-thirds of Canadians live within a hundred kilometers of the border. Most of the trade is here. You’ve had some economic headwinds in the last several months in terms of economic contraction and higher unemployment. How much can you reorient the Canadian economy, both to be more east-west than north-south, or to be more integrated with other economies than the U.S., given the long history here?

CARNEY: Yeah. It’s the right question. And the first—the answer to the question starts with recognizing the need to do it. And one thing I’d impress upon the audience is that Canadians understand the need to—as we put it—to be masters in our own house. The country does not want to wake up and look on—with all due respect—on Truth Social or X to see what the latest change is in U.S. policy, but wants to get on with what we can control. And that’s a big part of the government’s strategy. So getting rid of barriers east-west, as you put it, barriers across the provinces, you know, that alone, if it’s fully done—we’ve done the federal part, but if all our provinces reduce their barrier, the estimates are that is a bigger return to the Canadian economy than the worst-case trade outcome with the U.S.

Now, one has a more immediate impact and the other builds over time, but the orders of magnitude are clear. And that’s before we do what we need to do, which is to double the rate of housing. We announced a new approach on housing two weeks ago. And the first projects that we have identified there scaled to around $50-60 billion of housing investment. The first major projects that I referenced in the remarks on new ports, new energy corridors, beyond—those are measured in the hundreds of billions. So you start to build all of that out before the defense spending kicks in. And we’re very focused on dual use defense spending. There’s lots of areas where we’re going to be able to build out our AI, cyber, and other capabilities—critical mineral pathways—as part of that defense build. And it’s before we get traction with those new trade and defense partnerships with Europe, for example, and in Asia. So that’s our primary focus.

And, candidly, we’ve been done a favor because we should have been—all of these things we could have done before ourselves. So we needed the rupture. We needed the shock, it seems, in order to do them. But there is a very strong consensus in the country to do that. As well. there is a very attractive, for the United States, for Canada, obviously, as well, and Mexico, version of USMCA that can be developed. And, as you know from your previous life, we’re in the early stages of that development.

FROMAN: You mentioned the defense spending a couple of times. You referred to it as “dual use.” First of all, it’s—Canada had been a laggard on defense spending. Trump sort of highlighted that quite pointedly. But now you’ve committed to, I believe, it’s 5 percent, 3 ½ (percent) of military spending and 1 ½ (percent) of infrastructure spending. When you talk about dual use, are you talking about—is that in lieu of buying more military equipment, per se? Is that the—or do you see yourself buying more—

CARNEY: It’s a couple things. I mean, we have a lot of catch-up to do. We’re not alone in that in NATO. We’re resolute that we will catch up. So we are getting to the 2 percent level this year, which you can argue we should have been at before but we’re getting there this year. And then you have the ramp up towards 5 percent by 2035—5 percent of GDP by 2035. And for those who don’t follow quite as closely, what we agreed to—everyone in NATO agreed to—is of that 5 percent, 3 ½ (percent) is pure defense spending, and 1 ½ (percent) is related to defense—resilience, building that out. So everything in that 1 ½ (percent) effectively is dual use and has other benefits for your economy.

But even if we set that aside and just focus on the 3 ½ (percent) of pure, NATO is going to be spending a lot more on cyber, a lot more on AI integrating systems. I’m sure you’ve had lots of discussions here around drone warfare and the integration there. We will be spending—necessarily, from a military perspective, the end uses on some of the critical minerals, I mean, literally are militarily critical. So our development of that for our defense purposes, first and foremost, has direct spillover benefits because AI expertise, you know, being able to integrate big data lakes and optimize across them, well, that is a skill that is transferable—readily transferable to other aspects of the economy.

So we see a lot of the way—this is part of the advantage—last point—part of the advantage of coming late. Sometimes you go to some emerging and developing economies, they have much better cell coverage because they came late. They did it right. This is—we’re coming late to some of the spend, but at a time when the nature of security and conflict and warfare and what’s needed is changing very rapidly. And it actually plays to some of our strengths.

FROMAN: Let me ask you to put not only your prime minister hat on, but you’ve been a central bank governor, you’ve been an investor, you’ve been in finance. Looking around the world now, you’ve got China sort of playing by its own playbook economically, putting a lot of excess capacity that’s being exported to the rest of the world. You have the U.S. playing by its own playbook, ignoring various agreements, including at times USMCA. What does it mean if the two largest economies of the world are playing by their own set of rules? What does that mean for the rules-based system for a middle power like Canada?

CARNEY: Yeah. Yeah, well—

FROMAN: Do you keep on playing by the rules, even if nobody else is?

CARNEY: OK, so this is the key. So who else is willing to play by the rules? And can you get critical mass in that? That’s one of the big questions. And nobody’s perfect in this. But one of the things about the European Union is it’s a rule-based system. Sometimes there’s too many rules and they’re playing by too many rules—(laughter)—but it is a rules-based system. We have a free trade agreement with the European Union. CPTPP, newer, the U.S. made a decision not to be—not to be part of that.

FROMAN: I heard about that. (Laughter.)

CARNEY: Yeah. You heard about that. And it’s not too late. You can come back in. (Laughter.) But it’s not the European Union, obviously, to the same degree, but it’s—you’d recognize it as a rules-based plurilateral trade deal. It has labor standards. It has sustainability (standards ?). There is open discussion, we’re part of it—I don’t want to overplay it because it’s still early days—but of a bridge between the EU and CPTPP. Well, Canada’s in both, effectively. We’re deepening with Europe. We’re deepening with some of those players there. Then we’re in a pretty big system that is rules based. We would like to think that we will get to a position with the U.S. where we have new rules as part of USMCA, or a reaffirmation of these are the rules of conduct in USMCA. And, you know, we’re re-engaging with China and other major economies in terms of developing the rules bilaterally with them. So there’s more to play for than there appears.

And, you know, one of the things that—now I’m going to be a central banker, but this is important. OK, this is really exciting. This is—check your phones. (Laughter.) But so much of economics is on the margin, right? So, yes, we’re heavily weighted to the United States, and a big adjustment is going on in big sectors—steel, autos, as examples, our forest products—because of the trade shock. And we’re hoping to make progress in all of those. But on the margin, when you grow into very large markets—which are represented by the EU and CPTPP—it makes a big difference. So it’s the delta. It’s the growth that’s going to impact it.

FROMAN: Previous governments in Canada have worked quite closely with the U.S. vis-a-vis China. And sometimes at a great cost for Canada. How would you assess our joint effectiveness in influencing Chinese behavior, economic strategy, security behavior, et cetera? And what do you think we ought to be doing differently, if you think there’s room for improvement?

CARNEY: There’s always—(laughs)—there’s always room for improvement. I think one of the things that we can improve on—I’ll say this from a Canadian perspective with respect to China—is being clearer about where we engage. I alluded to it very lightly, but—and it’s a general point in variable geometry. You have different tiers of engagement depending on how likeminded you are. So with respect to China, or any other country that’s—well, any other—where do you engage deeply? Where are you comfortable engaging deeply, in the commodity space, in aspects of energy, for example, basic manufacturing? Where are there guardrails? And what should just be left off to the side—elements that bridge into national security, privacy, other aspects like that? So that’s where we can be—we can be better, number one.

Number two, in my experience with China they are, amongst other things, very sincere and engaged on climate. This is a country run by engineers. This is a country that understands a lot of the engineering solutions to issues around emission. They’ve happened to have built real competitive advantage in a number of these areas as well. So there’s a question of how—and there’s almost a standing offer from them about how to engage in the global commons in and around climate. Which a country like Canada, which is a—it is an energy superpower, where we’re certainly going to build and fully exploit that—then we’re dealing on—and we care about this issue as well. It’s still part of our policy. It’s still part of—and so there’s an opportunity to engage. Again, the United States can choose—could choose that lane very easily, but probably at the moment that’s not where the engagement will be.

FROMAN: Right. Well—(laughter)—

CARNEY: Probably. Probably. Who knows.

FROMAN: You mentioned your chairmanship of the G-7. The U.S. takes over the chair of the G-20 later this year. It’ll be an opportunity for the Trump administration to take over one of these organizations and figure out what the agenda is for international cooperation. You and I have been involved in a bunch of G-20 summits. You did somewhat better in your career than I did in mine. (Laughter.) But what advice would you give to the Trump administration about where the G-20 could be useful, and what the scope for cooperation can be going forward?

CARNEY: Wow. (Laughter.)

FROMAN: It’s called, stump the prime minister.

CARNEY: I didn’t see that one coming. But that’s—but that’s the right question. Look, as you know, with these things you want to—you want to pick three things and focus. You do want to—because it’s a sprawling agenda and you got to be clear, this is what we care about. I would—I actually think that I would emphasize, I think, the infrastructure. They won’t call it this, but I’ll use this term, but infrastructure for development, the infrastructure for the global economy, the leveraging of limited public dollars into multiples of private dollars. That is an agenda that’s good for the world. It’s an agenda that plays directly into American strengths—American strengths in finance, American strengths in, you know, just a whole host of energy industries.

It can play a bit complementary into Chinese and other countries’ strengths, but more America’s than elsewhere. And it’s an agenda, if really pursued, will grow jobs and, you know, good things back in America, but also would be enthusiastically endorsed by the—by the broader group of the G-20. And it would give—it would reinforce purpose at some of those—and this is a question whether the administration wants to—but some of the multilateral organizations. So that, you know, the World Bank’s agenda is effective. It’s a big part of that agenda. So putting their own frame in and around that, I think, makes a lot of sense.

There should—I’ve got two others, but I’m worried that we’re not going to have enough time for the audience. (Laughter.)

FROMAN: Very diplomatic. One last question before we open it up to the group. I believe yesterday Canada joined some European countries in recognizing Palestinian statehood. What do you expect that to accomplish?

CARNEY: Well, I think the first thing to say is this is consistent with our policy since 1947. Since—every Canadian government, whether—of whatever political stripe has supported a two-state solution, as many other countries have. What we have been seeing, first because of the acts of—these heinous acts of Hamas but then other in terms of response, is that that prospect is receding before our eyes, OK? So the idea of waiting until all the conditions are in place for a free and viable Palestinian state committed to peace and security side by side with the state of Israel—what I’ve called a Zionist Palestinian state, which is what we want—those conditions being in place, keeping the concept there on the shelf when it is the avowed policy of the Israeli government that there will never be a Palestinian state—that is the policy of the current Israeli government, and their actions are consistent with that policy, and I can just concentrate on what’s going on in the West Bank without touching Gaza.

So what we—what we’re looking to accomplish is to—is to keep that front and center, to be with a host of influential but not decisive countries. So we’re alongside Kingdom of Saudi—not in the recognition, but as part of this process Kingdom of Saudi Arabia, France, U.K., Australia, Qatar, Egypt, others—Norway, you know—actively trying to create conditions at a minimum for a ceasefire, obviously, and then a peace process as part of that. And it’s not—we’re not doing—we’re under no illusions that this is any sort of panacea, but it’s necessary in our judgment and the judgment of most other countries in the world that we have to push on this now because, as I say, the possibility in absolute violation of the U.N. Charter and in absolute violation of internation law of self-determination for the Palestinian people is being erased. So this is—we’re doing what we can, but recognizing the limitations.

FROMAN: All right.

Well, we’re going to open up for questions. This is on the record. In addition to the very full room we have here, we’ve got about—over 400 people—400 CFR members online as well. Please, if recognized, stand up, wait for the microphone, identify yourself, and ask a brief question, OK? Yes, this gentleman right here.

Q: George Vradenburg of the Davos Alzheimer's Collaborative, a successor to CEPI and Gavi but focused on aging populations.

So my question is a demographic question. Working-age populations in Europe are shrinking. You know, working-age populations are supporting a larger population overall. How does one deal with the financial costs of that, and how does one deal with how to increase worker productivity in the Global North?

CARNEY: Are you taking a few, or do you want me to do—

FROMAN: (Inaudible.)

CARNEY: Look, absolutely right, one of the biggest challenges—I think one of the first things you have to do as a—as a government—we haven’t fully done this, but we will in time—is to actually frame the policy and frame—Australia does this with their intergenerational reports, basically, which frames under current trajectories and with demographics what the challenges are. That’s first.

The second is maximize your labor force participation as much—female participation, older participation. We are pretty good on that. We have a bit more to do later in—later in career. But in—for all countries, that’s the next step. Clearly, the deployment of technology, the—I mean, AI coming in, it’s not like AI is going to solve everything but that the multiplier effects there, gotten right. There’s a variety of reasons why we have to get application of AI right across our economies. This is—this is one of them. And it provides some counterweight to that, and potentially substantial counterweight.

I mean, OK, I’ll be utopian—not utopian, but—

AUDIENCE MEMBER: (Off mic.)

CARNEY: Optimistic. Thank you, yeah. (Laughter.) I was going to say Panglossian, but then I was, like—(laughter)—so I’m optimistic.

FROMAN: (Inaudible.)

CARNEY: But if you take—if you take sort of full-bore productivity estimates on AI application, it’s adding one to one-and-a-half percentage points on productivity by, let’s—and I’ll push it out to the middle of the next decade. It actually dovetails pretty well with that bigger demographic crunch. I mean, that is—those are big numbers in annual productivity, so we have to get that right. And one of the challenges for us, of course, is to do that alongside everyone else. Yeah.

FROMAN: Maureen White. Microphone coming.

Q: Thank you. And thank you, Mark, for being with us today. I’m Maureen White, and I’m a senior fellow at the Foreign Policy Institute at SAIS. And I’m also chairman of the board of Refugees International.

And, Mark, Canada has had an exemplary role in refugee resettlement for many, many years, and I know your country—and you’re not alone in this—is backtracking a little bit on this commitment to refugee assistance. Could you just elaborate a little bit on what the Canadian policy in refugee resettlement is—will be going forward?

CARNEY: Sure. Yeah, I’m not—Maureen, now that they’ve taken the mic away—microphone away from you, I’m not sure I fully recognize the backtracking element of your—(laughter)—of your question. And you know, let’s—I’ll put it in context. I see the Ukraine pin on the previous questioner and salute you for it. We’ve taken 300,000 Ukrainian families into Canada—individuals, I should say; individuals into Canada. We still have quite substantial levels of asylum seekers. And you know, the Ukrainian case is a—is a humanitarian deliberate policy the asylum seeker, obviously, has received.

We, like every country, must control and be deliberate in—with respect to our borders and manage appropriately. And so the government is—the government is very focused on doing that on the border side, but also treating asylum seekers—treating everyone who comes to Canada to the standards they should, and that includes processing claims in a timely fashion. And one thing we have not done well enough is process claims in a timely fashion. So that’s resources and efficiency. And so I would say when we look at—that’s the aspect of your question that I would—I would bear down on, yeah.

FROMAN: Let’s go to an online question.

OPERATOR: We will take the virtual question from Missy Ryan.

Q: Hi. Hi. This is Missy Ryan from the Atlantic magazine.

I’m hoping you can talk a little bit about what you mentioned earlier several times about values-based—Canada’s values-based approach to international relations and a sort of guiding compass more generally, and how you’re thinking about doing that in a moment where the Trump administration is not talking about a values-based foreign policy and more—the America first as it’s articulated is more about American interests and sometimes backing away from some of the values that have been articulated by the United States in its foreign policies. How are you going to do that, especially given the United States’ clout as a kind of trendsetter on certain issues like the Palestinian state and Ukraine, Russia, and all of that?

CARNEY: Yeah. Well, thank you, Missy. Look, I’ll give a couple of examples and then pick up on your—let me pick up on Palestinian state, Ukraine—there are other examples of this—where, look, we believe in the U.N. Charter. We believe in self-determination for peoples. We underscore the importance of territorial integrity. And that drives our approach in Ukraine. It drives our approach in Palestine as well. There are other applications, but I’ll stop there. That is—that’s a consistent, consistent approach.

We welcome and I very much welcome his personal involvement of the president in efforts, for example, in Ukraine to broker ceasefires, to define paths for peace, to provide potentially complements to the security guarantee—security guarantees that the coalition of the willing, Canada included, are prepared to provide to Ukraine, which is necessary for a lasting peace or a lasting security for Ukraine.

The situation—this is no insight—the situation in in Palestine is both horrific and fluid. And there are multiple efforts, very much including by the United States, including the United States, to find a path to cessation of hostilities and ultimately security, and some form of peace. We come at these both those situations from somewhat different perspective, but the same ultimate goal. And we have different partners at present in some of the initiatives—in both of those initiatives. But we would hope that there would be convergence with the United States. And we will certainly support leadership of the United States that’s leading to outcomes that are consistent with our values.

FROMAN: Some European countries have suggested they would deploy troops to Ukraine as part of a stability force or peacekeeping force. Would Canada be among those?

CARNEY: Well, we’ll see what the structure is. We’re very active in the coalition of the willing. We have—I’d remind that we have—we have a very large troop presence in Latvia as part of our NATO obligations. I visited them three weeks ago. And to underscore the commitment to security in the region, to Latvia and Poland—by the way, the brigades in Latvia—it is not—they don’t do training. It’s an operational brigade. Which gives you—and that’s before the incursions—the Russian incursions of recent weeks. And that gives you a sense of both the stakes and the degree of our commitment. So we’ll see, in terms of Ukraine. There’s a lot to be done still to move that first to a cessation of hostility, before the guarantees would come into effect.

But what we do know, and the United States acknowledges very much, is that without—given the track record of Putin, that a security guarantee that’s written on paper is not—if the signature is Vladimir Putin’s—is not worth anything.

FROMAN: Yes, right here in the second row. Microphone coming up. There you go.

Q: Thank you. Alison Sander, Planet Action.

First of all, just want to start with a thank you for those of us who forget what leadership and diplomacy looks like. We follow you and it reminds us. (Applause.) And I think I’m speaking for the whole room. So, start with that.

A quick question. I think it’s Canadian modesty that you describe yourself as a middle power. I’d kind of bump you up. And could you paint us a picture in these times where IP, capital, and talent can flow so easily, what is your great—what’s the strategy for middle powers to use golden parachutes, different tax laws? And is there a coordinated strategy to just take some of the capital from here that’s getting frustrated and attract it?

CARNEY: Well, we would—(laughs)—we would never take anything from the United States. (Laughter.) Let me be clear. We would—

FROMAN: That’s on the record.

CARNEY: That’s on the record. I just want to underscore that we’re here to give, not take. (Laughter.)

FROMAN: Just not give too much.

CARNEY: Not give too much, exactly. No, like, on the—I mean, I think this is—our strategy, our core of the strategy is the core—look, it’s like any organization, yours included. Like, the core of the strategy has to be consistent with who you are and what your values are. And then you build off of that. So I said in my remarks, you know, the public square is loud, diverse, and free. That’s important. It’s important to Canadians. But it’s important—it’s a relative—it’s becoming more of a relative thing than it had been in the past, let’s put it that way. The second is, we are—look, the country is—it is a very diverse country. It is a very networked country globally. You know, Toronto—New York, it’s impressive; it’s one of three born outside of the U.S., I think. It’s one of two in Toronto, OK? And it’s not—that is not—that is a more extreme version, but most—many Canadian cities look like New York, not in scale but in diversity. And that is—that is a strength that’s there as well.

From a tax perspective, I don’t think you’ll see in Canada, you know, Swiss-type tax deals for individuals. That’s not the nature of the society. There is a social model that’s consistent. But what is there is those first two components, combined with very strong research universities that people can come to, a society people can live in, and a country that is connected to everywhere else in the world—including through trade and investment. And that’s something that we will push through, combined with—which is something that isn’t always there in Canada, or at least shouted out—which is ambition, and the scale of the ambition. And that’s part of how—people go to where things are happening, or where they think they can be part of something bigger. And that’s an important part of the strategy, yeah. Thank you.

FROMAN: Jane Harman.

CARNEY: Jane, how are you?

Q: Jane Harman, former member of Congress. Congratulations to CFR and Canada for superb leadership, which employs delightful humor. It’s really refreshing. (Laughter.)

My question is more about Ukraine. You’ve answered lots of it, but putting on your banker hat there has been a bill in the United States Congress for a while, sponsored by Lindsey Graham and Richard Blumenthal, to impose secondary sanctions on Russia to force Putin to change his strategy. That bill isn’t passing because Trump does not yet support it, despite a veto-proof majority. But my question is, how potent are secondary sanctions? And, should this bill pass, how much difference do you think it would make?

CARNEY: Well, thank—and great to see you, Jane.

Look, secondary sanctions can be incredibly powerful. And they were very, very powerful with respect to Iran. And the uncertainty around the extent to which what is secondary, if I can put it that way, particularly in the financial sector, is a powerful weapon. So just for those who don’t follow it, it’s not just what bank, so to speak, deals directly, in this case, with Russia, but does your bank deal with the bank that deals with Russia? So who’s your client’s client? And once you start asking that question, the risk really does pull in, and the isolation goes up orders of magnitude.

The Graham-Blumenthal bill, as I remember, doesn’t deal directly with the financial side. It’s more of a tariff, trade related. Is that correct, or am I misremembering? You think it has that financial—I think of it has the financial—I think that is powerful. It is something we have advocated, Canada has advocated, I personally advocated some of the discussions. And I will say that the U.S. has raised this issue on several occasions as a possibility. I think it is a possibility. I’m not saying the legislation, per se, but the use of secondary sanctions. And our view, Canada’s view, and a number of European countries would share this, is that if—that we should go quickly to that, because that really is the biggest nonmilitary disincentive. So I’m glad you raised it. But, yes.

FROMAN: Putting your former banker hat on, central banker hat on, would you worry about the impact of secondary sanctions on the role of the dollar going forward, in terms of weaponization of finance?

CARNEY: Look, I think this is—less. No. No. I mean, yes, I understand the motivation of the question, but I think it’s—this is—these would be very clear, well-motivated reasons. And it would be coming in—you would delay-delivery it. You’d say, we’re going to do it in two months’ or three months’ time, to effectively force Putin to the trilateral table. And it would give time to reorganize relationships accordingly. You always have a risk, as you know, when you do financial sanctions in terms of the impact on the dollar. But it is also—this is—this is a thing that needs to be hammered home. It is so difficult to transact, even in other currencies with ultimately the chain, one step removed, not touching a U.S. person, financial institution, the dollar, that that’s what gives this such power.

FROMAN: Do you support using the frozen Russian assets?

CARNEY: You know, when I was a central banker, I didn’t. But now that—(laughter)—you know, where you stand depends on where you sit.

FROMAN: Where you stand depends on where you sit.

CARNEY: Exactly.

FROMAN: Let’s go to an online question.

CARNEY: I’m much more enlightened now. (Laughter.)

OPERATOR: We will take the next—

FROMAN: Online question.

OPERATOR: —virtual question from Mark Rosen.

Q: Prime Minister, yesterday, in recognizing a Palestinian state, you set out a demand that Hamas must be disarmed and excluded from any Palestinian government or elections. Can you explain to us who, if not Israel, will carry out that disarmament of Hamas? How will that happen? And if, as seems highly possible, at least, a movement or political party committed to Israel’s destruction, whether under the Hamas name or another banner, ultimately wins those Palestinian elections you’ve called for next year, won’t you have, in effect, granted Hamas their own state to launch more invasions of Israel?

CARNEY: Thanks for the—thanks for the question.

First is, the disarmament and elimination of Hamas as a force, certainly as a political force—military force first and political force—is one of—is one of the conditions for a sustained cessation of hostilities and peace. And when you say who is going to do that, there are many proposals—as I suspect you’re aware—from a variety of Arab states, combination of Arab states, and European states, to which Canada would be party if they were to come to pass, for multinational forces to be deployed in Palestine to enforce a peace, and to—and to drive that process—that process forward. So I think the first part of your question I’d deal with directly that way.

The conditions for a free and fair election in Palestine are many. And the time in order to get to that spot is uncertain. The conditions for any form of self-determination of the Palestinian people do not exist at present. And the prospect of them ever being in a position to make decisions in their own land—it is the avowed policy of the current Israeli government to ensure that never happens.

FROMAN: Yes, way, way in the back.

Q: Thank you. Keith Abell with N4XT Experiences, producer of New York Fashion Week in L.A. Fashion Week. (Laughter.)

FROMAN: Wow.

CARNEY: Am I in the right session?

Q: I know. (Laughs.) Two sons at the University of Toronto getting a fine education. Thank you.

CARNEY: Good.

Q: One of them is a data science major and determined to start up his own company. And feels compelled, although he loves Canada, is Canadian, would stay up there if he could. But Canada really doesn’t have the opportunities that Silicon Valley offers. You know, your joke about immigration policy in the United States aside, isn’t that a problem? Why drive your brilliant young Canadians to the United States, because the capital markets doesn’t have the category of capital to support their new ideas? And is there a solution?

CARNEY: Yeah. I think—well, I think the first thing—thanks for the question thanks for sending your kids back home—(laughter)—if that’s right. And I would flip it a bit in that, how much are we driving people to Silicon Valley, and how much is Silicon Valley and Seattle, for that matter, sucking in and attracting—and I don’t mean that in a negative—but just the sheer weight of the opportunity in the United States. And this is true whether you’re Canadian, Israeli, European, Indian. You know, this is not a unique phenomenon to Canada. That, you know, 50 percent of our—probably one of the best, I’ll hedge, places to do computer engineering, all forms of it, is Waterloo. Fifty percent of the graduating class every year goes to—goes to the United States.

And we need to retain more of those. Part of it—yeah, part of it is the ecosystem, the venture capital ecosystem. I actually don’t think that’s the—to me, I don’t think that’s the biggest thing. I’m not saying there aren’t things that we shouldn’t be doing there. I think it’s—in part it’s the demand—part of it is the demand for the end product. So you—the ability to scale in Canada is more—has been more limited, for a variety of reasons. Part of it, our companies aren’t applying things as much as U.S. ones. A lot of that is going to change in AI, crypto, cryptography—cryptography is—when I say “crypto,” I don’t mean crypto—(laughter)—and in quantum, because we’re going to—we’re going to drive a lot of that and there’s—and spinoffs of that. Doesn’t mean we’ll keep everybody, but we’ll keep more.

FROMAN: I mean, the president just had an interesting visit to the U.K.—

CARNEY: Yeah.

FROMAN: —and signed this major technology agreement. The U.K.’s going to get hundreds of billions of dollars, potentially, of investment into their AI infrastructure. Could Canada cut a similar deal with the United States?

CARNEY: Yeah, we could cut—we would like to cut a similar deal. The extent to which it needs to be done with the U.S. government is—it’s not clear to me it has to be done with the U.S. government. I mean, I’m happy to—them to come. But we’ve got—so what do you need—what do you need for an AI datacenter? You need power. You need chips. And you know, more—clean power is preferred. You need chips. Wouldn’t hurt to have a fiber-optic cable that went down to the U.S. You know, proximity doesn’t hurt. What—and so we—that strategy of building out the infrastructure that the U.K., France, others are pursuing, that makes sense. That makes sense for us, and we’ve got to make sure that some of our power—those big chunks of power that are coming online are there.

For the overall benefit for Canada—it goes to the previous question and the productivity discussion—that’s nice getting that infrastructure. The big payoff is actually in the application, which means that you want to flow through some of that capacity for Canadian companies, Canadian usage, and actually the education side becomes that much more important.

FROMAN: There’s another question way—oh, right there, about two-thirds of the way back. Yeah, gentleman with the bag. Yeah.

Q: Hi. Andrew Watsch (ph) with Morgan Stanley.

Mr. Prime Minister, congratulations on passage of the One Canadian Economy Act this summer.

CARNEY: Congratulations on referencing it. Thank you. (Laughter.) This is very good. (Laughs.)

Q: I wonder if you could say a few more words and give us a few more details on the projects that you’re planning to fast-track through the approval authorities. What are the size of those projects? When might they be approved and shovel-ready? And when might—when might we start seeing those show up in GDP? Thank you.

CARNEY: Yeah. Great, great question.

So we’re going to—we’re going to layer these approvals roughly every four months for the course of the next couple of years. We have a series of them that were initially proposed. Canada’s a federation. Part of the way you—part of the way we have to get things moving, we—our parliament gave the government additional powers to fast-track approvals, so two-year time horizon. And once we designate a project, it’s presumed approved, OK? So they—something has to go kind of go off in order for it not to happen, which means that a lot of the engineering and other work drive through.

But part of the way to get things done in Canada—I mentioned this in my remarks—is through partnership. So we started with the provinces, saying what are your top priorities, and they’ve given us a bunch of their top priorities; indigenous people, indigenous rights holders, what are some of their top priorities, bringing those together and making sure that those are front of the—front of the line, front of the queue. What you’re—what you’re going to see is a series of things—and you’re starting to see them—in and around critical minerals, in and around energy, particular—a mixture of conventional and clean.

We just greenlit with B.C., for example, one of the largest, you know, whatever is it—one of the largest LNG projects, Ksi Lisims, which falls hard on the heels of LNG1 and potentially LNG2, which is this giant consortium. Those are, just to give a sense of sort of blocks, these are effectively zero-carbon LNG because the liquefication is—it’s before the Scope 3, obviously, I’ll say that, under the control of planet Earth, right? But the liquefication is done with hydro, very short shipping times to Asia, tons of demand, displaces coal. Lots of good things about that.

You will see a lot of that—those types of projects, but in parallel with scale nuclear—scale nuclear in Ontario, where the—where the actual FID decisions and the capital is starting to flow. Large-scale hydro—you know, 10,000- to 15,000-megawatt hydro in east. And then big corridors and critical minerals that are opened up.

Last thing. Sorry, this is too long an answer. But the AI infrastructure leg of that strategy is just being developed. We referenced it a few weeks ago around a sovereign cloud because we know that we’re the offtake for that—development for that. And you’ll see—you’ll see something on that in the next few months.

FROMAN: You’ve contributed so much to the United States, the U.K., the globe when it comes to climate change, and now you’re bringing it back to Canada. We are so privileged to have you here. Thank you for spending time with us.

CARNEY: Thank you. (Applause.)

(END)

This is an uncorrected transcript.