Davos 2026,“A Spirit of Dialogue,” took on an unexpectedly valedictory tone as world leaders confronted a rupturing global order. As world leaders gathered, Canadian Prime Minister Mark Carney bluntly declared that the world is “in the midst of a rupture, not a transition.” For decades, American hegemony underwrote global stability keeping sea lanes open, a stable dollar-based financial system, and collective security through alliances like NATO.
Carney cautioned that middle powers must come together. In a world of great power rivalry, the countries in between have a choice compete with each other for favor, or to combine to create a third path with impact. America’s closest ally, Canada sees a threat right at its border. The Canadian military is taking Trump AI memes seriously, has begun modeling responses to a hypothetical American invasion.
Transatlantic Strains and the U.S. “Might Makes Right” Push
Amid transatlantic strains and U.S. protectionism, EU leaders are lining up eastward in a clear de-risking pivot. Canada calls China more predictable than US. Keir Starmer’s latest visit to China expands the cohort of Western middle powers engaging in strategic realignment with Beijing. Canadian Prime Minister Mark Carney’s dramatic démarche to Beijing in mid-January 2026 the first such visit in nearly a decade pronounced a new strategic partnership.
Trump hit back with a 100% tariff threat if Canada deepens China ties. He had previously bullied eight European allies with penalties over Greenland to force compliance, only to dial back after Davos talks. As tariff threats, economic weaponization, and geopolitical unpredictability unsettles middle powers hedging their bets in the current contested multilateralism.
Middle and emerging powers pushed redefined sovereignty and multi-bilateralism. Trump rolled out his Board of Peace at Davos a new global body in conjunction with UN elements chairing the January 22, 2026 signing by 19 countries (mostly Middle Eastern).Billed as part of Trump’s Gaza peace plan endorsed by UN Security Council Resolution 2803 in November 2025, the Board of Peace was meant to oversee ceasefire enforcement, Hamas disarmament, and Palestinian reconstruction in conjunction with the UN.
Trump has de-institutionalized the UN for failing on Ukraine and Gaza, jabbed at it with $1B membership quips, and withdrawn from 66 plus bodies now using the Board of Peace to sideline European institutions.
The “might makes right” aligns with Alfred McCoy’s long-standing view of the United States as an empire in decline. A 50% surge in military spending hike from $1 trillion to $1.5 trillion for 2027 to build a Western Hemisphere fortress combined with partial retreats from Europe and threats to Greenland grabs is the accelerator to BRICS new phase of geopolitics.
Read More: US, Denmark to Renegotiate 1951 Greenland Defense Pact at Davos
Hedging Eastward: Middle-Power Realignment and the New Normal
As 2026 begins, Beijing and New Delhi stand at the center of renewed diplomatic engagement. EU’s impending free trade agreement (FTA) with India, coupled with an expected security and defense pact, was successfully concluded on January 26–27, 2026, during the 16th EU-India Summit in New Delhi described as the ‘mother of all deals’ by EU Commission President Ursula von der Leyen.”
India’s decision to accord a contingent of EU leaders the honor of chief guests at its Republic Day parade stands as a big diplomatic statement. Compared to the EU, India is better positioned to leverage U.S. power for deterrence against China without dependence on its security autonomy.
China’s Vice Premier He Lifeng pitched Beijing at Davos as the guardian of multilateral norms against the “law of the jungle” even as China advances its own form of regime-shifting through alternative alliances in Venezuela and the Arctic. For Greenland, China’s Arctic policies contest U.S. resource grabs tied to rare earths and strategic minerals where Trump’s Davos-touted ‘framework deal’ aims to secure rare earths and block rivals
India’s BRICS 2026 chairmanship was officially launched on January 13, with the presidency leveraged at Davos to push inclusive Global South reforms. The Reserve Bank of India (RBI) proposed BRICS central bank digital currencies (CBDCs) interoperable network to bypass dollar dominance in trade and tourism. Separately, the ‘Will for Peace 2026’ exercises brought Chinese, Russian, South African, and Iranian navies together for maritime drills.
Beijing has largely observed transatlantic difficulties with interest rather than faith in international law. Russia calls Greenland non-integral to Denmark, cheers the transatlantic strain on NATO, and dodge condemning the Caracas operation offering only cautious nods to the UN Charter. The real concern here is that U.S. normalization of unilateral regime creation or change through strikes (Venezuela), new frameworks (Board of Peace), or territorial pressure (Greenland) could embolden China and Russia to pursue similar actions in Taiwan, the South China Sea, or other flashpoints.
It is difficult to overstate the extent to which Europe’s post–World War II order underwrote security, economic openness, and foreign policy built under the American security umbrella. Once assumed to be unified against Russia and China, the West now faces the reality of Trump targeting them in the multiple fronts.
Washington appears to be stalling the US–India trade deal, leaving New Delhi subject to punitive tariffs of 25 percent on targeted goods and 50 percent overall. Peter Navarro calls India the Kremlin’s oil laundromat. Trade frictions are only a starting point. India and the EU are expected to deepen security and defense cooperation. Concerned about reliance on Chinese imports, particularly rare earths, the EU has pursued a policy of de-risking from China since 2023.
In the end, contested multilateralism is the new normal. In the World Economic Forum, China talks about the rising unilateralism and protection compounded by the impact of geopolitics bringing new order .Tariff and trade wars have inflicted shocks in the world economy. Opportunities for realignment remain, and if India and China solve their major political issues, they could form a major counter force to the US. By and large both nation are already cementing relations beyond west.
*The views presented in this article are the author’s own and do not necessarily reflect the views of The Diplomatic Insight.
Suloja Khadka
Suloja Khadka is a PhD candidate at Fudan University focusing on Nepal–China relations, China’s political development, and Nepal’s foreign policy. She contributes to scholarship on the behavior of rising powers in the international system.
