Canada and Germany are two of the world’s worst-performing rich countries—here’s why

During the 2021 German elections, former chancellor Olaf Scholz mimicked the hand gestures that became synonymous with the stability Angela Merkel supposedly provided during her whopping 16 years in power. The 2025 Canadian election similarly pitted Mark Carney as a safe pair of hands against a Pierre Poilievre who argued that “Canada is broken”—with Carney ultimately taking the most seats. But when everyday citizens aren’t seeing their living standards increase, the fundamentals aren’t fine. Furthermore, at a time when Chinese companies are blocking rare earth exports to extort German firms out of their trade secrets, or when Europe’s gas dependence helped embolden Russia to invade Ukraine, the idea that the liberal international order underpinning Canadian and German prosperity would be just fine if not for Donald Trump doesn’t stand up either. It makes sense for like-minded countries like Canada and Germany to seek closer ties—with or without Trump’s tariffs. But just as Canada and Germany have many shared values, they’ve also made many of the same mistakes. Both are playing catch-up after years of underinvesting in defence. Both seriously underestimated the risks from authoritarian regimes like China. Both made massive strategic errors over energy, with Canada becoming overly dependent on one American buyer due to inaction on pipelines, and Germany’s nuclear shutdown leaving it with a big bill to diversify from its reliance on Russian gas. Neither boasts political leaders known for having a plan that focuses on growing the economy, rather than simply preserving it. Both Prime Minister Carney and Chancellor Merz will likely soon be able to point to healthier defence sectors for some quick job and investment wins, but the biggest test of whether either will be successful truly hinges on whether they can break their countries’ defining national taboos Breaking national taboos Germany’s success is by no means assured. However, given the country’s historical reticence on both military force and confronting Russia, both its recent rearmament plans (by 2029 they intend to spend 3.5 percent of their GDP on defence, the largest expansion since reunification) and quick decoupling from Russian gas (a 30 percent drop in reliance from 2021 to 2022 alone)— both largely supported by the public—suggest some realization of the need to break certain national taboos. But in Canada, it’s still not clear whether the Carney government really intends to do the same when it comes to this country’s taboo: our reluctance to acknowledge the true economic and geostrategic value of our abundant natural resources. The recent MOU between Ottawa and Alberta is an encouraging first step, but until Carney makes it absolutely clear to provincial leaders like B.C. Premier David Eby and his own cabinet and caucus that shovels in the ground are the top priority, the prime minister won’t have demonstrated that he understands the need to break resource taboos and political deadlocks for the good of the whole country. It’s all the more perplexing given that a majority of Canadians now see pipelines as key to the country’s future economic prosperity, and how many international partners would welcome more Canadian resources—including natural gas—to decrease the leverage authoritarian regimes like Russia and China have. Taken together, we are seeing movement, but it is slow. Look no further than the recently announced “deal” between Carney and Merz on strengthening cooperation between the two countries on critical minerals. It’s not so much a deal as it is a statement of high-level intent. At the very least, though, Canadian missions abroad now have a clear political directive that promoting critical minerals is a high priority. However, whether our diplomats can turn that political intent into concrete deals greatly depends on the investment climate on offer for international partners. At a time when companies are planning to shut down Canadian copper mines, direct potash exports through American ports rather than Canadian ones, or when some mining projects are being tied up in regulatory approvals for more than a decade, success depends on a lot more than just dedicated diplomacy. Solving these political, cultural, and regulatory deadlocks will involve both nations acknowledging that, after over a decade of focusing on “sustainability” and “economic protection,” what Canadians, Germans, and the rest of their rich world counterparts really want today is growth that will allow them to prosper. Perhaps acknowledging that would break the biggest taboo of all.