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By Richard St-Pierre and Stephen Karam

January 28, 2026

In his landmark Davos speech, Prime Minister Mark Carney invoked Václav Havel’s famous “sign in the window” parable to describe the comfortable fictions of the old international order.

The sovereignty debate currently consuming the world is mostly framed in this old paradigm. While we rightly debate Arctic borders and territorial integrity, the consequential battleground has already shifted in the digital realm, where Canada risks becoming a colony without ever losing an inch of soil.

Sovereignty is no longer only a matter of borders and battalions; it is also a matter of data, computing infrastructure, and who controls the digital systems on which modern economies depend.

Here, Canada holds cards that no other middle power can play.

As the Prime Minister said at the World Economic Forum, the geopolitical chessboard has placed Canada in the midst of a rupture, not a transition. When faced with assertions of hemispheric dominance, of trade weaponized as coercion, and of unprecedented pressure on our institutions, a response is required.

Notwithstanding the overhyped promises that dominate headlines, only one opportunity can protect our sovereignty and move Canadian GDP at the scale this moment demands: the power lever of artificial intelligence.

Let us be precise about what this means. AI inference, defined as the deployment and usage of trained models across industries and public services, represents an economic impact comparable to adding an entire banking sector to our economy.

The mechanical formula is straightforward: if 10% of Canadian work hours are meaningfully augmented by AI, the conservative result is a 2% GDP lift.

No new federal outlays required. No decade-long infrastructure projects. Best of all, this is not an R&D venture; the blueprint to achieve this exists today.

Yet, as of late 2025, only about 12% of Canadian businesses report using AI to produce or deliver services. In the public sector, barely one-fifth of organizations have implemented AI systems. This gap represents both our crisis and our opportunity. Documented productivity improvements await the vast majority of organizations not yet deploying these tools.

Canada’s productivity has grown more slowly than that of every other G7 country over the past 50 years. We have fallen to 72% of American productivity levels, a nine-percentage-point decline since 2000. If the United States achieves 3% growth through AI deployment while Canada remains at 1 to 1.5%, the gap will become unbridgeable.

As the Prime Minister made clear at Davos, countries earn the right to principled stands by reducing their vulnerability to retaliation. Productivity is not just an economic metric; it is the material foundation for sovereignty.

The standard response to technological competition is to ramp up investments in research and development. That approach is no longer sufficient on its own. The race for large-scale training models is lost, and nostalgia for a race we might have won, to again quote the prime minister, is not a strategy.

Only two countries — the United States and China — can muster the hundred billion dollars required to develop foundational AI models competitive with GPT-5 or its successors. Canada cannot and should not try to compete on that battlefield.

Large-scale foundational AI models have effectively exhausted the high-quality data freely available on the public internet. By 2024, AI companies had scraped nearly all accessible text, images, and video to train their models—a practice now facing significant legal challenges and licensing demands from content creators.

The depletion and increasingly restricted availability of general-purpose training data signal a fundamental shift in how AI models will be developed.

But countries unable to compete in the foundational model race can still exert considerable influence by controlling and leveraging their unique data assets. On that front, Canada has a lot to offer.

To quote another of Prime Minister Carney’s well-known remarks: Canada has what the world wants. We are an energy superpower, and our compute capacity tracks electricity.

Data centres already consume about 1.5% of worldwide electricity, growing at 12% annually with AI as the primary driver. Our electricity costs run five to twelve cents per kilowatt-hour versus higher prices elsewhere.

Nations increasingly talk and act on digital sovereignty as a domestic concern. But what about multilateral digital sovereignty? Canada could play a leading role in offering something no other middle power can provide.

Our climate reduces cooling costs by half. Quebec, Manitoba, and British Columbia have ready export capacity, mostly from non-greenhouse-gas sources. Very few countries can match this position.

And let’s be clear. This is not merely an economic opportunity. It is a sovereignty strategy.

While sovereignty carries territorial implications, digital sovereignty should be understood as variable geometry applied to the compute economy; different coalitions for different challenges, anchored in shared infrastructure rather than shared borders.

Nations increasingly talk and act on digital sovereignty as a domestic concern. But what about multilateral digital sovereignty? Canada could play a leading role in offering something no other middle power can provide.

Imagine data embassies, sovereign computing infrastructure where allied nations can process sensitive data under Canadian law, powered by Canadian clean energy, and managed by Canadian operators.

France and Germany already collaborate on alternatives to American cloud services. The European Union’s Data Act gives European companies more control over their AI-generated industrial data. A regional data alliance, operating similarly to how OPEC manages oil supplies, could rebalance power in the AI economy.

Canada sits uniquely positioned to host such infrastructure.

Very few countries in the world can deliver what we have: the energy resources, the political stability, the legal frameworks, and the geographic position. Hyperscalers are making long-term data centre location decisions through 2027.

If Canada addresses grid interconnection issues and establishes proper partnership frameworks within this window, we can capture 20- to 30-year commitments. If we miss it, the foundational opportunity relocates elsewhere. Our advantages are solid, but the opportunities are fluid.

Which makes the policy imperatives urgent.

First, launch an energy-to-compute pathway with pre-permitted sites, transparent power blocks, and standardized revenue-per-watt contracts that unlock private financing for AI inference campuses.

Second, reform procurement to purchase outcomes rather than parts lists; our current vendor-selection logic imposes an innovation capability tax that widens the productivity gap.

Third, build sovereign computing architecture across multiple provinces with post-quantum-secure systems that keep sensitive data resident while enabling cost-efficient inference at a national scale.

This is not about building walls, it is about building leverage — and sharing the cost of strategic autonomy with allies who face the same choice.

If Canada elects to chase American AI research investments we cannot match, we will not bridge the productivity gap and our GDP growth will stagnate.

We will become a digital colony like so many others, subservient to AI infrastructure and large language models controlled by a handful of companies in Silicon Valley and Beijing, their commercial and political influence limited only by their appetite.

The alternative is to recognize that technology is evolving into politics in the same way that economics is transforming geopolitics, and the Venn overlap of those two trends is where we now live.

So, the ability of private AI firms to sway entire countries is not science fiction. It is already happening.

When OpenAI briefly shut down ChatGPT in Italy over privacy concerns, it disrupted thousands of businesses overnight. That was in March 2023. Think of how much has changed in those three years.

Such dependencies and the power shift they represent will only deepen.

Canada faces a choice.

We can continue debating 19th-century concepts of territorial sovereignty while the real short-term action shifts to data centres and cloud infrastructure.

Or, we can recognize that the path to defending our physical borders runs through digital sovereignty, converting our clean-energy advantage into compute infrastructure, our legal frameworks into data governance standards, and our strategic position into a hub for like-minded democracies.

That path is wide open to any middle power willing to take it with us, but the door to it is narrowing. It’s time to step through.

Richard St-Pierre is a Senior Digital Sovereignty Advisor at Levio. He previously served as Director General of the Quantum Innovation Zone in Canada.

Stephen Karam is Partner, Canadian Public Sector, at Levio. He brings over 30 years of experience leading digital government transformation and deploying AI solutions across all levels of government in Canada.