THE 10th Jeddah Economic Forum (JEF) opens today in the Kingdom’s commercial hub. The three-day event is addressing the theme of “The Global Economy in 2020”. Speakers and delegates will seek to identify and address the economic challenges ahead, not least in the light of the banking crisis and the global downturn in trade and services.
This forum is going to be subtly different from its predecessors because, for the first time, the guest list does not sport the extremely high-profile international political names, such as former US President Bill Clinton. These personalities were glad to take the opportunity to address big themes, but in the final analysis, they were often neither equipped, nor indeed prepared to drill down into the details that underpinned their stated ambitions.
This time the JEF is focusing far more on nitty gritty of what can and cannot be achieved in economic terms in the coming decade. The forum has assembled an international panel of speakers from governmental, banking, business and university sectors. Each has been chosen for the deep thinking they have undertaken on economic issues, and for their already demonstrated insights into how the world can and indeed must change, in the face of the exceptional range of challenges it now faces.
It has always been a pleasure to welcome current and past world leaders to JEFs. However, there is an argument that such well-known personalities, even though they underline the growing importance attached to the JEF around the world, make a different level of contribution from speakers and delegates with more technocratic backgrounds. Thus in addition to the presentations from the Kingdom, including Minister for Commerce and Industry Abdullah Zainal Alireza, Minister for Petroleum and Mineral Resources Ali Al-Naimi and SAMA Gov. Muhammed Al-Jasser, the 1,500 international delegates meeting once again at Jeddah’s Hilton Hotel will hear from a wide range of other distinguished experts in their fields. The 40 organizations they represent include the World Trade Organization, the UN Conference on Trade and Development, the International Fund for Agricultural Development, UNESCO, the GCC, the Arab Monetary Fund, the economics faculties of Oxford, Cambridge and St. Gallen universities, the International Telecommunications Union and leading private equity firm Carlyle Group. Also among their number is Dr. Ewa Helena Bjorling, Sweden’s trade minister.
After the disappointing cancellation of last year’s JEF, the forum is clearly returning in reinvigorated form. Along with Davos, it once again aims to be the leading venue where businessmen, bankers, government ministers, NGO chiefs, academics and think tank members can come together to debate both in and around the conference. The JEF is the more important because it can also bring a strong regional perspective to the discussions.
We would, therefore, like to take this opportunity to hope that the coming three days will be profitable and enlightening for all at the JEF. In particular we would also like to offer a warm welcome to the Kingdom and to Jeddah to all our guests who have arrived from around the world.
Europe’s next challenge
THE help for Greece is necessary, but bigger challenges lie ahead for Europe, said The Independent in an editorial on Friday. Excerpts:
Brussels came to the rescue Thursday. A summit of European Union leaders released a statement making it clear that they will stand in solidarity with Greece as that country comes to grips with its debt burden. This was the right thing for the EU to do economically, just as the recapitalization of the banks was the right thing to do at the height of the 2008 credit crisis. If Europe had stood aside as Greece defaulted, the panic would have spread to Spanish, Portuguese, perhaps even Italian, bonds. The entire euro zone could have unraveled. The debt markets reacted reasonably positively to the leaders’ statement. The hope is that the interest rate on Greek debt will now come down, making it easier for Athens to manage its liabilities.
But it would be premature to declare the crisis over. The detail of EU aid for Greece will not be unveiled until European finance ministers meet next Monday. If investors feel the plan to be insufficient, the panic could yet restart. And if popular protests disrupt the Greek government’s fiscal consolidation program, then all bets will be off. So what is the next challenge for Europe? Just as governments need to fix the banks that caused the credit meltdown, European governments need to address the imbalances in the euro zone that created the sovereign debt panic. The threat of bankruptcy did not constrain national government spending in the good times. A new version of the EU’s Stability and Growth Pact is needed, this time with credible sanctions on national governments that do not fulfill their responsibilities. But we must resist the assumption that this crisis is solely a result of fiscal profligacy by governments. It is true that Greece borrowed irresponsibly (and had deceived Brussels about the scale of its debts). But Spain and Ireland have come under pressure from investors too in recent months.
In the decade after the formation of the single currency in 1999, the “PIGS” (Portugal, Ireland, Greece and Spain) experienced a boom fueled by credit. Credit got out of hand because of relatively low European Central Bank interest rates and because international investors were prepared to lend freely to any euro zone country. The result was unbalanced growth across the continent.
