Davos at crossroads in age of populism, looming ‘climate catastrophe’

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Davos 2019 faces more headwinds than any annual meeting of the WEF has experienced for years. Above, participants familiarize themselves with the Congress Center in Davos. (AFP)
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Davos 2019 faces more headwinds than any annual meeting of the WEF has experienced for years. Above, a participant passes by a World Economic Forum logo in Davos. (Reuters)
Updated 21 January 2019

Davos at crossroads in age of populism, looming ‘climate catastrophe’

  • Raft of Middle East delegates expected at World Economic Forum meeting
  • Event grapples with tough issues at time of ‘permanent global crisis management’

DAVOS: The delegation of Saudi and other Middle East leaders expected in Switzerland for the annual meeting of the World Economic Forum (WEF) will find an organization at a crucial stage in its 48-year history.

Davos 2019 faces more headwinds than any annual meeting of the WEF has experienced for years, and many of the big issues that confront it — changing world trade relations, economic challenges and climate change — are also of serious concern for Middle East policymakers.

The yearly gathering of the global power elite has this year been hit by some big-name absentees. In 2018, there was an early buzz in the Alpine resort on the news that President Donald Trump was, surprisingly, to attend. This year the US president has decided to stay at home to deal with the government shutdown, and pulled out most of the top-ranking US delegation too.

A few weeks ago WEF officials were talking about the “strong man’s Davos” on speculation that Trump, Russian President Vladimir Putin and President Recep Tayyip Erdogan of Turkey might meet up in the snowy Swiss town, but none of that has materialized.

President Emmanuel Macron of France and Prime Minister Theresa May of the UK have also decided that events at home — violent street protests and the rolling Brexit crisis respectively — preclude their attendance at the annual meeting.

The absence of these big-power figures gives a taste of the second problem Davis 2019 faces: The global populist wave triggered in 2016 by the election of Trump and the British referendum on withdrawal from the EU are directly contrary to the WEF’s core philosophy of globalism, inclusion and tolerance.

The WEF is fighting back. Not only has it mounted a strong defense of its globalist ethos under the theme “Globalization 4.0,” but it has also pointedly highlighted the defects in the populist approach to global affairs.

The WEF’s Global Risks Report, published last week, could be read as a condemnation of the populist movement. In many areas — from threats to the world economic system to what it called an impending “climate catastrophe” — the WEF’s message was that populism, and a resulting inability to organize international relations, is a threat to global wellbeing.

Klaus Schwab, the WEF founder and chairman, said that the world is at “a crossroads” with the prospect of “permanent global crisis management” that could “deteriorate into chaos.”

This changing world outlook has also affected the Middle East. A strong US relationship with Saudi Arabia under President Trump has been counterbalanced by Washington’s general disengagement from some key parts of the region, as with the withdrawal from Syria.

Likewise, the Middle East, with its recent shift toward Asia and Africa as key trading areas, will not welcome any broader threat to global economic and trade relations that could result from an escalation of the US-China trade war.

The Middle East section of the Global Risks Report found that many leaders in the region are worried about the prospect of fiscal crises impacting their economies, with high levels of government spending not compensated by rising energy revenues. They were also concerned about the prospect of another “shock” in oil and gas prices following a period of volatility in global energy markets.

Saudi business leaders are also worried about the possibility of increased cyber and terrorist attacks, which is another theme of the WEF meeting, as well as a possible failure of regional governance.

Davos delegates will get the opportunity to discuss issues of particular interest to the Middle East in sessions on energy, the geopolitical agenda, and the “Strategic Outlook on the Middle East” on day one of the meeting.

Other topics of acute interest to the region will be raised on day two, with discussions on the emerging markets outlook, terrorism, and “The New Energy Equation,” a session in which Khalid Al-Falih, Saudi energy minister and chairman of Saudi Aramco, will participate.

Later on Wednesday, some artistic relief will be provided by an onstage interview with Haifaa Al-Mansour, Saudi Arabia’s prominent female filmmaker and winner of the WEF’s Crystal Award. Later in the week the Middle East outlook will be considered, as will the region’s changing relationship with China, India and other Asian economies in a panel including Mohammed Al-Tuwaijri, the economics minister of Saudi Arabia.

On the sidelines of the main WEF meeting in the Congress Hall, Saudi business leaders will host a series of events, including Aramco, SABIC and the Saudi Arabia General Investment Authority (SAGIA).

The UAE is also well represented at the meeting, with a party headed by Dubai Crown Prince Hamdan bin Mohammed. Leaders from the Emirates are most concerned about possible large-scale cyberattacks and the misuse of technology, a well as energy volatility, according to the risk report.


Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.