DAVOS, Switzerland, 25 January 2007 — The world’s business and political elite gathered yesterday in the beautiful Swiss mountain resort of Davos for the annual festival of networking and serious debate that is known as the World Economic Forum (WEF).
Tensions in the Middle East and global energy security were high on the agenda of the first of five days. The guest list was impressive — with participants able to flit from a breakfast with Microsoft founder Bill Gates to an evening audience with German Chancellor Angela Merkel, via round-table talks with Palestinian President Mahmoud Abbas.
The theme of this year’s meeting — “The Shifting Power Equation” — takes in everything from the growing geopolitical clout of countries such as India, China and Brazil to the increasing influence of weblogs on the traditional media.
“Everywhere, in society and business, power is moving from the center to the periphery,” said WEF founder Klaus Schwab. “Vertical command-and-control structures are being eroded and replaced by communities and different platforms.”
The 2,400 registered participants at Davos include 800 corporate chief executives or chairmen, 24 heads of state or government and 85 Cabinet ministers.
The mood in Davos was decisively upbeat, partly due to forecasts of ongoing economic growth in 2007. Ninety-two percent of 1,100 chief executives in 50 countries were confident of their company’s revenue growth in 2007, according to an annual survey by PricewaterhouseCoopers released yesterday. Only 40 percent identified climate change as a potential obstacle to business growth. The survey revealed divided attitudes between different parts of the world and signs that the issue was beginning to bite, according to the auditing firm.
Fifty-eight percent of chief executives in the Asia Pacific region pinpointed climate change as a business threat, yet only 18 percent of their US counterparts felt the same way. Overall some 59 percent did not feel concerned by global warming’s impact on their business, but a growing number of chief executives indicated that they were turning to public-private sector partners since awareness of climate change has risen sharply among business and political leaders who attend Davos.
The annual “Voice of the Leaders” opinion poll by Gallup International found that environmental protection was now rated as the second most important priority after economic growth.
The first debate kicked off with the view that global expansion would continue this year despite a predicted slowdown in the US economy. Laura Tyson, a professor of economics at the University of California, Berkeley, said 2007 could be another fairytale year but cautioned that “the big bad wolf was hiding in the forest” in the medium term.
This view was endorsed by three of four fellow panel members, namely Jacob Frenkel, vice chairman of insurance group AIG, Min Zhu, the vice president of the Bank of China, and Montek Ahluwalia, the deputy chairman of the Indian Planning Commission.
Following a sustained period of growth in the global economy, business leaders gathering at the exclusive Davos event this year are notably bullish about the future. But panel member Nouriel Roubini, a professor and chairman of Roubini Global Economics, was far more pessimistic, saying that a sharp slowdown would hit the US economy this year and have global repercussions.
“The main threat from the US slowdown is whether the US is going to have a soft landing or a hard landing,” he said. He said a recession in the housing market, coupled with job losses in the manufacturing sector, would hit consumer confidence, leading to lower spending and lower economic growth.
Geopolitical challenges are also high on the agenda in Davos, with Jordan’s King Abdallah, Lebanese Prime Minister Fouad Siniora, Palestinian President Mahmud Abbas and Israel’s Foreign Minister Tzipi Livni due to join discussions today.
Speaking at one session, Arab League Secretary-General Amr Moussa said the threat of a US attack on Iran was very serious. “It’s a 50/50 proposition, and we hope that it won’t happen. Attacking Iran would be counterproductive,” Moussa told the panelists at the session.
Moussa advocated dialogue rather than military action to resolve both Iraq and US-Iranian tensions. “If there were to be a war, other genies would get out of the bottle. You cannot imagine the impact on the Gulf countries, on the Mediterranean,” Moussa said.
He proposed a diplomatic solution, advocating a United Nations’ Security Council resolution that Iraq should not be partitioned, an agreement on reconciliation and amendment to its constitution.
Other panelists agreed that the Middle East was experiencing a period of great conflict. “Where are we in the Middle East?” asked moderator Vali Nasr, adjunct senior fellow for Middle Eastern Studies, Council on Foreign Relations, USA. “Are we on track or off track?” It is very off track, suggested one Arab diplomat, referring to the situation in Iraq and unresolved conflicts in other parts of the region. He also expressed concern at the growing sectarian violence, not only in Iraq but Lebanon as well. Others argued that a political solution and not a military one is needed for Iraq, referring to Bush’s recent decision to send more than 21,000 additional soldiers to Iraq. One panelist said that guidelines are needed to improve the situation in Iraq, including ones that ensure that the country is not partitioned and that some kind of agreement between groups is reached.
A possible US-Iran conflict was also discussed. Most agreed that the Middle East could not afford another war. One Arab business leader noted that from an economic perspective, a US-Iran conflict was worrying. Many agreed that it was better for Arab countries and Iran to have a dialogue to address regional issues, although some were not convinced that Iran is ready to put everything on the negotiating table. But even with all the conflicts, there has also been positive economic growth in some parts of the Middle East, said Nasr. The solution for the region is economic, stressed one panelist, but countries need to make reforming their economies a priority, including the need for greater diversification and privatization. Citing the need to create millions of jobs in the region in the next decade, one panelist said that human resource development and education were among the biggest challenges to a growing population.
Security was tight in the city, with Swiss police, the military and private contractors cordoning off access to the Congress Center, the venue for most of the meetings. Protests by people critical of globalization and who claim that corporations and big businesses favor profits over people are expected to be minimal. Critics have planned an action day for Jan. 27 in Davos and a national demonstration in the city of Basel the same day.
