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DAVOS, Switzerland: Global powerbrokers left their annual gathering
in the Swiss ski resort of Davos on Sunday, pursued by grim warnings
of a tough year ahead for the world economy.
Compared to the upbeat mood of previous years,
Davos 2008 was a distinctly gloomy affair dominated by talk of a US
recession and a wider economic slowdown.
US Secretary of State Condoleezza Rice had
opened the high-altitude huddle of political leaders and corporate
chiefs on Wednesday with some encouraging words about the
“resilience” of the US economy.
But with international stock markets on a roller
coaster ride in the wake of the crisis in the US subprime mortgage
sector, few found Rice’s optimism reassuring, even though there
were differences of opinion among the gathered chief executives over
the scale and likely duration of a US contraction.
On Saturday, IMF Director General Dominique
Strauss-Kahn said speculating on the precise nature of any recession
was beside the point and governments should use fiscal as well as
monetary policy to counter the headwinds.
“What is clear is there will be a serious
slowdown and it needs a serious response,” he said. “We cannot
rely only on monetary policy.”
On the eve of the Davos event, the US central
bank, the Federal Reserve, had announced a spectacular interest rate
cut of 75 basis points—a move that drew less than rave reviews
from some here.
“Reckless” and “dangerous” was the
verdict of Stephen Roach, head of US investment bank Morgan Stanley
in Asia.
Japanese Prime Minister Yasuo Fukuda, who will
chair the annual Group of Eight (G8) summit in July, gave a keynote
speech in which he warned against a “excessively pessimistic”
view of the problems ahead.
“But at the same time we do need to have a
sense of urgency as we engage in coordinated action,” he said.
Confirming its enduring pulling power, this
year’s Davos gathering drew nearly 30 heads of state or
government, more than 110 cabinet ministers and several hundred
corporate titans.
On the geopolitical front, debate focused on
efforts for peace in the Middle East, the stand-off over Iran’s
nuclear program and the rise of China and India.
Pakistan President Pervez Musharraf stopped
off on a European tour aimed at addressing concerns over the
credibility of upcoming elections following the assassination of
opposition leader Benazir Bhutto.
And Afghan President Hamid Karzai offered
delegates a gruesome portrait of the extremist violence infecting
his region, citing cases of bombers targeting schoolchildren,
elderly women being decapitated and teenagers being burned with
acetylene torches.
Development was also on the agenda, with the
now-established Davos double act of billionaire philanthropist Bill
Gates and rock star activist Bono striving to tweak the
gathering’s collective conscience.
Bono, decrying the international community’s
failure to live up to its promises on poverty alleviation, said it
was time to go beyond purely “moral” statements of intent.
The Davos event has long prided itself on
showing the caring side of capitalism, although participants have
often been criticized for trumpeting big ideas on big issues in
public, while actually expending most of their energy on corridor
schmoozing and backroom deals.
But if Davos is the ultimate networking
opportunity, it doesn’t come cheap.
Some 1,000 of the world’s largest businesses
pay 42,500 Swiss francs (26,300 euros, $38,700) apiece for annual
membership to the exclusive club—not counting the extra 11,000
euros per person to attend the annual meeting.
-- AFP
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