SOMBRE MOOD AWAITS AT DAVOS
Independent.co.uk
Thursday, 22 January 2009
The politicians and bureaucrats are likely to set the agenda at the
annual World Economic Forum in Davos. Sean O’Grady reports
Chastened" is probably the word that best sums up the mood of
participants preparing to travel to the annual World Economic Forum
in the charming Swiss ski resort of Davos. What else could they be,
after a year which has seen what the Governor of the Bank of England,
Mervyn King, has called the worst banking crisis since the First
World War? And when one of their discussions, ominously, will be on
"The Return of State Power"?
Since they last met among the ski slopes, some of the biggest
names in international finance have been humiliated and
nationalised. Personalities such as Dick "The Gorilla" Fuld of
Lehman Brothers and Fred "the Shred" Goodwin of the Royal Bank of
Scotland have been humbled; others, such as Bernard Madoff exposed
as frauds. The reputation of the financial community has not been
at such a low ebb in decades. Even the organisers of Davos have
found themselves embarrassed by the enforced absence this year of
Ramalinga Raju, of Satyam, an Indian technology and outsourcing
group. No wonder some at Davos talk about the possibility of a code
of ethics for bankers, similar to the doctors’ Hippocratic oath.
In his opening press conference yesterday, the distinctive personality
0Aof Dr Klaus Schwab, founder and inventor of Davos as a unique
gathering of world business and political leaders mixed in with a
little light winter sport, even condemned the "self-indulgence" of the
recent past. He said that could not replace "reasonable competitive
remuneration" and stressed his belief – a constant Davos theme – that
business is there to serve "stakeholders" and society at large. As
a sort of high priest for global capitalism, he went so far as to
express regret that the "warning voices" heard at Davos in the past,
such as those of Nouriel Roubini and George Soros, had not been heeded,
and said the free marketers should "blame ourselves" for that failure.
Well, we can of course, be sure, that some of the former masters of
the universe won’t be attending Davos this year. The hotel suites
normally allocated to Lehman Brothers’ contingent (slogan; "Where
Vision Gets Built") will have been reallocated, probably to some
regulators, the new masters of the universe.
The Forum’s organisers say that the numbers attending thus year are
broadly stable. This year, though, the balance at Davos will tilt
towards government and regulators, representatives from the "real"
economy and, above all, the Chinese, who will be landing in record
numbers.
What they will talk about is pretty obvious. A year ago, the mood was
subdued, the euphoria of the "Nice" (non-inflationary continuing
expansion) decade having already pretty much evaporated. The
question being asked in January 2008 was whether there would be a
recession. The question being posed this year is whether the world can
avoid a recession turning into a slump. The WEF’s mottos are usually
amorphous in the extreme; last year’s was the unarguable "Power of
Collaborative Innovation". In 2009, things are more to the point:
"Shaping the Post-Crisis World".
So who will be doing the shaping? Not Bono, is the short answer. Pared
down last year to the likes of Emma Thomson, the celebrity community
will be conspicuous by its absence. Bono, whose presence in the
name of the poor of the world was always a conference fixture,
is committed to completing an album. Tellingly, perhaps, even the
showbiz stars of Davos are glittering from Eastern skies – the
Chinese actor and martial arts expert Jet Li, and Bollywood legend
Amitabh Bachchan. Worthy cultural leaders such as Peter Gabriel,
Viswanathan Anand, the current world chess champion, and author Paulo
Coelho will be there to leaven the mix, though. A session entitled
"Meet the Peacemakers", and featuring the Middle East Quartet peace
envoy Tony Blair seems to have been cancelled (Mr Blair is appearing
alongside the religious leaders instead).
The emphasis is definitely on how to get the patient – world capitalism
– out of its coma. Shaping the answers to this is the usual array
of heavyweight fig ures: a substantial slice of the planet’s wealth
and power will be concentrated in this small corner of the Alps
next week. From the world of business will be, for example, Anand
Mahindra, managing director of Mahindra & Mahindra, Rupert Murdoch,
chairman and chief executive of News Corporation; Jeroen van der Veer,
chief executive of Royal Dutch Shell, Werner Wenning, chairman of
the board of management of Bayer, Carlos Ghosn, president of Renault,
and Tom Glocer, the chief executive of Thomson Reuters. Bankers and
financiers are more than adequately represented too, for example by
Stephen Green, chairman of HSBC, Joseph Ackermann, chief executive
of Deutsche Bank, and Stephen Schwarzman, the boss of Blackstone.
Some 56 per cent of the 2,500 participants from 96 countries will be
from the private sector, encompassing more than 1,400 chief executives
and chairs – but you get the impression that, this year above all,
the politicians and the bureaucrats will be setting the agenda. Some
42 heads of state and government will be showing their faces, with a
joint appearance by the Chinese and Russian premiers Wen Jiabao and
Vladimir Putin, to kick off the five days in a suitably grand fashion.
Given that these two great powers have not always been the best of
friends, such diplomatic gestures may even bring some tangible good
in their wake. In the past, Davos was known for the private sector
deals that were done in quiet rooms away from the public sessions;
they will still be there, but this time governments will also be
doing some deals, with each other (Armenia and Azerbaijan, say)
and with the private sector. Those behind the upcoming G20 summit
in Downing Street, for example, will be hoping to sound out some of
their ideas on the bankers.
Gordon Brown, Taro Aso of Japan and Angela Merkel of Germany will
join their counterparts from Thailand, Mexico, Kenya, Switzerland and
elsewhere in a unique gathering. Barack Obama and most of his team
may have other things to do, but members of the new US administration
will be there; Larry Summers, the new Treasury Secretary, and Jim
Jones, National Security Adviser, will be saying "yes we can". Boris
Johnson and Peter Mandelson will hopefully be at their provocative
best, spicing up the conversations between 17 finance ministers,
19 central bank chiefs, 20 trade ministers, 16 foreign ministers,
nine EU commissioners and a goodly quota from international bodies
such as the World Trade Organisation and the World Bank.
In its 39th year, Davos will be a more sober affair than ever, but
rumours that champagne receptions and parties are being cancelled to
match the more austere times are, wide of the mark. Few, if any, were
ever the decadent affairs some might imagine. Bad disco-dancing and the
odd ill-judged lunge was about as wild as it ever got; genteel drinks
receptions ho sted by chartered accountants were more like it, and
no one is going to dance on the table at the British business lunch.
Minds will be concentrated on the very survival of the laissez-faire
capitalist system as we have known it for the past two or three
decades. As one of the sessions is entitled, "Business as usual is
not an option".
Serious times: ‘Yes we can’ say serious leaders
This year, it will be the politicians and bureaucrats who will be
the stars of the Davos firmament, picking up the tab, on our behalf,
for the mistakes made by the world, bankers and investors. Gordon
Brown, Alistair Darling and David Cameron are not quite adequate
replacements for Bono, but these are, as someone said, serious times
for serious leaders. And you don’t get much more po-faced a crowd
than Vladimir Putin, Angela Merkel, Wen Jiabao, Ban Ki-Moon and Jean
Claude Trichet. We won’t get a dose of Obama, but Bill Clinton and
Al Gore both said "yes we can" and will no doubt be reminiscing about
the gold old days when they ran the world with the likes of Kofi Annan
and Tony Blair. The French Finance Minister, Christine Lagarde, should
help break the overwhelming maleness of the proceedings, as should the
seemingly constant presence of Ariana Huffington at these gatherings
of the great and good. The media are also in the spotlight; a session
entitled Fragility in the Fourth Estate may or may not benefit from the
presence of Rupert Murdoch. For different kinds of inspiration look to
noble prize-winners such as Joseph Stiglitz, the public intellectuals
Niall Ferguson, Nassim Taleb (of Black Swan fame), the world chess
champion Viswanathan Anand, Peter Gabriel and HRH the Duke of York.
Stars and bars: The places to be seen
Hotel Steigenberger Belvedere
Times may be tough, but Davos will still soon see the world’s biggest
concentration of wealth and power, and this is one of their favourite
haunts. In the boom, some banks used to book entire floors at this
five-star establishment. The ever popular Google party has often been
held here, and last year Arcelor Mittal held a late-night "speakeasy"
at the hotel.
Hotel Europe
Try the piano bar of this Davos Platz institution, where Barry the
cabaret singer will belt out Manilow and Queen covers. It’s said
that Barry has met more global leaders than Elizabeth II. Popular
with members of the press.
Hotel Schatzalp
This former sanatorium was a pioneering site for research into TB and
was the setting for Thomas Mann’s ‘The Magic Mountain’. It possesses
a certain jaded Art Nouveau era beauty, and is perched precariously
above the town on the Parsenn mountain. Famous for its hot chocolate
these days, and the Barclays’ dinner.