Big chill at Davos

Photo: Carlos with Ikram at davos 2009

Big chill at Davos



Thursday, February 05, 2009
By Ikram Sehgal

Davos normally has a snowstorm during the WEF Annual Meeting week, but the measure of winter this year was not the weather but the deepening freeze in the world economy. Most "feel good" economic soothsayers predictably, and prudently, absented themselves along with a host of world corporate figures, many dumped by the economic slide. Among those conspicuously missing were high-profile John Thain of Merrill Lynch who lost his job, embattled Citigroup chief Vikram Pandit did not turn up to avoid hostile interrogation. Nonetheless, quite a few of world business leaders joined dozens of heads of state and government, like Chinese prime minister Wen Jiabao, Russian leader Vladimir Putin, Britain's Gordon Brown, as well as many top academics, to discuss the ongoing crisis and work out solutions and possible post-crisis initiatives. The bad news consensus: while 2009 would be a tough year the world recession would not bottom out till mid-2010, or even later. Very bad news for the Third World.

Moderated by Harvard's David Shapiro, the session on "Crisis to Prevent at All Cost" had Gareth Evans, Graham Allison, Kishore Mahbubani, Lilia Shevtsova and Luis Moreno-Ocampo highlighting the dangers: (1) assuming that the international liberal economic order will survive and not come crashing down (2) major terrorist attack by either weapons of mass destruction or a biological one and (3) deterioration of relations between Russia and the West leading to another "cold war." Among challenges identified were: (1) some effective global governance with better sharing of power in international institutions between the west, countries like Russia and China and the developing countries (2) creation of more trust in world trade between the US and EU on the one hand and countries like China and India on the other (3) combating cynicism about the NPT and bringing into the fold not only India and Pakistan but also Israel (Arab League secretary general, Amr Moussa impassionedly appealed for the recognition of all nuclear players) (4) making the International Criminal Court (ICC) more effective (5) making the UN agreement strong about intervening in a country where there is gross violation of human rights. Graham Allison and Gareth Evans encouraged addressing the root causes of terrorism and micro-level problems in ground-zero countries like Pakistan.

Another session, titled "the Global Talent Equation" was moderated by David Arkless, head of Manpower Inc, along with Brunson McKinley, former director general of IOM and Carlos Moreira of Wisekey, founding member of a new grouping dealing with international labour mobility, aptly called "Association of International Mobility (AIM)." AIM was launched at Davos on Friday, Jan 30. They debated how education, training, gender and legal issues were hurdles to recruitment of the right people for the right job. In "World-Economic Brainstorming" chaired by Maria Bartiromo, CNBC's anchor and Young Global Leader (YGL), three critical questions outlined the ongoing financial crisis: (1) most damaging policy mistakes (2) regulatory failure producing the largest systemic shock and (3) where did genuine market failure occur? The participants felt that the failure to attribute personal blame for the collapse was intriguing. There should be serious consequences for inappropriate financial behaviour, "including going to jail" like other people are so criminally charged in other fields. Do we in Pakistan have the courage to send to jail for their criminal conduct some of our fat-cat stockbrokers, and those in the SECP who were criminally negligent in failing to regulate them? Manipulating stocks and shares for their personal benefit and holding the country to economic ransom, the SECP gave time to its favourites to bail out at the expense of the taxpayers' money by suspending trading for months.

There is far more to Davos than being a rich men's club interested only in collective gloating over their wealth and partying. Why indeed do world leaders come to Davos in droves? Gordon Brown's predecessor Tony Blair was there, Germany's Angela Merkel made an appearance. UN secretary general Ban Ki Moon was passionate about the Israeli destruction of Gaza. Davos was shell-shocked when Turkish prime minister Erdogan, displaying great sensitivity to the havoc wrought by Israel in Gaza, stalked off the stage and flew off to Turkey after a shouting match with Israeli President Shimon Peres.

The Chinese prime minister spelt out the reasons for Davos: "Annual Meeting (2009) has a special significance. Amidst a global financial crisis rarely seen in history, it brings together government leaders, business people, experts and scholars of different countries to jointly explore ways to maintain international financial stability, promote world economic growth and better address global issues. The theme of 'Shaping the Post-Crisis World' is highly relevant and reflects the vision of its organisers. People from across the world are eager to hear words of wisdom from here that will give them strength to tide over the crisis. It is our responsibility to send to the world a message of confidence, courage and hope. Confidence being the source of strength, in tackling crisis practical cooperation is the effective way to prevail over crisis, accepting responsibilities is the pre-requisite." Prime Minister Wen Jiabao's suggested: (1) deepening international cooperation and promoting a sound multi-logistics trade regime (2) advancing reform of international financial system and activating the establishment of a new international financial order (3) strengthening cooperation in financial supervision and regulation guarding against the build-up and spread of financial risks (4) effectively promoting the interest of developing countries by actively supporting economic development of the whole world and (5) jointly tackling global challenges and building a better home for markets. To quote the Chinese prime minister, "the harsh winter will be gone and spring is around the corner."

I was privileged to be a panellist in the session entitled, "Future Conflict" along with Interpol's Ronald Noble, Kenneth Roth of Human Rights Watch, Lockheed Martin's Dr Ray Johnson and moderated by Prof Audrey Kurth Cronin of US National War College. We explored the possibilities of cyber-terrorism and nuclear proliferation, as well as the ground zero of Pakistan's disturbed areas. When explained properly, Pakistan's predicament was better understood by world leaders and intellectuals in Davos. Facing a barrage of hostile questioning, Prime Minister Gilani held his own at my traditional "Pakistan Breakfast" on Friday, Jan 30. Personalities like George Soros, Sonje Bata, Anand Mahindra joined a host of world business and academic leaders at eight in the morning to hear the Pakistani prime minister. Compared to over 100 Indian business leaders, only Hussain Dawood, Arif Naqvi, Zakir Mahmood and Kalim Siddiqui provided Pakistan's scant representation. This was my sixth breakfast for a Pakistani head of state or government and one is grateful that for the first time there was some recognition at home. My friends Musharraf and Shaukat Aziz, privately acknowledged the event and its effectiveness, publicly in Pakistan it never happened!

For a Pakistani head of state or of government not to go to Davos every year would be criminally negligent. We need to drastically expand private sector participation to take advantage of commercial opportunities that can be networked in Davos and government-to-government interaction without the shackles of protocol. Whether in the media, the economy, geopolitics or simply in social engagement, Davos is a must, big chill or no big chill!



The writer is a defence and political analyst. Email: isehgal@pathfinder9.com