Are the Davos debates still relevant?

UN Secretary-General Antonio Guterres attends the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 17, 2024. REUTERS/Denis Balibouse (REUTERS)
UN Secretary-General Antonio Guterres attends the 54th annual meeting of the World Economic Forum in Davos, Switzerland, January 17, 2024. REUTERS/Denis Balibouse (REUTERS)

Summary

WEF’s 2024 edition of the Davos conference, which kicked off from 15 January, and will run till the 19th, seeks to rebuild trust in a fractured world. Can it?

Every January, Davos, a ski resort near Zürich, Switzerland, hosts the annual conference of the World Economic Forum (WEF). Carefully curated 3,000 or so delegates and speakers from global business, government, civil society and academia gather for sessions on the most pressing issues of the day. The idea behind it is “improving the state of the world".

What are the pressing problems in the world in 2024? The biggest seems to be the lack of political consensus on anything at all; not even on how to talk about sorting out differences and ending wars. It’s a time of upheaval and uncertainties – dubbed “a polycrisis". 

Russia’s war in Ukraine is on still, even as new conflict is brewing in the Red Sea, endangering one of the world’s most important trade routes that could affect more than 40% of Asia-Europe trade. Ongoing geopolitical tensions between the world’s two biggest economies, the United States and China, are nowhere near repair.

On Tuesday, Iran carried out a missile attack on Pakistan, complicating the already tense situation in the Middle East region because of the Israel-Hamas conflict. On Thursday, Pakistan retaliated with strikes at multiple locations inside Iran. This happened hours after a meeting between Pakistan's caretaker Prime Minister Anwaar-ul-Haq Kakar and Iran's foreign minister Hossein Amir-Abdollahian on the sidelines of the Davos conference.

These geopolitical tensions are spilling into global trade, business strategies and policymaking. Companies, investors and governments are setting about refashioning supply chains to reduce exposure to these vulnerabilities and protect national interests even if at the cost of giving up the low-cost advantage associated with sourcing from China. 

The US is leading this re-alignment of global trade and supply chains. Plus, it has sparked off a global subsidies war among rich countries for supporting domestic manufacturing of critical semiconductors and electric vehicle parts that the non-rich nations cannot afford.

The uncertainties also arise from the rapid advancement of technologies such as artificial intelligence (AI). The year 2023 was generative AI’s breakout year. As use of generative AI tools by governments and companies picks up, regulation needs to come up if the transition is to be orderly and non-disruptive. (The potential for menacing with democratic elections remains the biggest worry.)

Meanwhile, the World Bank has warned of a decade of lower global growth. How will it be averted?

International cooperation is essential to come to grips with all these problems but multilateralism is no longer working – the World Trade Organisation has proved incapable of resolving global trade’s problems; the COP 28 was let down by the rich countries’ chicanery and hypocrisy; and the World Bank and International Monetary Fund are dawdling through the processes needed to help low-income countries in sovereign indebtedness. 

WEF’s 2024 edition of the Davos conference, which kicked off from 15 January, and will run till the 19th, therefore, seeks to rebuild trust in a fractured world. Can it?

German economist Klaus Schwab had founded it in 1971. (His international not-for-profit organization was named the WEF in 1987.) His big idea wasto nudge business people to think beyond what was good just for them and their shareholders. He wanted them to think about what was good also for all those who have a stake in the destiny of a company, including employees, society, and the planet. He was at the time a 32 year old academic, with five degrees in economics and engineering on his CV, according to The Economist. Davos was where people went to recover from tuberculosis. 

Then the annual meetings became a hit. The secret of this success was that they are an informal meeting place for business heads and politicians to talk about policy. Over the years, they became the go-to place for networking among the global elite; upstarts to present their credentials and be admitted into the limelight – the P.V. Narasimha Rao government sent a delegation of ministers to Davos back in 1991, even as his newly-formed government famously managed a severe economic crisis the previous governments had left India on the brink of.

Do the Davos discussions result in breakthroughs? Sometimes. Especially when conventional intergovernmental negotiations become messy. In the 1980s, the WEF brokered peace between Greece and Turkey, preventing war. Subsequently, Davos also brought dissenting world leaders to its platform, such as South Africa’s Nelson Mandela and F.W. de Klerk, and Yasser Arafat and Shimon Peres.

The Global Alliance for Vaccinations and Immunisation, GAVI, was launched at Davos in 2000, long before it facilitated delivery of the covid-19 vaccines produced in the developed and developing countries such as India to underdeveloped and non-producing developing countries. 

In 2013, United Nations Secretary-General Ban Ki-moon called on the WEF’s help informally to have its Davos meeting come up with global action areas for reducing emissions and improve climate resiliency through public-private cooperation. Those discussions that year at Davos lent focus to his Climate Summit in September 2014, ultimately leading to the legally binding international treaty on climate change adopted by 196 parties at the UN Climate Change Conference (COP21) in Paris in December 2015.

But the irresistible draw of the annual Davos conference is also its big weakness, as absentees can dampen its clout. It’s hardly surprising that in a year the world is in a flux, this year’s congregation will miss among others, Joe Biden, Jinping, Narendra Modi and Rishi Sunak. 

Worse, the worldview that has so far powered the WEF – globalization will spread and strengthen democracy through the world – is now at variance with the reigning global mood. The US-China tech war and trade tensions and Russia’s war in Ukraine, the retaliatory sanctions by western countries, after which more than 1,000 companies shut down operations in the country, exposes how out of touch that worldview is with ground realities. 

In country after country, rising nationalism, populism, protectionism are challenging the ideals of western liberal democracy, free trade and free-market capitalism. That world order is no longer seen favourably but what the new guiding principles could be is far from clear still. 

Could the WEF throw light on the new world order that might replace it? The emerging anti-elite sentiments in the politics of country after country – latest is Italy which has installed its most right-wing government since the second world war with the ruling party known for its unwelcoming attitude towards immigration – points to a disconnect of the regular at Davos. 

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