Davos Diary 2013
Each morning, Davos veteran, Mark Malloch-Brown provided a daily digest of his Davos experience.
Still Searching For The Big Idea
26 January 2013
As a party weary Davos stumbles into its final day it is still in search of its Big Idea, or for that matter Big Country for 2013. As predicted with many Asian and American politicians staying home, European leaders like punch drunk boxers who have gone too many rounds occupied centre stage, but many others seemed little interested in their troubles: the consensus at the start of the meeting, that the Euro will survive after all but Europe will be a low growth region for the foreseeable future, held. Even Mario Draghi, the Central Bank Governor credited with stopping the Euro's collapse confirmed that while disaster had been averted don't expect much growth. For the Davos growth seekers, who have long factored in European economic weakness, that made Europe's fractious squabbles entertaining perhaps but not terribly significant in their hunt for the next investment frontier.
So the Not The Next Big Idea was a stable but flat Europe. It's hard not to suspect this may prove a rather dangerously complacent Davos consensus. Mario Monti gave what many feared will be his first and last Davos appearance as Italian Prime Minister before returning to a turbulent domestic political landscape. Like Spain and Greece, delegates worried about rising risks of social protest. Experts worried about difficulties ahead in further banking and sovereign bailouts. There were voices in the corridors if not at the podiums who worried that Europe was not out of the woods yet.
Disgruntlement too that Europe's internal preoccupations had led it to take its eye off the ball in its broader neighbourhood of North Africa and the Middle East. So while there was relief at the unexpectedly moderate outcome of the Israeli election there was a recognition that it was still no mandate for peace negotiations. One Israeli told me only 4 new members of the new parliament had campaigned on an explicit peace platform. And indeed what peace, as frustration poured over in one session about the meltdown of Syria. An old UN economist chum of mine who for awhile had been the main reformer in the Assad regime (when there were such people), told me that he estimated the war had destroyed 35% of Syrian GDP. Others suggested the UN estimate of 60,000 deaths may be off. As many as 100,000 may have lost their lives. There was also grumbling to be heard of how little Western and Gulf money had actually gone into the new Arab Spring regimes that were struggling to show some kind of improvement in economic life to their citizens.
So the Davos Men and Women had to stare into the further distance for opportunity. Africa and Latin America were this year's winners. Given those who have gone before it is a dubious honour, even perhaps a bit of a curse, to be so honoured. For the poster boys of earlier years, the winner's crown often proves to be made of thorns not gold as economic growth promptly falls off.
Still it was a welcome recognition. The most powerful group of Davos business titans, the CEOs of its 100 top tier members, in their private session apparently concluded: it's Africa's time. And indeed it has for some years had some of the highest growth national economies. There is a middle class developing which is becoming a domestic engine of demand as the continent urbanises. The cell phone has been more a tool of change in Africa than perhaps anywhere else. Kenya is arguably the global leader in mobile banking. Factoids of this kind dropped off eager Davos tongues.
The siege of the Algerian gas installation was taken as a cautionary reminder by some though of the dangers of commodity based growth: the inequality and corruption that easily accompanies them and the vulnerability of this kind of infrastructure to terrorism.
But Davos had found at least half an idea. Africa may not be quite ready for the bright lights of WEF prime time but it's on the move and that sadly is more than can be said for Europe.
Davos Beneath The Headlines
25 January 2013
Our FTI Consulting colleagues were yesterday involved in reporting back on two projects we had been involved in the run up to Davos. One was a study of wellness in the workplace. Just what is best practice in terms of keeping employees healthy. Over the lunch at which company health professionals discussed the findings there was lots of interesting discussion of how incentives from gym membership to just not hiring smokers could affect the well-being of employees.
Across town, another group of business leaders were discussing work we had done on corporate anti-corruption policies. Both are examples of the less visible Davos that bubbles industriously just beneath the surface of the glitzy receptions or headline-grabbing plenary sessions on the Euro or Global Strategy.
As a veteran, I have learned that Davos is a kitchen out of which, given time, dishes come that do make the main menu. The anti-corruption work for example has already got one foot in prime time. Our CEO Jack Dunn was on a panel at the conference centre with others, including the Nigerian Central Bank Governor, warning that the issue threatened corporate reputations and held development in a region like Africa hostage. And David Cameron who had shot his Europe missile at Davos from London a day earlier when he arrived, led off his own speech with corruption in Africa and its threat to prosperity and stability.
So from low profile beginnings issues have a way of making to the main stage at Davos. Development itself and the Millennium Development Goals that frames so much international co-operation have come a long way since at an earlier Davos I was asked in a plenary session by a puzzled US Treasury Secretary what they were. Now they are centre stage. Around the margins of the conference one can find next year's and the years after Big Issues.
Like countries and companies, ideas compete for attention at Davos. Slowly they get established on the agenda. The Japanese night is now a regular sushi stop for many of us. The Oxford University nightcap which promises college port and stilton is becoming an established niche event. Although either academics are serial partygoers or degree gatherers because you see a suspiciously similar group of alums at the Yale, Harvard and Georgetown events before they end their evening with Oxford port. Whether the port will survive the new wellness in the workplace movement remains to be seen. After all, how could you hire academics who don't quaff the stuff?
Davos prides itself on looking forward
24 January 2013
Davos prides itself on looking forward... This year bad luck in the political calendar has left it looking back. A leadership transition in China, recent elections in South Korea and Japan and the early stages of campaigning in India have left Asia with a muted political voice at this Davos. Similarly while US businessman are well represented, few senior politicians are here. So by default the political leaders here are disproportionately European. And so Europe's troubles are being revisited despite the fact that it's hard to find anybody who thinks Europe is going to do much for global growth.
A poll from FTI Consulting shows global business leaders anticipate an extended period of low growth but that by now that is largely discounted in their judgments about the world. It is just an uncomfortable fact that Europe and the rest of the world have to live with. Indeed the most talked about speech at Davos this year was not even given at Davos. David Cameron gave his long delayed, much trailed, speech about Britain in Europe in London before heading up to Davos. Much muttering in the corridors and some indignant explosions to journalists. But many Europeans with a more courteous political culture than Britain's just bit their tongues in public for fear of making things worse.
If our research is right outrage in political and policy circles may actually not be matched among business participants. And indeed casual exchanges at the FTI Consulting party last night tended to confirm our surprising poll discovery that Europe's reputation has been so shop soiled by the chaotic Euro drama that many businessmen would welcome a Hong Kong type solution for Britain: one Europe, two systems. This would allow them a sane, rule of law more lightly regulated place to continue to do business into Europe from so avoiding the regulatory nightmare and financial turbulence of the continent proper. A pipe dream probably. Less interested in the twist and turns of the politics they are impatient with their Europhile cocktail partners who argue this is not the outcome that Cameron's speech will lead to. That rather it has set up Europe for years of uncertainty followed by a British exit.
At a session on European competitiveness yesterday the starkness of Europe's future was clearly exposed. A chart was shown that showed US per capita income steadily pulling way ahead of Europe's which has now been overtaken by South Korea. While the impressive prime ministers of Sweden and Latvia explained how their countries had restored competitiveness along with Germany nobody could muster up much faith that the same thing was going to happen in Southern Europe. And indeed a thoughtful French journalist observed that France did not have the burning platform to do anything as bold as Latvia. When someone unkindly compared Europe's reform performance to Asia's she tartly responded that France was not Singapore.
As troubling for Europeans was the message that reform needs strong national leadership and will. This is a national not a European level issue. Brussels, to the extent it was mentioned, was more of a drag on competitiveness not a source of reform or leadership. One was left with a glimpse of a very different way the European debate might have been framed: not around a British exit but a coalition of reformers (northern European politicians and business leaders) who share a view that the Brussels machinery is anti-growth. But the dye was cast long before Cameron's speech. This would be fought on the old terms: Britain versus the continent.
So Davos this year is treated to a sentimental bit of history: the view of the world from the white cliffs of Dover. A long way from its normal mountain top preoccupations of Asian growth or human inventiveness.
Davos has started
23 January 2013
Davos has started. And the search is on again for what will be the defining new wisdom to emerge from this year's rash of seminars, lectures, parties and closed meetings in the Swiss mountain town. Last year it was the apparently terminally sick Euro (which has proved a rude survivor) earlier it has been the eclipse of the US and the rise of China (two different years). In 2009, when the newly-elected President Obama took office there was talk of the re-emergence of the US. But don't expect a repeat this year.
At the start of the year, FTI Consulting polled business leaders around the world and although the new administrations in China and the US are neck and neck in terms of which matters most for global prospects, I suspect Davos's zeitgeist will be somewhere else: for the poll also showed that Davos Man has got his (or her) confidence back. Business confidence is back to pre-2008 levels and even confidence in International Banks has rebounded. Trust is back. The world looks a less threatening place.
That I suspect is one half of this year's Davos party wisdom but it has a jarring second half: among the rest of the world that's not invited to Davos a very different mood prevails. In other FTI Consulting research of a broader cross-section of public opinion we see that the overwhelming majority still distrust Banks for what they have got up to and are in no mood to forgive them. Indeed they hold the whole international business community at fault for the global crash and then walking away from it leaving the ordinary taxpayer and employees with the cost of a decade’s long clean up. The World Economic Forum's own very useful annual Risk Report highlights inequality as a leading global risk. And of course increased inequality in many countries from the US to some of the world's poorest nations is the most common form the injuries of the global economic crisis have taken. From America's middle class, to the youth and pensioners of Spain or Greece, let alone to the urban workers in poor countries, many think that once more the costs of bailouts, austerity and adjustment is being born by them.
So while the view from the top of the mountain looks pretty good it looks a lot less happy from the bottom. And contrary to the dismissive view of Davos Man living in his privileged world they are a pretty astute lot who are quick to pick up the signals of discontent from their citizens and customers. And if they do miss it, there are enough NGOs and social activists at Davos to shout it over the canapés. So expect a schizophrenic Davos. What you think depends which end of the mountain you sit.