Saturday 7 December 2019

Davos yields little more than Alpine sun

In a week that saw panic in the global stock markets, the great and the good from around the globe ascended up to Davos to view the world from a lofty perch. But 16 years after he first observed Davos Man at close quarters, Donal O'Donovan was less than impressed

Souvenir ‘I Love Davos’ badges sit displayed for sale inside a shop in the Alpine town. Hopefully world leaders will make the World Economic Forum a little more memorable than the Davos snowglobes. Photo: Chris Ratcliffe/Bloomberg
Souvenir ‘I Love Davos’ badges sit displayed for sale inside a shop in the Alpine town. Hopefully world leaders will make the World Economic Forum a little more memorable than the Davos snowglobes. Photo: Chris Ratcliffe/Bloomberg
Donal O'Donovan

Donal O'Donovan

An exhausted global elite tramped to Davos, high in the Swiss Alps last week, and fretted collectively over the state of the world.

It isn't supposed to be like this.

The World Economic Forum (WEF) holds its annual conference in Davos and has, at least for the wider world, hijacked the Swiss village's name for the event.

WEF's motto says it is "committed to improving the state the world". It's a noble and even sensible aim. The idea is to bring practical people together with assorted visionaries to influence social, economic and political change.

Davos is unembarrassedly elitist - in the sense it wants to draw real leaders from all kinds of fields together in one place.

It just happens that those leaders include a fair number of billionaires, camera-pleasing celebrities and the kind of politicians that the media is obliged to follow up into the mountains.

"Davos" started out in the 1970s as a management conference, WEF developed out of that and through the 1980s and 1990s the annual conference developed into an important informal meeting point for world business and political leaders negotiating the transition away from the Cold War.

For a long time, the Davos conference was important but obscure. It's hard not to think the opposite is now the case.

Davos is now a massive jamboree, millions are lavished not just on the swish event itself, but on corporate hospitality and gimmickry in the surrounding hotels and bars. Hundreds of journalists pour into the village.

But is there anything to show for it?

No doubt there were plenty of deals done between businessmen (and it's overwhelmingly male) on the fringes of the main event.

For three days, select charities, many of them doing excellent work in difficult places, get extraordinary access to lobby the great and the good for financial and political support.

Last week, thoughtful people presented some good ideas - on issues like climate change, gender discrimination and the risk to millions of jobs from automation - but there was a real sense that the action was elsewhere.

President Obama didn't come, nor did Russia's President Putin. The wars in Ukraine and Syria were side notes and there was no frisson of enemies meeting on neutral ground.

The German President Joachim Gauck came, and pleaded with other European countries to share the burden of absorbing the million-plus people who arrived there last year. But he travelled in hope rather than expectation.

His chancellor, Angela Merkel, pulled out at almost the last minute. It says a lot about the world today that she stayed in Berlin to focus on the growing refugee crisis at home, rather than attend Davos and seek common solutions among fellow leaders abroad.

It was striking to wander through the conference centre, a lovely modern building with soft colours, big but human-sized halls and lobbies featuring plenty of relaxed seating, and notice the number of people on phones or else playing with phones. If everyone who is anyone is here, who could they be talking to?

It may be that Davos just wasn't answering the questions that everyone was asking: Can China steady as it slows? Where will the refugees go? What happens if the markets keep falling? Will America really vote for Trump?

Most of those questions weren't even on the agenda. When they were, the panellists generally had the same questions as the audience - and fewer answers.

That's a real contrast to 2015 when proceedings were dominated by the risk posed by rising inequality, giving the participants a juicy, worthy, but not especially pressing problem to expand upon between cocktails.

It's an even more striking change from when I first came across the Davos phenomenon 16 years ago. Back then, I happened to work at a short-lived dotcom, a since defunct media company with aspirations of greatness. It produced a daily newsletter for that year's Davos event dubbed The Global Agenda. My job, done from Dublin, was to load up the newsletter with stories and fire it out by email to the attendees.

Back then, Davos was in its pomp. 'Davos Man' was seen as the embodiment of business acumen and political and cultural sophistication - at least in his own mind. He had climbed to the top of the Swiss mountains to sup with his peers and look out on a world of opportunity with optimism.

It's hard to imagine now, but it was a decade after the fall of Communism and the euro had gone into circulation with the promise of cheap interest rates forever.

The war in Kosovo was over, the 9/11 attacks had yet to shock the world.

E-commerce was the next big thing and borders everywhere were being swept away.

In the afterglow of the Clinton presidency, the world's elite could come together purposefully once a year in the certain knowledge they were doing a hell of a job.

The difference between then and now is staggering.

The world now seeing fences thrown up overnight on European borders, the rise of European populists and Donald Trump - never mind Isil - is completely unfamiliar and frightening to Davos Man.

But if anything, the circus has grown more lavish. The congress, as it is called, is a huge event, dominating Davos itself, which including outlying districts has a similar population to Killarney.

There are 2,500 attendees, 1,500 of them are senior business executives from around the world and they are joined by assorted hangers-on and camp followers.

For three days, fleets of black Mercedes and four-wheel drives clog up the narrow streets ferrying delegates from hotels to seminars and meetings. Tiny local shops and cafes are taken over by global business brands and festooned with corporate banners and branding. Space is tight. The panel discussion featuring Enda Kenny and Joseph Stiglitz was held in the hall at the local high school.

Everything is covered in a blanket of snow and the standard uniform is any combination of business suit and mountain-wear - the frequent slips and the cold add a kind of Blitz spirit to proceedings.

Its a place that usually reeks of optimism, indeed hubris. But not this year.

Kenny and the Irish delegation came to Davos with a great story to tell - world-beating economic growth, a successful transition to the digital economy, buoyant exports.

But the audience wasn't ready to hear it.

The bias, as they say in corporate speak, was to the negative.

A collapse in oil markets at the start of the week knocked the wind out of the Davos crowd and they never really got back to their feet.

The collapse in oil was one piece of evidence too far that the managerial class is failing to manage. But its hardly the only one.

Davos was haunted by the spectre of a world that is on the cusp of becoming unmanageable.

"We can't cope with these numbers any longer, we need to get a grip on this," the Dutch prime minister Mark Rutte said on Friday.

He was talking about the refugee crisis, calling for collective action within the European Union to deal with the mass of humanity that will pour into the West this year. But he could equally have been talking about oil, or eurozone inflation, or Chinese debt, or the flood of money away from developing economies in recent weeks.

Legendary investor George Soros was talking about China, when he told the Davos audience that it was in for a hard landing.

"A hard landing is practically unavoidable," Soros said in an interview with Bloomberg from Davos. "I'm not expecting it, I'm observing it."

Soros thinks China has the resources to ride out a hard landing - though not without inflicting damage on the wider world economy.

He's even less optimistic about Russia, questioning how long it can hang on while oil and gas prices go through the floor. The European Central Bank's Mario Draghi was among those who struggled either to put a positive gloss on the state of the world, or even put his finger on where specifically the problems are - a prerequisite to actually dealing with them, as every good manager knows.

"There are market vibrations, certainly a heightened sensitivity to risk," the ECB governor admitted.

It's the kind of vagueness that unsettles markets and, even worse, people. But vagueness was everywhere at Davos this year.

An unsettling and unsatisfactory state of affairs for a population used to dealing with hard numbers and that, like most of us, draws confidence from certainty.

"We're all driving through a fog," Andrea Orcel, the head of investment banking at UBS, said during the obligatory Bloomberg TV interview at Davos, summing up the mood in the Alps this week.

"It's very difficult to see where it's all going to land, and it's difficult to plan for business where things are so foggy and uncertain. So at this point in time, we are trying to be as defensive as we can be, which in turn adds to this low level of activity."

The weather was sunny and bright in Davos, but it couldn't lift that pervasive bank of fog.

Somewhere through the fog are answers to questions that at some point need to be addressed. What's really happening in China? What happens if oil keeps falling? How many refugees are on the move? Where will the terrorists strike next?

And in the background always, could America really vote for Donald Trump?

In its heyday, Davos was the place where the best and brightest came to share their solutions to the world's problems.

Last week, the world's leaders came to share their problems and ended up being drawn into each others' fears.

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