The Oxford historian Timothy Garton Ash says that if one wishes to observe planet Earth in its entirety, the best view is from the moon, some 384,899 kilometers “above” us. The second best, he argues, is from Davos, Switzerland, altitude just 1,500 meters, during the World Economic Forum (WEF) every January. Now, what might be discerned about the globe’s future from outer space is beyond my ken, but after my 12th trip to Davos, I think I can remark usefully on Professor Ash’s observation.
Hermitage Capital Management chief executive William Browder, a regular participant at Davos, calls it “the best collection of individuals ever assembled in one place at one time ever in the world.” Where else does one find a conference with 2,400 upper-crusters from 87 countries—among them this year 24 heads of state and government, 800 chief executives and corporate chairmen, dozens of intellectuals (seven Nobel laureates among them), and more than 250 high-on-the-food-chain media participants to provide both exposure and the added stimulus of real or feigned (it doesn’t really matter which) adulation?
[credit: Sebastian Derungs/Reuters/Corbis]
This year’s Davos, however, differed from recent iterations in two respects: the absence of a featured, very senior American government official and Hollywood celebrities. The former chose not to come; the latter had been disinvited. What, if anything, is the significance of these differences?
In the past, the final evening’s star speaker has more often than not been a senior American government official. They have ranged politically from Bill Clinton to Dick Cheney. This year Condoleezza Rice opted for Mideast peacemaking. The curious thing was that most of the attendees didn’t seem to miss her. The conventional wisdom is that Davos 2007 confirmed the passing of America’s high-water mark of global power. Yet just as apparent, and certainly no less important, was the fact that nothing arising from the multipolar cacophony could supplant, let alone replace, American influence.
But if American power was less on display this year, so was anti-Americanism. That fad, too, may have passed a high-water mark. Or perhaps chic anti-Americanism (as opposed to the implacable but far less abundant philosophical sort) was merely in remission due to the obvious troubles of the Bush Administration, the mid-term election outcome being the main evidence to hand. On top of that, President Bush’s State of the Union address, which coincided this year with Davos’ opening day, was interpreted as Dubya’s surrender to his global warming critics. That doesn’t mean the high-rollers here were above kicking an adversary when down; there was plenty of Schadenfreude over cocktails. Yet most of the crowd was moving on from the Bush Administration’s Iraq drama prematurely, and without recognizing that, if Bush’s America fails through the next two Davos cycles, they will all suffer.
As for the absence of celebrities, that call came from the very top. Davos CEO Klaus Schwab’s decision to pull Hollywood’s passes this year was intended as a reminder that Davos is, above all, a business about business. Global companies are the customers, and their finance departments would soon pull the plug on paying for participation at a gathering that is more style than substance. And the price tag is considerable: Some 75 companies pay SFr. 500,000 a year (or about $400,000) to be WEF “strategic partners”; to attend just the annual meeting individuals shell out some $30,000 each before travel and hotel expenses. The Forum’s annual revenues are some $84 million. More impressive, Davos’ corporate sponsors do $12 trillion worth of business annually, slightly more than the U.S. gross domestic product and about one quarter of the world GDP.
Schwab had a point, no doubt, in ousting the Hollywood glitterati, who excel at style but often stumble over substance. Still, I couldn’t help feeling a little nostalgic for the celluloid heroes. Last year, for example, I downed enough vodka with Michael Douglas at the closing gala to dine off the story for months. It was fun. I chit-chatted with Sharon Stone until I awkwardly ran out of questions to ask. More fun. I checked out Angelina Jolie’s lips at close range. Beyond fun. (They looked real to me.)
Alas, this year’s only celebrity showing, aside from the inescapable Bono and Peter Gabriel, was that of supermodel Claudia Schiffer, and she wasn’t even an official Forum participant. She was on hand as a recent convert to the ever-growing global warming faith, explaining that she caught the bug at an event organized by James Murdoch (son of Rupert) at which Al Gore’s film An Inconvenient Truth had been shown. (It helps in Davos to drop these sorts of names.) She appeared as half of this year’s oddest couple, with Shimon Peres, to launch a climate-change campaign by the WEF’s future global leaders in an igloo built for the purpose at a Davos hotel. (I could not make this up.)
Peres scolded humanity’s wanton intervention into nature and urged all in listening range to make better use of what the Lord has provided for our children. Playing to the younger crowd, he told them, Prospero-like, “Don’t study history. There’s nothing to study except a chain of mistakes and many wars. . . . Think rather than remember.” Schiffer lectured on the need for more eco-friendly packaging and clothing made to be washable in cold water. They seemed to like each other. Peres has been unlucky at prime ministerial politics, true, but at that moment it was hard to feel too sorry for him. It seemed somehow fitting that one of the sponsors of their tryst was Sigmund Freud’s great-grandson Matthew, who does international public relations.
If Americans and celebrities were missing, what in essence was present at Davos 2007? Davos remains what it has always been since its kickoff in 1971: the biggest trade show for globalist encounters of the corporate kind in history. To lure more paying guests representing more of the world economy, Schwab has sliced and diced his operation into a myriad of interest and industry groups, ranging from clerics to take-over artists, creating devotees who dare not miss one of the five-day annual meetings for the simple reason that they know their competitors will be here.
Davos has become more than that, however: It has become an object of its own desire, a collective idol of reflective status. One can see this just by taking in the geography and geometry of the place. The physical layout of the meeting, which extends from the Congress Hall across hotels around the entire town, illustrates that where you land is a measure of where you stand in the Davos pecking order. If you’re in the Hotel Belvedere, you’re on the “A” list. If you’re exiled down the road in Kloisters, you must try harder next year (or you booked too late this year). If your panel discusses a headline issue at a plenary in the main hall, it means you’re a global star. If you appear elsewhere in the building’s maze of meeting rooms, you’re a player. If your only appearance out of this year’s 228 official sessions is as a commentator at one of the dozens of dinners all over town, you are a little person, even if you run your own company at home like a czar.
And then there are the many score parties, receptions and cocktail gatherings, all competing for attention by trying to snare the hottest guests or the best venues. Die Zeit publisher and American Interest co-founder Josef Joffe reviewed them for me casually one afternoon, concluding that, whatever else it may be, Davos is the best party on earth. He downgraded to second best what has been the hottest party ticket for the past few years, the Google bash in Davos’ Kirchner Museum. Like the company itself, the gathering has gone from fringe to establishment, and in so moving it has become less interesting and more crowded now at the Hotel Belvedere. (As one measure of the zeitgeist, Google CEO Eric Schmidt was one of this year’s WEF co-chairs, and his company has become a strategic partner). The understated McKinsey continues to throw the best bash, shipping in a seven-piece rock, rhythm and blues band each year. The party with the most brain power is the Harvard Dinner—“more IQ points per cubic meter” than any other, says Harvard grad Joffe. The most money per square meter? The Goldman Sachs reception, of course. The sexiest party is the Focus nightcap. Regular guest Claudia Schiffer placed an adoring, wet kiss on the cheek of blushing chief executive host Hubert Burda to the crowd’s cheers. (Peres, at 83 years of age, a regular at the Google grope, wasn’t anywhere near Claudia at the Focus party.)
Whether in the formal sessions, the hallways or the parties, the business vibrations are the same. Blackstone CEO Steve Schwarzman, like so many other top business leaders, says he increasingly uses Davos for “speed dating”—a series of short meetings with the globe’s highest fliers, whom he can only see once a year all in the same place. Bill Gates and Microsoft global chief Jean-Philippe Courtois regularly visit with twenty or more heads of state and government to save themselves the wear-and-tear of dozens of flights. The value-added of such convenience is apparently immense. Schwarzman came this year despite being in the middle of the $39 billion purchase of Equity Office Properties, the largest private equity buyout deal in history. I spotted him between “speed dates”, standing in the falling snow outside the Congress Hall, issuing what sounded like numbers and instructions into his cell phone.
Public intellectuals use Davos in similar ways, but to sell ideas rather than goods and services. They test out new ones, regurgitate old ones and in other ways try to retain the credibility that an invite to Davos can earn them. Professor Ash, for example, tested his new idea on global change: “Power is no longer what it was or where it was, concentrated in the West and particularly the West Wing of the White House. It is more diffused both vertically and horizontally.” Vertically, he says, less power resides with states and more with other groups—NGOs, global companies, private equity consortiums, online communities, terrorist groups; horizontally, power is more widely distributed among states. “Increasingly, the power map is both multilevel and multipolar.”
For political leaders, Davos has become a right of passage. It is a place to establish (this year Britain’s Tory Prime Minister candidate David Cameron) or reconfirm (Senator John McCain) foreign policy credentials before elections, to establish position for power struggles at home (Russia’s First Deputy Prime Minister Dmitry Medvedev), or to preen as a global leader once elected (German Chancellor Angela Merkel).
This year had a particularly pronounced Russian undercurrent, and not for the first time. Back in 1996, Russian oligarchs here agreed among themselves to support Boris Yeltsin against the rising challenge of Communist Party leader Gennady Zyuganov. In 2000, Vladimir Putin introduced himself to the global elites as Russia’s new face. What was behind Comrade Medvedev’s appearance this year is less clear, particularly since less than two weeks later Putin promoted Medvedev’s rival for the top job, KGB veteran Sergei Ivanov, to First Deputy Prime Minister. Had Dmitry misstepped? What was the only electoral college in Russia, Vladimir Putin, choreographing? All one can say with certainty is that Medvedev looks younger than his 44 years, that he is perhaps the only leading Russian politician who at 5’5” is shorter than Putin, and that he was here as part of a para-diplomatic offensive to rebut growing criticism that Russia has become a petro-nationalist, nuclear-tipped Soprano state increasingly pockmarked by contract killings and brazen government corruption. (Some things Davos can’t fix.)
As Medvedev tried to spin others, others predictably tried to spin him. After the formal dinner, one could watch Russian businessmen, one after the other, walk up to Medvedev and figuratively kiss the ring of the man who might inherit the recentralized Russian economic and political authority that would rule their futures. One unmistakable take-away: Unlike Davos of old, the billionaires no longer claimed pride of place among the Russians.
By default, Frau Merkel emerged as the most promising global leader of the year. After all, President Bush is on the skids, and both Tony Blair and Jacques Chirac are on the way out. Neither Japan’s Shinzo Abe or China’s Hu Jintao are ready or willing to play this crowd. A good thing, then, that Merkel hit all the right notes with her opening keynote: Globalization must continue but leaders must address the anxiety it is producing; the Transatlantic link remains vital and should be re-energized by removing investment and regulatory barriers. She even paraphrased Benjamin Franklin on behalf of economic liberalization, that those who give up freedom to gain security would lose both. It was a relief to know that, after Gerhard Schröder’s provincial populist act (and reincarnation as a bought-and-paid-for Gazprom apparatchik), the leader of the world’s third-largest economy and Europe’s most important country actually understands Germany’s global responsibilities. Hope may spring eternal, but it can also wither fast: Merkel’s delivery was as dull as used soap suds, her ruling coalition seems to excel only at political dysfunction, and her strangely self-satisfied country may never embrace liberal economic vision.
As the Russia vignette suggests, Davos is also a place where entire countries advertise themselves. Viktor Pinchuk, businessman son-in-law of former Ukrainian Prime Minister Leonid Kuchma, has been throwing a luncheon gathering that gets bigger each year. This year’s version included panelists George Soros, Bill Clinton (by videolink), former Polish President Alexander Kwasniewski, sitting Latvian President Vaira Vike-Freiberga and Ukrainian Prime Minister Viktor Yanukovich. A back-of-envelope calculation showed that some one-third of Ukraine’s entire gross national product was sitting in the audience. Pinchuk’s push now is for Ukraine to join the European Union, underscored by poll results Kwaniewski rolled out in Davos showing that Ukrainians want it and Europeans, by and large, aren’t opposed.
Davos, of course, is in Europe, but the WEF is no longer a Western club. India came in full force last year, advertising itself all around town and throwing the week’s main party at the closing gala. It was as if to say: Pay less attention to undemocratic China and more to us. India was back in full force this year. As for China, it continues to play a lower key role, partly because it can and partly—or so WEF organizers believe —because the Chinese remain leery of any international gathering over which they have little control. Chinese leaders, alas, still do not really trust any entirely free market. So since China won’t come all out to Davos, Davos has come to China, setting up an office and an annual meeting there.
My richest insight on China each year often comes from Victor Chu, perhaps the largest private direct investor in China as chairman of the First Eastern Investment Group, based in Hong Kong. Last year he advised me that Chinese mergers would expand sharply in the year to come despite growing investment protectionism. Sure enough, they did. This year he told me that businesses would be wise to focus on serving the inevitable lifestyle upgrades that the 400 million-strong Chinese middle class will soon seek, with twenty to thirty million added each year to that category. Chu is investing heavily in tourism, from hotels to guide books to travel agencies. “What Chinese tourists have”, he smiles, “is critical mass. The amazing thing we’re learning about China is this combination of size and speed—a great panda or elephant continuing to run at eighty miles per hour without tripping.”
He also tells me not to worry about China as a potential adversary of the United States. America is more of a model for China, as anyone can see who knows where Chinese elites send their children to university. That said, business is leading him to the Gulf. In the past year, he opened his second office in the region in Dubai, getting the first Chinese banking license there. That was just one sign in Davos of the shift of financial power from the United States to emerging market countries, which last year passed the total economic size of the developing world for the first time.
Davos, then, is useful to many in many ways. For that reason alone, Klaus Schwab will remain in clover for years to come, no doubt. But there is plenty amiss, as well, and this year’s session was not an exception. As with David Frum’s apt criticism of the Iraq Study Group Report, so with Davos: “We can be stupider together than we can be alone.”
Indeed, for all the smarts of the Davos assemblage, their individual insights are often far more enlightening than the public consensus that seems to crawl out from beneath the cuffs and hems of the crowd. In that respect, the most revealing moment this year came in the earliest hours of opening day, before many of the heaviest corporate hitters had rolled into town: the global warming insurgency.
The global warming constituency had already put an early mark on the week by referring repeatedly to the unusually green mountain pastures on the three-hour ride from the Zurich airport to Davos as evidence for the prosecution. Mother Nature, however, called in a surprise witness for the defense: Just a few hours before the conference’s first main event, the biggest snowfall of the year applied a thick, white coat to Davos’ roads and the surrounding Alps.
The organizers’ original intent for the first main session was to lay out the findings of previous brainstorming workshops on various aspects of the globe’s “Shifting Power Equation” for business, the economy, technology and politics. The rest of the week would then be devoted to coming to grips with change. The idea was that after a review of three leading shifts in each of these four areas, attendees gathered in the Congress Hall would electronically choose which they considered most significant.
The earlier, smaller gatherings had gone more or less as predicted. A session I moderated on geopolitical shifts settled on three of generally agreed significance: the relative decline of American power in a more multipolar world; the rising influence of non-state actors; and the emergence of energy interests as a growing force shaping alliances and foreign policy. The other preliminary sessions made similarly solid if not especially novel progress. And then came the insurgency. Protests at the main gathering were strident and numerous, enough so that the moderator, the BBC’s Nik Gowing, added “climate change” to the master list before the tally, even though this issue didn’t fit naturally into the logic of “Shifting Power Equations.” No matter: Some 55 percent of those voting agreed that climate change was the power shift for which the world was least prepared, and would have the greatest impact in coming years.
There were a few public protests that the session had been hijacked. One Indian participant found the whole thing preposterous, unless, she said, “one considers this a power shift of nature against man.” Others took a more philosophical approach. Hilda Ochoa-Brillembourg, chief executive of Strategic Investment Group, uses Davos’ conventional wisdom to calculate “bubbles.” She comes each year to find inspiration to shape her own ideas and writing, but as an investor she usually wagers against Davos groupthink—not a trivial datum considering that this is a woman who looks after $15 billion in assets. (Thus, when Davos-think concluded four years ago that the dollar would collapse, she bet successfully that it wouldn’t and won. There was no such conviction last year, and the dollar fell 20 percent. Thanks to her habit of taking the temperature at Davos, Hilda was ready for it.) By that measure, she sees climate change hysteria as this year’s Davos “bubble.” You don’t argue with Davos bubbles, she advised me; you learn from them. “You aren’t allowed freedom of speech if you disagree with any aspects of the argument”, she observes. “You are considered evil or dumb.”
So while 17 sessions focused on climate subjects, genocide in Darfur got nothing near that level of attention. Iraq was almost an afterthought (mistakenly written off as “just” an American problem). The one session scheduled to discuss the danger of Western failure in Afghanistan was cancelled. And even with Iran getting closer to the bomb, North Korea having one already and terrorists liable someday to gain access, the larger likelihood of nuclear terrorism frying us in oil than of global warming doing the same wasn’t a popular enough topic to capture the crowd’s attention.
If Davos really is the best place (apart from the moon) to view the planet in its entirety, its vista provides yet another disturbing image for some. Davos regulars have increasingly been heard to complain that the conference is drifting toward greater commercialism, though not of a visible, vulgar sort. Even Schwab’s friends contend that he allows the biggest donors to “shape the agenda” and stack the panels. The staff complains that in an effort to give everyone of importance a role, panels are often overcrowded with individuals who are not leading experts in that field. The desire not to offend, they suggest, sometimes precludes picking the most provocative voices. The media is not excused from this critique. Its members rarely cover the event critically, because we all want to be invited back. Two investigative reporters for the Wall Street Journal took a swipe at the World Economic Forum’s corporate governance several years ago, particularly the blurred line between Klaus Schwab’s personal and nonprofit interests. This prompted some changes, but there was no further coverage of that ilk.
Others argue that Davos is too much talk and too little action, prompting, for example, regular attendee Bill Clinton to start a competing initiative aimed at creating real, fundable projects. Aware of that criticism, the WEF has on its home page an ever-present box called “Latest Successes and Achievements.” It lists projects in specific parts of the world that are concerned with improving education and health, fighting hunger and tuberculosis, and generally engaging business in bettering the world. It is an impressive list (you could look it up). Indeed, the most adoring Schwabistas insist that Klaus deserves the Nobel Peace Prize for what he has contributed to the globe. At such suggestions his detractors are struck nearly dumb with indignation, but they should consider giving credit where it is due. Klaus Schwab is no Mother Theresa, but he has invented the mother of all global gatherings, and can be little doubt that the many unique contacts and initiatives that started in Davos have improved the world.
Alas, like most human agglomerations, Davos is less than the sum of its parts. But some of its parts are nonetheless pretty impressive. I left the Alps this year concerned by complacency over Iraq, Afghanistan, Iran and WMD proliferation. I left concerned that while America’s degree of dominance is declining due both to other rising powers and self-inflicted wounds, too many welcome this decline without having given thought to what better organizing force is available to replace American global leadership.
I walked away feeling particularly nervous about the reigning complacency over the health of the global economy. “Even with a U.S. slowdown, it should be another Goldilocks year for the global economy, thanks to encouraging growth from Europe and Japan”, said former Clinton Administration Council of Economic Advisors Chair Laura Tyson at a global economy session. When most of her fellow panelists agreed, I took my cue from Frau Ochoa-Brillembourg and the market swoons that followed Davos: I’m now more worried than ever about an economic shock. I just hope that, whatever it turns out to be, it doesn’t force the cancellation of next year’s meeting. I can’t get enough of those canapés.
At the same time, one walks away tanked up for the year with fat notebooks that brim with insights ranging from futuristic gene and energy technologies to the inspirational dreams of Africa’s best minds. I can’t say how this translates into global leadership, but most of the individuals one meets at Davos are prudent, experienced, caring and some are even wise. Such things never happen on the moon.