The World Economic Forum (WEF) held in Davos, Switzerland from 23 to 27 January 2008 reflected a new urge to analyse the values that underpin globalisation. The summit had Global Climate Change and looming recession in economy at the top of its agenda.

Lack of coordinated response and leadership was billed the single greatest threat to worldwide economic growth by participants at a brainstorming session. The corporate and policy leaders identified nine threats to the global economy in the coming year and a consensus was drawn over the need for the G8 to expand its membership and for effective stimulus for the American economy.

There were pervasive doubts whether the US will continue to be on the driving seat of global economy, given the global market crash and rise of Asia. But America kept its chin up in Davos. Condoleezza Rice, US Secretary of State, in her opening address said, “The US economy is resilient; its structure is sound, and its long-term economic fundamentals are healthy”. Her bold speech also dealt with America’s approach to diplomacy. “America has no permanent enemies, it can be friends with any country that shares its values and believes that diplomacy can make a world where enemies can become friends.”

While participants at a session on the state of the global economy generally agreed that US recession risks are high and growing, they differed over the potential impact on the rest of the world. Kamal Nath, Minister of Commerce and Industry of India, partially differed from the bearish consensus, arguing that the growth of trade between developing countries could cushion the effect of a US slowdown.

Bill Gates, Chairman, Microsoft Corporation called for a “creative capitalism” that uses market forces to address poor country needs that are being ignored. “We have to find a way to make the aspects of capitalism that serve wealthier people serve poorer people as well”.

Challenges of Globalisation

The forum concluded with a call from Tony Blair for new “collaborative and innovative leadership” to address the challenges of globalisation, conflict, climate change and water conservation.

Echoing agreement with Blair’s thoughts, WEF founder Klaus Schwab warned that if the challenges were not addressed then, “even the greatest opportunities will not be enough to guarantee our continuation as humankind if you look at climate change, terrorism, poverty.”

Blair, who co-chaired the five-day meeting, addressed 2,500 global political and business leaders at the exclusive Swiss ski resort. He said, “Globalisation is forcing political leaders to adopt more collaborative approaches. If we are interconnected and the world is interconnected, the only way for the world to work is to have a set of common values. We have no option but to work together.”

Blair also said he expected “an Israeli-Palestinian peace deal and a pact on climate change by the end of 2008.” Sharing his optimism, Nobel Peace Prize laureate Elie Wiesel demanded action on Darfur and Tibet. He made a call “to alleviate the suffering at Darfur in Sudan which has become the capital of human suffering in the world today.” He also received a standing ovation when he said, “I’d like China to open its doors to the Dalai Lama to go to Tibet. That would be a great, great victory.”

Helping Doha Round

Australian Trade Minister Simon Crean said, “The forum gave renewed impetus to the long-running Doha round to open up world trade”. There are still big gaps among rich and poor countries, but ministers agreed to finish the round as soon as possible with revised negotiating texts for agriculture and industrial goods. He claimed “It was a positive outcome from Davos. I’m encouraged by the response and the way that message has been conveyed back here and the momentum that that’s hopefully generated.”

Role Reversal

Ironically the WEF took place against a background of crashing stock markets and panicky interest rate cuts. This was in contrast to Davos a year ago, when the business and finance crowd was celebrating the joys of globalisation while the players in international politics were a bit despondent.

This year the roles reversed. While the financiers were in fear, the politicians and diplomats were calm. There is less bloodshed in Iraq; the chances of war between the US and Iran have receded; Middle East peace talks have begun and the situation in Afghanistan is improving.

In the summit, while the bankers grappled with the movement of billions of dollars across the global financial system, the political analysts were increasingly preoccupied by the way globalisation had been affecting people at the bottom of the pyramid.

Food, Energy and Water

The struggle for food, energy and water came up repeatedly in Davos. One session at Davos was devoted to the prospect of drilling for oil and gas in the Arctic. Eight countries including Russia, the US, Canada and Norway are gearing up to assert their claims over the fossil fuels that lie beneath the melting Arctic ice.

The costs of food and energy are rising fast. The availability of water is becoming an issue, from Australia to Africa. It noticed that globalisation is driving a lot of these changes. The world oil price has risen by 80 percent over the past 12 months and China has accounted for about 40 percent of the increase in oil demand. Global food prices have gone up by about 50 percent in the last 12 months.

The food, energy and water problems all touch on each other. The pursuit of alternatives to oil has led to massive investment in biofuels made from maize. That has cut the amount of maize being used for food production and contributes to rising food prices. The production of biofuels is also very water-intensive. Increased demand for agricultural land to grow more food is leading to the clearing of forests in many countries– which could worsen global warming – leading to further stress on the world’s water supplies.

Agenda-Setting Forum

In its evolution, the WEF is positioning itself as an agenda-setting organisation. As a private foundation that meets regularly with no formal policy making power unlike similar the World Trade Organisation.

The WEF was born in 1971 as a yearly “European Management Forum” of European corporate players funded by the European Commission. Klaus Schwab, Professor of Business Policy at the University of Geneva, chaired the gathering, which took place in Davos. In 1987, the forum changed its name to the WEF in an effort to claim global reach. It now includes the most prominent transnational corporations; over a thousand of WEF Foundation Members. Its members are mostly North American, European and industrialised Asian delegates.

Departing from its early market fundamentalism, the forum in 2008 was all about charting a new course for global capitalism. Enhanced market discipline, proactive crisis suppression and recognition of the social cost of an unchecked world economy were its areas of interest. Simultaneously, the forum is reaching out to Africa and Latin America, left out earlier from its social contract.