Kenny to join business, political elite in Davos

Wed, Jan 25, 2012, 00:00

WORLD ECONOMIC FORUM:THE WORLD’S political and business elite are, in the German-speaking world, known as the “upper 10,000”. This evening, Taoiseach Enda Kenny will be welcomed into an even more exclusive club of just 2,000 in the Swiss mountaintop resort of Davos for this year’s World Economic Forum annual meeting.

In a relentless 21st-century world of mobile phones and email, rolling news and Twitter, this wintry setting offers a chance for old-fashioned face-time.

Mr Kenny can lay out Ireland’s stall before political leaders, financiers and executives, to show them Ireland is not only open for business but is making considerable progress with its EU-IMF programme and is more competitive than in recent memory.

Following a prominent Irish absence last year, Mr Kenny can rely on the support of Davos veterans Archbishop Diarmuid Martin and Peter Sutherland, the Goldman Sachs International chairman and former EU commissioner.

Ireland’s return to Davos comes at an interesting moment in the history of the forum, now in its 42nd year.

As the initial shock of the world economic crisis wears off, the forum’s founder, Klaus Schwab, has reminded those in attendance that capitalism must adapt to reflect the changed world around it: a post-Arab Spring, Occupy movement planet.

The forum is throwing down the gauntlet to those present, asking in its first debate today: “Is 20th-century capitalism failing 21st-century society?”

Figures from the Organisation for Economic Co-operation and Development speak for themselves, with the richest 10 per cent of the world’s population nine times more wealthy than the bottom 10 per cent – a gap that has increased 10 per cent in the last three decades.

“We certainly have in the world today a morality gap,” said Dr Schwab. “We have undermined social coherence and we are in danger of completely losing the confidence of future generations.”

For many glitterati, blinded by the blizzard of fresh snow and business cards, his remarks may seem overly pessimistic or hopelessly naive.

But Dr Schwab’s concerns reflect the principles on which he founded the forum in 1971, on which he refuses to compromise.

The Geneva-based economic forum is an independent organisation that does not see itself as a traditional lobby or advocacy group. Its organisers see their annual forum as a place to convene the world’s major stakeholders, extending coveted invitations to the exclusive gathering on the understanding that attendees accept their obligation to make a contribution to society.

For companies and banks, that means more than paying workers and taxes and making a profit. For politicians it means listening as much as talking to people they would not otherwise meet, and considering actions beyond the needs of their own election calendar.

It is a tall order, and the forum’s ideals took a severe hit in the “me-first” years of turbo-capitalism. Today, critics argue, the attendee list stretches the term “elite” to breaking point.

Then there is the risk the daily grind – in particular the shape-shifting world economic crisis – will dominate the agenda and prevent more thoughtful contributions. It will occupy a prominent place in this afternoon’s opening address by German chancellor Angela Merkel.

The invitation reflects Germany’s growing stature in global circles, a role its critics say Berlin is struggling to fill.

Dr Merkel’s speech will outline euro zone reform measures to date and turn up the heat on her EU neighbours to agree to austerity and EU budgetary rules along German lines.

In the plenary sessions, her EU political partners will ratchet up pressure to boost Germany’s participation in the European Stability Mechanism (ESM), the permanent EU rescue fund.

Joining the discussion and seeking reassurance are the money men, who will be looking for signals that Europe’s leaders realise they are facing what IMF managing director Christine Lagarde this week called a “1930s moment”.

On the far side of barriers guarded by 5,000 soldiers, the forum’s critics have gathered to highlight what they see as a self-anointed exclusivity and lack of follow-up.

Will this year be different? Perhaps. From their Swiss mountaintop retreat, EU leaders head straight for their Brussels bunker to haggle over the final details of the euro zone fiscal compact. Parallel to this are the talks over the structure and fire-power of the ESM.

It is horse-trading on a grand scale and Davos offers leaders a private, informal setting, out of the EU hothouse and media spotlight, to listen to each other’s positions and concerns.

There are signs that European leaders, in particular, are beginning to hear the message that Dr Schwab and his team have been ramming home for years: the need for a new, sustainable form of capitalism.

The forum’s Global Risks 2012 report is a sobering read, arguing that problems such as youth unemployment will, if left untackled, eventually pull the rug out from under the western political system.

It is an idea that dovetails with the EU’s own sketchy plans to tackle labour market blockages as part of euro zone reform.

Where better than the World Economic Forum for EU politicians to swap ideas with academics, executives and artists about what needs to be done?