The small ski town of Davos, high in the Swiss Alps, tightens security during the annual meeting of the World Economic Forum, when armed guards sit on hotel rooftops while world leaders and businessmen sip champagne below.
However, today, all that Davos represents – Globalization, liberalism, free market capitalism, representative democracy – It looks like he’s being assaulted.
Over the past half century, Klaus Schwab, the aristocratic founder of the World Economic Forum, has extolled the virtues of an interconnected world, where the free flow of goods, services, people, and ideas leads to shared prosperity and peace. It was perfect vision that has withstood global turmoil, and has found its supporters in the corridors of power Palo Alto, California, to Washington, DC, and from Brussels to Singapore and beyond.
However, the past two years have fundamentally challenged the viability of this ambitious outlook on life.
The coronavirus pandemic has sparked a flurry of isolationist foreign policy moves, exposing the fragility of supply chains and leaving China largely isolated from the rest of the world.
The Russian invasion of Ukraine triggered a land war in Europe and raised fears of a broader global conflict.
Even before the pandemic and war, autocracies were on the rise across the world and internal divisions were straining great powers like the United States.
Now, as Mr. Schwab prepares to chair the first meeting of the World Economic Forum in Davos since the pandemic began, he faces a world that looks very different from the one he’s been trying to conjure into existence for more than 50 years.
said Ian Bremer, a political scientist who has often attended the annual conference. “I think he got it.”
As heads of state finalize travel arrangements and wealthy companies open shop on the Corniche, Mr. Schwab himself seems to understand that the world order as he once envisioned it is, for now at least, more than a fantasy.
We live in a different worldAndHe said in an interview. “Even when we came together in 2020, we had a lot of serious concerns. Now we have two more events that really speed up the gravity of our situation.. “
But while the world may have changed, Davos has not. The annual meeting will feature, as usual, politicians, civil servants, CEOs and non-profit leaders – the kind of distinguished, globe-trotting idealists who launched the term “Davos Man. Issues such as war and Covid will be discussed, along with perennial threats such as climate change and cyber security. Ukrainian President Volodymyr Zelensky will give a virtual address to other heads of state.
The only thing that will be different is the outside temperature. The annual meeting is usually held in January. But after the forced increase of Covid cases Cancel at the last minuteThe World Economic Forum has rescheduled it to late May. This means that there will be no snow on the ground, but the risk of boring and constant rain is real.
“My biggest concern is actually the weather,” said Mr. Schwab.
Nothing challenges Davos’ view more directly than Russia’s invasion of Ukraine.
While Moscow has been a strategic adversary to the United States and Europe for years, economic ties between Russia and the West have also been deep. Hundreds of multinational companies had large operations in Russia, and Europe emerged as a major importer of Russian oil.
Vladimir Putin’s decision to invade Ukraine, while based on a set of faulty assumptions, also exposed the fact that Western leaders fundamentally misjudged the Russian leader.
“It’s not at all logical or explainable to me,” said Mr. Schwab, who said he met Mr. Putin in late 2019 in a failed attempt to persuade the Russian president to come to Davos and deepen ties with the West.
Now the war is forcing even the old champions of globalization to reconsider the limits of free market capitalism as a means of promoting global harmony.
“One of the big ideas of the World Economic Forum was that shared economic prosperity would bring the world more together,” said Rich Lesser, global head of the Boston Consulting Group. “I think this is a much bigger challenge, unfortunately, than we had hoped.“
Indeed, the war itself demonstrates—as well as the unwillingness of other major nations, such as China, India, and Brazil, to stand behind Ukraine—that the world has never been as cohesive as some idealists might like to believe.
“The reality is that these countries are basically misaligned because of their political systems, their economic systems and also because of their relative wealth,” Mr. Bremer said.
The World Economic Forum has played the role of a peacemaker before. In 1988, Greece and Turkey signed the so-called Davos Declaration, marking a new era of improved relations between old adversaries.
But this year there will be no talks between Ukraine and Russia in Davos. In fact, there will be no Russian at all.
Whereas in past events oligarchs like Oleg Deripaska rented luxurious chalets and hosted lavish parties, Mr. Schwab made the decision not to have a Russian delegation at this year’s meeting. Mr. Schwab not only prevented Russian government officials but also all Russian citizens from attending.
This decision could in itself undermine Davos’ reputation as a place where all voices can be heard. “This is a place where everyone is invited, right?” Mr. Bremer said. “And now, all of a sudden, it’s not like that anymore.”
Mr. Schwab said he hoped that would change. “When we cut ties, I reached out and said at the same time, ‘The forum is open to building bridges at any time in the future,'” he said. “We’d like to be a bridge builder.”
It is unclear when that time might come. With the end of the war not approaching and other global alliances shifting, questions loom over whether the war was an isolated conflict, or the beginning of a broader realignment of global powers.
“It is much more complicated than just going to another country and causing destruction,” said Dambisa Moyo, a Zambia-born economist and author. “Of course it’s horrific. But I think the broader question is whether this is going to be a conflict that we’re revisiting and we think was a much more motivating event, in terms of the division of the world and the collapse of globalization.”
“Best story out there”
Even as the war in Ukraine shows the limits of Davos’ world view, many still believe in the benefits of an interconnected economy.
“I basically think globalization, the presence of people, ideas, goods and services moving faster and faster across borders, is what makes you a global middle class over the past 50 years,” Mr. Bremer said. “This is the best story out there.”
Statistics show that the number of people living in extreme poverty globally has declined sharply in recent decades, while access to electricity, clean water and nutritious food has steadily increased.
“Globalization has helped millions and millions of people out of poverty,” said Mr. Schwab. “Maybe in an unbalanced way because some countries have benefited from it, others less.”
However, even proponents of globalization recognize its limits, noting that there are deep and systemic problems all over the world, even in the wealthiest nations.
“If there was such a thing as the Davos Woman, I think I would cut it short in some ways,” said Ms. Moyo. “But clearly there are a lot of problems in Western economies, from underinvestment in education, to healthcare costs, to lack of infrastructure.”
However, Mr. Schwab said the need for multinational cooperation is becoming increasingly urgent.
He said, “Global cooperation related to overcoming our global challenges is absolutely necessary, because we depend on each other. “
This is especially true when it comes to tackling climate change. Although most countries of the world have pledged to rapidly reduce greenhouse gas emissions, Few of them seem to be on the right track to achieving their goalswhich means that global temperatures will likely continue to rise.
And with the effects of the war in Ukraine spreading abroad, experts warn of a looming food crisis that could stretch from Africa to South America, unleashing more social unrest and mass migration.
“The hungry are angry people,” said Mr. Schwab.
fragmentation of the world
In a world that can feel like it’s moving apart, Davos is one of the few places where power brokers from a wide range of sectors and geographies gather en masse.
“It is really the only irrigation gap where public policy, business and civil society come together,” said Ms. Moyo.
And while many of the executives present may prefer to cut deals from their hotel suites, policy makers and nonprofit leaders are likely to focus on How to prevent a wider escalation of the war, the looming food crisis, the rapid realignment of world powers and the coming years.
“For a group of people, it only takes five days to make as much money as possible because they are masters of the universe and they watch other masters of the universe and they meet every 30 minutes and make deals,” Mr. Bremer said.
“But for those people who really think about Davos’ role in the world, what will be talked about is the new Cold War, the forced separation of Russia from the West, the amazing alliance of the United States and Europeans” He said.
Although Mr. Schwab stopped short of calling it the new Cold War, he did say that we face the prospect of “the fragmentation of the world”.
“It’s basically the result of the aggression against Ukraine,” said Mr. Schwab. “We risk that the world will split into a multi-power system. We have different philosophies and ideologies. Even within countries we have a polarization not seen 10 or 15 years ago.”
However, these observations reflect a world that may have existed only in the minds of the regular attendees at Davos. Even as globalization united distant economies with a common set of snack foods, cell phones, and banks, hundreds of millions of people continued to live in poverty, many countries suffered from underinvestment, corruption remained rampant, and polarization was growing even within great powers such as the United States. United. States.
Today, with Covid and the war in Ukraine exacerbating these trends, there is a danger that right now we need global solutions to our greatest common challenges, there are fewer and fewer places where all sides can come together.
This means that there is a risk that the World Economic Forum – with Russia barring, isolating China and the potential for more global turmoil in the future – is not actually a forum for the whole world.
“That’s not what Klaus wants,” Bremer said. “And frankly, that shouldn’t be what any of us want.”