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Risks, Misperceptions and Globalization

2 Low-Key Forums Survey the State of the World

DAVOS, Switzerland, JAN. 31, 2004 (Zenit) - The annual meeting of economic and political leaders in Davos saw Europe and the United States making peace after the divisions caused by the war in Iraq. The five-day talkfest that ended last Sunday was generally low-key and saw no major protests by anti-globalization groups.

No one major idea dominated the meeting. The theme chosen, "Partnering for Security and Prosperity," was developed in seven subject areas: ensuring global security; promoting global growth; managing new risks; building corporate resilience; spurring innovation, harnessing the diversity of values; and reducing inequity. Over 2,200 participants were subdivided into more than 250 sessions, including workshops and interview-style panel discussions.

Before the meeting Klaus Schwab, executive chairman of the World Economic Forum that runs the annual meetings, explained: "I think we have to accept that we are living in a world of much higher risk." In an interview published Jan. 21 in the Wall Street Journal, Schwab identified a number of factors that have increased risks: the imbalance between industrialized and developing countries; monetary imbalances with the fast increase in value of the euro; and three very high U.S. deficits (trade, fiscal and foreign exchange). An objective for Davos was "to see how those risks could be reduced without surprises or major chaotic situations for the world," Schwab said.

Opposing views emerged at the meeting's first session on the economy. Merrill Lynch International chairman Jacob Frankel said the world is entering a "synchronized global recovery led by the United States," according to an article published Monday on the Newsweek Web site. But Morgan Stanley global economist Stephen Roach was pessimistic, worrying about the current U.S. account deficit and what he saw as a weak American economy.

Numerous political leaders also addressed the gathering. Those present included Pakistani President Pervez Musharraf, Iranian President Mohammad Khatami and Turkish Prime Minister Recep Tayyip Erdogan. U.N. Secretary-General Kofi Annan and U.S. Vice President Dick Cheney also gave major speeches.

Pakistan's president called for increased efforts to bridge the gap between the West and the Islamic world. Musharraf recommended an "enlightened moderation" that rejects extremism and focuses attention on the socioeconomic development of Islamic countries, according to a Jan. 23 press release by conference organizers.

Musharraf added that two "dangerous misperceptions" have spread about Islam: first, that it is being targeted by the West; second, that it is a religion of extremism, militancy and ignorance. The actions of a few extremists should not be regarded as being supported by the whole faith, Musharraf observed.

Cheney in his address last Saturday concentrated on political themes. The U.S. vice president noted a number of positive developments in the fight against terrorism: the capture of Saddam Hussein; the adoption of a democratic constitution for Afghanistan; and Libya's decision to stop its weapons of mass destruction program. Cheney warned, however, of the continued threat from a sophisticated global network of terrorists.

Call for more ethics

With corporate scandals on both sides of the Atlantic still fresh in mind, Davos also addressed business ethics, the Associated Press reported Jan. 25. "We have an environment in which fraud and malfeasance have destroyed jobs and assets, while chief executive pay goes up year after year," William Parrett, chief executive of audit firm Deloitte Touche Tohmatsu, told a panel discussion.

But many conferees warned that imposing additional laws in order to govern companies is not enough. Robert Diamond, chief executive of the British firm Barclays Capital, said companies also need to ensure they hire CEOs of integrity.

Meanwhile, Davos participants, who traditionally favor globalization, expressed concern about its consequences for jobs. "They question whether the increasingly global economy will produce as many high-wage jobs in rich countries as once was expected," the Wall Street Journal noted Monday.

Globalization advocates argue that when jobs in richer nations are lost to lower-wage developing nations, in turn this will mean more opportunities for workers to move up to higher-skilled positions. But recently an increasing number of skilled, white-collar jobs are moving from rich nations to developing countries. Estimates of U.S. service workers whose jobs have been outsourced vary from 250,000 to 500,000, which could just be the beginning.

Zhu Min, general manager of the state-owned Bank of China, suggested that the United States needs "to reposition itself. Manufacturing is gone; services are going. Research and development is still there. [The U.S.] needs to move up the [development] chain."

In the Feb. 2 issue of Time magazine, Michael Elliot observed that while a year ago Davos was marred by poisonous U.S.-European relations, this year the mood was "sweet and satisfying." He noted that Cheney even praised the "old continent" and said that America "wants the strongest possible Europe."

A parallel forum

Half a world away, and at the opposite end of the ideological spectrum, the World Social Forum held its gathering this year in the Indian city of Mumbai, formerly Bombay, from Jan. 16-21. This year's meeting was shifted from Porto Alegre, Brazil, in an attempt to involve a greater number of Asian participants.

Starting in 2001 the World Social Forum has held a meeting in parallel to Davos, in a move to provide an alternative focus for anti-globalization forces. The events in Mumbai drew around 100,000 people, BBC said Jan. 21. Topics at the meeting included opposition to the U.S.-led war in Iraq, Third World debt, trade arrangements, and the fate of India's lowest caste members, the Dalits.

Among the speakers were José Bové, French farmer and noted anti-globalization activist; Joseph Stiglitz, a former World Bank economist who wrote "Globalization and Its Discontents"; and Arundhati Roy, an Indian novelist.

While everybody in Mumbai was clear about what they are against -- "capitalism, imperialism and George Bush" -- it was more difficult to say what "precisely they are all for," the British newspaper Guardian noted Jan. 17.

In fact, noted the Guardian, a major split developed between the "left and extreme left." This led to the organization of a rival conference, titled Mumbai Resistance 2004, organized by groups who claimed that the forum has been "co-opted by capitalism." The Hindustan Times on Jan. 16 quoted one of the organizers of the rival meeting, Rona Wilson, saying: "We want to sharpen the struggle against imperialist globalization and war."

A post-meeting analysis published Wednesday by the Guardian judged that "the common thread running through every argument was of the struggle of the powerless against the powerful."

The same article observed that while the Davos meeting focused on how to generate more growth and resources in order to fight poverty, the Mumbai gathering emphasized more economic and social justice first. This division will no doubt continue. But at least this year both meetings were free from the violent protests by anarchical groups that have marred past gatherings.


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