We're in a world with no safe havens left
I have been to Davos eight times in the past 12 years, but this year’s World Economic Forum Annual Meeting in Davos was held against a backdrop of global turmoil unprecedented in the event’s history.
With war in the Middle East, a migrant crisis in Europe, and an economic downturn in China buffeting global markets, we are in a world with no safe havens left.
I identified three major trends in this year’s discussions.
1. Turning inwards
Countries are turning inward to focus on themselves. The US is only looking at the US; Europe only at Europe; the Middle East only at the Middle East. And neither Europe nor the US seems to be willing to tackle the problems in the Middle East.
Here’s an example of what I mean. This year the United States sent a powerful delegation to Davos made up of Vice President Joe Biden, Secretary of Defense Ashton Carter, Secretary of State John Kerry and Secretary of the Treasury Jacob Lew. Nonetheless most discussions about the US tended to focus on the would-be Republican presidential nominee Donald Trump (not present!).
2. Drifting apart
Under these conditions, national political leaders are far too busy troubleshooting at home to make a play for global or regional leadership. Drifting apart is the inevitable result.
Take the European Union. The UK will soon hold a referendum to decide whether or not to withdraw from the union. And despite the EU’s commitment to the free movement of people, many European countries are reintroducing border controls to control refugee flows and exclude terrorists. The EU seems to be drifting apart.
What about the United States? After its failures in Afghanistan and Iraq, the United States has given up on trying to police the Middle East. No one is taking responsibility for coordinating policy on Syria, for instance: different countries are acting independently according to what they see as their advantage. But no one I asked at Davos had a clear vision to guide the region out of turmoil and toward peaceful co-existence. The Middle East, too, is drifting apart.
A similar drifting apart can also be seen in the economic sphere. China - the apparently unstoppable engine which helped pull the global economy out of the 2008 financial crisis - is now slowing as it tries to shift from manufacturing to services, from exports to the domestic market, and from investment to consumption.
China’s slowdown is having a knock-on effect around the globe: its diminishing appetite for commodities caused resource prices to crash last year, putting producer nations under serious financial pressure. Falls in its stock market then caused a global swoon in share prices in January this year.
What really surprised me though was not that Chinese policymakers are fallible; it was China’s response— or rather the complete absence of a response .
Typically when China came under criticism, its spokespeople at Davos were ready with a rebuttal. This year all they had to offer was… silence. Unfortunately, I didn’t think their silence was strategic. I think they were frightened to say anything.
3. Championing technology
The only area where I detected any optimism among this year’s participants was technology. The main theme here was the so-called “Fourth Industrial Revolution”, a new wave of progress caused by the coming together of breakthrough technologies like 3D printing, artificial intelligence, robotics, autonomous vehicles, and so forth.
This convergence appears to be taking place. At the forum, GE’s intention to become “a top 10 software company by 2020” was quoted, and the CEO of Alcoa enthused about how 3D printing and the internet of things have revolutionized his manufacturing processes.
The Silicon Valley “usual suspects” - from Facebook and Airbnb to PaloAlto Networks and Palantir - were all there; other than the United States, I got the impression that India, represented by firms like Wipro, Tata Consulting and Infosys, was the country most fired up about, and in tune with, new technology.
Perhaps the most startling development was the transformation in governments’ attitudes toward technology companies. Whereas last year tech firms were out of favour (for not paying enough tax, failing to hand over data etc.), now the political class sees them as an engine able to make the nations they lead more competitive and innovative, and boost their economic fortunes.
Taking these three trends together, what was my personal takeaway from Davos 2016?
• That we are living in a troubled world where technology plays an increasingly dominant role.
• And that such a world requires leaders of a new kind.
We need leaders who look out rather than in; leaders with the courage to propose multi-stakeholder solutions and build alliances to implement them; and finally we need leaders who use technology to communicate their policies to the people to win their support and understanding at every stage.
SOURCE: World Economic Forum