Euro, rich-poor gap proved key issues at Davos

EDITH M. LEDERER

Asso­ci­ated Press

DAVOS, Switzer­land (AP) — Europe’s crip­pling debt cri­sis dom­i­nated the world’s fore­most gath­er­ing of busi­ness and polit­i­cal lead­ers, but for the first time the grow­ing inequal­ity between the planet’s haves and have-nots became an issue, thanks largely to the Arab Spring upris­ings, the Occupy move­ment and other protests around the globe.

The mood at the end of the five-day meet­ing in Davos was somber, and more than 2,500 VIPs headed home Sun­day con­cerned about what lies ahead in 2012. Plenty of cham­pagne flowed in this alpine ski resort — but the atmos­phere was flat and the bub­bling enthu­si­asm of some past World Eco­nomic Forums was notice­ably absent.

Despite some guarded opti­mism about Europe’s lat­est attempts to stem the euro­zone cri­sis, fears remain that tur­moil could return and spill over to the rest of the world. And there were no answers to the widen­ing inequal­ity gap, but a mount­ing real­iza­tion that eco­nomic growth must include the poor, that job cre­ation is crit­i­cal, and that afford­able food, hous­ing, health care and edu­ca­tion need to part of any solution.

Just before the forum began, the Inter­na­tional Mon­e­tary Fund reduced its fore­cast for global growth in 2012 to 3.3 per­cent from the 4 per­cent pace it pro­jected in Sep­tem­ber. Many other eco­nomic fore­cast­ers also pre­dict a slow­ing econ­omy, includ­ing New York University’s Nouriel Roubini, who is widely acknowl­edged to have pre­dicted the crash of 2008 and who said he might be “even slightly more bear­ish” on the new IMF forecast.

Asia is expected to remain the engine for global growth though at a slower rate, with China lead­ing the way at more than 8 per­cent, fol­lowed by India and Indonesia.

IMF Man­ag­ing Direc­tor Chris­tine Lagarde warned that the euro­zone cri­sis is not the region’s prob­lem alone.

“It’s a cri­sis that could have col­lat­eral effects, spillover effects, around the world,” she said. “What I have seen, and what the IMF has seen in num­bers and fore­casts, is that no coun­try is immune and every­body has an inter­est in mak­ing sure that this cri­sis is resolved adequately.”

The IMF is the world’s tra­di­tional lender-of-last-resort and Lagarde is try­ing to increase its resources by $500 bil­lion so it can help if more lend­ing is needed in Europe or else­where. Euro­pean coun­tries have said they’re pre­pared to give the IMF $150 bil­lion, but that means the rest of the world will have to come up with $350 billion.

At a clos­ing panel Sun­day, Paul Pol­man, CEO of Unilever, said a read­just­ment in Europe is essen­tial “because, if you want to really sim­plify it, we’ve lived above our means, and we’ve done that for too long, and the moment of truth has arrived.”

Vikram Pan­dit, CEO of the global bank Cit­i­group Inc., said the euro cri­sis “is cost­ing us about 1 per­cent in GDP around the world. You do the math. You do the math and say: ‘How many jobs is that? How many peo­ple are not work­ing because of that? What can we do to go after the biggest ques­tion we’ve got for this decade which is jobs?’”

The world needs 400 mil­lion new jobs between now and the end of the decade, not count­ing the 200 mil­lion needed just to get back to full employ­ment, so “that should be our num­ber one pri­or­ity,” he said.

To keep the spot­light on jobs and poverty at the forum, the Occupy move­ment that began on Wall Street and spread to dozens of cities around the world set up a protest camp in igloos in Davos. They demon­strated in front of City Hall.

In a sep­a­rate protest, three Ukrain­ian women were arrested when they stripped off their tops — despite tem­per­a­tures around freez­ing — and tried to climb a fence sur­round­ing the invitation-only gath­er­ing hold­ing ban­ners say­ing: “Poor, because of you” and “Gang­sters party in Davos.”

Citi’s Pan­dit said to cre­ate the con­di­tions for growth, eco­nomic uncer­tainty must end and that means quickly resolv­ing the euro­zone cri­sis, end­ing reg­u­la­tory uncer­tainty, and get­ting the pub­lic and pri­vate sec­tor together to build infra­struc­ture that can cre­ate jobs.

Unilever’s Pol­man said it’s unac­cept­able that more than 1 bil­lion peo­ple are hun­gry every day while another bil­lion are obese.

“How do we pull up the peo­ple that are excluded from the work force, at the bot­tom of the pyra­mid?” he asked. “That we haven’t quite fig­ured out yet.”

Sheryl Sand­berg, CEO of Face­book, said the Inter­net sec­tor has been cre­at­ing hun­dreds of thou­sands of jobs and to keep up inno­va­tions in tech­nol­ogy “great sci­en­tists” need to be edu­cated all over the world, invest­ment in infra­struc­ture is crit­i­cal, and reg­u­la­tions must not sti­fle growth or access.

Nobel eco­nom­ics lau­re­ate Peter Dia­mond, an eco­nom­ics pro­fes­sor at the Mass­a­chu­setts Insti­tute of Tech­nol­ogy, said in an Asso­ci­ated Press inter­view that in the U.S. there is “an unem­ploy­ment cri­sis,” espe­cially among young peo­ple who aren’t accu­mu­lat­ing expe­ri­ence. He said the gov­ern­ment should fix the Social Secu­rity sys­tem, fix aging infra­struc­ture, spend on research, and start fix­ing the edu­ca­tion system.

When the forum opened, its nor­mally upbeat founder Klaus Schwab said he remained a deep believer in free mar­kets but that cap­i­tal­ism is out of whack and needs to be fixed “to serve soci­ety.” He wel­comed crit­ics’ ideas of how to fix it — includ­ing from the Occupy pro­test­ers, though they walked out of a side event where a rep­re­sen­ta­tive had been invited to talk.

This year for the first time, the forum invited about 60 “Global Shapers” — young lead­ers under 30 — to the forum to try to address issues con­fronting the gen­er­a­tion that will be run­ning the world in decades to come.

Among the younger gen­er­a­tion also at Davos were Chelsea Clin­ton, daugh­ter of the for­mer U.S. pres­i­dent and present sec­re­tary of state, who mod­er­ated a panel on phil­an­thropy and phil­an­thropist Howard Buf­fett, son of War­ren Buf­fett, whose foun­da­tion focuses on pro­mot­ing agri­cul­ture and fight­ing hunger, espe­cially in Africa.

The pos­si­bil­ity of Iran devel­op­ing nuclear weapons was among top con­cerns at Davos this year. There were also sev­eral follow-up pan­els on the Arab Spring and a ses­sion mod­er­ated by Schwab with Israeli Pres­i­dent Shi­mon Peres and Pales­tin­ian Prime Min­is­ter Salam Fayyad, which demon­strated the deep divi­sions over get­ting peace nego­ti­a­tions back on track.

But although the con­flict in Syria — where the U.N. esti­mates a crack­down on anti-government pro­test­ers has killed some 5,400 peo­ple over the past year — came up in the Arab Spring pan­els, it wasn’t a hot issue.

Julia Marton-Lefevre, direc­tor gen­eral of the Inter­na­tional Union for the Con­ser­va­tion of Nature, said that this year for the first time at Davos “the envi­ron­ment is not treated so much as sep­a­rate topic, which I think is a good thing.”

“We are mov­ing towards a more inte­grated approach to the world’s chal­lenges,” she said. “Envi­ron­ment is not a side issue, it’s really a part of every­thing. For me, of course, nature is a life sup­port sys­tem — and finally it is being rec­og­nized as being a part of the solution.”

Posted by AP News on Jan 29 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.