Davos World Economic Forum 2016: Key Takeaways

Davos World Economic Forum 2016: Key Takeaways

The 46th annual meeting of the World Economic Forum at the Swiss ski resort of Davos – a major annual world event – took place on January 20-22.

The book The Fourth Industrial Revolution written by Swiss Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum, has seen light recently. Correspondingly, the theme of the 2016 Davos meeting was «Mastering the Fourth Industrial Revolution».

The annual 2016 meeting brought together more than 2500 participants from 99 countries (the World Economic Forum comprises 140 member states), including 40 heads of state and 14 Nobel Prize winners. The leaders of the United States, China, Germany, Great Britain, France and Italy failed to attend. Vladimir Putin, the President of Russian Federation, did not take part in the event either.

The US delegation was led by Vice-President Joe Biden.

The organizers did their best to focus on the fourth industrial revolution. But life introduced certain changes to the agenda. US, Chinese and some other stock markets fell in early January to dampen the mood of the Forum’s participants and change the course of discussions. The fourth industrial revolution was kind of sidelined to be remembered only to divert attention from hot issues and the upcoming global financial crisis.

By and large, it all boiled down to the following: falling stock markets and the threat of another phase of global financial crisis, prospects for world energy market as oil prices go down, the implications of China's declining economic growth,  the European immigration crisis, terrorism and other security threats, and   climate change. The organizers indicated they wanted other burning issues left out from the main debates. However, they were the subjects of animated discussion on the sidelines, including Syria, the threats posed by the Islamic State, the crisis in Ukraine and the   strengthening of   Russia’s military might.

This time it was much harder than usual to summarize the outcomes of deliberations as the organizers tightened up the already tight closed door policy. At that, media comments provide some clue to what was discussed at various sessions.

Many politicians and commentators called attention to the «rather low» level of representation of Russia in Davos. The delegation was led by Deputy Prime Minister Yury Trutnev. In reality, the level of representation has not changed. During the two previous years, Russian team had been headed by officials holding the same rank. Besides, there were specific reasons for not sending a delegation headed by a higher-ranking official, specifically the economic sanctions imposed by the West against Russia, as well as the general frustration over perceived ineffectiveness of the Forum.

At the same time, Russia has not refused to participate. First, being part of discussions is the way to keep tabs on the situation in world economy, finances and politics. Second, the Davos Forum provides a chance to uphold informal contacts with representatives of political and business circles of other countries. This time the members of Russian team held many meetings to discuss serious issues with their counterparts from the United States, West Europe, China and Japan. Yury Trutnev wears two hats as Deputy Prime Minister of Russia and Presidential Envoy to the Far Eastern Federal District. He was involved in the discussions on giving a new impetus to the international economic cooperation in the Far East and eastern part of Russia. Russia was the subject of the session held under the title «The Outlook for Russia». The anti-Russian sanctions topped the agenda. The session participants were unanimous in their opinion that the punitive measures were detrimental for the both parties and shook the very foundation of the World Trade Organization. The sentiments against the sanctions against Russia were prevalent at the Forum in general.  

The information on Russia provided by US News and World Report attracted special attention. The survey Best Countries (Ranking Global Performance) offers assessments of military and economic potentials. It encompasses 36 countries, including Russia. 

According to the publication, Russia became the world leader in government defense expenditure (4.5 per cent of GDP in 2015). One has a reason to surmise that the rating list prepared by US News and World Report was part of campaign to instigate anti-Russian feelings at the Forum.

In comparison with the last year, the interest towards Ukraine has dwindled. Ukrainian participants were given to know that the debates on the situation in the Donbass are not welcome. Europe has become very tired of Ukraine. Poroshenko pinned his hopes on Christine Lagarde, the Managing Director of the International Monetary Fund (IMF), and US officials. The head of IMF spoke in support of Ukraine to promise it further funding. The decision to grant the next tranche will be taken after the next review on Ukraine is prepared.

The talks between the Ukrainian and US delegations ended up without a definite result. The only thing the US team did was to give promises. Americans said the US would grant a one-billion-dollar loan if Victor Shokhin, the general prosecutor of Ukraine, were dismissed. Washington believes he is involved in corruption schemes. Until now, Washington has been sticking to a piecemeal approach granting no more than 2-3 dozens of millions USD at a time. Only very naïve people could believe it would be generous enough to come up with a one-billion-dollar credit. The proposal to appoint US citizens as heads of Ukraine’s state enterprises is a demonstration of American ingenuity. One should give the devil his due.

Kiev’s requests for financial aid looked funny when Global Competitiveness Report was distributed among the participants.

The Global Competitiveness Report 2015-2016 assesses the competitiveness landscape of 140 economies, providing insight into the drivers of their productivity and prosperity. The Report series remains the most comprehensive assessment of national competitiveness worldwide.

That’s how Ukraine was ranked this time (indicator – place):

- soundness of banks – 140 (the last place);

- financing through the local equity market – 118;

- affordability of financial services – 123;

- availability of financial services – 101;

- regulation of securities exchanges – 135;

- efficiency of institutions – 130;

- total tax rate – 118.

I believe EU officials have become acquainted with this data proving the fact that Ukraine’s finances, economy and management are in dire straits. That’s why the annoying requests for loans were politely rejected.

Comparing the Davos 2016 event with the previous forums, one can come to the following conclusions. First, the international standing of the World Economic Forum has diminished. Second, the United States evidently tried to control the Forum’s work, no matter it has always been a Euro-centric venue for discussions.

Tags: Davos  European Union  Russia  US