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World: Davos's Smooth Surface Ruffled By Controversy

  • Breffni O'Rourke

The World Economic Forum is under way in the Swiss alpine resort of Davos today (Thursday), in an atmosphere unusually laden with controversy and recrimination.

Davos, 27 January 2000 (RFE/RL) -- For the first time in the history of the World Economic Forum, troops of the Swiss Federal Army are guarding the outskirts of the exclusive resort high in the Alps of eastern Switzerland.

The forum, which brings together scores of top economists, political leaders, business leaders and other thinkers, has been held in Davos for the past 30 years to consider global economic issues. This is the first time the Swiss army has been in attendance.

The troops, along with scores of heavily armed police, are in readiness for the possible arrival of demonstrators determined to express their opposition to the concept of economic globalization.

Globalization, or the increasing interlinking of the world's national economies through the spread of multilateral businesses, is the favorite theme of the World Economic Forum. The concept has been growing more controversial since the spectacular collapse of the Southeast Asian economies several years ago. That collapse was blamed largely on sudden capital flight from the region, made possible by one of globalization's main principles: the free movement of capital.

The controversy burst into the public arena most recently in December, when the World Trade Organization's ministerial meeting in Seattle collapsed amid recriminations between the developed and developing world over how to share the world's trade wealth.

Outside the conference hall, in the streets of Seattle, thousands of anti-globalization demonstrators staged often-violent protests. They said that globalization undermines national environmental and labor standards, as well as local traditions.

The fear of another Seattle is what has brought the Swiss army to Davos. Big demonstrations here are not very likely, however, because of the difficulty of access through the narrow mountain roads, which are being watched by the authorities. Any large group protesters would be stopped before reaching the town.

But the fight is going forward on another level. A coalition of non-governmental organizations, or NGOs, has called on the forum to open itself up to more participation by groups that are not now part of the elite circle of business and politics.

The groups say this would prove that the forum in fact embraces the aim that its founder and chief executive, Klaus Schwab, said it is intended to promote -- namely, "the spirit of free enterprise to really benefit mankind."

The NGO coalition has invited Schwab to address them this week during the forum. Speaking on the forum's televised news service today before the forum opened, however, Schwab said that he believes NGOs are already sufficiently represented in the forum structure, and that he does not plan to increase their presence.

Schwab vigorously defended the forum from charges that it is just a rich man's club.

"What we are doing here in Davos at the World Economic Forum is to integrate very much the social, human and environmental dimensions into our discussions."

Schwab, a Swiss economist, has consistently defended his credentials as someone who cares about where the world is going. He said:

"In some ways we try [at Davos] to act as the social conscience of the world economy."

Adding to the sharpness in the atmosphere at this year's forum is a report appearing in a major economic newspaper, the "Wall Street Journal," today, suggesting that Schwab's private interests overlap with his forum duties. The forum is a non-profit organization, and some staff members are reportedly worried about what the paper calls the "web" of Schwab's overlapping personal and professional interests, particularly when it comes to the forum's profit-making subsidiary initiatives.

Another development affecting the tone of the Davos meeting is the latest attack on the international financial community by Joseph Stiglitz, the outgoing chief economist of the World Bank. The outspoken Stiglitz, who is attending the Davos forum, leaves the World Bank next week, and he obviously feels free to say what he really thinks. Already in Davos last year, he was intense on the subject of the negative effects of modern economics on the poorer people of the developing world.

This time, in comments from Rome to the International Herald Tribune, Stiglitz said the poor nations are being cut out of the economic decision-making process, even though they must suffer the consequences of those decisions.

And he also reiterated his disapproval of Russia's privatization process, which he said had gone ahead without a sufficient legal framework and thus had encouraged asset stripping, leading to a huge drain of money out of Russia.

Such brutally frank comments are not the self-congratulatory fare that is usual at Davos. But all in all, they seem to fit the mood that is building at the forum this year.