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World: Forum Showed No Economic Crisis

  • Breffni O'Rourke



The World Economic Forum in Davos is over for another year. Correspondent Breffni O'Rourke reports from the Swiss resort that the conference discussions had a calm tone that reflected the lack of any major global crisis.

Davos, Switzerland, 1 February 2000 (RFE/RL) -- The prominent participants have already helicoptered out of the Alpine resort, or their limousines, some in convoy, have headed down the snowy roads to the outside world, following a week of debate about the economic and political directions the world is taking.

The forum this year was enlivened by the brief visit of U.S. President Bill Clinton, the first such visit by a serving U.S. leader. There was much serious debate as usual about the merits and pitfalls of globalization, the controversial process of integrating the world economy.

But this year, for the first time in several years, there was no sense of crisis about the forum. The state of the world could hardly be called good, as the scourges of war and pestilence still oppress so many people. But nevertheless, there is no major economic calamity in progress, such as the sudden collapse of the Southeast Asian "tiger economies" that caused furor at a previous Davos meeting, nor an active Russian crisis, nor an impending catastrophe in Latin America.

Davos veteran Stanley Fischer, the second-in-command at the International Monetary Fund (IMF), marveled at how different the situation is from a year ago. He said the Asian countries are in the midst of a deep-seated recovery, with South Korea performing remarkably, followed by Thailand. Even Indonesia, still beset by political problems, has stabilized, and China and India have stayed the course.

Fischer said that Europe, after a slack period, is poised for growth, while the United States, is enjoying what he called "blistering" growth. Only Japan, mired in recession, remains a dark spot. Overall, said Fischer, the picture is happier than could have been expected a year ago.

The IMF official didn't have much positive to say about Russia, but he also said nothing too severe. He merely noted that it is not up to the IMF to get Russia out of the mud; the Russians themselves must do that.

As one would expect, Russian Finance Minister Mikhail Kasyanov put a rosier glow on things, pointing to further expected economic growth in his country this year, tolerable inflation, and the increasing stability of the government process. But even he admitted that the improvements in Russia are very fragile, and could easily be reversed.

So in the absence of a real economic crisis to wrangle over, discussions at the Davos forum turned more than usual to issues like democratization. U.S. Secretary of State Madeleine Albright noted the spread of democracy around the world during this generation. But she said that, in many countries, the arrival of democracy has been accompanied by falling living standards, such as in the former USSR.

Albright said that in those countries, daily life has gotten harder in the past decade, and many people have come to equate democracy with inequality, insecurity, and the unraveling of the social fabric. She said there is a risk that the public will lose confidence in elected government. She also noted that corruption was viewed as a byproduct of less centralized control.

Albright said that to reverse this negative perception, more people in more countries must be helped to become full participants in the global economy, so as to raise their living standards. As for corruption, she said democratic institutions provide the tools by which, over time, the habits of corruption can be curbed and its practitioners exposed.

Taking up a related theme, U.S. Treasury Secretary Lawrence Summers talked about the links between the spread of the free market and the rise of the new technologies of communication. He said it could not be an accident that in the same decade, both Soviet-style communism and large U.S. business corporations run by command and control methods had hit a "brick wall," as he put it, and had to be restructured. He drew a link between the new economic decentralization and the growth of the new information technologies. Today, the treasury secretary said, it is incentive-based systems which work, rather than the old control system.

Summers, a rather mournful-looking economist not much given to joking, recounted a tale about the rapidity of the spread of the new technologies. He said that little more than a decade ago, in the United States, he had taken a ride in a car fitted with a telephone. That was such a novelty at the time, that he had called his wife to tell her he was phoning from a car. Just eight years later, in 1997, he was in a canoe on a river in the bushland of West Africa. Someone had handed him a cell phone, and on the phone was the treasury secretary of that time, Robert Rubin. Rubin had a question on a U.S. budgetary matter.

That's how small the world has become in the span of just eight years. At that pace, who knows what the next eight years will bring.

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