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Western Press Review: Davos Forum Spotlights Economic Issues

  • Don Hill

Prague, 25 January 2001 (RFE/RL) -- To say that the world's elite and powerful are meeting at the World Economic Forum in Davos, Switzerland, has become a cliche. It's also true. In addition, the annual gathering -- which begins today -- attracts Western press commentary not only on the forum itself, but also on world economic issues.


The International Herald Tribune's Philip Bowring writes from Davos that a ubiquitous concern there and elsewhere is the likelihood of a U.S. economic downturn. It wouldn't necessarily be a bad thing, he says, because the United States needs a catharsis. Bowring writes: "As the World Economic Forum begins its annual meeting, almost everyone is fretting about a possible U.S. recession and the dangers that poses for the world. But should they be? Recessions are natural events that purge excesses."

The writer also says: "Interest rate cuts that prevent a seizing up of the system may be justified by giving relief to over-stretched households and corporations, but only if there is an end to the credit and consumption binges that [U.S. central bank chairman Alan] Greenspan has permitted. And that necessarily means stagnation in consumption. If Europe and Japan could see the opportunity that a U.S. recession would present for them to stimulate demand without causing inflation, they would help themselves and help the United States achieve its overdue adjustments."


In a new analysis for the Sueddeutsche Zeitung, Jean-Pierre Kapp discusses a report by the UN's International Labor Organization that says one out of three world workers is un- or under-employed. Writing from Geneva, Kapp says: "The United Nations agency warns in its World Employment Report 2001 against a widening 'digital divide' on the global labor market. [Its report] said that at the beginning of the year 840 million people were underemployed and 160 million openly unemployed. Thus, the jobless figure had increased by 20 million worldwide since before the onset of the Asian financial crisis in 1997 and, [the report says,] 'despite strong signs of financial recovery in most of Asia.'"

Kapp writes further: "The report finds that, given its different speed of diffusion in the wealthy and poor countries, the revolution in information and communications technology is resulting in a widening global digital divide." Kapp says this problem must be addressed urgently, Otherwise, he warns, the ranks of millions of unemployed in developing countries -- their ranks swollen by population growth -- will be left irretrievably behind.

From Munich, Nikolaus Piper writes in the Sueddeutsche Zeitung that Davos is increasingly a victim of its own success, no longer attracting only the invited elite. The writer says: "Last year's annual meeting brought an end to the era of exclusiveness." He notes that a year ago antiglobalization demonstrators organized the first protests the economic forum had ever seen, even though their only success was in smashing the windows of the local McDonald's restaurant. Piper adds: "This year, however, the protesters want to be more successful. They are hoping to supply the world with a steady stream of dramatic television images from the conference."

Piper writes: "The president [of the forum], Klaus Schwab, always makes a point of putting the darker side of economic progress on the meeting's agenda, as well as giving a nod to social and environmental issues. One of the themes of this year's meeting is 'Bridging the Divide,' which alludes to the yawning gap between the winners and the losers in the age of the Internet. But the [forum]," he concludes, "also is looking to build bridges between globalization's drivers and its opponents."


The International Herald Tribune carries a commentary by the chief economist of the World Bank, Nicholas Stern, entitled "Open the Rich Markets to Poor Countries' Exports." He writes: "To enable the poor to share more fully in the benefits of the rapid integration of the global economy, [at the least] rich countries should unilaterally open their markets to duty-free imports from the 48 so-called least developed countries."

"Impossible?" Stern asks. "I think not. Offering poor countries duty-free access for all products will appeal to many people in the rich countries as the fair thing to do. And it would be in keeping with enlightened self-interest. A small number of people in high-income countries would face adjustment costs, but the vast majority would benefit from wider choices and lower prices."

The economist concludes: "Eliminating all barriers to imports from sub-Saharan Africa in North America, Europe and Japan would lead to a 14 percent rise in the region's exports, an annual increase of about 2,500 million U.S. dollars. Liberalizing trade in the face of opposition from special interest groups isn't easy. For some people in rich economies, the transition costs can be high. But governments have the means and obligation to help adversely affected groups adjust to such difficult changes."


In the Wall Street Journal Europe, Belgian economic analyst Johan Van Overtweldt says that his country's appearance of prosperity and leadership is somewhat exaggerated. He writes: "This was supposed to be a great year for Belgium. The country chairs the euro group, which brings together the finance ministers of euroland. Starting in July, it takes up the presidency of the European Union itself. Better yet, a forthcoming annual report from the national bank will almost surely endorse Prime Minister Guy Verhostadt's view that Belgium has returned to Europe's top league of economic performers."

Van Overtweldt cites impressive statistics to bolster the assessment: strong gross domestic product growth -- outperforming the euro-zone average -- declining unemployment rate, a balanced budget, reduced national debt to production ratio.

The writer then splashes on a dose of cold reality. He writes: "Alas, the whole truth does not end there. Despite Mr. Verhofstadt's liberal instincts, economic success continues to elude the country. Belgium traditionally only outperforms the industrialized countries' average growth rate by a narrow margin and does so for short periods of time."

"In fact," the commentator goes on, "Belgium does not seem to have any meaningful autonomous growth capacity. The country fares relatively well if the European economy is growing, but quickly goes down the drain when the general picture worsens. In the euro zone, only Spain was hit harder than Belgium during the 1993 recession."

Van Overtweldt says further: "Belgium may no longer be 'the sick man of Europe' that it was in the early 1990s. But this does not mean that its economy has become structurally healthy. And given that Germany, France, Italy, and the Netherlands have all embarked on more or less substantive tax reform, Belgium's competitive disadvantages will get worse. Unless this government becomes philosophically coherent, 2001 will not, after all, be such a great year for Belgium."


France, too, is looking good economically, writes Philip Stephens in a commentary for the Financial Times. But it, too, has a worrisome dark spot, he says. Stephens writes: "There are moments in a nation's political life that come to be seen as turning points. A discernible but reassuringly murky trend suddenly emerges with brutal clarity as a decisive dislocation. Historians may judge that that is what happened to France at the European Union summit in Nice [last month]."

The writer cites evidence that, in his words, "the French economy, if not quite booming, is blessed with robust growth: Unemployment, down. French industry, confident and competitive. Trade account, in surplus. Job-creation rate, unmatched."

Stephens says further: "All the more striking, then, is the crumbling of political confidence -- above all the perception that the Nice summit marked a terrible defeat." The commentary continues: "There was no sign of the deference that France has come to expect of its neighbor [Germany]. The Franco-German relationship was important, [German Chancellor Gerhard] Schroeder intimated, but it could no longer be exclusive. The new Europe required a more complex patchwork of alliances. And Germany would assert its interests."

Stephens goes on: "What worries French policymakers now is that the difficult personal chemistry between [French President Jacques] Chirac and Mr. Schroeder coincides with a fundamental shift in Berlin's perception of its interests. The new Germany is making new alliances. Where it profits from a closer relationship with Britain, it is taking the opportunity."

Moreover, the commentator says, "what is changed is the fundamental assumption that has shaped Europe over four decades. The 'construction of Europe,' as the French like to call it, is no longer an essentially Franco-German enterprise. Berlin has claimed a bigger voice and, in the process, invited others to do likewise. [British Prime Minister Tony] Blair has joined a menage a trois [that is, a household threesome]. No wonder France's political elite is feeling glum."