Fiasco at Davos


There is not even an iota of doubt that the World Economic Forum (WEF) 2007 that opened with much fan fair at Davos, a well known mountain resort in Switzerland, ended in a fiasco. For five days (24-28 January) 2400 participants from as many as 90 countries
(among whom there were 24 heads of states or governments and 85 cabinet ministers, besides religious leaders, media magnates, representatives of NGOs and, of course, the bigwigs from the corporate world) put their heads together to produce something concrete and inspiring but utterly failed. This was simply because the contradictory viewpoints defied reconciliation.

Incorporated as a foundation in 1971, WEF and its guiding star Prof. Klaus M. Schwab, with full backing from the Swiss government have been trying their best to usher the developing countries into a global system, dominated by western corporations. The underlying philosophy is the same as that of the Washington consensus. What the World Bank stated in a document relating to India on the occasion of the Davos meet made it crystal clear. It underlined that the salvation of India lay in promoting private sector-led growth, improved macro management, greater integration with the global economy and flexible monetary and fiscal policies.

German Chancellor Angela Merkel inaugurated the Davos meet. She was invited to do so because she is president-designate of G-8 countries’ summit that is to meet in coming June in Heiligendamm (Germany). She promised to do her utmost to strengthen the terms of global investments in de eloping countries. In her own words, “For all countries, economic growth remains the precondition to achieve more employment, a higher standard of living and higher productivity.” Economic growth in developing countries requires investments that can be had only by inviting the foreign corporations to invest. The salvation lies in getting as much foreign direct investment as possible and for this such terms and conditions need to be offered to them that can induce them.

The theme of Merkel’s speech was “growth and stability”. She cautioned against unrestrained growth because there was a danger that it might endanger climate. Climate protection was equally important, which was to bring maximum efficiency and care in the choice and use of the sources of energy. She was optimistic about the co-operative response from the USA, in spite of its unwillingness hitherto to do anything concrete for tackling the issues like global warming and CO2 emissions. Relying on President Bush’s pledge during his state of the nation address to bring down the gasoline consumption by 20 per cent over the next 10 years, she said to the WEF: “I am hearing signals from the U. S. that are more hopeful than those of the past years.” She categorically ruled out the expansion of G –8 to include China, India and Brazil on the ground that these countries had very different priorities on issues such as carbon emissions and development.

Merkel stressed the need to revive the Doha round of trade talks and propel it to a successful conclusion. To that end, the talk between 150 member-nations and the WTO must start immediately in a spirit of accommodation. She wanted the European Union, the USA and developing countries to be flexible in their negotiations. To quote her, “We now have a time slot to make progress in the talks. The chance for success is undoubtedly there.”

The final document issued on the conclusion of the meet tried its best to cover up its failure by expressing optimism about the resumption of the Doha round without adducing any concrete grounds. The Financial Times (January 29) had this to say about it: “The Doha round of trade talks juddered back to life over the weekend, with leading countries expressing enthusiasm for clinching a deal but giving few details about how it would work.” The only ground for optimism was that around 30 ministers of trade present in Davos had instructed their officials to prepare an agreed framework to deal with differences relating to agriculture.

The next three months are crucial as regards the future of the Doha round. Even while attempts were on to cover up the fiasco at Davos by highlighting so-called agreement on the Doha round of negotiations, two typical statements were heard. France, an important member of the European Union, came out strongly against any deal on agriculture that could reduce export subsidies. He did not want European farmers to be exposed to competition from abroad. The second statement came from Rachid Mohammed Rachid, Egyptian trade minister, who said: “This is the third Davos meeting of trade ministers in succession that has had the same talks and still nothing has happened.” The USA, the European Union and other major trading countries made only a vague commitment to save the Doha round from failure. The USA and the European Union publicly blamed each other for the failure of the Doha round of trade talks. They also clashed with developing countries over slashing subsidies and tariffs especially in agricultural sector. Pascal Lamy, the Director General of the World Trade Organization, elaborating the minimum requirement to resume trade talks, said: “There will need to be a new U. S. offer on farm subsidies. There will need to be a new European Union offer on tariffs. There will need to a new offer from India and Brazil on manufactured goods.” In the absence of any indication that these offers were round the corner, Lamy was not in a position to say about the likely timetable for revival and conclusion of the Doha round of trade negotiations.        

It seems everything hinges on the Americans. People doubt their sincerity and seriousness about taking the Doha round forward. In this context, the following comment by The Economist (January 27) is quite relevant: “The optimism turns on two magic numbers: 17 and 54. If the Americans cap their trade-distorting farm subsidies to $17 billion a year, the Europeans might try to cut their agricultural tariffs by 54% or thereabouts. Neither number has appeared in a formal offer….”

On Africa’s poverty, the prominent agri-business corporations like Monsanto and Du Pont wanted Green Revolution a la India to be applied. In other words, the reliance on new seeds, new skills, chemical fertilizers, pesticides, more credit and integration with the global market was the panacea. Surprisingly, no one looked at the consequences that have followed Green Revolution in India. Large-scale suicides by farmers and growing inequalities were ignored. Hardly anyone mentioned the miseries of African cotton growers unable to export their produce because of the subsidies by the U.S. government to its farmers so that they can outbid others.

This time there were hardly any noisy protests by anti-globalization people at Davos as most of them had gone to Kenya to take part in the World Social Forum. However, in spite of strict security measures including barricades and barbed wire, one person – Iuemmel Lemmon—on January 26 could enter the venue with an anti-WEF placard. He sat peacefully in the front row displaying his placard!

Though India sent a strong contingent of 100 people, the meet was dominated by Europe and North America. Corporate sector representatives were all the time lobbying and striking deals with government people. What they could really achieve will be clear in the coming months and years.

 

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