The Hindu Business Line : Of global climate change and power shift

Davos without snow would be like the Sahara without sun. When I drove up last weekend to the ski resort in the Swiss alps, this is what I saw. It finally snowed that night, blanketing the streets and surrounding mountains, and making the place look like Switzerland instead of Swaziland! But that did not take away any of the urgency of the climate change discussion that emerged as the centre of this year's Davos agenda of the World Economic Forum on the go as I write this.

Global Power Shift

The first set of session in Davos around the Forum's theme of global power shifts, a kind of popular uprising took place. I was in one of the working groups that met to discuss different drivers in the global power structure such as geopolitics, technology, and so on. And then we gathered in a plenary to draw final conclusions. The plenary was to be augmented by wireless polling technology to add a democratic flair. But as they stood up to review the findings, several `insurgents' said that they rejected the conclusions being offered. Clearly, they said, the world's greatest power-shifting force is global warming.

This left many people somewhat baffled. While all of us acknowledge the importance of the issue, I am not sure if all of us feel it would reshape global power any time soon. Whatever the reason for their revolt, participants — all CEOs and political leaders and statesmen — succeeded in placing global warming high atop the list of drivers of change.

Global Economic Outlook

The panel discussion on 2007 Global Economic Outlook drew a standing-room crowd with Laura Tyson, Jacob Frenkel, Min Zhu and Montek Singh Ahluwalia at the head table. I was impressed by those panelists' insights. While most of the panelists favoured the prospect of a soft landing, there was at least one who insisted a hard landing might be inevitable. Whether soft landing, hard landing, or even no landing, the toughest challenge is the unbalancing, and the gap is becoming wider and wider that could take the form of a growth recession or an outright recession.

However, the panel members agreed that there is complacency in financial markets and under-pricing of the geopolitical and economic risks in the global economy, including the risk of a backlash against globalisation. Worries about the growth of debt, credit and credit derivatives were also expressed by the panel members. Nuclear terrorism was of the recurring themes.

New Look at Power Shifting

The key message that the five-day meeting of the 2007 Davos Forum delivered was the essence of the rich ancient Vedic dictum of Vasudaiva Kutumbakam — the whole world is one big family! Participants at the Power Shift session agreed that with the inevitable adoption of global localisation and local globalisation, the world is indeed becoming a `global village', they said. Participants agreed that power, economic or otherwise, is starting to shift from developed countries to the developing, or the so called emerging nations such as India, China, and Brazil.

European Role

The star of the first day of Davos was Ms Angela Merkel, the Federal Chancellor of Europe's most important country, Germany. She held the rapt attention of some 1,500 people in the main hall of Davos Congress Centre as she spoke about globalisation, her own experiences, the relationship between the developed and the developing world, and her sense of Europe's role.

Executive Pay

One of the discussion sessions at the Forum was on top management pay, which has been a hotly contested issue. Estimates are that CEOs are now making at least 431 times more than the average worker. While some argued that the pay scales of executive managers have only risen in line with the market, others believed that company profits need to be distributed more evenly. Less controversial, though, was the idea that pay should be linked to performance.

Debates, Dinners, Nightcaps

In a single day, you can go from listening to the charismatic Queen Rania of Jordan to having a serious chat on the fate of the universe and search for life with Astronomer Royal, Master of Trinity College and Cambridge Professor Sir Martin Rees. As a matter of fact, it is quite interesting to experience how ideas are tossed around and injected in the general debate and finally processed by the WEF body.

The party scene in Davos, as always, is at fever pitch. From fondue and raclette parties in smallish rooms crowded with delegates doing the Davos Dip to campari and canapés, then more speeches with wine. I am not sold on formal dinners but they are hard to dodge in Davos. Last night I was fascinated to be at a dinner session on "The Age of the Avatar and Multiple Identities" with Nicklas Zennstroem, Co-Founder and CEO of Skype Technologies, Michael Wolf, President CEO of MTV Networks, Baroness Susan Greenfield, Director of the Royal Institution of Great Britain.

As I walked into the Belvedere Hotel for a Nightcap Session on "Who Am I?", I found in the lobby, a mix of awesome financial and CEO power, celebrities, and just enough has-beens and hangers-on to remind you who the real power players are.

Germany's Focus magazine was hosting a "lobby party" and in one corner stood Michael Porter of Harvard Business School chatting with friends.

In another corner of the room, there was Blackstone's Steve Schwarzman, Lakshmi Mittal and Crown Prince Haakon of Norway. Elsewhere, supermodel Claudia Schiffer stood on a small podium like a queen receiving visitors, who did everything but pay obeisance. And, Jack Ma, Founder of Alibaba Group of China, wandered around the room, looking slightly lost.

Anatoly Karpov, the most successful chess grandmaster of all time, challenged up to 25 opponents to a high-power chess game. He checkmated all in a jiffy!

Frozen Trade Talks

As I write this piece from the snowy Davos, we are just a few minutes away from walking into one of the most interesting session on "Frozen Trade Talks and the Need for Progress," where the Commerce Minister, Mr Kamal Nath, will share the podium with Mesrs Pascal Lamy, Director-General of the World Trade Organisation, Celso Amorim, Foreign Minister of Brazil, Gordon Brown, British Chancellor of the Exchequer, Akira Amari, Minister of Economy, Trade and Industry of Japan, Bill Gates of Microsoft and, last but not the least, Tony Blair, Britain's Prime Minister. But, will Davos 2007 defrost the frozen trade talks?

(The author, a former Europe Director of CII, can be reached by email mohan.murti@t-online.de)