The big names of business and politics have come together in one small corner of Switzerland for the annual meeting of the World Economic Forum. swissinfo.ch’s Matt Allenexternal link is in Davos to follow developments on the ground, while our newsdesk in Bern will keep you up to date on the day’s stories.
--> 18:00, January 24: Until next time…
And so it’s the end of another World Everything Forum (I have long thought the actual title to be a bit of a misnomer) in Davos. For a journalist and the public I think it acts as a useful barometer to where we actually are in fixing problems and “improving the state of the world” (as WEF wants to do).
I remember some of the most feisty debates I ever attended in Davos took place in 2009 surrounding the financial sector. Bankers, regulators, economists, central bankers and politicians tore strips out of each other on the subject of how to regulate the system better to safeguard against another crash. It seemed obvious to me then that bank regulations would take a few more years to sort out.
Judging from the comments of one US billionaire (who flew into Davos in his private jet with family and two nannies in tow) that the middle class should rein in their living standards aspirations, I would not expect to see much early movement on the issue of unequal wealth distribution. Oxfam expects the richest 1% to own half of the world’s wealth by the end of next year.
I would expect a much more robust and better coordinated international fight against terrorism in the coming months. France, the country that opposed the Iraq wars, has now called on the world to join them at the front line and put an end to long-standing conflicts, such as Syria.
Will mega-banks start to break up under regulatory pressure as predicted by some media or will Europe find a solution to its ongoing economic problems? If the debates are anything to go by, there is too much conflict of interest and opinion to make much headway in the next 12 months.
On a more positive note, we may well see a significant and meaningful global approach to carbon emissions this year, which could over time herald the dawn of a new public-private drive into green energy technologies.
In the meantime, delegates will be hedging their bets on tomorrow’s Greek election, a significant event that could go some way to shaping the future of Europe and the euro.
Until next time.
Matt Allen in Davos
--> 17:30, January 24: Talks on talks
In an informal meeting on the edge of Davos, Swiss Economics Minister Johann Schneider-Ammann led talks between 21 members of the World Trade Organization. They agreed to try and finish talks that started in Doha, Qatar in 2001.
The main topics still on the agenda for these discussions include agriculture, industrial products and services.
Schneider-Ammann said they were all aware that 2015 was to be an important year, adding, "It was the clearest commitment today I ever had before (seen)."
--> 16:05, January 24: A peaceful protest
Around 50 protestors gathered in Davos on Saturday; activists from Amnesty International, the Davos Greens and the solidarity campaign for 43 missing Mexican students, were among them.
“Even though we are few, we stand for a lot,” said the protest organiser Henning Zierock, president of the German organisation, Culture of Peace.
Zierock added that they wanted people who would be affected by decisions taken at Davos to be consulted, and not only spoken about by an elite group.
--> 14:55, January 24: Counting the Women
A topic that’s becoming more and more a part of the WEF meeting is the representation of women at the Alpine get-together. While the Davos meeting is on, a number of high-profile discussions on gender equality also take place in the panels and seminars.
First of all, let’s start with the numbers.
The percentage of women attending this year has risen 2% on last year. Fortune magazine spoke to one woman CEO who went to the WEF meeting in Davos in 2012 and 2014. Barri Rafferty, the CEO of Ketchum North America, told the magazineexternal link, “When you are in [those] social settings, often people assume that you are someone’s wife”.
Winnie Byanyima, executive director of Oxfam International and expert on women’s rights, co-chaired this year’s meetingexternal link in Davos. One panel she took part in was the BBC World Debate: A Richer World, but for Whom? Watch it here:
During this debate Christine Lagarde, managing director of the International Monetary Fund (IMF), spoke about her interest in equality over the years.
Why we should invest in women in order to address wider issues came up at a different event, where Melinda Gates, co-chair of the Bill & Melinda Gates Foundationexternal link was on the panel.
As for improving the future for girls, who could grow up to be the next businesswomen and world leaders taking part in the WEF meetings of the future, here's Erin Ganju, CEO of Room to Readexternal link, an organisation which helps educate children in Asia and Africa.
Overall, some participants were left with the feeling that the WEF meeting is still a man’s world, despite the discussions about womenexternal link at the meeting and in general.
-->14:00, January 24: Seeking THE green solution, NOW
Amidst the talk of currencies, economies and unfair wealth distribution at Davos, WEF has also given a platform to the climate agenda this week.
The United Nations has put the climate and sustainable development to the top of its list of priorities this year, culminating on a make-or-break summit in Paris in December to thrash out the terms of a global carbon reduction agreement.
Former US Vice-President and long-time environmental campaigner Al Gore set the scene on day one with a presentation outlining both the enormous damage that global warming is wreaking on the planet and hope driven by advances in green energy technologies. “This is the year of the climate,” he told delegates.
UN Secretary-General Ban Ki-moon then took up the baton, praising an historic global agreement reached in September to cut carbon emissions by 20% by 2040. In July countries head for Addis Ababa to thrash out a financing mechanism for sustainable development. “With these [events] we can set our life and world on course for a better future,” Ban Ki-moon said at Davos.
All these efforts will converge on Paris at the end of this year with French President François Hollande notably spending as much time on climate issues during his special address on Friday as on the fight against terrorism.
“Paris needs to resolve in a binding global agreement that will map out an effective fight against climate change,” he said. “The time is past when human kind thought it could selfishly draw on inexhaustible resources. We know now that the world is not a commodity, it’s not a source of revenue. It’s our heritage.”
Perhaps delegates at next year’s Davos will be talking about the climate in an entirely new light.
Matt Allen in Davos
-->11:00, January 24: crossing the Ts & dotting the Is
It’s nearly a wrap on a frenetic four days in Davos. Saturday is traditionally wind down day, as evidenced by a nearly empty media tent this morning.
But there are still a few nuggets to be squeezed out of this year’s event. This is the day that WEF experts put their heads together and gaze into a crystal ball in an attempt to unlock what we can expect from 2015 – mainly in terms of economic outlooks.
Swiss Economics Minister Johann Schneider-Ammann will be hosting some WTO talks behind the scenes, hoping for some sign of clear progress in the interminably long global trade negotiations. It’s perhaps best not to expect too much.
At around the same time WEF protestors will be allowed near to the congress centre for the first time (world leaders having already left) to voice their frustrations at continued economic malaise and increasing wealth inequality.
Matt Allen in Davos
-->20:00, January 23: Close of play, day three
* Chinese dotcom entrepreneur Jack Ma treated Davos to his unorthodox life story and breezy style of delivery. From being rejected for a job at Kentucky Fried Chicken, Ma has battled his way to the top. His company Alibaba became the biggest IPO on Wall Street last year.
* WEF now enjoys the same legal status as NGO heavyweights the United Nations and the World Health Organization. It was officially upgraded by Swiss Foreign Minister Didier Burkhalter in a ceremony today.
* France President François Hollande gave a feisty address, urging the world to get together to combat terrorism following the Charlie Hebdo attack earlier this month.
* He was followed by US Secretary of State John Kerry who offered some graphic descriptions of terrorist atrocities last year. But the world is fighting back, and making some progress, he told Davos.
* A WEF fringe annual institution, the Public Eye Awards, bowed out at Davos with its last side swipe at misbehaving corporates. US oil giant Chevron won the dubious distinction of picking up the last ever award today.
* Again on the sidelines, Swiss Energy Minister Doris Leuthard said she would renew talks with the EU next week at Switzerland joining a harmonised European electricity market. Former EC President Barroso broke off talks after last February’s Swiss referendum to restrict immigration. Leuthard hopes for more success with Barroso’s successor, Jean-Claude Juncker.
* Finance Minister Eveline Widmer-Schlumpf had better news, strongly hinting that a Chinese bank could soon set up shop in Switzerland – an essential prerequisite to Switzerland achieving its ambition of becoming a RMB trading hub. Watch this space for the China Construction Bank, she said at Davos.
Matt Allen in Davos
-->16:00, January 23: snowmen stand in protest
WEF-goers have been greeted by a field of 193 snowmen - one for every country in the world - built by the action/2015 organisation to call for action on poverty, inequality and climate change this year. Here's how they were built.
--> 15:30, January 23: tongue-in-cheek
Petroleum giant Chevron has gotten what's probably the least desirable award at WEF: the Public Eye Award, designed to call out corporations for deplorable behaviour related to human rights and environmental practices. Chevron gets the extra-special privilege of being the last company that will ever receive the award. More below.
--> 14:30, January 23: the nation of WEF
The atmosphere in Davos can be a bit other worldly at times, so I suppose it’s no surprise that the Swiss government has decided to name the World Economic Forum as a quasi-nation.
On the fringes of Davos today, Swiss Foreign Minister Didier Burkhalter signed a document that acknowledges WEF as an “other international body” under the 2007 Host State Act.
It sounds a bit like the Vatican, but what does all this mean? It confirms and underlines a number of advantages that have been conferred on WEF: tax breaks, the ability to run its own operations and finances free from state interference and the freedom to employ as many foreigners as it likes.
The latest symbolic act puts WEF on the same status as the UN, Unesco, WHO and CERN. In return, WEF has agreed to cooperate with the Swiss authorities on certain unspecified diplomatic activities.
Matt Allen in Davos
--> 12:00, January 23: paying respects
The big news among the Davos delegates this morning involved paying respects to Saudi Arabia’s King Abdullah, who died last night. He was considered by many to be among the world's most powerful individuals.
But he's not to be confused with his Jordanian counterpart.
Jordan’s King Abdullah, who was planning on speaking at a WEF forum on Middle East security on Friday afternoon, departed Davos early for the funeral of the deceased Saudi monarch, who is believed to have been about 90 years old. Other Arab delegates also left early.
Among the Davos delegates to pay their respects was International Monetary Fund head Christine Lagarde.
But amid ongoing reports of discrimination against women and human rights abuses in Saudi Arabia, her comments didn't go down easy on social media.
Other news this morning: French President François Hollande's speech has been pushed back to 2:15 p.m. CET and US Secretary of State John Kerry will speak at 4:40 p.m. CET. Stay tuned for their remarks and reactions.
--> 09:00, January 23: Third day in Davos - Fight against terrorism
Welcome to another day of weighty issues being discussed and debated in Davos. Even before the event started, WEF executive Philipp Rösler, said that Friday would be dedicated to the fight against terrorism.
All eyes, therefore will be on French President François Hollande whose address at 11:30 is bound to centre on the Charlie Hebdo attack earlier this month and on France's subsequent response. He will be followed later this afternoon by US Secretary of State John Kerry who may well touch upon the same subject.
It's worth bearing in mind, however, that some civil rights leaders believe that terrorism is often driven by exclusion, poverty and inequality. Such issues have featured prominently at Davos with the message being that the global economy is currently failing too many people.
Finally, the curtain will close today on a WEF fringe institution - the Public Eye Awards that each year name and shame miscreant corporates. The Berne Declaration NGO behind the awards says WEF is no longer a relevant place to give its message. There won't be a dry eye in the house at the WEF conference centre.
Matt Allen in Davos
--> 22:00, January 22: A second day in Davos draws to a close
* The European Central Bank’s announcement of a government bond-buying programme was the big news to come out of Davos today. It was a pledge to buy up those struggling bonds at a rate of $60 billion (CHF51.6 billion) per month until the end of September 2016 and in doing so, help out the Eurozone economy.
* International Monetary Fund head Christine Lagarde said in a panel discussion that the expectation of the programme had an impact before it was actually announced and that “to a point” it had already worked.
* German Chancellor Angela Merkel said in a speechexternal link to the WEF meeting that EU governments have to carry on making changes in their economies to become more competitive.
* On the sidelines of the WEF meeting, the CEO of pharmaceuticals firm Novartis, Joseph Jimenez, commented that they would have to review their cost base in Switzerland since the Swiss National Bank put an end to the franc’s peg to the euro and the franc subsequently appreciated. The company will have to see what could be “relocated abroad” from their Swiss base.
* It was a marathon day for Swiss President and Simonetta Sommaruga:
- Eight private meetings with high-ranking politicians
- Three public events
Sommaruga described the WEF meeting as “efficient” due to the numerous possibilities to meet such a large number of people within such a small place.
And it saves on travel, she said.
That's it for today, we'll be back tomorrow.
--> 17:05, January 22: Tech Mahendra's CEO CP Gurnani gives his views
And so here it is, my interview in Davos with CP Gurnani, CEO of Indian IT services giant Tech Mahindra. The company bought SofGen in Geneva early this year, only to have the strong franc create a strategy headache.
But Gurnani is confident that the newly merged company will come good in the rapidly developing niche market of private banking digital services.
Matt Allen in Davos
--> 16:45, January 22: Stop thinking in European terms
After all this buzz of the European Central Bank throwing money around like confetti, Davos took a look at the other side of the coin: a debate on economic migrants, or people escaping desolate countries in search of a better living elsewhere.
For those who missed the live stream earlier on today, here’s a recap:
Swiss President and Justice Minister Simonetta Sommaruga was on hand to give a perspective of the issue from Switzerland’s viewpoint. Migration is part of Sommaruga’s portfolio, a task made more complicated last year with a Swiss public vote that demanded a brake on immigration.
Sommaruga pointed out that 90% of refugees displaced from war-torn countries go to neighbouring countries, not Switzerland or Europe. With that in mind, Switzerland spends a slice of its migration budget in countries like Jordan, next to Syria.
“Let’s stop just thinking in European terms. We have to help impoverished countries,” she said. “There is always tension and this has been accentuated by the vote,” she added. “When immigration flows increase suddenly then it always creates problems.”
Some 40,000 migrants died last year trying to achieve their dreams, according to William Lacy Swing, Director General of the Geneva-based International Organization for Migration. Some 22,000 perished in the Mediterranean area. Already this year, 5,000 more deaths have been recorded, twice the number for the same period last year.
“Migration is a process, not a problem.” Sommaruga said. “We have to shape it and not let it run out of control.” On the same day that Sommaruga spoke, Switzerland revealed that asylum applications had leapt 11% last year to 23,765. Some 6,199 applications out of 26,715 were accepted by Switzerland in 2014, doubling the acceptance rate of 2013.
Matt Allen in Davos
--> 15:07, January 22: ECB unloads stimulus
Pow! It’s happened. The European Central Bank (ECB) will flood the eurozone with hundreds of billions of euros, creating market volatility and putting further pressure on the Swiss franc.
Davos delegates are busy scrutinising the nitty gritty details on tablets and smartphones (maybe some are also calculating profits or losses). And here they are: the ECB has pledged to buy up struggling government bonds to the tune of $60 billion (CHF51.6 billion) per month until the end of September 2016.
By my calculation that would amount to over €1 trillion of economic stimulus if they go to the wire with that plan. Media last night were speculating around half that figure.
But there will also be winners from the ECB’s controversial quantitative easing programme. Struggling European countries, mostly in the south of the continent, will find a willing buyer for their government debt, allowing them to pay their way.
Italian Prime Minister Matteo Renzi, for example, has been positively glowing at Davos at the thought of so much cheap money coming the way of his country. Germany has been fuming.
And don’t forget, as of today the Swiss National Bank (SNB) will start charging institutional clients (domestic banks, hedge funds etc) to deposit their assets in Bern – as its negative interest rate policy kicks in. However, the franc dropped below parity with the euro moments after the ECB announced its plan.
Matt Allen in Davos
--> 12:00, January 22: Poverty debate
While many Swiss residents are eagerly bagging bargains in the eurozone, record numbers of people are moving north in hope of a better future in Europe and North America. Swiss President and Justice Minister Simonetta Sommaruga takes part in a debate on “the right response to economic migration”.
(From 13:00-14:00, broadcast live in partnership with Swiss public television, SRF)
--> 10:55, January 22: Empty seats
Despite all the recent excitement over currency issues, it seems attendance was poor at this debate, as observed by the economics editor of the Financial Times.
--> 09:30, January 22: Mixed bag on day two
Good morning from Davos. Wednesday was dominated by currencies, central banks and the commercial banking system – with the added news of Switzerland’s Renminbi hub deal with China thrown on top.
The currency issue will continue as a theme today with the European Central Bank poised to announce a massive government bond buying programme that will heap further pressure on the Swiss franc.
But Thursday will offer up a much more diverse range of subjects, taking us on a whirlwind tour from Japan to Europe, Egypt, the rest of Africa, the Arabic world, the BRICS, Latin America and Asia. I have a feeling that many eyes will be on Indian Finance Minister Arun Jaitley this morning. There are more Indian delegates at WEF this year (120) than Chinese, perhaps reflecting the enhanced confidence of India at present.
Matt Allen in Davos
--> 22:00, January 21: Closing out day one
The first day in Davos has drawn to a close. Other key takeaways include:
* UBS chairman Axel Weber praised the Swiss National Bank's move to unpeg the Swiss franc from the euro, criticises lack of EU financial reforms
* The Open Forum Davos sessions, accessible to the public, began with a discussionexternal link on whether religion is a pretext for conflict.
*Italy's Prime Minister Matteo Renzi said the European Union's economic direction needs to change. “Europe and the Eurozone spoke only about austerity. It is important to pay attention to budgets, but it is also important to invest in a new relationship with citizens.”
* Singer Pharrell Williams and former US Vice President Al Gore announced a "Live Earth" concert on seven continents to build support for a U.N. climate pact in Paris among more than 190 nations in December.
--> 19:00, January 21: A renminbi hub dream comes true
In a meeting at the World Economic Forum, Swiss and Chinese finance leaders hashed out a deal to make Zurich the next trading hub for the renminbi currency, as Swiss Interior Minister Alain Berset documented.
With that, Switzerland leapfrogged over Luxembourg, which had also been in the running to become one of just half-a-dozen trading hubs around the world for what many see as the next major global currency. More below.
--> 18:00, January 21: The pitfalls of globalisation
In her opening remarks at the World Economic Forum, Swiss President Simonetta Sommaruga cast a critical eye on globalisation. Speed, flexibility, mobility, efficiency - all are demands of the global economy that seem like benefits at first glance. But not for the workers who are under constant pressure to bend to those demands, the Swiss leader pointed out.
“Are we creating an economic environment in which only high performers working under constant pressure can prevail?” she asked.
“Let’s look reality in the eye: every structural change leaves behind losers,” Sommaruga added. “Many citizens can barely identify with an economy whose scale they can’t even grasp” and are demanding answers from businesses that should have responded to their concerns long ago.
Sommaruga sees solutions in socially conscious companies that value people and profits.
“We need business people who want to earn money but who also want something more,” she said.
At the end of the day, she said, a sound economy comes down to faith in the legal system, protection of human rights and social equality. It’s not enough to defend human rights with a march through Paris like the one in solidarity with those killed in the recent terrorist attacks on the Charlie Hebdo satiric newspaper.
Instead, said Sommaruga, human rights must be defended every day, even away from the glare of the cameras.
--> 17:00, January 21: ECB rumoured to go large
Several media claim to have grabbed a scoop on the European Central Bank’s quantitative easing plans to be formally announced tomorrow: The ECB will splash out €50 billion a month on bonds issued by struggling EU countries, reports claim.
The effectiveness of quantitative easing (flooding the markets with money to boost economic growth) has been the topic of hot debate in Davos today. Some delegates, such as UBS chairman Axel Weber, claim that such measures are meaningless unless accompanied by stringent economic reforms by the countries that will benefit.
Former Bank of Mexico governor Guillermo Ortiz called on central banks to coordinate their efforts in the face of increasingly conflicting monetary policy strategies in different parts of the world. But Arkady Dvorkovich, Deputy Prime Minister of Russia, said such ECB quantitative easing was well overdue.
In the meantime, Swiss exporters and the tourism industry will be nervously awaiting confirmation from the ECB about their plans on Thursday. There might be a few white knuckles in Davos tomorrow.
Matt Allen in Davos
--> 15:00, January 21: Early exit
Ukraine has sent a large delegation to Davos this year to discuss "security, reforms and economics," according to deputy head of the Ukrainian presidential administration Dmytro Shymkiv.
But those plans were thrown for a loop today when Ukrainian President Petro Poroschenko – who had been making the rounds in Switzerland at the invitiation of Swiss Foreign Minister Didier Burkhalter – announced he was leaving early to deal with renewed fighting in his homeland between Russian and Ukranian troops.
Before he left, he explained the situation to Bloomberg TV.
--> 12:50, January 21: TechMahindra frank about franc
I just spoke to CP Gurnani, CEO and Managing Director of Indian IT services giant TechMahindra, who is a bit worried about the soaring Swiss franc – particularly as he just shelled out an estimated $30-50 million for Geneva-based banking IT firm SofGen.
Servicing Swiss banks from within Switzerland is no problem as both expenses and revenues would be in Swiss francs. But SofGen also has clients in Europe, creating a mismatch between franc denominated expenses and euro income.
The Swiss National Bank’s shock decision last week to allow the franc to appreciate against the euro has forced TechMahindra into a period of “reflection” followed by a “realignment” of strategy. What does that mean? Well, if exchange rates continue on their present path, some of the services offered to European banks out of Geneva may have to be moved “across the lake,” Gurnani told me.
On the other side of the coin, Gurnani believes that the soaring franc will give Swiss companies greater spending power, potentially boosting growth. And that would be good news for TechMahindra – that services their IT needs.
Stay tuned for the full interview later.
Matt Allen in Davos
--> 11:50, January 21: Bustling and bursting
The WEF meeting is a feat of organisation and security, not least because of the number of people from around the world who flood into the area for just a few days.
It can be too much for the small town's roads to handle:
And for the skies as well:
--> 10:25, January 21: Swiss cabinet schedule
Four days, seven Swiss cabinet ministers and about 60 bilateral meetings:
After opening the annual meeting with WEF founder Klaus Schwab this morning, Swiss President and Justice Minister Simonetta Sommaruga will meet Li Keqiang, China’s prime minister. It’ll be the first of several meetings with political figures from around the world.
Sommaruga’s cabinet colleagues also have action-packed schedulesexternal link certain to keep their blood pumping in chilly Davos. For example, Environment Minister Doris Leuthard will hold talks on energy policy issues. She’ll also take part in the WEF Energy Summit series.
And on Saturday, Economics Minister Johann Schneider-Ammann will host an informal WTO ministerial meeting on Saturday. He and around 25 participants will discuss progress in implementing measures adopted at the WTO Ministerial Conference held in Bali in 2013.
--> 09:40, January 21: CEO survey
The confidence of Swiss CEOs has plummeted compared to a year ago, according to the PricewaterhouseCoopers annual WEF surveyexternal link. And this study was completed well before the Swiss franc started soaring, throwing the Swiss export scene into confusion.
To be fair, CEOs around the world are feeling less optimistic about business opportunities this year, with the exception of the United States. But the Swiss are feeling particularly grumpy: only a quarter are very confident of growth this year (18% lower than 2014 and well below the 39% global average).
Only Russian and Venezuelan bosses are more pessimistic about economic growth in the next three years. Only Russia (again) and France are more downbeat than the Swiss about global GDP growth in the next 12 months.
But surprisingly, PwC Switzerland head Urs Honegger told me last night that the abandonment of the Swiss National Bank franc-euro peg should make little difference to the sentiment of Swiss CEOs. They are more concerned with external developments, such as the continued euro crisis, problems in Russia and falling oil prices.
“The SNB decision has resulted in an analytical, rather than a panicked, response from Swiss companies,” Honegger said. “They have been through this before [in 2011] when the franc fell in value from CHF1.65 to CHF1.20 against the euro. They survived that and are still in the race.”
“Nothing can prepare a company for a sudden and unexpected rise in the franc, but they all have systems in place to cope with the after effects. They have systems in place to fight the fires.”
Matt Allen in Davos
--> 08:30, January 21: Welcome to Davos
Welcome to Davos at the start of a sprawling four days of international discussions about the most pressing issues affecting the globe. Day one will be dominated by the themes of finance and economic growth as the World Economic Forumexternal link burrows down to its roots.
Last week's Swiss National Bank decision to abandon its defence of the franc has cast a cloud over Davos this year. Executives, financiers and speculators – already reeling from the sudden and unexpected SNB u-turn – are awaiting tomorrow’s anticipated European Central Bank decision to flood the markets with up to €1 trillion.
The ECB quantitative easing programme will be swiftly followed by the Greek election on Sunday, the day after WEF Davos 2015 closes its doors. Will Greece stay in the euro or engineer a ‘Grexit’? The result of the general election could go some way to answering that question.
No better debate to follow in Davos, therefore, than “Volatility as the New Normal” which will ask if safe havens even exist anymore. This debate will be sandwiched between discussions on “The New Banking Context”, “The Rise of Shadow Banking” and “Global Financial Security”.
Matt Allen in Davos