Neither the last two days of the renowned gathering in Davos brought a revolution to the world in social, political, and economic terms. On the contrary, the ideas were mostly exhausted and known.
Alongside the problems of Greece, which continue to shake the world, not so much due to the effect as due to the broader implications it carries, Davos this year served to cement the rift between the West and the East, or rather to establish the growing dominance of the latter. The Chinese simply informed the world that they would conduct their economic policy as they see fit, showing that they are not at all concerned about the demands of their Western counterparts.
The West, on the other hand, has not yet tired of itself, so they used Davos for further wrangling over possible financial system reforms and shaping the world of the future, still believing that it is enough to apply a little makeup to make everything alright again. On Saturday, the head of the IMF, Dominique Strauss-Kahn, had his five minutes and made several statements. First, he warned against excessive reliance on consumption as a source of growth, but all the pondering over the past two years has failed to determine on what exactly capitalism should grow.
After that, he supported the idea of merging the G20 with the IMF administration, a concept proposed by Mervyn King, the governor of the Bank of England, but rejected the proposal of French President Nicolas Sarkozy to direct taxes taken from the financial sector towards combating poverty. There is no need to overdo reforms. Instead, Strauss-Kahn says, let that money be found at home. His organization has gathered, in line with its new role, a series of reports from various parts of the world, and after a cursory glance, Strauss-Kahn announced that many might be disappointed with what they contain. According to him, growth expectations exceed realistic possibilities.
Bankers, quite predictably, vigorously began to reject the wild attacks of the furious mob thirsting for innocent blood and interpret how regulation of their business would more or less mean the end of banking and the world as such, and given the level of compliance that could be seen in Davos, the media are already inclined to declare the flushed bankers the winners of this round.
The last day did not offer any more memorable statements or events, and the summary is that the Chinese did not consider Davos a particularly important event, but rather just a good place to flex their muscles. They had the largest delegation to date, but lacking in ‘heavier’ names. The peak of disdain was the speech of the possible successor to Prime Minister Wen Jiabao, Li Keqiang, who in his speech avoided any major issue troubling the West, thereby actually saying a lot. If one sentence were to be drawn about this year’s Davos, the mutual avoidance of the East and the West would likely be at the center of that sentence.
In the technical part, the bickering in the Western camp continued on Sunday regarding the financial sector and restraining the crazed financiers, with Larry Summers, director of the U.S. Economic Council, representing President Barack Obama and his concept, which, as could be read from Summers’ relatively disinterested appearance, increasingly leans towards the old habit of unilateral problem-solving. In Obama’s plans to muzzle the financial sector, there is still no mention of a multilateral approach, but given the absence of any common denominator, that is not surprising. Just waiting for the Europeans to agree on what they want would likely take until 2020, as it is known that Europeans can only reach a consensus when it comes to smoking bans.
This American approach, judging by the end of Davos, may have once again yielded a good outcome. After prolonged deliberation, the world decided that there is actually no problem with the ‘Volcker Plan’ (the main point is to strip banks of the right to use their money for speculation) and that it is not difficult to simply integrate it into everything that the Financial Stability Board, the body entrusted with the difficult task of regulating the financial sector globally, is already doing. In the end, they concluded that in their diversity they are stronger, which means that a series of measures can function at the national level without the need for alignment, while some fundamental issues need to be agreed upon at the global level. In other words, it is important that the heart is in the right place. (Vanja Figenwald)
