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Davos 2024: Assessing the Challenge of Restoring Global Confidence

30 January 2024

The World Economic Forum at Davos aptly chose "Rebuilding Confidence" as its slogan, acknowledging the escalating global divisions and the need for sustained efforts towards reconciliation. As the forum concluded on January 19, a pressing question remained persistant: Has confidence truly been restored, or is the world on an extended journey towards attaining this ambitious goal? 

This year's Davos Forum witnessed over 300 public figures, including 60 heads of state and government, engaging in discussions that covered more than 90 political tensions and their global economic repercussions exceeding the value of USD 17.5 trillion, the impacts of global elections, climate challenges, economic disparities, and the impact of artificial intelligence on productivity and labour markets.

Key Issues on the Agenda

The forum's agenda extended beyond economic considerations, reflecting significant geopolitical developments and their global financial, monetary, and economic repercussions. Among the key topics of discussions were the following:

1. Ukraine vs. Gaza:

Political tensions were at the forefront of the forum, with discussions on issues like the Gaza war, albeit being overshadowed by the Russian-Ukrainian conflict – the main topic of discussion since its outbreak in February 2022. The transformation of the Russian pavilion into the Ukrainian pavilion last year, or 'Ukrainian House' as it was referred to, turned the forum into a stage for a global demonstration, fervently supporting Ukraine and simultaneously cursing Russia with a nervousness reminiscent of the medieval wars we see in Hollywood films.

Reflecting on my experiences at the previous two forums, I observed a stark contrast between the intense focus on Ukraine and the neglect of the Gaza war. In prior forums, virtual addresses by the Ukrainian President Volodymyr Zelensky were met with overwhelming applause, even in his absence. However, at this year's forum, President Zelensky's physical attendance seemed to be an attempt to regain momentum, possibly in response to a perceived waining interest and a failure from the West to fulfil their commitments to support Ukraine sufficiently.

Despite the relatively long applause at the end of his speech, his reception was notably cooler than before. Zelensky's attempt to leverage his background as a comedic actor to connect with the audience and break the ice between himself and them was evident. However, the primary focus of his speech was on the Russian President Vladimir Putin, whom he vehemently criticised, labelling him as a 'predator,' 'the only terrorist in the world,' the only person who has taken a nuclear power plant as 'hostage, ' and the sole reason for ongoing global conflicts. Zelensky's speech also included a call for the West to take action against Putin and to seize Russian assets to aid in Ukraine's reconstruction.

On the other hand, the sessions that addressed the Gaza war reiterated the need for conflict resolution, relief, and reconstruction efforts. A notable session with US Secretary of State Anthony Blinken spurred calls for renewed discussions on establishing a Palestinian state as a model for fostering confidence-building and peace. Concerns also were expressed regarding the fate of Palestinians, potential regional conflict extensions, and other geopolitical debates.

2. The potential return of Trump:

The forum scrutinised the impact and role of the upcoming US presidential elections, focusing on potential changes in the American foreign policies and alliances. Discussions also delved into the repercussions of election results on the US economic policies, with an emphasis on market stability and the quality of development policies.

In a private dinner conversation, former President Donald Trump made a bold assertion, stating, If I return to the presidency, I will stop the Gaza war in two days and the Ukraine war in a week.” This statement, coming from a reliable source, has raised concerns about the possible implications of Trump's potential return to power. This subject was a significant point of discussion at the World Economic Forum in Davos.

A. European concerns: Trump's recent victory in the Iowa primary elections, where he secured 51% of the votes, has heightened speculations and worries about the global landscape under a Trump administration. European Commission Vice President Vera Jourova expressed concern regarding former President Trump's potential return to power, suggesting it could embolden Russian President Putin to annex more territory and pose a security threat to EU nations. Echoing these concerns, European Central Bank President Christine Lagarde stressed the importance of European unity and resilience in the face of possible shifts in the global order should Trump return to office.

Other European leaders, including German Chancellor Olaf Schulz, have previously expressed doubts about Trump's candidacy. The European Union, a collective of 27 countries, faced criticism in 2016 for underestimating Trump's election victory, as tensions emerged in trade, NATO, and environmental policies during his term.

B. Chinese maneuvers: The global community is also bracing for the potential implications of a Trump comeback. China, in particular, had to navigate his policies of economic sanctions and custom tariffs during his previous term. Observers note that the anticipation of Trump's return is not just due to a waning popularity of the Democratic Party or perceived shortcomings of other Republican candidates; it is also attributed to a growing acceptance of Trump's political approach among the American electorate.

As the possibility of Trump reclaiming the presidency becomes more tangible, the world finds itself in a state of mixed anticipation and anxiety, contemplating the ramifications of Trump once again becoming a pivotal figure on the global stage.

3. Economic outlook:

Despite being primarily an economic forum, Davos explored the outlook for 2023, 2024, and the near future. Many participants acknowledged a slightly brighter global economic picture than expected, despite high interest rates and inflation, even in the world's wealthiest markets.

Secretary General of Amnesty International, Inés Callamard, expressed surprise at the participants' commitment to such optimism. Economic discussions, beyond optimism, focused on issues like economic disparity, the COVID-19 pandemic's impact, and global economic recovery. Attendees highlighted challenges and opportunities related to post-COVID-19 recovery, focusing on measures to promote growth, enhance economic stability, and reduce income inequality.

German Finance Minister Christian Lindner humorously described Germany, amidst a 2023 recession, as "not a sick man" but "a tired man in need of coffee" in the form of structural reforms to reignite growth.

4. "Climate change threatening millions":

Against the backdrop of 2023 being the hottest year on record, as highlighted by UN Secretary-General António Guterres, discussions underscored the urgency for countries to address conflicts to prevent further temperature increases.

Climate change discussions took centre stage at Davos' sessions held just a month after the UN climate conference in the United Arab Emirates, where multiple stakeholders brainstormed collaborative efforts. The Forum’s debates focused on climate challenges and the need to balance economic growth with sustainability. They included exploring ways to strengthen the green economy, shifting from pollution-contributing policies, and implementing measures to adapt to climate change and reduce emissions.

The Forum issued an important analysis on the climate crisis, underlining its potential to worsen global health inequality and increase vulnerability among marginalised groups. The report, "Measuring the Impact of Climate Change on Human Health," prepared with Oliver Wyman, examined the health consequences of climate change, including deaths, lost healthy lives, and an estimated additional USD 1.1 trillion in healthcare costs by 2050.

Based on Intergovernmental Panel on Climate Change (IPCC) scenarios, the report focused on the planet's average temperature rising from 2.5 to 2.9 degrees Celsius above pre-industrial levels. It identified six major climate-related events impacting health: floods, droughts, heatwaves, tropical storms, forest fires, and rising sea levels. Floods were projected as the highest acute risk, responsible for an estimated 8.5% of climate-related deaths, reaching one million by 2050.

Dehydration, linked to extreme heat, emerged as the second leading cause of death, with an expected toll of 3.2 million lives. Heatwaves were forecasted to incur the largest economic losses, totalling USD 7.1 trillion by 2050, primarily due to productivity losses. Air pollution, resulting from fine particulate matter and ozone pollution, was anticipated to contribute to nearly 9 million premature deaths annually. 

These trends sparked extensive discussions among diverse communities, highlighting the opportunity for decisive strategic actions to confront and mitigate the global health impacts of climate change.

5. "Navigating the complex landscape of artificial intelligence":

Artificial intelligence (AI) discussions played a pivotal role at the Davos sessions, exploring its impact on the future. A notable incident involved a video, purportedly showing a controversial speech at the forum's 2024 meeting. The video's fabricated nature highlighted concerns over AI's ability to generate seemingly authentic content.

In a departure from past years, AI became a dominant topic at Davos, with about 30 sessions dedicated to discussing its role in the economy and society. Feelings were mixed, ranging from fear and apprehension to hope. Unlike previous forums dominated by cryptocurrency discussions, AI took centre stage.

During a session moderated by Klaus Schwab, CEO of the Forum, with Satya Nadella, CEO of Microsoft, the importance of AI education was emphasised. Nadella advised exploring any field and researching how to leverage AI for the greatest benefit.

While some business executives praised AI for enhancing productivity and reducing time and effort on routine tasks, conservatives expressed concerns about its rapid growth outpacing regulations. Such concerns included job displacement and increased misinformation on social media.

Vietnam's Prime Minister Pham Minh Chinh stressed the significance of taking into account humans in AI's impact, emphasising the need for training highly skilled workers. The primary concerns were about leaders and experts using AI to cut costs through workforce layoffs.

The forum also addressed technological transformation, emphasising the need to understand the effects of emerging technologies on cybersecurity. While emerging technologies were acknowledged for addressing cybersecurity challenges, benefits seemed to favour advanced institutions and societies capable of protecting against cyber threats.

"Assessing Confidence and Trust: A Reality Check"

The forum's organisers ambitiously chose "Rebuilding Trust" as their slogan, highlighting its importance in resolving global crises. However, murmurs within the forum suggested a fundamental lack of trust, questioning the feasibility of rebuilding it in such a fragmented global landscape.

Rich Lesser, President of the Boston Consulting Group, acknowledged the unrealistic nature of expecting forums like Davos to rebuild trust single-handedly. Despite scepticism, Lesser saw cross-sectoral discussions—social, private, and public—as a starting point for rebuilding trust.

The forum's diverse agenda revealed significant trust erosion. In the context of war, trust discussions seemed unfeasible. Also, climate change discussions fuelled mistrust, casting doubt on major countries' commitment to climate agreements. Similarly, artificial intelligence disrupted trust dynamics between employers and workers.

The artwork-adorned wall welcoming dignitaries bore the title "Rebuilding Confidence" and featured phrases like "Growth and Jobs," "Climate, Nature, and Energy," and "Cooperation and Security." These buzzwords prompted astonishment and questioning of their real-world existence.

In contrast to the prevalent scepticism, optimism was noted in the forum's corridors. In conclusion, Borg Brende, President of the World Economic Forum, reflected this optimism during the announcement of the Global Cooperation Barometer results for 2024. He highlighted the potential for positive change indicated in the results to be aligning with the forum's optimistic outlook.