Ngaire Woods

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Friday, January 27, 7pm

Last year at Davos after getting through all the security into the enclave of the privileged few, I was taken aback when the first person I met said `the thing about Davos is that you get to meet people from all walks of life’. But I’m starting to understand what he meant. `Davos gives us a chance to see world leaders in the flesh, to hear them speak, and make a judgement of them’ said someone else this morning. On stage today was President Lula of Brazil exuding the good humour and political judgement which has won support from initially reluctant big businesses. The first year Lula was invited to Davos, he insisted on first going to the alternative World Social Forum in Porto Alegre – and on making (and being seen to make) the same speech in both venues. The dash from the noisy anti-globalisation protests in a big dirty city, to the champagne-drinking pro-globalisers in a quiet Swiss ski village must be dizzying. Others this year are following Lula’s lead. Mary Robinson, former President of Ireland and former UN Human Rights Commissioner is now President of the Ethical Globalisation Initiative. She has dashed here from Nairobi (where this year’s Social Forum is taking place). Her message is `be inclusive’ – build bridges to the activists meeting in the alternative forum. But is that a good idea? Intuitively it sounds nice. But might it pre-emptively dilute pressures to change out-of-date institutions?

In a discussion of institutions for the twenty-first century, the theme was raised. It struck me that commentators were leaping too quickly for a search for `consensus’. Sometimes in politics or business, you need a challenger - and a process of challenge – for things to change. Compare global trade and global finance. In trade negotiations developing countries have rebelled, forming a Trade Ministers G20. This has forced the European Union, Japan, and the United States to face up to the US$260 billion they spend on agricultural protection. It has not led to a consensus but it has shifted the middle-ground. By contrast, in international finance the politics have been different. Emerging economies did not rebel. They were invited to the top table and absorbed into a Finance Ministers G20. This took the heat off negotiations on IMF reform. Unsurprisingly change is occurring in tiny and timorous steps.

Aid came under scrutiny this afternoon in a panel which reminded me that at Davos, as elsewhere, you can predict what people will argue by asking yourself what stake they have in the argument. Bill Gates - donor of millions- made an eloquent case for the successes of aid, highlighting one hundred million lives saved. Bill Easterly - previously a relatively unknown World Bank official who has shot to fame through his ferocious critique of aid - predictably argued that 40 years of aid has not produced growth and does not work. Ellen Johnson Sirleaf -President of aid-needy Liberia - highlighted that aid can work but donors need to listen harder to governments. Cheekily, Fareed Zakaria finished the panel by asking Paul Wolfowitz - World Bank President and former Bush administration architect of US policy towards Iraq - to reconcile his current project (getting the World Bank to fight corruption) with his previous project (transforming Iraq) given that Transparency International rates Iraq as having become the most corrupt country in the world. There was no real answer to that one.

Thursday, January 25

You quickly come to realise that half of Davos is here to do business. To quote a top international banker I ran into on the street: “I come here to sell, and I just sell and sell all day long. It’s exhausting.”

Davos is - for international business - what a New York street corner is to a man with a bag full of watches and sunglasses. Not surprisingly the participants at Davos are fervent supporters of international trade. Just today the International Business Council lamented the stalemate in global trade talks on behalf of all of their members. They unanimously announced their support for free trade and liberal markets.

It is a mainstream view here at Davos that all countries should liberalise and open up their markets to global business. I heard Ecuador and Bolivia being persuaded of this over coffee this morning. But other private conversations I have had here at Davos today nuance that argument.

One of my partners at lunch is one of Dubai’s most successful businessmen. He reminded me that Dubai is home to 23 per cent of the world’s cranes at the moment. Not bad for a population of 1m. Not bad for a country which has not joined the WTO (they plan to in 2011). They have also postponed any free trade agreement with the US.

But surely their success will stop when oil prices drop? Apparently not. Dubai’s income is made from logistics, real estate, tourism, and only 7 per cent from crude oil. They do not want to sign a free trade agreement until they are ready. The United Arab Emirates (of which Dubai is a part) views the idea as the equivalent of selling all their family heirlooms and best businesses in a car-boot or yard-sale. Their eyes are firmly on how they can work to attract some of the $3,000bn investment income which McKinseys say will be generated in the Gulf over the next twenty years. They want to sell from a boutique, not a bargain basement. Perhaps we can afford the trade talks to proceed slowly.

Privatisation came up again this afternoon. A South Africa Executive explained to me the immense pressure that country has been under to liberalise its ports and its rail infrastructure. At present these run profitably and without government subsidy. But the company running them is in government hands. This is unfashionable, and very frustating for global companies who see an excellent purchasing opportunity. But privatising ports and railways is not necessarily a recipe for greater efficiency or success.

Nigeria sold off a port for a $1bn to a large shipping company which has subsequently pushed up its tariff (to all but its own ships) by some 1000 per cent. Thinking harder about governance in these countries it must surely be better for countries with weak governance (like Nigeria) not to take a $1bn pay-off (who knows where that might go) but rather to hold onto a constant income stream for which (one hopes) the government will be required more and more to account to its own people. But that is highly unfashionable thinking here at Davos.

The overall tone this year definitely has two contrasting notes. As another Oxford participant, Ian Goldin, put it the sessions in which economists and investors speak are full of good news, optimism, and economic growth projections. The sessions about politics and security are gloomy and desperate. None more so than this morning’s session on Iraq. Coming out of the Conference Hall, I spoke to a businessman who noted how much it contrasted with the hope and optimism of last year’s Davos session on Iraq – a contrast all the more immediate for him since his son has been serving in the US military there.

Wednesday, January 24

Snow outside my window in Oxford this morning made me feel I’d already been transported to Davos. Several hours of travelling later, I’ve contributed directly to one of this year’s concerns – climate change. My Davos guide tells me that everyone arriving on flights from London has created nearly a ton of CO2 emissions. The good news is that we can offset our emissions by contributing to an investment in a small hydropower plant in Indonesia. The Salido Kecil project promises to replace greenhouse gas emitting power generation, ensuring that cleaner air in Indonesia offsets the clouds of CO2 swirling around Heathrow and Zurich airports (details are on www.davosclimatealliance.org).

With my scholarly hat on, I hope such projects will also avoid problems which in the past have plagued the building of dams in the developing world: involuntary resettlement (people forced away from their land or livelihood to make way for dams); corruption (virtually endemic in construction contracts associated with dam projects around the world); and misalignment with the priorities of the local community whose cooperation will be needed to build and maintain the dam (is this project the priority of the local community?). These kinds of concerns are not the bread and butter of Davos, but they are raised quietly across the discussion tables in the elegant hotels, and more noisily in the `Open Forum’ debates run by a group of NGOs and churches in a local school hall – one of the only events open to the general public.

Back at the glitzy end of proceedings, a second big theme in the Davos schedule this year is `the new philanthropy’. Faced with serious shortcomings in the way poverty, disease, and humanitarian emergencies are being dealt with – corporations are stepping up to the plate. Bill Gates is out front. Many are joining him. Just this morning an investment banking friend emailed me from Davos to let me know about the corporate partnership she is building between Citigroup and the World Food Programme (a United Nations agency which coordinates disaster relief). They are launching an Emergency Network for corporations to donate goods and services ahead of global disasters (their base this week is a tent in the middle of Davos). This kind of injection of the resources, dynamism and client-focus of successful business has potential for foreign aid and emergency relief. The obvious risk is that well-intentioned groups will rush in without enough heed to what actually works and why it works.

Some well-intentioned efforts can be disastrous – such as shipping grain to Tsunami-stricken areas without realising that inland farmers could still produce grain and shipments would wipe out their livelihoods. Health officials tell me they spend hours persuading new corporate philanthropists not to rush into doing the wrong thing. But governments and multilaterals have not always got it right in the past. Key is for both groups to learn from one another as well as from scholars and researchers who have studied and documented past successes and failures.

The Davos aspiration is to open up lines of communication – all the better to leverage what each knows best. We’ll see this week how that works out - starting at breakfast tomorrow - with insurers, bankers, and the corporate sector debating how they can better work with governments to distribute risks associated with natural disasters.

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