For the past two years, the World Economic Forum in Davos has been dominated by fears for the global economy. This year, cautious optimism about the economy has returned. But as economic risk declines, so geopolitical risk seems to be on the increase.

The forum’s deliberations took place against the background of the turmoil in Egypt and elsewhere in the Arab world. Terrorism is also back on the agenda, after the bombing of Moscow airport. And the increasingly tense relationship between China and the US has served as a backdrop to many of the discussions at the WEF.

Davos delegates do not seem to know how to react to events in Egypt. The young people demonstrating on the streets of Cairo are not the kind of voices that are represented at the forum.

The most prominent voice from the Arab world in Davos has been Amr Moussa, the head of the Arab League and a former foreign minister of Egypt. But, in his public appearances, Mr Moussa has restricted himself to bland and generalised calls for “reform” in Egypt and elsewhere in the Arab world. He has also suggested that unrest on the streets of Egypt and elsewhere partly reflects frustration at a lack of progress in the Middle East peace process.

Other participants from the region have suggested that the Middle East is now subject to a “political contagion”, similar to the financial contagion that caused sovereign-debt crises to cross borders in Europe.

Delegates have struggled to place the upheavals in the Arab world in the context of the kind of issues that Davos is used to dealing with. There is growing concern about the political impact of rising food prices. Even fashionable emerging powers with strongly growing economies, such as India, China and Brazil, are felt to be vulnerable to popular unrest driven by food-price inflation.

Rising levels of income inequality across the world have also been a recurrent theme – and many delegates have pointed to their political consequences. George Papandreou, the prime minister of Greece, argued that in Europe the middle and working-class were being squeezed while the rich continued to prosper. Mr Papandreou said he feared that populist, nationalist and racist political movements would gain ground under such circumstances.

The bombing in Moscow put the threat of terrorism firmly back on the Davos agenda. In spite of the bloodshed, Dmitry Medvedev, the president of the Russian Federation, kept his appointment to make the opening address to the forum. His speech was preceded by a minute’s silence in memory of the victims of the bombing. In his address, Mr Medvedev used his determination to honour his pledge to speak in Davos as a symbol of his broader determination not to yield to terrorism.

The future of globalisation is a central concern of Davos delegates, so there has been a lot of focus on trade. The threat of anti-Chinese protectionist legislation passing through the US Congress is thought to have receded a little, following the midterm elections. David Cameron, Britain’s prime minister, made an urgent call for completion of the Doha round of trade talks by the end of this year, arguing: “It’s frankly ridiculous that it has taken 10 years to do this deal. We simply cannot spend another 10 years going round in circles.”

But, speaking to the Financial Times, Felipe Calderón, president of Mexico, was sceptical that a deal could be done. “I am not optimistic about the Doha round,” he said.

Yet, amid the political anxieties expressed at Davos, there have also been many pockets of optimism. Although there has been much head-shaking about the “paralysis” in the US political system, particularly when it comes to addressing the American budget deficit, Barack Obama’s stock seems to have risen.

Last year it was fashionable to debate whether the US president was turning into a “new Jimmy Carter”. This year there seems to be more confidence in Mr Obama’s ability to lead, in spite of the results of the US midterm elections.

The economic optimism of delegates from Asia, Latin America and parts of Africa has also spilt over into their approach to politics. Political leaders from the emerging world seem generally more cheerful than their harried western counterparts.

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