MBR_Issue_27 -January 2017 low res

Malta Business Review
DAVOS 2017
DAVOS 2017
Malta Business Review
World
Economic
Forum
Annual
Meeting
Welcome to POLITICO’s
Davos Playbook, our
guide for this month’s
gathering in the Swiss
Alps. Florian Eder and
Ryan Heath have teamed
up to make this little
extra goodie possible for
you.
Anthony Scaramucci Stars
As ‘The Trump Whisperer’:
The billionaire founder of SkyBridge Capital
was mobbed by journalists clamoring to get
into a hastily organized press briefing after
his on-stage session with the forum’s Philipp
Rösler on Tuesday. Speaking shortly after
Theresa May announced the U.K. would not
seek to remain in the EU’s single market,
Scaramucci backed May’s determination
to go it alone. “I wouldn’t bet against the
United Kingdom,” he said.
Gossip: Scaramucci was called home
shortly after his remarks in Davos and was
already on a plane to the U.S. on Tuesday
evening.
Background
THE EUROPE FIX: Donald Trump bookends this
Davos. Opening festivities (in a sense) from his
office in Trump Tower on Monday, he lashed out
at Angela Merkel, declared NATO “obsolete” and
rooted for the EU’s downfall in his first interview
with European newspapers since winning the
presidency. The Donald’s ascendance to the most
powerful job in the land closes things up here on
Friday too. And of course, in between Theresa
May delivered her Brexit démarche to Europe, in
another sobering dose of reality.
The world as the Davos crowd knew it for decades
is coming apart at Mach speeds. Sure, the
“European project” was bruised up by migration,
economic stagnation, financial crises and various
populist uprisings. Nothing compares to the
double blow of its second-largest economy pulling
out altogether, and a new president in America –
usually the patron saint of Europe’s postwar order
– sounding openly hostile to it.
The diagnosis of the predicament, mixed in with
anxiety only a few steps removed from panic, is
dominating discussion so far. Ideas are not in short
supply. POLITICO co-hosted an event Wednesday
Europhiles can temporarily
rejoice until the next Trump
tweet: Scaramucci said Trump “wants to
have a great relationship with the EU. I really
believe that, if we can get the trade deals
right.” He couldn’t offer any commitment to
continue negotiations on the EU-U.S. trade
deal TTIP, however.
DAVOS PLAYBOOK WOULDN’T
BE POSSIBLE WITHOUT Gabe
Brotman and Vince Chadwick.
BREAKFAST BATTLE: Gillian Anderson
(of X-Files fame) is throwing around some rare
7 a.m. A-list star power,
headlining a breakfast
discussion on forced
labor. That’s the time
slot normally reserved
for worthy and wonky
discussions like Deloitte’s
“Smart cities and smart
nations,” one of the
sessions that will go headto-head
with Anderson
today. Let’s see if the host,
CNN’s Richard Quest, can
pull in the same numbers
Anderson does. Playbook
will keep tabs.
called, prescriptively, “Fixing Europe’s Disunion.”
One of the panelists, Pierre Moscovici, the former
French finance minister and current European
economic commissioner, argued “the way to
combat populists is to be popular — to show
results,” primarily by improving the economy.
“More Europe” is his answer. Joseph Stiglitz, the
Nobel Prize-winning economist, blamed the euro,
but seconded Moscovici’s call for budget transfers
from rich countries to poor and a eurozone finance
minister. Others talked about touting the EU’s
benefits more effectively, and much was made of
spending more on infrastructure. But how any of
this will go down with European voters, say in a
Germany asked to pick up these checks, wasn’t
discussed.
For the last 50 years of the 20th century, the point
of the EU was not to repeat the first 50 years: A
Continent, at peace and prosperous, nothing more
or less. The power of this narrative – that one
Big Idea – is gone. It needs a new one. The EU’s
leaders see an opportunity in the current crisis
too, to find that elusive fix. “Brexit is a wake-up
call for us,” Moscovici said. Though the European
political class hopes it’s sufficient, it won’t leave
Davos any more optimistic than it arrived.
That’s where the
compliments ended: Brussels
is too far removed from local markets and
concerns in the eyes of Trumpland: “His
[Trump’s] political observation is not that
he wants the EU to go away but that it
is not being managed effectively for the
people it is supposed to serve.”
The most direct criticism
of Trump: Without naming the U.S.
president-elect, Xi told participants: “We are
not jealous of the success of others. We will
open our arms to other countries.”
RAGE AGAINST THE MACHINES:
Alert readers will have seen the signs long
ago, and the World Economic Forum itself has
been pushing the theme of a “Fourth Industrial
Revolution” for more than a year. In a widely read
article published December 21, the New York
Times’ Claire Cain Miller pinpointed automation,
not China, as the real American jobs killer. The
European Parliament released a report January
12 on how to regulate robots’ role in our world,
while McKinsey analysts declared automation is
inevitable. Then there’s Uber’s head-first dive into
driverless cars and Amazon’s exponential use of
robots. Like it or not, pretty much everyone will
be forced to talk automation this week.
So it was no surprise that WEF founder and chief
Klaus Schwab addressed the issue in his speech
to open this year’s event. What did surprise
was Schwab’s stirring language as he called for
more humanization and voiced fears that we
now face “nearly an avalanche” of technological
transformation with little political capital left to
help pay for the adjustment. Hence Schwab’s
lament: “Davos is a global village but an isolated
place.”
Bankers are used to being bashed; for politicians it’s
a daily ritual. But tech titans who bask in delivering
convenience are not ready for the backlash their
products are generating. Automation could eat
the global middle-class alive. That may be the real
killer message from Davos 2017. Donald Trump
and Marine Le Pen may be symptoms of emerging
populism. Globalization may indeed be one of its
causes. But if the tech sector can’t do more to
solve the problems it helps create, then the Davos
Man could truly face extinction.
DAVOS INSIGHT — CHINA MAKES ITS PITCH:
Chinese President Xi Jinping sounded more
Silicon Valley than single-party Communist
leader at times during his opening keynote
speech in Davos, issuing a strong rebuke
against protectionism. If Xi wanted his carefully
calibrated and reassuring remarks to contrast
sharply with the style of U.S. President-elect
Donald Trump, he succeeded, in a speech
peppered with quotes from Dickens, Chinese
proverbs and his own jokes.
Xi spoke directly from the Davos playbook
— even naming it “Schwab-onomics” after
the WEF’s grand seigneur. Some wondered,
however, if his description of the forum as a
“cost-effective brainstorming session” was a tad
backhanded.
He went on to defend economic globalization
from the attacks of populist politicians, arguing
it does more good than harm. It was an
alternate new world order to the one laid out
by the U.S. president-elect in an interview a day
earlier — and Xi seemed to be applying for the
vacant job as global sheriff.
Special Address by Joe Biden,
Vice President of the United States
In the final days of President Barack Obama’s
administration, Joe Biden is addressing Davos for the
last time as Vice President. He’s expected to share
his thoughts on global security and the relationship
between the United States and Europe.
ARTIFICIAL INTELLIGENCE:
Is it replacing or amplifying humans? The
judgements were mixed at an Infosys
session on “Keeping the machines in check.”
One angle Playbook had never considered
before: the ability of algorithms to teach
themselves to breach antitrust laws without
knowing it. The WEF has produced a handy
summary of Ginny Rommetty (IBM), Satya
Nadella (Microsoft), and others weighing in
on the role of AI. IBM launched a new set of
principles it is committed to using regarding AI.
REAL WORLD: Days before Trump’s
inauguration, General Motors announced
it would invest $1 billion in the U.S. and
Wal-Mart promised to create 10,000
additional jobs there by the end of the year.
Bayer announced an $8 billion research
investment in the U.S. after discussions with
the Trump team.
An economist’s view: Li Daokui, from Tsinghua
University: “One of the few things on which
China and Trump agree is that the dollar must
fall,” h/t La Stampa’s Marco Zatterin.
Christine Lagarde's 2013
warning about inequality
In the session Squeezed and Angry: How to
Fix the Middle-Class Crisis, IMF Managing
Director Christine Lagarde spoke about the
Davos speech she gave in 2013 warning
about rising inequality.
Here is excerpt from her speech - watch from
13:55 for her main warning:
"You can be absolutely sure that nations
will revert to their natural tendency of
hiding behind their borders, of moving
towards protectionism, of listening to
vested interests, and they’ll forget about
transcending those national priorities."
—Christine Lagarde, speaking in 2013
"Why did people not listen, I don’t know,
but certainly I got a strong backlash, from
economists in particular saying that it
was not really any of their business to
worry about these things," she said in this
morning's session.
P r i v a t e
c a p i t a l
welcome: “In
the past, we’ve relied
on governments to
power our countries;
we now need to bring
in the private sector
to help empower
our economies and people,” said Cyril M.
Ramaphosa, South Africa’s deputy president,
during a panel discussion on the future of
energy across the African continent.
The Klaus Schwab reply: “We cannot go
back to old policies,” the forum’s founder
said. “We cannot take recipes which may
have worked in the old world but are not
working anymore in the new world.”
The most popular line came when Xi likened
protectionism to “locking yourself in a dark
room,” in that “you keep out wind and rain but
also air and light.” He added that “no one will
win a trade war.”
THRIVING AT DAVOS: It’s the serendipity,
stupid: Keep your eyes open and chunks of
your agenda free. You will be late at times.
You will run into old friends and interesting
people. MBR
Source: POLITICO Davos Playbook; POLITICO SPRL
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