Via TIME Magazine
Why Davos Doesn't Matter
By Tony Karon of TIME Magazine
Published 24 January 2008
A decade ago, Davos was the most coveted invitation among the
aspirants, wannabes and star-struck hangers-on of the world's power
players. The annual shindig of the World Economic Forum in the Swiss
Alpine ski resort assembled the corporate and political elites of the
West — and those from the developing and former socialist worlds who
were ready to accept their tutelage — to plot the future of
globalization. The free market had become the uncontested economic
model, free trade was the order of the day and dot-com visionaries
promised that stock market exuberance was no longer irrational. The
future seemed to belong to what Samuel Huntington (yes, he of the
"Clash of Civilizations" fame) dubbed "Davos Man."
The fact that this year's gathering opened under the cloud of a
precipitous global stock market slide and creeping recession may be
symbolically apt, but it is not the only reason for the absence of
triumphalist illusions at Davos 2008. The markets are telling us that
the U.S. economy, and all whose wagons are hitched to it, are in for
some very nasty times whose depth and duration nobody can predict. And
the stalled global talks on extending free trade (the "Doha Round,"
which began seven years ago and remains unfinished) are a further sign
that faith in free markets has its limits. But even outside of his
immediate economic woes, it has become increasingly clear that Davos
Man's authority is in decline.
The choice of the event's opening speaker and one of its co-chairs —
respectively, Secretary of State Condoleezza Rice and former British
Prime Minister Tony Blair — suggests that Davos Man is either out of
touch, or else in a state of melancholic denial. For one thing, Rice
and Blair arguably bear substantial personal responsibility for the
catastrophic policies that have exacerbated the violent chaos spanning
an "arc of instability" from Palestine to Pakistan. Their track record
alone suggests that neither has much new, or interesting, to offer in a
discussion about managing an increasingly dangerous world.
Track record aside, though, neither Rice nor Blair is a significant
player going forward. Blair lost his leadership of Britain precisely
because of his foreign policy choices, and is now confined to a role on
the margins of a Middle East peace process that has the proverbial
snowball's chance in hell of succeeding — and even then, he serves at
the pleasure of a U.S. Administration whose lame-duck status is quickly
rendering it largely irrelevant on the global stage.
Rice's recent tour of the Middle East along with President Bush
confirmed that, politeness aside, Washington is now being substantially
ignored by both friend and foe in that troubled region. Neither the
Israelis nor the Palestinians, Saudis, Syrians and Iranians appear to
set any store by the threats, promises and prescriptions of Washington.
Israeli Prime Minister Olmert may flatter Bush with exaggerated praise,
but he's not heeding the Administration on the question of settlements.
The Saudis may shower Bush with bling, but they also firmly rebuff any
suggestion that they should be isolating Hamas or Iran. And so on.
The decline of Davos Man is not simply related to a credit crunch or
a U.S. election year. Even if America elects a new Administration
dedicated to reversing the mistakes of the Bush team, it is unlikely to
restore U.S. and Western primacy such as it existed in the golden years
of Davos. The policy failures of the Bush years may have accelerated the decline of U.S. influence, but they are not its sole cause.
In the years during which the U.S. became distracted by the "global war
on terror," China's economy has grown to twice the size it was when
President Bush first took office. It is to China — guarantor, by virtue
of the trillion dollars and growing line of credit it makes available
to the American consumer, of the American way of life — that U.S.
investment banks turn for help when confronted by their losses in the
subprime loan crisis. The very success of capitalism in developing and
former socialist countries has inevitably weakened the grip of the West
on the global political economy.
Today, market analysts contemplate whether the best hope for the
global economy avoiding being dragged into the vortex of recession by
the U.S . slowdown may be the "decoupling" from the U.S. economy that
some believe could allow economies such as China and India to continue
growing by virtue of momentum in their own economies. It's a theory,
untested in crisis — and clearly the wobbles hitting India's stock
market this week suggest its own investors are not convinced. Still,
China has already become the key trading and investment partner in both
Africa and in some key Latin American countries, offering a model of
development quite different from the "Washington consensus" on issues
of governance and economic management that might, as easily, have been
dubbed the "Davos consensus." China is certainly not going to take
direction from its debtors, and global energy prices have transformed
Russia from obedient supplicant to swaggering challenger to the West.
The U.S. and its allies remain immensely powerful, but the limits of
their ability to influence events have been laid bare in Iraq. Today,
long-term traditional U.S. allies in Asia, Africa, Latin America, the
Middle East and Europe can no longer be counted on to follow
Washington's lead. At the same time, the Davos crowd has lost its
near-monopoly on global political and economic power, which is
increasingly being diffused across a variety of different power centers
with shifting alliances. French foreign policy intellectuals of the
1990s, fearful of what they called the American "hyperpower,"
fantasized about a "multipolar world" where power was balanced across a
variety of different power centers and interests. While economic
"decoupling" remains an untested hypothesis, geopolitical
"multipolarity" is today increasingly plain to see. And nowhere more so
than at Davos.