Leaders head for Davos as chilly winds whip world economy
Jan 20 04:10 PM US/Eastern
The icy Swiss mountains are to host the world's business and political elite this week for their annual gathering in Davos, where the cooling temperature of the world economy is set to focus minds.
The Davos event, a unique spectacle of wealth, power and debate, begins Wednesday when chief executives and heads of state gather in the chic Alpine ski resort for five days of public discussions and private deal-making.
Started in 1971 and known as the World Economic Forum, the gathering provides a unique opportunity to gauge the mood and preoccupations of some of the world's most powerful people.
This year's invitation list includes 27 heads of state or government, 113 cabinet ministers and a smattering of stars from the world of entertainment, notably British actress Emma Thompson and singer and campaigner Bono.
Among the presidents, Afghanistan's Hamid Karzai, Israel's Shimon Peres, Colombia's Alvaro Uribe, Nigeria's Umaru Yar'Adua and his counterpart from the Philippines, Gloria Arroyo, are likely to draw particular attention.
Other big name attractions include UN Secretary General Ban Ki-moon, Microsoft founder and philanthropist Bill Gates and British Prime Minister Gordon Brown.
The prospect for peace in the Middle East is likely to be a major theme -- US Secretary of State and top negotiator Condoleezza Rice is to open the event on January 23 -- but it is the health of the world economy that is likely to dominate.
The official theme of the meeting, The Power of Collaborative Innovation, appears intentionally vague.
An avalanche of weak economic data from the United States has raised fears the world's biggest economy is heading towards a recession, meaning the bankers, corporate executives and policymakers may arrive in more morose spirits than in previous years.
One of the key questions this year will be: "If America sneezes, does the world still catch a cold?"
The role of emerging countries in Asia and the Middle East will be crucial in answering this question.
Can emerging economies withstand a slowdown in the US and power the world economy, or will they too grind slower as their dependence on the American motor becomes apparent?
Some of the people best placed to answer this will be in Davos, from economists and central bankers to the heads of Indian conglomerate Reliance Industries or the chief executive of China Mobile Communications Corporation.
There will also be representatives of Asian and Middle Eastern sovereign wealth funds, the state-backed investment funds that have recently helped recapitalise a host of struggling Western banks.
"We have to understand how such funds operate and Davos will be a platform to do so," explains the founder of the event, Klaus Schwab.
He adds: "It is a good sign that the developing world plays a major role in the global concert."
The US economy has been hit by a downturn in the property market that has exposed banks to billions of dollars of losses and caused a generalised tightening of credit to businesses and consumers.
The US Federal Reserve has slashed interest rates by a percentage point in recent months and is expected to continue loosening monetary policy.
President George W. Bush has also ridden to the rescue with a proposal for a giant fiscal stimulus plan worth around 140 billion dollars or one percent of gross domestic product.
Last year, a survey released before the event showed that 92 percent of 1,100 chief executives in 50 countries were confident about their company's revenue growth in 2007.
This year's survey is likely to show a distinct swing in sentiment but Schwab warns about excessive pessimism.
"This year, it is very important, with all the problems that we have, not to fall into an overextended pessimism," he said.
High oil prices, the falling dollar, rocketing food prices, trade imbalances and a rising tide of protectionism add to the broad economic woes linked to the slowing US economy.
Global warming and poverty eradication are among the other weighty topics set to be tackled by the assembled worthies but there is also lighter fare on offer.
Last year, a workshop called "Dialogue in the Dark" offered high-performing businessmen the chance to explore how they interacted as a group when asked to assemble a Russian doll in pitch darkness.
A series of nightly parties also provide delegates with endless opportunities for winding down and smoozing, with the annual party thrown by Internet darling Google the highlight of the social calendar for many.