Powell addressed the group days after a fissure opened between the U.S. and the Continent's two biggest countries about when and how to tackle Iraq. Germany opposes war in any circumstances, and France says Iraq should be given more time to disarm. Last week, German Chancellor Gerhard Schr?er
persuaded President Jacques Chirac of France, which has a veto in the U.N. Security Council, to oppose authorizing a war for the time being.
Many of the European corporate executives who gathered in Davos over the past few days have also expressed serious qualms about U.S. policy. So much so that some U.S. delegates say they're shocked by the depth and ferocity of the opposition (see BW Online, 1/27/03, "A Wider Ocean Splits the U.S. and Europe"). Hubertus Heemskerk, CEO of Dutch banking giant Rabobank Group, spoke for many European businessfolk when he told Powell after his speech that "nowadays we need evidence before we hang someone. We can't hang him when the evidence isn't there."
"TELL THE TRUTH NOW."? Powell responded that the proof against Saddam is convincing. He said Iraq has failed to account for tens of thousands of liters of biological- and chemical-warfare agents that it was known to possess in the 1990s. "Saddam Hussein still responds with evasion and lies," Powell added. "Saddam should tell the truth and tell the truth now."
Still, Powell said the U.S. is "in no great rush to judgment tomorrow [Jan. 27] or the day after, but clearly time is running out." U.N. weapons inspectors report their findings about Iraqi weapons on Jan. 27. But most analysts expect their report to be inconclusive and to set the scene for a new clash in the Security Council between the U.S. and France and Germany. President Bush will address the U.S. and the world with his third State of the Union address on Jan. 28.
Most Europeans consider Powell to be the more reasonable face of U.S. policymaking. Bush and Secreatry of Defense Donald Rumsfeld "have alienated Europeans with their style and language," says the CEO of a large U.S. company's European subsidiary. "Powell is different. He knows how to communicate with us effectively." On Jan. 23, Rumsfeld astonished NATO allies by calling both France and Germany "a problem" and referred to them as "old Europe."
UNRELIEVED JITTERS. Powell's approach is more sophisticated. But whether it'll be effective remains to be seen. The Secretary of State's speech went down well with the audience. But few of the Europeans in Davos' Congress Center came away convinced of the need for early action. Most are now braced for another week of market jitters. War fears have pushed up oil prices to a two-year high of more than $33 a barrel (see BW Online, 1/24/03, "How Global Growth Could Skid on Oil"). European stocks fell by more than 6.5% last week, the biggest decline since July last year, while U.S. markets have tumbled to lows last seen in October, 2002.
The dollar, too, is taking a hit, having fallen for nine days in a row to a three-year low of $1.08 to the euro. The big worry now is that the looming war with Iraq will undermine consumer confidence both in the U.S. and in Europe, and weaken further already sluggish economies. While welcome, Powell's warnings also suggested to this crowd that things may get worse before they get better. By David Fairlamb at the World Economic Forum in Davos