Global Economics

Record Attendance Expected at Davos Amid the Global Financial Crisis


CEOs and 40 heads of state assemble for informal diplomacy and off-site dealmaking; economics and Gaza will dominate conversations

You might think that the world's chief executives and heads of state would be too busy coping with crises at home to attend this year's World Economic Forum. Not so. The global economic slump seems to be having the opposite effect. World leaders are trekking to the Swiss mountain village of Davos from Jan. 28 to Feb. 1 in record numbers, seeking the wisdom they'll need to navigate what may be the most treacherous economic conditions since the annual gathering began 38 years ago.

Probably the last time the Forum convened before such a grave backdrop was 2002 in New York, when attendees paid homage to the victims of the Sept. 11, 2001, attacks on the World Trade Center. Then the overriding concern was global terrorism. Now terrorism is still a huge worry, but so is financial meltdown, global warming, energy, the world food supply, and a host of other issues. "Davos has been always a very serious meeting, but there are times when there is a lot of optimism and times where there are challenges," says Maurice Lévy, chairman of French advertising group Publicis (PUBP.PA) and a member of the board of the World Economic Forum Foundation.

Many of the people attending Davos will be making decisions in the coming months that may affect world growth and security, for better or worse, for years to come. For them, Davos offers a unique opportunity to consult with their peers in an informal setting, unencumbered by their usual retinues. "Davos is my university," says Hubert Burda, a longtime Davos participant who is chief executive of Munich-based Hubert Burda Media, a leading magazine publisher.

Record Attendance

Perhaps the powerful expect to gather valuable insights—or maybe Davos simply offers a stimulating respite from everyday pressures. Whatever the reason, the event's appeal looks especially strong this year. Organizers report that local hotels are so heavily booked, even those with coveted "participant" badges, which give their holders full access to the forum's events, are in some cases being forced to stay miles away in places such as Landquart, a railway junction 45 minutes from the Forum venue. "Davos will be a very crowded place," Lévy says.

Slightly more than half the 2,500 participants will be CEOs and other top managers whose companies finance the event. Among the dozens of prominent names will be Microsoft (MSFT) founder and philanthropist Bill Gates, Google (GOOG) founder Larry Page (who will host one of the event's must-attend parties), and steel magnate Lakshmi Mittal, CEO of ArcelorMittal (MT). In previous years politicians were often overshadowed by the powerful heads of multinational corporations.

But amid massive bailouts of troubled banks the world over, and a surge in government stimulus and regulations, one of the messages of this year's Forum is that public servants are back, big time. More than 40 heads of state are planning to attend, a record, not to mention platoons of central bankers, ministers, legislators, and the odd monarch. Their retinues apparently account for the especially acute shortage of Davos-area hotel rooms this year. As in past years the Forum caps the number of people actually allowed to participate in the proceedings at 2,500. Those leaders include Russian President Vladmir Putin, who will address the forum on opening day, Chinese Premier Wen Jiabao, German Chancellor Angela Merkel, British Prime Minister Gordon Brown, and Japanese Premier Taro Aso.

Informal Diplomacy

President Barack Obama will not attend—no surprise considering that he only took office a few days ago. White House Senior Advisor Valerie Jarrett will represent the Obama administration after last-minute cancellations by National Security Advisor James Jones Jr. and Lawrence Summers, director of the President's National Economic Council. Several key members of Congress are also expected to be present, including Representative Barney Frank (D-Mass.), chairman of the House Financial Services Committee, and Senator Max Baucus (D-Mont.), chairman of the Senate's Committee on Finance.

The presence of so many key figures makes Davos an opportunity to work out solutions to the current emergency in world finance. One of the unique achievements of the event is the way it brings together people normally hostile to each other, in an atmosphere that demands a degree of civility. One panel will feature Israeli President Shimon Peres and Amre Moussa, secretary-general of the Arab League, to discuss the Gaza Strip. Such meetings at Davos have occasionally given a boost to peace efforts, as in 1994 when Peres and Palestinian leader Yasser Arafat drafted an agreement on Gaza and Jericho.

But in keeping with the idealism that is a hallmark of the Forum, organizers are trying to get participants to look beyond current conflagrations and think about how they might create a more stable world order. The official theme is Shaping the Post-Crisis World, a title that optimistically assumes there will be a post-crisis world. Lee Howell, a senior director at the Geneva-based World Economic Forum and head of programming, says the current economic crisis is proof that national policies are inadequate for dealing with global problems.

Dealmaking

Instead, Howell and Davos founder Klaus Schwab hope they can get world leaders to work more in concert and to consider how global problems are interconnected. "If everyone locks in on the economy, that's great, but if they ignore climate change or nuclear proliferation or terrorism, we're really not helping things in the long term," Howell says. "We need a higher degree of global cooperation."

As always, Davos will be open to criticism that it produces more platitudes than policies, that it's simply an excuse to party in the Alps and revel in one's own self-importance. There's some truth to the criticism. And much of the real dealmaking will take place in surrounding hotels, away from public scrutiny. But by separating powerful people from the usual trappings of power, at least for a few hours, Davos forces them to confront each other as human beings. Says publisher Burda, "The 'spirit of Davos' has definitely achieved a thing or two."


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