It was zero degrees and mostly sunny this week in Davos, the setting for the World Economic Forum’s (WEF) annual meeting. That’s positively balmy for the highest town in the Swiss Alps in midwinter and a reminder that the world is hotter than it should be. A reminder also that the scariest noise coming out of Washington is not about trade or tax or making America great again but “drill, baby, drill”.
Within minutes of being sworn in for a second term, US president Donald Trump signed executive orders to expand drilling for oil and gas; to make it harder to access funding for electric vehicles and battery manufacturing; to halt the construction of wind farms on federal lands and waters; and to end the climate policies of his predecessor. The move sent shock waves through the clean energy sector.
“We have something that no other manufacturing nation will ever have: the largest amount of oil and gas of any country on Earth, and we are going to use it – let me use it,” Trump said in his inaugural address, which also announced that the largest and most polluting economy on the planet would withdraw from the Paris climate accord.
The US fossil fuel industry funded Trump’s campaign to the tune of $75 million (€72 million).
On the other side of the Atlantic in balmy Davos, UN secretary general António Guterres claimed the world’s addiction to fossil fuels was now a “Frankenstein’s monster sparing nothing and no one”.
“What we are seeing today – sea-level rise, heatwaves, floods, storms, droughts and wildfires – are just a preview of the horror movie to come,” he said just days after 2024 was confirmed to have been the hottest year on record.
The world is dangerously divided and ideologically incoherent. If there was a theme at this year’s Davos that was it.
European Commission president Ursula von der Leyen described it as a “fracturing”. She said the co-operative world order imagined 25 years ago had not materialised and the global economy is now “fracturing along new lines” with supply chains being “weaponised”, a reference to Russia’s energy blackmail.
“Rudderless” was the word other participants used. At the coalface of this fraying in international relations is Ukraine, caught between Europe’s ineffectual support, the potentially wavering support of the US and the belligerence of Moscow.
In perhaps the most consequential speech of the four-day meeting, Ukrainian president Volodymyr Zelenskiy excoriated Europe’s inability to act decisively and for its continuing reliance on the US nearly 80 years after the second World War to underwrite the continent’s security.
“Most of the world is now thinking: what is going to happen to our relationship with America, what will happen to alliances, to trade? How does President Trump want to end war? But no one is asking these kind of questions about Europe,” he said.
“In times of war, everyone worries will the US stay with them... but does anyone in the US worry that Europe might abandon them one day or might stop being their ally? The answer is no,” he said.
A major stumbling bloc for Ukraine has been Germany’s dithering support. Seeming to echo Zelenskiy, German opposition leader Friedrich Merz, tipped to become chancellor in next month’s election, said he was convinced that the war could have been over already had the West supported Kyiv more decisively.
If Trump and his election chances cast a shadow over last year’s Davos, the ramifications of a second Trump term dominated this year’s meeting. No matter what the topic, the T-word lurked menacingly in the background.
Unsurprisingly, Trump’s address by video link to the forum on Thursday got top billing.
He signalled that all imports into the US would face tariffs, a move that could spark tit-for-tat trade wars across the globe.
“If you don’t make your product in America, which is your prerogative, then very simply, you will have to pay a tariff,” he said.
Trump also said he would be asking Saudi Arabia and the Organisation of Petroleum Exporting Countries (Opec) to bring down the cost of oil and that a significant reduction in oil prices would end the conflict in Ukraine.
“If the price came down, the Russia-Ukraine war would end immediately. Right now, the price is high enough that that war will continue – you got to bring down the oil price,” he said.
The US president also used his address to trash the previous Biden administration, claiming his government was acting with speed to fix the “disasters” inherited from “a totally inept group of people”.
To understand the Make America Great Again (Maga) firebrand’s negotiating style, Patrick Foulis, the foreign editor of the Economist, said earlier in the week that you had to think in terms of “New York real-estate tactics”.
“When you’re a company that’s overburdened and strained, you do one of two things: you escalate, or in US real-estate terminology you kill the dogs, you get rid of the weak obligations you have,” he said.
That’s the sort of binary thinking, Foulis believes, Trump will bring to US trade policy. While much of the narrative – in advance of Trump’s inauguration – had been about US tariffs, Trump’s favoured tool to extract concessions, his move to pull the US from the global deal on tax blindsided many.
[ What does Trump pulling out of the OECD tax deal mean for Ireland?Opens in new window ]
[ Ireland risks being caught in the middle of Trump’s tax warOpens in new window ]
Off the record, officials said the move meant the Organisation for Economic Co-operation and Development’s (OECD) process, which gave rise to new a global minimum tax rate for multinationals and which promises a reallocation of taxing rights, was effectively “dead”.
One senior source said the tariffs narrative surrounding the US was just noise, “the real meat in the sandwich” was always going to be tax.
Despite thinking it had put the tax issue to bed by signing up to the OECD deal, Ireland, courtesy of playing host to so many big US multinationals now finds itself catapulted back into the spotlight.
IDA chief executive Michael Lohan sought to play down the ramifications, saying he did not believe the US’s decision to withdraw from the deal posed a “significant threat to Ireland”, noting that the new tax is not due to take effect until 2026.
“Trump’s order is undoubtedly going to lead to further negotiations on international tax and over the course of the next year we’re going to see that intensify. But I do think we’re going to see agreement on this because ultimately companies need to trade internationally ... and a fundamental component of that is tax certainty,” he said.
Another big theme was what Spain’s prime minister Pedro Sánchez described as the malign influence of social media, an argument that went – in the main – uncontested given that so many US tech figures had prioritised Trump’s inauguration over Davos, reflecting Silicon Valley’s craven embracing of the new administration.
Social media owners should be held responsible for “poisoning society” and eroding democracy with their algorithms, Sánchez said in one of the most forceful addresses.
But if politicians expressed concern, even anger, at unchecked technology, Marc Benioff, head of Salesforce, represented the business view of it, saying he was among the last generation of chief executives who would only be managing humans.
“From this point forward ... we will be managing not only human workers, but also digital workers. And that is just incredible,” he said.
Argentina’s president Javier Milei, one of the few who attended both Trump’s inauguration and Davos, as expected slammed full force into the event, saying that if organisations like Davos wanted to turn over a new leaf, they must acknowledge their role in events of recent decades and make a mea culpa.
Reading what everyone else reads, or saying what everyone else says, is a mistake, he said, adding that the script of the past 40 years has run out.
Several panel discussions debated how modern capitalism had concentrated wealth and power in the hands of a small band of billionaires, a trend that was threatening to erode democracy.
What the acceleration in billionaire wealth (Ireland has 11 of them, according to Forbes) and inequality says about the world is complex. On one level it suggests that the current period of rapid technological transformation has outgunned the antitrust legislation designed to police it, creating behemoth monopolies and uber elites wielding too much economic power.
[ Who are Ireland’s 11 billionaires?Opens in new window ]
[ It’s a good time for a wealth tax on Ireland’s 11 billionairesOpens in new window ]
Davos treads a fine line between highlighting increasing levels of global inequality and itself being a gabfest for rich elites, something that invites a steady stream of cynicism.
On the first day of this year’s Davos, three Greenpeace campaigners evaded the tight security checks to scale a balcony in the main congress centre and unfurl a banner saying: “Tax the super-rich”. Activists had earlier blocked the Davos heliport.
The event this year convened under the theme “Collaboration for the Intelligent Age”, which inadvertently seemed to highlight the opposite, namely that the world is riven with political discord and that new technologies are ushering in an age of unreason.
Critics will say Davos and its progressive gestures are essentially meaningless and even a sop to the status quo. Organisers insist the forum has been a force for collaboration and worthwhile debate. The truth is probably somewhere in between.
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