In the corridors of the World Economic Forum last week, Kenneth Rogoff, the Harvard economist, summed it up: “This is the flattest Davos I can remember. Normally, there is a star country or a star industry that everybody is talking about. But this year, there is nothing.”
That enthusiasm deficit has implications well beyond the easily parodied world of the Davos conference. For the past 30 years, the Swiss resort has been the best place to monitor the ideas and crazes that were exciting the rich and powerful. It is the place where elite consensus was both formed and promoted.
Last year, the two Davos stars were easily identified. The fashionable technology was blockchain and the fashionable politician was France’s president, Emmanuel Macron. But, since then, Macron’s poll ratings have fallen almost as fast as the price of bitcoin. The French president stayed at home this year to deal with domestic discontents.
Macron and bitcoin can now join the growing club of discarded Davos darlings. These are the countries, politicians or industries that were once deemed to represent the future but whose reputations have since taken a dive.
The star countries of previous forums have often been fast-growing emerging economies that were preferably also democracies, or at least “moving in the right direction”. Brazil used to tick all these boxes. In 2010, the WEF awarded its “Global Statesmanship Award” to Luis Inácio Lula da Silva, then Brazilian president, who had spoken at several previous forums. Lula was almost designed to delight Davos. He was a former radical, who had embraced capitalism and globalisation, while retaining his credentials as a social reformer. His country’s economy was growing fast.
But the Brazil of 2019 has just been through a deep recession and a corruption scandal and Lula is in prison. Brazil is now represented by Jair Bolsonaro, a president famous for insulting gays and praising torturers. As an advocate of liberal economic reforms, Bolsonaro had a chance to repackage himself for the Davos audience. But his appearance at this year’s forum was brief and stilted.
Other former Davos darlings have followed a similar trajectory. Turkey was once the star country. Its president, Recep Tayyip Erdogan, was hailed as the model of a moderate Islamist leader, presiding over a country that was both democratic and capitalist. But Erdogan stalked out of Davos in 2009 after an onstage row about Israel – and he has never returned. These days, Erdogan is increasingly authoritarian and his country is teetering on the edge of a debt crisis.
The apparent transformation of the Russian elite from faceless apparatchiks into raucous, rough-edged capitalists was also one of the wonders of the WEF. But, ever since the invasion of Crimea in 2014, Russia has been in the Davos doghouse.
Britain has disappointed Davos by voting for Brexit – and merely baffled delegates at this year’s conference by draping vast banners over the Belvedere Hotel proclaiming, “Free trade is great”. Donald “Tariff Man” Trump is clearly not somebody who would endorse that WEF-friendly slogan. The US president stayed away from the forum this year to deal with the government shutdown.
China’s claim to be “star country” is also tarnished. Slowing growth, rising antagonism with the US and increasingly authoritarian politics at home makes Xi Jinping’s government an increasingly tough sell in Davos. That leaves India, or “Incredible India” as it branded itself in a PR blitz at Davos 2006. Narendra Modi, the Indian prime minister, made a slick appearance at the WEF last year. But since then, news has reached Davos that economic reforms have slowed in India and central bank independence is under threat. So even India seems less incredible this year.
As a result, this year’s search for star countries and politicians in Davos reached into the second tier – with Austria and Ethiopia getting positive attention. Sebastian Kurz, the 32-year-old Austrian chancellor, is a smooth performer and is pursuing liberal economic reforms. One German pundit enthused: “I would love him to be chancellor of Germany, but we have had unfortunate experiences with Austrians in the past.”
Abiy Ahmed, the Ethiopian prime minister, came across like one of the Davos heroes of the early 1990s with his talk of releasing political prisoners, peace treaties with neighbours, regional economic integration and (of course) liberal economic reform. But positive change in Ethiopia is not enough to change the global mood.
In the past, when politicians have seemed particularly hopeless, Davosites have turned to industry for inspiration. But the tech groups are mired in controversy and the future they represent looks increasingly dystopian.
Davos is also the place where legacy industries rebrand themselves as futuristic. Oil companies talk about renewables and car companies show off their electric vehicles. But this year, the oil companies are reeling from shareholder divestment drives and the German car companies are still struggling with the aftermath of the diesel scandals. So there was no cheer to be found there.
It seems as if the world has disappointed Davos. But, then again, maybe Davos has disappointed the world. – Copyright The Financial Times Limited 2019
Gideon Rachman is a columnist with the Financial Times