World Economic Forum: Thousands gather, with billions to spend. Will the world benefit?
As the global elite meet in Davos, Ben Chu asks what the annual shindig can hope to achieve
Forget the reviled "1 per cent". This club is far more exclusive that that. The 2,500 men and women who will gather in Davos this week for the annual World Economic Forum constitute an economic elite that makes the verbal targets of protestors in London and Manhattan look like the great unwashed. From next Wednesday, corporate titans, senior bankers, wealthy entrepreneurs and top politicians from almost 100 countries will converge, once more, on a ski resort in Switzerland, a short hike up the valley from Klosters.
As always, Davos has attracted a stunning list of delegates. From the political world, Angela Merkel, David Cameron, Ed Miliband, Tim Geithner and Zhou Xiaochuan, the governor of China's central bank, will all turn up to take in the Alpine air.
The international governance crowd will be there too, from Christine Lagarde to Ban Ki Moon, to Tony Blair and Gordon Brown. Representing business on the slopes will be names such as Google's Eric Schmidt, Tidjane Thiam, of Prudential, Mark and Spencer's Marc Bolland, and BP's Carl-Henric Svanberg. The bankers and financiers will be there in force. Bob Diamond, Peter Sands, Nat Rothschild and the Royal Bank of Scotland's bonus man of the moment, John Hourican, will all make the trip to the Alps.
And the list goes on. Anshu Jain, George Soros, Felipe Calderon, John Studzinski, Ana Botin, Klaus Regling, Min Zhu, Jacob Zuma are attending. The chief executives of Coca-Cola, eBay, Petrobras and China Mobile Communications (the world's largest telecoms company) will be there. That roll call makes Davos – for five days in January every year – easily the planet's greatest single concentration of money and power.
It's all a long way from the "European Management Symposium" of 1971, which was designed by a German academic, Klaus Schwab, to offer European executives a chance to brainstorm in a convivial Alpine getaway. Ever since then, like a sphere of ice tumbling from the nearby summit of mount Jackobshorn, the World Economic Forum has been snowballing. It now has a membership of around 1,200 companies, most with a turnover measured in billions of US dollars. It employs 750 people. Total revenue in 2011 was $157m (£102m), although as a non-profit organisation any surplus is reinvested.
This year's forum will feature 230 workshops on topics ranging from climate change, to the rise of Asia, to the use of music to bind communities together.
But what is Davos actually for? The WEF describes its mission is to "improve the state of the world". Yet is the world any better off for its existence? The "Occupy Davos" protestors, who are building an igloo camp just outside the security cordon, do not think so.
"It is the decisions of the few which have have led us into the crisis of recent years and now the same people are posing as the solution to these problems," said David Roth of the Swiss Social Democrats this week.
And there are certainly grounds for some cynicism. The WEF's organisers choose nebulous "themes" for the annual meetings that might have been plucked at random from a dictionary of management jargon. In 2011 it was "Shared norms for the new reality". This year it is "The great transformation: shaping new models". One would not be surprised if next year's forum were to be devoted to "The great shared norm: shaping new realities". Some delegates don't even attend the sessions, preferring to schmooze with clients. James Quigley, the chief executive of Deloitte, has said that Davos saves him 50 days of travel each year.
Those with a jaded eye will also look at the hundreds of artists, charity workers and academics who attend – their expenses picked up by the corporate delegates – and see a fig leaf for what is essentially a networking event for the rich and powerful. The stereotype of "Davos man" – the materialistic, individual with no national loyalties and a gargantuan sense of entitlement – has not been expunged by all the noble rhetoric from the WEF about finding solutions to the planet's many ills.
"Many of the attendees who truly matter are not interested in the organisers' higher ambitions, and some are even suspicious," said Mohamed El-Erian, the chief executive of the giant investment fund Pimco, in an article this week.
It is certainly hard to imagine that many of the chief execs and senior bankers agreed with the argument of the WEF's recent Global Risk Report, which found that rising inequality is one of the biggest threats to the world's economy in coming years. Turkeys are not going to be persuaded to vote for Christmas (higher taxes) even if they are subjected to a lecture extolling the wonders of the festive season. Nor are the travelling billionaires likely to pay much heed to the organisers' plea for them to consider their carbon footprint as they commission their private jets, helicopters and limousines to transport them to the conference.
Yet, for all that, a public interest defence of Davos is possible. Not all of the academics and "thought leaders" take a sip of champagne and a sniff of Alpine air and magically start to see the world through the eyes of the rich and powerful. Bracing conflict can occur. Economists Nouriel Roubini and Joe Stiglitz have torn into the world's top bankers mercilessly over the years, perhaps one of the reasons that, in 2009, the heads of Bank of America, Citigroup and Morgan Stanley thought it prudent to stay away.
Davos also claims to have been midwife to various progressive projects and historic international rapprochements. The North American Free Trade Agreement was first proposed at an informal meeting in Davos. The Former Turkish prime minister, Turgut Ozal, says that a meeting with his Greek counterpart, Andreas Papandreou, at Davos averted war in 1987. A year later the two men signed an agreement that became known as "the Davos Declaration". In 1989, North and South Korea held their first ministerial-level meetings at the conference. And the former West German chancellor, Helmut Kohl, met with his East German counterpart in that same year to discuss reunification. In 1992, the South African president FW de Klerk and the recently liberated Nelson Mandela appeared on a podium together for the first time.
Advocates say that Davos is the ideal arena for precisely this kind of high-level ice-breaking and deal-making because it is intimate and informal. Politicians turn up without the usual entourages. There are no civil service sherpas and no communiqués. Klaus Schwab puts it thus: "The World Economic Forum is not a decision-making body. It fosters dialogue, it fosters understanding."
There are, though, inevitable limits to the top-down Davos approach. Last year's meeting coincided with the outbreak of the mass demonstration in Egypt's Tahrir square, the flowering of the Arab Spring. It was a timely reminder that, while power-broking at the top has something to be said for it, fundamental change often comes, entirely unexpectedly, from the bottom up. The world's economic and political elite are about to gather in a single Swiss town, but the real action might still be elsewhere.
Davos has grown steadily bigger over the years. And so have the parties. Google, KPMG, Microsoft and McKinsey are reputed to do the best shindigs on the slopes.
But, as in the real economy, the developing world is catching up fast. In recent years Wipro of India has reserved a whole nightclub in Davos for its Bollywood Night.
The most desirable hotel is the five-star Steigenberger Grandhotel Belvédère, where many of the most opulent Davos get-togethers are held.
For some of the hosts, money is no object when it comes to entertaining. In 2009 the Indian steel boss Lakshmi Mittal flew out the jazz singer Jamie Cullum to play at his reception.
The smattering of celebrities who turn up in Davos each year also adds to the excitement. Guests in recent years have included Robert de Niro, Claudia Schiffer and Sharon Stone. This year Wyclef Jean and Michelle Yeoh will be in attendance. Not everyone gets invited to the glamorous parties. But anyone with a coveted "white badge" that allows them full access to the conference centre gets well treated. The free sushi at Japan Night last year was a big hit.
£689 Cost to take a limousine from Zurich to Davos
£9,000 Price of return trip by helicopter
4 Number of igloos the ‘Socialist Youth Group of Switzerland’ plan to build in Davos this year
1 Reported attack on the World Economic Forum since 1971
£15,973 Estimated cost of the wine served at one World Economic Forumparty in 2011
4 Number of global economic recessions since the WEF was first held at Davos in 1971
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