Clouds over the summit

The spreading backlash on globalisation and the murmurs about the WEF's opaque financial transactions are each in their own way casting a shadow on the annual summit, says C. RAMMANOHAR REDDY.

THE 2000 summit of the World Economic Forum (WEF) showed once again why it draws heads of Government and chief executives of the world's biggest corporations by the hundreds every year. The meeting in Davos is not only the world's biggest networking opportunity for business, it is also a place where the ideas of tomorrow are on display. But this year's summit may end up being remembered for something else as well. The allegations of opaque financial transactions between Mr. Klaus Schwab, founder of the ``not-for-profit'' WEF, and his business ventures which surfaced in the international media cast a shadow on the summit.

The WEF always prides itself on being able to spot global trends ahead of everyone else. Long before it became fashionable in the West to do so, Mr. Schwab had in 1996 co-authored an article in The International Herald Tribune that discussed the downside of globalisation. It was therefore fitting that Seattle and the inequalities of globalisation were one of the major themes of this year's meeting.

It was only to be expected that the protests of Seattle would climb the Davos mountain as well. Yet, it was not the small-scale protests that took place during the meeting that mattered as much as the fact that the WEF had been quick to invite representatives of a few NGOs to participate in a debate on globalisation. Whether anything will come of such attempts to engage some of the world's leading businessmen with the NGOs is another matter, but as always the WEF demonstrated that its ears were close to the ground. The downside of globalisation was one of the refrains of Mr. Bill Clinton as well. But in the first-ever visit by a U.S. President to Davos, Mr. Clinton did not show any sign that he had modified his views on the controversial issue of trade and labour. If anyone came to the summit expecting a breakthrough during informal discussions on the stalled WTO talks they would have left Davos disappointed.

However, Seattle was only one of the themes at Davos. The more numerous ones were those, naturally, on how much more change the Internet would bring to the world of business. The attraction that Davos provides for those willing to pay the $20,000 summit fee is that they can hear of the latest developments in business and technology. This year, for instance, the chief scientist of Sun Microsystems, Mr. Bill Joy, reportedly spoke of the imminent arrival of six webs/networks, of which only the first and the most simple has arrived in the world. The bigger and more powerful networks which would leave no aspect of our lives untouched would be made possible by the ever-increasing power of computer chips. The scientist offered the prediction that by 2010, the chip would be a 1,000 times faster than today and by 2030 computers would be a million times more powerful.

Some would say that above all it is brilliant marketing which year after year brings Government leaders and CEOs to Davos. May be. However, it is a fact that Davos brings together political and business leaders in numbers that no other global organisation - the United Nations, the World Bank, the International Monetary Fund or the WTO - can hope to gather in one place. People around the world may be getting increasingly restive about the activities of the ``Davos Man'' (as one political scientist described the world view of the CEOs who participate in the summit) but the summit keeps growing in influence.

However, the sheen may have started wearing off with murmurs that all may not be transparent at the WEF. On the eve of this year's meeting, the Wall Street Journal published a detailed report on some of the financial links between the WEF, the business ventures of Mr. Schwab and members of his family. It must have been disconcerting for participants at the summit to read that, among other things, soon after the WEF awarded a contract to a U.S. firm, Mr. Schwab was appointed to the board of the latter and was given stock options. And that the contract was later terminated and transferred to another firm where Mr. Schwab was also a director and held stock options. The WSJ was careful to report that no Swiss laws were broken and that U.S. conflict of interest rules could not be applied to European organisations. But, as the paper noted, such ``for-profit activities seem to be at odds with the Forum's goals.'' The embarrassment to the WEF must have been all the more given that one of the themes of the summit this year was ``corporate governance''.

While the WSJ also reported that discomfort at the WEF's financial activities had forced more than a third of its staff to quit in the past year, another influential newspaper, The Washington Post, carried another damaging report on how there seemed to be an overlap at the WEF summit between those firms which make large financial contributions to the forum and those represented on panel discussions. ``The companies that pay the most money to the Schwab-led foundation that organises the conference tend to be the ones whose executives run the show,'' inferred The Washington Post.

All this is unpleasant publicity for an organisation that is reputed to have brought the two Germanys closer at its 1990 summit, facilitated meetings between the apartheid regime and the ANC in 1992 and reactivated the stalled West Asian peace talks in 1996. But the spreading backlash on globalisation and the murmurs about the WEF's opaque financial transactions are each in their own way casting a shadow on the annual summit.

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