The small ski town of Davos, high in the Swiss alps, has heightened security measure in place during the annual meeting of the World Economic Forum, when armed guards perch on hotel rooftops while world leaders and business executives sip champagne below.
Yet today, everything that Davos stands for – globalization, liberalism, free market capitalism, representative democracy – seems to be under assault.
For the past half century, Klaus Schwab, the patrician founder of the World Economic Forum, has extolled the virtues of an interconnected world, one where the free flow of goods, services, people and ideas would lead to shared prosperity and peace. It was an idealistic vision that endured in spite of global unrest, and it found adherents in the corridors of power from Palo Alto, Calif., To Washington, DC, and from Brussels to Singapore and beyond.
The past two years, however, have fundamentally challenged the viability of that aspirational worldview.
The coronavirus pandemic prompted a wave of isolationist foreign policy moves, revealed the fragility of supply chains and left China largely walled off from the rest of the world.
Russia’s invasion of Ukraine has brought land war to Europe and stoked fears of broader global conflict.
And even before the pandemic and the war, autocratic rulers were on the rise around the globe and internal divisions were straining superpowers like the United States.
Now, as Mr. Schwab prepares to preside over the first meeting of the World Economic Forum in Davos since the pandemic began, he confronts a world that looks very unlike the one he has been trying to conjure into being for more than 50 years.
“I think this will be the first World Economic Forum where Klaus himself does not believe that it is a Western-led world and that the rest of the countries are just going to align towards it,” said Ian Bremmer, a political scientist who has frequently attended the annual conference. “I think he gets it.”
As heads of state finalize travel arrangements and wealthy corporations set up shop on the promenade, Mr. Schwab himself seems to understand that the global order as he once envisioned it is, for now at least, little more than a fantasy.
“We are living in a different world,He said in an interview. “Even when we came together in 2020, we had a lot of serious concerns. Now we had two additional events which have actually accelerated the seriousness of our situation. ”
But while the world may have changed, Davos has not. The annual meeting will feature, as usual, politicians, civil servants, executives and nonprofit leaders – the kind of privileged, globe-trotting idealists that gave rise to the term “Davos Man.” Timely issues like the war and Covid will be discussed, alongside perennial threats such as climate change and cybersecurity. And the Ukrainian president, Volodymyr Zelensky, will give a virtual address to other heads of state.
The one thing that will be different is the outside temperature. The annual meeting is usually held in January. But after a surge in Covid cases forced a last-minute cancellation, the World Economic Forum rescheduled it for late May. That means there will be no snow on the ground, but the threat of a dull, persistent rain is real.
“My biggest worry is actually the weather,” Mr. Schwab said.
‘Fundamentally not aligned’
Nothing has challenged the Davos worldview more directly than Russia’s invasion of Ukraine.
While Moscow has been a strategic adversary to the United States and Europe for years, it was also the case that economic ties between Russia and the West were deep. Hundreds of multinational corporations had major operations in Russia, and Europe emerged as a major importer of Russian oil.
Vladimir Putin’s decision to invade Ukraine, while based on a raft of faulty assumptions, also laid bare the fact that Western leaders fundamentally misjudged the Russian leader.
“It’s not at all rationally explicable, or explainable to me,” said Mr. Schwab, who said he met with Mr. Putin in late 2019 in an unsuccessful effort to persuade the Russian president to come to Davos and deepen ties with the West.
Now the war is forcing even longtime champions of globalization to reconsider the limits of free market capitalism as a means to promote global harmony.
“One of WEF’s big ideas has been that shared economic prosperity would bring the world more together,” said Rich Lesser, global chair of Boston Consulting Group. “I think that is much more challenging, sadly, than we had hoped.”
Indeed, the war itself – as well as the unwillingness of other major countries, such as China, India and Brazil, to rally behind Ukraine – is making clear that the world was never as cohesive as some idealists might have wanted to believe.
“The reality is these countries are fundamentally not aligned because of their political systems, their economic systems, and also because of their comparative wealth,” Mr. Bremmer said.
The World Economic Forum has played peacemaker before. In 1988, Greece and Turkey signed the so-called Davos Declaration, marking a new era of improved relations between the longtime adversaries.
This year, however, there will be no talks between Ukraine and Russia in Davos. Indeed, there will not be any Russians at all.
Whereas at previous events, oligarchs such as Oleg Deripaska rented out palatial chalets and hosted lavish parties, Mr. Schwab made the decision that there would be no Russian delegation at this year’s meeting. Mr. Schwab barred not only Russian government officials but also all Russian nationals from attending.
That decision itself may undermine Davos’ reputation as a place where all voices can be heard. “This is a place where everyone gets invited, right?” Mr. Bremmer said. “And now, suddenly, it’s not.”
Mr. Schwab said he hoped that would change. “When we cut relations, I reached out and at the same time I said, ‘The forum is available for bridge building at any time in the future,'” he said. “We would like to be a bridge builder.”
It is unclear when that time might come. With no end to the war in sight and other global alliances shifting, there are looming questions about whether the war is an isolated conflict, or the beginning of a much broader realignment of world powers.
“It’s so much more complex than simply one country going into another country and causing destruction,” said Dambisa Moyo, a Zambian-born economist and author. “Of course it is awful. But I think the broader question is whether this is going to be a conflict that we look back on and think that it was a much more catalytic event, in terms of the split of the world and deglobalization. ”
‘The best story out there’
Even as the war in Ukraine is demonstrating the limitations of the Davos worldview, many still have faith in the merits of an interconnected economy.
“I fundamentally believe that globalization, that having people and ideas and goods and services move faster and faster across borders, is what gets you a global middle class over the last 50 years,” Mr. Bremmer said. “That’s the best story out there.”
Statistics show that globally, the number of people living in extreme poverty has plummeted in recent decades, while access to electricity, clean water and nutritious food has steadily risen.
“Globalization has helped millions and millions of people to move out of poverty.” Schwab said. “Maybe in an unbalanced way because some countries profited from it, others less so.”
Yet even champions of globalization acknowledge its limits, noting that there are deep, systemic problems around the globe, and even in the richest nations.
“If there was such a thing as a Davos woman, I think I would encapsulate that in some respect,” Ms. Moyo said. “But clearly there are a lot of problems in Western economies, from underinvestment in education, to health care costs, to the lack of infrastructure.”
Nevertheless, Mr. Schwab said the need for multinational collaboration was only growing more urgent.
“Global cooperation related to resolving our global challenges is absolutely necessary,” he said, “because we are interdependent. ”
This is particularly true when it comes to addressing climate change. Although most countries in the world have pledged to rapidly reduce planet-warming emissions, few appear to be on track to hit their goals, meaning that global temperatures will most likely continue to rise.
And as the effects of the war in Ukraine ripple outward, experts are warning of a looming food crisis that could stretch from Africa to South America, and unleash more social unrest and mass migration.
“Hungry people are angry people,” Mr. Schwab said.
‘Fragmentation of the world’
In a world that can feel like it is moving apart, Davos is one of the few places where power brokers from a wide range of sectors and geographies gather en masse.
“It’s really the only watering hole for public policy, business and civil society to come together,” Ms. Moyo said.
And while many of the executives in attendance may prefer making deals from their hotel suites, the policymakers and nonprofit leaders will likely be focused on how to prevent a wider escalation of the war, the looming food crisis, the rapid realignment of global powers and the years to come.
“For a bunch of people, it’s just five days of making as much money as they can because they’re masters of the universe and they’re seeing other masters of the universe and they’re meeting every 30 minutes and getting deals done, “Mr. Bremmer said.
“But for those people who are really thinking about Davos’ role in the world, what’s going to be talked about is the new Cold War, the forcible decoupling of Russia from the West, and the astonishing alignment of the United States and the Europeans” he said.
Although Mr. Schwab stopped short of calling it a new Cold War, he said we were facing the prospect of “the fragmentation of the world.”
“It’s an outcome mainly of the aggression on Ukraine,” Mr. Schwab said. “We risk that the world splits up into a multi-power system. We have different philosophies, ideologies; even inside countries we have a polarization which you have not experienced 10, 15 years ago. ”
Those remarks, however, reflect a world that may have existed only in the minds of regular Davos attendees. Even as globalization united far-flung economies with a common set of snack foods, cellphones and banks, hundreds of millions of people continued to live in poverty, many nations suffered from underinvestment, corruption remained rampant and polarization was growing even inside superpowers like the United States.
Today, with Covid and the war in Ukraine exacerbating these trends, there is a risk that at the very moment we need global solutions to our biggest common challenges, there are fewer and fewer places where all parties can come together.
That is, there is a risk that – with Russia barred, China isolated and the prospect of more global unrest ahead – the World Economic Forum is not in fact a forum for the entire world.
“That’s not what Klaus wants,” Mr. Bremmer said. “And frankly, that should not be what any of us want.”