Davos elite to grapple with bank reforms, Haiti

GENEVA, Jan 24, 2010 (AFP) - Financial reforms, climate talks and Haiti's reconstruction are set to dominate the agenda of the world's elites heading up to the Swiss mountain resort of Davos this week for their annual meeting.

Haitians fight for aid at an old military airfield in Port-au-Prince on January 23, 2010. AFP PHOTO

And with the global economy showing signs of a pick-up, participants expect the mood to be lighter than the gloom experienced a year ago.

But the climate is far from the celebration that might be expected for a gathering that is commemorating its 40th anniversary.

Klaus Schwab, the founder and chair of the World Economic Forum that organises the yearly meetings of top officials, executives and experts, set the tone for the meeting with a warning that another crisis may be looming.

"We have a tendency to look at the stock exchanges, to look at the very modest growth figures of the economy and to feel the world overall has come back," Schwab said.

"Let's not forget the world has fundamentally changed."

"We feel that this is the danger: to move from a financial crisis in 2008, an economic crisis which we experienced in 2009, into a social crisis in 2010 and the following years."

Experts note that the global recovery remains fragile, unemployment is high and government budget deficits are worryingly wide.

"If there was immense optimism two years ago and immense pessimism a year ago, this year it will be much more even. People will be waiting to see what is likely to happen," said Aron Cramer, who heads the non-government group Business for Social Responsibility.

French President Nicolas Sarkozy -- a champion of re-regulation -- has been invited to deliver the opening speech of the meeting, which is to be attended by 2,500 top politicians, captains of industries and civil society leaders.

Central bankers ranging from the European Central Bank's Jean-Claude Trichet to Central Bank of Mexico's Agustin Carstens, and finance ministers such as Egypt's Youssef Boutros-Ghali and South Africa's Pravin Gordhan are also scheduled to be out in force to discuss financial reform.

However, Nariman Behravesh, chief economist at IHS Global Insight, said the fears of an economic meltdown that dominated last year's meet have subsided.

Along with that, the pressure for swift reforms is also receding.

"Is this the new world or is this business as usual? I would say it is neither. It's certainly not business as usual because some things have changed. There is some financial regulation, but I would say, not a major change."

"It will be a modest redesign, not an ambitious redesign," said Behravesh.

Bankers, who are resisting the reforms, are also expected to be a lot more vocal this time round compared to last year, he added.

While bosses from US banks were conspicuously missing in the midst of the crisis last year, they are back this year.

However, unlike corporate America, the US government is, for the second year running, sending a bare minimum of officials.

Larry Summers, Barack Obama's top economic advisor, is the lone top official from the administration scheduled to attend.

Besides financial issues, climate change -- an issue dealt with by Davos before -- and the failure at December's summit in Copenhagen to broach a binding deal, also features prominently on the agenda.

Cramer noted that the question of business sustainability is taking on a "much bigger profile than before" in the environmental field.

If there is one thing that Davos does well, it is that it gets businesses to take the lead, he said, adding that he hoped businesses "stand up to be counted" in pushing for an accord.

Businesses will also be called on to contribute on a pressing issue that had cropped up on the agenda -- the reconstruction of quake-devastated Haiti.

"Haiti will be very much in the forefront of the discussions," said Schwab.

During a special session with former US President and UN special representative for Haiti Bill Clinton "we will launch a major initiative to engage businesses in the reconstruction of Haiti," he said.

The initiative would go beyond fund-raising for immediate humanitarian relief to "actually engage the business community well after the television cameras have gone," said Robert Greenhill, the forum's chief business officer.

"Where we, the forum, can have the greatest impact is in encouraging the business community to make a sustained long-term engagement with Haiti."

Source: AFP

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