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Meltdown on the Alps

The meltdown in the global stock markets hogged everyone’s attention at this year's World Economic Forum summit of political and business leaders, reports John Zarocostas.

world Updated: Jan 27, 2008 00:11 IST

The meltdown in the global stock markets ambushed this year’s World Economic Forum summit of political and business leaders and the tidal wave of pessimism that followed swept aside movers and shakers from the limelight.The mood of fear and uncertainty sunk even deeper after France’s second biggest bank, Societe Generale, revealed that it had taken a hit of $7.1 billion because of a fraud committed by a rogue trader.

Taken together, the chain reaction of events made it difficult for captains of finance and industry, including a big delegation from India — now an established annual fixture at this beautiful Swiss alpine resort, to focus on what they had come here to do. Instead, every chance they got they sneaked out of meeting rooms, into the lobbies of the conference centre to get updates on the financial markets, checking on Wall Street and bourses back home.

Getting warmed up

Climate change was a key theme at this year’s meeting, but participants were so consumed by the economic fallout of the global financial turmoil that presentations by Indian Nobel Laureate Rajendra K Pachauri and UN Secretary-General Ban Ki-Moon failed to resonate a high note. “In the Himalayas, melting glaciers endanger the water supply of hundreds of millions of people in India, Pakistan and Bangladesh,” the UN chief warned. Few, however, appeared willing to pay much attention to it now. They remain keen on knowing how bad it could get in the United States — the world’s largest economy is heading for a recession — and what could it do to their businesses.

Efforts by government leaders and prominent economists, who sought to assure delegates that things were not as bad as they seemed, have so far failed to lift up the mood.

Team India

The chorus of figures who took the stage to try and calm the waters included India’s Commerce and Industry Minister Kamal Nath and Finance Minister Palaniappan Chidambaram. Nath said he did not see the US economic slowdown, aggravated by the sub-prime mortgage crisis, from having a “major impact” on India, which has been driven by strong growth in domestic demand. Growth by developing countries like China and India, he said, could cushion the US slowdown. Even as western economies grappled with fears of an impending recession in the United States, China reported this week that its economy grew 11.2 per cent in the most recent quarter. India’s economy, which is estimated to expand at around nine per cent this fiscal year, is expected to slow down by a percentage point or so per cent next fiscal year, but would still remain robust by any standard.

Chidambaram told delegates that a deceleration in growth can be “taken in stride”, if not welcomed. For India, the World Economic Forum has been a rewarding platform that has helped propel it into global limelight in recent years. “Davos is a place where India announced its coming as a global economic force. A couple of years ago it was a star,” said Shashi Tharoor, the former UN under-secretary general.

An ‘India Everywhere’ campaign, which billed the country as world’s largest free-market democracy, overwhelmed last year’s meeting at Davos. This time it’s not like that, Tharoor said. “This is not an exceptional year for India at Davos.” But then India has already arrived; it no longer needs to do what it did in the past to gain visibility at meetings like these. Moreover, “you hardly have any discussion where people don’t mention India”. Tharoor, currently chairman of the investment group Afras Ventures, said: “Now India is taken as a force, and you have an impressive Indian presence on every panel, or discussion, an Indian face, or voice...”

Indeed, some of the Indian participants in the panels included Civil Aviation Minister Praful Patel, ICICI Bank’s K.V. Kamath, Nandan M. Nilekani of Infosys Technologies, Bharti Enterprises chairman Sunil B Mittal and Hari S. Bhartia, co-chairman of Jubilant Organosys. “Davos without India,” Tharoor said, “is as unimaginable as Davos without America.”

Missing stars

Unlike last year, there were no stars this time. Even a highly upbeat presentation from China, by Vice-Premier Zeng Peiyan, failed to make any impact. Notwithstanding all that, several emerging economies brought large delegations to Davos this year as well. Well-heeled delegates flush with billions of petro-dollars from oil-rich Kuwait, the UAE, Saudi Arabia, and Russia were being courted by cash-strapped western bankers. There also was a strong presence by Japan and several South east Asian Nations. Pakistan’s President Pervez Musharraf too brought a large entourage. On an upbeat note, the best and the brightest of India’s savvy new generation of entrepreneurs, who in recent years have earned a reputation for their daring spirit and command of the complexities of the globalised world, were also networking in the corridors for a slice of the same action.