Davos Talks End on Upbeat Note

Times Staff Writer

If talk produces action, the annual meeting of the World Economic Forum that concluded Sunday could herald progress on issues such as fighting misery in the developing world and achieving Middle East peace.

Prominent political and business leaders used the five-day event to unveil pledges of assistance for poor nations with a focus on concrete solutions, such as expediting the provision to Africa of generic AIDS drugs and mosquito nets to prevent malaria.

In addition, upbeat Israeli-Palestinian conversations raised hopes that 2005 could bring new areas of international consensus.

“There is a meeting of moods as well as of minds,” Israeli Vice Premier Shimon Peres said during a panel discussion with Palestinian counterparts last week.


Nonetheless, the hopeful mood was tinged with concern about abiding triggers for global strife: Iran’s nuclear program, transatlantic discord and U.S. deficits that could threaten world economic stability.

Even when it came to Africa, perhaps the most prominent issue at Davos, a discussion Sunday highlighted differences over strategy as well as agreement that the time had come to act. In contrast to Europeans who favor using international institutions, Australian Prime Minister John Howard and New York Stock Exchange chief executive John Thain emphasized the response of nations and free markets.

“The trade policies of Europe have denied access to agricultural exporters from some of the poorest countries in the world,” said Howard, adding that Africa would benefit enormously if Europe dropped trade tariffs and farm subsidies that blocked African commodities.

French President Jacques Chirac will have a more difficult time persuading voters to forgo domestic farm subsidies than accept an international anti-poverty tax, a proposal he offered here last week to a lukewarm response from corporate executives. There was more enthusiasm about a British proposal to create a mechanism for floating bonds on financial markets to raise aid money.


European leaders said the time had come for revitalizing a transatlantic alliance hurt by divisions over Iraq. They also said European negotiators should be given time and U.S. support in seeking a diplomatic accord over Iran’s nuclear program. In a nod to that option, Sen. John McCain (R-Ariz.) acknowledged that the U.S. had no desire to wage battle on another front now.

Participants say that nonproliferation could serve as a unifying issue for Europeans and the Americans seeking rapprochement. President Bush’s planned visit to Belgium and Germany next month will emphasize that point.

For all the talk about helping the developing world and reaffirming alliances, Western nations have internal economic challenges to confront, participants agreed. There were warnings about the future of the global economy, and the U.S. budget and trade deficits that have contributed to the dropping value of the U.S. dollar against the euro.

Although the world economy looks strong in the short run, the combination of a weakening dollar and mushrooming deficits could eventually provoke a plunge in the American currency that would wreak worldwide havoc.


A panel of economists recommended that the U.S. take action to reduce its deficits, though the expected fiscal demands of a continued military presence in Iraq and proposed revisions to Social Security could make that difficult.

Meanwhile, European economies must do their part to increase growth and correct trade imbalances with the U.S., according to experts at the conference.

That means pursuing reforms of labor regulations, social welfare expenditures and other structural problems that spread stagnancy, according to Jose Manuel Barroso, the new president of the European Commission.