x Abu Dhabi, UAESaturday 20 January 2018

Mena's troubles cloud Davos forum

Leaders and business chiefs at the World Economic Forum remain broadly upbeat on recovery but Middle East protests darkened the mood.

Police riot use water cannons against protesters in Davos after they turned violent. Jean-Christophe Bott / EPA
Police riot use water cannons against protesters in Davos after they turned violent. Jean-Christophe Bott / EPA
The economic malaise at the root of the political upheaval in parts of the Mena region hijacked the World Economic Forum agenda this year.

It produced a sombre mood among delegates who had been buzzing with optimism about the state of the global economy.

The unrest has highlighted the need for economic reform and jobs in the region - home to 200 million people and on the doorstep of Europe.

"Middle Eastern politics and people power is an issue that's cropped up and probably wouldn't have been on the agenda two weeks ago," said Stephen King, the chief economist at HSBC.

The escalation of events in Egypt, Tunisia and Yemen appeared a significant worry for many delegates, even if it was not always openly discussed in sessions at Davos. Inequality was highlighted as a likely important theme by speakers at the forum's opening session.

"There is a lesson in making sure you have a middle class," said Khalid Abdulla Janahi, the group chief executive of Bahrain's Dar Al-Maal Al-Islami Trust. "The problem is that in the last 10 years the gap between the rich and poor in Egypt has widened."

Both China and India outlined how they hoped to reduce that gap in their countries.

"You have to be concerned about inequality in the world, as it puts very clear constraints on future growth," said Bill Clinton, the former US president, during one session at the WEF.

Other challenges debated during the five-day event included achieving a breakthrough in global trade, ending global currency wars and fighting inflation.

There was general consensus that the global economy was picking up, albeit patchily, led by buoyant emerging markets.

Disagreement, however, remained on other topics that could risk the recovery if handled badly.

Most political leaders seemed convinced about the benefits of signing the much-delayed Doha round of talks to liberalise international trade. A deadline of the end of the year was set to reach a deal, before US elections next year potentially smother progress.

China's most senior official at the forum, Chen Deming, the commerce minister, expressed concern about what the world's biggest single exporter may lose under the deal.

Participants also appeared at odds about global currency valuations. Jose Sergio Gabrielli de Azevedo, the president and chief executive of Petrobras, the Brazilian oil giant, warned about facing new currency wars caused by a weak US dollar. Others said the onus was on China to allow its currency to appreciate.

Surging oil prices cast the spotlight on the Middle East. Emerging markets seemed particularly anxious about rising commodity prices exacerbated by strong inflows of capital.

Much had been made before the event about the increased presence of China and India at the WEF as being indicative of a shift in power eastwards. Both countries sent their largest delegations yet to the annual forum.

Russia, too, took a leading role, with Dmitry Medvedev, its president, delivering the opening speech as the country sought to woo foreign investors. Participants from Brazil, Russia, India and China - the Bric countries - seemed most positive about the outlook. "We have one billion people in India, that's one billion opportunities for the future," said Puneet Sharma, the president of SWAY Techno Solutions.

But perhaps those leaving the Swiss mountain resort with the biggest smiles on their faces were company executives. Behind the scenes, bilateral deals appeared to be where most progress occurred. Among them were Pepsico and ExxonMobil, both signing deals with Russia.