Frankfurt Everything should be the same as before the pandemic. The meeting of the World Economic Forum (WEF) in the Swiss ski resort of Davos will take place again in January, as has been a tradition for many years.
And yet the world has changed fundamentally. Starting this Monday, WEF President Borge Brende will receive around 2,700 heads of state, members of government, CEOs and board members from all over the world, while the war in Ukraine continues and concerns of a global recession have increased significantly.
Against this dreary background, Brende is surprisingly optimistic – thanks above all to the European Union. “Europe has pulled itself together again and shown strength,” he told the Handelsblatt.
Mr Brende, the war in Ukraine is raging on, the energy crisis is far from resolved, we may be facing a global recession. What can the World Economic Forum do under these circumstances?
The G20 Summit in Bali showed that there are still areas where cooperation is possible. In Bali, the US and China agreed to hold another climate dialogue. So there are opportunities to build bridges in the various areas.
Top jobs of the day
Find the best jobs now and
be notified by email.
Which areas are the focus in Davos?
Trade and investment, for example, which can prevent further economic fragmentation. There will also be the question of how a worldwide growth pact could look like in order to combat a global recession.
This is a difficult subject. After all, inflation and key interest rates are significantly higher than at the time of the 2008 financial crisis, and the scope for fiscal policy is very limited given the high debt levels in many countries.
Therefore, it is now a question of agreeing on stronger supply-side thinking. So make sure we get our trade and investment going again. And that protectionism will not increase further. It is important to maintain a level playing field between nations. There is also an urgent need for further investments of all kinds, such as in infrastructure, research and education. We also need to build resilience – make no mistake: the next pandemic is bound to come.
Does the topic of protectionism implicitly resonate with criticism of the US government, which is very specifically promoting its own industry with the Inflation Reduction Act?
One could argue that the European Union (EU) is also taking action, albeit in smaller amounts, such as promoting semiconductors and renewable energies. But it is not the task of the World Economic Forum to evaluate specific support measures that have been taken. In principle, however, it is important that the same competitive conditions are maintained and that transparency is not lost in the process.
>> Read here: The US is subsidizing itself to be the world leader when it comes to chips
Because if it’s just a matter of a neighboring country being worse off than you are, then this increasing fragmentation will also lead to less growth and prosperity.
Can the deglobalization that we have experienced in recent years be reversed?
I think we should look at the big picture. Perhaps ten percent of the global economy is affected by the protectionist measures in relation to sensitive technologies. The remaining 90 percent should and can continue to trade. And you know, the last three decades have shown us that globalization has had many good sides. Never before have there been so few people living in extreme poverty, for example.
Many corporations have long since started to reorganize their supply chains in order to be able to react better to possible production losses.
That is also necessary. We see the shift from “just in time” to “just in case”. Nevertheless, we should be careful that the pendulum does not swing too far in the other direction. Only doing “friendshoring” would be the wrong way.
>> Read here: One crisis after the other: World Economic Forum predicts the end of globalization
Are we seeing a new cold war?
I don’t think the Cold War analogy is a good way to describe the current situation. But it’s definitely a very complex situation. I would say that the world stands between several possible orders. We do not know which order we are heading for exactly. But I think it’s a more multipolar world. There can be different centers of gravity, like Beijing, Brussels, Pretoria, New Delhi.
Many countries have recently introduced protectionist measures.
(Photo: dpa)
And competition between states will become tougher and, above all, will be based on new technologies. But it must be possible to find ways to continue working together on global challenges. For example, no country can tackle climate change or a pandemic alone.
Last year you were still very pessimistic, also with regard to the energy crisis in Europe. How do you see the situation today?
I’m more optimistic now than I was a few months ago. I don’t think it’s that likely anymore that Europe will go into recession. Europe has pulled itself together again and shown strength. I see Europe as a comeback kid in many ways. Industrial production in Germany has increased. Gas prices are falling again.
>> Read here: The EU Commission wants to brace itself against the USA with new debts
That’s no reason to sit back. Especially not Germany, which has a very strong industrial base. But overall, Europe has come through the crisis better than I initially thought. Together with the USA, the EU accounts for 45 percent of world trade. It is all the more important that both sides meet at eye level. US Trade Representative Katherine Tai and EU representatives will have business to discuss in Davos.
Will Europe master the energy crisis?
I’m moderately optimistic and hope that the crisis will end up being an unexpected blessing and significantly accelerate the transition to renewable energy.
There is also a supply chain problem there. Rare earths, which are needed for e-cars and wind energy and many other things, are mainly mined in China.
That’s right. Again, there needs to be a breakthrough in the sourcing and perhaps use of alternative materials, not to mention the concept of the circular economy. Much can be recycled and reused. The situation is similar to the early 1970s. Back then, during the oil crisis, German automakers had to find ways to make vehicles more efficient. That too has been successful.
Mr. Brende, thank you very much for the interview.
More: For 16 years, freedom decreased globally, now the democracies are fighting back