The world expectantly awaits word from its most powerful man, Barack Obama who delivers his State of the Union address on January 27. On that day, France’s Nicholas Sarkozy will make a keynote speech at Europe’s most prestigious annual gathering in Davos, Switzerland, of global political, business and civil society leaders.
The only significant American personality at the World Economic Forum’s Davos meetings will be Lawrence Summers. This continues the Obama White House snub to the World Economic Forum (WEF), a Swiss body whose mission is to “improve the state of the world”. During the Bush presidency, former Vice President Dick Cheney, Secretaries of State Colin Powell and Condoleezza Rice and numerous Cabinet members, attended Davos.
Sarkozy, who has pretensions to European leadership, is the top draw at Davos this year. He has cooled to Obama in recent months despite being the most pro-American French President in half a century. Other political glitterati at Davos will include the Presidents of Brazil, South Korea and South Africa. The Prime Ministers of Canada and Spain will also attend.
The WEF hopes that the the four-day meetings of 2500 participants will inject significance to its ambitious title: “Improve the State of the World: Rethink, Redesign, Rebuild”. Those three R’s –rethink, redesign and rebuild — are also what Obama’s State of the Union is expected to do for the US.
Despite critics, the US is still the world’s overwhelming power although Europe together exceeds its GDP and Asia together is not far behind. The pronouncements of no other President affect the world as much as Obama. Yet Sarkozy, who is determined to return France to some of its lost grandeur in Europe, wants to offer choices different from Obama for restructuring world finance, controlling imprudent banks, fighting terrorism and handling climate change. For him, Davos represents an audience of top-level business leaders he cannot find elsewhere. Its seven co-chairs include Melinda Gates and Google’s Erich Schmidt but also business leaders from Asia and Europe.
Obama and Sarkozy face a common broad problem, which is the decline of Western influence on global policy makers and the growing voice of others like China, India, Russia and Brazil. The events of 2008 have also battered the credibility of the Western model of banking and financial capitalism. In particular, none of the West’s usual pontificators knows how to create jobs more quickly to avoid a jobless economic recovery. With so much economic stimulus money sloshing around everywhere, the challenge of inflation has yet to be handled credibly.
Above all, the emerging economies are turning to trade among them and raising money on domestic or neighboring stock exchanges. This is not yet a major problem for the influence of New York or London but it does force those traditional financial markets to adapt more quickly to the specific needs of non-Western countries. The rise of Dubai, Singapore, Hong Kong and Mumbai may not be easy to resist.
Overlapping these issues is the growing frustration of voters with current models of social governance that are worsening inequality and failing to provide sufficient health care and retirement funding. Sarkozy’s views lean toward state intervention while Obama prefers public private partnerships. Both approaches fuel sky high budget deficits that cannot be handled without more unpopular taxation.
The hope now is that either or both leaders will have feasible suggestions to rethink, redesign and rebuild ideas, systems and institutions. Otherwise, popular frustration may burst into social unrest around the world worsening threats of illegal immigration and perhaps terrorism. Failing a visible start to better governance, both will lose influence around the world as new powers fill the vacuum.