Davos Man still seems to see GCC as a wild frontier

Does Davos make a difference in the real world? At the end of the day, ideas have the power to change the world, and there were plenty of those flying around in Switzerland, Frank Kane writes.

George Osborne, the UK chancellor of the exchequer, listens during a session at Davos. Bloomberg News

One session I'd like to see on the agenda for Davos 2013 is: "Does Davos make any difference to the real world?"

You could debate forever whether the ruminations of all those movers and shakers over five days actually achieves anything other than ego replenishment. But in the end you'd have to conclude that ideas do have the power to change the course of history, and there were certainly plenty of ideas knocking about at the World Economic Forum (WEF) last week.

The marginal consensus was that "Davos Man" emerged from the event feeling a little more optimistic about the world than at the beginning. But it was by no means a universal sentiment.

George Osborne, the British chancellor of the exchequer, or finance minister, said he felt like a prisoner about to be hanged who had got a last-minute stay of execution. There is nothing too optimistic in knowing that your fate has merely been postponed until another day.

How good you felt depended largely on which sessions you attended. The WEF was on the whole very Eurocentric, and the message coming from the Europeans was gloomy, to say the least. From the less-than-cheery opening address of Angela Merkel, the German chancellor, to the warnings of a euro-zone collapse in the closing debate, it was a story of almost unremitting negativity.

The European Central Bank had pulled the continent back from the brink in December, it was agreed, and some consolation was taken from the bond issues put away successfully by Ireland and Italy.

But Europe was still a disaster waiting to happen, with speaker after speaker, from Tim Geithner, the US Treasury secretary, to David Tsang, the chief executive of Hong Kong, declaring the European crisis the biggest threat to the global economy. "I've never felt so scared," Mr Tsang summed up.

But if you went instead to the events organised by Chinese, Indian and other emerging market policymakers, you would come away with a different impression. Chinese GDP growth was going to be between 8 and 9 per cent this year, we heard, with India just a little behind, and Russia and Brazil coming up comparatively strong in the 3 per cent band.

Even in those fast-growing markets, however, there were fears over other factors: the Russian elections later this year were seen as a potentially destabilising factor; an impending change of leadership in China was also a worry, as was the grumbling condition of Chinese property and construction.

From the US perspective, things were carefully balanced between positive and negative. There had been some improvement in economic growth and employment, but also concerns that in a US election year anything could happen, especially in reaction to potential crises in Europe and the Gulf.

Salam Fayyad, the prime minister of the Palestinian Authority, said he worried his cause had been marginalised by the Arab Spring, but in truth it was the Middle East that was marginalised at Davos this year.When the region was viewed in any of the big set-piece debates, it was through two prisms: the first was as the crucible of the Arab Spring, which Davos wholeheartedly applauded as an exercise in democracy and freedom, but which it also feared as a potential threat to global security and economy.

The second was the potential for conflict in parts of the Gulf as a result of the escalation of US-led sanctions against Iran, and the potential knock-on effect for world energy markets.

There was real fear here: Mr Geithner shocked one gathering when he put Iran alongside Europe as the two main dangers to US economic health. Some observers took that as the clearest sign yet from a senior policymaker that the US was prepared to go all the way in the Gulf.

On the GCC and the rest of the Middle East, little was said. One session on emerging markets failed to mention any Gulf states, with the exception of Qatar as a distant outsider, as potential members of the fast-growth club.

Mongolia, with 30 per cent GDP growth, got more attention than any Gulf state.

As seen by Davos Man, the GCC is still on the frontier of the global economy, it appears. Perhaps it's an idea whose time is yet to come.