Davos Notebook

from Breakingviews:

Euro zone crisis may be close to resolution

By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

DAVOS, Switzerland -- The euro zone crisis may be close to resolution. There is certainly optimism among policymakers at the World Economic Forum in Davos that a comprehensive deal -- involving more discipline by peripheral nations and more help from rich nations -- could be put together in coming weeks. If so, the hot phase of the crisis could be over and even Greece would have a fighting chance of getting out of the woods.

There is still no deal. But the stars seem to be coming into alignment. Germany, the zone's paymaster, clearly realises that it has a strong interest in the single currency holding together -- and will do what is needed to make that happen. Peripheral nations also seem to be willing to go an extra mile to give Berlin enough air cover to sell further help to the German people.

The basic bargain would involve more generous terms for loans to indebted countries, especially Greece, balanced by hard-and-fast promises not to run up debts in the future. The countries are discussing some form of "debt brake", a provision embedded in the German constitution which forces it to balance its budget in the medium term. Such self-denial could, indeed, be a healthy mechanism for all countries to adopt.

Meanwhile, two changes could be made to make even Greece's debt burden -- which is officially forecast to peak at just under 160 percent of GDP -- more bearable. The first would be to buy back chunks of its debt in the secondary market at a discount and pass the benefit onto Athens. If, say, a quarter of its debt could be acquired at a 20 percent discount, the peak ratio would fall by 8 percentage points. Not huge, but helpful. More importantly is the idea of cutting the interest rate on the debt. If the country was able to fund itself at below 5 percent, the annual interest payment would be below 8 percent of GDP.

Is Davos toxic? (for your health)

This is part of a series written by Anya Schiffrin, author of “Bad News,” and the wife of Nobel Prize Winner Joseph Stiglitz. The opinions expressed are her own.

This morning at the Davos coffee bar I was, as usual, tucking into the stale Danish, when I spotted a Davos Wife (easily identifiable by the infamous white name tag) drinking a cup of green tea. My companion, a Glamorous Davos Girlfriend (GDG) (my husband was, of course at a meeting) congratulated her on her healthy choice.

“I am trying to detox because of all the crap I have been eating,” came the pithy reply.

China and the future of the Internet

CHINA- Michael Fertik is the founder and CEO of Reputation.com, an online privacy and reputation management company. He is a member of the World Economic Forum Agenda Council on Internet Security and recipient of the WEF Technology Pioneer 2011 Award. The opinions expressed are his own. -

China’s Internet is, in fact, the world’s largest intranet. This is not news to anyone who follows technology in the Middle Kingdom. The Chinese government doesn’t make any real attempt to hide its complete control over what happens behind the Great Firewall. The regime is open about its intent to ensure what it calls “harmony,” which more or less means that it will squelch civil debate that moves beyond a certain pitch or further than a few degrees off the median line. As China’s power grows online and offline, these patterns, taken together with the Chinese government’s technical sophistication, will be of fundamental importance to the overlap between digital freedom and privacy.

The Chinese play hard. They mean to keep their intranet secure and the integrity of their “harmonious” public web discourse intact. They do not hesitate to use their considerable technical prowess to spy on machines that are operated on their network.  As a friend of mine in U.S. intelligence circles says without hesitation, “If you go to China, there is a 100 percent chance that your equipment will be compromised.” Earlier this week here at the World Economic Forum (WEF) in Davos, I met a successful civil activist who routinely visits China for her work, and she casually reported a recent office visit from Chinese state security services who evinced specific and sweeping knowledge of her emails, calendar, and other information she keeps exclusively on her computer.

Energy policy is key at Davos

– Laurens de Vries and Emile Chappin are researchers at Delft University of Technology. Much of their research is funded by the Next Generation Infrastructures Foundation. The opinions expressed are their own. –

One of the key issues being debated at this year’s World Economic forum is energy policy, particularly how we best make the transition to clean energies of the future to mitigate global warming.

Nuclear power, like energies of the future — wind, solar, carbon capture — must rely on government subsidies to be economically viable. This is true of virtually all alternatives to fossil fuels, which is a consequence of the fact that the social costs of the pollution that they cause is not included in the price people pay for them.

from Felix Salmon:

Wine list of the day, Davos edition

The prize for most obnoxious party at Davos was won on the first night, with the Davos Tasting put on by the Wine Forum.

Wine tasting was historically one of the more interesting and enjoyable events that was put on at Davos, but it got nixed in 2009 when conspicuous consumption of first-growth clarets was considered inappropriate in the face of the global financial crisis. The consequence was much the same as attempts to cap CEO salaries: just as the executives end up making much more money through stock options, the wine tasters, freed from whatever decorum was imposed upon them by the official constraints of the World Economic Forum, showed just how out-of-control wine events can really be.

The plutocrats at Davos, of course, both western and eastern, are exactly the kind of people who spend thousands of dollars a bottle on fine wines. But they're also driven and single-minded executives who naturally gravitate to the obvious and middlebrow in other areas: if they're buying art, they'll plump for something shiny by Damien Murakoons (both Hirst and Koons are in Davos this week), while the big-name creative types here are the likes of Jose Carreras, Peter Gabriel, and Paulo Coelho.

Davos and the never-ending Doha round

This year’s World Economic Forum offers not one but two meetings of trade ministers on the never-ending Doha round. Besides the traditional Saturday lunch hosted by Switzerland on Saturday, this year featuring 26 ministers plus WTO chief Pascal Lamy, the EU is holding a dinner on Friday for the G7 – that’s the trade G7: Australia, Brazil, China, EU, India, Japan and USA.

The meetings may attract some interest as this year is seeing a renewed push to conclude the Doha round, now in its 10th year, after leaders of the G20 (that’s the financial G20 not the trade G20) said 2011 was a window of opportunity.

For those who think this might join a long list of missed deadlines, I offer this story from Jean-Pierre Lehmanne, founder of

from Breakingviews:

Dimon’s Davos offensive is premature

By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

DAVOS, Switzerland -- Bankers are back on the front foot. At the World Economic Forum in Davos, Jamie Dimon led a chorus of his peers warning of the dangers of excessive regulation. In front of a packed meeting, the JPMorgan chief told French President Nicolas Sarkozy, "Too much is too much". But his complaint is misguided -- and his new offensive premature.

It's not hard to see why Dimon is frustrated. JPMorgan weathered the crisis well, and has emerged even larger and more formidable than before. Dimon and other crisis survivors like Peter Sands of Standard Chartered feel they are being blamed for the sins of less capable peers -- most of whom retired to the golf course years ago.

A golden opportunity for a new trading system


By Mari Pangestu, who is the Trade Minister of Indonesia. The opinions expressed are her own.

The world continues to face great uncertainties. Global recovery has been uneven, unemployment high and current account imbalances have led to continued tension including the use of currencies and other mercantilist policies for protectionist purposes. And we have yet to conclude the Doha Round of World Trade Organization Negotiations. So what do trade policymakers have to do to face this situation and ensure trade continues to contribute to growth and development?

For Indonesia, trade has recovered to higher than pre-crisis 2008 levels and in line with the higher growth in emerging economies. Like other East Asian economies, Indonesia is increasingly integrated with the region, clearly indicating that East Asia is a growing market with the rise of its population, middle class and purchasing power.

The deepest fear of the Davos Man


This is part of a series written by Anya Schiffrin, author of “Bad News,” and the wife of Nobel Prize Winner Joseph Stiglitz. The opinions expressed are her own.

Shoes …

The deepest fear of the Davos Man is not fear of failure or of giving a boring speech but of falling. Not falling from the heights of being at the greatest confab of businessmen the world has ever known but of slipping on the ice that forms when the winter sun meets the piles of snow that line the streets of this Alpine resort.

An undignified tumble is, of course, highly humiliating and so it’s rarely talked about. No one admits to slipping but a highly unscientific poll conducted by me shows that nearly everyone admits to seeing someone else take a tumble at one time or another.

from Felix Salmon:

Nick Clegg’s inaccessible press event

One of the big changes to the ecology of the Davos conference center this year, after its $37 million revamp, is that there's now a whole level at the top which is off-limits to the working press and accessible only to fully-fledged delegates with coveted white cards. There are a couple of conference rooms up there -- called Aspen 1 and Aspen 2 -- which is normally no big deal, given that the working press isn't allowed in to conference sessions anyway.

One thing which hasn't changed, however, is the way in which everybody bumps into everybody else in the conference center. Which is fine, just so long as you're not deliberately keeping a very low profile and trying to avoid the press. Like Nick Clegg, for instance, with his 7% approval rating.

And so today we have a rather hilarious double oxymoron. Nick Clegg is having a press event, where he'll be talking to Arthur Sulzberger; the email invite says that "sign-up is required as there are a limited number of seats available." That makes sense, given how everybody's wanting to talk to him right now. But then we're told that "the session is off-the-record," which is always disappointing, for a press event. And then we learn that it's in Aspen 1 -- it's been deliberately put in one of the two rooms which the working press can't get close to.