WEF will not directly affect Philippines, says UP prof

Filipinos should not expect the World Economic Forum (WEF) annual meeting held recently at Davos, Switzerland to directly affect the country, according to a UP Diliman political science professor.

Amado Mendoza, a professor on international political economy, said the meeting did not focus on any of the countries, much less the Philippines.

He said that the participants did not come up with actual policies, and that the meeting was only a venue for “exchange of views” and for the “appreciation” of today’s global problems and issues. The WEF does not dictate upon the participants what to do.

Mendoza commented that despite President Macapagal-Arroyo’s attendance, the meeting will not influence her economic policies.

On the other hand, earlier news reports said that President Arroyo came home with reports of positive responses regarding our economic growth.

The chief executive assured that Filipinos can expect new trade and investment opportunities, strengthened relations with multilateral agencies and donor agencies supporting the country’s economic program, better working conditions for our overseas Filipino workers, and increased levels of cooperation with countries around the world.

The need for further joint transactions with other nations would mean expansion for the Philippine market entailed by these expectations, said US Democratic Party chair Howard Dean.

Rise of Big Governments
Top leaders at the Davos Summit asserted that “the world is entering an era of big government with only state muscle powerful enough to fight the economic crisis,” previous news reports said.

The “go-go years” have passed, admitted HSBC chairman Stephen Green. Europe’s main leaders clearly stated they want more control over the international financial system.

The times call for a “global regulatory system” and the strengthening of the International Monetary Fund (IMF) and World Bank, he added.

“You cannot leave everything to the market,” Britain’s Prime Minister Gordon Brown said, justifying the governments’ move to save global markets.

However, South Korean Trade Minister Kim Jong-Hoon, warned, “The more governments get involved in the market, the more probable that protectionist measures will come about and that is vicious circle.”

Political Instability, Protectionism
“Social unrest and protectionism are the two major risks of the world economic crisis. I think [if] it’s a risk in Europe, it’s a risk elsewhere as well,” French Finance Minister Christine Lagarde said.

If 2008 was the year of “financial crashes”, 2009 will be the year of “political crashes,” predicted Foreign Policy magazine editor Moisés Naím. Governments, he said, will be unstable in many countries.

“When the economic malaise really begins to affect families and people don’t have jobs, that will have huge political repercussions,” he said.

According to Dean, the global economic crisis cannot be solved in isolation. The world is headed towards further multinational cooperation.

“We see more and more signs [of] protectionist measures in developed countries... [that] fall within some sort of ideology of economic nationalism,” Brazilian Foreign Affairs Minister Celso Amorim said.

Policies like directing financial support to companies who will manufacture in their own countries instead of investing in developing nations show this trend,the participants of the meeting concluded.

Developing countries run the risk of losing financial assistance from developed countries, said Ricardo Hausmann, Director of the Center for International Development at the John F. Kennedy School of Government.

Participants of the meeting noted that some state-supported lenders have also withdrawn from emerging markets in the developing world.

They also cited that members of the IMF were reluctant to fund the lending entity to the extent the current crisis calls for.

Leadership expected of G20
“This is the time to see courageous leadership on the part of the G20,” said Maria Ramos, Group Chief Executive, Transnet, South Africa, and Co-Chair of this year’s annual meeting.

However, WEF participants disagreed on evaluating the G20’s current actions towards the crisis. Some praised governments for their speedy address of market panic, while others commented the G20’s actions as “low, fragmented and non-systemic.”

As the leader of one of the current superpowers in the world, more pressure is now given to President Obama, since the WEF will be monitoring the “changes” he promised to implement.

The G20, set to meet in April, includes the seven major industrialized nations—Britain, Canada, France, Italy, Japan, Germany, and the United States—plus Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey, along with the European Union.

In the meeting’s opening remarks, Klaus Schwab, Founder and Chairman of the World Economic Forum, outlined five objectives.

One aim is to help governments, particularly the G20, to come up with ways to deal with the global financial crisis.

Since the meeting hosted leaders from various sectors, it also aimed to come up with a multistakeholder response for other global issues like climate change, food and water security and education.

It also initiated a year-long process of developing recommendations to effectively address the contemporary global challenges.

To achieve improvement in business, a model for business ethics will be developed in a year-long process, initiated by the Young Global Leaders (YGL) Community. Panelists will engage in debates on market capitalism values and leadership shortcomings.

Lastly, WEF aimed at restoring confidence in the future of the world despite the global crisis.

Around 2,400 government and private business leaders worldwide participated in the 2009 annual meeting of the WEF held from January 28 to February 1.

WEF, an independent, non-profit, international organization of business, political, intellectual leaders, believes that economic progress and social develop ment go hand-in hand in its mission to “improve the state of the world”.

The said organization holds annual meetings to define global challenges and brainstorm solutions for them. ▪

Article by Richelle Joy Belgira and Alexandra Gabrielle Francisco