The continuation of a fractured world, lack of international collaboration and rising inequalities within and between countries will impede efforts to fight the pandemic and face the climate change crisis, warned the president of the World Economic Forum in an interview with Asharq Al-Awsat.
“We need to make sure that the recovery (from the Covid-19 pandemic) will be sustained, and that it will be inclusive,” Børge Brende insisted on the eve of the “Davos Agenda” week.
Despite this year’s forum being held virtually as countries grapple with a raging coronavirus pandemic, world leaders are expected to convene on Monday and throughout the week under the theme “A Crucial Year to Rebuild Trust.”
“We aim at rebuilding trust at the beginning of the year, because trust is the basis for progress”, Brende explained.
A global compact
The president of the World Economic Forum warned that “if there is a continuation of a fractured world, where leaders don't collaborate, we will have a hard time finding solutions to climate change, and to fight the pandemic.”
He is however hopeful that “the US re-entering the Paris protocol agreement, as well as the World Health Organization will send a clear signal that the largest economy in the world will also use international bodies and multilateral agreements as the basis for cooperation.” He added that it “will also hopefully break some impulses in other areas, like the World Trade Organization for example, where the appellate body needs to be filled with judges.”
That said, “I don't think we're out of the woods yet”, Brende noted, as “there will definitely be much more competition between the big economies. We can also see clear disagreements in some areas. But I do think however that there will be areas where we definitely see clearer will to find common solutions.”
He highlighted the need for a global compact to face common challenges, saying: “Look for example at Covid-19. We know that the pandemic doesn’t know any borders: Covid anywhere is Covid everywhere. We know that climate change doesn't know any borders either. So we need a global compact.”
In addition, Brende reflected on the importance of getting the economy back on track, and said: “If we're going to go into pre-Covid levels of global GDP, we will need to start investing in each other’s countries through Foreign direct investment, that has gone down dramatically in the last one and a half year.”
He added: “We also know that the global value chains and trade are struggling to get back to their pre-Covid levels. And we know that trade has been an engine of growth, and has lifted millions of people out of extreme poverty in the last three decades.”
Rising levels of extreme poverty
“In the last one and a half year, close to a hundred million people have become in the category of extreme poverty,” Brende warned. He continued: “For the first time in two decades, we have seen an increase in extreme poverty in the world, and not a decrease. Covid-19 is hitting poor, developing and emerging countries hard.”
“We know that we were faced with growing inequalities before the pandemic, not only between countries but also inside industrialized countries,” he added.
“But these inequalities seem more pronounced today, and we can see that people who have received good education and have good jobs have been able to work from home, and have adjusted to the situation. Whereas some who work in the grocery store or a hotel or on a cruise liner, or might not even not have a job” have been hit harder, he went on to say.
Brende, therefore, stressed the importance of helping the Covax initiative succeed, saying: “Fortunately, they have more than 2 billion doses of the vaccine now available. But that is not enough, and we have to do more.”
He also pointed out that, once growth is “back on track, we the need to address not only climate change that is hitting poor countries the most, but also the worrying digital divide and the fact that 3.6 billion people don't even have access to the internet.”
“If we don't fix this digital divide,” he warned, “we unfortunately will see growing inequalities in the years to come.”
Brende said that developed nations are doing “whatever it takes” to confront the economic downturn caused by the coronavirus. “There are 12 trillion US dollars in stimulus packages out there. But we also see that the EU has pivoted from consumption to investments in the green deal and the green transformation, but also to the digital transformation. They are doing whatever it takes. The US and China are also doing whatever it takes.”
But many emerging economies and developing countries, he added, “can only do whatever they have, and they don't have that same fiscal muscle as developed countries.”
Brende continued that “these are all very worrisome signals that we have to look at very seriously. and that's why we have to get the economy back on track, but the growth needs to be much more job creating and inclusive and sustainable.”
In his comment on the return of China’s president Xi Jinping to Davos this year, albeit virtually, Brende said: “We are very pleased to have China's president back. President Xi’s speech in 2017 is known for a speech where China underlined the importance of multilateralism and globalism.”
He added that “since 1990, when globalization really took off, the world population has increased from 5 billion to 7 billion people. And at the same time, the amount of people living in extreme poverty has decreased from 40 percent to 10 percent.” Globalization, he concluded, “has had many successes, but we should not be complacent.”
In the WEF’s risk report this year, “we found that one of the big challenges moving forward is addressing inequalities. We cannot have economies where wealth is not trickling down. The legitimacy of the social market economy is based on people having the chance to live on decent salaries.”
A Fourth Industrial Revolution Center in Riyadh
Saudi Crown Prince Mohammed bin Salman bin Abdulaziz participated, on January 13, in a strategic dialogue session moderated by Brende and convened with over 160 influential international leaders and business leaders, representing 28 sectors and 36 countries.
“We had a very well attended country strategy meeting with the Kingdom of Saudi Arabia. I had the honor to moderate the session with Crown Prince Mohammed bin Salman, as he laid out his plan for continuing reforms. We also had announced that we will open in Riyadh a center for the Fourth Industrial Revolution, which is a WEF center for technologies, like Artificial Intelligence, and big data, and also the internet of things,” explained Brende.
He added that it was very interesting to follow all the questions from the CEOs, ranging from energy transformation, to reforms regarding women empowerment, to investment opportunities for foreigners.
The strategic dialogue session came after the WEF postponed a planned regional meeting that was due to take place in Riyadh last spring.
“There was huge interest for that crucial meeting in Saudi Arabia. So we decided that at least for the time being, we will need to offer the opportunity to those CEOs that were signed up to meet virtually with the Crown Prince in this dialogue,” said Brende.
He added: “We unfortunately had to postpone all our original activities. We were supposed to have meetings in Addis Ababa and Jakarta and in Riyadh. All these three meeting are postponed. And we will just have to see how things develop with the pandemic in the year to come.”
“There was a saying by a world leader who said that there can be decades without any news, and a decade (worth of news) within a week. And I feel that we have been through a decade in a year,” said Brende when asked about the many changes the WEF is trying to adapt to.
He explained: “We had to replace all of our physical meetings with 300 digital meetings this last year, but we have also launched a lot of new initiatives. And I think the strength of the World Economic Forum is really that we are now the international organization for public-private cooperation. And I think that a lot of the challenges that we are facing today, be it climate change or the pandemic or getting growth back on track, require the need to mobilize more collaboration between the public and private sectors.”
He added: “The public sector has now used a lot of its fiscal muscles in coming through this crisis, and we have seen that governmental debt has increased quite dramatically. So in the year to come, I think we also have to mobilize resources in the private sector to compliment what the governments are doing.”
“The WEF has also challenged companies. We created a Covid platform in March last year, and launched 41 initiatives from private companies related to speeding up the vaccinations,” he continued. “We also launched the ESGs (Environmental, social and corporate governance) where 120 companies committed to the environmental, social and governmental standards.”
“ESGs are far above what governmental regulations are, and touch on the environment, climate governance, fighting corruption, but also creating decent jobs, re-skilling and upscaling, and this is what stakeholder capitalism is about,” he explained.
“So we will see a World Economic Forum that is much more focused on impact and action and also that contributes to reaching the sustainable development goals. We will also seriously address issues like the digital divide in the world,” he concluded.