Policy Alert #158 | February 7, 2018

World leaders, celebrities, activists, and business moguls rubbed elbows at the World Economic Forum Annual Meeting in Davos, Switzerland, under the theme “Shared Future in a Fractured World.” Indian Prime Minister Narendra Modi gave the opening speech of the forum, while US President Donald Trump provided the closing remarks. Despite the forum’s lofty goals of international cooperation and development, some representatives of Rising Powers struggled to balance their domestic policy initiatives as well.

INDIA
In his speech, Prime Minister Modi used the opportunity to unabashedly promote India for foreign direct investment amidst his prescription for preventing and healing fractures between nations. “If you want wealth with wellness, work in India; If you want peace with prosperity, live in India; If you want health with whole life, be in India.”

• Columnist Tavleen Singh at the liberal Indian Express critiqued Modi’s efforts to appeal to foreign investors. “What puzzles me is why his government has not made half as much effort to encourage Indians to invest in India. Is the Prime Minister not aware that real jobs will only come when Indian entrepreneurs, big and small, are persuaded to invest in new businesses?”
• Nisha Agrawal, CEO of Oxfam India, echoed these sentiments by pointing out the irony of Modi’s speech at Davos. “PM Modi is expected to address a special plenary today on ‘Creating a Shared Future in A Fractured World’. But it does not seem that the one per cent of India are sharing anything with anyone,” she argued.
• Jyoti Malhotra, Consulting Editor of The Indian Express, predicted that despite Modi’s grand aspirations to promote India, “[t]he China Factor will definitely be the elephant in the room in Davos,” given that China was already wooing French President Emmanuel Macron in Beijing and former British Prime Minister David Cameron added star power to the Shanghai International Ball and Leader’s Forum as the forum opened.
• Ahead of the WEF’s opening, Gulshan Sachdeva, Jean Monnet Chair at the School of International Studies, Jawaharlal Nehru University, argued that “To be more effective, the PM’s focus in the inaugural keynote speech should be about much more than just showcasing India’s readiness for business. This job is best left to ministers and bureaucrats. He must outline India’s growing role in the evolving economic and security architectures in Asia and beyond. He has to outline Indian approach to ‘creating a shared future in a fractured world’, the theme of this years’ forum.”
• Gaurav Dalmia, Chairman of Dalmia Group Holdings, commended Modi for encouraging the leaders at Davos to also “welcome India’s leadership on the world stage.” “In a strange twist of fate, India, very much like it’s [sic] Asian brethren, was evangelising the case for optimism to a rather gloomy western world. Irrespective of political leanings, it was a proud moment for all Indians at the World Economic Forum’s meeting in Davos,” he said.
• Mihir Swarup Sharma, fellow at the Observer Research Foundation, was more critical of Modi’s approach. “[W]e got yet another speech that climaxed with talk of the GST [goods and service tax] and doing business rankings. Don’t get me wrong: those are important to us as an economy, and they should be important to us Indians as voters. But can Modi ever be a global leader of the sort that he and his die-hard partisans want him to be unless he has something more to offer the world than Sanskrit slogans and yoga? The cultural nationalism might satisfy his own voters. It won’t in any way satisfy the rest of the world.”
• Diplomatic editor of the center-right Times of India Indrani Bagchi hailed Modi’s speech: “The Chinese president, who was the plenary speaker at Davos in 2017, brought his own brand of snake oil: globalisation with Chinese characteristics. Xi was salve to the western soul, hurting from a Trumpian blow they had not anticipated, a monstrous anathema to the entire ‘liberal’ edifice they had built. It was Xi who told them globalisation was not dead, it had a new home in the Chinese consciousness. […] A year later, the world is treated to a kinder, gentler vision of a new global order – ‘a cooperative, harmonious, sharing and caring world’ – as Narendra Modi took the dais in Davos this week.”
• The business-oriented Economic Times noted that while Modi’s pitch was “most welcome,” “India would also be under greater pressure to live up to the expectations aroused by the grand vision outlined at Davos. The steady rise in import tariffs that India has been effecting [sic] of late, on things ranging from steel and mobile phones to solar panels, sporadic outbursts of vigilante violence that feeds alienation of the kind terror feeds on, and state governments reneging on power purchase agreements with renewable energy producers are out of sync with such a vision.”
• Times of India had similar points, and argued that, “Much is needed, however, by way of follow-up action at home. Modi is right to extend the notion of ‘ease of business’ to ‘ease of living’. But both are peremptorily affected when citizens reel under dubious economic disruptions such as demonetisation, suffer from a plethora of bans, vigilantes and moral policing, or live and work in polluted cities and villages […]. Delivery needs to match the oratory, else the latter may well go waste.”
  

CHINA
Liu He, member of the Chinese Communist Party Political Bureau and right-hand advisor of Chinese President Xi Jinping, gave a talk on the “three critical battles China is preparing to fight,” as a follow-up to Xi’s opening remarks last year that promised economic opening in China: “I want to stress that China is a force for world peace, development and the international order. China remains a developing country despite its economic progress. We will run our own business well, and on that basis, we are ready to work with the rest of the international community to champion a vision for global governance that features extensive consultation, joint contribution and shared benefits. Together, we will stand firm for multilateralism, for the multilateral trading regime, and for common development and progress.”

• Jane Kai, contributor to the independent South China Morning Post, provided insight to Davos attendees’ reception of Liu’s speech, finding that most were unimpressed. “[I]n his more than half an hour speech the 66-year-old director of the Office of the Central Leading Group for Financial and Economic Affairs, failed to provide any details of what form […] opening up might take,” she explained. “Instead, the man on course to become China’s vice-premier in charge of economic and financial affairs – his appointment is expected to be announced at the country’s legislative sessions in March – largely repeated what the top leadership said last year.”
• Deng Yuwen, researcher at the Charhar Institute think tank, conceded that “[w]hat Liu said was nothing new,” but pointed out that “global analysts and investors were right to pay attention,” given the factors driving Beijing to open up its markets.
• Meanwhile, Wang Xiangwei, editorial adviser to the independent South China Morning Post, took aim at China’s “propaganda machine” that was “stuck in a time warp” as government-associated media outlets “prais[ed] the wisdom of Xi’s Davos speech on its one year anniversary” at the expense of covering “what really happened at this year’s Davos” and the vagueness of the Chinese delegation’s remarks this time. “Unless China soon rolls out concrete measures that exceed expectations, it is likely to lose its moral high ground at Davos next year.”
• The state-directed China Daily and the nationalist Global Times were sources of some of the nostalgic pieces reminiscing about Xi’s speech last year. One editorial characterized Indian Prime Minister Modi and Canadian Prime Minister Justin Trudeau’s speeches as a fruition of “the simple truth that much of the rest of the world is keenly feeling the same worries President Xi Jinping expressed at last year’s event.” The Daily also featured an article entitled “A Year of Success since Xi’s Speech,” by WEF’s Circular Economy Initiative Team member James Pennington. The Global Times claimed that “In 2017, many countries came to learn about and consider [Xi’s] proposal of building a community with shared future for mankind, which has been increasingly welcomed and accepted in international society.”
• The China Daily criticized President Trump’s speech for “offering nothing new” at Davos. “[R]ather than sharing with his audience American solutions, he used the podium as an opportunity to promote his achievements at home and sell the US as the best place for foreign investment. [..T]here was no clue as to what goals and dreams his administration wants others to share, aside from others helping to make the US great again.”
• The Global Times had strong words for Trump’s rhetoric of “economic nationalism” in his speech. “Trump has been substituting the concept of ‘free trade’ with ‘fair trade.’ […] His fairness is for the US to benefit. Trump must know that, in Davos, China’s reputation as a supporter of free trade and globalization is sounder than that of the US. Germany too has a better reputation. If Washington wants to pick a fight with Beijing or Berlin on fair trade in Davos, it picked the wrong place.”
• The Global Times also featured an illustration by staff cartoonist Liu Rui, depicting India as a “Jealous Jumbo” taking the stage at the World Economic Forum.

JAPAN
After US President Trump’s suggestion that the US was interested in returning to the Trans-Pacific Partnership (TPP) multilateral trade agreement in an interview on the sidelines of Davos, Japanese Prime Minister Shinzo Abe responded positively to the news. “I will call on President Trump to ensure that the United States leads free and open TPP rules with Japan in a steady manner,” Abe said in a House of Councillor Budget Committee meeting.

• The conservative Yomiuri Shimbun was dubious of Trump’s “real intentions” regarding his off-handed remark, “Is it merely a strategy typical of US President Donald Trump, changing his attitude several times and stirring up other countries? […] It should be noted that a change is not expected in Trump’s pet theory that places importance on bilateral negotiations.” A follow-up editorial further explained that Trump’s motivations were probably linked to “heavy pressure coming from US agricultural groups,” given that, “[it] seems Trump made such remarks [on the TPP] on purpose, rather than on impulse.”
• The liberal-leaning Mainichi Shimbun offered a similar take on Trump’s sudden interest in returning to the TPP, noting that his his motivation “may simply be hinting at the move to hold back China, with which the US has its largest trade deficit.” In another editorial, the Mainichi mused on the “irony” of Trump’s attendance, given that he is “the main figure in fractures across the world” who appeared to have imposed emergency import tariffs on solar panels and washing machines from China and South Korea “as if to issue a challenge” to the spirit of Davos. “The world economy is currently healthy, but if a policy of putting one’s own country first runs rampant and fractures appear in the global economy, then growth will stop and jobs will be lost. […] Japan must join with other countries in raising a voice against protectionism,” the Mainichi advocated.
• Staff writer Takeshi Kawanami at the conservative, business-oriented Nikkei echoed the uneasiness in his coverage of the episode: “The future actions of Trump, who calls himself a deal-maker, are hard to predict. And there are uncertainties over how the remaining TPP members will react to a potential US return.” Kawanami explained that although US participation would be a boon to the group’s motivation to counter China, the process of renegotiation with domestic industries would be costly and time-consuming.
• The progressive Asahi Shimbun featured a commentary on Japan’s economic policies by Makiko Eda, who will take over as chief representative officer of the World Economic Forum’s Japan office on April 1st. While her article was largely a glowing review of Japan’s economic performance under Abe-nomics, Eda highlighted Japan’s role as “the canary in the world’s post-industrial coal mine” with its rapidly aging population. The solution, she says, is improving women’s standing in the workforce. “If Japan is serious about driving innovation and achieving economic growth, it has a lot more to do in order to truly embrace diversity and inclusion,” Eda urged.
  

RUSSIA
Economic Development Minister Maksim Oreshkin was optimistic about foreign investment in Russia in an interview at Davos. “We see a positive trend in foreign direct investment in the past several years. This volume exceeded $20-25 billion in 2017,” he said. Other Russian leaders had warm words for the efforts of the Russian delegation at the event. Deputy Prime Minister Arkady Dvorkovich commented that, “The Russia House has become an effective place to work, hold meetings, and promote Russia’s interests around the world.” Anton Kobyakov, advisor to President Vladimir Putin, described Russia House as “a major attraction for Russian and foreign representatives of the business elite, representatives of the state authorities, business and scientific circles, and opinion leaders.”

• State-owned media outlet TASS covered both the opening events and closing remarks of the Russia House for the forum. TASS reported that in the four days of the forum, the venue “hosted more than 1,000 guests from 60 foreign countries in addition to more than 120 media representatives,” marking a successful first year for the program.
• Columnist Ivan Danilov of the state-owned SputnikNews gave a blistering response to billionaire George Soros’s criticism of Trump at Davos. “There are three politicians continuously targeted by Soros and the organizations financed by Soros: the Hungarian Prime-minister [sic] Viktor Orban, the Russian President Vladimir Putin, and the US President Donald Trump. What do these politicians have in common? All of them are status quo disruptors. All of them are populists, in the sense that they try to cater to the ideals and interest of the common people and not the global financial elite.”
• SputnikNews contributor Denis Bolotsky surveyed the “many conflicts within global elites and between different powerful world players” and concluded that the goal of this year’s forum may be out of reach.
• Sputnik also highlighted commentary by Polish President Andrzej Duda and Ukrainian President Petro Poroshenko on their battles against “fake news” during a joint session at Davos. Sputnik described the forces the leaders were battling as “the current success of populists and Euroskeptics.”

SOUTH KOREA
South Korean Foreign Minister Kang Kyung-wha attended the forum to promote the 2018 Winter Olympics being held in PyeongChang. In an interview with Reuters on the possibility that North Korea could undertake provocative actions despite the Olympics and success of recent talks, Kang assured the public that, “We approach these talks with all contingency scenarios in mind and are prepared to deal with whatever may happen.” The Ministry of Foreign Affairs also reported that in a closed-door debate at the forum, Kang advocated for governments to “harness new technology and innovation” in order to raise private financing for UN development goals.

• The conservative-leaning Dong-A Ilbo called for the South Korean government to protest the US’s emergency import tariffs at the WEF. “Korea should raise its voice together with other states against US protectionism, and at the same time, brace itself for a prolonged trade war by diversifying markets and developing premium products that will withstand price hikes.”
• Conservative-leaning JoongAng Daily warned that “Korea Inc. must brace for a currency battle on top of heavier trade barriers,” given the comments by US Treasury Secretary Steven Mnuchin at Davos in which he indicated that the Trump administration prefers a weak US currency for the purposes of trade.
• The liberal-leaning Korea Times called on the government to keep a close eye on the country’s household debt given the “pessimistic forecast” given by speakers at Davos on the issue who warned that bad debts are accumulating worldwide and may lead to another economic crisis. “The Moon Jae-In administration must not overlook economic danger signals, from within and without, by being lost in the bright growth outlook. Instead, it ought to bear in mind the warning from the Davos forum and take timely and proper steps to deal with the aftermath of the abundant liquidity.”

BRAZIL

• The center-right business newspaper Valor Economico used the headline “Temer goes to Davos and Asia to ‘sell’ Brazil and soothe relations” to speculate on the primary intention of Brazilian President Michael Temer’s participation in the World Economic Forum and who would try to benefit the most from the interaction with the world’s financial and corporate elites in Davos.
• JOTA, a magazine focused on legal topics, remarked that the advantages of the new digital technologies, such as the Fintechs and crypto currencies, were under discussion during the Forum. During a meeting held on January 26th, experts pointed out that initiatives involving operations through online or peer-to-peer platforms and cryptocurrencies often bring a viable alternative to markets that the traditional banking system can not reach: the so-called “unbanked” public.
• Catraca Livre, a left oriented online portal, emphasized that Davos warns on lack of progress in sustainable development, as nations have been negligent with respect to global and pressing environmental challenges. The article also mentions that since Davos enabled the return of a Brazilian head of state in 2014, none have shown up until now.

RPI acknowledges support from the MacArthur Foundation and the Carnegie Corporation of New York for its activities.