CORPORATE EUROPE OBSERVER
Issue Number 8 April 2001
« We have something of a communication problem »  confessed Klaus Schwab, founder of the World Economic Forum (WEF), to an audience of some 2,000 of the most powerful corporate executives and politicians in the world. « It's very difficult to explain to the general public who we are »,  he continued, while outside, battalions of Swiss police sealed off the normally serene alpine village of Davos from the thousands of protestors who had come to demonstrate.
Schwab wasn't just voicing his concerns about the WEF's PR strategy; he was reflecting what many observers have already caught onto - namely that the WEF is in a deep existential crisis. Last year's meeting, the first high profile corporate event since the dramatic events that unfolded in Seattle, reflected a deep crisis of conviction by the pro-globalisation camp. Davos rhetoric was either repentant and subdued, or reactionary and defensive. Then, in September, the WEF was confronted by thousands of demonstrators from down under who targeted the WEF regional meeting in Melbourne. A diverse coalition of Australian and New Zealand/Aotorean groups from all walks of life came together for the 'S-11' (September 11) [S11 2000 - WEF Meeting, Melbourne, Australia, see: www.s11.org] action day as part of a global movement towards fairness, environmental sustainability and genuine democracy. This year, the WEF leadership, still seemingly rubbing its sores from Oz, struggled to regain some of its footing in the high Alps, with a notable shift in tone away from neo-liberal extremism to a more conciliatory admission that « economics isn't king". 
In its attempt to « build bridges » (« Sustaining Growth and Bridging the Divide » was the chosen theme for Davos 2001), there was a noticeable shift in emphasis from previous years. Gone was the puritanical faith in the US economy and its bull market. There were no high-level officials in attendance representing the new Bush administration. Gone too was the near religious fervour over the promise of technology. Less tech gurus were in attendance than last year and Microsoft founder Bill Gates, a Davos regular, spoke mostly about his philanthropical activities and his criticisms of technology rather than eulogising over his Sun Tzu-like corporate IT warrior's codebook, 'Business @ the Speed of Thought'. More workshops addressed issues of corporate ethics, and social and environmental accountability. The UN leadership, including Secretary General Kofi Annan and UN Environment Programme Director Klaus Töpfer, was very prominently engaged in the various meetings, and more NGO representatives and artists were in attendance than ever before. But, despite the gloss, not much has changed. The vast majority of participants were rich, white businessmen, with only a few women and representatives from the South in attendance. This point was raised almost immediately by Walden Bello, Director of Focus on the Global South, who together with 10 other participants attending an alternative forum in Porto Alegre, Brazil, engaged in a televised debate with representatives from Davos via satellite. « We would also like to register our consternation that while we in Porto Alegre have painstakingly come up with a diverse panel of speakers, you in Davos have come up with four white males to face us. But perhaps you are trying to make a political statement ».  But then there was a workshop at the WEF cynically entitled « Capitalising on Diversity ».
Riot Police, Davos 2001
While numerous speakers at the Forum called for more transparency and dialogue with civil society, protestors outside were harassed, beaten, imprisoned and deported in one of the most ruthless policing operations in Swiss history.  The irony was not missed by the Financial Times' editors who observed that « the water cannon has become an uncomfortable symbol of the divide between global capitalism and its critics ».  Police measures drew criticism from trade unions, local residents, lawyers, groups, Amnesty International, Swiss officials and even financier and Davos participant, George Soros. « The way it was handled was not a good one. It helped to radicalise the situation ».  Welcome to Davos.
George Soros in Davos
In another bout of cynicism, the WEF's spin-off group, Global Leaders for Tomorrow, released an update of their 'Environmental Sustainability Index', which strays so far from reality one could almost be forgiven for thinking it was a bad joke. The index claims that some of the world's most environmentally criminal economies are actually the most sustainable. Rich industrialised countries rank highly in the Davos report, while poorer economies in the South rank at the bottom. Friends of the Earth International accused the report's authors of perpetrating « ideological greenwash »,  while the UK-based think-tank, the New Economics Foundation (NEF), attacked the report as « global misleadership ». 
Analysis done by the two groups shows that the index failed to take into account figures for the amount of consumption by industrialised countries of climate damaging fossil fuels; the effects of climate disaster on poorer nations; the impacts of Northern dominated World Bank, IMF and WTO policies on Southern economies, ability to invest in social and environmental services; or the legacy of colonialism itself which has fuelled the North's prosperity at the expense of eco-systems and societies in the South. With the Bush administration's recent move to pull out of the Kyoto Protocol negotiations and cancel efforts to reduce greenhouse gas emissions, it makes the Index's rankings even more absurd. 
« I've worked on plenty of indexes in my time, but I've never come across quite such a blatant effort to bury the most important parameter - global warming - in a morass of irrelevant noise », said Alex MacGillivray, NEF's Deputy Director and leading international expert on indicators. 
Recalculation of the index, factoring-in important internationally accepted environmental variables such as: forest protection, marine fish catch, paper consumption levels, greenhouse gas emissions and pesticide use per hectare, as well as looking at the UNDP's Human Development Index rankings, brought completely different results. Those that scored well in the Davos index, such as Norway and the United States, ranked at the bottom, while countries such as Uganda which received a poor rating by WEF standards moved to the top. 
Ruggiero & Dunkel
In an unprecedented move, three former WTO and GATT bosses, Renato Ruggiero, Peter Sutherland, and Arthur Dunkel, made a plea to the Davos participants and government leaders to « speak up for the WTO ».  In a statement to the Forum, they claimed that the « public undermining » of the World Trade Organisation has gone too far: « The most dangerous misconception - at least to the extent that is taken seriously - is that the system amounts to a conspiracy between large multinational firms and certain governments ». 
Numerous references to the protests in Seattle were made in various sessions dealing with trade issues, indicating that the business community is still reeling from the shock of the mass protests in Seattle during the WTO Ministerial Conference. In an attempt to placate critics of the WTO who charge that the current system severely threatens the environment, US Senator John Kerry (Democrat) suggested that the next new round set-up a multi-billion dollar environment fund. Others made calls to set aside funds through institutions such as the World Bank, to aid developing countries to implement WTO agreements.
Accusing critics of the WTO of being ignorant of the institution's work and influence, the three former leaders of the trade body said that the WTO « cannot be used as a Christmas tree on which to hang any and every good cause that might be secured by exercising trade power ».  Peter Sutherland, Chair of both BP Amoco and the merchant bank Goldman Sachs, and long-time member of industry groups such as the European Roundtable of Industrialists (ERT), rejected criticisms directed at the WTO by protestors. In a workshop entitled, « The Future of the Multilateral Trade System » Sutherland said the WTO « is being blamed for the very problems of underdevelopment and exploitation it seeks to address. It's like blaming the doctor for trying to cure the disease ». 
Michael Moore in Davos
The plea comes at a time when the WTO and trade ministers from the wealthy industrialised nations are struggling to persuade developing countries to agree to a new round of trade negotiations. It is clear from the rhetoric tossed around in the halls in Davos, that the WTO is in deep crisis. Trade officials from key developing countries who remain sceptical of the benefits of a new round, such as India and Egypt were present, perhaps in an attempt to win them over. An unusually large delegation from Qatar, which is set to host the next Ministerial conference of the WTO this November, was also present. Much of the multilateral trade system's credibility is being pegged on whether or not a new round will be launched. In attempt to sow fear among the nay-sayers of a new round, the current WTO chief, Mike Moore, warned, « if the WTO fails, the risk of hostile trading blocs shouldn't be taken lightly as a long-term threat. This is not a time to be shy ». 
One of the key themes of the Davos summit was that of dialogue. WEF-sponsored opinion pieces in international press all called for the need for the corporate community to engage more with civil society. They also, however, called on demonstrators to stop demonstrating and start dialoguing. « From diatribe to dialogue », was the title of an opinion piece written by WEF Managing Director Claude Smadja in Newsweek, as well as having been a workshop title during the summit. « We should listen to responsible protests, but not to the fringe groups who only crave the spotlight », said Smadja who went on to link protests in Seattle with forces of « nationalism and hatred » and the « bleak history of the world between two world wars ».  Patronising attitudes towards protestors and anyone concerned about the impacts of globalisation abounded.  Most were convinced that those who protest are simply misinformed, and uneducated. The reason, according to Schwab, is « a communication problem ». 
As one journalist put it, the traditional approach by the « Davos man » would be to ask: « Why bother patiently explaining the virtues of policies when you can instead threaten a country with the wrath of the markets? »  However, the new approach of the « Davos man » would be more in line with what Monsanto chief Hendrik A. Verfaillie said at the session on « Addressing the Backlash Against Globalisation »: « We failed to listen. We failed to appreciate the other concerns people have. It is very clear that dialogue is very important ». 
Nothing held more prominence at the Forum than Kofi Annan's Global Compact initiative. Originally an idea floated around at the WEF Annual Meeting in 1999 and then officially launched the following year in Davos,  this voluntary code of conduct for transnational corporations (TNCs), was seen by many business leaders as the panacea to many of their problems. After intensive discussions between the UN leadership and major companies and their lobby groups, more companies have endorsed the Compact seeing it as a potentially useful way to stave off calls by campaign groups for global regulation of TNCs. The Compact is comprised of nine basic principles on labour, environment and human rights issues from major UN treaties. The appeal for industry is that there are no binding enforcement or independent monitoring and assessment mechanisms. It's a toothless treaty, but of enormous value to business. Not only does it help companies fight-off calls for regulation, but it also serves as a useful interface for companies to have access to UN institutions, and potentially discover some golden market opportunities to boot. Most of all, the Compact has great brand value for companies concerned about growing consumer concern over corporate behaviour.
In the run-up to Davos 2001, the Paris-based International Chamber of Commerce (ICC), the world's largest and arguably most influential corporate lobby group, together with Kofi Annan's office undertook a massive media blitz to build up momentum for the Global Compact. Numerous Op-Ed pieces appeared in the Financial Times and the International Herald Tribune espousing the virtues of a Compact which « is not a regulatory instrument, but a platform for institutional learning ».  Part of the media drive seems to have been influenced by industry's fear that increasing pressure from NGOs might come down to bare on the Compact and force stricter measures on the member companies. « The danger is loss of focus », said ICC Secretary-General Maria Livanos Cattaui. « The Global Compact was launched as a challenge for business and the UN to work together. We must make sure other players don't dilute it ».  ICC President and former head of the powerful US lobby group, the US Council for International Business (USCIB), Richard McCormick stated that one of the main factors influencing US business over whether to join the Compact or not has been due to, « questions about the role of NGOs in the process ». 
Although corporate enthusiasm for the Compact exercise has grown, US industry has not been very keen so far. Only a few companies, such as Nike and Deloitte Touche have signed-up while others seem to still be waiting in the wings to see what's going to happen. McCormick relayed concerns from the US business community about how the Compact would work in practice, and expressed fears that « bureaucratic oversight » on the part of the UN might be more than they (the TNCs who've signed-on) bargained for.  Their main concern is to have a guarantee that the Compact be primarily a vehicle for improving relations between the UN and business, rather than expanding to encourage more NGO and union involvement in the process. « There is a widespread view among business leaders that the Global Compact will stand the greatest chances of achieving critical mass if it remains a two-way compact between business and the UN ».  It is clear from such remarks that industry is terrified of any substantive engagement with NGOs and organised labour.
In order to get some high-profile support for his cause and attempt to gain wider business acceptance of the Compact, Annan enlisted the help of Göran Lindahl, the former CEO of energy and engineering giant, Asea Brown Boveri (ABB). In his new capacity as « Special Advisor to the Secretary-General » Lindahl's main task will be to lead a recruitment drive to sign-up 1,000 corporations to the Compact by the end of the year.  It is likely that Lindahl was chosen for his 'green' credentials due to his extensive work with greenwash groups such as the World Business Council for Sustainable Development (WBCSD) and the Alliance for Global Sustainability (AGS), as well as the more balanced World Commission on Dams (WCD).
Despite some dabbling with 'green' issues, Lindahl is a heavyweight industrialist currently active in a number of powerful and influential lobby groups and corporate think-tanks, including the European Roundtable of Industrialists (ERT), the International Business Leaders Forum (IBLF), the World Energy Council (WEC), and the International Chamber of Commerce (ICC). Under his reign, ABB reinvigorated its investments in climate-damaging fossil fuel-based power generation and services (particularly oil, gas, and coal). He also sits on the board of US chemical and biotech powerhouse, DuPont, as well as the Swedish telecoms giant Ericsson. One of his first actions as ABB's CEO, was to close 12 factories, mostly in Europe, firing some 13,000 workers in the process. In the three years he has served as CEO of the company, he has put approximately 50,000 people out of work, amassing millions in stock options and pay bonuses at their expense. His new position in the UN gives the powerful industry groups he represents an influential point-man at the highest level of the secretariat, able to directly influence any UN policy which might impact business.
In an attempt to mollify critics of the WEF who say it is too elitist and exclusive, Schwab personally invited more NGO representatives than ever before. An estimated 50 groups were represented at the Forum, including groups like Greenpeace, Amnesty International, Oxfam as well smaller organisations such as the Third World Network, Tebtebba Foundation, Public Citizen, and the New Economics Foundation. Eight representatives from major unions were also in attendance. NGO representatives had access to most sessions and were billed as moderators and speakers for a number of workshops. Some groups had previously attended the Forum, and others were newly invited. The number of NGO representatives invited reflects a growing, albeit reluctant, recognition by the WEF organisers of the power of these groups and the impact they have on business.
However, attendance by NGOs also does pose some potential problems in terms of legitimacy and representation of 'civil society'. Some groups have decided not to attend Davos after an in-depth internal debate on the potential pitfalls inherent in participating in such meetings. Such organisations felt that whatever was gained from being 'inside' did not merit the cost in terms of the legitimacy it lends to the WEF. Some who did attend last year, turned down their invitations, preferring to invest their energies in one of the major alternative events which took place at the same time as the WEF meeting. « I was in Davos last year, and believe me, Davos is not worth a second visit », said Walden Bello, director of Focus on the Global South. 
While some individuals from the NGO world attempted to penetrate Davos culture from inside the forum, key alternative events took place outside the fortress-like conference centre, which sought to give space to a wide range of views and ideas on alternatives to the current global economic system. Both the World Social Forum in Porto Alegre, Brazil, and the more modest alternative forum in Davos itself, Public Eye on Davos, were in stark contrast with the World Economic Forum meeting. While even conservative Swiss newspapers and government officials condemned the massive police operation in the country as being excessive, the approximately 12,000 landless peasants, farmers, workers, union organisers, academics, leaders, and grassroots activists who congregated in Porto Alegre saw a minimal police presence and had an official welcome from the local government instead. While in Davos, a McDonalds billboard read, « Think Global, Eat Local » in Porto Alegre corporate sponsorship was noticeably absent. « This is what democracy looks like », writes CorpWatch Research Associate Kenny Bruno. « No ads telling us how sustainable Shell is, or how clean Dow is, or how concerned for the poor Philip Morris is ». 
In Davos itself, despite police crackdowns, arrests, and deportations, those that managed to get through into the village itself had a venue to express their critique of the WEF as well. The Public Eye on Davos, now in its third year, is an initiative sponsored by groups such as the Berne Declaration, Friends of the Earth International, Network Women in Development Europe, World Development Movement (WDM), and Focus on the Global South. Sessions examined a range of issues including international finance, regulation of TNCs, international trade policies, and Third World debt. The free admission and friendly atmosphere, as well as the intriguing discussions and critical information was an important safe haven for victims of police harassment and for anyone wanting to get a critical perspective of the World Economic Forum. The Public Eye organisers also organised an informal evening gathering with local residents of Davos, many of whom were very well informed about global economic issues and the policies promoted by the corporate executives over in that 'other' meeting.
Both the Public Eye on Davos and Porto Alegre sought to highlight positive alternatives to the 'Davos consensus'. Contrary to the patronising remarks made by speakers at the WEF meeting on the intelligence of critics of globalisation, both the participants of the Porto Alegre and Public Eye initiatives proved to have very well-developed and articulate critiques of the current corporate-led global economic system, as well as concrete proposals on alternatives. Both events provided the political space necessary for activists to exchange ideas and articulate a vision of a better world. Global solidarity with on-going struggles was a chief characteristic of both gatherings, and a general mood of celebration and unity infected the air. Davos is the past. An elitist crumbling institution that has no relevance in a future of myriad possibilities. A future shaped by the combined efforts of grassroots and international action worldwide.
Schwab is right. There is a communication problem. No one cares to listen anymore.
1. As quoted by Hirsh, Michael. 'Whose Davos is it Anyway?' Newsweek Web Exclusive. <http://www.msnbc.com/news/521712.asp - 3/3/01>
3. Zakaria, Fareed. 'No, Economics Isn't King'. Newsweek Magazine, Special Edition. December 2000 - February 2001. Pages 16-17.
4. Bello, Walden. 'When Davos Meets Porto Alegre: A Memoir', January 31, 2001.
5. « This has been our biggest challenge since 1804 », said Peter Aliesch, governor of South-Eastern Switzerland, referring to the date of Napoleon's first arrival to the region. As quoted by: Theil, Stefan. 'Is Zurich Burning? Switzerland counts the cost of protecting Davos'. Newsweek Web Exclusive. <http://www.msnbc.com/news/522891.asp - 3/3/01>
6. Financial Times. 'Comment & Analysis: Global Business'. Jan 31, 2001.
7. George Soros as quoted by: Dillon, John A. 'Forum Will Work with Swiss to Meet NGO Grievances' Forum News Daily. January 29, 2001.
8. « This so-called « Environmental Sustainability Index » is a product of ideological greenwash. It sums up the wishful thinking of the World Economic Forum that more economic globalisation will solve the world's problems ». Friends of the Earth International. 'Davos Forum's Environmental Sustainability Index « Deeply Flawed »' Friends of the Earth International Press Release. January 26, 2001.
9. « Our calculations on the impact of the US economy highlight the difference. The US comes eleventh from a list of 122 countries in the Davos index, suggesting it has one of the most sustainable economies in the world. Yet the US consumes so many finite natural resources that you could fit the whole of China, India the Russian Federation and Brazil into its ecological footprint and still have room to spare. Saying that black is white on environmental impact is a severe case of statistical abuse », New Economics Foundation. 'Davos Fiddles Figures - World Economic Forum « Statistical Abuse » Attacked for Defending US Pollution'. New Economics Foundation Press Release. January 30, 2001.
10. For more info on the Kyoto Protocol, see the CEO briefing 'Greenhouse Market Mania', available from http://www.xs4all.nl/~ceo.
11. New Economics Foundation. 'Is the US Really the Greenest Nation?'. New Economics Foundation Press Release. February 10, 2001.
12. Friends of the Earth International. 'Davos Forum's Environmental Sustainability Index « Deeply Flawed ». Friends of the Earth International Press Release. January 26, 2001.
13. As quoted by, BBC News. « WTO on the Defensive ». BBC News Online. January 27, 2001 http://news.bbc.co.uk/hi/english/business/newsid_1139000/1139804.stm
16. World Economic Forum, Session Summary: 'The Future of the Multilateral Trade System' 2001 Annual Meeting.
18. Smadja, Claude. « From Diatribe to Dialogue ». Newsweek Magazine, Special Edition. December 2000 - February 2001. Page 14.
19. Newsweek Magazine, for example, characterised the director of US-based Public Citizen's Global Trade Watch Programme, Lori Wallach, as « an unusually articulate opponent of the WTO, IMF and World Bank. ». Hirsh, Michael. 'Whose Davos is it Anyway?'. Newsweek Web Exclusive. <http://www.msnbc.com/news/521712.asp - 3/3/01>.
21. Former US President Clinton's chief campaign advisor, James Carville, once said that when he was a boy he used to fantasise about being reincarnated as the pope or the president. But now he wanted to come back as the bond market because, « you can intimidate everybody ». Zakaria, Fareed. 'No, Economics Isn't King'. Newsweek Magazine, Special Edition. December 2000 - February 2001. Pages 16-17.
22. Verfaillie, Hendrik A. 'Quotes from Davos Session on: Addressing the Backlash Against Globalisation'. January 2001.
23. The launch was so unsuccessful that a relaunch was necessary in July after a High-Level Meeting took place between 50 CEOs of major companies, and the UN secretariat in New York. After receiving assurances from the UN leadership that the Compact is and will be completely non-binding on companies, over 300 TNCs and lobby groups have signed on to the Compact. For more info on the Compact, please see previous CEO articles on the subject.
24. Ruggie, John G. and George Kell. 'Globalization: Shared Risk, Shared Promise'. IHT Sponsored Section. International Herald Tribune. January 25, 2001. Ruggie is Advisor to Kofi Annan, while Kell is Senior Officer in the UN Executive Office.
25. Cattaui, Maria Livanos, as quoted in International Herald Tribune. 'The Business of Building a Better World'. IHT Sponsored Section. International Herald Tribune. January 25, 2001.
26. Ibid. Currently NGOs that have officially endorsed the Compact approach include: Amnesty International, Human Rights Watch, Lawyers Committee for Human Rights, The World Conservation Union (IUCN), World Resources Institute, and the World Wide Fund for Nature (WWF). Labour is represented by Global Unions.
28. « Clearly, the Global Compact has direct implications for labour and what is broadly termed « civil society ». But there is a widespread view among business leaders that the Global Compact will stand the greatest chances of achieving critical mass if it remains a two-way compact between business and the UN ». International Herald Tribune. 'The Business of Building a Better World'. IHT Sponsored Section. International Herald Tribune. January 25, 2001.
29. Ryan, Orla. « UN Chief Warns Business ». BBC News Online. January 28, 2001 http://news.bbc.co.uk/hi/english/business/newsid_1141000/1141623.stm
30. A collaborative venture between top engineering universities such as the Massachusetts Institute of Technology (MIT), and industry. The group focuses on research and development of so-called « clean » technologies, though it also conveniently benefits companies such as ABB which seeks to dominate the niche market of « clean power generation ».
31. Notably after ABB significantly divested its interests in hydro-power generation and pulled out of controversial dam projects such as Bakun in Malaysia, Three Gorges in China, and the Ilisu dam in Turkey.
32. Bello, Walden. 'When Davos Meets Porto Alegre: A Memoir'. January 31, 2001.
33. Bruno, Kenny. « This is What Democracy Looks Like ». CorpWatch. January 28, 2001. http://www.corpwatch.org/trac/globalization/wef/portoalegre2.html
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