MATTER OF TRUST

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WORLD ECONOMIC FORUM OPENING MEETING: MORE QUESTIONS THAN ANSWERS

An update on the opening meeting of the World Economic Forum in Davos.


All participants of the World Economic Forum in Davos know what caused the global crisis. What nobody knows is the way out. Neither did Russian Prime Minister Vladimir Putin offer a solution in his opening address.

Practically every second speaker at the opening meeting reminded the rest that the crisis currently unfolding is the largest in scope, worst in destructive potential, and symbolic over the last 50-80 years. The global development system failed, the system where one regional center endlessly printed banknotes and indulged in consumption and the other poured out cheap commodities and stocked up on money printed by others. As far as Putin is concerned, it was well-being borrowed rather than fairly earned.

Lots of speakers talked of irresponsibility, absence of genuine leadership and adequate management, inadequate evaluation of assets and risks. All the same, the discourse raised more questions than offered answers. What is to be done to up the role of state in economy but not critically? Exactly what should states do? What existing institution – International Monetary Fund, UN, or G20 – should be evolved into a new global regulator?

Businesses, regulators, and economic gurus from the advanced countries are determined to look for answers to these and other question in company with the developing markets. No wonder it was Russian and Chinese premiers Putin and Wen Jiabao who opened this forum, not the Europeans or Americans.

Putin and Jiabao echoed each other on some points. Both attributed the crisis to wanton economic techniques and unbridled consumption, to uncontrolled and uncontrollable growth of financial institutions and tenuous regulation.

There were some differences in the speeches as well. Jiabao congratulated everyone on the Chinese New Year. Putin failed to resist the temptation to hint at the crisis’ country of origin. He did not go so far as to name the United States, but he did not really have to.

The crisis is having an effect on the PRC economy, Jiabao allowed and admitted the external demand on a decline. Anyway, China did not hesitate to act. Beijing expects a 9% economic growth this year.

Putin in his turn promised to keep on easing the tax strain on energy companies. He said that the only way to ensure genuine energy security necessitated interdependence of exporters, consumers, and transit countries that would include exchange of assets, fair and without discrimination or double standards.

The audience was sufficiently tactful to refrain from asking Putin about national GDP and budget deficit in 2009. Asked if Russia needed help with technologies, he arrogantly replied that it was the poor who needed help and that Russia would manage on its own, thank you very much. Putin ruled out the possibility of the isolationist policy for Russia.

“We should develop mutual trust and resolve to boost interdependence in all spheres of economy and politics. We should revert to basic values,” president’s Economic Advisor Arkady Dvorkovich said hen asked to summarize Putin’s speech in Davos.

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