Forumblog.org - The World Economic Forum Blog

World Economic Forum on Europe closes in Brussels

The World Economic Forum on Europe closed in Brussels. Over 400 leaders from business, government, academia and civil society from over 40 countries participated. The next World Economic Forum on Europe will be held in Vienna, Austria 8-9 June 2011.

The recent sovereign debt crisis and the unprecedented rescue package announced Monday 10 May exposed the fault lines in the Eurozone and “blew holes” in the complacent view that Europe is okay. The events of the past week forced policy-makers, politicians and citizens to a crossroads, where there is no choice but to face up to the tough challenges Europe needs to overcome to get back on a growth trajectory. Leaders from both “old” and new Europe agreed at the World Economic Forum on Europe’s closing plenary that the only way forward is reform, which will involve tough, unpopular choices for politicians and citizens.

The sheer scale of the immediate and longer-term challenges throws into question the Europe 2020 Strategy to guide the EU out of the worst economic crisis in decades, lays bare the weaknesses of the failed Lisbon Agenda and threatens to undermine the European social model. But the cataclysmic events of 2010 are also viewed as an opportunity.“A decade of austerity will be necessary, but 2010 could become a new start for Europe,” said Vincent Van Quickenborne, Minister of Economy and Reform of Belgium.

“Either we go to a future of being a footnote of the US … or [we] become a world player with more growth; 1% or 1.5% growth is not enough to pay for old Europe’s welfare system. We need brave, honest national politicians who are ready to say that to protect that welfare system, we should work longer
and work harder. It is either reform or decline.”  ”Despite the crisis that has rocked the Eurozone, Latvia still plans to adopt the currency by December 2015, if rules are enforced and Eurozone enlargement is not postponed. Valdis Dombrovskis, Prime Minister of Latvia, reminded participants that many countries in the Eurozone do not play by the rules whereby government deficits are not to exceed 3% of GDP. Fiscal control mechanisms and sanctions eliminated in 2003 need to be reintroduced
and enforced.

Dombrovskis said the best way to protect the European social model is to focus the Europe 2020 Strategy on green growth and jobs. “Bottlenecks exist. We need to improve the business environment, overcome barriers, cut red tape, support SMEs and [push through] labour market reforms,” he said. “These are all obstacles to EU’s growth potential. The best way to achieve social cohesion is through economic cohesion.”

Dalia Grybauskaite, President of Lithuania, considered the macroeconomic picture. “Europe was shaking from global pressures, but we tried not to wake up. In Europe, there is an avoidance of seeing reality eye to eye. We cannot live alone in this globalized situation. [Member States] need to clearly agree on what kind of Europe we want, how deep an integration we want and in what other areas we want to agree. Otherwise, Europe will be a discussion club. If we can understand [our] problems, we can avoid them,” she said.

Pictures from the World Economic Forum on Europe

Pictures from the World Economic Forum on Europe held in Brussels, Belgium from 10-11 May 2010.

Unprecedented Rescue Package to Reinforce the Euro

Europe’s historic decision to provide an unprecedented rescue package to combat Europe’s sovereign debt crisis will “reinforce the euro in the face of recent systemic challenges to the Eurozone and Europe,” predicted Olli Rehn, Commissioner, Economic and Monetary Affairs, European Commission, Brussels.

The “consolidation pact” is a two-pronged package: a commitment by EU Member States to take significant measures of fiscal consolidation to reduce debt and a European stabilization mechanism created by the Economic and Finance Council, comprising the economics and finance ministers of the EU’s Member States. “[This will] create a financial backstop for the current crisis and safeguard the economic recovery that is going on in Europe [by creating] preconditions for sustainable economic growth and employment,” added the commissioner.

The biggest issue of concern for most is how the EU got into the position of having to take these measures in the first place. Valdis Dombrovskis, Prime Minister of Latvia, whose country is scheduled to join the Eurozone by 2014, reminded participants that many countries in the Eurozone did not play by the rules laid out in the Maastricht Treaty, whereby government deficits were to not to exceed 3% of GDP. At the same time, control mechanisms, including sanctions, were eliminated in 2003.

“The budget deficit criteria were fine. But most countries do not fulfil the Maastricht criteria. This problem must be addressed before the Eurozone will be a zone of currency stability,” he said. The prime minister was concerned about rumours of the European Commission suspending enlargement of the Eurozone, but said his country still intends to meet the criteria to adopt the euro by the deadline of 2012.

Business leaders call for less bureaucracy and more competitiveness in Europe

The five Co-Chairs of the World Economic Forum on Europe called on the Eurozone’s political leaders to simplify bureaucratic restrictions that reduce Europe’s ability to take advantage of its market potential, and indirectly contribute to the Eurozone’s financial crisis.

Jeffrey Joerres, Chairman and Chief Executive Officer of Manpower, USA, pointed out that the Lisbon Treaty, which called for unlocking labour laws and investing in people, succeeded mostly in adding to the complications of doing business in Europe. “What we have done is to make things more complex,” Joerres said. “Without simplicity, companies will continue to go elsewhere. It is too easy to move out of the Eurozone, and it is getting easier and easier.”

Lord Levene, Chairman of Lloyd’s in the United Kingdom, illustrated the point by noting that it took him six months to transfer his car registration to France, despite the fact that the car was manufactured in France. Levene said that Lisbon was supposed to define the structure of the European Union. “This is probably the only city in the world where we can get more than 20 people who understand the treaty.”

Instead of focusing on bringing new business into Europe, politicians have wasted time squabbling about petty differences. “We have the wrong agenda,” Levene said. “We have very able people, who are focusing on the wrong thing.” Levene added that the advantages offered by the Eurozone, which encompasses around 500 million people, are being lost because many politicians take a theoretical approach to economic issues and fail to understand pragmatic business needs. “We have a lot of people spending a lot of effort producing reports,” he said, “but they don’t produce what we want to see.”

The growing impact of populism on politicians was mentioned as another factor complicating Europe’s response to the crisis. Joerres observed that unemployment in the US is just as high as it is in Europe, but the approach is much more open. People lose their jobs, retrain and move on with their lives and find new jobs. “In Europe,” Joerres said, “that is a difficult message for a politician to say and get re-elected.” Watch the full plenary session below.

World Economic Forum on Europe discusses Eurozone rescue package

The World Economic Forum on Europe opened in Brussels with over 400 leaders from business, government, academia and civil society from over 40 countries participating. The meeting is being held from 10 to 11 May under the theme Renewed Leadership, New Vision.

In less than 48 hours, Europe took “a historic decision” to provide an unprecedented rescue package in an effort to combat the debt crisis that has swept across Europe and threatened markets globally. “We have stated that we will do anything to defend the euro. We completed an agreement to respond in a coordinated, fast and effective manner to any difficulties in Member States. Any attempt to weaken the stability of the euro will fail,” said José Manuel Barroso, President, European Commission, Brussels, at the opening plenary of the World Economic Forum on Europe.

After a meeting in Brussels lasting more than 11 hours, the Economic and Finance Council, comprising the EU’s economic and finance ministers, reached an agreement in the early hours of Monday morning on a loan package of more than 720 billion euros over three years to defend the euro and to cover the needs of European Member States that, according to Barroso, are “living beyond their means”. Stock markets, which fell to near three-month lows last week over rising concerns about debt contagion from Greece, rallied on Monday in response to the substantial emergency loan package from the EU and the International Monetary Fund.

Referring to the bailout package as a “consolidation pact” for the eurozone, Barroso pledged to broaden surveillance of the EU’s economic imbalances, reinforce competitiveness and push for a permanent mechanism to deal with economic crises. “If there is one lesson we have learned from this crisis, it is this: if you want a monetary union, you need to promote an economic union. This means reinforced economic governance and respect of all obligations Member States have under the Stability and Growth Pact.”

The decision is “courageous and far reaching,” said Herman A. van Rompuy, President, European Council of the European Union, Brussels. “All of Europe’s institutions collaborated to save the stability of the euro, the second biggest currency of the world,” he added. “Governments that faced internal problems regarding this decision to help Greece took their responsibility. They voted and showed political courage.” The stimulus package is “timely, targeted and temporary,” commented Yves Leterme, Prime Minister of Belgium. Referring to Europe’s foot-dragging in addressing Greece’s escalating debt crisis, Leterme added: “We were wondering where the European institutions were when the situation of Greece over the last years worsened. We could have had more speed in our reactions. The lesson to draw is that, when you have a single currency, you need a common monetary policy.”

Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, praised European leaders for their “great act of European solidarity” and noted that this historical moment represents a “critical juncture” for the future of Europe. Watch the full session below.

The EU failed to become the most competitive region in the world

Sweden remains the most competitive economy as measured by the European Union’s (EU) own competition benchmark, the Lisbon criteria, followed by Finland, Denmark and the Netherlands, according to the World Economic Forum’s Lisbon Review 2010 released ahead of the upcoming World Economic Forum on Europe. Download the full report here.

The World Economic Forum’s study is the fifth and final review in a biennial series that assesses the progress made by EU Member countries in the far-reaching goals of the EU’s Lisbon Strategy of economic and structural reforms. In addition to assessing the performance of 27 existing EU Members, it also measures the competitive performance of EU candidates and potential candidate countries.

The Nordic countries are the strongest European performers in the area of innovation, attributable to their companies’ aggressiveness in adopting new technologies and their level of spending on R&D, and the high degree of collaboration between universities and the private sector in research. Indeed, in terms of innovation “output”, they register among the highest rates of patenting per capita internationally.

The Nordic countries have also achieved a high level of social inclusion, with low unemployment (especially in Denmark, pioneer of the “flexicurity” system) and strong participation of women in the workforce (especially in Finland and Sweden). These countries also have developed highly-skilled workforces through top-notch educational systems and strong on-the-job training programmes.

Among the other countries in the top 10, performance is more mixed, with some notable strength in specific areas. For example, the Netherlands is ranked 2nd both for its information society and for the extent of liberalization. Germany and France have particularly strong network industries (ranked 1st and 3rd, respectively).

Watch a four-minute interview with the author of the report, Jennifer Blanke, Senior Economist at the World Economic Forum below.

What business leaders expect from the World Economic Forum on Europe

The co-chairs of the World Economic Forum on Europe 2010 lay out their expectations for the meeting which starts on 10 May 2010 in Brussels, Belgium under the theme : "Renewed Leadership, New Vision". Watch interviews with Lord Levene, Chairman, Lloyd’s, United Kingdom; Sir Martin Sorrell, Group Chief Executive, WPP, United Kingdom; Chander P. Gurnani, Chief Executive Officer, Mahindra Satyam, India; Jeffrey Joerres, Chairman and Chief Executive Officer, Manpower, USA; Ruben K. Vardanian, Chairman of the Board and Chief Executive Officer, Troika Dialog Group, Russian Federation.

Livestream Programme of the World Economic Forum on Europe

The World Economic Forum on Europe will open next week in Brussels, bringing together over 400 leaders from business, government, academia and civil society from over 40 countries. The meeting, held on 10 -11 May 2010, will be held under the theme “Renewed Leadership, New Vision”. It is the first time that the World Economic Forum on Europe will be held in Brussels. The meeting is co-organised with the Government of Belgium shortly before it assumes the rotating Presidency of the EU.

 

Key sessions listed below will be streamed live on Livestream, key quotes will be live tweeted on the Forum’s Twitter feed, and high resolution photos will be available for free download on Flickr.

First Challenges identified

The big debate has finally begun around the theme of regional identities and struggles and the first conversations identifying the key challenges have begun to take place in small intimate groups, discussion panels and in the big townhall debate.

The first day of the 2006 Annual Meeting was dedicated to identify the key challenges for each of the major themes of this year's event.

With regards to regional identities and struggles , the main challenges identified, with potential global impact, that face the five major world regions over the coming 12-18 months were:

1. Institution and Governance:  Pushing through the reform agenda, democratization, transparency and building a sense of regional identity and community.  The new “conservative” wave of political leadership. 
2. Security: Taming social unrest through integration, militarization of rouge states and the development of a new breed of terrorism
3. Economics: The long oil boom and the repercussion on global economy. The winners and the loosers, Market reforms
4. Development Struggle: new models of the welfare state for the 21^st century, reform of the labour market and changing balance of demographic population of nations ( local vs immigrants),

Key regional questions that need to be addresssed in the next 12-18 months the most pressing ones identified were:

In terms of k

1. Europe:  How can the European Union clearly define the region’s priorities to ensure that the European Union can work.  Solving the key governance and leadership issue are key to ensuring the ecomomic development of the region in face of a european identity crises

2. Middle East: How can governments in the middle east ensure that their elections are not simply “window dressing” exercises benefiting simply national elites?  How can the long oil boom ensure regional development and stabilty. 

3. Latin America: How can, or will, the new regional political alliances arising from the coming to power of conservative goverments make sure that the market the reforms accomplished thus far are continued?

4. Africa: How can african governments keep the reform agenda moving forward to ensure good public and corporate governance practices become wide spread and they create the structures necessary for strong intra-regional trade aimed at  economic development.

The real question however is what are the mechanisms for change that each region needs to adopt  in order to provide concrete solutions to the key challenges identified?  Are interntational bodies or umbrella organisations going to be able to provide the answers or are the transformations needed only able to be done at a local level?   

Welcome to Regional Struggles Action Group

Welcome to the World Economic Forum Action Group Blog. This action group, formed in our Annual Meeting 2006 focuses on Regional Identities and Struggles. The aim of the Action Group  is to address how the business community can positively impact the regional economic growth and prosperity of Europe, Asia, Latin America, Middle East and Africa. Topics we hope to discuss (and disagree on) are: - Labor movements, regional immigration, economic and social integration - Social reform: combatting poverty and disease - National identity and religious struggles - New regional balance and emerging hotspots - Emergence, or not, of new leadership So, now it's time to introduce ourselves: two Mediterranean inquisitive minds (an Italian and a Lebanese) who usually write and think in less dry terms ( it's really late right now!!!!!) who will try to navigate you through the thousands of different sessions where the best minds will try providing real answers to serious questions! Jokes aside, we will try to be faithful reporters on the discussions we witness in Davos, on the one side, and critical analyzers on the other. We are hoping to keep you informed and entertained- and we promise to report the fashion faux-pas of the day. Hope you do the same! Thea Chiesa and Diana El-Azar (of course, you knew we were women from all our exclamation marks!)