Daily Archives: January 23, 2013

Though the Swiss army troops on security detail tend to bark instructions in Schweizerdeutsch if you stray off-piste, inside the Congress Centre the Davos language is English. A few visiting leaders insist on their own language – Prime Minister Dmitry Medvedev is dispensing bromides in Russian as I blog – but all the debates are in English, which might be thought to give talkative Brits a competitive advantage.

There is some truth in that, and the UK chattering classes are probably over-represented. We outpunch our gross domestic product. But the Davos language is not quite the English one finds on the pink pages, or indeed in Prime Ministerial speeches.

At a session on the crisis of confidence in business the moderator told us that after the initial presentations there would be plenty of time “for your interrogatives”. As the presenters talked movingly of the crucial need for businesses to communicate clearly and fully with their stakeholders, I had the leisure to ponder why the word “question” has become somehow too blunt and vulgar to use in polite company.

When we got round to the interrogatives, it turned out that “answers” are also out of fashion. After a rather penetrating initial interrogative from the floor, the CEO of NYSE Euronext was asked: “Do you want to log on to this?” Duncan Niederauer speaks Davosian like a native, and responded without a moment’s hesitation. He knew what to do at the end of the session, too, when the panelists were asked for a “headline benediction”, which means a “closing comment”, I think. Certainly no one took it literally and swung a thurible around the platform.

Between the interrogatives and the benediction the speakers worried aloud about the decline of trust in business leaders, which the FT reported last week. New polling in the US shows that only 18 per cent of those surveyed believe that business leaders tell the truth in a difficult situation, slightly fewer than those who trust politicians. They are trusted much less than the institutions they represent.

This is a bit of a blow to the well-meaning Davos crowd. How can it be? An American produced a list of conspicuous failures over the past year or two, which he thought contributed to bad headlines and damaged reputation. The list included Bernie Madoff, Bo Xilai and George Entwistle, which seemed a bit harsh on the ex-DG. His BBC tenure may not have been glorious, but even the Daily Mail has not argued that he has real blood on his hands.

By contrast, the list of good guys, showing the rest of us the way to better corporate social responsibility, included Howard Schultz of Starbucks, which I guess shows that news doesn’t travel as fast as we might think across the Atlantic, or that the US concept of CSR doesn’t necessarily include paying tax.

What is the answer? How can business leaders become loved and revered again? “Profit with purpose” was the favourite headline benediction. Log on to that.

Howard Davies will be writing from Davos for the FT A-List throughout the week. Click here to read previous entries.

David Cameron is making three assumptions in seeking to change the basis of Britain’s EU membership and then put this “new settlement” to an in-out referendum. That our partners want Britain in at any price. That they will negotiate a new treaty in which Britain’s demands can be easily accommodated. And that the British government will be able to determine the timetable. All these assumptions are highly questionable.

First, what “new settlement” are other member states likely to agree as the condition for Britain’s continued membership? Without doubt, nobody wants the UK to leave. Minus Britain, both the EU and Britain itself would be diminished in weight and global influence. Most member states value the influence of Britain’s outward-looking global instincts and networks, and they recognise the importance of the global financial hub we provide in the City of London.

But this will not mean accepting Britain at any cost, especially if it involves unpicking the rules of the single market. No doubt Britain could find allies for a range of measures that strengthen the EU’s accountability and competitiveness and reduce its regulatory burden. But the EU is approaching the outer limit of its flexible geometry, the patchwork quilt of different opt-ins and opt-outs enjoyed by member states across the EU’s activities. Britain already opts out of the single currency and the union’s cross border migration arrangements and is proposing to quit justice and policing, including the European arrest warrant. If Mr Cameron were to seek exemption from employment and social policy regulation as well, while retaining the trade and investment privileges of the single market, others would say “sorry, with rights come obligations – you cannot treat the EU as a cafeteria service in which you arrive with your own tray and leave with what you want”.

What is Mr Cameron’s answer to this? I do not see that he has leverage over other major players, notably Germany and France. In public these countries will be polite but for years to come their overriding priority will be fixing the eurozone and securing the single currency. Britain’s demand for legitimate protection of the position of member states outside the euro against discrimination is reasonable. But if a Cameron government were to say to them “we’ll only help you fix the euro if you agree to our opt out demands elsewhere”, I think there would be a very dusty reply.

What of a future treaty negotiation which could be used as the vehicle to agree Britain’s “new settlement”?

At one stage a new treaty was planned to overhaul the eurozone’s governance – firewalls and stability mechanisms, fiscal co-ordination and transfers, banking union – but the idea has lost support. The markets’ seeming implacable demand for such clarity has abated since the ECB’s intervention calmed nerves. Market pressure might return and, with it, fresh talk of a treaty. But, for now, there is a preference for carrying out the necessary changes in stages, within existing treaties, rules and protocols, or by means of very tightly drawn new treaties which can be approved by parliaments rather than highly risky national referendums.

Mr Cameron should look to the precedent offered by one of his predecessors, Labour premier Harold Wilson. When Wilson “re-negotiated” Britain’s accession to the European Community in 1974, he did so by finessing the agreement and not by re-opening the accession treaty itself. This, he knew, would be a bridge too far for other heads of government and Mr Cameron will soon discover the case will be the same for him.

So, if the prime minister wins the next election and embarks on this venture, how will he bring it to a close? It will be very difficult to start negotiating at a time of his sole choosing, let alone conclude in any meaningful way at a time of his choice. Mr Cameron may still be bargaining in five years from now, creating huge uncertainty for investors and their access to Europe’s single market.

And what of the subsequent British referendum he says will determine acceptance or not of his putative “new settlement”? Mr Cameron might find himself in the worst of all worlds: starting a negotiation he cannot quickly end, on eventual terms that satisfy neither pro- nor anti-Europeans, with voters probably bored by the process and using the ballot to express their views on any number of unrelated issues. Whether you regard Mr Cameron’s Europe gamble as a sincere attempt to reform and improve Europe or a cynical ploy to head off party opposition to his leadership, he does not seem to be a man with a plan.

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