It’s the first day of the World Economic Forum. We’ll keep you up to date. By Tom Burgis, Claire Jones and Ben Fenton in London with dispatches from FT correspondents in Davos. All times are GMT.
18.26 That’s it for the first day of Davos live.
Among the talking points were monetary policy, currency wars and that speech by David Cameron.
The British PM arrived in Switzerland today and is due to talk at 10.30am local time (9.30am UK time) tomorrow.
18.03 Unsurprisingly, the “resilient dynamism” (see 10.09) theme of this year’s Davos hasn’t gone down too well with the British press pack:
17.48 The IMF’s managing director Christine Lagarde took the stage after Mario Monti and she’s just taken a swipe at Cameron:
17.40 Gideon Rachman’s analysis of the Italian PM’s reaction to Cameron’s speech:
Gideon Rachman: His line that Europe does not need reluctant Europeans will be spun as anti-Cameron. But, in context, I think Monti was trying to be positive.The Italian PM said Cameron was right that “prosperity and growth have to be priority number one” and that he was confident “Britain will vote to stay inside” in the event of a referendum. He also said it’s good that Cameron will ask the “fundamental” question of whether nations are in or out and that this will provoke Brits to make a proper analysis of costs and benefits.
17.12 Monti (who is speaking now) on Cameron:
The applause sounded rather muted, though. The Italian PM got a louder cheer when he said the EU needed “willing” citizens. This from Chris Giles:
Chris Giles: To applause at the World Economic Forum, Mario Monti, Italian prime minister, said: “we desperately need willing Europeans, we don’t need unwilling Europeans”.
17.06 More reaction to Cameron’s speech — this time courtesy of our Berlin correspondent Gerrit Wiesmann:
Gerrit Wiesmann: Markus Kerber, managing director of the German industry association(BDI), warned Mr Cameron’s path would lead him to “a dead end” and ignored that “EU-membership is above all in the UK’s interest”.
“Anyone who continuously rejects economic and currency union and declares national interests as their only yardstick is endangering the internal market,” he said.
Deepening economic policy co-operation and political integration were the only ways to ensure the competitiveness of European industry in the long term.
“German industry wants a United Kingdom which is active within Europe. Great Britain has proved itself to be an important driver of open markets, both in Europe and across the world,” he said.
16.49 A contender for the best one-liner so far, via the economics editor of the UK’s Channel 4 television.
16.36 Still to come this evening are Mario Monti, Italy’s technocrat prime minister turned election contender, and IMF chief Christine Lagarde. Both can be expected to offer some thoughts on the outlook for the eurozone. James Gorman, Morgan Stanley’s chief exec, has done just that, and seemed, in comments to CNBC, to be pretty relaxed about the whole thing.
“Europe has bottomed and the risk or the fear of a breakup of the euro is not likely anymore.”
16.09 The big moment of the Davos day so far has been Dmitry Medvedev’s talk (see 11.35). Gideon Rachman, the FT’s chief foreign affairs commentator, has had time to reflect on a less than convivial session.
The World Economic Forum has a reputation for never putting anybody important on the spot. But this morning, Dmitry Medvedev, the Russian prime minister, was an exception to this rule. Before he spoke, the forum presented three scenarios for Russia’s future – all of them depressing. Then it polled the audience on what Russia’s top priority should be: 77.9% said “good governance”. The implied rebuke to Medvedev and his government was obvious.
In his speech, the Russian prime minister said – unsmilingly – that he was not surprised by the verdict, since it reflected well-known popular perceptions. But he personally had voted for another option. Then he set about trying to combat some other “myths”. Russia’s population is not declining – it has stabilised. Efforts to form a customs union with its neighbours are not a plan to restore the USSR – that’s “nonsense.” Russia does not want an ever-higher oil price; the current level is “optimal”. And Russia is not over-dependent on oil and gas – its future also lies in agriculture and the knowledge industries.
Finally, the Russian leader laid into the EU for “changing the rules of the game, seizing assets and not honouring previous arrangements”. Funny, some people make a similar complaint about the Russians.
16.04 While we’re on the subject of Cameron’s decision to park a battleship in the Channel big speech on Europe, FT editor Lionel Barber says it’s being overshadowed by more pressing matters at Davos.
The speech is making some waves here and there, however. Joseph Nye, a former US defence department official and professor at Harvard, said:
“Europe with Britain in it is much more powerful and important than without it.”
President Barack Obama “very much wants Britain to remain in the EU”, Nye told a panel at Davos.
Among those defending Cameron were Austrian eurosceptic Hans-Christian Strache of the far-right Freedom Party, who called the criticism of the British leader “hysterical”.
Patrick Jenkins, the FT’s banking editor, cornered Tony Blair in the cramped lift of a Davos hotel and heard the former UK PM’s views on the matter:
“Why is [Cameron] doing this? It just creates dreadful uncertainty for business and the City. Why do it now other than for political reasons?”
The markets appear singularly unmoved. This was the answer Sam Jones, the FT’s hedge funds correspondent, got when he raised the prospect of a referendum with one hedge fund manager:
“It’s a stupid question to even ask. The euro hasn’t budged. Sterling hasn’t budged. Are you really asking me for an opinion about something that may or may not happen in politics in four years time?”
15.47 Gideon Rachman has managed to get some more reaction to Cameron’s speech:
Valdis Dombrovskis, prime minister of Latvia: “We like the emphasis on strengthening the single market and competitiveness. And I am also pleased that Cameron stressed that he personally supports Britain’s membership of the EU. But the issue of renegotiation is very tricky and cherry-picking is a real risk. So it’s a bit complicated, but let’s see if we can move forward.”
Martin Schulz, president of the European Parliament (to Reuters): “European leaders will reject this ultimatum.”
15.21 Some gnomic wisdom from the CCP’S Li Jingtian:
15.10 The International Monetary Fund has downgraded its global growth forecasts. Again. Here’s Chris Giles on the Fund’s latest assessment on the international economy:
Chris Giles: The global recovery is likely to gather momentum this year and next, but at a slightly slower pace than appeared likely three months ago, the International Monetary Fund predicted on Wednesday in an update of its forecasts.
Without any signs of an end to the global “two-speed” economy with emerging economies powering ahead while high-income countries languish in the slow lane, the fund called for action to boost confidence and growth in advanced countries.
The IMF’s assessment broadly matches the consensus of economists attending the World Economic Forum who are more positive in 2013 than at any point since the crisis started five years ago.
14.53 Another WEF, another deluge of announcements of research into vitally important, thoroughly ineffable topics. One such bombshell reveals: Nine out of 10 Global Decision-makers Believe Collaboration Is now Essential if Global Economy Is to Recover – Finds Bank of America Survey on “The Connection Imperative” for WEF 2013 in Davos.
Or, as Ft Alphaville reinterprets the data: Ten per cent of self-identified decision-makers don’t want to talk to you even if the global economic recovery hangs in the balance.
14.28 A panel on “de-risking Africa” has just wound up, featuring some serious heavyweights from the continent. Tom Burgis was watching the feed.
There has been much boosterish talk about Africa of late. The continent is, various august publications have declared, “rising”. Growth is relatively high compared to the sluggish economies of the west. Yet as a high-level session just concluded at Davos highlights, the African sky is hardly cloudless.
Jacob Zuma, South Africa’s president, may have taken issue with the suggestion in the session’s title that the continent needs to be “de-risked”. But dangers abound, be they the scars of empire or present-day misrule.
Vowing that southern Africa would forge ahead with the Inga dam mega-project in Congo – an endlessly delayed massive electricity venture – the leader of Africa’s biggest economy bridled at criticism of the lack of the basic ingredients of industrialisation. “Colonialism left us with a legacy of no infrastructure,” Zuma said.
That lack of infrastructure is also both a cause and result of the continent’s chronic problem: an inability to broaden its economies beyond the export of raw commodities.
“Any country that depends on one major commodity, it’s a big risk,” said Goodluck Jonathan, Nigeria’s president. He should know. Africa’s most populous nation and biggest energy producer depends on oil revenues for four-fifths of government income and almost all its hard currency earnings.
Such dependency has been linked to everything from coups to underinvestment in education. Stressing the potential of agriculture, Jonathan rattled off diversification initiatives.
But recent data from the African Development Bank (whose much-admired boss, Donald Kaberuka, is also at Davos) paint a grim picture. Its export diversification index, in which a lower score indicates a dependence on raw commodities such as oil, gas and minerals, shows that African economies remain cripplingly narrow, with only a handful of exceptions.
So while it may be true, as Sunil Bharti Mittal, the Indian tycoon whose telecoms group bought into Africa with the purchase of Zain’s assets in the continent, said, that “the last bastion of big growth is the African continent”, it is also in thrall to commodities markets. “Africa relies very heavily on commodities,” Mittal said from the stage, and weakening prices are “a concern”.
The infrastructure investment shortfall is estimated at some $90bn. And the outlook is worsening, according to another panellist, Graham Mackay, executive chairman of SAB Miller, the South African brewer that ranks among the most pan-African investors. Infrastructure investments are not keeping up with growth, he warned. “On balance, the infrastructure deficit is widening rather than narrowing.”
Perhaps the bigger problem is one of perception. Paul Kagame, the Rwandan president who is still held in high esteem in much of the west for his economic successes despite an authoritarian streak and his government’s meddling in neighbouring Congo’s wartorn east, posited as much from the floor.
“The major problem I see is that Africa’s story is written from somewhere else and not by Africans themselves. And that’s why the rest of the world looks at Africa and wants to define it. The best thing we can do for ourselves is to own our problems and own our solutions and write our own story.”
14.13 Davos’s status as a tweeter’s paradise has been confirmed by the inclusion of an WEF Twitter board at the event. Nouriel Roubini took to twitter (naturally) to show off his number 3 slot in the wonk board of fame:
13.46 English might be the official language of Davos. But there is still plenty that gets lost in translation, writes Howard Davies on the FT’s A-List blog:
Howard Davies: 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.
13.25 FT editor Lionel Barber has tweeted former Bank of Israel governor and JPMorgan Chase chair Jacob Frenkel’s eloquent take on the futile and destructive nature of currency wars:
13.16 By undermining trust in the entire tech sector, a serious cyber attack could have devastating consequences for the global economy. The FT’s Gillian Tett writes that America is particularly exposed.
Gillian Tett: Cyber security features heavily in this year’s Davos agenda — and it is easy to see why. This morning I attended a closed door meeting of academics, government officials and business executives where the topic cropped up, and the message was chilling: there is barely a large company out there today which has not had its infrastructure and systems breached, and one tech CEO predicts that “it is just a matter of time before we have at least one big disaster with data, at a bank or something like that.”
And if that occurs, it will not just be individual companies that suffer: trust in the tech sector is currently sky-high, as surveys from groups such as Edelman shows. If that trust suddenly cracks it could have a very damaging impact, given how dependent modern economies are on mobile technologies and communication, and the degree to which big companies are focused on big data.
So is there anything that can be done? There is hot debate on this issue in the meeting, with some voices calling for companies to adopt a more holistic strategy towards their mobile communications, and invest more resources in the issue. But one of the most interesting points of dispute is the degree to which governments should, or should not, get involved in helping companies to combat cyber attacks.
Everyone agrees that there is an “agency” problem in tackling this issue in the corporate world, as economists might say: no individual company wants to stick its head above the parapet — but getting collective action is hard. In some countries, such as Australia and theUK, the governments are already heavily involved in terms of corralling business to act in a proactive manner.
But, while that state action is accepted in places such as Australia, the big elephant in the room isAmerica. American companies are now being targeted by hackers to a startling degree, and the US intelligence forces have — in theory — extremely sophisticated systems to combat this. But there is still huge reluctance in the US corporate world towards the idea of the state intervening too heavily in corporate affairs, which begs the question of who (if anyone) will take the leadership here.
Better public education about cyber security might, of course, help (and perhaps puncture the public’s excessively blind faith in technology.) But there is another subtle issue here: it is tough to raise public awareness until there is a true disaster.
In that senses, then, the whole debate around cyber security reminds me of the problems with the credit bubble before 2007: although the looming dangers in derivatives and mortgages, say, were clear to anyone who delved into the issues before 2007, most of the media did not want to cover it since the story seemed complex, slow-moving and distinctly “geeky”, and there were few “faces” who could be attached to the tale. Of course, once the financial crisis struck, the level of public (and media) interest rose but then it was too late. Sadly, I suspect that this pattern may well be echoed for cyber security too.
13.02 The FT’s chief foreign affairs columnist Gideon Rachman has this tidbit from this morning’s session with Russian PM Dmitry Medvedev:
Gideon Rachman: Medvedev was unamused that 77.9 percent of the audience had said good governance was the top priority for Russia in an interactive poll. “I voted for something else,” he said.
12.53 The FT’s Ireland correspondent Jamie Smyth has news from Dublin on the Cameron’s speech:
Jamie Smyth: Eamon Gilmore, Ireland’s deputy prime minister, said Ireland wanted Britain to remain in the Union.
“The EU is better with Britain in it and Britain is better with being in the EU,” he said.
“We want to see Britain as a fully engaged member of the European Union. It is important our focus doesn’t get deflected into debate about who is in or who is out,” said Mr Gilmore.
12.44 Reuters has just flashed that the German chancellor has reacted to British PM David Cameron’s speech earlier today, in which he promised a straight “in-out” referendum on the UK’s future in the EU by 2017. Here’s what they’re reporting:
MERKEL SAYS WE ARE PREPARED TO SPEAK ABOUT BRITISH WISHES BUT HAVE TO FIND COMPROMISE THAT IS FAIR FOR ALL – REUTERS
12.42 Turkey’s foreign minister Ahmet Davutoglu wants Syria’s attacks on its people to be declared a war crime. This from AP:
DAVOS, Switzerland (AP) – Turkey’s foreign minister is calling on the international community to declare the Syrian regime’s bombardment of its own citizens a war crime and to insist on humanitarian access to areas of central Syria.
Syria has seen a new rise in violence in recent weeks, including a government rocket attack Wednesday, in a conflict that the U.N. says has killed more than 60,000 people.
Turkey’s Ahmet Davutoglu said Wednesday that “Aleppo and many other cities are being bombarded by airplanes indiscriminately.” His country has taken in tens of thousands of Syrian refugees.
Speaking at the World Economic Forum in Davos, Switzerland, he said, “this is a criminal act” even at a time of war.
12.27 Overheard in Davos. The FT’s economics editor Chris Giles catches this nice bit of hyperbole from Jamie Dimon:
12.07: One of the big topics of conversation at Davos is, of course, the possible outbreak of “currency wars” in the world, and to that end, the FT’s Jonathan Soble has interviewed Akira Amani, the Japanese economy minister, whose attitude to his German counterparts could not be described as conciliatory:
Akira Amari, economy minister, hit back against admonishments this week by Jens Weidmann, the president of Germany’s Bundesbank, and other German and UK officials who have raised concerns about the new Japanese government’s assertive efforts to loosen monetary policy.
In an interview with the Financial Times on Wednesday, Mr Amari rejected Mr Weidmann’s characterisation of Japanese moves as “alarming infringements” of central bank independence that could lead to “politicisation of the exchange rate”.
“Germany is the country whose exports have benefited most from the euro area’s fixed exchange rate system. He’s not in a position to criticise,” Mr Amari said.
11.52: Chris Giles, our economics editor, says economists have an (almost) optimistic message for Davos:
Predictions offered in the mountain air of Davos are often spectacularly bad predictors of the year’s significant global events. Most notably almost all delegates failed to see the financial crisis coming in the years before 2007. Throw-away calls to avoid complacency and address risks there were aplenty, but real understanding of the fragility of the world’s economic systems were absent.
But since the financial crisis, the predictive power of the WEF has been much more impressive. Deep concern about the eurozone and Greece dominated discussions in 2010 well before it was fashionable, accurate talk of a “three speed” global economy infused debates in 2011 and an unexpected confidence emerged last January to most delegates’ surprise as they listened to European policy makers and began to trust they would act.
11.47: No friends found for Mr Cameron in Paris, not surprisingly, as Hugh Carnegy, the FT’s European managing editor reports from the French capital:
Bernard Cazeneuve, French european affairs minister, said after a cabinet meeting that the “internal politics of the hard tendency of the Conservative party” explained Mr Cameron’s stance. “It is always irritating when the European question is used for electoral ends,” he
said.He said France wanted the UK to stay in the EU, but he again used the phrase that membership could not be ‘a la carte’. Jean-Dominique Guiliani, head of Robert Schuman Institute, said it remained unclear exactly what Mr Cameron wanted to renegotiate. “Every time I ask (British officials) I get no clear response,” he told the FT. He said EU members wanted to preserve common rules for the single
market ,with no more ‘opt-outs’. “Cameron is all alone,” he said.
11.42: The FT’s John Gapper has all you need to know about badge anxiety at Davos.
11.35: BREAKING: Dmitry Medvedev tells Davos audience that the current oil price is “more or less optimal both for consumers and producers” from Russia’s perspective. He said his country believed high commodity prices hindered the development of the world and of the Russian economy.
11.32: Here is the FT’s story on the news from Davos that Daniel Vasella, the Swiss executive who created Novartis, has unexpectedly said he is standing down as chairman of the pharma group. He was chief exec until 2010.
11.29: Aluminium oligarch Oleg Deripaska tells the Davos Russia forum, which is waiting to see prime minister Dmitry Medvedev, that having only two major banks is hurting industrial growth.
“Interest rates which are at enormous high levels will prevent us from growing.”
11.20: Herman Gref, chief executive of Sberbank, tells his Davos audience that Russia’s banks deserve a better ranking for “soundness” than being ranked No. 132, saying they are “better than we look”.
11.16: Sarah O’Connor, FT economics reporter, has been reading the instant reaction of financial analysts to the Cameron Europe speech:
City economists were busy drafting notes for investors on Wednesday
morning about the implications of Mr Cameron’s speech for the
beleaguered UK economy. Simon Hayes, UK economist at Barclays Capital,
told his clients: “Although the issues are profoundly weighty, the
timetable is such that this announcement carries few immediate
implications for government policy, or for the economic outlook over
the next couple of years, although there is a risk that uncertainty
about the UK’s position in the EU might be detrimental to some
business investment.”David Tinsley, UK economist at BNP Paribas, was also relaxed about the
immediate implications for economic growth. “In the short-run the
macroeconomic implications of all of this are probably quite limited,”
he wrote. “It’s reasonable to suggest that uncertainty over the UK’s
place in the EU might have some impact on long-run investment
decisions, but given the doubts over if or when a referendum will be
held, this should not be over-egged.”Others were more concerned. One economist, who did not want to be
named, warned clients there was a risk that foreign investment
spending in the UK would be hit suddenly and persistently.
11.13: A double-barrelled Twitter response to the Cameron speech from Martin Schulz, president of the European Parliament:
11.06: If he was hoping for a nuanced message from Germany in reaction to his speech, Mr Cameron may be disappointed. Here is Guido Westerwelle, the German foreign minister:
“Germany wants the United Kingdom to remain an active and constructive part of the European Union… but cherry picking is not an option.”
11.01: Here is the Press Association report on Nick Clegg’s critique of his coalition partner’s EU speech. Predictably, it is not exactly a ringing endorsement:
Deputy Prime Minister Nick Clegg said that a renegotiation of Britain’s position in Europe was not in the national interest and would lead to years of uncertainty for business.
“The biggest challenge which is facing our country is that we have a fragile economy which is taking time to recover,” he said. “That’s why my priority, certainly the priority of the Liberal Democrats, is to build a stronger economy in a fairer society.
“Now, that job is made all the harder if we have years of grinding uncertainty because of an ill-defined, protracted renegotiation of Britain’s status within the European Union.
“That, in my view, will hit growth and it will hit jobs and that’s why, in my view, it’s not in the national interest.”
Asked whether Mr Cameron’s promise would put a strain on the Coalition, the Liberal Democrat leader replied: “It’s entirely for the Prime Minister, as leader of the Conservative Party, to set out what he wants to put in the Conservative Party manifesto and what he wants to do if there was a Conservative majority government.
“My priority remains, and will always remain: yes, reform in Europe; yes, a referendum where the circumstances are right, as we’ve set out in law; but above and beyond anything else, promoting growth and jobs and building a stronger economy in a fairer society.”
10.55: More reaction from Brussels, courtesy of the FT’s bureau chief Peter Spiegel:
If Mr Farage is the European Parliament’s most high-profile advocate for British exit, former Belgian prime minister Guy Verhofstadt is its leading federalist, heading the centrist Liberal group with an outspoken advocacy for political union.
Mr Verhoftadt warned that Mr Cameron was “playing with fire” by promising an in-out referendum, since his government has no control over the timing or outcome of EU treaty changes and has raised “false expectations that can never be met”.
However, Mr Verhofstadt – whose European Parliament grouping includes British Liberal Democrat – went even further, belittling the speech as being “full of inconsistencies [and] displaying a degree of ignorance about how the EU works”.
The Flemish liberal said Mr Cameron cannot call for common rules in the single market while asking for British exceptions, and noted that Mr Cameron’s call for a “single market council” comes despite the fact that “we already have one” – an apparent reference to the EU’s competitiveness council, which includes single market issues.
“There can be no question of individual renegotiation or opt out by a single Member State from agreed policies,” Mr Verhofstadt said. “To do so, would precipitate the unraveling of the Internal Market as other countries seek their own concessions in return. Cameron will not succeed if he attempts to hold his European partners to ransom.”
10.50: Still on the Cameron speech, the BBC reports that the prime minister’s own deputy, his coalition partner Nick Clegg, has already criticised his words:
10.47: The UK prime minister is picking up some reaction straight from the horse’s mouth, according to Reuters, with what looks like a slapdown from Germany.
10.44: With the WEF just beginning to warm up, the Cameron speech promising an in/out referendum on a putative renegotiated British membership of the EU continues to hog most of the attention, both within Davos and without.
Peter Spiegel is sending in reaction to the Cameron speech:
Someone who could have a very direct effect on the British debate unleashed by Mr Cameron’s speech is Nigel Farage, head of the euroscepitic UK Independence Party. The Brussels MEP spared little time to use Mr Cameron’s pledge of an in-out referendum to argue that “out” is preferable.
“No longer can the case for British withdrawal be confined to the margins,” Mr Farage said. “The genie is out of the bottle.”
Mr Farage called the speech UKIP’s “greatest achievement to date,” and said he would use the coming campaign to argue for a trade deal with the EU instead of membership. “We will campaign…to cooperate and be good neighbours, but we do not want membership of a political union.”
10.40: Lord Mandelson, a former European commissioner and at the heart of the UK’s relations with Europe in Tony Blair’s government, writes in the FT’s A-List comment pages disparagingly of David Cameron’s policy and his balancing strategy with his own party.
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.
10.35: The pound is stronger this morning than might be expected, Jamie Chisholm reports in his Global Markets Overview:
The pound is rallying as investors parse some contrasting news on the currency. Cable – the sterling/dollar cross – started the day by falling to $1.58 for the first time since August, but is now up 0.3 per cent for the session to $1.5876. Support for the pound is coming from better-than-expected UK jobs data. Meanwhile, the British unit is shrugging off comments from the Bank of England’s recent monetary policy meeting in which it was stated that sterling’s real exchange rate may be above the level needed to rebalance the UK economy.
10.30: Asked whether the recent hostage crisis in Algeria and the increase of terrorist activity in Africa was evidence that US policy towards the Islamic world and the Middle East was wrong, prime minister Medvedev says: “It would seem so.” [He is speaking in Russian and this is being translated.] But he adds that US/Russia relations are “stable and productive…not as good as we might like them to be…but [investors] should not be worried about [those relations].
He says he will greet David Cameron when he meets him today, and will “of course” want to improve UK/Russia relations. His main role in Davos is to “tell the truth” about Russia.
Medvedev’s main message in the interview with Bloomberg was that Russia would push ahead with the sale of more monopoly assets.
10.25: Dmitry Medvedev says in his interview with Bloomberg TV that Russia may lend more money to Cyprus, but only if “our European partners” put something in to the pot.
He says that he will not run against Vladimir Putin because they represent the same political views, but does not rule out being president again in the in/out situation that Russia’s leaders engage in.
10.22: With Davos attendees only feeling their way towards some decent soundbites, wit remains the preserve of those commenting on David Cameron’s in/out referendum speech, Peter Spiegel reports from the Brussels bureau of the FT:
French liberal Sylvie Goulard, widely considered one of the rising stars in the European parliament and a leading voice for more federalism, didn’t see much she liked in Mr Cameron’s speech: “Cameron’s vision of Europe is: ‘I love you very much that I will marry you as long as I remain single’.”
10.16 BREAKING NEWS Dmitry Medvedev, the Russian prime minsiter, tells Bloomberg that Russia will push for growth of at least 5 per cent this year and will work even harder to “create the right climate for inward investment”.
The Russian president says he is looking for an increase in privatisation of Russian resources and industry.
“We are looking for a more effective owner than the state, because the state cannot always be a good owner.”
The Bloomberg interviewer points out that actually state ownership has grown in the past few years, but Medvedev rejects that claim, pointing to its recent disposal of Rosneft equity.
10.09 We would strongly recommend following Davos Deville, a mysterious and iconoclastic tweeter with murky connections to the FT’s Alphaville posse. This is a flavour:
On which theme, FT energy blogger Nick Butler has posted on what you won’t hear in Davos this year.
Fashions come and go and the agenda for the annual meeting of the World Economic Forum in Davos is usually a pretty good guide as to whether skirts are long or short this year. This year’s title for the meeting is “Resilient Dynamism”, which is very cool. But the issues that have slipped down the agenda are energy security and climate change….
10.05 Henry Blodget of Business Insider deconstructs the Davos freebie bag.
10.02 Today in Davos there will be plenty of set-piece comments from global leaders that will grab the limelight, writes the FT’s Gillian Tett.
Last night, the FT co-chaired a dinner with Wipro, the Indian technology group, looking at the issue of how “big data” is over-turning the corporate universe. The topic sounds geeky, but it was a very lively conversation, with Dick Olver, chairman of BAE Systems, TK Kurien, CEO Wpiro, and Sir Martin Sorrell, CEO of WPP on the panel. Big data is transforming how companies operate, internally and externally, at startling speed. However, one big challenge for companies such as BAE or Wipro is finding engineers who can make sense of the social implications of data (or as TK Kurien pithily observed, how do you teach engineers to handle “ambiguity”.) Another big problem is that the rise of social media and change in employee norms is challenging traditional corporate hierarchies. And, as Sir Martin pointed out, the really big headache for companies is how to break down internal “silos”: tomorrow’s corporate winners will be the businesses that can not just collect numbers but make sense of them too, and find ways to use this data to foster more collaboration across the organisation. Expect to hear a lot more on that theme in Davos in the coming days.
This morning I took part in a debate that the FT co-hosted with Edelman on trust. This was distinctly unnerving: although trust in business, government and media has risen slightly across the world in recent months, after plunging in the wake of the 2008 financial crisis, Edelman’s latest trust barometer shows that there is a dire lack of public trust in leaders.
Ruth Porat, CFO of Morgan Stanley, suggested that the readings on US banks showed the value of stress testing and transparency (eurozone banks and policy makers take note!) Yoshito Hori, head of Globis business school, pointed out that trust in Japan has been badly undermined by the Fukushima disaster but optimism has now risen with the arrival of the new Abe government. Bob Moritz, head of PwC, observed that the crisis of leadership put the onus on companies to become much more transparent and engaged, via social media and other platforms. Kevin Rudd, former prime minister of Australia, pointed out that the big challenge for politicians is that the public “conversation” has become so fragmented that it is tough to build trust or engagement (notable fact: Rudd currently has 1.2m followers of his tweets.)
However, some of the most fascinating remarks came from Rui Chenggang of CCTV, who suggested that in today’s world, the public in China and elsewhere has the equivalent of ADD (attention deficit disorder): although scandals break dramatically, and tend to affect almost anyone in the public eye, they tend to be forgotten quickly too; business and government leaders simply have to accept this pattern, and engage with society via social media (Chenggang apparently has 10m followers).
Last but not least, there was a lively debate about energy — and whether the energy sector can avoid the reputational hits that finance has suffered in recent years; representatives of Chevron argued that they are already acting to avoid the bankers’ fate. However, issues like shale gas are becoming “hot”. Expect to hear a lot more about technology this week in Davos, particularly cyber security. And brace yourself to hear a lot more debate about whether companies can interact effectively with society, in a world where social media is up-turning many of the old norms and economic polarisation is growing.
09.34 There’s someone sitting there…
09.26 The WEF’s financial services panel has finished but the fallout from David Cameron’s Europe speech is just getting going — and will doubtless be reverberating through the corridors at Davos through the day. Here is the full text of Cameron’s EU speech. From Paris, the FT’s Hugh Carnegy sends some wonderfully barbed comments from the French government.
First reaction from France was a warning from Laurent Fabius, foreign minister, who likened the EU to a football club. “You join the club, but once you are in you can’t say that you want to play rugby.”
Mixing his metaphors, Mr Fabius repeated the standard French line against Mr Cameron’s demand to renegotiate the terms of Britain’s EU membership. “You can’t have Europe a la carte,” he said on France Info radio.
He added that leaving the EU would be “dangerous” for Britain. He threw back at Mr Cameron the UK prime minister’s taunt last year that Britain would “roll out the red carpet” to French businesses fleeing President Francois Hollande’s high tax regime.
“The other day I was in a meeting with British businessmen and I said: ‘Listen, if Great Britain decides to leave Europe, we will roll out the red carpet for you,” he said.
Pierre Moscovici, the finance minister, offered a more nuanced reaction, saying Britain had always been a “particular” but “extremely useful” member of the EU.
“The European spirit is also to respect diversity. I support one Europe and one Europe that is differentiated, one Europe where some can advance more quickly than others,” he told BFM TV.
From Brussels, the FT’s Alex Barker sends this invaluable explainer of the nuts and bolts of how David Cameron’s call for an British referendum in the event of a change to the EU treaties would work.
And Jan Techau, the head of Carnegie Europe in Brussels, has given FT Brussels bureau chief Peter Spiegel his take on the speech.
“There is one fundamental flaw in David Cameron’s thinking: you can’t separate politics and economics. His entire re-negotiating idea for the EU is based on this idea, which reflects old gentlemen’s thinking. It won’t work, as the current crisis shows.
His pro-European wordings were much stronger than expected. That actually constituted leadership.
It is very unlikely that Cameron will get the far-reaching re-negotiating of the treaties. Cameron is the only leading EU politician who really wants treaty change. That’s not without irony.
Very smart speech tactically on the domestic political front, putting tremendous pressure on Labour and Lib Dems to find a strong position.
Business captains are also starting to react, among them WPP’s Martin Sorrell.
09.18 “A pessimist is an optimist with experience,” quips Jamie Dimon of JP Morgan. Here he is, alongside Axel Weber.
Photo: Reuters
09.15 Another big theme of the week: whether it falls to central banks, governments or a mixture of both to revivify the world’s economy. At this morning’s financial services panel, Axel Weber, chairman of UBS and former Bundesbank president, has given a very similar speech to that of Sir Mervyn King, BoE governor, last night, reports Chris Giles, the FT’s economics editor.
“There is a need for expectations management,” Weber said, because central
banks cannot solve a solvency crisis. Low interest rates and quantitative
easing are “heading into dangerous territory” where this generation “is
living at the expense of future generations“.“I am not in favour of a short term fix … we are trying to keep a speed
limit for our economies that is simply unsustainable.”This is the orthodox supply-side former central banker talking with a
tough message that advanced countries should get used to slow growth.
09.07 Should you not be mixing with the mighty in person, you can watch them on the WEF’s own feed.
09.00 Just when you thought it was safe to go outside…
“Financial markets structures haven’t changed much. We’re not safer yet.”
So says Zhu Min, deputy head of the International Monetary Fund, speaking at the same heavy-hitting finance panel as Dimon and Weber (see 08.52). He adds that, five years after the crisis, there’s not enough regulation, says Patrick Jenkins, FT banking editor, who is in the room. It would be a “huge mistake” to pull back from proposed regulatory changes, Zhu exhorts.
It seems he is in a minority. A straw poll of the 500-plus audience suggested about 90 per cent were in favour of a regulatory retreat.
08.42 Meanwhile, not in Davos but in London, David Cameron is giving that long-awaited and much-leaked speech on Britain’s relationship with Europe. We expect it to ruffle some feathers at the WEF. He’s saying he will hold an in-out referendum on the UK’s EU membership but vows to campaign tirelessly to stay in.
Here is FT political editor George Parker’s advance take on the speech.
“It is time for the British people to have their say. It is time to settle this European question in British politics.”
He has now finished and is taking questions but Nick Robinson, political editor of the BBC, has spotted a telling slip:
08.25 Patrick Jenkins, the FT’s banking editor, is listening to JP Morgan boss Jamie Dimon — one of the few Wall St titans to come through the financial crisis un-defenestrated — speak at a session on financial services. He’s touched on the “London whale” scandal, involving a massive trading loss. Dimon says:
The London whale incident was a “terrible mistake” but “customers didn’t
suffer, it wasn’t venal”. He added as an aside: “if you’re a shareholder
of mine I’m deeply sorry, but you move on”.
This debate over the opacity of banks has been bubbling for the last couple of years in the US, reports the FT’s Tom Braithwaite.
Paul Singer of Elliott Capital Management versus Jamie Dimon of JPMorgan Chase is a rare heavyweight clash in public of an argument that has gone on in private over that time — and seems to be building.
Mr Singer told the Davos session that “completely opaque” bank balance sheets made it impossible to tell whether they “are actually risky or sound”.
The revelation last year that JPMorgan had accrued a credit derivatives position valued at tens of billions of dollars that spectacularly blew up has fed the concerns. Mr Dimon ultimately acknowledged that the episode cost JPMorgan more than $6bn and he has overhauled his executive team in the aftermath.
Mr Dimon’s retort that “with all due respect hedge funds are pretty opaque too” may have some justification but Mr Singer, who has engaged in a high-stakes battle with the Argentinian government in the last 12 months, was not giving any ground. “No hedge funds supplied any systemic risk during the 2008 crisis,” he said.
Plenty of hedge funds and institutional investors echo Mr Singer’s comments, with considerably more venom, in private. A widely read piece in The Atlantic recently aired some of these arguments. If even JPMorgan and Wells Fargo, both seen as well-managed banks, are difficult to understand on current reporting principles, perhaps something needs to be changed, they argue.
Such matters are, however, tricky to regulate when you have national watchdogs trying to police banks that sprawl across borders, as Axel Weber, formerly of the Bundesbank and now chairman of UBS, has just told the same session. Patrick Jenkins reports:
Weber attacks the breakdown of a global regulatory standard as different jurisdictions in US, EU, UK and Switzerland go in different directions. “You need a global standard. But this is not happening.” He warned that if there isn’t a harmonised rulebook the dangers in the global banking system will increase.
08.09 And we’re off. Another summit of the great, the good and the astoundingly wealthy is under way in the Swiss mountains. Some big names up today: Jamie Dimon (who’s already speaking), Russia’s Dmitry Medvedev and Italy’s Mario Monti, Christine Lagarde of the IMF and Nouriel Roubini. There is an African flavour to the afternoon, too: Goodluck Jonathan and Jacob Zuma, presidents of Nigeria and South Africa, respectively, will both be speaking.
The FT contingent, led by the editor, Lionel Barber, is as follows:
Reporting:
- Chris Giles, economics editor
- Patrick Jenkins, banking editor
- Tom Braithwaite, US banking editor
Finding and distributing nuggets of wisdom:
- Gideon Rachman, on foreign affairs
- Martin Wolf, on the global economy
- Gillian Tett, on markets, finance and whatever else catches her eye
- John Gapper, on business
The tone in the build-up is thus, report Mssrs Braithwaite and Jenkins:
Executives arriving in the Swiss resort of Davos for the annual World Economic Forum, which begins in earnest on Wednesday, are plagued with concerns about growth, restive shareholders and declining margins.
The banking elite are back in force in 2013, with Lloyd Blankfein, chief executive of Goldman Sachs, making his first appearance since 2008. His counterparts on Wall Street and in Europe are, for the most part, joining in.
For views and opinions on the European Union from Peter Spiegel, Joshua Chaffin, Alex Barker and James Fontanella-Khan, follow the