Davos

Davos

Notes from different corners of the world.
Feb. 5 1997 3:30 AM

Davos

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       We Media Leaders have had a busy schedule. You will be relieved to know that your correspondent is no ordinary working journalist at the World Economic Forum. Working journalists do not wear around their necks the coveted white badge that allows them to reserve places (when the tickets aren't already gone) at the programmed luncheons, dinners, and smaller seminars. They must wear "distinctive orange-colored" badges. They cannot snack and schmooze at the Executive Lounge off the Centre's main stairway. At night they are confined to large pens outside the Congress Centre where they bay and howl at the early-rising moon ... no, now I exaggerate. A little.
       As a Media Leader, or "editorialist" if you prefer, I can go where I like--except that, thanks to our super-efficient media coordinator, Barbara Erskine, I am so booked up I can hardly get to where I am supposed to be. Although I no longer carry the imprimatur of the Washington Post, I am surprised how many people seem to have heard of S

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. Some even read it regularly. All are curious.
       Thus far I have survived all three of my panels. No one has risen from the audience to cry "Impostor! What makes you think you know anything about [economics or politics or--more tellingly--cyberspace]?" This is heartening, though I remind myself that people here are generally very polite.

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       Andrew (we Media Leaders call him Andy) Grove, president and CEO of Intel, speaks at my last panel, where I am posing as a cybermaven. The audience, many of whom are trying to figure out how to make a buck on the Internet, press him to reveal his thoughts about what sort of business model will achieve that end. "Columbus," observes Grove, "crossed the Atlantic in pursuit of a business model. Instead he discovered America." I take that as reassuring, though I'm not quite sure why.
       Will Bill Gates stumble in his attempt to become a major Internet publisher? Grove can imagine the time in the next century when it will be remembered as a curiosity that "William Randolph Gates got his start as a computer guy." That is definitely reassuring.

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       Grove also notes that the possibilities of the Internet seem so attractive that businesses will continue to flock there "even though the payoff isn't clear." This brings us to China, the subject that clouds the otherwise sunny skies of Davos. Word is quietly spreading in the business community and among the financial press that while billions are being poured into China, hardly anyone is taking out a nickel. "They're delighted to let you in and borrow your technology," says one businessman, "but in the end they plan to make everything themselves."
       At the China sessions, however, criticism is muted. Hong Kong officials are studiously optimistic that Beijing will keep hands off come July 1 when Great Britain relinquishes its hold on the last outpost of its Asian empire. (If Hong Kong flourishes, it will be an enticement to Taiwan, which is what the Chinese really care about, argues one impressively calm Hong Kong official.) U.S. officials and experts note politely that Chinese growth cannot be predicated indefinitely on the willingness of the West to buy vast amounts of Chinese exports while selling to China little except precious--and easily copied--technology. But everyone remembers how worried everyone was a few years ago by Japan's seemingly unstoppable economic machine. True, China is far bigger, and far less democratic, but surely it too will soon hit limits.
       The Chinese themselves are not always so restrained. A Beijing University professor--speaking on behalf of the government, as she made clear--warns that U.S. efforts to shore up security arrangements in the region are raising "suspicions" in Beijing.
       Until we develop a clearer policy toward China, as we once had toward the Soviet Union, observes Dow Jones' Karen Elliott House later, "we are going to be more shaped by China than shaping China." A Middle Eastern gentleman makes the same point more colorfully: "In my country," he says, "we have an old story. Someone asks the pharaoh how he came to be the pharaoh. 'Because no one stopped me,' he replies."
       At a later session, U.S. Undersecretary of Commerce Stuart Eisenstat does note that the enormous Chinese trade surplus is a matter of heightened concern--but he doesn't expect it to interfere with renewal of China's most-favored-nation trade status. Eisenstat seems to be everywhere at Davos, addressing sessions, attending dinners, talking in small groups in his earnest, pleasant way. In his spare time, he seems to have negotiated an amicable agreement with the Swiss for full exchange of information on the gold that Switzerland acquired from the Germans during World War II. (The whole issue is very embarrassing to many of the Swiss. One elegant woman approaches me urgently in a coat-check line for assurance that Americans are not truly angry over something that most current-day Swiss knew nothing about.)

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       My computer has forgiven me. Unaccountably, it has started again to ask me for my Microsoft password. This reminds me of a story told to me yesterday by Paul Sagan, the former head of Time Inc.'s New Media division. Three people are in a car. One is a mechanical engineer, another is an electrical engineer. The third is Bill Gates. The car breaks down. The mechanical engineer says not to worry, he'll get under the hood and fix it. He's sure it's the carburetor. The electrical engineer says let him do the fixing. He's sure it's the alternator. Wait a minute, says Bill Gates, why don't we just stay in the car and open the doors and slam them shut a few times. When we turn it back on it will probably work.
       Don't knock it till you've tried it.

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       Shimon Peres stops by a table in the lounge to say hello to Health and Human Services Secretary Donna Shalala and CNN's Hillary Bowker, with whom I am chatting. He jokes gently about the ebullience with which his successor, Mr. Netanyahu, described the current strength of the Israeli economy in yesterday's plenary session: "I thought the next thing he'd do is offer aid to the United States." The former Israeli prime minister is here to raise support for the Peres Institute for Peace that he has established. One of its early projects is to build a biomedical institute on the border between Israel and the West Bank, in which Israeli scientists and technicians will train and work beside Palestinian scientists and technicians. On the spot, Shalala--a world-class networker, with or without modem--thinks of three ways the U.S. government can help out. Cards are exchanged. Thus does Davos work.
       Why does Davos work? (And it does.) Deputy Treasury Secretary Lawrence Summers offers the best explanation. (Summers has wowed the conference with a short but truly eloquent statement on the plight of America's underclass--the rest of the world likes to hear about America's troubles; they are much less forthcoming about their own.) Davos works, Larry says, because of the fabulous entrepreneurship of its sternly guiding light, Klaus Schwab, and because it is exactly the right place. While hardly anyone takes time out to actually ski or even look at the mountains, the location sounds sufficiently exotic to be attractive: "You wouldn't take time out to go to Pittsburgh." Yet it is secluded enough that the distractions are few. "If we were in Paris," he notes, "we wouldn't be standing here in the hall talking about Social Security privatization." Which, I must admit, is what we were doing.

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       I am beginning to adjust to Swiss time. This morning I slept, I admit, through my scheduled breakfast on "Networking and the Professional Woman." My knees still knock a little as I drag my laptop (which now weighs 75 pounds--all that extra data) up the four flights to my neat but tidy room, but my eyes, my journalist friends assure me, are no longer crossed. It must be getting near time to go home. Tonight I will munch with Mandela. (Nelson, that is.) Tomorrow I hope, at last, to wash my hair.

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       I hope you will forgive me for boring you with some foreign-policy details. This happens to you when you come to Davos: You rediscover the world. It is a most interesting place.
       The Financial Times reports this morning that Russia has softened its stance on NATO enlargement. That is not the message that Anatoly Chubais tried to give at his press conference yesterday. The handsome, blond chief of staff to Boris Yeltsin literally pleaded with the West to stop and think before it made its "biggest mistake ... in 50 years." Enlargement, he said was "unacceptable," for reasons both political and practical. It would strengthen the hands of Gennady Zuyganov and Vladimir Zhirinovsky, Yeltsin's rivals to the left and right, and lead inevitably to a diversion of scarce Russian (and Western) resources into another arms race. And yet, as the Financial Times noted, he waffled. If, before the NATO meeting in July, the West would sign a binding treaty not to deploy new arms in the former Warsaw Pact nations, Russia would accept the inevitable.
       But why is NATO enlargement inevitable? Apparently it is because it is. No one I have talked to here--not businessmen, bankers, politicians, or foreign-policy experts--thinks (off the record) that it makes sense to grant NATO membership to even the most progressive of the new Eastern European democracies. They should be devoting their energies to economic development, to ultimate absorption into the various institutions of the European Economic Club--not to buying the expensive Western armaments needed for NATO "compatibility." And the alliance is already strained by the demands of its current commitments, express and implied. Of course, this is not the view of the would-be entrants. To the governments of Poland, the Czech Republic, and Hungary, NATO membership is a badge of honor. And the United States is officially committed. And all the power of Davos cannot resist the proverbial power of the bad idea whose time has come.

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       Another shibboleth coming under quiet attack at this year's forum is the notion of a common European currency. The European Monetary Union is scheduled to begin coinage come January 1999. But a panel of European businessmen has raised what seem obvious doubts. If you want to live by German money (and the Germans are clearly not prepared to let others tell them what sort of inflation they can tolerate--perhaps you have forgotten their last reaction to an uncontrolled currency?), you must be prepared to live by German discipline. Are the Italians, the French, and the Spanish prepared to do that? Do we--even just as tourists--want them to? And yet the EMU, too, is treated as an inevitability.

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       Speaking of social norms, I am struck by the differential treatment accorded Americans, or more generally, English-speakers, in the sign on the back of my hotel-room door informing the occupant about check-out time. The messages in other languages are softened by wir bitten sie's and nous prion's and si prega's. The sign in English reads only, "You are required to leave your room by 12:00." I wonder what transgressions on the part of my countrymen have earned this curt reminder. I will certainly meet the requirement.

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       The Plenary Hall is enormous, but there is standing room only when Bill Gates addresses the full assemblage. The session is titled "Digital Visionaries." Gates shares the podium with an MIT professor who is obviously anxious to remind the audience that, having also authored a book on the subject, he too can lay claim to this grand title.
       Earlier, Anne Swardson, Paris correspondent for my former employer, the Washington Post, has drawn me aside to discuss the "Gates phenomenon." Have I noticed, she asks, that all the world leaders were clustered around him yesterday, hanging on his every word? It must be tough, I think, when everyone else thinks that you have in your pocket the key to a brighter (networked) tomorrow. Especially when you are someone smart and sensible enough to know that mostly you're just making it up as you go along, that, as Gates says in the session, in his industry, "we run scared."

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       Gates gets a good hand at the close, but the standing ovation is reserved for Nelson Mandela, who follows him to the plenary podium. Forgive me for my corniness, but when you see Nelson Mandela in person, you know you are in the presence of greatness. He is humorous and gracious. He thanks Klaus Schwab and the World Economic Forum for giving him a speaking platform--and an entree into the world's capital markets--even before he had embarked on his remarkable effort to transform a society. At the plenary session he speaks primarily of the need for a collective global effort to combat the AIDS epidemic, which is threatening so many in his country and elsewhere.
       Later at the media dinner, Mandela gets two more standing ovations. The TV and print journalists from Holland, Britain, and elsewhere at my table leave off their joking (and, among the TV cameramen, their jockeying for camera view) to remark on the slim fitness, the youthful demeanor of the 78-year-old statesman. "I suppose a few decades in prison will do it for you," one Brit cracks. I think a sense of humor and irony may be the secret tonic. After telling a few self-deprecating jokes ("May I ask, who are you," asks the autograph-seeking lady at an earlier Davos conference), Mandela talks about the problems of low skill levels and unequal income distribution that plague his country. Still, he points out, in scarcely more than two years he has confounded the pessimists by moving South Africa from recession to a 3 percent growth rate and a modest trade surplus.
       The South African president stresses all the safeguards he has put in place to maintain the rule of law--strictly limiting his own powers. But, he warns the West, he has forgiven his enemies--and he will not forget his friends, even if some of those countries that supported him in his exile are now the enemies of the West. Nor will he undertake to be the savior of his continent. That would be "presumptuous." Anyway, how can he rein in rogue states, when countries with real economic leverage--pointedly, the United States--go on buying oil from the likes of Nigeria?
       It is hard enough to be a world apostle of growth, like Bill Gates. How much harder to be a world saint. Mandela carries it off with grace.
       The first question to the South African president comes (no kidding) from a Swedish journalist. What does South Africa know about the murder of Olaf Palme? Say, isn't this where I came in?

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       "Zimmer Frei" signs are cropping up in this once overbooked town. The lines have disappeared at the messaging terminals and sign-up desks. The Gnomes of Zurich are climbing back into their caves, er, limousines. I have even figured out how to make my modem work. The secret has been imparted to me by a newspaperman from the American Midwest. It has nothing to do with all the advice (and fancy connectors) laid upon me by technicians at home and abroad. Perhaps the networked society has a future after all.
       I am running out of toothpaste. In a country where they sell aspirin by the tablet, I am afraid to ask the price of a replacement tube. United Airlines willing, it is time to go home.

Slate Washington Editor Jodie T. Allen is filing from Davos, Switzerland, where she is attending the World Economic Forum, an international meeting of leaders from business, government, academia, and the media.