Anxiety Crashes the Party at Davos

from The New York Times

By MARK LANDLER

DAVOS, Switzerland — There was George Soros hunched over a dinner table, deep in conversation with a nodding companion. Howard Stringer of Sony ran into Mickey Schulhof, who once ran Sony’s American arm. And Klaus Schwab, the impresario of the World Economic Forum, welcomed an A-list crowd to a twinkling ballroom at the Hotel Belvedere.

It seemed like just another meeting of the world’s most exclusive talk shop, held each January in this Alpine ski resort. The trouble is nobody was talking about anything but the global market turmoil and the faltering American economy.

This year, the World Economic Forum is actually going to be about the world economy.

Which is not to say that there won’t be fun. The guys from Google, Sergey Brin and Larry Page, will play host to a dance party, featuring Norman Jay, a British disc jockey who spins funk, soul and house music. It is likely to be the biggest hit of the conference.

But on Tuesday afternoon, high anxiety had already taken hold, even before the movers and shakers from business, politics and nonprofits made their way to Davos.

“The Fed cuts rates by 75 basis points, and still the market drops. Incredible,” said Nouriel Roubini, an economist, staring at his BlackBerry. He showed a chart with a downward spiraling stock market to his associates.

On Wednesday, Mr. Roubini, who is known for dark views even in good times, is expected to appear on a panel about the global economy. In the wake of the stock market’s ferment and the emergency action by the Federal Reserve on Tuesday, his pessimism is likely to find a receptive audience.

“The mood will be more subdued this year,” Mr. Schwab said in an interview, “but I hope not pessimistic.”

Like a party host nervously refilling the punch bowl, though, Mr. Schwab can do only so much to improve the mood.

A Gallup poll of 61,000 people in 60 countries, taken for the forum, shows that those responding are more worried than last year about security and the economy.

The organizers said only 13 invitees had pulled out of the conference on Tuesday, a typical rate in a given year. But Secretary of the Treasury Henry M. Paulson Jr. canceled last week, citing the press of business at home, as did the prime minister of Turkey, Recep Tayyip Erdogan.

The president of the European Central Bank, Jean-Claude Trichet, was sticking to a plan to come on Thursday afternoon. But his spokeswoman noted, “We have canceled things in the past.”

People here predicted that immediate concerns about the economy might crowd out the official agenda, which as usual is devoted to high-minded concerns, humanistic as well as economic.

“The chief executives are going to be running crisis sessions from their hotel suites,” a public relations executive said, asking that his name not be used because he did not want to upset Mr. Schwab.

Nonetheless, Bill Gates of Microsoft, the quintessential Davos Man, is expected to ask questions that go beyond the current turmoil in the stock market. Mr. Gates, a regular and ordinarily upbeat participant in these meetings, plans to deliver a potentially provocative speech titled “A New Approach to Capitalism in the 21st Century.”

A spokesman for Microsoft was cagey about the details. But people involved in Mr. Gates’s appearance said he would take business and government to task for what he views as their inadequate response to the twin scourges of disease and poverty in the developing world.

Mr. Gates plans to step away from day-to-day operations at Microsoft this summer to devote his time to the Gates Foundation, which is pouring billions of dollars into AIDS, tuberculosis and malaria research. His speech is intended to be a call to arms, people with knowledge of it said.

Mr. Schwab will break his rule of not giving any speaker more than 15 minutes, allowing Mr. Gates half an hour. The theme is close to Mr. Schwab’s heart; he questions corporate behavior in an article in the current issue of Foreign Affairs magazine.

“It’s not that the pendulum is now swinging back to Marxist socialism,” he said in the interview, “but people are asking themselves, ‘What are the boundaries of the capitalist system?’ They think that the market may not always be the best mechanism for providing solutions.”

The role of banks in fueling the subprime-lending crisis, which has mutated into a broader trans-Atlantic credit crisis, spurring a lack of confidence in global markets, is likely to raise questions about the need for better regulation of the worldwide financial system.

Davos, a Swiss enclave, has long been a place where the sick go to be cured. Thomas Mann set “The Magic Mountain” in a sanatorium here. Tuberculosis patients used to come for the peace and quiet.

But in the next five days, the turmoil of the outside world can be expected to invade this sanctuary, adding a sense of urgency.

This year’s token celebrity guest, for instance, the British actress Emma Thompson, has criticized corporations for how they market products to children. Ms. Thompson has campaigned regularly on behalf of refugees.

“One question is how much priority we give to political issues versus economic issues,” Mr. Schwab said. “This year, economic issues will be at the forefront compared to political issues.”

Organizers expect one of the most sought-after sessions to be the session on the growing financial muscle of sovereign wealth funds, a subject that did not figure on the Davos agenda until this year. Lawrence H. Summers, former Treasury secretary, will take part in the panel, along with the managing director of the Kuwait Investment Authority, Bader al-Saad; Norway’s finance minister, Kristin Halvorsen; and others who manage hundreds of billions of dollars.

While there will be 27 heads of state and government on hand, they will be outnumbered by 74 chief executives from the largest companies. Among the bold-faced names will be James Dimon of JPMorgan Chase, Wang Jianzhou of China Mobile, Indra K. Nooyi of PepsiCo, Rupert Murdoch of the News Corporation and Lakshmi N. Mittal of ArcelorMittal.

Davos regulars will turn up. Bono, the rock statesman, is to appear with Al Gore, the former vice president and Nobel laureate, on a panel modestly titled, “A Unified Earth Theory: Combining Solutions to Extreme Poverty and the Climate Crisis.”

Tony Blair, a reliable visitor when he led Britain, will compete for airtime with his successor, Prime Minister Gordon Brown, who is also scheduled to attend. Mr. Blair is a co-chairman of the meeting and has joined the board of the Forum, prompting speculation that he might someday succeed Mr. Schwab, who turns 70 this year.

Mr. Schwab still nurses grand ambitions for Davos and its role in world affairs. While Mr. Paulson canceled, Secretary of State Condoleezza Rice is scheduled to speak about terrorism and climate change.

For the first time in three years, Mr. Schwab has invited a senior government official from Iran, Manouchehr Mottaki, the foreign minister. Pervez Musharraf, the Pakistani president, will also be here.

Competing with the Google guys for the title of richest party hosts will be the oil producer Bahrain. The Persian Gulf state is sending a large delegation, including its crown prince, Sheik Salman bin Hamad al-Khalifa, and the heads of several companies. They will play host at a reception and an art exhibit.

Global anxiety still doesn’t mean that you can’t party.