Setting the agenda in a constantly changing world

Date: 21/11/02

Klaus Schwab, founder and president of the World Economic Forum, tells Karen Carstens why the Davos summit, bringing together political leaders and top corporate executives, is still reaping dividends more than 30 years after he launched the event

WHEN Klaus Schwab comes to town, people talk to him. About how to make the world a better place.

Achieving this may sound a tall order, but to Schwab it's all in a day's work.

During a recent stopover in Brussels, for example, he met (among others) EU foreign policy chief Javier Solana, European Parliament President Pat Cox, Competition Commissioner Mario Monti and Rockwell Schnabel, the United States ambassador to the EU.

'That's how we shape our agenda: by taking the perspectives that these people have and creating a framework for it,' he says.

Clad in a navy-blue suit and cornflower-blue shirt that matched his gentle eyes, the mild-mannered German economics professor also stopped by at European Voice to explain why an idea he had more than 30 years ago still holds true today.

In 1971, he founded the Geneva-based World Economic Forum (WEF), a non-profit foundation now backed by some 1,000 member corporations and buoyed by a monumental motto: 'committed to improving the state of the world'.

A noble goal, indeed, but one that is still worth pursuing in this cynical day and age?

'More than it ever has been,' the 63-year-old says solemnly.

The most high-profile part of the WEF's work remains its annual meeting, a global gathering in the Swiss Alpine resort town of Davos.

It brings together leaders from business, politics, academia and non-governmental organisations, as well as religious and cultural figures, to try to tackle some of the most pressing problems facing humanity today.

'We are a catalyst for things to come. We shape the agenda,' says Schwab, 'we do not manage the agenda. Actually, we try to be one or two years ahead of it,' he is quick to add.

Last January, the WEF's big brainstorming bash was held in New York in an act of post-11 September solidarity. The next 'Davos' is scheduled to take place back in its usual home, from 13-28 January. The overarching theme is 'building trust'.

Schwab explains why: 'Right now, the world is in a complex situation of fragility, like three overlapping circles with a negative spin.'

First, there is the unstable geopolitical situation, in the Middle East and elsewhere. Second, a dire economic situation, with analysts wondering if the world is entering a 'double-dip' recession or even 'Japanisation of the world economy'. Third, there is the question of corporate governance.

The trouble, says Schwab, is that people have not only 'lost complete confidence in the business community' but in everyone else, too - 'even the churches'.

'The confidence of people to master the situation has been lost,' he laments. 'We are working at the moment against a very negative climate.'

The forum's 33rd annual meeting will focus on six themes relating to business, development, economics, leadership, security and values. 'Instead of looking at one key issue, we wanted to look at all of these issues in a systematic way. Instead of making policy statements, we will look at scenarios,' he explains.

But if people's trust has already been broken can it ever be restored?

'You cannot recreate trust, so we have to do this in a completely different way,' he says, suggesting that this means building a fresh concept of trust that meets today's realities.

'You cannot build trust by telling people the old world will come back,' he comments. That is gone and the world now faces different challenges, such as the war against terrorism

'You can, however, tell people how to handle the situation, how to better protect themselves.' He highlights a recent Gallup poll conducted for the WEF which found that people's trust remained highest not in their politicians but with the military.

This is particularly good news for the North Atlantic Treaty Organisation which holds its enlargement summit in Prague this week (21-22 November).

So what are Schwab's views about the direction NATO is taking?

'We must see it [the Alliance] much more in terms of a global security network and less in terms of a pact against someone who doesn't exist anymore,' he explains. Such thinking belongs in 'the framework of an old world'; strong and active partnership arrangements - with Russia in particular - are the template for the future, and should assuage the fears of non-NATO members.

There is no need to fear EU enlargement either, he adds, though conceding that some people do.

'As a very convinced European, I find it the most exciting event of our time.

But the enthusiasm it actually deserves is missing in the population.'

Schwab somewhat wistfully and visibly proudly recalls his 1950s youth in southwestern Germany, when he played an active role in chairing the local German-French youth movement.

'We were in the French zone, so I had French in school instead of English,' he remembers.

Of course, this was a radically different era. 'In the 1950s, we were going through a big change. We had lost our identity and were in search of a new one - assuming the European identity was a natural process.'

It was all about 'having hope for a new life after the disaster'.

The role models of the day were Charles de Gaulle, Alcide de Gasperi, Robert Schuman and Konrad Adenauer. 'They were the antipodes to the Hitlers and the Mussolinis,' he says.

Listening intently at Schwab's side is Ann Mettler, the WEF's director for Europe. The 31-year-old says that today's young people, blessed with ever-increasing opportunities to study and work in other countries, 'take Europe much more for granted' than her boss's generation.

Some of the young people who participated in the forum's recent 'Bridging Europe' initiative, who produced a draft constitution for the EU, grew up after the Berlin Wall came down. 'They have no concept of a divided Europe,' she says.

Schwab's main point of concern, however, is that enlargement just 'hasn't been explained enough. Finally we overcome the Wall, we grow together - it's Europe as it should be,' he says. 'But I agree with the young people that Brussels seems to be too distant.'

The WEF invited several representatives of the youth movement to its European Economic Summit, which brought together some 600 participants from 40 nations, in Salzburg two months ago.

'They really appreciated being given a voice,' says Mettler, adding that Enlargement Commissioner Günter Verheugen suggested afterwards that he would like to host some of them in future in Brussels. 'Even if we only get one or two responses like that, it makes such a big difference,' she adds.

The Salzburg gathering was not only enlivened by providing a platform for youth. The 'main' event featured a fascinating political debate on enlargement involving Verheugen, the presidents of Austria, Finland, Bulgaria and Estonia, together with the prime ministers of Slovenia, Romania and Serbia.

But there was no doubt that the most keenly anticipated appearance there was of Leonid Kuchma, the controversial president of Ukraine, who read a prepared speech on why the EU should invite his country to join the club.

Verheugen was invited to reply and did not mince his words. There was no way he could see Ukraine joining the EU for the foreseeable future. It was humiliating for Kuchma and he later stormed out of the building.Schwab, who was sat next to Kuchma on the platform, was chairing the debate and had to make an instant judgement on whether to intercede in a bid to soften the embarrassment for the Ukrainian.

'For me, that was a particularly awkward situation,' he admits. 'Sometimes I think that as the chairman I should do something, but in this case I decided against it.'

Does he feel uncomfortable giving certain dubious leaders the red carpet treatment in Salzburg, Davos and at other WEF events?

The position on who and who is not eligible to be invited is clear, Schwab explains.

'We would never invite someone from a country boycotted by the United Nations,' he says. So, for instance, that until recently would have excluded Libyan leader Colonel Gadaffi or politicians from South Africa while the apartheid regime was in place. At the same time, he adds, 'it's good to confront people with thinking I was very happy he [Verheugen] spoke out.'

Bringing together good and bad, whether they be people or ideas, allows the WEF to conduct a kind of realpolitik and foster a dialogue of 'constructive engagement'.

Mettler also emphasises the forum's crucial role in offering a 'neutral platform'.

For example, Serbian Prime Minister Zoran Djindjic seized the opportunity for a tête-à-tête with NATO Secretary-General Lord Robertson at the 2001 debut European Economic Summit, also held in Salzburg. Djindjic had apparently been trying to meet the Scotsman for a while and suddenly they found themselves face-to-face in a hallway and had to talk.

'That was one of the most rewarding moments for us,' she adds.

Still, some observers claim that Schwab is nothing more than a 'glorified conference organiser' who has become a victim of his own success as Davos has developed into a veritable 'beauty contest' among the world's political and industrial elites who vie to receive one of the coveted invitations to the event.

Besides representatives of the 1,000 WEF member companies, some 150 political leaders, 150 heads of non-governmental and other organisations, 200 academics and 40 senior religious leaders have been invited to January's meeting.

'There are all these guys jockeying for position as hot new young CEOs in Davos,' said one Brussels-based representative of a German chemicals company, adding that many of his superiors now prefer to steer clear of the high-profile event. 'Our CEO just stopped going years ago because he couldn't be bothered any longer.'

Quiet lobbying to be among the chosen few who receive an invitation remains unabated, however.

A smattering of EU commissioners at Davos is almost guaranteed - especially given the history of the organisation.

The WEF might not have come into being had it not been for the European Commission, Schwab admits.

In 1970, the then 32-year-old German wrote to the EU's executive body, requesting patronage for his idea. Italian Commissioner Altiero Spinelli, whose name now graces one of the European Parliament buildings in Brussels, became one of his staunchest backers. 'I was very lucky,' Schwab recalls. 'I was a very young man.'

Spinelli and his colleagues said they would support him under 'one condition and one wish', says the professor. 'The condition was that it could not become a for-profit affair, and the wish was that it would be on the territory of the EU.'

Schwab, however, was based in Switzerland and pushed for Davos to be the venue because it was already established with a history of hosting medical conferences.

It was also 'a place where people are not disturbed', he argued.

'So Spinelli finally said 'Okay, let's do it in Switzerland,'' he recalls, with a twinkle in his eye. The forum - then known as the World Management Forum - was thus born, with the first Davos meeting held in January 1971.

The initial concept was to bring the European business community together with other key stakeholders. 'In my academic work I was probably the first promoter of the 'stakeholder concept' - at least in the German-speaking world,' claims Schwab.

Davos steadily grew and developed into a more global organisation, and was rebranded as the World Economic Forum in 1987.

As well as the event itself, the WEF became increasingly involved in research. Its annual 'world competitiveness report', launched in 1979, is now regarded as one of the key market indicators. (The latest such report, released last week, found that the United States still leads the way in global competitiveness. Three EU member states - Finland, Sweden, and Denmark - are among the top ten countries in the overall ranking).

EU candidate Turkey experienced one of the worst declines, it found.

Which brings us to one of the hottest topics of the moment. Where does Schwab stand on Turkish membership of the EU, given the recent controversial comments by Valéry Giscard d'Estaing, head of the Convention on the future of Europe, suggesting it should never join the Union?

He is not averse to the idea of Turkish membership: 'Europe is based on a common civilisation...it is just an issue of all countries [in the EU] to stick to the fundamental values that are at the core of European civilisation.' The EU's strategy, he suggests, should be 'not to close the door to Turkey, provided they fulfil these values the key is the separation of church and state.'

Even if questions remain 'from a territorial point of view,' he adds, 'we should not make it an issue of black and white.'

Spoken like a man who has spent years trying to facilitate the consensus-building process - and who plans to continue doing so for as long as possible.

Major interview with Klaus Schwab, founder and president of the World Economic Forum.