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Davos elite to gather in shadow of financial crisis

By Agencies


The world's business and political elite will hold its annual Swiss mountain resort meeting - from January 23-27 - in the shadow of a financial crisis resulting from the subprime debacle.

It is a contrast from a year ago, when participants in the World Economic Forum were basking in a steady economic expansion and a private equity and takeover boom fuelled by cheap credit.

"The discussions in Davos will certainly be very dominated by the economic challenges we have at the moment -- the aftermath of the subprime crisis, the transfer of capital from energy-consuming to energy-producing countries, inflationary tendencies," said forum founder Klaus Schwab.

Private equity groups and hedge funds were star attractions last year, but this year the sovereign wealth funds -- investing billions of dollars of reserves for mainly developing countries -- are likely to be the most courted participants.

Reflecting the world's changing dynamics, more than one fifth of business executives taking part are from developing countries.

Schwab said the warnings about the fragility of the global economic system were there last year amid the general optimism, for those with ears to hear.

One of the main things the forum, running January 23-27, offers is the ability to gather experts from a range of disciplines from government, business and civil society.

This allows them to look at the ways issues are connected with each other, such as how efforts to tackle climate change by encouraging biofuels can create social problems by aggravating water shortages and pushing up food prices.

Schwab said this year's meeting will assemble practically everyone of importance in the financial and economic world to discuss the challenges to the world economy.

As in the past, it will also provide a platform for the head of the G8 rich countries, this year chaired by Japan's Prime Minister Yasuo Fukuda, to lay out his agenda for the year.

The opening session, looking at two issues facing the world, climate change and terrorism, will be addressed by Secretary of State Condoleezza Rice.

The more than 2,500 participants from 88 countries expected include 27 heads of state or government, 113 cabinet ministers, and a dozen heads of international organizations. Central bankers are also due in force.

There will be 1,370 company chairmen or CEOs, with 74 of the Fortune or Forbes top-100 companies represented, including Microsoft chairman Bill Gates, Goldman Sachs CEO Lloyd Blankfein and Renault / Nissan CEO Carlos Ghosn.

In the past, meetings on the sidelines have been milestones on the road to German reunification and political reconciliation in South Africa. Schwab said the 2008 meeting would provide an opportunity for Israeli and Palestinian politicians to get together informally.

The forum has looked top-heavy with participants from the United States and Europe in the past. This year the publicity highlights those from developing countries, especially executives from China and India.

But that also reflects a shift in political and economic power, as weakened U.S. financial institutions seek capital infusions from developing countries, and developing country businesses bestride the world with growing confidence.

Schwab dismissed suggestions that Davos should help curb carbon emissions by putting the whole forum online, something possible now with an electronic platform it is launching.

"The best way to make sure that we do not explode as humankind is to remain in dialogue and contact and this still, even in the age of Google and whatever we have, is best done physically." (Reuters)