The View From Davos

The View From Davos is a daily newsletter featuring insight from our Senior Advisors, Partners and Directors at The World Economic Forum Annual Meeting 2020.

Ambassador Anthony Gardner, Senior Advisor
Former US Ambassador to the EU

TURNING TO EUROPE

Another year, another Davos. Every year there are meta-themes and subsidiary themes that occupy the global elite in the Congress Centre and the many meetings around town. This year, in addition to the handwringing about the global climate crisis and rising global inequality, I was struck by how many of my high-level business and government interlocutors are focused on the new EU Commission’s policy program.In particular, the common questions that appear to preoccupy them include: will the new Commission under President von der Leyen succeed in its aim to make the EU more “geopolitical”? If so, how will this new strategic focus evidence itself? Will the search for EU “sovereignty” and “autonomy” morph into an industrial strategy that will, either directly or indirectly, shut out non-EU competitors?

The meeting between President von der Leyen and President Trump in Davos appeared to go well enough. But it is well known that Trump sees the transatlantic trade relationship only through the prism of the EU surpluses in goods trade — ignoring the significant US surplus in the flow of services and income from US business affiliates in Europe. It is unlikely that he will give up easily on his demand that the EU fix the perceived trade gap.

The consensus among experts appears to be that the US is unlikely to impose import tariffs on EU cars, thereby sparing German auto manufacturers and the risk of a major transatlantic bust-up. But there are other hand grenades lying around, waiting to explode. The WTO decision on the Airbus complaint against Boeing is expected soon. The White House is assuming that the level of permissible retaliation will be much lower than in the case of Boeing’s complaint against Airbus, but Commissioner Hogan has warned Washington that he has other WTO compliant retaliation “in his back pocket.”

Admiral Mike Rogers, USN (ret), Senior Advisor
Former Commander, U.S. Cyber Command and Director, National Security Agency

IRAN: WHAT A DIFFERENCE A FEW WEEKS MAKES

Three weeks ago today, the U.S. conducted and publicly acknowledged a drone strike targeting and killing Iranian Major General Qasem Soleimani, long time commander of the Iranian Revolutionary Guards Qods Force. That death then led Iran several days later to conduct missile strikes against two airbases in Iraq used by the U.S. Both events leading the world to wonder just a few short weeks ago if these two nations were entering into a direct armed conflict.

Discussion at Davos has centered largely around capitalism, technology, humans and work, and climate with the topic of Iran a non-factor in the formal agenda and seemingly of little interest in the many offline interactions and venues on the margins of the WEF. President Trump for example did not mention Iran in his remarks here at Davos (although the topic did come up somewhat obliquely in his press conference when asked about injuries to US personnel from the Iranian missile strikes at those two bases).

So, what a difference a few weeks makes. But we should not be lulled into any sense that the US-Iran confrontation has gone into some sort of stasis. Rather, the events of earlier this month and others leading up to them, highlight that neither party desires a direct, public confrontation in which each feels it cannot back down or move to deescalate the situation. Yet each has interestingly chosen to very publicly double down on its previously stated objectives - for Iran, to remove the US from the region and ensure Iranian regional hegemony and for the U.S., to forestall the development or acquisition of any Iranian nuclear weapon capability while contesting Iran's regional hegemony.

Paddy McGuinness CMG OBE, Senior Advisor
Former UK Deputy National Security Adviser

TECHNOLOGY + CLIMATE

Technology solutions are always to the fore at Davos - from service providers promoting their wares to early stage companies looking for finance, partnership and growth. This year they are slightly muted and very clearly instrumentalized to the Davos agenda of how to address urgent climate and environmental challenges. Microsoft’s pledge to get carbon negative has set the tone. This year at Davos tech is solution oriented.

In contrast there is an underlying reality which is not much discussed in plenary but comes up in private. Year on year CEOs are turning up at Davos with ever more technology risk attached to them: more data being held and processed, greater operational dependency on networks, pressure to implement new technologies to keep up and ever more regulatory interest. The difficulty for them is that this risk is getting no easier to price and manage. Security spend doesn’t always equate to system resilience. Being organized is crucial.

Climate issues are bringing this liability into focus. When Australian Prime Minister Scott Morrison was seen off by residents in Cobargo recently much of their anger resulted from a collapse of the networked systems on which they depend - no telephones and no Internet which meant no banking and an inability to restore their lives. It is a useful reminder of the public response which a lack of system resilience can expect - whether it is caused by a climate amplified natural hazard, human error or a cyber incident. Let’s hope the climate solutions being promised will be secure by design.

The other notable development in tone and content is on AI. For the past few years it has been AI with everything - as it is with climate this year. However, this year there is a heavy emphasis on capturing and codifying the ethical aspects such as transparency on how life effecting decisions are taken by learning machines. The phrase “human enabled AI” was to the fore.