Davos forum is warned over impact of Iraq war

www.gulf-daily-news.com DAVOS, Switzerland:

The annual World Economic Forum (WEF) opened in the Swiss ski resort of Davos yesterday, with dire forecasts about the economic impact of a war on Iraq and demands for more responsible business practices.

Economists and industry leaders at the forum warned that a US-led war could jeopardise chances of recovery for the fragile global economy, which was more "US-centric" than any other time since the Second World War.

They opened their meeting as the foreign ministers of Egypt, Iran, Jordan, Saudi Arabia, Syria and Turkey were due to meet in Istanbul in a last-ditch effort to avert a US-led war.

"The true risk ... if we see a war in Iraq (is) that there will be an event either in the Middle East or in the US, or a series of events around the world, that will create a sharp visible impact on consumer confidence, said Gail Fosler, chief economist of the private US forecasting institute, the Conference Board.

"This could give you no growth in the US or a possible recession," she said, adding: "If there is a major oil shock, its impacts are likely to be felt as much in 2004 as 2003." A poll of chief executives worldwide, published by the consultancy PricewaterhouseCoopers at the forum, showed 48 per cent of CEOs rated "terrorism and global war" as "significant or one of the biggest threats" to their growth prospects.

"The uncertainty and the variation of possible scenarios (concerning a war) is certainly weighing on our economies," Bertrand Collomb, CEO of French construction materials giant Lafarge, told a news conference in Davos.

"The sense (among top US executives) seems to be that a short, successful conflict could even be positive for the economy because it would remove the economic uncertainty (and) the war premium on the price of oil. A long, dragged out conflict could be very depressing for everyone concerned, certainly the economy" added Henry A McKinnell, CEO of pharmaceuticals giant Pfizer.

US Secretary of State Colin Powell is expected to address the Iraqi crisis in a speech on Sunday in Davos, where police and soldiers drafted in from across Switzerland have mounted a tight security operation.

His speech comes one day before UN chief arms inspector Hans Blix gives his first report to the United Nations Security Council on Baghdad's alleged weapons programme.

US Attorney General John Ashcroft is also due in Davos today, while Iraqi opposition groups are expected to meet there on Tuesday, the same day US President George W Bush will deliver an anxiously awaited State of the Nation address to the American people.

Another key speaker at the forum - a seven-day brainstorming session for some 2,100 political and business leaders - is newly-elected Brazilian President Luiz Inacio Lula da Silva.