Summit has few bright spots - It's so gloomy China's economy is getting the most compliments

www.charlotte.com Posted on Sat, Jan. 25, 2003 TRUDY RUBIN KNIGHT RIDDER

DAVOS, Switzerland - The annual gathering of the world's top economic and political leaders at the World Economic Forum in this Alpine village mirrors the mood of the powerful.

To say they view the future with foreboding would be an understatement.

In the late '90s, Americans were giddy over the soaring stock market and Europeans over the introduction of the euro. They grew high anticipating the miracles of a dot-com economy. With a brief blip of concern over the Asian financial crash of 1997, most years were upbeat -- until the dot-com crash decimated the markets and al-Qaeda destroyed the twin towers.

But even last year, when the conference moved temporarily to New York City, the mood was optimistic. The revelations about Enron cast a shadow, but the we-will-rise-again aura was encapsulated by a gala soiree on the stock market floor a couple of blocks from ground zero.

This year is different. During 2002 one corporation after another was tarnished by scandal, the U.S. economy has barely recovered, and an Iraq war looms. The tone of this year's Davos is somber.

The theme of this year's meeting is "Building Trust," trust in business and politics and even religion. A recent global public opinion survey conducted by the forum showed 48 percent of those surveyed in 15 countries had little or no trust in global companies and 51 percent felt the same about their parliaments or congresses.

So this year's Davos includes such mea culpa panels as "Understanding the Loss of Political Trust" and "The Dot-com Boom: How Did We Get It So Wrong?"

What's most striking about Davos 2003, however, is that there are no bright spots. In years past Davos leaders would at least have trusted the U.S. economy to pull the world out of its economic doldrums, as it did during the Asian crisis.

This year there are no star countries or regions. The United States is still the 800-pound economic guerrilla.

But leading economists here are uneasy about the economic impact of an Iraq war, at a time of growing U.S. trade and fiscal deficits.

Once upon a time, Davos delegates waited for Robert Rubin, Bill Clinton's treasury secretary, to take the stage as if he were the leader of a rock band. This year, they are waiting for Secretary of State Colin Powell with trepidation, looking for hints about whether there will be an Iraq war. (Bill C. himself, who's coming as a private citizen, will probably get a warm welcome.)

Europeans, meanwhile, are sulking, as Germans and Italians wrestle with no-growth economies (ditto for Japan). No top European leaders even came to Davos this year. Perhaps the French and Germans didn't want to spread discord at Davos by publicly airing their grievances with the Bush team over Iraq.

There always has been friendly rivalry here between Europeans and Americans, even some sniping. But this year, European public opinion is so hostile to American policies that hours of Davos sessions are devoted to how to bridge the continental divide and how to deal with "American omnipotence."

In this conference of mega-capitalists, the world leaders getting biggest billing at Davos are the new leftist leader of Brazil, "Lula" da Silva, and the new neo-Islamist leaders of Turkey. The economy that is getting the most compliments is the People's Republic of China.

There is a palpable sense that the world is heading toward great uncertainty. In past years, Davos always prided itself on holding sessions that brought warring parties together in highly publicized peace efforts -- Yasser Arafat and Shimon Peres in the old days, Balkan leaders during the Bosnia crisis.

Peres is back, but is meeting only with a minister of the Palestinian Authority, which Israel's government has virtually dismantled. Eight Iraqi opposition leaders are being given a total of 35 minutes to explain how they could bring democracy to post-Saddam Iraq.

No one is certain whom to trust, not George W. Bush, not European leaders, not international institutions like the United Nations that don't have real power. So the subject matter at Davos this year is right on the money.

It reflects a world whose economic and political leaders are groping in the dark.

Trudy Rubin is a columnist and editorial-board member for the Philadelphia Inquirer. Readers may write to her at: Philadelphia Inquirer, P.O. Box 8263, Philadelphia, Pa. 19101, or by e-mail at trubinphillynews.com.