Politicking, partying and deal-making in eastern Switzerland
When more than 3,000 world leaders and journalists start their, well, deliberations on the snowy – and often snow-bound – ski resort of Davos on Wednesday at the annual meeting of the World Economic Forum January 23-26, they may well run into inclement weather, not unusual for this Alpine village in eastern Switzerland.
Indeed, several mandarins of the global business and political communities have suggested over the years – the late Indian prime minister Rajiv Gandhi, and Steve Forbes among them – that the Forum should hold its annual meeting somewhere warmer and more accessible – like, say, Cannes, or Nice.
But then Davos wouldn’t be Davos, would it? In fact, the Forum actually shifted its venue from Davos once – in January 2002, it held its annual meeting in New York City. It was held barely four months after 9/11, and the Forum’s founder and executive chairman, Klaus Schwab, said at the time that the move was made to show solidarity with New York after the terrorist attacks that leveled the World Trade Center.
“There seems to be a genuine appreciation for the decision we made to show solidarity with New York and hold our annual meeting there,” Schwab said in an interview at the time. “We made our announcement when New York was still in shock from the tragic events of Sept. 11, and in the midst of the anthrax scare. The people of New York are glad we’re coming, and we’re grateful for their warm welcome.”
The people of Davos – those that live year-round in the village that Thomas Mann cited in “The Magic Mountain” – are often less than warmly welcoming.
For one, the tight security measures make it virtually impossible to go anywhere without encountering a phalanx of policemen and soldiers, and also black-attired private guards hired by the Forum. (Swiss officials have said in the past that the tab for providing security for world leaders during the Forum’s meeting runs well beyond $10 million. Swiss taxpayers foot the bill, not the Forum.)
Here’s an excerpt from The Financial Times:
A study in 2000 by the University of St. Gallen estimated that the annual meeting contributed about SFr22m to the local economy and about as much again to Switzerland as a whole. “I’d say that’s nearer SFr30m now,” reckons Hans Peter Michel, Davos’s mayor, who is a farmer from a neighboring valley.
“The WEF is a major event for Davos, whether in terms of business or prestige,” says Jürg Zürcher, chairman of the local hotel and restaurant association. “For a short period, we welcome the world.”
Commercially, the event vastly overshadows the Spengler Cup, an international ice hockey tournament held in the town each December, or the medical and businesses congresses it stages regularly.
Yet the meeting is not seen as an unalloyed bonus. Mr. Michel acknowledges that the event provides priceless international recognition and fills to bursting the town’s hotels and restaurants. But it also causes traffic jams, security headaches and gripes from residents who cannot understand why – for a few days each year – they cannot enjoy free movement in their own town.
“I’ve always said it’s not black and white – an issue of hosting the WEF or not. It’s more a matter of: Under what conditions? If the conditions are right, then the meeting is a huge plus,” says Mr. Michel.
The crux lies in finding the right balance between the wishes of the WEF and its guests, and the need to preserve some normality for the residents of Davos, he argues. If done correctly, both sides benefit.
Some are unremittingly opposed. But Mr. Michel reckons that local hostility has declined in recent years. In a referendum in 2005 on providing financial support for the event, about two-thirds of voters backed the proposal to provide financial support for the event. Under a now established formula, Davos pays one-eighth of the cost, the cantonal government of Grisons and the WEF pay a further one quarter each, and the Swiss federal government picks up the rest of the tab.
Falling costs for security explain why the budget has fallen from its 2003 peak of SFr13.4m to about SFr8m today – leaving Davos with a SFr1m bill. That is good value considering the advantages, says Mr. Michel.
(Excerpt ends)
Nevertheless, shopkeepers complain that while the Davos delegates may be uniquely wealthy in their own right, they are, relatively speaking, cheapskates when it comes to fattening up local shops with their custom.
Indeed, many shopkeepers report that their sales actually decline during the week or so in January that the Davos fiesta lasts. Skiers who normally frequent the stores stay away, and local residents do their grocery shopping well in advance of the Forum’s week.
Moreover, local hotels are practically taken over by the Forum, which assigns delegates their accommodations. (Everyone pays for hotel rooms at rates that are raised during Forum week.) That means anyone turning up in Davos who’s not officially registered for the Forum, simply cannot get a room.
In fact, Schwab said last week that the Forum received more requests than ever before to attend the 2008 meeting, the Forum’s 38th annual session. Some participants have had to be housed in other nearby resorts, such as Klosters. Some intrepid locals rent their apartments to Forum visitors.
This annual meeting – whose main theme is “collaborative innovation” – will be unusual for another reason as well. The leaders of the four biggest and most diversified family-owned holding companies in Turkey – who are ordinarily in cut-throat competition with one another – are collaborating to produce the Forum’s signature gala event.
“For decades, Turkey has been regarded as a developing or an emerging nation,” said Ferit F. Sahenk, chairman and chief executive officer of Dogus Holdings, which deals in financial services, real estate, tourism and other industries. “But business growth and economic development have transformed the country. And the fact is, Turkey has emerged.”
Sahenk, who received his bachelor’s degree from Boston College, will be joining hands with Ali Koc, his counterpart at Koc Holding; Mehmet Ali Yalcindag, head of Dogan Holding, and Suzan Sabanci, who leads Sabanci Holding.
The gala is traditionally a way for countries to tout their accomplishments at Davos. Typically, the Forum invites two countries each year to sponsor the gala and some other activities. France will be the other sponsor of the gala. While the figure for hosting the gala is not officially disclosed, representatives of other countries – such as India – who have hosted the black-tie galas in previous years said that the price tag can run into millions of dollars, depending on the lavishness of the entertainment and the breadth of the banquet.
Whatever the cost, the Turks see it as money well spent.
“”I think our colleagues in Davos will come to appreciate the fact that Turkey has become a global powerhouse,” said Yalcindag. “As an American friend of mine told me, ‘Istanbul is becoming the Big Apple of Europe.’”
His co-sponsor of the gala – and domestic competitor – Koc, said that the Turkish economy was keeping up with the annual rates of 7.4 percent or more experienced by giants such as China and India since 2002. “Turkey is one of the most rapidly growing economies in the world,” he said.
Turkey, with a population of 70 million and GDP of $400 billion, also received more than $20 billion in foreign direct investment in 2007, at least $5 billion more than India, whose population is 1.2 billion and GDP $1 trillion.
Sabanci could not resist one other point about her native land.
“Turkey is where East and West come together, and where North meets South,” she said. “Turkey is the historic crossroads of civilization. It’s the place to be right now.”
How well that message resonates with the Davos crowd of world leaders and decision makers will depend on how many stay around for the gala. It will be held on the evening of January 26, the last official day of the four-day Forum meeting. In previous years, the heavyweights of global business and politics typically stay just a day or two, and take off. The galas tend to be attended by lower level networkers and, of course, journalists who savor the predictably delicious cuisine – regardless of the sponsor country.
The journalists pay nothing to be admitted to Davos. The other 2,500 participants cough up $50,000 each. Little wonder that the Forum’s culinary menus receive as much careful attention from organizers as do the agendas for the talkfest.