Wider World by CS

Time to take bold action at world economic forum

The Straits Times
Asia News Network January 30, 2012 1:00 am

The World Economic Forum's annual gathering in Davos gives international leaders an opportunity to meet and discuss weighty global issues with critical candour.

What is particularly important is that the forum in the Swiss city has brought policymakers and opinion-formers together at an informal platform where they have been debating issues thoroughly, but without being tied down to negotiating positions that they will feel duty-bound to uphold.

The meeting is no different, but for one exception - the fate of the euro zone, which continues to hang in the balance. It is no surprise that the issue, which concerned economists and analysts regard as the world economy's No 1 problem, took centre stage at the event, not least because the future of the European Union would have a major impact on Asia and North America. Together these regions form the main pillars of the globalised economy. An inkling of what is at stake has been provided by the World Bank. In a pre-emptive move, it has announced a commitment of US$27 billion (Bt838 billion) to shore up the European banking system and help protect Eastern European and Central Asian nations from bearing the brunt of a retreat of investments stemming from any European banking crisis.

In her address at Davos, German Chancellor Angela Merkel reminded the audience that Europe will remain an economic power - but only if it deepens integration. Germany and France, as two economic powerhouses of a stricken Europe, are critical in the search for fundamental solutions to Europe's crisis.

That is why the Davos gathering can be useful for the continent. A gathering of political leaders, top economists who more often critique the solutions that governments provide, and the presence of influential corporate leaders who know what will work on the ground to get business and investment moving effectively, is a powerful combination.

 Davos is an opportunity for key players to chart solutions to spark job creation and economic growth that will be acceptable and achievable by governments and businesses alike. What Europe needs is a concerted strategy that opens up the market, fosters innovation and improves its competitiveness. That strategy requires, in turn, structural reforms that will produce a genuinely single market.

British Prime Minister David Cameron has suggested, correctly, that the time for tinkering is over and that "this is a time for boldness, not caution". Europe has failed thus far to convince all its global economic partners that it has a firm handle on the crisis. Its leaders must open themselves up to ideas, embrace well-intended advice and strive to emerge from Davos with plans and solutions that are more convincing.