German, French and Italian leaders speaking in Davos have taken the high ground on Wednesday (24 January) to blast past business practices, which have prompted the resurgence of populism and protectionism, and said they were ready to reshape globalisation and correct the mistakes of the past.
Lamenting that the world had forgotten the lessons of history as we are approaching the 100th anniversary of the First World War, German Chancellor Angela Merkel said multilateralism was under threat.
In what seemed a veiled rebuke of US President Donald Trump, expected to speak in Davos on Friday, Merkel said that unilateral action and protectionism are not the answer.
“Germany wishes to be a country that lends its contribution in the future to solve the problems of the world together, we think that shutting ourselves off and isolating ourselves will not lead us into a good future,” she added, hinting that an ever-closer European Union was part of the solution to the many challenges faced in the world.
Hours after Merkel, French President Emmanuel Macron spoke in front of a huge crowd in the Davos plenary room to echo the chancellor by launching a call for action to build a world that is both free and fair.
Macron in Davos pleads for a new global contract in which we invest for all (especially education for girls), share our wealth fairly, and protect people from social and economic abandonment, terrorism, and climate change. #WEF2018 pic.twitter.com/7dfXtxdF3n
— Kenneth Roth (@KenRoth) January 24, 2018
“There is a crisis of contemporary capitalism. It has become a capitalism of superstars, where the spreading of value added is not equitable. We have to establish mechanisms to share value added more equitably,” Macron insisted, urging corporate leaders in the room to take responsibility and help shape this new globalisation.
“If we want to share value better, we need a more co-ordinated tax approach at a global level. There should not be a race to the bottom. We need a strategy that avoids the maximisation strategies of some companies. It is a moral issue,” he continued.
Inequality is rising across the world, but it’s not increasing everywhere at the same pace. In many ways Europe stands out as a positive example. Despite all the criticism thrown at the EU, it is a global leader in preserving a degree of fairness thanks to elaborate social welfare systems.
“The search for growth has sometimes made us forget what it takes to achieve it.
Some people thought that if we had growth, all problems will be solved. Not the case, because this growth is less equitable,” Macron continued.
He argued that neglecting social cohesion and with it large parts of the poorer populations in Europe would produce more opposition to globalisation and proposed a new strategy based on three fundamentals: invest, share, protect.
Macron also called for a more robust International Monetary Fund with a broader mandate that would include regulatory authority over parts of the financial system that currently escape regulation – including cryptocurrencies and the shadow banking system.
Mentioning Canada’s Prime minister Justin Trudeau he said their visions for the world were aligned.
Business leaders in Davos have enjoyed an increase in wealth in the past year as a result of rising stock markets, said Trudeau earlier this week, asking whether they wanted “to live in gated enclaves while those around them struggle”.
Despite Trump’s decision to pull the US out of the Trans Pacific Partnership, Trudeau used his speech to announce that the 10 remaining members would go ahead with the free trade agreement.
Italian Prime minister Paolo Gentiloni also scolded business leaders saying “inequality is still rising, reaching intolerable levels, even as growth increases,” he said.
“We cannot end up in a world with a cosmopolitan digital elite and an army of discontented workers.” He added: “Today we must answer positively and decisively the call for a stronger Europe. Our history and roots are not synonymous with protectionism.”
“European political systems are going through radical changes,” Gentiloni told participants in a special address in Davos.
“Political fragmentation is a new feature of the old continent,” he added. New political groups are forming in response to widespread discontent, offering shortcuts and simplistic solutions.
Meanwhile, large segments of population are dissatisfied by the lack of proper policies to tackle long-standing crisis like migration.
France is back, and Europe too
Macron used the forum also to reassert that ‘France is back at the core of Europe’.
But we have to also redesign a ten-year strategy for Europe. Europe has a role to play in between China and the United States, he said.
“If we want to avoid fragmentation of the world, we need a stronger Europe. We have to have a 10 year strategy to make Europe a green, scientific and political power. We need more ambition to have a more united Europe.”