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Paris, Saturday, January 29, 2000

Global Elite Are Fretting On Response To Backlash


By Alan Friedman International Herald Tribune
DAVOS, Switzerland - When the talk is of digital convergence or financial markets, the optimism, even euphoria, is palpable throughout the conference halls and corridors of the annual meeting of the World Economic Forum now under way in this chic Alpine ski resort.

But on Friday, as members of the world's political and business elite began to grapple with the backlash against free trade and globalization that caused the failure of last month's World Trade Organization meeting in Seattle, a starkly different mood took hold.

At public seminars and private meetings, heads of state and government and corporate chieftains bemoaned their inability to answer the Seattle protesters or the poor countries that see globalization as a plot by a rich men's club.

The leaders - including the chairmen of Renault and Textron, the investor George Soros, the president of Mexico, the prime minister of Turkey and the director-general of the WTO - were all eloquent in recognizing they have a huge problem on their hands: how to answer those who oppose free trade and blame globalization for social inequality, for job losses, even for impoverishing millions.

The establishment elite has recognized the problem. But as participants at the meeting acknowledged, it appears at a complete loss for a solution. And everyone here will be waiting to see whether President Bill Clinton can offer any convincing answers when he flies into Davos for a brief appearance Saturday.

''We have to admit that we have not created a guiding coalition to make global free trade a reality,'' said Lewis Campbell, chairman of Textron. ''Too often we use factual, dry arguments, but our opponents use emotional arguments like fear of losing jobs or fear of some impersonal global machinery.''

Turkey's prime minister, Bulent Ecevit, warned about the growing gap between rich and poor.

''Disparities in the distribution of wealth within and among societies are being augmented to a disturbing degree,'' Mr. Ecevit said, adding that the violent protests against globalization in Seattle ''bode ill for the future of the market economy and globalization in many other countries.''

Britain's prime minister, Tony Blair, suggested that the United States and Europe join forces to cut tariffs for imports from poor countries. He also said that the trade organization needed to open itself to the public in order to begin a new round of trade talks and that ''we cannot afford another Seattle.''

Christian Sautter, the French finance minister, agreed, saying in an interview that the answer to the protesters was ''more transparency and more debt reduction for poor countries.''

Mike Moore, director-general of the trade organization, was visibly frustrated.

''There is enormous anxiety out there,'' Mr. Moore said, ''and for some reason the WTO is copping the blame for everything that goes wrong. Globalism has become the Šism to hate, but it is not an ideology; it is a process.''

He rejected the notion that the Seattle meeting ''was a few wealthy white guys trying to fix the rules.'' But when asked whether it seemed that the world's elite was somehow impotent in the face of the backlash, Mr. Moore acknowledged that ''there may some truth in that.''

President Ernesto Zedillo of Mexico offered a ringing defense of free trade and mocked what he called ''a curious alliance of forces from the extreme left, environmentalists and other self-appointed critics in a common endeavor - to save the people of developing countries from development.''

Mr. Zedillo labeled the critics a group of ''global-phobics'' who were basically bent on protectionism, and he asserted that free trade helped poor countries ''by creating jobs.''

Mr. Soros had no answers beyond arguing in favor of ''open society'' and the desirability of working ''for the common interest.''

If the anti-globalization backlash is a nightmare for the Davos crowd, so is the fear of social unrest, and even of violence here Saturday. Security is very high because protesters have threatened to defy a ban on demonstrations Saturday.

Switzerland's president, Adolf Ogi, warned of ''massive discontent'' and said the protesters felt like many other ordinary people - ''not exactly empowered'' in the face of global economic expansion.

''Their feelings have been in evidence in Seattle and, if we are honest with ourselves, we all know that this is not the last we have heard of it,'' Mr. Ogi said.

John Sweeney, president of the AFL-CIO labor federation, warned that ''Seattle was just the beginning'' and that ''if globalization brings more inequality, then it will generate a volatile reaction that will make Seattle look tame.''

As for the protesters and critics, they held their own debate on Friday, outside the conference building, but only one corporate chief attended.

Goran Lindahl, president and chief executive of ABB, the Swiss-Swedish engineering company, sat down with members of nongovernmental organizations who vowed that after their success against the World Trade Organization in Seattle, they would now target World Economic Forum.

The critics accused the Davos conference of having a large impact on global trade, investment and environmental policies and complained that ''the people who suffer the costs of these policies are excluded from the discussions.''

Mr. Lindahl replied that until now the stakeholders in business had included stockholders, employees and customers.

''And now, as a result of the widening public debate,'' he said, ''we must also include society at large.''

Mr. Lindahl defended globalization as ''basically a good thing'' but also acknowledged to critics that large corporations ''have a new civic role to play in the 21st century.''