WAR, POLITICS ECLIPSE ECONOMICS ON DAVOS LEADERS’ MINDS | Kanebridge News
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WAR, POLITICS ECLIPSE ECONOMICS ON DAVOS LEADERS’ MINDS

Hot and cold wars, fragmenting trade and key elections fuel anxiety at annual forum

By GREG IP
Mon, Jan 22, 2024 10:20amGrey Clock 4 min

Never mind interest rates, inflation or recession. The economic concerns that usually preoccupy the global elite at their annual gathering in Davos are taking a back seat to hot war in Ukraine and the Middle East, cold war between the West and China and watershed elections from India to the U.S.

For government and business leaders, it is a disorienting departure from a world in which fortunes were mainly driven by financial forces. The World Economic Forum, which hosts the meeting, is now the de facto world geopolitical forum.

“There’s a higher-level issue than the economy, which is geopolitics,” said Christian Mumenthaler, chief executive of reinsurance giant Swiss Re, which insures risks around the world. Geopolitics hasn’t been so big an economic threat since the height of the first Cold War in the 1980s, he said.

“We’re starting this year with the longest list I ever recall of potential disruptions,” said Christian Ulbrich, chief executive of real-estate company JLL, which operates around the world. “You really have to run your organization in an extremely agile way so that you can react immediately.”

Longtime Davos attendees came of age in a world in which products, capital and people flowed ever more freely. But globalization began fragmenting in 2016 when Britain voted to leave the European Union and Donald Trump was elected president—and who went on to withdraw from a global climate accord and a trade pact with Pacific nations and then hike tariffs sharply, especially on China.

Deglobalization has gathered speed with the pandemic, Russia’s invasion of Ukraine, the intensifying rivalry between the U.S and China and the newfound appeal of industrial policy—governments directing resources to favored home industries. That is over and above the hazards thrown up by the natural world, such as extreme weather.

The upshot is that political events that were once peripheral to business leaders’ concerns are now central, especially when optimism is high that major economies will lower inflation without recession, so-called soft landings.

The U.S. election is on everyone’s minds because of the potential for Trump to return to the White House. On Monday, Trump won the first Republican nominating contest, in Iowa, by a wide margin.

“Every conversation begins with a query about my assessment of the outcome of Iowa, who’s going to win New Hampshire, and what are the odds of Trump 2.0,” said Tim Adams, president of the Institute of International Finance, a Washington-based group of international banks, and a former senior Treasury official under President George W. Bush. The questions are driven by trepidation, curiosity and fear that “the U.S. retreats, engages in protectionism, isolationism.”

One European bank chief said he has conducted “game-boarding exercises” to figure out how a Trump administration could play out for his business.

The U.S. election is one of many taking place this year, and for some companies, it isn’t necessarily the most salient. Last Saturday, Taiwan elected as president the candidate most opposed by Communist-ruled China, which is pressing for reunification with the self-governing island. Taiwan is home to Taiwan Semiconductor Manufacturing Co., the world’s dominant supplier of the most advanced microchips.

Many major tech companies depend on those chips. They must reckon with the possibility that military or economic coercion by China, or even war that draws in the U.S., could interrupt that supply. U.S. restrictions on investment and trade related to crucial technologies, including chips, have already disrupted what was once one of the world’s most integrated industries.

The threat to the chip supply “is a risk. That needs to be factored into all analyses you can do,” said Börje Ekholm, chief executive of Swedish telecommunications manufacturer Ericsson. The company has been focused on diversifying its supply chain for semiconductors and other parts since 2018, he said. “You also need to think about how you’re going to manage the situation where chip supply will be constrained.”

Gita Gopinath, the No. 2 official at the International Monetary Fund, said business leaders are worried about geopolitics interfering with trade and investment for good reason: “Fragmentation is a reality, it’s not just a threat.”

While trade has slowed everywhere since Russia’s invasion of Ukraine, it has slowed down more between blocs of allied countries—such as between the West and China or Russia—than within blocs. She said this shows that efforts to confine trade restrictions to strategic sectors, such as high tech, are failing, and a more general decoupling between blocs might be under way.

A study released by the McKinsey Global Institute Wednesday echoed the IMF’s findings. China, Germany, the United Kingdom and the U.S. have all reoriented trade toward allies or nonaligned countries like Mexico and Vietnam, it said

China’s share of U.S. imports of laptop computers and mobile phones, though not subject to tariffs, fell between 2017 and 2022, with much of that share going to Vietnam, the report said. Mexico, it noted, became the largest trade partner of the U.S. last year. Germany all but halted imports of natural gas from Russia while vastly increasing imports from Norway, a fellow member of the North Atlantic Treaty Organization.

That politics, not economics, might govern where companies sell and invest is a new reality that is taking some getting used to. Mike Henry, chief executive of Australian coal and mineral company BHP, said the company has always advocated free trade as the most efficient way to bring commodities to market. “A world of open trade and where countries are able to compete on natural advantage—that’s the world of the past. That’s not the reality we live in today.”

A few years ago China, upset with Australia for demanding an inquiry into Covid’s origins, cut many imports from the country, including coal from BHP, which saw its sales there fall. Though relations between Australia and China have since improved, BHP has since found other markets for that coal. Still, Henry said that in time, economic factors such as shipping rates will once again influence where it sells.

Some executives see hopeful signs, in particular that a rapprochement between China and the U.S. that began last fall will continue, in part because China is trying to help its faltering economy.

Geopolitical tensions also have beneficiaries. After artificial intelligence, the loudest buzz in Davos might be directed at India. Many executives called it their most promising foreign market, and its appeal has only grown now that Russia and much of China are off limits.

“When disruptions take place, people are trying to hedge,” said Hardeep Singh Puri, India’s minister of oil and gas. “But India has a growth story of its own. That is what is driving interest in India.”

For some companies, geopolitical tensions are weighing on employees, not just management. “People are concerned about what’s going on in the world,” JLL’s Ulbrich said. Conflict, or the threat of it, in Europe, Israel/Gaza and China weighs on people, he added. “They don’t know what’s going to happen and look to other people, leaders, for what’s going to happen, but leaders don’t know either.”

—Chip Cutter and Alex Frangos contributed to this article.



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Saudi Arabia’s 2024 Summer TOURISM Plans Unveils New Incentives and Global Attractions

“Saudi Summer is Next Door” plans to boost tourism in the Kingdom over four months across seven destinations.

Wed, May 22, 2024 4 min

Saudi Arabia has unveiled its plan to attract international tourists this summer. The strategy includes appealing visa options, complimentary airline tickets for families, a lineup of major events, and opportunities for tax-free shopping.

The initiative, organized under the guidance of Ahmed Al Khateeb, Minister of Tourism and Chairman of the Saudi Tourism Authority (STA), is named “Saudi Summer is Next Door.”

Jeddah

Extensive Summer 2024 Tourism Activities

The initiative will span four months, ending in September, and will be hosted across seven key destinations: Aseer, Al Baha, Taif, the Red Sea, Jeddah, Riyadh, and AlUla.

It features over 550 tourism products and more than 150 specially tailored offers and packages for families and various interest groups including adventure enthusiasts, luxury seekers, and cultural and heritage buffs.

The launch event of the Saudi Summer Program 2024 was attended by notable figures such as Zurab Pololikashvili, Secretary-General of the World Tourism Organization, in addition to more than 250 key partners from both public and private sectors, prominent media personalities, and influential opinion leaders.

Showcasing Global Events and Cultural Richness

This year’s program will also welcome back the Jeddah Season and introduce the Aseer Season, each filled with various activities and events for families. The Kingdom will host several significant events as part of the summer program, including the first Esports World Cup in Riyadh, an eight-week competition featuring top esports athletes, and various boxing tournaments in Riyadh and Jeddah.

During the event, Al Khateeb highlighted the latest global tourism trends, the Kingdom’s growth in the tourism sector, and the record-high tourist numbers that have propelled Saudi Arabia to the top of the UN World Tourism list and the G20 nations list.

Al Baha

Al Khateeb emphasized, “Saudi Arabia is witnessing a transformative period in tourism, driven by our vision to position the Kingdom as a premier global destination. The Saudi Summer Program 2024 is our commitment to showcasing the rich cultural heritage, natural beauty, and unparalleled hospitality that Saudi Arabia offers. “We invite local and international tourists to experience the diversity of our seven unique destinations and take advantage of the exceptional offers and packages designed to create unforgettable memories. “This initiative, supported by our strategic partnerships and groundbreaking efforts like the eVisa and increased flight connectivity, demonstrates our dedication to making Saudi Arabia more accessible and appealing to tourists worldwide. “We look forward to welcoming visitors from all corners of the globe to explore and enjoy the vibrant experiences that await them this summer.”

Zurab Pololikashvili, Secretary-General of the World Tourism Organization, also remarked, “Saudi tourism is witnessing unparalleled development at all levels, achieving great leaps in recent years, which I witnessed during my multiple visits to this hospitable country.”

Riyadh

“Saudi Arabia has global indicators related to the number of tourists, which has qualified it to top the UN World Tourism list of significant tourist destinations.”

“All of these great achievements for Saudi tourism would not have been possible without proper planning by those in charge of the sector in the Kingdom and the great potential it possesses in terms of diverse climates, stunning natural landmarks, and the generosity of Saudi people who are distinguished by their hospitality, raising the ceiling of ambitions for new achievements.”

STA CEO Fahd Hamidaddin said: “While temperatures in the region rise to high levels during summer, temperatures in the highlands of Saudi Arabia in the southern region decrease to the extent that we even witnessed snowfall in Al Soudah yesterday.” “Through the promotional campaign for the Saudi Summer Program 2024, we seek to highlight the uniqueness of our destinations and their climatic, natural, and cultural diversity, along with the exceptional events and activities happening during summer. “This year’s summer program includes more than 550 tourism products and 150 special offers designed in collaboration with STA’s partners, which include attractive offers from hotels, airlines offering free tickets for children in partnership with major travel, tourism, and aviation companies, and exceptional products in the Aseer Season and Jeddah Season like tax-free shopping offers and many new and exciting experiences such as private beaches for tourists and ladies’ beaches.”

“The campaign slogan “Saudi Summer is Next Door” embodies an open invitation to explore the magic of Saudi destinations and their diversity. This diversity is expressed with simple words that reflect the uniqueness of each destination, such as “Closer,” “Cooler,” “More Beautiful,” and “More Affordable.”

The private sector is a very important component of the success of tourism programs and initiatives, and the Saudi Tourism Authority is committed to empowering it by fostering demand for products and offers that align with the aspirations of tourists globally.

The launch of the Saudi Summer Program 2024 marks a period when visiting the Kingdom has become easier, smoother, and safer through measures such as the availability of the eVisa to citizens of 66 countries, a 20 percent reduction in eVisa prices, and a significant increase in the number of weekly flights from

Gulf cities to Saudi summer destinations, now totaling 1,100.

Residents of the GCC can also benefit from the GCC residents visa, which allows them multiple entries and a stay of up to 90 days in the Kingdom over a year. Moreover, the number of hotel rooms available to travelers is set to increase, with an additional 25,000 rooms expected to be added this year.

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