DAVOS, SWITZERLAND // Leaders from East and West stepped up efforts to prevent future market turmoil yesterday in a combined push to reform global financial architecture at the World Economic Forum. Statesmen as diverse as Britain's prime minister, Gordon Brown, and Qatar's prime minister and foreign minister, Sheikh Hamad bin Jassem bin Jabor Al Thani, discussed strategies to address a turbulent economic crisis.
Mr Brown set out his agenda for a forthcoming G20 crisis summit in London, emphasising the need for beefed up global institutions and better international co-ordination. "We have a global financial system, but until now no global co-ordination or supervision, only national supervisors," he said during the five-day meeting of business and government chiefs. "We have to ensure, therefore, that all major changes are agreed for our financial system as a matter of urgency over the next few weeks at the G20 summit in April," he added, during a joint press conference with Ban Ki-moon, the UN secretary general.
Mr Brown called for "an early-warning system of risk on any continent in the world economy" and an agreement on "international standards of transparency and disclosure" for financial institutions and products. He, together with Angela Merkel, Germany's chancellor, was taking part on the third day of a forum that has attracted about 2,500 delegates including more than 40 heads of state and government to this snow-capped Alpine retreat.
Ms Merkel said the scale of the crisis could provide enough international will to establish a UN Economic Council modelled on the Security Council that would oversee world markets. "The central task of politicians now is to restore the ability of markets to function, thereby creating new trust that is placed on a sounder footing," the German leader told delegates. Under the slogan of Shaping the Post-Crisis World, this year's Davos forum saw laissez faire capitalists and bankers sidelined by government chiefs as greater market regulation was presented as the solution to a deepening financial crisis.
Qatar's Sheikh Al Thani joined envoys from Singapore and Switzerland to unveil a major research initiative being sponsored by the three governments that will attempt to brainstorm a way out of the crisis. The so-called Global Co-operation Project will see academics and scientists join media, business and government chiefs to develop guidelines for fixing global economic bodies and suggest improvements to inter-governmental co-operation. Recommendations will be presented at the forum's 40th annual meet in Davos in January 2010.
"The crisis has underlined the dangers that surround us all. It has become very clear to us that we all are interdependent and that we must all work together to face the challenges of the 21st century," Sheikh Al Thani told delegates. Qatar, along with the UAE and Kuwait, was among the regional economies worst hit by the financial crisis after embarking on an aggressive strategy of overseas acquisitions. Last year at Davos, Sheikh Al Thani, also chief executive of the emirate's sovereign-wealth fund, said the Qatar Investment Authority planned to spend 2008 building up a US$15-billion (Dh55bn) treasure chest of holdings in a clutch of 12 blue-chip western banks.
The value of foreign assets in portfolios of the Gulf Co-operation Council states fell by $100 billion to a total of $1.2 trillion last year, not counting the vast personal holdings of their ruling families, according to a report this month by the New York-based Council on Foreign Relations. Speaking yesterday, Sheikh Al Thani said the global economic infrastructure was designed in 1945 and still served the interests of the world powers that emerged victorious from the Second World War.
The Qatar-sponsored research project would define methods to "repair the flaws and cure the ailments" of global financial systems and prevent more "catastrophic consequences" in the future. "We need to work together, especially in financial maters, to achieve mutual development," he said. "We must ensure that international laws and legislation are implemented in order to avoid chaos." "If these issues are not tackled well, they could undermine our system, our world and they could undermine the stability and sovereignty of some countries."
WEF chairman Klaus Schwab, the German-born economics professor who founded the forum in 1971, said the research project would address a "wide range of pressing challenges such as climate change, energy security, food security, terrorism and proliferation of nuclear weapons". * With agencies jreinl@thenational.ae