THE WORLD'S LEADERS DISCUSS THE KEY ISSUES

For several days each year the Swiss resort of Davos is transformed into the capital of the world: the world's political and business elite all meet here for the World Economic Forum. This year will be the 45th time it has been held and it received about 2,500 delegates from 140 countries, including several dozen presidents and leaders of governments, heads of international organizations and eminent political figures.

The forum initially promised to be intriguing and tense. The uneasy calm and equilibrium which had been disturbed after the world economic crisis could not fail to impart some nervousness to the debates at the forum. As expected, this time the controversies focused more on geopolitical issues and problems of the impact of conflict situations in individual regions on the economic processes of an increasingly globalizing world.

Since the world crisis in 2008 questions of the state of the world financial system has been the main topic of debate at Davos. It was only last year that the organizers decided to make some adjustments to the agenda of the forum, proposing that problems of health and medicine and their influence on the economy be discussed. This year, the theme of Davos was "The New Global Context", which included ten basic challenges - tight resources, gender equality, development of the infrastructure, the future of the internet, the fight against corruption, social inclusion, and so on. These are the issues facing the world today, the organizers felt. The prospects for financial systems this year were named last in the list of the world's challenges.

As expected, on this occasion the discussions in the Swiss holiday resort centred mainly on the situation in Ukraine, the impact of the sanctions on Russia, the fall in the oil price and the "new normal" of Chinese economic growth. However, the Ukrainian agenda did not in fact become the main subject - the absence of leading Russian officials prevented the organizers from carrying out their ambitious peace plans. Ukrainian President Petro Poroshenko came to the forum, but the Russian leaders preferred solving domestic problems to having debates in Switzerland.

Poroshenko's emotional speech focused totally on the conflict with Russia and the fight against terrorism. He spoke of Ukraine's adherence to European values and he tried to explain the tragic events in the south-east of the country by way of reference to the recent terrorist acts in Paris. In the evening, without waiting for the second day of the forum, the Ukrainian president flew back to Kiev because of the deteriorating situation in the east of the country. But before leaving he met with the head of the IMF, Christine Lagarde, and asked her to replace the existing Stand-By credit agreement with the multi-year EFF (Extended Fund Facility), which provides for a longer loan redemption period - from 4.5 to 10 years. In April last year the IMF approved a two-year loan programme of 17bn dollars, of which Kiev has only managed to receive 4.6bn. It eventually became clear in December that Ukraine did not have enough of the approved money: the IMF assessed the country's additional needs at 15bn dollars. Lagarde told reporters that the IMF's executive council would meet as soon as possible to consider Ukraine's application, but she made it clear that the authorities in Kiev would have to embark on broader and deeper economic reforms in exchange for the loan.

It was left mainly to First Deputy Prime Minister Igor Shuvalov and former Finance Minister Aleksey Kudrin to "face the music" for Russia at the forum. The latter's speech is best remembered for his comment that President Vladimir Putin, in shaping the country's foreign political course, sees its objective as setting Russia up in the international arena as a strong state and is ready to pay a high price for this. Kudrin predicted that in 2015 the fall in the Russian economy could be 3-4 per cent of GDP, and it would take 2-3 years to enter a new trajectory of growth. "I hope that the period of low oil prices will be an incentive for the diversification of our economy," he said. 

As it happened, the oil industry used Davos as a platform to get across to OPEC and the whole world its alarms at the oil prices which over the last six months have slumped to their lowest for six years. "Oil quotations have now become locked in the range of 45-50 dollars a barrel, but in a few years' time the price could rocket to 150-200 dollars if the current slump leads to a freezing of many long-term extraction projects," the head of Eni Claudio Descalzi warned in the corridors of the forum. The Eni head urged OPEC to play a key role in stabilizing the market. His view was shared by Patrick Pouyanne, chief executive officer of the French Total company. "There is a natural decline in production at existing fields in the world of 5 per cent annually," he said. "This means that by 2030 over half the world's existing oil production will disappear." Bob Dudley, the head of BP, said that prices will remain low for another two-three years. OPEC Secretary-General Abdullah al-Badri weighed into the debate with the oil majors, defending the cartel's November decision not to interfere in the situation in the market, which was saturated with oil. "If we had cut production in November we would then have had to cut again and again because the non-OPEC producers would be increasing production," he explained.

There was also a big debate on the situation in the Chinese economy. Incidentally, in 2009 the Premier of the Chinese State Council Li Keqiang became the first representative of the Chinese leadership to visit Davos. He admitted that in 2015 growth in China could slow down even more, but gave encouragement to his audience by saying that there would not be a "hard landing" in the economy and there was no danger of a systemic financial crisis. China had entered a phase of "new normality", switching from "high-speed growth to growth ranging from medium to high-speed".

Azerbaijani President Ilham Aliyev who has traditionally taken part in the Davos forum, held several meetings, including with Swiss President Simonetta Sommaruga, Georgian Prime Minister Irakli Garibashvili, Prince of Monaco Albert II, EU Energy Commissioner Maros Sefcovic, founder of the Soros Foundation George Soros, as well as the heads of several companies, including Sberbank, BP, Gaz de France Suez and others.

Besides this, within the context of the forum, Aliyev addressed a session entitled "Regions in transformation: Eurasia". He pointed out that Azerbaijan, which had successfully carried out, first and foremost, a political transformation, has been pursuing a policy of open doors during the period of independence and successfully switched from a planned to a market economy. Diversification of the economy is continuing successfully and the ratio of the non-oil sector in the economy is outstripping the oil sector. The president noted that Azerbaijan has already become a donor-country and is funding a number of projects in many countries. The country's energy projects, along with regional cooperation, are also opening up broad opportunities for international cooperation, creating all the conditions for all partners to obtain benefit from these projects. The head of state said that in connection with the fall in oil prices in Azerbaijan control had been tightened on expenditure and measures are being taken to avoid waste, and so on. 

Significantly, the president was asked a question about the Nagornyy Karabakh problem. The world has begun to realize how difficult it has been for the country with the current economic crisis, bearing in mind it has had the burden of a conflict for 25 years. In this connection, the head of state particularly emphasized that if the Nagornyy Karabakh conflict is not settled within the framework of the norms of international law, this will also have a negative impact on other countries. The head of state noted that the norms of international law have been specifically reflected in the UN Charter and the documents of the OSCE and other international organizations. It is only by compliance with the norms of international law that we can prevent the spreading of double standards and similar problems in the region.

The president also spoke at a session "Overcoming violent extremism". He said that over 30 terrorist acts had been committed against our country by Armenia at various times, as a result of which over 2,000 of our people have been killed. He also noted that Azerbaijan has always participated in the international fight against terrorism and was an active member of the anti-terrorist coalition.

The latest forum in Davos again showed how fine is the line between the political and economic trends in the world and how conflicts in one region can lead to crises in the economy of countries which have absolutely no part in them. Perhaps this will prompt the stronger countries of the world to react more attentively and responsibly towards solving smaller conflicts before they become the pretext of bigger crises.