DAVOS WARNS

A world in which all work is done by robots seemed close to ideal in the last century. According to science fiction writers, it would help provide all the earth's population with necessary products and goods and secure full supplies to mankind. The presence of artificial intelligence should further improve the process of creation. However, there is an alternative point of view - machines endowed with artificial intelligence will eventually destroy humanity, as we are warned by the creators of Terminator movies featuring Arnold Schwarzenegger.

But the reality turned out not so rosy and not so grim. It was the fourth industrial revolution, which is based on the introduction of "smart plants", i.e. the unification of IT systems at all stages of the production chain into one network allowing them to interact with each other in real time and adjust themselves, that the World Economic Forum in Davos was dedicated to.

Geopolitical differences, falling oil prices, the slowdown of the Chinese economy and problems of migration and climate are all urgent topics discussed in any format. But the founder of the Davos Forum, Klaus Schwab, said the problem of robotization was more important. Therefore, the central hall of the Congress Centre in Davos, where the forum is taking place, demonstrates the capabilities of the Korean robot HUBO, which even has a forum participant's card. The main purpose of HUBO is to facilitate the work of rescue workers during disasters.

According to Schwab, the fourth industrial revolution associated with the Internet and robotics will "change not something that people do, but people themselves". He called "the threat of losing the soul and the heart" one of the main dangers of the new technologies that will fundamentally change the lives of people.

US Vice-President Joseph Biden agrees with his point of view. He noted that the fourth industrial revolution will have a fundamental impact on society and every individual. Moreover, according to the vice-president, the middle class, which, as you know, is the key to economic growth, will face a threat. Therefore, he considers investments in education - from children's education to professional retraining - to be a top priority.

Whatever the prospects of the theme of the industrial revolution raised by Schwab, the meetings of the world's main economic platform was inevitably dominated by other issues that concern the world more today.

Specifically...

The main theme of Davos, of course, was oil and the unexpectedly low prices. Moreover, some forecasts about the future of the oil market do not predict rosy prospects. For example, BP chief Robert Dudley believes that the price of oil could fall to 10 dollars a barrel this year, but says that it will not stay too long at this level and will exceed 50 dollars by the end of the year.

He predicted that in the second half of the year the price of oil will rise as demand from America and China will increase and supply will begin to wane as production in the US will decline.

The head of Russian Lukoil, Vagit Alekperov, believes that oil prices are already close to their bottom and will soon begin to rise to reach 50 dollars per barrel at the end of 2016. In his opinion, the lowest benchmark for the oil price is 24 dollars per barrel. "Below this price, many projects, even the operating ones, will be stopped," he said.

Meanwhile, the main player in OPEC - Saudi Arabia - has no intention of reducing production of hydrocarbons and expects oil prices to grow by the end of 2016. "If prices stay low, we will be able to withstand it for a long time. Naturally, we do not look forward to such a scenario," Saudi Aramco chief Khalid al-Falih said in Davos, noting that Saudi Arabia will not give way to competing manufacturers.

The topic of oil prices represented a special interest for Azerbaijan too. Participating in the Davos Forum, President Ilham Aliyev said at a session that the "black gold" can depreciate by another 2-3 dollars per barrel, after which the market will grow. "In 1994, when a major oil project was launched (on the development of Azari-Ciraq-Gunasli [Azeri-Chirag-Guneshli]), the price of oil was 12 dollars. And this was perceived normally. I remember when the most optimistic scenario was planned at the time, the oil price was 23 dollars. And now we are very close to the optimistic scenario of 22 ago. I hope that the market will stabilize, as the oil sector requires investment. In the past year we witnessed the least amount of investment in the oil sector. Without this, prices will certainly rise. I think that 60-70 dollars per barrel is an excellent price for companies, investors and governments, and I hope to see it sooner or later," Ilham Aliyev said at the session on the "New Energy Balance", saying that prices can reach this level in 2017.

The Azerbaijani president noted that he had repeatedly discussed the prospects for balancing the oil market with OPEC. However, the small potential of Azerbaijan should be considered here. "But I believe that with better coordination between OPEC and major producers that are not its member, we may achieve some result in reducing production, because, unfortunately, after each meeting of OPEC members, oil prices fall. For this reason, we are afraid of a new possible meeting. Maybe it's better not to hold this meeting?" Aliyev joked.

The president said that Azerbaijan was preparing for the post-oil era, but not in such a short term. "We in Azerbaijan prepared ourselves for the post-oil period after 15-20 years. So it was a surprise to us and a blow to our economy. We planned our budget for this year based on an oil price of 50 dollars and last year - 90 dollars. We had to cut spending and investment and keep social services at the previous level. We can balance the situation. But if this situation continues, of course, it will seriously impact our budget," Aliyev said.

One of the main effects of lower oil prices was the devaluation of the manat. The president says that it was a necessary step in conditions due to the unfavourable situation on the oil market and the devaluation of currencies in neighbouring countries, which reduced the competitiveness of Azerbaijani products. "We tried to avoid it as much as we could. We lost some of our national banking resources. But we had to take this step. We are still a country dependent on imports from the standpoint of certain products. Therefore, the rise in prices caused some concern. It was a small protest. The reason was that people went through a stressful situation for which they were not prepared. But it has already passed, and I believe that development in Azerbaijan will be stable. With foreign exchange reserves we will come out of this situation," Aliyev said.

In general, the Azerbaijani leader considers the current stage as an auspicious moment for reforms in Azerbaijan: "We have started to reform our financial sector on the basis of new thinking, economic reforms and the production of export-oriented non-oil products, and we should forget about the oil factor."

In an interview with RIA Novosti in Davos, President Ilham Aliyev stressed that the current rate of the manat is stable and fair in accordance with the price of oil. "As for the manat, I think we have already done all that had to be done. I think the government will take no further action. If oil prices continue to fall, I do not think that the manat will suffer," Aliyev said. He also invited Russian companies to participate in a large-scale privatization programme, which is now being prepared by the government, although he stressed that SOCAR will remain in state ownership as a strategic asset.

The president of Azerbaijan is a regular participant in Davos and offers the potential of the country for investment every year. His present visit is of particular importance in terms of presenting planned reforms in the difficult period of falling oil prices and the decline in the country's revenues. It seems that the statements of President Aliyev about reforms, the rate of the manat and the government's willingness to confront global economic challenges made it possible to dispel to a considerable extent the investors' concern about the prospects for the development of Azerbaijan's economy.

It should be noted that the excessive decline in oil prices worries not only oil-producing countries, but also consumers.

In particular, Japan's Minister of Economic Recovery Akira Amari believes that the decline in oil prices could have a negative impact on Japan's economy, as it leads to shocks on the stock market. "Falling oil prices and the depreciation of shares are closely related," he said. "The decline in oil prices aggravates the situation in oil-producing countries. This causes investors to sell financial assets, which largely include Japanese stocks as well. The excessive drop in oil prices will have a negative impact on the economy of our country." Two Nobel Prize winners Paul Krugman and Nuriel Roubini have also warned about this. According to Roubini, who predicted the global economic crisis of 2008, instead of positive effects in the form of growing incomes in the largest consumers of oil, investors are waiting for the deterioration of aggregate demand in the world due to economic problems in developing countries, many of which are heavily dependent on the export of the raw material.

Traditionally, it was believed that oil-producing countries of the Middle East and the Texas billionaires are so rich that when oil prices fall, they will hardly experience liquidity problems. But many will feel the benefits, including consumers living from pay cheque to pay cheque, who can spend the saved money on fuel, Paul Krugman wrote in the New York Times. But this can be expected if prices decrease by 10-20 per cent, but when prices collapse by 70 per cent, producers lose more than customers gain, he said. In addition, previously central banks could lower interest rates due to the slowdown of inflation, but today they are set at zero. This is precisely why the International Monetary Fund (IMF) downgraded the outlook for global economic development by 0.2 percentage points - to 3.4 per cent in 2016 and 3.6 per cent in 2017. The forecasts for US economic growth and emerging markets are equally reduced. At the same time, the IMF does not expect a new global crisis, even despite the situation with refuges and conflicts. It is the unexpected migration crisis that WEF experts regard as the main threat in 2016.

Analysts of the Davos Forum have calculated that over the last three years, only one of the 40 conflicts in the world was resolved, and 80 per cent of them have been dragging on for decades. If in the 1980s IDPs left their homes for 9 years, at the beginning of the new millennium - for 20 years.

And the main question will be Europe's ability to cope with the influx of refugees from the Middle East, although, according to the IMF, the EU economy will receive additional benefits from migrants. In particular, the economy will grow by 0.09 percentage points in 2016 and 0.13 - in 2017.

But here we go back to the topic of the industrial revolution. After all, as is known from the examples of the previous three industrial revolutions, their main danger lies in the replacement of humans by machines. According to the WEF report, by the end of this decade, robots and new technologies will leave 7m people without work. The greatest reductions are expected in the field of office and administrative staff - 4.7m. And the struggle for workplace will affect the problem of migrants in the developed world. Soulless machines do not understand basic human needs and people's abilities to provide for their family and children. And maybe in real life we will see a war of machines and humans, but not in terms of an uprising by intelligent machines, but an uprising by humans against soulless robots. Therefore, the fourth industrial revolution must be carried out very subtly and harmoniously. After all, the current working class is not workers and artisans of the 17th century, most of whom were put out of action by the first industrial revolution based on transition to machines. At that time, the majority managed to retrain and adapt to new conditions. And even the third revolution, which began in the 1950s and allowed the gradual access of computers in our lives, benefited people by creating simultaneously new jobs and new spheres of human labour - because ultimately, no machine can replace the human brain and intelligence. But it is the fourth revolution that is focused on this exclusively human ability. And we have enough power to turn it to our own advantage as it has happened in the past three centuries.