DAVOS:THE GLOBAL ECONOMY IS FACING A CRISIS

Switzerland has long been associated with famous cheese and chocolate, well-known brands of watches, as well as the most reliable banks. But in recent decades, this prosperous and comfortable country has developed another brand - the mountainous resort of Davos which has regularly hosted the World Economic Forum (WEF) since 1971. Authoritative businessmen, financiers, politicians, public figures and economic experts from the whole world regard participation in it as prestigious and important.

The current 38th Davos week was held on 23-27 January and brought together 2,500 delegates. Among them are 30 heads of state and government, more than 100 ministers, 74 top managers of major companies and financial institutions. During the forum, its participants get a chance to combine work with pleasure, participate in seminars, presentations and discussions, hold information meetings, view the wonderful scenery and go skiing. In this sense, Davos provides unique opportunities.

Although the forum is economic, discussions there often focus on political problems. For example, previously the main subjects of discussion were Russia, China, the situation in the Middle East, Iraq and so on. This year the main subject of the forum was "The Power of Collaborative Innovation". The organizers identified five major subjects of discussion: "Addressing Economic Insecurity", "Competing While Collaborating", "Aligning Interests Across Divides", "Exploring Nature's New Frontiers" and "Understanding Future Shifts". There were also five sections that began at eight o'clock in the morning and ended late in the evening.

The crisis in the world economy did not leave a chance for more or less broader discussions on political problems. Literally on the opening day of the Davos week, the leading stock exchanges experienced a decline. Such a course of events was not so unexpected. This is proved by a report posted on the website of the Davos forum, in which leading experts assess the likelihood of this or that problem deteriorating on a five-point scale. For example, the danger of a global economic crisis was assessed to the maximum (5.0). The possible fall in real estate prices in the USA and Europe comes second (4.8). The third danger is the growing food prices (4.5). Oil prices will continue to grow (4.0), experts think, and the main countries that pollute the environment are unlikely to reduce emissions into the atmosphere (3.8).

Although such international meetings have become a scene of serious fighting between the police and anti-globalists in recent years, this time the situation was quieter. Apparently, security services learnt a lesson from the past and better organized preventive measures. It cannot be ruled out that even the organizers of rampant protests by anti-globalists understand the serious danger posed by the imminent world economic crisis.

The 38th World Economic Forum is Davos ended with the adoption of a joint declaration. For various reasons, the leaders of major powers did not participate in the forum this time. For this reason, US Secretary of State Condoleezza Rice had to dispel fears about the world crisis. She only repeated the statement by President George Bush about the "steadiness" of the American economy and Washington's readiness to take energetic measures appropriate to the situation. Other representatives of Western countries also spoke in the spirit of affected optimism. However, the well-known US financier, George Soros, said that the "golden age" of the dollar is ending, and the US economy is very unlikely to avoid collapse. He said that there is no chance that financial markets will regulate themselves, and authorities should intervene in the situation.

The Davos forum is a place where the state of the world economy and politics is diagnosed. The diagnosis for this year is not consoling. Decisions are made in a much narrower circle - at so-called G8 summits, closed meetings of heads of the world's major financial institutions and central banks of leading world powers. Small and medium-sized states that are unable to seriously influence the global situation will have to minimize risks first of all and protect their own countries from the imminent crisis.

In this sense, it is notable that Azerbaijani President Ilham Aliyev also participated in the Davos forum. Our country has started getting huge oil revenues, the correct placement and management of which is becoming an extremely difficult task at a time of an imminent financial and economic crisis in the world. It is clear that this is the duty of relevant officials. But the biggest responsibility lies with the head of state, which is why it was quite useful to personally feel the atmosphere in the world political and economic elite. Azerbaijan itself, with its energy resources, growing market and steady financial situation, favourably differs from many countries gripped by the financial crisis, which is why it is drawing more and more attention. It was important not to miss such a good chance and make effective use of it in order to solve problems of speedy development. President Aliyev actively solved these tasks during his three-day visit to the Davos forum.

Ilham Aliyev met heads of state and government, as well as ministers from a number of countries. Among them are Swiss President Pascal Couchepin, Ukrainian President Viktor Yushchenko, chairman of the Albanian Council of Ministers Sali Berisha, Hungarian Prime Minister Ferenc Gyurcsany, Iranian Foreign Minister Manuchehr Mottaki, Israeli Foreign Minister Tsipi Livni, Duke of York Andrew, British Secretary of State for Business, Enterprise and Regulatory Reform John Hutton, American Jewish Committee Executive Director David A. Harris, and South Africa's African National Congress Chairman Jacob Zuma.

As for representatives of the business and financial elite, Ilham Aliyev also met the president of the European Bank for Reconstruction and Development, Jean Lemmiere, BP Group Chief Executive Anthony Hayward, Citigroup Chairman Win Bischoff, the chairman and owner of the US company Global Hyatt, Thomas Pritzker, and the chairman of the British company Euromoney Institutional Investor PLC, Padraic Fallon.

Productive meetings and negotiations with the heads of leading world companies in the sphere of modern means of communications and information technology became a reflection of the strategic policy of developing this sphere in Azerbaijan. It is notable that during the forum, the Azerbaijani head of state was accompanied by Minister of Communications and Information Technologies Ali Abbasov. President Aliyev received and negotiated with Executive Director of CISCO Systems Inc. John Chambers. Then President Ilham Aliyev received Microsoft Chief Research and Strategy Officer Craig Mundie. Microsoft is planning to set up an electronic-information centre in Azerbaijan. A number of other projects in the ICT sphere are also planned in association with this corporation.

However, if the development of ICT is, in many respects, a short-term task, energy resources and their delivery to the world market already define Azerbaijan's real importance. It is no surprise that it was exactly during discussions on these issues that our country and its leader were in the centre of attention. President Aliyev participated in the session of the forum on the role of solar energy in the energy industry. He made a report on the subject of energy security and Azerbaijan's role as an alternative source of energy. In his speech, President Aliyev noted energy projects being implemented in the South Caucasus, and the irreplaceable role of the Caspian basin as an alternative source of energy and its importance to Europe's security. He spoke about the prospects of such a project as Nabucco, Azerbaijan's policy of integration into Europe and regional cooperation. President Aliyev also touched on the Nagornyy Karabakh conflict, noting the importance of its settlement to peace, stability and comprehensive cooperation in the South Caucasus.

Problems of energy were also in the centre of attention during the meeting with Ukrainian President Viktor Yushchenko. The meeting discussed cooperation on the Odessa-Brody-Plotsk-Gdansk oil pipeline and prospects for the establishment of a common energy transit area which may involve Azerbaijan, Georgia, Lithuania, Poland, Ukraine, Estonia, Latvia, Slovakia, Turkey, Romania and Bulgaria. During the meeting, Ilham Aliyev confirmed his participation in the energy summit that will be held in Kiev in May 2008.

The Davos week ended, leaving the world without the answer to the question as to where the world economy is going and whether it will be possible to avoid a global crisis. One thing is clear - fewer and fewer people share the liberal hopes that the market itself will solve the existing problems. The role and importance of institutions of state intervention in the economy at a time of an imminent crisis are increasing, while politics and energy, state power and finance are becoming more and more intertwined. A careful conservative financial policy, risk reduction, the implementation of infrastructure projects and the real sectors of the economy may help Azerbaijan remain an island of stability and development even at a time of a crisis.