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The BBC's Claire Doole in Davos
"The World Economic Forum is bracing itself for more than just verbal attacks"
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Maria Mendonza, of the Global Exchange
"Most people didn't know about the WTO before the Seattle protests"
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Friday, 26 January, 2001, 12:24 GMT
Davos: Fears for Europe

A message of hope is beamed onto hills above Davos
European businessmen and government officials have been discussing Europe's ability to weather an economic slowdown at the second day of the world economic forum at Davos.

The chairman of one of Britain's biggest companies has warned the world is in danger of "talking itself into a recession."

Sir Martin Laing, who heads John Laing Construction, said there was no sign yet of a global recession, but too much talking could knock confidence and might lead to companies cutting back on investment.

His remarks come as head of the US Federal Reserve, Alan Greenspan, reported that growth rate of the US economy is near zero.

But many others remained optimistic about the prospects for growth in the European economy.

"Growth in Europe might be underestimated compared with the US," Bundesbank president Ernst Welteke said.

And the head of Germany's largest company agreed.

"I am very upbeat," Deutsche Telekom's Ron Sommer told the BBC. "It is a fair race [against the US] and it is a good one."

The World Economic Forum was meeting amid unprecedented security at the Swiss ski-resort.

Police and army units have sealed off the resort, fearing a repeat of the riots that dogged last year's meeting.

Need for restructuring

Meanwhile, delegates were warned that Europe must become more business-friendly if it is to compete with the US in a global market.

Attention focused on the pace of restructuring in the European economy - the many laws which make life difficult for businesses - and which has been seen as one of the factors which have made investors wary of investing in Europe and its weak currency.

"We need structural reform, there is no question about it," Mr Sommer said, citing problems with the 3G auctions of mobile phone licenses.

Michael Porter, professor of business administration at Harvard Business School said: "There is no question that the European companies are making progress and moving in the right direction. There is much more regulation in Europe, there are much more subsidies. There is still quite a way to go."

"In five years from now, I don't think we will be celebrating the victory of Europe over the US," he said, injecting a healthy note of scepticism into the debate.

Developing country plea

The leaders of developing countries have demanded a fair share of the benefits of globalisation, saying profits had mainly flowed to the rich industrialised countries.

Globalisation can deliver - just as Tanzania can theoretically play in and win the World Cup

Tanzanian President Benjamin Mkapa
"Globalisation can deliver - just as Tanzania can theoretically play in and win the World Cup," Tanzanian President Benjamin Mkapa told the star-studded gathering of political and business leaders from around the world.

In a fierce critique of globalisation, President Mkapa said the wealth gap between rich and poor countries was widening.

The "digital divide" - the gap between the haves and have-nots of the technological world - was also getting worse, he added.

And in the face of epidemics of Aids and malaria, a new gap was emerging, "a gap between the value attached to life itself".

While Aids was increasingly turning into a manageable albeit still serious disease in rich countries, it is threatening entire societies in developing countries, he said.

"Further support for globalisation and deregulation can only be built if we have something to show to our people in terms of concrete returns and rewards," Mr Mkapa said.

He called for the decline in Africa's share of foreign direct investment to be halted and said debt relief measures had to be taken and implemented more quickly.

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25 Jan 01 | Business
Tight security for Davos summit
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