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Thursday, 23 January, 2003, 17:01 GMT
Economic gloom at Davos forum
Police car patrolling Davos streets
Thousands of police are protecting the venue
World leaders gathering in Davos have been greeted with tight security and dire forecasts about the state of the global economy.

The harmful impact of war, terrorism and rising oil prices were repeatedly stressed at the start of the annual gathering of the world's political and business elite in the exclusive Swiss ski resort.

Whether it is a short war or a long war, the best answer is: no war

Ujiie Junichi
chief executive Nomura Holdings
"This could give you no growth in the US or a possible recession," said Gail Fosler, chief economist at the US-based research group the Conference Board.

Industry leaders also warned that this would have a grave impact on the rest of the world, with the fragile global economy especially dependent on the US at present.

Security is tight at the event, with thousands of army and police protecting the venue. Swiss authorities have declared a no-fly zone and threatened to shoot down any aircraft making unauthorised flights over the region.

'Pathetic' US growth

As the forum kicked off, a survey revealed that just under half of all chief executives rated terrorism and global war as a significant threat to their growth prospects.

The most fundamental issues are the issues regarding terrorism

Thomas Russo
Lehman Brothers bank

"Whether it is a short war or a long war, the best answer is: no war," said Ujiie Junichi, chief executive of Japanese financial services giant Nomura Holdings.

Stephen Roach, chief economist at US investment bank Morgan Stanley, said the American economy's performance last year had been "pathetic" and might get worse.

"If we went into war with a big [economic] cushion, we might be able to come out of it. When you hit with a zero growth rate, we will go into recession."

Rival anti-globalisation summit

On the other side of the Atlantic in Brazil, meanwhile, anti-globalisation protesters are gathering for a rival summit, the World Social Forum.

Police and anti-globalisation protestors scuffle at Zurich airport
There have already been scuffles between WEF protestors and police

Meeting in Porto Alegre they will focus on issues such as poverty and participative democracy. Organisers expect more than 100,000 people from 157 countries to attend.

The threat of a war in Iraq is also high on the agenda, with a debate on how peace can be achieved scheduled for 27 January, the day UN weapons inspectors will submit their interim report on Iraqi disarmament to the Security Council.

A day earlier, though, the focus will be firmly on Davos where US Secretary of State, Colin Powell, will deliver a "major speech" on US foreign policy at the weekend.

Kings, presidents and corporate bosses

This year the World Economic Forum has returned to the Swiss Alps, after a one-off move to New York last year to show solidarity after the September 11 attacks.

Tent city in Porto Alegre
A tent city has sprung up in Porto Alegre to accommodate thousands of participants

The event, the forum's 33rd annual summit, has been themed 'Building Trust' to reflect that the WEF termed "an extraordinary climate of global uncertainty and complexity".

Among the 1,300 business leaders at the forum will be Microsoft founder Bill Gates, Douglas Daft of Coca Cola, Nobuyuki Idei of Sony and Carly Fiorina of Hewlett-Packard.

Top politicians are also attending, among them the boss of the World Trade Organisation, Supachai Panitchpakdi, presidents Vicente Fox of Mexico and Johannes Rau of Germany, King Abdullah II of Jordan and Malaysian Prime Minister Mahathir Mohamad.

Brazil's new president, Luiz Inacio Lula da Silva, will be in Davos as well. Ironically, he used to be one of the organisers of the rival World Social Forum and is coming from there.

World leaders, facing steep declines in credibility, have been warned they must prove their worth to a "new world" if they are to recover the public's trust.

Klaus Schwab, president of the World Economic Forum, urged business leaders and politicians to launch personal clean-up crusades to regain confidence lost through debacles such as the Enron scandal.

The BBC's Tanya Beckett
"Oil is very much a talking point"

Conference colour

Eyewitness accounts


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