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Friday, 1 February, 2002, 06:51 GMT
Forum hopes for economic recovery
Conference Hall
Panel members discuss the world economy
Hopes of a rapid recovery for the US and world economies, and calls for concerted action on poverty, have dominated the first, rain-soaked day of the World Economic Forum (WEF).

With protests remaining peaceful, more than 3,000 of the world's political and business movers and shakers kickstarted the summit in the unaccustomed surroundings of bustling New York City.

Like Wagner's music, the US economy is better than it sounds

Jacob Frenkel
President, Merrill Lynch International
The shadow of 11 September hung heavy, and the executives and political leaders avidly debated the relationship between the economy and the "war on terrorism".

Many said they felt they had seen the back of the worst of the downturn.

"Like Wagner's music, the US economy is better than it sounds," said Jacob Frenkel, president of investment bank Merrill Lynch International.

"We will see a significant recovery in the US in the second half of the year, and that will pull the rest of the world with it."


But Stephen Roach, chief economist at Morgan Stanley, said the economic fundamentals were "crummy" and the recession would show "a double dip in the spring."

Now that our global coalition against terrorism has been successful, we should use this to fight poverty, because terrorism and poverty are twins

Gloria Arroyo
President of the Philippines

And Niall Fitzgerald, chief executive of UK-based household goods multinational Unilever, warned against over-confidence.

"I don't think we're going to see a quick recovery," he said, noting the massive levels of debt in economies around the world.

"As there are more people out of work - and there will be - and problems in the financial markets continue, the debt will become a problem."

The huge injection of stimulus into economies around the world could see a recovery in 2002 peter out in 2003, he warned.

Top to bottom

But other speakers reminded delegates, most of whom come from rich countries, that they needed to remember that widening gap between rich and poor.

Gloria Arroyo, president of the Philippines, said that without a concerted effort to tackle poverty both economic stability and success in the war against terrorism would remain out of reach.

Waldorf-Astoria hotel
The forum in based at the Waldorf-Astoria hotel
"Now that our global coalition against terrorism has been successful, we should use this to fight poverty, because terrorism and poverty are twins," she said.

Her advice echoed the words of other influential participants, who fear that political and business leaders from rich countries would prefer not to be bothered with the connections between unrest and international economic inequality.

In an interview with the International Herald Tribune (IHT), World Bank president James Wolfensohn warned that aid to poorer countries needed to be massively expanded.

Three months ago, Mr Wolfensohn shared a platform with UN Secretary-General Kofi Annan and the UK's chancellor of the exchequer, Gordon Brown, to call for aid to be doubled from its current "paltry" level to $100bn a year.

Merrill Lynch International's Jacob Frenkel
Frenkel: recovery on the way
But the US - both Congress and the White House - is blocking the idea.

The main US representative, Treasury Secretary Paul O'Neill, reiterated his opposition.

British and other opposition to converting loans to grants on the basis that this will reduce aid spending - repayments go back into the fund at present - was "an absurdity", he said.

"It would be a lot easier for me to say to the President that we should compromise if I can find one argument that strikes me as legitimate," he said.

But he said he could see common ground in the aid-doubling proposal.

Change of scene

The Forum is far from its traditional home in the Swiss skiing resort of Davos, and much of the discussion was about the impact of the 11 September attacks on New York.

"New York is more legendary than ever before," the city's former mayor, Rudolph Giuliani, said, choosing his words carefully.

Barricades to keep protestors out of World Economic Forum
The surrounding area has been barricaded off
Officially, the decision to change venue was taken by the WEF's founder, Klaus Schwab, as a gesture of solidarity with New York.

But the spiralling expense of dealing every year with thousands of protesters at what they see as a talking shop for a global elite means the local government in Davos has come to see it as a burden.

Riot squads will remain close to hand and New York's police commissioner has promised his forces will arrest demonstrators for even the most minor of public order infractions.

The 4,000 police on stand-by have so far only arrested five people, though more protests are expected in the coming days.

The BBC's Alison Gee
"Never before have participants talked so much about the need to reduce poverty"
Phil Condit, Boeing
describes the benefits of attending WEF
The BBC's James Coomarasamy
"The police outnumber the protesters"
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