Monday, May 23, 2022

Davos Russia House isn’t what it used to be

A newsletter from POLITICO that unpacks essential global news, trends, and decisions.
May 23, 2022 View in browser
 
POLITICO Global Insider

By Ryan Heath

Check out the weekly Global Insider podcast.| Follow Ryan on Twitter.

Happening Today

Biden in Japan: Japanese Prime Minister Fumio Kishida has welcomed President Joe Biden for his first official visit to Japan, declaring solidarity with the U.S. in confronting Russia's invasion of Ukraine, which he said "undermines the foundation of global order."

Biden said that the U.S. remains committed to Japan's defense, and unequivocally stated his administration would defend Taiwan if it were attacked.

Indo-Pacific Economic Framework launched: Don't believe any hype you see about this being a trade agreement — it's all intentions and no tariff reductions. "We will seek" is the key repeated phrase in the launch document, showing there's a lot of work to do, but the framework does at least involve a stellar line-up of countries who prefer to dialogue with the U.S. over China.

Up next: A meeting of the Quad alliance takes place Tuesday in parallel to business leaders meeting in Davos.

Kishida announced plans for the 2023 G-7 leaders summit to take place in Hiroshima.

 

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GLOBAL RISKS AND TRENDS

AUSTRALIA GOES GREEN

Australian voters on Saturday dumped their conservative Liberal-National Coalition government which has ruled for nine years.

While unemployment is at its lowest level in 50 years, voters cared more about inflation pressures and climate change. The pro-coal government suffered massive defections with large chunks of their wealthy voter base shifting to the Greens and a group of so-called Teal Independents backed by the Climate 200 organization, which won a combined 15 seats in the 150-seat parliament.

Center-left Labor Party leader Anthony Albanese — known Down Under as "Albo" — is now Australia's 31st prime minister, succeeding Scott Morrison. In his victory speech, Albanese promised to make Australia a "renewable energy superpower."

Albo in a paragraph: Raised by a single mother in government housing, the 59-year-old is only the fourth Labor leader since World War II to win government from opposition. He studied economics and used the six-week campaign to reveal a "glow-up" — his girlfriend Jodie Haydon and Toto, his cavoodle. Albanese won despite contracting Covid and being forced into isolation at the height of the campaign.

Next stop Tokyo: Albanese and Foreign Minister Penny Wong are touching down today in Japan for a meeting of the Quad Alliance.

5 great charts on the Australian election: The electorate has split into three equal-sized chunks; green issues now animate voters and parties; and the affluent have defected from the conservative parties. See more here.

DAVOS POSTCARD

If you want more detailed WEF updates: sign-up for our daily free Davos Playbook 

BIG NAMES MISSING: As Quad leaders prepare to meet in Tokyo, the Davos line-up looks very thin. German Chancellor Olaf Scholz is the only G-20 leader confirmed as attending this year's World Economic Forum annual meeting.

While the leaders of 40 other countries are here, it's a long way from the days when most of the G-7 would show up. WEF supremo Klaus Schwab is instead talking up this edition of Davos as the "up and comers" version of the meeting. That's certainly the case with the U.K. delegation, ahem, which consists of two middle-tier ministers instead of the usual Cabinet heavyweights. More on the Incredible Shrinking Global Britain.

DAVOS SUMMER VS. DAVOS WINTER? The first World Economic Forum to take place in the early summer is breaking all sorts of convention. Gone are the snowy hills and idyllic winter scenes that provided the picture-perfect backdrop for TV crews. In are the executives running down the Promenade in athleisure, and a younger crowd taking over the streets for happy hour.

We've never seen such an active Sunday at WEF. "Every single person here this week is going to be lobbying for this warm weather shift to become permanent," said one veteran Davos-goer at CNBC's opening reception.

In vogue — eye-contact: The Davos of yesteryear involved frozen delegates picking their way through the snow with eyes either glued to the ground as they tried not to slip, or fixated on your badge, the plastic caste system of Davos. This year, the streets are full of smiling participants putting their best foot forward.

REACHING NEW HIGHS: The diplomacy might be missing but — fresh from Uma Thurman hawking the benefits of psychedelics at Milken Global Conference — it's definitely mushroom season in the Swiss Alps. Davos really is Europe's highest town. The psychedelics program this year includes around 40 sessions and speakers, including researchers, entrepreneurs and investors. We'll report back on the level of audience participation.

TODAY'S BIG DAVOS FOCUS: UKRAINE

ZELENSKYY ADDRESS: He may have won a standing ovation for his virtual address, but this wasn't one of Ukrainian president Volodymyr Zelenskyy 's better speeches. Perhaps it was the hesitant interpretation, but his remarks as translated in English wandered — Zelenskyy barely looked at the handwritten script in front of him — between criticizing Russia for "becoming a state of war criminals" to lauding the bravery of his citizens.

Zelenskyy urged the global community to impose further sanctions on Russia : "All the Russian banks should be blocked, no exceptions. There should be no trade with Russia. … If the aggressor loses everything, he loses his incentive to invade."

He went on to tell the representatives of governments in attendance that their inaction in not sanctioning Russia harder, and earlier, has cost tens of thousands of lives. "Sanctions should be preventative; not just imposed as a response," he said.

Zelenskyy also called for all Russian assets to be seized or frozen, and then allocated to a special fund that would be used to help all those affected by the war — an idea already mooted by the European Union.

He urged for new global systems to support countries that have been invaded. That last idea, in Zelenskyy's mind, should include something akin to a 911 service for governments to call when they need help against aggressors … which sounds a lot like NATO.

Zelenskyy spoke poignantly about how each morning for him begins with a report on the previous day's Ukrainian deaths.

Message to world leaders: "Ukraine is short on time … wake up in the morning with the question: What have I done for Ukraine today?"

Message to CEOs in Davos: "Your brands should not be associated with war crimes."

Message to those who want to rebuild Ukraine: "Set a precedent for rebuilding the country, that will send the message to anyone who wants to destroy a neighbor, that it is not worth it."

Not cool: WEF staff refused entry to some journalists to the Zelenskyy session, including Global Insider, while letting other badge holders in.

ZELENSKYY REACTIONS 

Joe Manchin: The pivotal U.S. senator joined a bipartisan panel offering "The view from Capitol Hill," and focused on Ukraine's bravery, saying it "has united the Senate like nothing else in my lifetime. ... I am totally committed to seeing Ukraine to a win … moving Putin back to Russia, and hopefully getting rid of Putin."

Alexander Stubb: The former prime minister of Finland told Global Insider "we have a Ukraine fatigue challenge in the week and months ahead, including in convincing the public" to continue supporting the war effort.

BEST OF THE REST (OF UKRAINE): Other Ukrainian voices here include mayor of Kyiv Vitali Klitschko and Foreign Minister Dmytro Kuleba. Ukraine House is shaping up to be the most prominent national house in Davos this year, located right beside everyone's favorite end-of-night watering hole, the Piano Bar. The official colors of Davos-Klosters — present everywhere — are blue and yellow, adding to the Ukrainian vibe.

The former Russia House is now renamed the Russia War Crimes House, home to a must-see exhibition of what's happening in Ukraine . The display includes 4,600 verified images of civilian death and destruction. Bjorn Geldhof, the curator of the Russia War Crimes House, told Global Insider: "This is a war of values. At the end of the day, it's not only Ukraine trying to survive, it is Ukraine fighting for the values that we stand for. We want sustainable support, anchored to the thinking of politicians and decision makers."

BILLOWING BILLIONAIRES: Attendance at Davos might be down this year, but the key demographic is growing at an eye-watering pace: A new billionaire was minted every 30 hours during the pandemic, according to areport out today from Oxfam International.

Hear more from Oxfam's chief Gabriela Bucher on POLITICO's Davos Confidential podcast — sign up.

INTERVIEW — MOHIT JOSHI, PRESIDENT OF INFOSYS

What are you promoting in Davos? "We just signed on one of the biggest blockchain projects in the world, a distributed ledger based platform for domestic trade in India, with 16 banks."

Are you surprised by how prominent blockchain and crypto businesses are here? "No, but it is a surprise maybe to mainstream financial services people. AI on the other hand, has gotten a lot more mainstream."

How are you coping with the rising pressure to take social and geopolitical stands? "We are mostly a B2B business, so we don't feel the pressure as much as if we were a B2C business. But Infosys made a commitment to become carbon neutral in 2013, and we became carbon neutral in 2020."

"Companies have to be authentic to what they truly believe in. I don't have the choice (to not be authentic) anymore: It's employees, it's the customers, it's the partners who push you to take a stand."

POLITICO RECAP

EQUITABLE RESPONSES TO ENDING THE PANDEMIC: VIDEO. POLITICO editor-in-chief Matthew Kaminski interviews GAVI's Seth Berkley, Oxfam International's Gabriela Bucher, Wellcome Trust's Jeremy Farrar and Moderna CEO Stéphane Bancel.

DAVOS HOUSE KICK-OFF: POLITICO kicked-off the first big night-cap of the Davos season at Davos House last night, now branded as "Goals House" in reference to the U.N. Sustainable Development Goals. In what counts as the wilderness in Davos, attendees trekked on foot and by winged Uber Teslas to the clubhouse on the south side of the tracks.

POLITICO Europe's editor-in-chief Jamil Anderlini asked Sudanese-American poet Emi Mahmoud and your author to debate whether Davos, a gathering of global elites, can really affect change when the event itself is open to just a tiny percentage of the world's population?

Mahmoud, a UNHCR goodwill ambassador and world poetry slam champion, dazzled guests with her delivery of Mama, a poem that explores the theme of matriarchy.

L-R: Emi Mahmoud, Ryan Heath, Jamil Anderlini, Laura Round, Jake Evans and Matt Barbet, preparing for the nightcap.

L-R: Emi Mahmoud, Ryan Heath, Jamil Anderlini, Laura Round, Jake Evans and Matt Barbet, preparing for the nightcap. | POLITICO

IS WEF REALLY THE MOST INTERESTING GLOBAL INSTITUTION? That's the claim of WEF veterans quoted in this New York Times piece dedicated to explaining the business benefits of heading up the mountain. Over at Bloomberg, Mohamed A. El-Erian — chief economics adviser at Allianz — explains why he thinks Davos fails to convert potential into solutions.

WHERE'S THE TRUST?

WEF posits that governments and businesses are at a turning point, and one of forces pushing them to that point is declining trust. A special report from the Edelman Trust Barometer published today finds that — among democracies — business now has higher levels of trust than government, media and NGOs.

The bigger finding is that businesses are now subject to geopolitical demands: 95 percent of respondents said that they expect companies to act in response to an unprovoked invasion by publicly speaking out, applying political and economic pressure, or exiting the aggressor country's market.

The follow-up challenge for CEOs is whether — in an inflationary (and potentially recessionary) environment — they can run a successful business, lead on social issues and manage geopolitical pressure all at once.

"The trust leader is business over government in every democracy, and government over business in every autocracy."

"The trust gap between the top quartile and bottom quartile (of income) has never been wider. ... This is the tinder on the floor of the world's situation."

— Richard Edelman, founder and CEO of the eponymous PR firm

"We have the poorest people not trusting anything. That vacates the middle of politics, the middle of politics is dead in many countries. That pushes everyone to extremes … leads to politicians not meeting in the middle and politicians asking business to do their job for them."

— Helle Thorning-Schmidt, former Danish prime minister

"The U.S. has decided to try to stop China becoming No. 1. But for most of Asia, China becoming No. 1 is a given: a return to the natural state of 1,800 of the past 2,000 years. Most of the region is trying to integrate with China. If the U.S. tries to decouple from China it will decouple from most of the region."

— Kishore Mahbubani, Asia Research Institute

"When businesses shut down in Russia they were not making that decision about Russia alone."

Brad Smith, president of Microsoft, noting it was a message to all authoritarian regimes.

ONLY IN DAVOS

ARE YOU A PJ OR A BUS PERSON? As the private jets and helicopters descend, anti-child labor campaigner Fernando Morales-de la Cruz thinks he's one of the few people who arrived in Davos by bus. While WEF is running free buses from the Arrivals 1 area at Zurich airport, de la Cruz took the bus all the way from Hamburg. Can you top that? Email playbook@politico.eu

The main message Morales-de la Cruz is bringing to Davos, now that his bus finally arrived: There are roughly 75 million children working around the world who should be in school. Some of the work for the companies represented in Davos. "I am in Davos to demand the business and political elites here respect the right of all girls and boys to education, and implement zero child labour programs," he told Global Insider.

 

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GLOBETROTTERS

Vladimir Potanin, a Russian business oligarch too big to be sanctioned, is still raking in the cash.

How Jared Kushner and Steven Mnuchin mixed business with government service.

Francesca Craig is leaving her role as social secretary at the U.K. Embassy in Washington to start her own social consultancy.

BRAIN FOOD

"My Nazi-obsessed spy lover tried to kill me — and his MI5 handlers did nothing" ... is definitely the week's best headline

Paying for freedom — the source of Haiti's misery.

How racial segregation is at the core of one Dallas school district's operating model

Thanks to editor Ben Pauker, Suzanne Lynch, Zoya Sheftalovich and producer Hannah Farrow.

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