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Davos returns under Ukraine cloud after Covid break

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The world has changed drastically since the last time the World Economic Forum took place in person at the Davos ski resort in January 2020
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The world’s political and business elite will hobnob in Davos next week after a two-year break caused by Covid, with the Ukraine war set to dominate the exclusive Swiss mountain summit.

The world has changed drastically since the last time the World Economic Forum took place in person at the ski resort in January 2020.

At the time, US President Donald Trump and climate campaigner Greta Thunberg headlined the show and the coronavirus had yet to spread widely outside China.

Since then, the outbreak in China turned into a pandemic that rocked the global economy, Trump lost the US election to Joe Biden, countries have endured climate change-driven weather disasters, inflation has surged and Russia invaded Ukraine.

After a virtual forum in 2021 and the postponement of this year’s in-person event due to the Omicron variant, the WEF returns to its Davos den on Monday under the theme “History at a Turning Point”.

But the hub of cheerleaders of capitalism and globalisation will lack its usual scenic snowy backdrop — and the usual Russian contingent.

President Vladimir Putin spoke at the online meeting last year, but organisers decided to exclude Russians this time as Western powers have imposed sanctions on Moscow over the Ukraine conflict.

Instead, Ukrainian President Volodymyr Zelensky will address the summit via video link while around a dozen officials from his country will attend in person.

WEF founder Klaus Schwab said it would be “the most timely and consequential” meeting since the creation of the forum more than 50 years ago.

“Russia’s aggression on the country will be seen in future history books as the breakdown of the post-World War II and post-Cold War order,” Schwab said in a pre-summit briefing, adding that Davos will do what it can to support Ukraine and its recovery.

WEF president Borge Brende said that excluding the Russians from the forum was “the right decision”.

“We do hope, though, that Russia will follow a different path … in the years to come to start to stick to the UN charter and to their international obligations,” Brende said.

– Few stars –

More than 50 heads of state or government will be among the 2,500 delegates ranging from business leaders to academics and civil society figures attending the four-day gathering.

Some of the biggest names include Germany’s new chancellor, Olaf Scholz, European Union chief Ursula von der Leyen, NATO head Jens Stoltenberg and US climate envoy John Kerry.

While war will overshadow the meeting, the forum will also have panels on everything from climate change to rising energy prices, global supply chain problems, gender inequality, poverty, football and the metaverse.

This year’s meeting, though, lacks some of the star power of the past. Some, such as Chinese President Xi Jinping, spoke in a virtual version in January.

“I am sure that this is kind of a disappointment,” said Adrienne Sorbom, co-author of “Discreet Power”, a book on the World Economic Forum.

“I think that the discreet diplomacy that the… forum arranges for is one of the things that is truly to the heart of the forum and what Klaus Schwab sees as his greatest achievement,” said Sorbom, a sociology professor at Stockholm University.

While the forum’s relevance is questioned every year, it keeps attracting titans of industry and government leaders — as well as some of its biggest critics.

When Sorbom attended Davos in 2014, “business leaders were saying, ‘if you’re not here you do not exist”.

“Everyone that wants to be someone needs to go there,” she said.

– ‘Festival of wealth’ –

The forum has produced some consequential moments.

It hosted the first ministerial meetings between North and South Korea in 1989 as well as talks between South Africa’s apartheid-era president F. W. de Klerk and then dissident Nelson Mandela in 1992.

The forum, however, regularly faces criticism as evidence of the cozy relationship between the political and corporate elite.

“At this Davos, at this festival of wealth, I think we’re going to see just how profoundly unequal our world has become,” said Nabil Ahmed, head of strategy at global charity Oxfam.

But Oxfam, which is pushing for taxes on the rich, is also among Davos regulars.

“I think it’s important to go to Davos to challenge power, to put forward hard facts, to talk directly to these governments and corporations and amplify the voices they’re not listening to,” Ahmed said.

“That’s why we go.”

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US recession not ‘inevitable,’ Treasury secretary says

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US Treasury Secretary Janet Yellen speaks at a policy forum in Washington on June 9, 2022
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A recession in the United States is not “inevitable” but the economy is likely to slow, Treasury Secretary Janet Yellen said Sunday, days after the US Federal Reserve hiked interest rates, raising fears of a contraction.

“I expect the economy to slow” as it transitions to stable growth, she said on ABC’s “This Week,” but “I don’t think a recession is at all inevitable.”

The US economy has recovered strongly from the damage wrought by Covid-19, but soaring inflation and supply-chain snarls made worse by the war in Ukraine have increased pessimism.

Wall Street stocks tumbled after the US central bank, seeking to cool inflation, on Wednesday raised the benchmark borrowing rate by 0.75 percentage points, the sharpest rise in nearly 30 years.

And economists see worrying signs that consumer confidence is weakening, with spending on services affected most sharply.

People are beginning to hold off on vacation plans — domestic flight bookings were down 2.3 percent last month, Adobe Analytics reported — and are cutting back on restaurant visits, haircuts and home repairs.

– Inflation ‘unacceptably high’ –

Yellen conceded that “clearly inflation is unacceptably high,” attributing it partly to the war in Ukraine, which has pushed up energy and food prices.

But she said she did not believe “a dropoff in consumer spending is the likely cause of a recession.” 

The US labor market is “arguably the strongest of the postwar period,” Yellen said, and she predicted a slowing of inflation in coming months.

For Fed chair Jerome Powell — who succeeded Yellen in that position — to control inflation without weakening the labor market will take “skill and luck,” she said, before adding, “but I believe it’s possible.”

The US economy contracted by 1.5 percent in the first quarter of this year, its first drop since 2020, and early indications point to a continued slowing in key sectors including manufacturing, real estate and retail sales.  

A recent survey of 750 company executives by the Conference Board found 76 percent believed a recession is looming, or has already begun.

A recent analysis from the non-profit business group predicted a period of “stagflation” — stagnant growth coupled with inflation — in 2023.

Economist Larry Summers, who served as Treasury secretary from 1999 to 2001, said a wide range of indicators — market volatility, interest rates and inflation among them — suggest a recession on the horizon.

“All of that tells me that… the dominant probability would be that by the end of next year we would be seeing a recession in the American economy,” Summers told NBC’s “Meet the Press.”

– ‘Pain’ at the pump –

For now, Americans are trying to cope with some historically sharp price increases. The cost of gas at the pump, now around $5 a gallon, has roughly doubled in only two years. 

Yellen was asked about proposals for a temporary suspension in federal gas taxes, and expressed openness.

US President Joe Biden “wants to do anything he possibly can to help consumers,” she said. “And that’s an idea that’s certainly worth considering.”

The White House recently confirmed Biden will travel to major oil producer Saudi Arabia during a Mideast trip next month.

The president is “very concerned about what people are experiencing at the pump,” Energy Secretary Jennifer Granholm told CNN Sunday. 

“Saudi Arabia is head of OPEC and we need to have increased production so that everyday citizens in America will not be feeling this pain that they’re feeling.”

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US recession not ‘inevitable,’ Treasury secretary says

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US Treasury Secretary Janet Yellen speaks at a policy forum in Washington on June 9, 2022
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A recession in the United States is not “inevitable,” Treasury Secretary Janet Yellen said Sunday, just days after the US Federal Reserve hiked interest rates, raising fears of an economic contraction.

“I expect the economy to slow” as it transitions to stable growth, she said on ABC’s “This Week,” but “I don’t think a recession is at all inevitable.”

The US economy has recovered strongly from the damage wrought by Covid-19, but soaring inflation and supply-chain snarls exacerbated by the war in Ukraine have increased pessimism. 

Wall Street stocks tumbled after the US central bank on Wednesday raised the benchmark borrowing rate by 0.75 percentage points, the sharpest rise in nearly 30 years.

And economists see worrying signs that consumer confidence is weakening, with people beginning to hold off on vacation plans, dining out or doing home repairs.

Yellen conceded that “clearly inflation is unacceptably high,” attributing it partly to the war in Ukraine, which has pushed up energy and food prices.

But she said she did not believe that “a dropoff in consumer spending is the likely cause of a recession.” 

Yellen argued that the US labor market is “arguably the strongest of the postwar period” and she predicted that the pace of inflation would slow in coming months.

She acknowledged, however, that as Fed chair Jerome Powell works to control inflation while preserving labor-market strength, “That’s going to take skill and luck.”

Soaring gas prices — at some $5 a gallon, they have roughly doubled in a few years — are a pressing concern for many Americans.

Asked about proposals for a temporary suspension in federal gas taxes, Yellen expressed openness.

US President Joe Biden “wants to do anything he possibly can to help consumers,” she said. “And that’s an idea that’s certainly worth considering.”

As to whether Biden might move further to lower consumer prices by lifting tariffs on Chinese goods, Yellen demurred.

Reworking the Donald Trump-era tariffs “is something that’s under consideration,” she said.

“I don’t want to get ahead of where the policy process is.” 

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Italy’s Eni joins giant Qatar gas project after Russian cuts

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Qatar's Energy Minister and president and CEO of QatarEnergy Saad Sherida al-Kaabi (R) and Claudio Descalzi, CEO of Italian multinational oil and gas company ENI, attend the signing ceremony for their joint venture
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Italian company Eni on Sunday joined Qatar Energy’s project to expand production from the world’s biggest natural gas field, days after Russia slashed supplies to Italy.

Eni will own a stake of just over three percent in the $28 billion North Field East project, Qatar Energy’s CEO said at a signing ceremony in Doha.

Qatar announced France’s TotalEnergies as its first, and largest, foreign partner on the development last week, with a 6.25 percent share. 

More companies are set to be named. 

“Today I’m pleased… to announce the selection of Eni as a partner in this unique strategic project,” said Energy Minister Saad Sherida al-Kaabi, who is also president and CEO of state-owned Qatar Energy.

The project’s LNG — the cooled form of gas that makes it easier to transport — is expected to come on line in 2026. It will help Qatar increase its liquefied natural gas production by more than 60 percent by 2027, TotalEnergies chief executive Patrick Pouyanne told AFP last week.

Russia’s invasion of Ukraine has injected urgency into efforts around the world to develop new energy sources as Western countries try to reduce their reliance on Russia.

On Friday, Eni said it would receive only 50 percent of the gas requested from Russia’s Gazprom, the third day running of reduced supplies. Rome has accused Gazprom of peddling “lies” over the cuts.

“We have a lot of things to learn from your leadership and also from your standards and from your ability to adapt to very difficult circumstances,” Eni CEO Claudio Descalzi told his Qatari counterpart.

Qatar Energy estimates that the North Field, which extends under the Gulf sea into Iranian territory, holds about 10 percent of the world’s known gas reserves.

Kaabi refused to divulge how many more partners will be announced. Industry sources have discussed ExxonMobil, Shell and ConocoPhillips, while Bloomberg reported this week that Chinese companies were in talks.

South Korea, Japan and China have become the main markets for Qatar’s LNG but since an energy crisis hit Europe last year, the Gulf state has helped Britain with extra supplies and also announced a cooperation deal with Germany.

Europe has in the past rejected the long-term deals that Qatar seeks for its energy but the Ukraine conflict has forced a change in attitude.

“Qatar is the lowest cost source of supply at the moment and  therefore it’s attractive to the majors (companies),” Daniel Toleman, an analyst at resources consultancy Wood Mackenzie, told AFP.

“So these companies want to be involved in those projects.”

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