By Olivia Sterns & Zoe Schneeweiss
Klaus Schwab, founder of the World Economic Forum, sees political “black swan” events threatening global security even as economic risks subside, with confidence returning to the euro area.
“The world is still full of risks and we do not have only to address the economic risks, I think it is very important that we become more resilient in terms of the political risks,” Schwab, 78, said in an Bloomberg Television interview in Davos yesterday. “There are many black swans round,” he said, referring to the Japan-China dispute in the East China Sea, the Syrian civil war and the nuclear inspections in Iran.
Enlarge image WEF chairman Klaus Schwab
Black-swan events, named after the belief that all swans were white until the discovery of black ones in Australia in 1697, describe extreme outcomes such as the 2008 financial crisis that were previously considered very unlikely to happen. A World Economic Forum survey presented earlier this month found that income disparities and government budget deficits present the most likely risks to the global economy in the next decade.
Schwab, who founded the annual meeting of political and business leaders in 1971, said that he expects Northern Africa, Syria and the war in Mali to be “hot issues” at the Forum, which starts tomorrow, while the euro-region crisis “will not play such a big role as it did the last year.”
“I think we have certain signs that at least we have stabilized the situation,” Schwab said, adding that a breakup of the common currency was “definitely” off the table. “There might again be a crisis mode, but there will not be a breakup, because we have seen in Europe sufficient political will to make sure that Europe remains as a unity.”
Europe’s fiscal crisis has subsided since European Central Bank President Mario Draghi said in July that he’d do “whatever it takes” to save the euro. While the region isn’t seeing “an early and strong recovery,” the euro area is “back in a normal situation,” Draghi said on Jan. 10.
Economic confidence in the euro area increased more than economists forecast in December even as the 17-nation currency bloc remained mired in its second recession in four years.
The ECB head, together with French President Francois Hollande and German Chancellor Angela Merkel, “certainly” are to thank for averting a collapse of the euro, Schwab said, adding that the crisis “created a European identity.”
A good leader has heart, soul, vision and “good nerves,” Schwab said, adding that former South African President Nelson Mandela was the most impressive of all the captains of politics and industry he has met over the years. The Forum, which will be attended by as many as 50 heads of government including Merkel and Britain’s David Cameron, shouldn’t be about “big names,” he said. “Everybody should be a star.”