GENEVA — A possible war in Iraq and its implications for the world economy have for months galvanized the minds of economic and political leaders — which is why it’s no surprise that it dominated the agenda at this year’s World...
GENEVA — A possible war in Iraq and its implications for the world economy have for months galvanized the minds of economic and political leaders — which is why it’s no surprise that it dominated the agenda at this year’s World Economic Forum in the Swiss mountain resort of Davos.
Forget the usual discussions of trade, technology, the Third World or other economic issues. All most attendees wanted to speak about was the ramifications of a war. But analysts and corporate executives were divided on what impact a showdown in Iraq would have on the highly interdependent world economy.
Many economists believe a drawn-out war, coupled with a sustained spike in world oil prices, could push the frail world economy into a deep recession marked by rising unemployment and declining demand. This would affect not only the major advanced industrial economies — the U.S., western Europe and Japan — but also could put the brakes on dynamic emerging economies such as China and India.
A war would result in a dramatic increase in the price of oil, especially if Saddam Hussein destroyed all of Iraq’s oil wells, said economists such as Claire Harasty of the International Labor Organization. Harasty said a war would have grave consequences for employment, especially in emerging countries, and would further sap investor confidence.
Alan Blinder, professor of economics at Princeton University, said the extra security costs since the attacks of 9/11 could amount to 1 percent of U.S. gross domestic product. Blinder told the business leaders in Davos that the 1991 Gulf War cost $80 billion during the first Bush administration. The present Bush administration puts the costs of a possible war at $60 billion, while some academic experts estimate the tag could be up to $1.6 trillion.
"Nobody knows because nobody knows the duration," Blinder said.
Kenneth Rogoff, director of research at the IMF, however, told WEF delegates the price of oil will come down by $5 a barrel this year. It currently stands at $29.86 a barrel.
Another school of thought argues that if the war is brief and the Saddam regime is defeated or ousted, the global economy could bounce back, boosting consumer and investor confidence. But a possible casualty of the war on terror, some top business executives such as the chairman of Unilever Niall FitzGerald said, is that the global trade talks are unlikely to end as planned on Jan. 1, 2005.Some Western experts reckoned the use of chemical or biological weapons by terrorist groups on a mass scale could have a more adverse impact on the world economy than a clash in Iraq. Such action, they argued, could spread panic and stifle a recovery in a host of key areas of the global economy from the retail trade to tourism, travel and basic foodstuffs. The increasing tendency by terrorist groups to go after "soft" civilian targets could spread terror in many urban centers, unless authorities take the necessary steps to put in place security, civil defense and an emergency response infrastructure, they added.
Indeed, U.S. Health Secretary Tommy Thompson, in an interview with the Financial Times Monday, after meeting health ministers from 20 rich and developing nations in Davos, warned there is going to be a bioterrorist attack that could kill thousands.
"There is going to be an attack," Thompson said. "Whether it is in western Europe, the U.S., Africa, Asia, or wherever…every country is at risk." He went on to argue that rich and poor countries are unprepared and need to spend tens of billion of dollars to cope with the threat.
Thomas Donohue, president of the U.S. Chamber of Commerce, said the challenge of the security threat "is to move people to where they want to go, to free people to participate in the economy as they wish."
Bill Owens, governor of Colorado, proposed to delegates that "offense instead of defense" is the way to proceed on the global security front, and said he "hopes the world doesn’t kneecap the world’s policeman."
Breaking News: @louisvuitton's men's artistic director @mrkimjones is leaving the French fashion house after nearly 7 years. Jones joined Louis Vuitton in 2011, following a three year tenure as creative director of British luxury goods brand Alfred Dunhill. Jones is to exit Louis Vuitton after showing his fall 2018 collection for the brand in Paris on Thursday. Read the full exclusive story on WWD.com. Link in bio. #wwdnews #wwdfashion
For men’s fall 2018, @giuseppezanotti drew on elements from streetwear, sport, biker, combat and rock ‘n’ roll. Pictured here are a pair of shoes from the collection, featuring zippers, rhinestones, and silver hardware. Head to WWD.com to see a roundup of the accessories from Milan’s men’s fall 2018 shows. #wwdfashion (📷: Andrea Delb)
To celebrate the 25th anniversary of @ralphlauren’s snowboarding collection, the brand is mining its archives. The iconic brand is reintroducing vintage styles and dropping new designs for a color capsule that will be available in Ralph Lauren stores and @openingceremony on January 25. The capsule will consist of 10 pieces, including the Snow Beach Pullover, pictured here, which is a collector’s item that rapper Raekwon wore in Wu-Tang Clan’s “Can It Be All So Simple” video. #wwdfashion (📷: Tom Gould)
For @rochasofficial’s pre-fall 2018 collection, creative director Alessandro Dell’Acqua channeled the sophisticated and intriguing Catherine Denevue in the film “Belle de Jour.” Polished collarless coats, midi skirts, suits and ’60s graphic motifs were all featured in the collection, adding a sense of discreet luxury. See the rest of the photos on WWD.com #wwdfashion
“We tried to produce clothing of that couture quality, but the most daunting part was that we only had a matter of days [to do it],” said costume designer Lou Eyrich, who recreated Gianni Versace’s iconic looks for @americancrimestoryfx. Eyrich searched online retailers and vintage shops for original pieces from the design house and for @penelopecruzoficial, who plays Donatella Versace. Head to WWD.com to read how she created the Versace world. #wwdfashion
Only three months after her stellar debut catwalk season, @kaiagerber has inked her first big design collaboration –– with @karllagerfeld. The collection blends Lagerfeld’s Parisian chic aesthetic and the model’s signature West Coast casual style via RTW, accessories, footwear and more. The #KarlLagerfeldxKaia collection will launch in September with a series of events. Get all the details on WWD.com. #wwdnews #wwdfashion
Harrods plans to remove the famous statue of Princess Diana and Dodi Al Fayed from the bottom of the Egyptian escalators and hand it back to Mohamed Al-Fayed. “We are very proud to have played our role in celebrating the lives of Diana, Princess of Wales and Dodi Al Fayed at Harrods and to have welcomed people from around the world to visit the memorial for the past 20 years,” said Michael Ward, Harrods managing director. “With the announcement of the new official memorial statue to Diana, Princess of Wales at Kensington Palace, we feel that the time is right to return this memorial to Mr. Al Fayed and for the public to be invited to pay their respects at the palace.” More on the news, with reporting by @loreleimarfil, at WWD.com. #wwdnews