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I have just returned from a two-week European trip, the first part in Davos, then on to London, Paris and Munich. At my last stop, German businesspeople told me about farmers blocking the roads into the city to protest a proposed elimination of a fuel subsidy and a series of marches last weekend to show solidarity with immigrants threatened with expulsion by the far right AfD party if they are not “properly integrated” into German society. It is this state of discontent that will influence the four billion people going to the polls in 50 countries in the coming months. Here are my observations on Davos:

1. ����������Ա�—President Volodymyr Zelenskyy gave a stirring address that earned him a standing ovation from the Davos crowd. He made it clear that his country would fight to the last man and woman against tyranny. “We are fighting for the sake of freedom and our common values…We must isolate Putin who has created a bunch of slaves in Russia, a nation without a middle class.” He presented Ukraine 2.0, with “smart, talented people working at transparent companies.” He asked CEOs to invest in four target industries: agriculture, defense, transportation and technology. “We want to have jobs to help our citizens to return from abroad.” 
2. ��������Գپ��Բ�—The newly elected President Javier Milei spoke with conviction about the power of capitalism. “Our country abandoned freedom in favor of collectivism. That is the root cause of our poverty…the Left speaks about social justice but it is not just, because it relies too much on taxes and coercion…Those nations with economic freedom have 12 times more wealth…We will have unrestricted freedom with life, liberty and property guaranteed…The West is in danger of undermining capitalism by relying on neo-classical economic theory but regulation creates distortion and prevents growth.” He and his team have already implemented 300 reforms, cut fuel and food subsidies, devalued the currency by 40 percent and opened the door for foreign investment. 
3. ��󾱲Բ�—Premier Li Qiang moved from wolf-warrior to global citizen with a not so subtle message for the U.S. “Trust between countries is enabled by economic progress of the last three decades, a shared aspiration for a better future…China cherishes peace, stability and transparency…We need better macroeconomic coordination, with major countries committed to upholding the multinational trading system…There is discrimination against Asian suppliers…China has 400,000 technology companies, part of our demographic dividend of moving from cheap labor to top talent…We are moving upscale to high quality.” He spoke with passion about Artificial Intelligence. “AI must do good, to be people centered, to facilitate good AI with governance, with benefits for all…We have proposed global AI Governance Rules.”
4. In-Sourcing and Near-Sourcing a Reality—Pat Gelsinger, CEO of Intel, explained the present American industrial policy in the CHIPS and Science act as key to national security and economic prosperity. “Eighty percent of semiconductor manufacturing was in the EU and U.S. in the 1980s, today it is 20 percent...the cutting edge chips for AI are all made in Taiwan and Korea…the Asian countries had government backing to attract the chips industry….We woke up during COVID to the value of near-shoring…We are building factories in Germany and in the U.S. (Ohio) in Silicon Heartland, near the car industry, a key user of chips…We also have plans for factories in France and Ireland.” This is consistent with what I heard from HP CEO Enrique Lores, who has ramped up production in Mexico and is constructing a new factory in Thailand for PCs and printers. Siemens CEO Roland Busch spoke about “Local for local,” meaning that his company is building factories in China for consumption in China. DP World believes that North-South trade will take up a substantial part of global trade, which is now 70 percent East West.
5. Integration of MENA (Middle East, North Africa)—Majid Al Futtaim (MAF) Holding CEO Ahmed Galal Ismail said that the next 25 years will be the Golden Age for the region, which is enjoying the fastest growth rate in the world post COVID. In the UAE, 75 percent of GNP is already non-oil. Ismail asserted that “we have an ease of doing business, with free movement of people, data and inter-regional trade, with significant cross border foreign investment.” One example is the UAE investing in green energy in Egypt. Egypt is seeking to build up its food and furniture industries. There is a major focus on education, in the belief that skilled youth will push the start-up eco-system. As a combined entity (Saudi Arabia, UAE, Egypt) the economy is as large as the UK
6. Sustainability at a Cost—The energy transition expressed in the successful outcome of COP28 is going to be costly. Doug Peterson, CEO of S&P Global, estimated that the annual cost of the transition will be $2 trillion a year for the next decade. He projected that global debt load will soar by 50 percent in that time, from $220 trillion to $330 trillion. We will need to have Blended Finance, combining public sector with private capital, to increase the credit quality of the Global South, which urgently needs investment to achieve sustainability goals. The possibility of change is best expressed by Europe’s pivot because of the Ukraine conflict; there was more use of solar and wind than natural gas in the Continent for the first time in 2023 and EVs accounted for 20 percent of cars sold. Mike Henry, CEO of BHP, the mining company, said that the capital markets must recognize the difference between good and bad players; as an example, Indonesia has a much higher carbon footprint in its nickel production than does Australia. One such effort is the Taskforce on Nature-related Financial Disclosures (TNFD), which has been signed by 320 companies and 100 banks. Standard Chartered Bank CEO Bill Winters said that his institution is implementing a Climate Risk Assessment to track the effect of its loans; this is needed in markets such as Colombia, where 60 percent of CO2 emissions can be tied to deforestation.
7. Global Monetary Policy to Remain Aggressive, the Global Economy to Grow Slowly—Mark Carney, former head of the Central Bank in Canada then UK, said that the credibility of central banks is on the line. “Interest rates must stay high until inflation is controlled.” Inflation coming out of COVID was still at 2 percent but spiraled after the invasion of Ukraine, with central banks behind the curve on raising rates. He pointed to “good dis-inflation, as supply chains are sorted out and labor markets remain relatively flexible with a productivity boom in markets such as the U.S.” He asserted that inflation targeting has worked, as higher rates have moderated demand. The central bankers believe that there will be more supply shocks, given the re-wiring of trade routes to de-risk the supply chain given present geo-politics. This high interest rate environment will cause slow growth in most markets in 2024, with China and EU struggling the most.
8. Government View of AI—The AI minister of the UAE said that government should guarantee access to everyone by investing in telecom infrastructure (note that 2.5 billion people lack access to internet, 2.2 billion have no access to telecommunications), to ensure availability of energy to power the machines, to secure data and to recognize the potential impact on the workforce. The Japanese minister said that there needs to be a strong non-English language data set, citing potential distortion of images. He wants to watermark content to help creative professionals to protect their work product. Pedro Sánchez, the Prime Minister of Spain, said that AI may reduce the value of workers and cut wages, which would increase inequality and widen the digital divide. “Gains of AI must be fairly distributed.” He wants to ensure that AI does not allow bias to be magnified. The Secretary General of the OECD (Organization for Economic Co-operation and Development), Mathias Cormann said that his organization has established an incident tracing system for cybersecurity and disinformation. Foreign actors account for only 20 percent of the disinformation, the balance comes from domestic bad actors.
9. Future of Media—The Media Governors convened as the Los Angeles Times owner mandated a 20 percent reduction in newsroom staff and TIME Magazine cut 15 percent of its unionized journalists. Google executives said that the search engine is distinguishing and elevating quality content and that its YouTube subsidiary is using third party raters to put high quality, fact-based content higher in search results. The risk of deep fakes is accelerating; one participant cited the fake Call of Duty video that was posted after the October 7 attacks in Israel. YouTube is now offering Dream Track which uses AI to enable your favorite singer to croon Happy Birthday to you. Neal Mohan, the CEO of YouTube, said that the TV screen is now its most popular use venue, arguing for a Unified Place on TV, phone, or laptop. The New York Times CEO Meredith Levien made the case for AI paying for quality journalism; now, Times content is being used in Large Language Models for free (litigation underway). Microsoft is now creating a C2PA, Coalition for Content Provenance and Authenticity, an open technical standard providing publishers and consumers the ability to “trace the origin of different types of media.” In the words of Microsoft Vice Chair and President Brad Smith, “These are tools to protect democracy.” 
10. Future of Europe tied to Capital Markets—The Prime Minister of Ireland, Leo Varadkar, said that the capital markets are the key to European competitiveness. There is too much reliance on the banks for financing. Europeans must change their investing behavior, according to the Deutsche Bank CEO Christian Sewing, who said that 55 percent of Americans own shares compared to only 33 precent of British, 16 percent of Germans, and 7 percent of French. There is a big role for the European Investment Bank as a green lender, to de-risk investments and support new financial instruments for the green transition. European entrepreneurs are no longer happy with a small exit; they are over-reliant on American venture capital which has an investment pool 20 times the size of Europe. Europe is doing well in discovery; there are a record number of new patents being recorded. But the money needs to be there to suit the opportunity. Christine Lagarde, President of the European Central Bank, suggested a single set of rules for the capital markets across the EU, a European SEC with authority and speed of action and infrastructure for trading. There was also discussion of cross-border M&A that would enable consolidation of the very national banking business; Europe needs giants the same size as J.P. Morgan.

The 2024 ������Ƶ Trust Barometer was frequently quoted in Davos because we challenged the presumption of progress as a universal good. We issued a strong warning to innovators across AI, health, food, and energy; innovation is key to development and prosperity but the license to innovate cannot be assumed. By two to one across gender, income, education, age and political system, respondents believe that innovation is being poorly managed; that government regulation is lagging, consideration of employment effects is lacking, and emphasis is given to Wall Street not Main Street. The triple threat of the mass-class divide, battle for truth, and imbalance of trust between business and government must not be further aggravated by innovation at warp speed. The promise of AI is real, in medical diagnosis, improved supply chain, sustainability, and economic growth. We are at the crossroads of trust; it is in the hands of business leaders to make acceptance and adaptation as much of a priority as invention so that all will benefit from this once in a generation burst in innovation.

Richard ������Ƶ is CEO.