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The Davos Question: Is America History?

By Trudy Rubin

DAVOS, Switzerland - Who would have imagined the drama?

Just as 2,500 of the world's most important economic, business and political leaders are arriving in a Swiss resort town for the annual meeting of the Davos World Economic Forum, the U.S. stock market goes into wild gyrations and the Fed stops a free fall with a historic rate cut.

A wild-eyed playwright could not have provided a more fitting (if scary) backdrop for a meeting unlike any of the 11 sessions of Davos I've previously attended. Beginning today, in a bunkerlike conference center, with no view of the surrounding mountains, this conference of the world's top achievers will be focused on global uncertainties, both economic and political.

The global business elite is watching anxiously to see whether the United States can limit the damage from the mortgage lending mess and the banking crisis that has resulted.

"When the United States sneezes, does the world still catch cold?" is the title of one panel, which will examine whether - as in the past - a U.S. economic slowdown, or recession, will undercut the global economy. As the delegates arrive, people are also discussing the U.S. elections, and wondering whether the next president will pull America back from the world stage.

But here's what is different this year: The rich and the powerful at Davos are already looking beyond the United States as present and future global leader. The talk is about whether emerging economies, primarily China, India, and resource-rich Russia, can pick up the economic slack if America falters and maintain global growth.

No one underestimates the continued importance of America. But a series of policy setbacks - the failure to foresee or head off this mortgage debacle, the decline of the dollar, the continuing wars in Afghanistan and Iraq - has created the sense that the era of the American hyperpower is history. George W. Bush is already regarded as a lame duck; the meager results of his recent trip to the Middle East showed how little he is able to achieve.

"Our failed economic and political policies have caused us to become increasingly irrelevant," says Philadelphia executive John Strackhouse, senior partner in Heidrick & Struggles. His words echoed other comments I heard my first day here. He worries about an outflow of capital and talent to Asia, leading to permanent job losses. "China has a 3-1 ratio of engineers to the United States," he notes.

The unease about America's ability to right its own ship is reflected in the subject matter of many upcoming Davos panels. The themes at Davos, as I've observed year after year, have an uncanny knack for reflecting global trends. One panel is titled "Rebuilding Brand America: Five suggestions for the Future President." The blurb for the panel reads: "Global opinion surveys consistently show that the level of confidence in the U.S. is declining in a number of areas. How should the next U.S. president reverse the trend and rebuild the brand equity of the country?"

In the early years of the Bush administration, the Davos themes of global cooperation were anathema, and the White House never used the Davos platform to project an image of leadership, on global environmental issues, or reform of international institutions, or even Middle East peace. Late in the day, the Bush team is trying to soften its unilateralist image, and Rice is the frontwoman. But this shift, which might have made a big difference to America's image abroad, comes too late in the day to remake brand Bush.

A second irony is that Rice's speech was followed by Afghanistan's President Hamid Karzai, a poignant reminder of how the White House squandered its Afghan victory by failing to follow up military success with reconstruction. It is no accident that Karzai is featured and that troubled Pakistani President Pervez Musharraf will also be in attendance; a subtheme here is how to cope with the resurgence of jihadi terrorists, who have regrouped during the Bush years.

At Davos you can see new global players in the wings. China has a strong delegation here. India has sent powerhouse executives. Brazil is more in evidence. Russia's new power, born of huge oil and gas resources, is causing much discussion. Iran has sent a large contingent, not including President Mahmoud Ahmadinejad, but with representatives of several different political factions.

Don't get me wrong. Davos attendees would like to see America recoup. They are hoping, uncertainly, that 2008 elections might help the United States get its groove back. But the murky uncertainties of the market reflect the unease here about where America is headed, and what the world will look like with America no longer firmly in the lead.

Copyright 2008, Philadelphia Inquirer

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