Davos Displays Weakness of Western Leaders

(Bloomberg) -- It's been a decade since western bankers commanded the deference in Davos they enjoyed before the financial crisis. That blight appears to be spreading to politicians.

The so-called masters of the universe headed to this year's annual gathering of the global elite are looking less than magisterial. From the U.S., to the U.K., to Italy and beyond, an unusual number of leaders due to address the World Economic Forum are arriving in the Swiss Alps either politically damaged, unpopular or close to expiry.

With the U.S. in “America First” mode under Donald Trump, Britain consumed by Brexit and Germany struggling to even form a government, this year's Davos reflects a growing sense of disarray among advanced democracies. Their weakness is all the more striking in contrast to other major powers.

A supremely confident President Xi Jinping of China used the event last year to lead the charge for free trade and globalization, a role previously played by the U.S. This year, it's the turn of India's Prime Minister Narendra Modi. He warned against protectionism and isolation in a speech at Davos on Tuesday, just a day after the U.S. announced new tariffs on imports of solar panels and washing machines.

The relative weakness of some leaders reflects the recent fragmentation of electoral support on which democratic leaders rely, unlike in more authoritarian systems. But it also exposes how liberal democratic institutions are themselves withering, amid what Eurasia Group's Ian Bremmer calls a geopolitical depression. Those challenges were accumulating long before U.S. President Donald Trump's election to the White House, he said.

In Pictures: The 2018 World Economic Forum Arrives in Davos

“It's no one individual's fault,” said Bremmer, founder and president of the New York-based political risk consultancy. It's “astonishing” that the strongest leaders of advanced democracies in 2018 should be from hitherto stagnant France and geopolitically reticent Japan, he said. And as many western powers turn inward, China in particular is filling the vacuum. “They have a strategy,” said Bremmer. “We don't.”

Trump, 71, will be the first U.S. president to speak at Davos since Bill Clinton in 2000. Yet his power to herd others behind American priorities is less certain.

A chaotic leadership style has compounded the difficulties that any new White House occupant faces in getting campaign promises enacted. He could have arrived in the Swiss ski resort trumpeting cuts in corporate and individual taxes, a centerpiece of his economic agenda. Instead he's been fending off a U.S. government shutdown as lawmakers on Capitol Hill struggle to secure an agreement on a budget.

Trump's average approval ratings at home are the lowest for any first-year U.S. president since the Gallup polling agency began its surveys 72 years ago. Worldwide, approval for U.S. leadership has fallen by a record 18 percent, to 30 percent, since 2016.

U.K. Prime Minister Theresa May, 61, is arguably weaker still. An early election she called last year to cement her authority in negotiations over Britain's exit from the European Union backfired. Her parliamentary majority evaporated and she now depends for political survival on the support of a small party in Northern Ireland. May's toiling to keep her ministers behind her are the stuff of daily newspaper headlines.

Italy's Paolo Gentiloni, meanwhile, could well lose his job in elections in March as the populist Five Star Movement leads opinion polls. Greek Prime Minister Alexis Tsipras approaches re-election next year with his Syriza party trailing 10 percentage points or more in opinion polls.

Even German Chancellor Angela Merkel arrives in Switzerland diminished compared with previous years. After losing a surprisingly large share of her party's vote in elections, she is still negotiating to form a government four months later.

To be sure, by no means all leaders of advanced democracies at Davos are weak. Merkel, 63, is likely to remain the veteran leader of Europe's largest economy. French President Emmanuel Macron came to power last year with extraordinary authority, after his startup political movement trounced all-comers in national elections.

At the same time, Canadian Prime Minister Justin Trudeau, who addresses the forum later on Tuesday, remains politically secure. Japan's Shinzo Abe solidified his rule in a landslide election victory last year.

Those who aren't weakened have succeeded largely because they answered a thirst among voters for “rejuvenation” -- Macron is 40, and Trudeau 45 -- or, in the case of Japan's Abe, nationalism, said John Chipman, director general of the London-based International Institute for Strategic Studies.

As for Macron, he cautioned, the jury is still out, because he not only needs to deliver successful economic reform at home, but also an effective Franco-German partnership to lead the EU.

Given that Merkel has been preoccupied with election campaigning and coalition talks ever since Macron's election, he said, “Macron's apparent strength has yet to be tested in match conditions,” said Chipman. As a breed, western leaders look “tired and constrained,” he said.

Follow our full coverage of Davos 2018 here.

To contact the author of this story: Marc Champion in London at mchampion7@bloomberg.net.

To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net.

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