by BG Srinivas

Davos notes: Merkel and Cameron are both right over Europe

Jan 29, 20123 mins
IT LeadershipIT Strategy

See also: S.D Shibulal, COO of Infosys at Davos 2011 Day one of Davos 2012 Day two of Davos 2012

The addresses made to the audience of Davos, by two of Europe’s powerhouses, Angela Merkel and David Cameron, have sparked plenty of debate last week.

In her speech, Angela Merkel was confident that the Eurozone will survive if the focus is shifted to taking responsibility and being disciplined, rather than injecting more cash into the situation.

On the other hand, David Cameron believes that Europe isn’t competitive enough and that is its Achilles heel.

Executives have been deliberating over both view points and are now accepting that maybe both leaders are correct. Rather than opposing one of the opinions, merged, the two views actually provide an attractive solution.

Angela Merkel’s approach certainly works in the near term and David Cameron’s in the long term. After all, there are two topics up for debate. One is currency and the other is trade, and the two go hand-in-hand.

This competitive trade approach should be taken beyond Europe as well, to ensure innovation and competition at a larger scale across the globe.

Traditionally, countries like the USA and Japan have been world leaders in the export market but countries such as China, India, and South Korea are quickly catching up.

If these emerging countries developed, produced and sold products at a competitive price point, in line with the individual domestic markets’ requirements they are exporting to, they would also become more competitive.

Likewise, the local talent and innovation hubs in these emerging markets should also be mobilised across the globe to help encourage open trade.

The open trade debate also continued into one of the sessions I attended on energy and economics, where the conversation was focused on the potential energy crisis in the Gulf Region and Iran.

There were talks about likely oil price spikes, which would have an impact at a political and economic level for the USA and Europe, as the crisis would affect the availability of supply.

In addition, the disparate price point for natural resources was also debated, with conversation on what should be done to achieve an international price cap being unresolved.

Energy is an affluent industry sector, and with it sparks the debate of whether it should be about open trade, or capping and disciplining.

It creates two conflicting opinions like Merkel and Cameron, but merged the opinions could create a better future for the energy industry.

The Eurozone and European crisis really have been the trending topic at the forum and many attendees have been questioning how committed all of the nations involved really are.

Commitment from the UK, in particular, has been questioned.

However, I attended a lunch session hosted by George Osborne, and he made it clear that although the UK is not part of the common European currency, it has an equally responsible role to play in the European Union.

He stated that the UK would not be a bystander. This instilled confidence in those of us who attended and perhaps by merging his government’s thoughts with Angela Merkel’s, there will be a more disciplined, competitive Europe in the near future and long-term.

BG Srinivas is head of European operations at Infosys and member of the company board

Pic World Economic Forumcc2.0