The founder and executive chairman of the World Economic Forum, Klaus Schwab, listens as South Korean President Park Geun-hye addresses a session at the annual meeting of the of the World Economic Forum in Davos. Photo: Reuters/Denis BalibouseThe founder and executive chairman of the World Economic Forum, Klaus Schwab, listens as South Korean President Park Geun-hye addresses a session at the annual meeting of the of the World Economic Forum in Davos. Photo: Reuters/Denis Balibouse

Today is the penultimate day of this year’s meeting of the World Economic Forum in Davos, Switzerland. It is an annual occasion for the world’s economic and political leaders to give their take on the current global situation. Naturally, in choosing what they say they also try to influence how things could turn out.

Some day, I hope to compare what the leaders have said over the years with how they behaved and what actually took place over the following 12 months.

There have been 44 such meetings, enough to be able to tell whether they get it right because of insight or by chance.

They are in a good position to have real insight into how things will unfold. They are not merely observers. They are leading participants. They know how they would like to act and already have a feel for their global counterparts.

Their bird’s-eye view, however, is not neutral. Looking at matters from a global perspective has its disadvantages as well as advantages. The big picture downsizes local or regional conflicts and troubles even though they may be tragic for the participants themselves.

The devil in the detail suggests that the outlook for the Mediterranean should be cautiously pessimistic

Therefore, from a Maltese perspective, interested in what the key Davos wisdom says 2014 is going to be like, what comes out of the meetings cannot just be digested without restoring the Euro-Mediterranean region to the proper size it has for Malta’s interests.

Among the themes that have emerged, four have caught my attention.

After the biggest economic hit since the 1930s, global business leaders are cautiously optimistic.

Stability is returning to many important economies. Modest growth in GDP is being predicted.

It says a lot that business leaders are back to being afraid of their customary bogeymen: over-regulation and public debt. It indicates they truly feel normality is making a return.

It is interesting to note that the highest public debt, as a percentage of GDP, belongs to Japan; the second highest is Iceland’s, still recovering from its economic bust a few years ago. The US is the 10th highest.

In between, we only find EU member states. Of the remaining seven states, four are Mediterranean. In descending order of debt, they are Italy, Greece, France and Portugal.

The second theme is unemployment. It shows why the optimism has to be cautious. Unemployment in the eurozone still averages 12.1 per cent.

Those are near record levels but the true picture in the world close to us is even worse.

In Spain and Greece, unemployment is closer to 25 per cent. Among youth, alas, the figures are even worse. It is over 50 per cent in both countries.

Sticking to the Mediterranean, Portugal has a much lower rate of unemployment but it is still about 15 per cent. Italy and France have a rate that is below the average but still miserably high at 10.7 and 9.9 per cent respectively.

As the IMF director, Christine Lagarde, said recently: “Can a crisis really be over when 12 per cent of the workforce is without a job?”

The third theme, inequality, is related. The gap between rich and poor is growing dangerously, putting economies at risk of having political instability follow the economic turbulence.

The risk is not faced by Europe alone. Elsewhere, countries that were previously growing from year to year are experiencing social stress for various reasons, including inequality and job losses. Brazil, China and Russia are among them. So is another Mediterranean country, Turkey.

The fourth theme, instability in the Middle East and North Africa, refers to our region more specifically. Even by its own standards, the region seems to be in for a rough year.

One reason is that it faces many elections and, therefore, as many losers as there will be winners. It remains to be seen how the losers will take their losses. The signs from Egypt are troubling.

This week, the Syrian conflict again resulted in a bomb going off in Lebanon. Iran, whose UN invitation to participate in peace talks on Syria was withdrawn, has stated that the prospects for an end to the Syrian crisis are dim. Libya saw Islamists withdraw from government.

Tunisia is touted as the country that has held together since the change in regime and is somehow managing the transition. However, Tunisia faces its own serious economic problems.

How does the Davos global perspective downsize the Mediterranean scenario? It is because the Mediterranean is not discussed as a whole.

The economic challenges facing Greece and Italy are discussed as eurozone problems. Those of Turkey are discussed in the context of the BRICS countries. Those of Tunisia, Libya, Egypt and Syria fall within Middle East problems.

Take them all together, however, and you will see a single neighbourhood. And what a neighbourhood it is! One where on both sides of the Mediterranean, youth unemployment is in the high double digits and where extremists are taking advantage of the unpopularity of mainstream politicians.

To complicate matters further, the rise of extremists on both sides may make cooperation by the two sides even more difficult to undertake.

While, therefore, the global outlook in Davos seems to be cautiously optimistic, the devil in the detail suggests that the outlook for the Mediterranean should be, unfortunately, cautiously pessimistic.

John Attard Montalto is a Labour member of the European Parliament.

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