Global Retreat

The Real Reason the Forum Bigwigs Are Here: The Swiss Didn’t Want the Hassle

In November, the World Economic Forum announced with great fanfare that it would hold its annual meeting at the Waldorf-Astoria hotel to show solidarity with New York. That may, in fact, be why it came here last week. But that doesn't begin to explain what drove the annual gathering of multi-millionaire CEOs and politicians out of Switzerland in the first place.

The Forum fled because it failed to manage the political and financial problems triggered by demonstrations the past two years. Rampaging anarchists scored a major victory in Davos in 2001. They disrupted the Forum's placid marriage to the sleepy ski resort, which had hosted the annual meeting for 31 years. Davos, first famous as the setting for Thomas Mann's Magic Mountain, is not like Seattle or Genoa, cities that might lose a battle to protesters but never have to see them again. Davos is home to the World Economic Forum. If the Forum can't keep the peace, it has to go elsewhere.

"It's just too small a town for big demonstrations," says Hans Klaus, spokesman for the Swiss Justice and Police Ministry. "We haven't found a good way to let all of those people in there at once."

Demonstrators show up, like it or not. Crowds took to the streets here and in Zurich last weekend to protest the Forum's role in globalization. In Zurich, police arrested 54 protesters Friday night, and disturbances caused $180,000 in property damage, according to published reports.

Dealing with demonstrators is expensive. Security costs for a meeting in Davos have exploded from $175,000 in 1998 to an estimated $6 million to $9 million this year, according to Klaus. Convincing the provincial government of Graubünden to swallow its 62 percent share of the tab was tough. But parceling out the security tasks proved to be even more difficult. Well aware that a large, violent demonstration in Davos could spell the end of the Forum, Swiss authorities turned back protesters before they reached the meeting in 2001. This strategy moved the security problems to neighboring cities and sowed the seeds of Davos's political undoing.

Protesters were not allowed into Davos last year because, in 2000, they had attacked a McDonald's and smashed shop windows along the main street of town. In 2001, the authorities created "Fortress Davos," and blocked roads and searched trains on Saturday, the traditional demonstration day. Forced to turn back, about 1000 protesters regrouped in Zurich, where they burned automobiles and battled police water cannons. Ironically, Zurich's riot police were 90 miles away in Davos and had to be helicoptered back. Zurich residents and businesses blamed their police for dedicating local resources to the rich visitors in the mountains, and then failing to keep order at home. Davos's security woes had become a national problem.

A national police problem in Switzerland becomes a nightmare overnight. Each of the country's 26 cantons (provinces) has an independent police force, as do most cities and towns. Most of these forces are tiny by American standards. The city of Zurich (pop. 300,000) has 2000 uniformed officers. The canton of Zurich (pop. 1.2 million) employs another 2000 officers. These are the largest forces in a country of 7.2 million people. The police contingent that boarded helicopters to quell the Zurich riot numbered fewer than 50 officers. (This year, the NYPD dedicated 4000 officers to protect the Forum, freezing a three-block zone around the Waldorf-Astoria.)

To police the Forum, each of the 26 cantons must send a few officers to the meeting, as almost all have done in the past. But after the unrest in Zurich, no canton wanted to be caught short if anti-Forum demonstrations spread across the nation. Zurich refused to send officers with experience in quelling demonstrations. At most, Zurich police would stand by, waiting to be choppered in if it were clear that Zurich remained peaceful. Similarly bitter negotiations with other cantons began in June, and they were still going on in October, when the Forum was forced to commit to Davos or find a new home.

"Money was not the biggest problem," says Pascal Couchepin, the Swiss minister of economic affairs. "Finding money in Switzerland is easier than finding police officers."

In the meantime, terrorists attacked the World Trade Center, which altered the Forum's agenda as certainly as it changed the global political climate. Klaus Schwab, the founder and head of the Forum, was in New York on September 11, meeting with Rabbi Arthur Schneier of the Park East Synagogue when the planes struck. After Schwab returned to Geneva, the off-season headquarters of the Forum, he and his staff tore up plans for a meeting on the impending global recession and rewrote the program based on a new and insecure world.

As Charles McLean, communications director for the Forum, tells the story, Schwab was toying early on with the idea of moving the 2002 meeting to New York. "He just brought it up as an idle remark in a meeting, but no one took it very seriously," McLean recalls. Meanwhile, on October 1, the Forum sent out 2500 invitations to the meeting in Davos. The negotiations about costs and security continued. The Forum agreed to pay for relocating police officers, which would have come to about 20 percent of the total bill, according to McLean. (He notes that the Forum did not save money by coming to New York.) The Swiss federal government committed $1.9 million to protect visiting heads of state and dignitaries. Asked about the ongoing security negotiations, McLean recalls them as "background noise." He says Swiss federal authorities assured the Forum that security questions could be solved in time for the meeting.

That noise may have been a faint buzz in Geneva, but in Zurich and Graubünden, the canton that hosts the Forum, it was deafening. Esther Maurer, the Zurich police chief, a Social Democrat who is also a city councilmember standing for re-election on March 3, continued to balk at sending officers to Davos unless two conditions were met. First, the officers must not be needed in Zurich. Second, the Forum would have to change its format to become friendlier to demonstrators. Those seeking dialogue should be offered the opportunity to join the discussion, rather than being shut out, Maurer said.

Late in October, the Forum dispatched two board members to New York to pitch Mayor Giuliani on holding the meeting here. McLean recalls: "The mayor looked at his advisers and asked, 'Does anybody think this is a bad idea?' " On November 7, Klaus Schwab held a press conference at the Waldorf announcing the Forum's "solidarity" with New York.

When the Forum announced that it would leave Switzerland, negotiations took on renewed urgency. The parties agreed to bring the meeting back to Davos in 2003. Esther Maurer's conditions were met. The Swiss government and the Forum endowed a foundation called In the Spirit of Davos, which aims to "institutionalize a dialogue with demonstrators," according to Economic Affairs Minister Couchepin. Swiss Justice and Police Minister Ruth Metzler-Arnold called a meeting of the 26 provincial police departments, and the security costs were redistributed.

But major questions remain for the demonstrators. They have succeeded, so far, in rocking the foundation of the World Economic Forum. Do they want to join the party? Or will the Forum be driven out of Davos forever?

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