«Reality is multilateral»

Professor Schwab
Excellencies
Ladies and Gentlemen

The Annual Meeting in Davos is a retreat from everyday life. This distance is intentional. But being removed from everyday life does not mean we are removed from reality. By withdrawing, we give ourselves the time to think. And in return, the possibility of being rewarded with fresh solutions. That is why we are here. My heartfelt thanks go to Klaus Schwab - the spiritus rector - as well as to the organisers. And of course to you: thank you all for coming.

ILLUSORY STABILITY

For many, the past few decades have been decades of hope. Hope that the order established after the Cold War would endure. There were setbacks, of course, but overall, things were looking up. Open world markets and technological progress generated prosperity for hundreds of millions and provided a boost for more democracy, freedom and stability.

States, the economy and the public believed what states, the economy and the public like to believe, namely that things will carry on as they are.

This deceptive foundation of apparent security induces us to underestimate our own vulnerability. Those who believe that the factors that contribute to success are constant easily overlook the risks of growing nationalism, hunger for power and protectionism.

But suddenly the foundations upon which such hopes are built fall apart. One crisis collides with the next. First the financial crisis, then climate change, the pandemic and, on 24 February, Russia's attack on Ukraine.

Almost overnight, this war of aggression reduced a sovereign state to rubble, turned cities into graveyards, robbed a people of its livelihood and shattered an era of hope.

This war has a total disregard for everything the community of states has achieved in decades of civilizational progress. In view of this brutal violation of international law, especially international humanitarian law, Switzerland has strongly condemned the war and adopted the EU's sanctions.

COOPERATIVE NEUTRALITY

This clear stance surprised many. There were questions in Switzerland and abroad about whether this is compatible with our neutrality. The answer to that question is important, especially in a situation of geopolitical upheaval.

So, why did we come to that decision?

Democracy must be stronger than tyranny, international law stronger than subjugation, law stronger than power, self-determination stronger than repression. There is no neutral attitude towards the brutal violation of fundamental values, which are also our values. For these values are the epitome of freedom. Passivity tolerates the violation of law and can play into the hands of the aggressor.

That is why Switzerland stands together with those countries that will not simply stand idly by as the very foundations of democracy are attacked.

This cooperative neutrality is still in keeping with Switzerland’s understanding of neutrality:

•    Cooperative as a neutral country committed to strengthening its own and common fundamental values.
•    Cooperative as a neutral country committed to securing its own and joint peace efforts.
•    Cooperative as a neutral country committed to a rules-based and stable security architecture that can only emerge multilaterally.

Neutrality does not mean standing on the sidelines. The political twin to our neutrality is and remains solidarity. Switzerland's neutrality has never been rigid, but has always evolved. For the world never stands still. Conflicts and their effects have become increasingly international in nature. ‘Together’ implies that thinking in broader terms is becoming more important. When our democratic environment is threatened and values agreed under international law falter, Switzerland too is threatened. We are experiencing this now.

Our scope for action is limited by the law of neutrality. On the basis of the Hague Agreement, Switzerland is bound by the principles of "no participation in wars, international cooperation - but no membership in military alliances, no troops or arms deliveries for warring parties, no rights of passage".

UKRAINE RECOVERY CONFERENCE IN LUGANO

History shows that wars always have their aftermath. When that time comes, Switzerland is ready to act as a mediator to facilitate talks and create platforms so that they may take place.

Last July, the 4th Ukraine Reform Conference took place in Vilnius. The aim of these international reform conferences is to support Ukraine in the areas of democratisation, decentralisation and modernisation. The 5th conference, organised by Ukraine and Switzerland, will take place in Lugano, Switzerland, in early July. But this time it will be a recovery conference.

Because when the war is over and the weapons fall silent, all our efforts will be focused on rebuilding.

The path to reconstruction and addressing the economic consequences of the war will be channelled through a broad-based political and diplomatic process. The conference in Lugano will provide an opportunity to discuss this complex path to recovery with all key-stakeholders for the first time. It will mark the international kick-off for the recovery process for Ukraine. Last week 40 countries and 18 international organisations have been invited to attend this high level conference. And Switzerland is offering to host follow-up conferences to address further steps if necessary. Even if the end of the war is not yet in sight today, it would be unforgivable to wait any longer before starting to reflect on how to organise such efforts and on the role of national and international institutions, and so risk losing valuable time.

I am very much looking forward to hosting the conference in my home canton of Ticino

FOCUSED MULTILATERALISM

War is the embodiment of instability. And this war is driven by a destructive force that not only shakes the geopolitical security architecture, but also undermines other principles of civilisation. It upends the pillars of the old order. Against this backdrop, other questions naturally arise, especially at a WEF Annual Meeting. What does the risk of growing polarisation mean for global markets, for national economies, for prosperity?

Let me outline three broadly formulated scenarios as a possible model for your discussions:
As I see it, the first scenario is sectoral globalisation. The formation of blocs leads to a decoupling of economic areas with regionally closed cycles. A model with enormous risks: polarisation, sharpened power politics, a trade cold war, eroding world rules, blocked exchanges and, as a consequence, widespread losses of prosperity.

Scenario two would involve a measured scaling back of ‘hyper-globalisation’. And associated with this is a calculated renationalisation of system-critical resources, value chains and production processes. In other words, reduced dependencies and risks, and fewer suppliers. However, this risks pushing up product prices, because such targeted repatriation also eliminates efficiency effects. Scenario two could be a transitional solution.

Scenario three involves reinforcing a more focused form of multilateralism, and for me this would be the way forward. The targeted strengthening of multilateralism and the return to core tasks is and remains the instrument for avoiding a shipwreck on the Cape of Endangered Hopes.

Multilateralism must concentrate its efforts on the major issues that cannot be solved in isolation:
•    Issues such as climate change , pandemics or extreme poverty;
•    Issues such as global economic crises, trade blockades or energy supply
•    Issues such as the threat of war or mass migration

We cannot remain static in the face of the dynamics of our time. So let's think decisively about focusing rules and institutions on the most pressing geopolitical risks. The existing multilateral institutions (such as the UN or the Bretton Woods institutions) do cover these issues. But they are repeatedly blocked by conflicting interests - that tendency is increasing. And because timely and decisive multilateral action is imperative in these key areas, rules and reforms are needed to ensure well-established and bindingly accepted political coordination that is up to meeting these new challenges.

Three scenarios, one broad framework. Perhaps your discussions will take you in other directions. That doesn’t matter. What matters is that such discussions take place: without moralising and remaining open to a broad range of opinions. Solutions do not emerge from an exercise in groupthink. They emerge through open dialogue. Because conversations are the basis for any new solutions. That is what it is all about - here in Davos too.

I thank you and wish you lively and fruitful discussions.