Is America irrelevant in today’s world?

DAVOS, Switzerland — Who would have imagined the drama?

Just as 2,500 of the world’s most important economic, business and political leaders were arriving in a Swiss resort town for the annual meeting of the Davos World Economic Forum, the U.S. stock market went into wild gyrations and the Fed stopped a free fall with a historic rate cut.

A wild-eyed playwright could not have provided a more fitting (if scary) backdrop for a meeting unlike any of the 11 sessions of Davos I’ve previously attended. Beginning Wednesday, in a bunkerlike conference center, with no view of the surrounding mountains, this conference of the world’s top achievers opened, with the focus on global uncertainties, both economic and political.

The global business elite is watching anxiously to see whether the United States can limit the damage from the mortgage lending mess and the banking crisis that has resulted.

“When the United States sneezes, does the world still catch cold?” is the title of one panel examining whether — as in the past — a U.S. economic slowdown, or recession, will undercut the global economy. As the delegates arrived, people were also discussing the U.S. elections, and wondering whether the next president will pull America back from the world stage.

But here’s what is different this year: The rich and the powerful at Davos are already looking beyond the United States as present and future global leader. The talk is about whether emerging economies, primarily China, India and resource-rich Russia, can pick up the economic slack if America falters and maintain global growth.

Policy setbacks

No one underestimates the continued importance of America. But a series of policy setbacks — the failure to foresee or head off this mortgage debacle, the decline of the dollar, the continuing wars in Afghanistan and Iraq — has created the sense that the era of the American hyperpower is history. George W. Bush is already regarded as a lame duck; the meager results of his recent trip to the Middle East showed how little he is able to achieve.

“Our failed economic and political policies have caused us to become increasingly irrelevant,” says Philadelphia executive John Strackhouse, senior partner in Heidrick & Struggles. His words echoed other comments I heard my first day here. He worries about an outflow of capital and talent to Asia, leading to permanent job losses. “China has a 3-1 ratio of engineers to the United States,” he notes.

The unease about America’s ability to right its own ship is reflected in the subject matter of many Davos panels. The themes at Davos, as I’ve observed year after year, have an uncanny knack for reflecting global trends. One panel is titled “Rebuilding Brand America: Five suggestions for the Future President.” The blurb for the panel reads: “Global opinion surveys consistently show that the level of confidence in the U.S. is declining in a number of areas. How should the next U.S. president reverse the trend and rebuild the brand equity of the country?”

Great ironies

One of the great ironies of this Davos year is that the opening address was given by Condoleezza Rice, who said the United States will remain “an engine of growth.” In the early years of the Bush administration, the Davos themes of global cooperation were anathema, and the White House never used the Davos platform to project an image of leadership, on global environmental issues, or reform of international institutions, or even Middle East peace. Late in the day, the Bush team is trying to soften its unilateralist image, and Rice is the frontwoman. But this shift, which might have made a big difference to America’s image abroad, comes too late in the day to remake brand Bush.

Don’t get me wrong. Davos attendees would like to see America recoup. They are hoping, uncertainly, that 2008 elections might help the United States get its groove back. But the murky uncertainties of the market reflect the unease here about where America is headed, and what the world will look at with America no longer firmly in the lead.

X Rubin is a columnist and editorial-board member for the Philadelphia Inquirer. Distributed by McClatchy-Tribune.