(Updates with comment from Schwab in 11th paragraph. See DAVOS for more on the World Economic Forum.)
Jan. 22 (Bloomberg) -- Klaus Schwab, founder of the World Economic Forum, sees political “black-swan” events threatening global security even as economic risks subside, with confidence returning to the euro area.
“The world is still full of risks and we do not have only to address the economic risks, I think it is very important that we become more resilient in terms of the political risks,” Schwab, 78, said in a Bloomberg Television interview in Davos, Switzerland, yesterday. “There are many black swans around,” he said, referring to the Japan-China dispute in the East China Sea, the Syrian civil war and the nuclear inspections in Iran.
Black-swan events, named after the belief that all swans were white until the discovery of black ones in Australia in 1697, describe extreme outcomes such as the 2008 financial crisis that were previously considered very unlikely to happen. A World Economic Forum survey presented earlier this month found that income disparities and government budget deficits present the most likely risks to the global economy in the next decade.
Schwab, who founded the annual meeting of political and business leaders in 1971, said he expects North Africa, Syria and the war in Mali to be “hot issues” at the forum, which starts tomorrow. The euro-region crisis “will not play such a big role as it did the last year,” he said.
“We have certain signs that at least we have stabilized the situation,” Schwab said, adding that a breakup of the common currency was “definitely” off the table. “There might again be a crisis mode, but there will not be a breakup, because we have seen in Europe sufficient political will to make sure that Europe remains as a unity.”
Europe’s fiscal crisis has subsided since European Central Bank President Mario Draghi said in July that he’d do “whatever it takes” to save the euro. While the region isn’t seeing “an early and strong recovery,” it is “back in a normal situation,” Draghi said on Jan. 10.
Economic confidence in the euro area increased more than economists forecast in December even as the 17-nation currency bloc remained mired in its second recession in four years.
The ECB head, together with French President Francois Hollande and German Chancellor Angela Merkel, “certainly” are to thank for averting a collapse of the euro, Schwab said, adding that the crisis “created a European identity.”
A good leader has heart, soul, vision and “good nerves,” said Schwab, who called former South African President Nelson Mandela the most impressive of all the captains of politics and industry he has met over the years. The forum, which will be attended by as many as 50 heads of government including Merkel and Britain’s David Cameron, shouldn’t be about “big names,” he said. “Everybody should be a star.”
The fall of Libyan President Muammar Qaddafi in 2011 allowed a cache of weapons and cash to spread across North and West Africa, threatening to destabilize governments in the region, according to the United Nations. Al-Qaeda in the Islamic Maghreb, which operates in the Sahel region of Africa, has collected tens of millions of dollars through kidnapping for ransom since 2008 and currently has nine foreign hostages, according to the U.S. Treasury.
“My biggest fear is terrorist action which we do not foresee,” Schwab said. “Let’s not forget that with chemical, nuclear devices you can do a lot of damage if those means fall into the hands of really nasty terrorists.”
Ethnic Touareg rebels declared a separate state in northern Mali in April, taking advantage of a power vacuum following a military coup in Bamako in March. Since then, Islamist rebels that initially backed the Touaregs wrested control of the area and began taking towns farther south on the way to Bamako, the capital.
The French military helped Mali recapture two towns this week. In Algeria, terrorists killed at least 38 hostages at a gas complex in the Sahara after a standoff with the Algerian military. The militants had planned to blow up the site and flee to neighboring Mali with the hostages.
In Syria, more than 60,000 people have died in fighting since March 2011 between mainly Sunni Muslim rebels and President Bashar al-Assad’s government, according to the UN. The rebels are trying to destroy or reduce the military’s ability to carry out bomb attacks by carrying out an assault on a strategic base in Idlib.
--With assistance from Andres R. Martinez in Johannesburg. Editors: Jennifer M. Freedman, Leon Mangasarian