“The preservation of the republic is no less than governing- what a thankless task it is!”
Cicero, Speech, 9 November 63 BC
The present era is an era of change and transformation, an era in which all elements are critically in ferment. This world is characterised by widespread turbulence, rapidity and volatility of events. This reminds me of an old Chinese proverb: “May you live in interesting times”! We are at such a time today.
Founded in 1971, the World Economic Forum has evolved from a European management conference into one of the most consequential annual gatherings of global power. Davos today is not merely a networking event; it is a barometer of elite consensus, anxiety, and ambition. In 2026, nearly 3,000 leaders from more than 130 countries will converge on the Swiss Alps between 19–23 January, including around 65 heads of state and government, hundreds of chief executives, central bankers, military officials, and civil society leaders.
There is a strong sense of both continuity and rupture reflected in this year’s theme, “A Spirit of Dialogue.” On its surface, the theme signals a recommitment to cooperation, diplomacy, and multilateralism at a moment when the global landscape appears increasingly fragmented. But a deeper and fundamental analysis beneath the convivial panels, snowy backdrops, and ritualised optimism brings out a deeper unease: dialogue itself is no longer assumed to be sufficient.
“Within this umbrella of a ‘spirit of dialogue,’ there’s also a sharper, more pragmatic question — now what?” notes Davos delegate Solveigh Hieronimus. “How do we actually operate and cooperate when shocks are no longer exceptional, but recurring? What does cooperation mean when crisis is the baseline, not the outlier?” This tension between form and substance, aspiration and power, which has altered the rules of the game and brought about a “new normal”, defines Davos 2026.
Global Economic Fragility and Trade Realignment
According to the World Economic Forum’s Chief Economists Survey and its flagship Global Risks Report, global economic conditions are expected to weaken through 2026. The headwinds are familiar but intensifying: slowing growth, mounting public and private debt, geopolitical disruption, and deep uncertainty over trade rules and industrial policy. What is new is the growing acceptance that the post-Cold War economic model may not be coming back. This poly-crisis reminds us of Muin Ahsan Jajbi’s famous Urdu couplet
“जब कश्ती साबित-ओ-सालिम थी साहिल की तमन्ना किस को थी
अब ऐसी शिकस्ता कश्ती पर साहिल की तमन्ना कौन करे”
This means when the boat was intact (i.e., when the going was good), there was no wish to reach the shore; now, when the boat is dilapidated (i.e., when things are in a mess), it’s futile to expect to reach the shore.
Trade, once governed by efficiency and comparative advantage, is increasingly subordinated to security, ideology, and coercion. Supply chains are no longer optimised solely for cost, but redesigned for resilience, redundancy, and political alignment. Governments are intervening more directly in markets, reshaping flows of capital, technology, and labour.
This shift has been dramatically underscored by President Donald Trump’s extraordinary move earlier this month to capture Venezuelan President Nicolás Maduro. The situation is poignantly reminiscent of William Butler Yeats’ amazing poem about the dangers confronting the modern man:
“Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity”.
William Butler Yeats (The Second Coming)
President Trump’s action has sent shockwaves through diplomatic and economic circles alike, reinforcing Trump’s long-held belief that the Western Hemisphere should function explicitly as a U.S. sphere of influence. For many in Davos, the episode signals the acceleration of a global order in which power increasingly trumps rules. “Gunboat diplomacy is back with a vengeance,” warned Comfort Ero, president of the International Crisis Group. “The question now is: what do you do when international law becomes international niceties?”
The WEF now ranks geo-economic confrontation — the use of tariffs, sanctions, export controls, and financial pressure — as the most severe near-term global risk, overtaking even armed conflict. Economic tools have become weapons, and the line between commerce and coercion has blurred almost beyond recognition.
Trump makes third presidential appearance
President Donald Trump leads the largest American delegation ever to attend the Swiss Alps summit, with about six Cabinet members accompanying him. His Wednesday speech will tackle housing affordability, a topic that resonates as everyday people struggle while the ultra wealthy accumulate trillions. Trump’s presence dominates the week, raising questions about whether he’ll engage in genuine discussion or simply broadcast his agenda to the assembled elite.
U.S. Tariffs and Trade Tensions: A Central Davos Fault Line
Against this backdrop, renewed U.S. tariff threats loom large over Davos. Washington’s targeting of European nations linked to Arctic security exercises has rattled markets and strained diplomatic ties, injecting fresh volatility into already fragile transatlantic relations. These measures, framed by the U.S. as security imperatives, are viewed by many European leaders as politically motivated economic punishment.
WEF officials have acknowledged that tariffs and trade coercion will be among the most candidly debated issues at the forum. Unlike previous years, trade policy is not confined to technical panels or ministerial side meetings; it is at the heart of political dialogue.
Why this matters at Davos is clear. Tariffs, once relatively narrow instruments, have become central to geo-economic competition. They reshape supply chains, redirect investment, and alter global production patterns with long-lasting consequences. With senior U.S. officials present, trade policy itself is being discussed at the highest political level, forcing allies and competitors alike to confront uncomfortable questions about retaliation, accommodation, or de-escalation.
European leaders are expected to explore a range of responses, from coordinated countermeasures to renewed diplomatic outreach. Markets are already reacting to volatility in European equities, currencies, and energy markets, which reflects fears that tariff escalation could spill over into broader economic disruption.
“We stand ready to engage in dialogue based on the principles of sovereignty and territorial integrity,” read a joint statement from European countries facing U.S. tariffs over Greenland. “Tariff threats undermine transatlantic relations and risk a dangerous downward spiral.”
Geopolitics Beyond Trade
Trade tensions are only one strand of a wider geopolitical web shaping Davos 2026. The war in Ukraine remains a defining security and economic issue, with negotiations between Ukrainian and U.S. officials expected to continue on the sidelines of the forum. While Davos is not a peace conference, it often serves as a discreet venue for testing ideas, signalling intentions, and gauging political appetite.
Beyond Ukraine, conflicts in the Middle East, rising instability in parts of Africa, and the deepening strategic rivalry between the United States and China permeate economic discussions. Investment decisions, energy policy, and technological cooperation are all being filtered through a geopolitical lens.
This year, Davos is less about GDP projections or IMF-style macroeconomic forecasts and more about how economic instruments are being deployed as tools of statecraft — and whether global governance institutions can adapt fast enough to this reality.
Other Major Focus Areas
Alongside geopolitics and trade, several other themes are shaping the Davos agenda:
- Artificial Intelligence and technological power: Discussions focus not only on productivity gains, but on labour displacement, national competitiveness, and the concentration of economic power among a handful of firms and states.
- Inclusive growth and investment: Emerging markets face the dual challenge of attracting capital while navigating higher borrowing costs and fragmented trade regimes.
- Resilience to systemic shocks: From supply chains and sovereign debt to future pandemics and climate-linked disruptions, resilience has become a core economic metric rather than a secondary consideration.
What unites these themes is a growing recognition that efficiency alone is no longer sufficient — systems must be robust under stress.
Strategic Options and Choices
Cataclysmic events and qualitative changes in the rules of the game have caused a feeling of unease and a sense of concern all around. These are reminiscent of Timothy Findley’s observation (Not Wanted on the Voyage, Toronto. Viking. 1984), “Well. It wasn’t an excursion. It was the end of the world”. Things are certainly not easy anymore. But this is not the end of the world, provided the agenda that is widely known is implemented with alacrity. As Jagdish Bhagwati (In Defense of Globalization. Oxford University Press New Delhi. 2004) firmly argued, “globalization is part of the solution, not part of the problem, but that we do need institutional changes and support mechanisms to smooth out its occasional rough edges”. We strongly maintain that the first step towards “smooth(ing) out its occasional rough edges” is to ask the right questions. Is the conventional strategy workable in the present environment, where all elements are critically in ferment? Given the huge socio-economic implications involved, should we perhaps not attempt to modify the strategy in line with the altered ground realities and new growth theoretic? The answers to these questions are obvious. What is not so obvious is how we are going to implement those answers and make them a reality.
Contextual Significance: Why Davos Still Matters
In an era of fragmentation, Davos retains its relevance precisely because it offers one of the few remaining platforms for sustained multilateral dialogue. It functions simultaneously as a confidence gauge for global economic elites, an early warning system for investors and policymakers, a backchannel arena for negotiation and de-escalation, and a symbolic reminder that cooperation, however strained, remains possible.
The myriad complexities of the global system that drive economic decisions also expose the limits of dialogue without power alignment. The fractures in the international order — whether driven by tariffs, war, or technological rivalry — cannot be papered over by rhetoric alone. Still, the alternative to collective effort is unmanaged fragmentation, where crises compound, and cooperation collapses. The question is no longer whether the global order is under strain, but whether it can be repaired — and if so, by whom, and on what terms.
It is often not fully recognised—let alone deeply felt—that political conflicts are seldom separable from economic interests. I have held this view consistently for over four decades. In my paper, “The North–South Dialogue,” published in the October–December 1981 issue of The Eastern Anthropologist (an international interdisciplinary journal), I argued that conflicts commonly portrayed as political—whether among states, regions, or social groups—are fundamentally struggles over resources, production, distribution, and economic power. Political ideologies, diplomatic disputes, and even ideological confrontations frequently serve to obscure underlying battles shaped by inequality, access, and material interests. This insight appears even more valid today than it did when I first articulated it forty-five years ago.
ABOUT THE AUTHOR
Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings is a globally acclaimed scholar. With a brilliant academic record, he has over 350 publications and six books. His views have been published in Associated Press, New York; Dow Jones, New York; International Herald Tribune, New York; Wall Street Journal, New York.
