DAVOS WATCH: Anxiety Over Greece, Currency Wars, QE Support

January 22, 2015 Updated: March 10, 2015

DAVOS, Switzerland—The World Economic Forum held in the Swiss ski resort of Davos has the official goal of “improving the state of the world.” In practice, it’s a massive networking event that brings together 2,500 heads of state, business leaders, philanthropists and artists.

Here are some glimpses of what’s happening and being discussed Thursday at Davos:

Merkel Upstaged

It’s not often that German Chancellor Angela Merkel gets upstaged — but upstaged she was as she arrived to speak before the World Economic Forum.

As Merkel returned to Swiss ski resort following her absence last year due to a broken leg, all eyes were on Frankfurt as Mario Draghi, president of the European Central Bank, delivered the news that the ECB was ready to buy government bonds on a massive scale to oil the wheels of the eurozone’s ailing economy.

During Merkel’s speech, many in the audience were scrolling social media to get the details about Draghi.

Merkel said little to take the spotlight away from Draghi but declared whatever the ECB did, it wouldn’t be enough. EU governments have to continue to reform their economies to get more competitive, she said. Some have been forced to do so in return for bailout money, such as Portugal and Ireland. Others, such as Italy and France, are now doing so too, she said.

On non-economic matters, Merkel said the terror attacks in Paris had “woken us up thoroughly.” She also said there was no military solution to the conflict in Ukraine and that any solution rested on the Ukraine’s territorial integrity being “restored,” first in eastern Ukraine around Donetsk. Crimea, which Russia has annexed, is “not forgotten,” she added.

Femen Protest

A Frenchwoman took an early morning train from Paris and by mid-afternoon was baring her breasts in a protest in Davos against the financial world.

The woman was a member of the activist group Femen, which also targeted the World Economic Forum two years ago. Police detained her and escorted her away.

Femen has used similar tactics around the world to get its point across, including at the Vatican.

It’s Coldplay

Surrounded by nearly 200 snowmen, Chris Martin, frontman of the British band Coldplay, joined forces with Virgin boss Richard Branson in backing a new initiative to pressure business and political leaders to deal with poverty, growing inequalities around the world and climate change.

The two put their weight behind Action/2015, an umbrella movement that is trying to underline the need for the global elite to back initiatives this year to deal with the big issues. To do so, Action/2015supporters built 193 snowmen on the sidelines of the World Economic Forum, each representing a nation, neatly attired with a flag scarf.

This year is a big one for activists. In September, global leaders are set to meet to update their efforts to fight poverty, followed three months later by international climate talks in Paris.

Greek Forgiveness

The Greek elections due Sunday are making EU leaders uneasy.

Greece’s left-wing Syriza party, which is leading in the polls, has been calling for easier terms on bailout loans the country owes to fellow EU countries. Some fear that if it does come to power, a big disagreement on this point could push Greece to leave the euro, the common currency used by 19 European nations.

European leaders don’t want to forgive Greece’s debt outright. But they also recognize that, if Syriza wins, they will have to negotiate with a democratically elected government.

“It will be very difficult for us to forgive any loans or restructure debt at this particular moment,” said Alexander Stubb, the prime minister of Finland. “We can look at different kinds of extensions, at different kind of programs,” he added, referring to longer repayment periods or lower interest rates.

Currency Wars

The world’s central banks are competing to weaken their currencies, says Goldman Sachs President Gary Cohn.

Central banks provide stimulus to help their economies, but a convenient side effect is that such stimulus weighs on the currency, helping the country’s exporters compete in the global market.

Increasingly, major central banks are providing stimulus – those of Japan, Canada, Switzerland, India and the eurozone to name but a few. The question is whether it’s meant mainly to weaken theircurrencies.

Cohn has no doubts: “We’re in currency wars,” he told a debate in Davos.

Europe Cheerleading

All eyes today are on the eurozone, where there are expectations — and hopes — that the European Central Bank will deliver another stimulus.

Many leaders gathered here support the ECB’s move, a program technically called QE that is facing some resistance from Germany amid worries it could expose its national finances to risks.

“We’re all for QE in Europe,” Larry Summers, former U.S. Treasury Secretary, said during a panel including International Monetary Fund chief Christine Lagarde.

The question is whether the stimulus will be enough.

Lagarde noted that expectations of the stimulus had already boosted markets. “To a point, you can say it has already worked.”

Summers replied that if that’s the extent of the stimulus’ impact, it’s worrying, as economic forecasts remain dismal. “We should not make the mistake that the situation in Europe is in hand,” he said, adding that rich governments like Germany need to accept to spend more to help growth.

From The Associated Press