DAVOS: With the European economy lagging behind the United States, the head of the International Monetary Fund had a piece of advice for the continent on Friday: “Believe in yourself.”
There was much handwringing about Europe losing its competitive edge at the World Economic Forum in Davos this week, with the European Union racing to act to catch up with the United States and China.
At the forum’s closing panel, focused on the global economic outlook, IMF managing director Kristalina Georgieva suggested a change in attitude to tackle the issue. “The United States has a culture of confidence. Europe has a culture of modesty,” Georgieva said. “My advice to my fellow Europeans is more confidence. Believe in yourself and most importantly, tell others that you do.”
European Central Bank President Christine Lagarde warned that Europe needed to keep its “huge amount” of talent at home and raised the alarm for its leaders to act. “So if the European leaders can actually get their act together, respond to this wake-up call and existential threat that can be identified, then I think that there is a huge potential for Europe to respond to the call,” said Lagarde, herself a former IMF chief.
She even suggested encouraging “disenchanted” talent to move to Europe after Donald Trump returned to the White House this week. “Maybe it’s also time to import a few of the talents that would be disenchanted, for one reason or the other, from another side of the sea,” she said, without directly mentioning Trump.
In front of hundreds of movers and shakers in business and politics in his hotly awaited virtual speech on Thursday, Trump criticized Europe, especially over the United States’ trade balance gap with the EU.
“I’m trying to be constructive because I love Europe,” Trump said. “They do treat the United States of America very, very unfairly with the bad taxes.” Lagarde said it was true there had to be negotiations with the United States. “There has to be trade relationships that are organized in a framework that is giving confidence to the partners. It cannot be about removing all the rules, ignoring the institutions,” she said.
Europe should take greater risks and plough more money into artificial intelligence, Meta’s chief AI scientist Yann LeCun told AFP at the World Economic Forum. Widely viewed as one of the “godfathers” of AI, he also judged as “a little unrealistic” a $500 billion AI bazooka announced by US President Donald Trump this week. The major investment deal aims to build infrastructure for AI, led by Japanese giant SoftBank and ChatGPT-maker OpenAI. Tesla and X chief Elon Musk as well as Anthropic head Dario Amodei have also expressed doubts about the plans.
“It is not clear that any entity has this amount of money to invest, even over five years,” LeCun said in an interview. “This is certainly what is lacking in Europe in terms of investment,” he said. But he admitted the United States’ financial system was different to Europe’s. “There is a lot of money to invest in the United States because of retirement funds, which do not exist in Europe.”
AI was again the buzzword at the annual talkfest in the Swiss ski village of Davos, with technology firms such as Facebook-owner Meta out in full force on the thoroughfare near the forum’s main center. Meta proudly put on show its Ray-Ban Meta AI glasses -- which can take photos and provide details about objects in view -- at its storefront, for participants to try.
The amounts involved in AI are massive. LeCun pointed to Meta’s plans to invest around $60 billion this year, while its rivals plan to plough billions of dollars too. “These are absolutely enormous numbers. And all of this is used to build a computing infrastructure that not only allows AI models to be trained -- it is not a huge amount of resources -- but above all to run them,” LeCun noted. — AFP