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Terrorism casts shadow over summit

Afghanistan's president warned on Wednesday that world could suffer terribly from the "wildfire" of terrorism engulfing his region, thickening the gloom at a meeting of political and economic leaders already worried about the threat of global recession.

Formally opening this year's World Economic Forum, Hamid Karzai listed a sobering rundown of the attacks attributed to Islamist terrorists in recent months -- among them the December assassination of former Pakistani prime minister Benazir Bhutto and deadly bombings in Afghanistan and Pakistan that claimed dozens of victims, including many schoolchildren.

With terrorism still on the rise in the region six years after the ouster of the Taliban, "it seems like the mutant of extremism is dangerously unleashed across the region," Karzai said, warning that the trend "bodes terribly badly for the whole world."

Pakistani President Pervez Musharraf, a US ally in the fight against terrorism, is attending the conference in Davos as well, as part of a European tour seeking to reassure the West that he was still in control of his country after months of political instability. Both leaders held talks on Wednesday with US Secretary of State Condoleezza Rice, but there was no indication they would meet each other.

Musharraf spokesman Rashid Qureshi said that the meeting with Rice "went very well" adding that there was "total consonance and unanimity of views" on joint efforts to fight terrorism and a feeling that the sharing of intelligence between the two countries was "excellent."

How to stem terrorism is one of the themes at the Forum, along with climate change, pursuing a workable peace process in the Middle East and how technology is ushering in a new age of social networking that knows no borders.

Still, with many participants heavily exposed to the markets -- and sharing the realization that economic downturn can breed political turmoil -- the main focus on Wednesday was on the fear of world recession.

Rice, in a nod to the economic anxiety at the forum, told an audience of chief executives, politicians and others that the US economy was resilient and would remain an "engine of growth."

Rice also said the US would welcome foreign investment and free trade, "and our economy will remain a leading engine of global economic growth."

Many leading participants shared the view that the world could not escape the effects of the US' economic malaise, marked by the subprime crisis, loss of business confidence, poor company reports and a roiling stock market.

World markets remained volatile on Wednesday, with Asia closing up and Wall Street staging a stunning comeback but European stocks falling despite the US Federal Reserve's surprise interest rate cut the day before aimed at shoring up the sagging US economy. The fireworks added weight to fears at Davos that the world could be sliding into recession.

"We're in Round 1 or 2. This is a 15-round fight," declared Guillermo Ortiz, governor of the Central Bank of Mexico, suggesting the worst might yet be coming.

Billionaire George Soros called for a radical cure -- a massive injection of regulation and oversight over financial markets whose excessive freedoms have caused "not a normal crisis but the end of an era."

"Authorities ought to go in and examine the books" of financial institutions, Soros said -- and provide assurance that "they will rescue and even take over banks that become insolvent."

He blamed the US Federal Reserve for keeping interest rates too low for too long.

Meanwhile, former US vice president Al Gore and U2 frontman Bono offered measured praise yesterday for efforts in tackling climate change and global poverty, but warned the World Economic Forum that conditions were not improving as much as they could.
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