Score one for humility.

The self-anointed Masters of the Universe who gather at Davos every year claim to have all the answers to all the world’s problems. But this year, with the economy in tatters, environmental missions in doubt, and the most vile forms of terrorism on the rise, this once confident collection of wealthy Westerners who gave Davos its prestige are eating humble pie.

To be sure, left-wing windbags like the billionaire investor George Soros – who decades ago nearly destroyed the British economy with his ruthless currency bets – still drift in and out of the WEF’s Congress Hall and make stern pontifications as to how they think the world should be. But the reality that’s set in for most of the forum’s participants is that the world’s markets have transformed over the past year – and that entrepreneurs need to change with the times, too.

“I’ve always asked myself what caused this great recession and values are always part of the answer we come up with,” the chief executive officer of Deloitte, James Quigley, said. “I don’t want to continue the blame game. Let’s have a forward look instead of an autopsy. What broad values do we need to re-think?”

Davos participants took a sober assessment of the economic slump’s effect on the markets. If there were a consensus on any point, it was that there was an overriding hope that investors were less reckless because of the financial fallout.

Jim Wallis, the editor-in-chief of “Sojourners,” a religious publication, said that it’s up to business and political leaders to shape a moral compass for the new economy. Maxims like ‘Greed is good’ and ‘I want it now’ wrought havoc with the culture and should be replaced with ‘Enough is enough,’ according to Wallis. “We are indeed at a populist moment,” he said. “Either it will be dark with anger and fear or one of optimism. This is a structural crisis but also a spiritual crisis that calls for a new accountability. If we go back to business as usual then all the pain will have been in vain.”

That pain might be what helped usher in a new era of personal responsibility, according to the chief executive officer of Thomson Reuters, Tom Glocer. “Many individual Americans filled out mortgage applications and lied about their income. Nobody forced them to lie. Nobody has a constitutional right to live in a house he can’t afford. Yet people are saying: If we only had a better regulation of our compensation system. But in the end, personal responsibility is key,” he said.

Muhammad Yunus, the managing director of Grameen Bank in Bangladesh, won a Nobel Peace Price and the Presidential Medal of Freedom proving that when people take responsibility for their actions – especially their financial ones – society wins. Grameen Bank has lent more than $8 billion to the poorest citizens of Bangladesh and boats a 100 percent repayment rate.

What follows are more candid thoughts from Davos participants on how the world could change for the better…

Well, to be honest, the one that has seen an explosion here is television. The whole region has basically moved from, in a decade, from one, maybe two channels, state-owned and operated, to this diversity of 300 channels today. And in that respect, it’s a pretty free region. … There are many societies on earth where you cannot own a satellite dish. Iran comes to mind, certainly China.

So who do you see as your competition?

We have two operations for the region. One is radio Sawa, and the other one is the Alhurra TV channel. Who do you compete with when you are in the mass media business? Everybody. Who is specifically in your category? It’s obviously Al Jazeera, Al Arabiya, and now there are many others joining the parade. You know, BBC has an Arabic service, France has announced its own, Russia has announced its own.

So you see these other national broadcasters as your direct competition?

No, I don’t see the other broadcasters as our competition. No. I was just describing the landscape of the people that are in the business of news and information, and that includes Al Jazeera and Al Arabia. And in that respect, you could say that the main competitors, if you were to define it in commercial terms, which you can’t, would be Al Jazeera and Al Arabia. But we think we have a niche and we have a role to play that is different to what they do.

Saudi Arabia’s King Abdullah responded almost a week later in an interview with Kuwait Arabic newspaper al-Seyyasah in a conciliatory manner. Considering the politeness that came with the UAE’s withdrawal, the king believes this step is not intractable. “The atmosphere for reviewing the monetary union agreement is open and the UAE has an alert leadership … We do not doubt they are keen to maintain a strong Gulf (Cooperation) Council.”

”The coming review before the implementation would resolve what had been disputed,” he said.

The decision to pull out reflects the fact that centralizing and unifying elements of the GCC will be fraught with such problems in the future. Much of this stems from creating an equitable framework for each nation, a hard-to-balance task. The single currency is seen by observers and politicians as a means of creating greater interdependence among the GCC states - the basis for improving political unity.

It also mirrors the formation of the EU single currency, when Germany and France wished to foment greater unity and mutual reliance. Nevertheless, while monetary union is an economic objective, it is also an optional tickbox on the political checklist of goals designed to form greater unity within the GCC, says Marios Ma-ratheftis, chief economist of Standard Chartered Middle East. “No matter what happens to the common currency, we’re still part of the GCC and we’re willing to cooperate with our GCC neighbors - and that’s the right way to go,” he says. “Political cooperation is essential, and monetary union is not necessary to achieve that.”

There is also the issue that most of the GCC states have parity with each other on exchange rates anyway, as all (except Kuwait) are pegged to the greenback. Kuwait removed the dinar from the dollar peg in favor of a basket of currencies in 2007, creating further wobbles over monetary union at the time. Yet this is a tactic other Arab nations would do well to adopt, argues Paul Krugman, professor of economics at Princeton University and Nobel laureate in economics.

You have produced statistics that SWFs were investing in their own countries at the height of the boom. Was this a strategy to shore up confidence against a potential collapse at home?
That’s a very real possibility in terms of what’s going on. Certainly, at least at first glance, there doesn’t seem to be a ready explanation for why you would want to come in at a time when everything is at its peak, because you might think that, at least from a social perspective, already these markets are overheated.

Some experts argue that SWFs have proven to be political as well as economic forces. What do you think?
It’s hard to unambiguously answer, but it’s important to emphasize that sovereign wealth funds do play a multi-headed role. It’s not just purely about generating the most financial returns. They’re also wedded to the country in which they play a role. There’s the expectation that their purpose is to ultimately help the country in which they invest. That being said, you know, one of the important things that I have [seen is that] the inherent challenge is dealing with their multiple roles. I think the more that can be done, to be explicit and clear as to what the mix of roles is, it’s probably going to be better in terms of making better investment decisions.

The one notable exception in the Gulf is Saudi Arabia, which hasn’t set up its own SWF. What do you make of that?
Well, I think it’s a great question and it’s an im-portant one. I don’t think, in terms of the evidence we’ve gathered today, we can say definitively one way or the other as to what the optimum way to organize these things are. I think it’s an issue we need to dig into and understand more.

You have observed severe downward trends with regards to the price-to-equity ratios of local investors. Can you explain why this has occurred?
In a sense, they are a victim of bad timing, which is to say that certainly it seems that the rate of investments by sovereign funds appeared to accelerate in recent years here. I think that if you look in many other regions you will see more growth, but a steady sort of growth. As you know, we’ve had this phenomenon in the last period, where the returns to emerging markets in general have been somewhat disappointing, to put it mildly.

US President Barack Obama is pushing to make good his promise to foment greater dialogue with the Middle East. Having conducted his very first television interview as president with Al Arabiya on Jan. 27, Obama took another step last month by addressing the people of Iran in an open broadcast message.

The move has produced some hope. Broadcast over Nowruz, the Persian New Year, Khamanei and Ahmadenijad’s broadcast speeches made no mention at all of Obama’s message at first. Later,  Ahmadinejad requested that the US issue an apology for its previous stance.

Not surprisingly, Obama’s olive branch came with preconditions about Iran’s influence on Hezbollah and its nuclear ambitions. In exchange for restoring ties, Obama said the way forward for Iran must not be, “through terror or arms, but rather through peaceful actions that demonstrate the true greatness of the Iranian people and civilization. And the measure of that greatness is not the capacity to destroy, it is your demonstrated ability to build and create.”

Using such lofty rhetoric to couch the true meaning of the US president’s intent is nothing new; neither is Obama choosing an open address as his medium. Iranian President Mahmoud Ahmadinejad has made similar moves towards other nations during his tenure. Last year, the UK’s Channel 4 Television broadcast a video message from Ahma-dinejad to the UK during Christmas. In 1998, former President Khatami called for improved relations with the US, then withdrew his comments a week later through a series of sermons criticizing Washington’s policies.

Nevertheless, Obama’s address pre-sages the forthcoming Iranian elections in June, in which Ahmadinejad is trying to secure a second term. However, Oba-ma’s message is aimed at Iran’s supreme ruler, Ayatollah Ali Khamenei, and whoever else sits in Iran’s presidential chair.

The response from Iran’s leaders seemed bellicose, and was mistakenly reviewed by newspapers such as the New York Times as a rebuff. In fact, the language showed a slight softening – even if demands to the US seem impossible: severing ties with Israel, apologizing for its previous relations with Iran, dropping both UN and US sanctions and accepting Iran’s goal of enriching uranium.

The main battle is between the executive branch of government, the senior ministers and prime minister, all of whom come from the ruling al-Sabah dynasty, and political factions in parliament. The previous deadlock over the rescue package, which is still under consideration, continues with calls to interrogate prime minister Sheikh Nasser Mohammed al-Sabah over matters ranging from the dealings of his personal office, to the demolition of a makeshift mosque without due process. As the prime minister also happens to be the nephew of the Emir, however, this isn’t something that’s likely to occur.

But the dissolution may help the government implement the $5.17 billion fiscal stimulus package for the country’s crippled banking industry, since the cabinet can now proceed with the deal un-fettered. Yet the economic situation continues to worsen. Moody’s has announ- ced that the sovereign creditworthiness of Kuwait is likely to be downgraded.

“We discern a deteriorating trend in government effectiveness, exemplified by the repeated changes of government and parliament,” says Tristan Cooper, vice president and senior analyst with Moody’s sovereign risk unit. “It is the accumulation of such disruptive political events, rather than this event in particular, which is concerning.”

As the first and only Gulf state with a democratic structure, this is sadly not a new phenomenon for Kuwait. The state has seen two previous suspensions of the constitution by the Emir – in Aug. 29, 1976 and July 3, 1986. Yet this cycle of political turmoil seems to happen with disturbing regularity once every decade.

As the maxim goes, “Buy in gloom, sell in a boom.” Aabar Petroleum Investments Company is certainly doing the first bit. On Mar. 22, it secured a 9.1 percent stake in embattled car manufacturer Daimler, for 1.95 billion euros ($2.65 billion) in cash.

As many analysts and commentators scratch their heads trying to work out when the markets will bottom out, this deal shows that cooler heads are prevailing at the business table, and that the phase of “wait and see” attitudes in this recession may be drawing to a close, at least in the Gulf region.

Matthew Wakeman, managing director of cash and equity at EFG-Hermes brokerage, sees the deal as, “a further move to diversify from [Abu Dhabi’s] dependence on oil for revenue, and increase its manufacturing knowledge and production. A premium brand such as this opens the doors for cooperation and regional expansion in the future,” he says.

“The timing is particularly good, as it provides Daimler with a cash injection at a very challenging time for the auto industry.”

Listed on the Abu Dhabi Securities Exchange, Aabar is mainly owned by the International Petroleum Investment Company (IPIC), which in turn is owned by the Abu Dhabi government. Aabar’s move represents a change in its strategic focus, widening its investment activities from the energy sector into areas such as finance and real estate. It was Aabar, for example, that quietly bought AIG Private bank after the US finance group’s financial problems were made public last year.

One day after the Daimler deal, Aabar completed the final payment and conversion of its bond issue into shares for IPIC, which now holds a 71 percent stake. This represents what is known as the Chinese box strategy – where parent companies retain controlling interest in smaller holding companies that own a stake in a corporate asset. (One of the more notable examples of this was the takeover of Telecom Italia in 1999 by Pirelli and the Benetton family.)

Many businesses will be inclined to cut research and innovation programs in the wake of the downturn. Why do you think they should actually focus more on innovation?

Innovation is even more critical in the current market climate, and the reason for that is actually quite simple. Each scenario facing a slowdown and possible recession [means] if you want to maintain your market share or make gains, you will have to innovate. I was talking to the CEO of a company recently and he told me that, for his organization, he has kept the marketing expenses the same, and [told] his team members to aim for 7 percent growth in the next calendar year. Now, if you keep the marketing expenses the same and you are aiming for higher growth, you cannot do things the way you did last year.

How does your book compare to other texts on innovation?

We asked the question: “to what degree is driving innovation a part of the CEO’s responsibility portfolio, or is this something that the CEO delegates to either a bunch of scientists in their R&D lab or to a start-up company in acquisition mode?” 

I don’t think there’s another similar book that looks at the role of the CEO in driving responsibility or innovation. What makes the book unique is the very honest and direct perspective of the CEOs about how they see their own roles vis-a-vis innovation in their own organizations and global businesses.

INSEAD does an annual innovation index every year. How is the Middle East performing?

Clearly there is a tremendous focus on innovation in the region because economies right now are trying to move towards a more diversified economy, away from oil-based economies.

You have to diversify and you have to innovate and you have to experiment with new possibilities. So I think you are seeing broad-based movement [across] a number of economies in the GCC, including Saudi Arabia and Qatar. The drive and push for innovation in these economies is pretty pervasive and it’s coming from the top of governments in these cases.

How would you rate the Middle East’s level of performance when it comes to innovation and change?

There are a lot of new interesting initiatives in the region … which promise innovative outcomes for society at large and businesses.

Culture is a very important example, especially the museums in Saadiyat Island and Abu Dhabi. You have Masdar, which is another interesting example of innovation in looking at carbon-neutral cities. You have world-class service sector companies coming out of Dubai, for example. You have Dubai Ports, Jumeirah, Emirates Airlines, Etihad Airlines and Qatar Airways. On the media sector you have al-Jazeera in Qatar, you have Education City in Qatar, you have all the universities coming in to Abu Dhabi.

And the fact that this region has welcomed so many expats, both blue collar and white collar, is a sign for me that they are very open to change.         

In Turkey they call it DerinDevlet – “the deep state” – a supposed underground network that reaches into the country’s power elite, the political leadership, the military, police and judiciary, and has close  links to the country’s crime syndicates, terrorist organizations, mercenary assassins and drug cartels.

In recent months, the authorities have arrested more than 120 ultranationalists, including retired four-star generals, politicians, journalists and lawyers, on charges of plotting to overthrow the Islamist-led government headed by Prime Minister Recep Tayyip Erdogan.

Eighty-six of those arrested are now on trial for belonging to a shadowy network known as Ergenekon, a name that’s steeped in Turkish national mythology. The mammoth trial marks the first real attempt in Turkish history to prosecute the leaders of the violent nationalist fringe and their friends in high places.

It will be a lengthy affair. The indictment totals 2,445 pages and will take weeks to be read into the court proceedings. And the political implications for Turkey, at a critical juncture in its efforts to reassert itself as a major power in the Middle East and Central Asia, may be immense and problematic.

The alleged coup plot has dramatically exposed the fissures that divide Turkey’s 73 million people. This at a time when the nation is grappling with where it belongs (to Europe or Asia), and is coming to terms with the growing political power – and popularity – of the ruling Islamist Justice and Development Party (Adalet ve Kalkinma Partisi or AKP).

Turkey, heir to the Ottoman Empire, has been pressured into making sweeping political and social reforms to bolster its bid to qualify as a member of the European Union. But the long-powerful military see the changes as eroding the dominant status it has held since the modern Turkish Republic was founded in 1923.

Ergenekon has evoked the dark days of Turkey’s ferocious battles between left and right in the 1970s and 1980s. “The cleavage is very deep: every institution, every social class, everybody is divi-ded,” says Professor Murat Belge of Istanbul’s Bigli University. “I’m deeply apprehensive about what is going on now, and what might happen.”

February or March 2009. That’s when the draft law regarding offshore oil and gas exploration that Lebanon has been stuck on since 2002 should finally be ready. At least that’s what Alain Tabourian, the country’s energy and water minister said in October. Once it is approved by cabinet and parliament, the law is expected to give a serious push to the country’s would-be hydrocarbon industry.

Petroleum exploration isn’t new to Lebanon. In fact, seven wells that were drilled on Lebanese soil between 1947 and 1967 struck oil. The late Ghassan Qanso, a prominent geological expert, also publicized a number of studies that suggested abundant quantities of gas and oil may lie beneath Lebanon’s territorial waters. It was only in the 1990s – after the dust of the 30-year civil war had settled – that Lebanese authorities began to look more seriously at exploration.

In early 2003, Spectrum Energy & Information Technology (SEIT), a British firm specializing in seismic trace scanning and digital reconstruction, completed a survey of 5,000 square-kilometers of Lebanon’s coastal waters.

It concluded that there were potential offshore hydrocarbon deposits. And it reinforced previous findings from a survey the company had conducted in 2000, which covered the international waters of the Mediterranean Sea off Lebanon, Syria and Cyprus. Seismic studies by other firms have corroborated that Lebanon’s seabed may hold significant crude oil and natural gas deposits.

In 2004, oilfield services provider Schlumberger was assigned to head up the bidding process for exploration rights. But before the year was out, the Ministry of Energy and Water went through a personnel change – with some employees being arrested on corruption charges – and exploration negotiations stopped.