Israeli Prime Minister Shimon Peres and Turkish premier RecepTayyip Erdogan got so emotional over each other's remarks at a panel on Gaza that the huge plenary hall was practically vibrating with their anger. 

    Erdogan was furious, among other reasons, because he felt betrayed by Israel over the Gaza invasion.  Israeli Prime Minister Ehud Olmert visited Ankara on Dec. 23 to discuss peace talks with Syria that Turkey was mediating. The talks were going so well that Erdogan believed they could soon be upgraded to direct Israel-Syria talks. He also suggested to Olmert that Turkey try to mediate the release of a kidnapped Israeli solider with Hamas and Olmert promised him an answer on the next day.
     "We never got an answer," Erdogan shouted on the stage, "and four days later Israel went into Gaza." The Turkish leader was also furious about civilian suffering in Gaza.

    Peres was angry that the world didn't understand how unsupportable it was for hundreds of thousands of Israelis to have to rush to shelters when Hamas was shooting missiles at Israel. "What would you do?" he shouted at the audience. "What we did was due to lack of choice."

    Erdogan got strong applause, but when the audience also applauded Peres passionate defense of Israel, Erdogan lost control. "I find it sad that people applaud what you said," he shouted, "when so many people were killed."  Erdogan stalked off the stage after moderator and Washington Post columnist David Ignatius told him there was no time for a reply to Peres. Erdogan declared "I will never return to Davos because I wasn't allowed to talk."

     This astonishing exchange underscored how the Gaza tragedy has set the region on edge. If Turkey, a Muslim country which has strong relations with Israel and is doing important mediation, is so bitter, it shows how crucial it is that the lingering Gaza crisis be defused soon, and peace talks resumed.

     Here's a glimpse into why the World Economic Forum is so terrific for a foreign affairs columnist. In one hour, walking up and down the stairways in the compact, underground conference center, I spoke with the following people:

     A former Jordanian deputy prime minister who is a leading voice for social and economic reforms in the Arab world. A South African executive and his wife - he of Sri Lankan origins and she of mixed German-Iraqi background - who talked of the gains their country has recently made in fighting HIV-AIDS. A Chinese journalist who interned last year at The Inquirer and is attending Davos with her husband, the managing editor of a leading Chinese business magazine.  The energy expert Dan Yergin. A leading columnist for a Lebanese newspaper. Two well known economic analysts who predicted the current crisis, Steven Roach and Nouriel Rubini. The head of an Egyptian think tank. And on and on.

It was strange enough that the World Economic Forum invited Prime Minister Vladimir Putin to give the opening address at the conference. After all, Russia doesn't seem interested in playing by the international rules that the forum is so anxious to promote. Only recently, Moscow shut off the gas, again, to Ukraine, which impacted flows to Europe. And that's not even to mention that journalists and human rights workers get murdered regularly in Russia, with the real culprits never found.

But what was even stranger was Putin's shabby performance. Following the impressive special address by Chinese premier Wen Jiabao, the Russian premier's speech underlined why China is surging ahead economically while Russia is stuck with a limping economy that depends on the price of oil.  

Putin never cracked a smile, and clearly enjoyed criticizing America's troubled economy and calling for a multipolar world that lessened American dominance. What was incredible was when the Russian leader, whose government throws private entrepreneurs in jail when they displease him and seizes their property on bogus charges, started lecturing the West about the risks of too much government interference in the private sector. And when he claimed that the Internet was completely free and fully available in every town in Russia, even in Siberia. And when he issued veiled threats to Europe about dealing with Russia properly on energy issues.

Wen's performance was masterful. Putin's wasn't ready for international prime time.

The plenary hall was indeed crammed to hear China's premier Wen Jiabao detail how Beijing plans to tackle the global economic crisis. The slight, bespectacled Chinese leader wowed them with a detailed outline of a massive Chinese stimulus package that will sound familiar to Americans: build new infrastructure, establish a comprehensive national health system in the next three years, improve compulsory education.

What sounded different was the Chinese leader's obvious self confidence (he used the word "confidence" around a dozen times). China's banking system is in far better shape than those of the USA and Europe, and Wen predicted a growth rate of 9% for this year. He was stinging in his indictment of the "unsustainable economic model" in the United States (which he didn't refer to by name) that saved too little and relied on the "blind pursuit of profit."

Of course, China has helped fund that blind persuit by buying our T-bills with dollars earned from exporting cheap goods to America. That model is going to change, and Wen was telling the audience that he thinks China can flourish with a new model that relies more on domestic consumption.

He issued a veiled warning to the Obama administration which has already criticized China for keeping its currency artifically high against the dollar.  While saying he looked forward to "early contact" with the new administration, he said a "confrontational relationship with China will make both losers." That's true, since we will need China's cooperation if we are to wind down our heavy dependance on their financing of our debt, and do so at a speed slow enough to prevent a dollar train wreck.

    Journalists crowded into a Davos media lunch for George Soros, the billionaire financier, who had warned a year ago that the global financial system was heading for a bender. But he told me that even he didn't expect things to be so back. "I'm very worried we're still heading into the storm rather out of it.

    "Since last year we've lived through a remarkeable period in history where the global financial system that we used to take for granted has collapsed."

     More of my conversation with Soros later, but I am heading to the plenary hall to hear Chinese premier Wen Jiabao. Since the future of the global economy right now rests heavilly with the world's largest importer, the USA and its largest exporter, China, the hall will be packed. People will be waiting to hear about China's stimulus plan - in other words whether China will be encouraging its own people to save less and buy more from abroad.

 According to contacts at the State Dept. this post has been travelling around the department's computers: 

Dear World:

We, the United States of America, your top quality supplier of ideals of democracy, would like to apologize for our 2001-2008 interruption in service. The technical fault that led to this eight- year service outage has been located, and the software responsible was replaced November 4. Early tests of the newly installed program indicate that we are now operating correctly, and we expect it to be fully functional on January 20. We apologize for any inconvenience caused by the outage. We look forward to resuming full service and hope to improve in years to come. We thank you for your patience and understanding,

Sincerely,

THE UNITED STATES OF AMERICA