Turkish Prime Minister Recep Tayyip Erdogan stormed out of an impassioned debate with Israeli President Shimon Peres about the Gaza war at the Davos forum today.
Erdogan said he would not come back to Davos after being cut off by the moderator because of time constaints on the debate.
Earlier today in Davos, Iran promised a positive response if the US makes genuine policy changes and held out hopes of a breakthrough in a long-running dispute over its nuclear ambitions.
Tehran's comments brought international security to the fore on the second day of the World Economic Forum, which has been dominated by fears over financial instability in the worst global economic crisis in 80 years.
In new signs of the deepening economic woes, Turkey and the International Monetary Fund failed to break an impasse over a loan deal in talks at Davos, and Russian state bank VEB said Russian companies had asked it for $90 billion in aid.
The overall mood at the annual Davos meeting of policymakers and business executives is gloomy.
India's trade minister, Kamal Nath, said the global economic crisis could fuel protectionism to safeguard national industries and jobs. Such protectionism, if it led to retaliation, would intensify the downturn, he said.
Policymakers are working behind the scenes in Davos on ways to fix the financial system, ahead of a summit of the G20 group of leading developed and developing countries in April and a G8 summit in July.
UK's Darling and Miliband no-shows
As politics overshadowed the Davos debate on the economic crisis, it emerged that British Foreign Secretary David Miliband and finance minister Alistair Darling have pulled out of the Davos meetings.
British Prime Minister Gordon Brown, who is to host an international summit on the economic crisis in April, will still attend Davos.
Several top bankers have withdrawn and no senior policymakers from the new US administration of President Barack Obama attended.
The forum is to hear from Bill Gates on Friday on how the crisis has hit his charitable foundation. The foundation endowment has lost about 20% of its worth in the recession.
Europe must remain 'extraordinarily alert' - Trichet
Meanwhile, European Central Bank chief Jean-Claude Trichet said Italy and Greece are well aware of the problems they face in staying within the euro zone.
'I'm sure the executives are getting the message,' he said, in response to a question on the two countries' difficulties in continuing to share the common currency fielded during a World Economic Forum session in Davos.
With ballooning public deficits, both countries are struggling to climb out of the crisis without having the option to devalue their local currencies.
Trichet said Europe must remain 'extraordinarily alert' during the crisis, and that the ECB had taken measures to jumpstart the economy that have yet been priced in by the market.
He also stressed that regulators did not intend to require banks to set aside higher capital during the crisis. Increasing the amount of capital set aside by banks is among proposals cited as regulators seek to close gaps in the supervision of banks exposed by the financial crisis.
But fears of such a move has sent banking shares tumbling amidst fears that the institutions did not have sufficient cash.
Brian Cowen visits Davos
Taoiseach Brian Cowen has said that Ireland must redouble its efforts to sustain jobs and attract investment.
He was speaking ahead of engagements at the World Economic Forum where he will promote Ireland as a location for investment and international business.
The Taoiseach travelled to Davos this evening. Over 40 heads of state and government are attending, along with senior ministers and the heads of international organisations including the World Trade Organisation and European Central Bank.
Brian Cowen is due to participate in tomorrow's key working session for Heads of State and Government on the global economy before returning home tomorrow evening.
Speaking ahead of the Forum, the Taoiseach said that Ireland was one of the most open economies in the world and so it was important to participate in the international debate about the global economy.
He stressed that Ireland was enormously dependent on international trade and described the World Economic Forum as an excellent opportunity to promote Ireland as a location for investment and international business.
The Taoiseach addressed a dinner tonight organised by IDA Ireland for senior executives of international companies.
