What is Gordon Brown thinking on the G20 summit?
I joined a roomful of suits today for an hour with the PM. The venue was Lancaster House, the pink marble and gilt architectural cheesecake that will be the venue for the G20 summit on 2 April. Perhaps there’s guilt as well as gilt – Lancaster House previously hosted talks that led to the independence of Zimbabwe, Ghana and Kenya, among others.
Gordon was in his element – like Kevin Rudd and Barack Obama, he is a wonk’s wonk, speaking without an autocue, relaxed and fluent. So what did he say? These are my notes, so before citing, you may want to check with the official version on the London Summit website.
Brown set out four stages in the response to the crisis:
1. Worldwide recapitalization of the banks of about £1 trillion
2. Monetary and fiscal stimulus currently amounting to about 2% of GDP
3. Measures to get credit flowing again, especially to ‘replace the loss of foreign capacity’ in the financial sector. He referred repeatedly to the dangers of ‘financial protectionism’ and ‘financial mercantilism’.
4. Investment and export led growth in the long term
Although he was talking about the UK and other rich economies, he said the same arguments applied to developing countries that have seen financial inflows drop from the record 2007 volume of $929 billion to a predicted $165 billion this year, according to the International Institute of Finance. The difference is that the poorer countries do not have the cash or the credit to plug the gap – they need a massive increase in lending from donors and the international financial institutions. This will require what he called a ‘fundamental change’ in the role of the Fund and Bank. The Fund will have to focus on surveillance and building an ‘early warning system with teeth’, as well as find mechanisms for a massive new injection of cash for development, perhaps via a new allocation of Special Drawing Rights – the quasi currency used by the Fund. Brown said a new allocation was ‘agreed some years ago, but never implemented.’ The World Bank should also be looking for new sources of finance, including selling bonds to oil producers and developing countries with large reserves.
He was interesting (and encouraging) on climate change: He several times raised the possibility of the World Bank issuing ‘environment bonds’, along the lines of the ‘International Finance Facility’ that he introduced at the Treasury to raise money for immunization programmes. He lamented the lack of ‘any international organization for funding energy efficiency in developing countries’ and later added ‘the agreement (in Copenhagen) will be as much about how we fund climate change proposals as about targets.’
And so to questions: NGOs always ask questions – however scary, it gets stuff on the record, reinforces or shifts the agenda in decision makers’ heads, and helps you network with everyone else in the meeting. I’d done the proper NGO thing and got a seat in the front row, and caught the chair’s eye, so I got the second question. ‘Given your speech in Davos on the need for a low carbon recovery, do you have any specific ideas on how the G20 could ensure that the climate change talks culminating in Copenhagen this December is not undermined by the crisis. Would you support the idea of an independent carbon audit to assess the short and medium term impact of the various bailout plans on CO2 emissions?’ Phew, didn’t mangle it, didn’t go on too long, included a specific suggestion. Deep breath and try and listen to the answer.
How did he respond? Not bad, actually. He expressed himself ‘fascinated’ by how we can advance the response to climate change in the run-up to Copenhagen. ‘This will require not just the willingness but the means to finance low carbon recovery in developing countries.’ On the carbon audit idea, he stopped short of saying ‘yeah, great idea – could you send over a paragraph for the communiqué?’, but opted for ‘it’s right to look at cost and effectiveness [of recovery packages] for the environment.’ He finished with ‘I don’t see a way through this crisis unless we move to a low carbon economy as part of the solution.’ I’ll take that.