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1 November 1999

The Iron Chancellor who works for the poor

Gordon Brown: The case for

By Tom Clarke

When I was shadow secretary of state for international development (1993-94), I visited some of the poorest countries in the world and saw that many have been forced to spend more on their interest repayments than they have been able to invest in basic healthcare and education for the poor.

Recent news on global debt relief is sweet, not only because it does something vital for the world’s poor, but also because it is a manifesto promise delivered earlier and more successfully than anyone could have hoped a few years ago. From the day Gordon Brown made his way towards his desk in the Treasury at Whitehall, this government has energetically sought to find practical solutions, through widespread consultation (and many late-night meetings and much arm-twisting) with other western governments. In the vital weeks before an agreement, even churches in America were leant upon to influence a positive outcome. These efforts culminated in the positive decisions taken at the annual meetings of the International Monetary Fund (IMF) and the World Bank in Washington less than a month ago.

In Washington, the UK delegation of Brown and Clare Short worked tirelessly over the weekend prior to the Labour Party conference to lobby other European finance ministers for commitments to further funding. Within a few hours £500 million was raised, with Brown and Short securing a deal to reduce the debt of poor countries by a staggering $28 billion in today’s prices. A joint paper from the IMF and the World Bank, agreed upon by ministers present, made three important points: first, that poverty reduction should now be a key objective for IMF lending to low-income countries; second, that to qualify for debt relief there must be a poverty reduction strategy developed by governments with the participation of civil society, including schools, churches, journalists and regional development banks; and third, that the IMF and the World Bank will work more closely together to achieve these objectives.

The British government recognises that securing an international agreement on greater debt relief, though profoundly significant, is not the end of the process but the beginning. It is the first vital cog in that virtuous circle of debt relief, poverty eradication and economic development. For countries such as Zambia, Mozambique and Nicaragua to break free from the cycle of unsustainable debt and poverty, clearly most of this money must be switched to anti-poverty spending.

That is exactly the strategy that is now being adopted. Along with the US, Britain has said it is prepared to write off 100 per cent of debts to countries that are spending their funds on poverty relief. For it is essential that investment should not be lost in bureaucracy or spent on armaments.

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Three crucial tests lie ahead. First, the funding of the agreements made in Washington could present problems, particularly if the cost of the debt relief agreed rises in the future beyond current estimates – which has happened in the past. Fundamental to the whole package are the contributions of the USA: the Republican- dominated House of Representatives is currently slashing the US’s already meagre foreign aid budget, and it may not agree to President Bill Clinton’s request for funds for debt relief.

Second, while a new consensus has been built around delivering faster debt relief, we must remain vigilant to see that this imperative does not run counter to the crucial objective of providing extra resources for a strategy that would focus on education and healthcare. The temptation for many governments will be to agree to spend token extra amounts on health and education in order to receive debt relief. There will have to be safeguards to prevent such ploys; in order to receive further funding we need the government to show us the progress they are making – on the basis of actual numbers rather than projected figures – in implementing a poverty reduction strategy.

Third, and of vital significance, will be the role of the IMF. It is essential that IMF staff now listen to economists outside the institution about the benefits of quality growth, where jobs and investment in people are given as much priority as inflation rates. Gordon Brown, as the new chair of the IMF’s interim committee, will have a key role to play. This is an ideal appointment. We know of the Chancellor’s conviction of the importance of investment in people; we know, too, of his record in containing inflation. Brown’s task will be to replicate those skills on the international stage. Above all he must persuade the IMF to rid itself of its monetarist shackles and find new solutions to fight poverty. It is encouraging to see that his first act as chairman was to bring together the development committee of the World Bank and the interim committee of the IMF.

In his Labour conference speech Brown managed to use the word “socialism”. This did not go unnoticed. Aneurin Bevan’s name was barely uttered from the same platform. Those who have come to know Brown’s style are minded to recall Bevan’s indelible advice in his last Labour conference speech that “even innocence requires guile”. Having made so much progress, Brown simply can’t allow this strategy to wither on the vine. And I, for one, am confident that he will not.

The author is MP for Coatbridge & Chryston and former shadow secretary of state for international development

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