Examination of Witnesses (Questions 98-99)
THE RT
HON GORDON
BROWN, MP, THE
RT HON
CLARE SHORT,
MP, MR GUS
O'DONNELL AND
MR BARRIE
IRETON
TUESDAY 14 MAY 2002
Chairman
98. Chancellor, Secretary of State, welcome.
Subject to anything you would like to say, I thought, how we would
play it, Chancellor, is, if you and then the Secretary of State
might like to make an opening statement, then we will have some
questions which we will put to you, and, I think, between you,
decide how you would like to answer them, and indeed whether Gus
or Barrie want to answer them. And then, subject again to anything
you want to say, we thought we would try to take this reasonably
briskly, to finish by about 5 o'clock, if that is convenient to
you, so it gives us about an hour and a half maximum; is that
okay?
(Mr Brown) That is okay; thank you.
99. So, Chancellor, do you want to start off?
(Mr Brown) Yes, thank you very much, Chairman. It
is a pleasure to return with Clare Short to this meeting of the
International Development Committee, to thank you for the work
that you do and have done, and to record that in the last five
years I believe that your support has been vital in ensuring a
restructuring of debt, which has enabled 26 countries now to obtain
substantial debt relief, agreement around achieving the Millennium
Development Goals, that by 2015 we must halve the proportion of
people in poverty, cut child mortality by two-thirds and ensure
every child has basic education. And, of course, the Monterrey
Consensus, which you are discussing today, that development aid
be seen not as charity but as investment in building capacity
for growth; and what I believe is the makings of a new deal for
the global economy, that, in return for developing countries pursuing
corruption-free, pro-stability, pro-investment and pro-trade policies,
developed countries should substantially increase the development
aid they are prepared to offer in the run-up to 2015. Clare Short
will be able to talk about all areas of international development,
of course, but I want to say something specifically about debt
relief and finance for development, so that we build a virtuous
circle of debt relief, poverty reduction and sustainable development,
in order that no country genuinely committed to good governance,
economic development and poverty reduction, and to the opening
up of trade and investment, is denied the chance to achieve the
2015 goals through lack of resources. Twenty-six countries are
now receiving debt relief, but because of difficulties, as a result
of low commodity prices and economic decline, and because some
of the earlier forecasts made by the international institutions
for growth were overoptimistic, we estimate that we will need
a further $1 billion from richer countries to drive forward the
implementation of HIPC and ensure its full financing. And, starting
from the Halifax G7 Finance Ministers meeting, we will be asking
the international community to come up with a plan that would
mean ensuring the full financing of the HIPC initiative, and the
systematic topping-up at completion point to ensure that no country
exits the HIPC process with an unsustainable debt burden. The
Zedillo report estimates, if we are to succeed in achieving the
Millennium Development Goals, an extra $50 billion will be required
each year until 2015; to raise investment by $50 billion would
require unprecedented action, but I believe it is not beyond us.
Together, pledges from the European Union and the United States,
made at the Monterrey Conference, would raise $12 billion a year
more for education, health and anti-poverty programmes from 2006,
which means there is a reversal in a 20-year decline in aid levels.
And I propose we ask Europe, America and other countries to maximise
the benefits from the development aid spending by examining, as
a matter of urgency, the means by which this $12 billion a year
boost can be made to go much further, and its benefits maximised.
By dissociating aid from the award of contracts, to maximise the
impact on poverty, gains to anti-poverty programmes could be as
high as 20 per cent. More effective use of aid could produce extra
resources. A greater focus on the poorest countries and better
collaboration amongst donors, including the pooling of budgets,
could also maximise the efficiency of aid in diminishing poverty.
Overall better allocation, co-ordination and untying, by bilateral
donors and by international institutions, could make aid 50 per
cent more effective. Developing countries must, of course, show
that the funds they have received are properly and effectively
used, ending corruption, meeting their obligations to pursue stability
and creating the conditions for new investment, so that we can
ensure the resources go to fighting poverty. This is a new deal,
where, in return for developing countries pursuing these policies,
developed countries would put more money to increase vitally-needed
funds to achieve the Millennium Development Goals. Now, in recent
months, many proposals have been made for new and innovative ways
to meet the funding gap, the Tobin tax, arms tax, Special Drawing
Rights, and it is right that we examine the practicalities of
these proposals. One possibility is to leverage up the new resources
promised by Europe and the US through an international financing
facility, or Development Trust Fund; if national governments offered
a guarantee, either through callable reserves or appropriate collateral
security, then additional aid contributions could be levered up
in the years to 2015 to meet the $50 billion target, so ensuring
that the $12 billion already committed to additional aid goes
further and its benefits are maximised to the advantage of all.
We will advance only if we advance together, and that means that
each country must play their part, accept their responsibilities
and go further than they have been prepared to go in the past.
(Ms Short) I would like just to say a couple of words
about where Monterrey fits into the action we have been trying
to take to get more coherence and more united effort into the
international system. Because, as you know, international development
is littered with conferences, that make grand declarations that
are never implemented, littered with initiatives and announcements,
made by important people when they go to these conferences, that
simply recycle the existing money around the fashion of the moment.
We have been working since 1997 to get better global governance,
really, and, as you know, the UN conferences in the nineties came
up with a series of targets, the OECD adopted them in the DAC,
the International Development Targets, we then took them back
to the UN, and they started saying, "Don't impose these OECD
targets on us." But we worked on, and the Millennium Assembly
of the UN, reaffirming the targets, now named the Millennium Development
Goals, at a meeting of the UN attended by more heads of state
and prime ministers than have ever previously attended, was step
one. Step two, Doha, Trade and the Development Agenda, and that
was a shift in the international mind set, we have got to deliver
on it, but to get the world agreeing there will be a trade round
that will focus on delivering advances to developing countries.
Then Monterrey, Financing for Development, where is the money
coming from, and not just where is more aid coming from, that
is an issue and I am sure you will come back to it, but how do
we maximise the flows from trade, from how developing economies
run themselves, to grow their economy, to have better revenues,
to get rid of debt overhangs, so that they can use their revenues
better. And the final bit in the jigsaw is Johannesburg, WSSD,
can we get the environmental lobby to join up with the development
lobby to be working for a sustainable planet; rather than a north
of the world that is almost anti-development and not looking for
sustainable development, but looking for conservation. So I think
we are making great advances in getting coherence into this international
picture and into all countries agreeing. And Monterrey was very
important, in that the developing world and the OECD countries
agreed on what the reform agenda is to deliver to the poor of
the world; that is unprecedented in human history, and very post
cold war. That, now, what reforms are necessary to get the best
balance between what the state does, what the market can do, internationally
and nationally, was an enormous gain, and most of that was done
before the meeting in Monterrey. The preparatory process was very
good and went well. But I think it would have gone sour without
the commitment to more aid, and the commitment from Europe, which
is yet to be delivered, but helped to leverage the US feeling
then that they had to commit. And I think, now, we have got to
get WSSD right and then drive the world into implementation and
stop having so many conferences, and, if we have conferences,
let us just check on delivery, rather than have any more grand
declarations.
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