London, Asharq Al-Awsat- A British cabinet minister has described the G20 summit, scheduled for London at the beginning of next month to discuss plans for invigorating the global economy, as a crisis meeting which everybody understands is dominated by the ghost of the 1930s (the Big Depression).
Lord Mark Malloch-Brown, British Minister of State for Africa, Asia, and the United Nations, who traveled to Saudi Arabia yesterday to discuss the agenda of the G20 Summit in which Riyadh is a member, stressed the importance of global coordination in the face of this crisis which he said no one has seen the likes of since the 1930s.
In an interview with Asharq Al-Awsat Lord Malloch-Brown highlighted the subjects he will raise during his discussions in Saudi Arabia, which he described as an important power in the global economy and in international policy. He said that what we want is that the members of the G20, including Saudi Arabia, should agree on a coordinated revival plan and on reform of international financial institutions to back the revival plan, and also on reform of the supervisory systems on the international financial sector to create higher transparency and agree on global principles in financial supervision, as well as create better means for early warning against crises and seeking to provide the necessary resources to meet the pressing needs of the poor nations that could become victims of this crisis because of conditions on the international lending market, plus affirming the agreement reached at last year’s G20 summit in Washington to seek to avoid slipping towards protectionism.
On a question on the difference in conditions now as compared to the previous G20 summit in Washington, which was held amid apprehensions over the steep rise in petroleum prices whereas the situation is different now with the petroleum-producing countries earning less revenues and having problems of their own, Lord Mark Brown said about this problem “if we are looking for solutions then everybody must give and take in conformity with their own capabilities. We want to see solutions, and these require commitments and also payback for all”. He affirmed that Saudi Arabia had an enormous incentive to see the global economy growing anew, for the prices of petroleum have fallen because of the global recession. As a petroleum producer, there is an important incentive for the materialization of a shift in the global economy. This requires contributions, and parallel to this everybody must be realistic because this is not the Saudi Arabia of four months ago, in a reference to the difference between the previous and present oil prices.
He expressed belief that the issue of the oil prices will not be raised on the agenda of the G20 summit but said at the same time that the discussions will include knowing whether the issue of petroleum prices will be included in the deliberations or not. He said that his own personal viewpoint was that the severe oscillations in petroleum prices are very harmful for the economies of both producers and consumers and solutions should be sought to allow a more stable situation, although he said that no one has a magic solution for this. He went on that this was a crisis summit and that petroleum prices were no longer as pressing as they used to be, even though the immediate issues tied to the crisis do not cancel long-term issues like whether there are sufficient investments channeled to energy resources.
On the type of support for plans to reform international financial institutions, he said that Saudi Arabia had an important share in these institutions. It is an influential contributor in the IMF, he said, and reform has become a pressing need because there will be requirement for additional resources to these institutions and also for studying the models and methods of lending in these institutions. He added I would like to brief the Saudis on the ongoing discussions on this matter in its capacity as an important contributor. On a question about these institutions not having been part of the crisis, he said this is true but they are part of the solution, for there is a need for additional resources to meet the needs of the developing countries. He also alluded to the necessity of introducing a fundamental change in the lending philosophy of these institutions because there is a crisis our generation has not seen in its lifetime in which traditional procedures have been frozen and there is an international economy that needs a push to come out of this crisis. He cited as an example the role of a fireman who has to work before anything else to extinguish the fire, something which means making resources available through the IMF to the countries that need it. This does not mean that the IMF will throw away money, for it has to make sure that it will be used soundly in such a way as to be repaid later.
On reforming supervision over the international financial order, he said this will be pursued on the national level of each nation, ruling out that it would be through a global body, even if this is within the framework of an agreement on global, international rules that are adopted so that there will be no havens for tax evasion or financial services that are not subject to supervisory authorities. He alluded in particular to the activities of financial services institutions that are not registered as banks, such as hedge funds and institutions that deal in derivative financial products.
He said the G20 summit will be on the level of the leaders even though its objective is to deal with the global economic crisis. He affirmed in this connection that the most important political issue in the world today was the global financial crisis. On protectionist trends, he said that no one was deliberately adopting protectionism but that as a result of the adoption of national policies to deal with the crisis, like saving banks or corporations, there are side effects that have shown protectionist manifestations even though they are not deliberate. The discussions now are on affirming what the Washington summit pledged about not following protectionist measures and on creating a means of monitoring this. He also stressed the need for progress in the Doha round of negotiations on international trade and for completing them. He reminded of the crisis of the 1930s, where recession led to protectionism, nationalizations, isolationism and eventually war.
Lord Brown, who attends cabinet meetings, was appointed in his position in June 2007. He served before this as deputy UN secretary-general from January 2005 to December 2006. He held posts prior to this at the UN Development Program and the World Bank.