Geopolitical Monitor - News

NEW DELHI January 23, 2008 (The Penninsula, Qatar) - British Prime Minister Gordon Brown called yesterday for an overhaul of global institutions to counter financial crises, deal with new priorities such as climate change and recognise the rise of new powers like India.

In a wide-ranging speech, he said the international institutions formed after World War Two, such as the United Nations, World Bank and International Monetary Fund (IMF), had to be radically reformed to fit the new, globalised world.

"I see a world that harnesses for the common good the growing inter-dependence of nations, cultures and peoples-a new global society," he said in a speech to business groups in New Delhi.

Brown is on an official visit to India drumming up support for business with the growing economic powerhouse, which is also increasingly playing a more important diplomatic role in Asia.

He said he supported India's bid to become a permanent member of the UN Security Council, where Britain, China, France, Russia and the United States have wielded exclusive veto power since 1945.

And he called for changes to the IMF, World Bank and the Group of Eight leading industrial countries to reflect the rising economic clout of India and Asia in general.

Brown proposed turning the IMF into an independent watchdog that would form the heart of a global early warning system against financial turbulence. He suggested there should be rapid response teams of police and experts that could move quickly to restore order and begin rebuilding after conflicts. He called for a new UN crisis prevention and recovery fund and for a multi-billion-dollar global climate change fund within the World Bank to finance environmentally sustainable development in the poorest countries.

He said Britain would play a leading role in efforts to speed up nuclear disarmament "and to ultimately achieve a world freer from nuclear weapons".

London would also press for early agreement on a new international system to help non-nuclear states acquire new sources of energy, he said.

Brown believes the rapid spread of the credit crisis last year, after problems with US sub-prime mortgages, points to failings in global financial supervision which must be fixed.

"I propose that the IMF should act with the same kind of independence as a central bank in a national country," he said.

"It should make its focus the surveillance of the global economic and financial system. Its role should be to prevent crises and not simply to manage or resolve them as in the past," said Brown, nearing the end of a four-day trip to China and India.

"The IMF, working with the global Financial Stability Forum, should be at the heart of ... an early warning system, involving regulators and supervisors in all countries, for financial turbulence affecting the global economy," he added.

The Financial Stability Forum groups central banks, regulators and international bodies. He said the IMF should develop a financial instrument to insure "well-managed economies against sudden reversals of capital flows" but gave no details.

The credit crunch claimed a high-profile casualty in Britain when mortgage lender Northern Rock suffered the country's first bank run in more than a century last year.

Northern Rock has borrowed about 26bn pounds ($50.9bn) from the Bank of England, creating a huge political headache for Brown.

Brown meets the leaders of France, Germany and Italy in London on January 29 to discuss a response to the crisis.

British Prime Minister yesterday again extended support to India's bid for a permanent place on an expanded UN Security Council and to "India's rightful place" in a new world order. Delivering his keynote address at a breakfast event hosted by leading business chambers at the Taj Mahal Hotel here, Brown - on a two-day India visit - said more must be done "to make our global institutions more representative".

Shortly after arriving here on Sunday afternoon, Brown had said: "India should become a member of the UNSC". He went on to say that "there is no future for any economic bloc that does not include India".

In a major policy speech, the dignitary referred to India's growth story: "In just 15 years you have doubled your national income, doubled your share of world exports, and lifted 20 million people out of poverty.

He proposed the creation of a "global climate change fund", to be built on Britain's international environmental transformation fund of $1.6bn.

The initiative, which will operate within the World Bank Clean Energy Investment Framework, will finance carbon investment, sustainable forestry programmes, adaptation and climate-resilient development in the poorest countries, he added.

From the breakfast meeting, Brown headed to the presidential palace Rashtrapati Bhavan where he was ceremonially received by at the forecourt by Prime Minister Manmohan Singh.

He also went to Raj Ghat to lay a wreath at the memorial for Mahatma Gandhi. In a day packed with events before the delegation level talks at Hyderabad House, which will be followed by one-on-one discussion and the signing of documents, Brown also visited Delhi University where he was conferred with an honorary degree by Vice Chancellor Deepak Pental.

He announced the launch of a UK Sports Initiative at the university sports ground.

The post-lunch session witnessed the start of talks with top Indian leaders, beginning with a call by External Affairs Minister Pranab Mukherjee and opposition leader L K Advani.

His wife Sarah had a separate itinerary with a visit to a maternal health centre in Nangloi in northwest Delhi.

Later she joined her husband for a formal call on the President Pratibha Patil at Rashtrapati Bhawan.

The busy day rounds off by a state banquet that marks the end of the visit. Brown boarded a plane for London at night.