At a conference in Chile ahead of a key G20 summit in London this week, British Prime Minister Gordon Brown called for global unity and reform of the IMF to face the fallout of the economic crisis.
Brown will host world leaders from the G20 industrialized and developing economies for a crucial summit aimed at coordinating global efforts to fight the economic downturn and preventing similar crises.
“We cannot solve the problem of global financial instability without there being a global solution,” Brown told center-left leaders and policy makers at a two-day conference in the Chilean resort town of Vina del Mar, due to end yesterday.
“We must reform the International Monetary Fund,” Brown told participants at the two-day Progressive Governance conference. “It is absolutely clear that the global institutions that we built in the 1940s are quite incapable of dealing with the problems that we have now.”
Brown cited the World Bank as saying that 100 million people had been thrust into poverty as a result of the crisis, 30 million more people would be unemployed and half a million children would die because of poverty.
Host and Chilean President Michelle Bachelet also called for major reform of the IMF to make economic cooperation work.
“We need to coordinate the effort of countries on plans for fiscal stimulus,” Bachelet said.
IMF head Dominique Strauss-Kahn said on Friday that more government stimulus plans may be needed next year to boost the world economy.
European countries including France and Germany have so far brushed off calls from the US to increase their spending plans, saying they have done enough and there should be more emphasis on financial regulation.
During a meeting in Brazil on Thursday, Brown and Brazilian President Luiz Inacio Lula da Silva meanwhile proposed to create a US$100 billion global fund to boost trade.
Lula, US Vice President Joe Biden, Spanish Prime Minister Jose Luis Rodriguez Zapatero, Uruguayan President Tabare Vazquez and Norwegian Prime Minister Jens Stoltenberg also attended the Chile meeting, as well as Argentina’s President Cristina Kirchner.
The conference was organized by Policy Network, an international think tank initiated 10 years ago by former US president Bill Clinton.
Meanwhile, Bachelet unwittingly embarrassed Brown when she said Chile had put aside money during good economic times to help it through the downturn.
Standing next to Bachelet at a news conference, Brown heard Bachelet extol economic policies that Brown’s Conservative opponents at home have repeatedly said he should have followed before the global financial crisis.
“I would say that because of our decision during ... the good times in copper prices, we decided to save some of the money for the bad times and I would say that policy today is producing good results,” Bachelet said in English.
Brown has pumped extra money into the British economy to help counteract the downturn. But the Conservatives say his maneuvering room is limited because he failed to “fix the roof” when the sun shone.
“Gordon Brown is getting lessons from the Latin Americans about sound public finances. You couldn’t make it up,” Conservative finance spokesman George Osborne said.
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