Transcript of interview given by the Prime Minister with Al Jazeera.
Read the transcript:
Interviewer:
Prime Minister [indistinct] we meet the Prime Minister of Great Britain, Gordon Brown, on the occasion of his tour of some Gulf countries, and only a few days before he makes his way to Washington to take part in an eagerly awaited summit which is going to discuss the global financial crisis, and in this programme we will try and discuss this with Mr Brown.
Mr Brown, welcome to al Jazeera. Who bears the responsibility in Europe in the end for this financial crisis, who do you blame particularly?
Prime Minister:
I think you have got to look at a long period where irresponsible lending decisions have been made by banks, at the same time even undisclosed decisions about [indistinct] lending and the quality of what was being lent. And so you had the sub-prime market in the States, it then was being sold on, sold on, sold on. Half of it ended up in Europe. And so round the world we had a problem that arose the minute that house prices and the housing market started to fall in the States.
So you can say first of all it was the result of poor decisions by banking institutions. I think then you have got to say well you know what lay behind that, and I think we have got to improve the international system. We have global financial flows now, but we have got national systems of supervision, so we have got to create a new financial [indistinct] around the world that is appropriate to the conditions of 2008 that replaces the old institutions of the 1940s.
Interviewer:
Therefore, Prime Minister, this crisis originated in the US, you have said from some poor decisions by the banking sector, why is it now your own country, like the Gulf countries, China and Japan should bear responsibility for these mistakes?
Prime Minister:
We are talking about how we deal with creating a new global financial order. The old global financial order isn’t working, it was built around institutions created in the 1940s that were for the conditions of the 1940s where you had national capital flows, where you had local competition, where you had sheltered economies. Now everybody knows we have got a global set of financial flows, global competition, global sourcing of goods and services, so we have all got a responsibility to create a new financial order and that will involve China, India and Asia, it will involve all the oil producing countries as well as Europe, America, Latin America and so on, and Africa.
So we have got to create this new global financial system and in that system everybody has got responsibilities. If people can contribute through their surpluses or through their reserves to avoiding contagion in countries like Pakistan, then I think it is important that if you have these reserves and have these surpluses you are prepared to do so.
Interviewer:
It seems that the priorities are different Prime Minister. Do you say that we should all bear the responsibility in establishing a new financial global order, then it seems like you are saying you will pay first and then we will discuss things later?
Prime Minister:
Not at all. I have been proposing for nearly ten years that we build a new global financial system which involves all the different parts of the world, the industrialised, the industrialising, the emerging markets, and of course the developing countries in Africa. And I want to see the World Bank become a World Bank for poverty and tackling poverty and the environment, I want to see an early warning system for the financial problems of the world that will mean that people, particularly in poor countries, are protected. But if we are going to build a new global financial system then everybody should be involved and everybody should play their part. I would like to see changes in the administration of the International Monetary Fund and the World Bank, but that is part of the process of reaching decisions about a new global financial system.
Interviewer:
Prime Minister, as we talk now, what is required now? The Gulf countries are expected to pay a certain amount of money, provide liquidity, what will you give them in return?
Prime Minister:
I think the first thing is that the International Monetary Fund’s reserves that are mainly reserves that have been built up over the last, what, 60 years are in the order of something like $250 billion. So we start, if we are trying to protect Pakistan, or protect Hungary, or protect Ukraine, or protect any country that is in difficulty in Africa, we start with reserves of $250 billion. The question is whether that is enough to deal with the different problems that are going to hit the world, and whether we should be stronger in saying that we will fight contagion. Now it is in everybody’s interest that we fight contagion and that is why I think it is important, as China has actually said already, that they are willing to consider contributing to this fund.
Interviewer:
I am not quite sure Prime Minister, what will you give this country in return? Will they be given a role in policy making for the future [indistinct]
Prime Minister:
Absolutely. The new global financial system must include [indistinct]
Interviewer:
Can you please explain for our viewers, how they will have a say in this new [indistinct]?
Prime Minister:
The new global financial system must include all the countries that are part of the system. You cannot leave out Africa, or leave out parts of the Middle East, or leave out parts of Asia any more because we know that everybody is affected by the decisions that take place, and whether it is in America, or whether it is in Europe, or whether it is in Asia, we are all affected by what has happened. So you have got to build a global financial system that is inclusive, so the G20 includes Saudi Arabia.
Interviewer:
But my question is how will we be allowed to have an influence, for example if [indistinct] countries wanted to say look [indistinct] pricing oil [indistinct] and pegging to the dollar, will we be here, can you guarantee that we will be here?
Prime Minister:
I have just said that the G20, which is meeting in Washington, it will include Saudi Arabia being present at the meeting. It is not the old G8 or G7 of the European and American countries with Japan. So that has changed. The second thing that is changing is of course that there are more rights for some of the emerging market countries, for some of the countries that are industrialising in the running of the International Monetary Fund, that is being agreed, but there are more proposals to come. So you cannot build a system for the future without involving your countries that you are talking about, and they will be involved in the making of the new financial system.
I keep saying these are global problems, you can’t solve the problem of climate change, you can’t solve the problem of food production, you can’t solve the problem of international finance without involving all the major continents of the world. And that is why everybody’s [indistinct] has changed as a result of this crisis.
So I have put forward the proposals to change the IMF and the World Bank and to change the G8 and that means that countries that are countries such as in this region, or in Asia, China and India, will have a greater role
Interviewer:
Does everybody share your opinion, for example the United States and the European Union, Russia, all these countries you mentioned, are you able to make the United States commit itself to accept these changes?
Prime Minister:
Well I think the agenda of the G20 meeting at which China, India, Saudi Arabia, Korea, they will all be present. The agenda will include how we reform the international financial system, so there is an agreement now from the Americans, the Europeans, that reform is on the agenda. There are quite specific proposals that I have been putting forward, and others have been putting forward. We started with the recapitalisation of the banking system, we now want to see transparency and disclosure and we want to see greater coordination so that there is an early warning system. Now these are the proposals that will be discussed at this and at future meetings so that we can reach agreement. With the old system, with the system from the 1940s onwards, we are now in a global economy, we need a better system and that is what I want to see created and it will involve all the countries of the world.
Interviewer:
The question still remains, Prime Minister, have you felt that there is a positive response in your talks and what is the basis for the new [indistinct].
(Commercial break)
Prime Minister you were saying before the break that you carry with you many suggestions, proposals, but according to this have you met any of the [indistinct] do you expect a change in Britain towards the regime?
Prime Minister:
Yes, I think there is a general agreement about change. I think the American administration recognises the need for change. We will have a meeting of all the European Union countries next Friday to discuss how we can propose changes and work together to make these changes possible. And I have talked to friends in Latin America and in Asia about what we can reach agreement on. There is a general need for change, there is a willingness to accept that we need to decide on change, these changes are long overdue, I have been proposing some of them for nearly ten years and I believe all the different continents are now ready to contemplate the sort of changes that I am talking about.
Interviewer:
If we take some examples, Prime Minister, what will happen to the World Bank, the IMF?
Prime Minister:
I think you need to look at the future of the World Bank. The World Bank is a bank that has been dealing with development and reconstruction issues. I think over time it has got to deal more directly with poverty and with climate change and it should be a bank for tackling poverty and tackling environmental dereliction. And I think you need an international financial institution that is able to give money either in grants or loans to countries that are making big decisions about low carbon policies, and they need money to move from what is a cheaper type of fuel to what might originally be a more expensive investment to make, and we need to support them.
The International Monetary Fund must become an early warning system for the world economy. We saw things happen over the last year, as you know, that just transmitted themselves from one country to another with speed, but there was no early warning, we hadn’t the information about what was going on, and I think it is important to recognise that you need a group of people beyond national frontiers who are looking at the world economy and seeing problems before they arise, then having a crisis prevention mechanism so you can prevent these problems spilling over into large numbers of countries, and I am sure that the lessons that we are learning, as we should have from the Asian crisis ten years ago, are that we need to cooperate more closely and build international institutions capable of doing these things.
Interviewer:
Prime Minister that you referred to the Asian problems. Prime Minister the Malaysian Prime Minister has placed some regulations on his country’s economy to save it, but he has faced some severe criticism. Do you say that he was right now?
Prime Minister:
Well what happened in the Asian crisis is a little different from what happened in the last year. I mean the public institutions, the [indistinct] at Central Bank, they were going bankrupt and people had to deal with these problems. I think that in retrospect the way that the IMF dealt with these problems could have been better, but the fact of the matter is we are now in a global economy. To put capital controls on and to prevent things leaving your country or entering your country is now very difficult in the long term, you can do something in the short term but we are in a global economy.
I think the real challenge for every citizen round the world is to make globalisation inclusive so that everybody benefits and is sustainable, so that it means that you can sustain through environmental policies and other policies a global society that is actually working to the benefit of all the people. Now that is the real challenge. You can’t achieve it in the end by protectionism, you can only postpone dealing with your problems by protectionism, but you can achieve it by working together, cooperating, coordinating policies, and this is what we have been unable to do and I want to press for us to be able to do that in future.
Interviewer:
Prime Minister as regards [indistinct] the business of oil, and specifically to some statements you made before starting this tour when you described the OPEC’s decision to lower the [indistinct] as scandalous or scandalism, why did you use this description?
Prime Minister:
I am actually interested in a dialogue between oil producers and oil consumers, I am not actually interested in blaming people for what has happened. And the dialogue between consumers and producers must recognise that the oil producers and consumers have a common interest in a stable energy market, not a volatile oil price, not a price that goes up and down and gives no stability, not a price that actually causes consternation because nobody can plan ahead as a result of the volatility of the price. So I am interested in getting a stable energy market, and that is why I am proposing a consumers and producers dialogue, and that is what I want to achieve. And I have been talking to the Saudis about it, I have been talking here in Qatar about it. I do think that the long term future is consumers and producers working together. So I don’t think there is much point in saying what has happened before, it is what we are going to do in future that matters, can we have a more stable energy market, can we diversify in such a way that oil producers are guaranteed stability but at the same time we have a range of different fuels and energy sources that are available?
Interviewer:
Prime Minister, the question many ask in this part of the world is that if production doesn’t go down, or goes down, but the prices go down, so where can these countries get the liquidity you want and achieve the stability?
Prime Minister:
But it is of no great benefit to a country in the long run if the price ten years ago was $10 a barrel, a few months ago it was $150 a barrel, and is now $65 a barrel. It is far better that we can arrange our affairs, in consultation with each other, that we have a more stable energy market. And oil producers need to hedge against what might happen if the oil price goes down, and I believe that oil producers would benefit from investing in other sources of energy, other than oil. And that is what many Middle East producers are now doing, they are investing in solar power, renewables, carbon capture and all these things. I think we have got to plan for the future where oil will continue to be very important, the majority fuel, oil and gas, but you need other sources of energy as well so that you have that stability in the new energy market. And I think any country that has been a beneficiary of the high price actually wants stability more than they want the higher price, they want long term stability.
Interviewer:
Stability is what everybody wants and the question of money is linked to that. In your [indistinct] Prime Minister, to what extent, how much will you gain if any election campaign starts? We know that your popularity was not very high but now it seems that you are doing very well. In your opinion if you succeed in dealing with this crisis, how will this affect you?
Prime Minister:
I think the only thing that really matters is doing the right thing. I mean you know opinion polls go up and down, as you know people’s political fortunes go up and down. I think the only thing that really matters at the moment is can we as a world come together, and that means all parts of the world, and deal with this global financial crisis? If we can prove that we can deal with this then I think you can truly create a global society for the future where people can work together in other areas, for security, to deal with climate change, to deal with poverty – the greatest problem that faces Africa in particular, the large amount of poverty. If we can’t prove we work together on this to deal with the financial crisis, then we will not be able to prove to people that they should have hope that we can actually create that better world.
So it is a really important decisive moment for the world - can we come together to deal with this problem? And that is really what I am thinking about most of the time, how ordinary people in our country who are worried about their fuel bills, or worried about their mortgages, or worried about their businesses, and people in other countries who are worried about poverty and worried about what is happening to their lives, how we can give them more security by showing that the world can actually work together and deal with this problem.
Interviewer:
Now security is not only linked to despatching troops, the Commander of the Special Forces in Afghanistan resigned because of lack of equipment. Now, you are going to spend $1billion. This kind of expenditure, if it was [indistinct] to the economy, wouldn’t it help to achieve at least partially [indistinct].
Prime Minister:
The solution for Afghanistan, as I think everybody knows, is not military alone, it is the work that is done in training Afghan troops themselves, training the Afghan police force, but also combining that with policies for social and economic development so that we give people a stake in the future and building up the local institutions in Afghanistan themselves, working with the tribes, working with the central government to try and build an Afghanistan, working with the people, that is capable of withstanding terrorist pressure.
Now I think we are spending a considerable amount of money on equipment so I don’t agree with those people who say that we are not making the investment in equipment. But we also know the long term future of Afghanistan, and the people of Afghanistan who voted for a democracy in Afghanistan where girls are now going to school, the long term future depends on the combination of taking the military action that is necessary, but also giving people a proper stake in the future, and that is economic, social and political power for people themselves.
Interviewer:
And how do you see Prime Minister the proposed offer of dialogue with the Taliban?
Prime Minister:
I think it is very difficult. I think at the moment the Karzai government wants to reach out and to make for a more inclusive society. But I think at the same time when British and other troops are being murdered by Taliban forces in the if you like the way road bombs and the way explosive devices are being pointed in a form of guerrilla warfare, I think that is very difficult indeed. I would hope that people would come to realise that the Afghans’ future lies in a political process and not in guerrilla or other forms of warfare. I would hope that people would see that our interest in Afghanistan is in ensuring that the people of Afghanistan themselves can build prosperity for the future. And I think we have got to remember there are 41 countries that are part of this coalition to try to sustain the Afghan democracy.
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