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Tuesday, 27 November, 2001, 18:01 GMT
Brown's 'Marshall Plan' for poor countries
Afghan refugees
Aid to poor countries averages just 0.2% of rich countries' GDP
UK Chancellor Gordon Brown has thrown his weight behind a United Nations-sponsored plan to double aid to developing countries.

"Out of the tragedy of September 11th a new sense of our obligations to each other has been born and a recognition that... a new deal for prosperity must be forged between the richest developed countries and the poorest developing countries," he told parliament in his pre-Budget report.

This new deal, Mr Brown said, would be an equivalent of the Marshall Plan, under which the United States helped revive the European economy after World War II.

"The UK Government will propose... that the international community now establish a new international fund leveraged up to $50bn a year to help achieve for the developing countries after 2001 what was achieved for Europe after 1945."

Whatever the outcome of the proposal, Mr Brown pledged to boost British government aid to the developing world.

"We will not only raise significantly the amounts of our own overseas development aid but also raise its share in national income," Mr Brown told parliament.

Brown's global view

Mr Brown's development proposal was extensively trailed in a speech he gave on 16 November in New York.

Chancellor Gordon Brown
Gordon Brown aims to lead a global aid coalition

Then, in one of his most emotive appearances, he pledged to lead rich countries in the fight against poverty.

"Globalisation can be for the people or against the people," he said.

"Managed badly, globalisation would leave whole economies and millions of people in the developing world marginalised. Managed wisely, globalisation can and will lift millions out of poverty, and become the high road to a just and inclusive global economy."

He said that the orthodox form of economic reform - privatisation, deregulation and liberalisation - was not sufficient to fight poverty, and that the world needed new ideas.

Boost for Zedillo

Then, and again in the pre-Budget report, Mr Brown endorsed a UN plan, drawn up earlier this year by former Mexican President Ernesto Zedillo.

Ernesto Zedillo
Ernesto Zedillo has big plans for the war on poverty

The Zedillo report concluded that development targets in poor countries could be met by 2015 only by increasing aid from the rich world by $50bn a year.

This would represent more than double the amount currently donated, taking annual total international aid close to $100bn.

Over the next 14 years, the UN aims to halve global poverty, reduce infant mortality by two-thirds, and make primary education available to all the world's children.

Restoring the balance

If achieved, the Zedillo plan would help reduce the imbalance between private and public sector flows to the developing world.

Protests in Prague against the IMF and World Bank
International financiers have not always been popular

Private sector investment into developing countries is about $200bn yearly - although only a fraction of the $1.1 trillion in annual global foreign investment.

Pressure groups, and some governments, have long campaigned for states to do more to combat world poverty, arguing that they can target funds more accurately than corporate investment.

And the current multilateral institutions charged with fighting poverty - notably the International Monetary Fund (IMF) and the World Bank - have come in for criticism in rich and poor countries alike.

These institutions are too driven by capitalist concerns, and insufficiently zealous in their attack on inequality, critics argue.

Gathering a coalition

Mr Brown's endorsement represents a major step forward in the UN campaign.

An anti-World Bank protest in India
Developing countries have reservations about rich-world aid

But it may still prove tricky to stitch together a wider rich-country coalition.

Although other governments have recently expressed concern about poverty, especially in the wake of the 11 September attacks, few have made any unequivocal promises of financial support.

At present, when a host of rich countries are either in or sliding towards recession, purse-strings are tight.

The UK currently devotes 0.31% of its annual output to international aid, compared with an average of just 0.22% in other industrialised countries.

Jostling for position?

Another potential practical obstacle could be the position of the IMF and World Bank.

It is still unclear how these institutions will work within a vastly expanded international aid framework.

The Zedillo plan does not propose to set up a rival institution, but simply to increase the flows of aid.

Gordon Brown is chairman of the International Monetary & Financial Committee of the IMF.

The government's pre-Budget report will be on 27 Novewmber


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27 Nov 01 | Business
19 Nov 01 | UK Politics
01 Oct 01 | Business
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