BRITISH PRIME minister Gordon Brown has called for changes to the global financial architecture and for greater international co-operation to improve crisis prevention instead of focusing on protectionism.
“The problem is that our institutions were built in the 1940s for sheltered economies, for limited competition, for national not global flows of capital, so we’ve got to rebuild these institutions,” he told delegates at the World Economic Forum. Mr Brown said that the IMF only assisted countries when it was too late. “What you’ve got to do is have a preventative facility which deals with crisis prevention rather than crisis resolution,” he said.
“If we don’t act, protectionist tendencies will become paramount and we will have failed in this first stage of building a new global era which I hope will end with a global economy becoming a true global society.” He said that following bank recapitalisations and national fiscal stimulus plans, international agreement needed to be reached for an insurance scheme to deal with toxic bank assets.
This would increase the flow of credit, he said, because banks were curbing lending at their foreign subsidiaries, which was leading to growing protectionism and exacerbating the crisis.
Climate change moved centre stage on the third day of the economic gathering as former US vice president Al Gore warned that climate change urgently needed a global solution. “We are running out of time. . . we must have a planetary solution to a planetary crisis,” he said.
“The new administration is very serious about this,” said Mr Gore. “Obama is the greenest person in the room [White House]. He is pushing hard for a dramatic and bold move in the right direction. If other governments do the same then we can make the change to a low-carbon future.”
The former Irish attorney general Peter Sutherland, also a former head of the World Trade Organisation (WTO) launched a scathing attack against the trade group he led, describing its stalled Doha talks on a world trade agreement as a disgraceful contribution to an economy in dire need of a confidence boost.
He said that the negotiations were paralysed by a lack of political will and “irresponsible positions” adopted by some members.
He called on the US and India to play a constructive role to conclude the Doha trade round.
Meanwhile, speaking to The Irish Times in the Swiss resort, businessman Denis O’Brien warned the Government not to create a bad bank out of Anglo Irish Bank. “If they are going to have a toxic bank, it should be away from the big four [banks],” said Mr O’Brien. “Anglo should not be the toxic bank because Anglo has a core business that is highly profitable.” He said the Government should incentivise senior management at the bank because “if the Government allows the management to walk out of Anglo, it is going to be extraordinarily difficult for the Government to get their money back”.
