By David Ferguson
It is reported in the Western media that UK Prime Minister Gordon Brown will be meeting today with Chinese President Hu Jintao to seek increased contributions from China to the IMF, in exchange for an increased role for China. Patrick Wintour, Political Editor of The Guardian, reports: "Gordon Brown will enter talks with China today to see if it would be willing to commit extra funds to fighting a world recession in return for greater voting powers on multilateral institutions, including the IMF and World Bank."
Brown's blandishments should be viewed with caution. There are two issues at stake.
The first is Brown's motives. Britain's finances are in an appalling state. The UK government maintains that the country's debt is no worse than many other developed economies, but this has only been achieved by the expedient of concealing massive liabilities – hundreds of billions of pounds - 'off the balance-sheet'.
Nobody is fooled by the clumsy gerrymander. The IMF itself has said that Britain is going into the world recession in the worst position of any of the major economies. Already borrowing ￡9 billion a month, it is increasingly believed, both at home and abroad, the UK is going to have to go cap-in-hand to the IMF for a bail-out.
It would be a crushing embarrassment for Brown, who famously boasted that he had 'put an end to boom and bust', if the IMF did not have enough funds to meet Britain's needs. Brown needs there to be cash in the bank and he would like it there as soon as possible.
The second issue is Brown's ability to deliver on any promises he makes.
Domestically, his government's reputation is at rock-bottom. Aside from its economic problems, it is mired in accusations of sleaze and corruption. One sitting MP, Nigel Griffiths, is beset by a scandal involving a sex-tryst in his office in the Houses of Parliament which he has tried to lie his way out of in the media, and then injunct his way out of in the courts – both unsuccessfully. The government, with the aid of its supporters in the BBC, is trying furiously to pretend that the whole thing never happened.
Jacqui Smith, the Home Office Minister - one of the great offices of state - is involved in an ongoing scandal about claims for expenses for hundreds of thousands of pounds paid by the taxpayer, much of which has been used for fixtures and fittings for her family home. In spite of a salary of ￡140,000 (US$200,000) augmented by a further ￡40,000 (US$57,000) paid to her husband to act as her assistant, her claims include such absurdities as ￡10 for hiring pornographic videos for her husband, and 88p for a bath plug.
But it is in the international sphere that the real difficulty lies. For the past few weeks Brown has played the international statesman card for all it is worth – criss-crossing the continents like a colossus bestriding the economic world – in an attempt to shore up his image back home. But his remedy to the economic crisis - further government borrowing - sounds to other authorities uncomfortably like a despairing cry of: "I've squandered all my money – won't you squander all of yours too..?"
The German Bundeskanzler Angela Merkel is distinctly underwhelmed. So much so that a media leak of a UK briefing paper prior to the G20, which did significant damage to Brown's credibility going into the summit, was widely believed to have come from the German government itself. Mr Brown should not look to Germany – by far the most powerful country in the EU - for much in the way of support for his strategies, and therein lies the nub of the problem.
Last Sunday (April 30) I interviewed Benita Ferrero-Waldner on behalf of China Talk, our video webcast programme. Ms Ferrero-Waldner is the European Commissioner for External Relations. Effectively, she is the European Union's Foreign Minister, and as such she is likely to carry a good deal more credibility in the EU, and wield a good deal more influence, than Mr Brown currently does.
I specifically asked her about the prospects of China playing a bigger role in the IMF. You can read the full detail of my questions and her answers below.
I wish now I had pressed her harder on the matter. I confess I was distracted by irritation that she had told me before the interview that she would not deal with questions I wanted to ask about the European Union involvement in Chinese issues such as human rights, and it was not until later that I fully took in the detail of her replies to my questions.
I have no doubt that the IMF will be more than happy to take China's money. But look behind the inevitable diplomatic niceties, and you will struggle to find a single word in Ms Ferrero-Waldner's responses that gives any reason to expect that the European Union has any intention at all - now or at any time in the near future - of increasing China's voice, or allowing the country to exert more influence. Count the number of 'buts', and admire the bland generalisations.
If President Hu would like to secure a greater formal role for China in the IMF in exchange of the country's cash, he would do well to keep his hands and his money firmly in his pocket until he has a rock-solid offer on the table, signed by a more reliable and a better-placed interlocutor than Gordon Brown.
China Talk interview:
DF: Do you believe that China should play a more important role in organisations like the IMF and how do you see that evolving?
Ferrero-Waldner: I think already at the Washington summit the idea was there that in general the international financial institutions need an overhaul. Now this will take time, but in the framework of such an overhaul I think one should also tackle these questions. But I don't think that this will already be done at this London summit. I think this needs a lot more preparation and particularly also union opinions in the IMF or in other international financial institutions. But it's true they are (China is) 60 years old so maybe it is the right time to really look for an overhaul.
DF: Do you think generally there is a view internationally that it is time now for China to play a more important role in institutions like the IMF?
Ferrero-Waldner: I think China already has shown that it is playing a very important role. Look for instance at the big funding that China has been (providing) to American Banks. So I think this is necessary but at the same time this will not go from today until tomorrow. This will take a certain time.
(China.org.cn April 1, 2009)
