Brown's crusade on debt knocked off course by the US

THE G7 MEETING As finance ministers converge on London, Brown marshalls support for his agenda
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The Independent Online
GORDON BROWN'S call for a new Marshall-style plan to help tackle poverty in Africa by doubling aid payments to $100bn (pounds 53bn) a year, was dealt a blow yesterday after the US made it clear it would not support the proposal.

The Chancellor received a boost last week when Germany and France signed up in principle to his plans for a new International Finance Facility (IFF) which would enable the world's rich nations to borrow an extra $50bn on the world's capital markets against future aid payments. However, the US Treasury Under Secretary, John Taylor, speaking on his way to London for this weekend's G7 meeting of finance ministers from the world's wealthiest nations, appeared to pour cold water on the idea. "Not only does the IFF not work for the United States, we don't need the IFF," he said, adding that the US had "bold" proposals of it own for debt relief which included channelling more aid through grants as opposed to loans.

The US Treasury Secretary, John Snow, had been due to attend the G7 meeting but dropped out at the last minute, reportedly because of a bad cold. UK Treasury officials denied that Mr Snow's decision to send his number three instead was a snub for Mr Brown, who is hosting the gathering. They also maintained there was nothing new in Mr Taylor's comments and that the Chancellor was still hopeful of finding a way to accommodate the US administration's reservations.

"We are committed to continuing to work with the US to see how the IFF can be adapted to its needs," a spokesman for the Treasury said. "The international community agrees that we need an extra $50bn in development aid to have any chance of meeting our Millennium Development Goals. The IFF is the best and most advanced mechanism for achieving this increase. Anyone who does not agree with the IFF must present an alternative."

The practical difficulties for the US in supporting the IFF lie in gaining congressional approval for a something that would commit it to making payments over a number of years because of the facility's long-term nature and funding structure. Beyond that, there also appears to be a difference of philosophy, with the Bush administration more attracted by the idea of grants channelled through the World Bank in place of existing loans.

The lack of US support for the IFF represents a major obstacle. However, Mr Brown pointed out at the World Economic Forum in Davos a week ago that together with France, German and Italy, a majority of the G7 backed the idea, adding that it could still go ahead with a "coalition of the willing".