Germans back Brown plan to tackle global poverty

Gordon Brown, the Chancellor, hailed a breakthrough in the fight against poverty yesterday as Germany swung behind British proposals for an International Finance Facility (IFF) that would tap the capital markets to enable a substantial boost in international aid spending.

Speaking to participants at the World Economic Forum in the Swiss Alpine resort of Davos, Gerhard Schröder, the German Chancellor, for the first time formally backed the proposals, bringing to four the number of G7, industrialised nations that have said they will support the initiative. The IFF has also been welcomed now by all other countries in the European Union, and by China, India and Brazil.

The IFF aims to borrow against existing aid budgets to yield an immediate step change in the size of development spending. Although the initiative has won high praise here in Davos as the most practical and predictable way of increasing international aid to Africa, it has yet to be backed by the US.

Here in Davos to promote the initiative, Mr Brown said the IFF could practically go ahead without American support as a "coalition of the committed", but he conceded that to have its full effect, the fund needed the backing of all donor nations, including the US.

Efforts would be made at all levels of government to persuade the Americans to come on board. However, in the meantime, committed nations would kick-off the initiative by applying it to a wide-ranging vaccination programme that Mr Brown claimed would save 5 million lives over the next 10 years.

Debt relief, fair trade initiatives, and the IFF will be top of the agenda for next week's meeting in London of the G7 finance ministers.

British proposals for tackling African poverty received a further boost at the World Economic Forum last night when Italy's finance minister, Domenico Siniscalco, said Italy would back demands for 100 per cent write-off of multilateral debt to the poorer nations advanced though the International Monetary Fund and the World Bank. Mr Siniscalco said he hoped the proposal could be formally adopted by the G7 in London, though again, the move is likely to be resisted by the US.

Mr Brown said he was happy to debate French proposals for an international tax to fund development. However, the advantage of the IFF was that it could produce an immediate and predictable uplift in aid. He said that at present rates of progress, the Millennium Goals for tackling poverty, illiteracy and disease in Africa would not be achieved until 2165, or 150 years after they were supposed to.

French and German support for the IFF is qualified by concern over how the borrowings taken on would eventually be repaid. Jacques Chirac, the French President, has proposed a series of international taxes as the most effective way of plugging the gap.

There was high praise for both Mr Brown and Tony Blair in Davos for their efforts to put African poverty at the top of the global agenda. Earlier in the week, the Irish rock star Bono had described Mr Blair as one of two alongside Bill Gates, the chairman of Microsoft, who had done most in the fight against African poverty.

Yesterday he swapped his praise to Mr Brown, whose finance facility he described as the best and most effective way of delivering an increase in the aid budget.

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