Global Policy Forum

by Gordon Brown

Courageous American leadership is winning the war against terrorism, but how can we win the peace?

After World War II American visionaries seized a powerful and unprecedented moment of opportunity. They created not only a new military and political settlement but a new economic and social order that tackled, in their words, "hunger, poverty, desperation and chaos." And their plan, the Marshall Plan, transferred 1 percent of national income every year, for four years, from America to poverty-stricken countries -- not as an act of charity but in recognition that, like peace, prosperity was indivisible and to be sustained it had to be shared.

America's postwar achievement should be our inspiration today for both rebuilding Afghanistan and for a new global alliance for prosperity between developed and developing worlds. Just like our predecessors, we recognize that national safety and global reconstruction are inextricably linked. And like them we see that the gains are not simply the spread of prosperity but the spread of democracy.

The Marshall Plan was of course constructed in a postwar world of distinct national economies in need of rebuilding. Our job today, in a quite different, more interdependent world is to help build -- for the first time -- market economies for an era of international capital flows and global competition.

Fifty years on, we see more clearly that what happens to the poorest citizen in the poorest country can affect the richest citizen in the richest one. And we are challenged by the yawning gap between what technology enables us to do -- abolish poverty -- and the reality of 110 million children without schooling, 7 million avoidable child deaths each year, one billion people in poverty.

That is why the whole international community has committed to ambitious development targets for 2015 -- halving world poverty, cutting child mortality by two-thirds and guaranteeing every child primary education.

My plan is this: In return for the developing countries' pursuing corruption-free policies for stability, opening up trade and encouraging private investment, wealthier countries should be prepared to increase development funds by $50 billion a year: the resources needed to achieve these agreed-upon development goals.

This funding would not be aid in the traditional sense but investment in the future. During the past 50 years, the Marshall Plan's European model could not be applied wholesale to developing countries because neither the economic foundations nor the necessary open and accountable systems for managing the public sector were in place to prevent corruption and waste. And too often we treated development funding as short-term aid to compensate for poverty instead of long-term investment tied to tackling the causes of poverty and building the capacity to compete. So a new global alliance for prosperity means not just new opportunities for countries but new responsibilities too.

The first is to ensure that every country, rich and poor, adopts recognized codes and standards for fiscal and monetary policy -- rules that assist macroeconomic stability, deter corruption and increase investor confidence in unstable regions. Our capacity to prevent global financial crises can be further improved by adopting effective early warning procedures, making the International Monetary Fund's surveillance and monitoring functions independent of decisions about crisis resolution, and the private sector's engaging on a more consistent basis as partners in development.

Economic stability is necessary for prosperity, but not sufficient. Developing countries must make themselves attractive to both domestic and foreign investors, not least with sound legal systems for contracts and business forums that bring public and private sectors together to discuss the best environment for higher levels of investment and intra-regional trade.

Full trade liberalization could lift at least 300 million people out of poverty by 2015, so the third step is to carry out the Doha agreements.

But we cannot solve the urgent problems of poverty without a fourth step -- a substantial increase in funds for development. No country genuinely committed to open, corruption-free, pro-stability and pro-investment policies should be denied the chance to progress because of the lack of basic investment in education and health.

A $50 billion-a-year investment fund that invites applications for health, education and anti-poverty work will help build the capacity of the poorest countries for sustainable development and is the high road to a more just and inclusive global economy.

Some say the issue is whether we have globalization or not. In fact, the issue is whether we manage globalization well or badly, fairly or unfairly.

Our answer to anti-globalization protesters is that, in the spirit of Marshall, we shall not retreat from globalization. Rather, we will advance social justice on a global scale as today's global alliance for peace is transformed into tomorrow's global alliance for prosperity.

The writer is Britain's chancellor of the exchequer.

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