Saturday, April 09, 2005

[US Aid] US will block Brown campaign to beat poverty with gold sale

Heather Stewart
Economics Correspondent
Sunday April 10, 2005
The Observer

Gordon Brown's year-long anti-poverty crusade is in jeopardy this week, as the US prepares to block his plans for a sale of International Monetary Fund gold reserves to raise cash for debt relief.

Striking a deal to sell or revalue some of the IMF's $9 billion of gold reserves in Washington, at the spring gathering of the IMF and World Bank, was meant to be the first victory in Brown's campaign to increase spending on aid, and offer debt relief to the poorest countries. But the Treasury is playing down prospects for a deal, and it is thought Brown could even give Washington a miss this week, to concentrate on the election campaign.

'Clearly, the US is the blockage on this,' said Jonathan Glennie, senior policy adviser at Christian Aid. But he accused the Chancellor of overplaying the chance of a debt deal in February, after he chaired a fractious meeting of G7 finance ministers.

An IMF feasibility study, commissioned by G7 finance ministers, has given the thumbs-up to gold sales. But the US Treasury has been urged to oppose the idea by gold-mining firms who fear that a sell-off could depress global prices for the metal.

Henry Northover, policy analyst at Cafod, said the US preferred its own debt relief plans, under which poor countries' debts would be written off against aid flows. 'I think there is little appetite for the gold plan in the US. They feel they've done enough.'

Failure to reach a deal this week will leave Britain with a tough timetable for agreement on its other anti-poverty proposals by the G7 summit at Gleneagles in July. A Treasury spokesman insisted: 'We've got lots of other meetings between now and then. The agenda's on track.'