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A splintering world needs a stronger Britain

(Alamy)

4 min read

The battle fury rampaging through blood-soaked Sudan is a tragedy for a beautiful country which had just begun to dare to dream of peace. But the conflict lights up a wider truth: the world is now facing a surge tide of violence which may spark a vicious circle of poverty and war, threatening the lives and livelihoods of millions.

It’s time to recognise that a splintering world needs a stronger Britain – a Britain that steps forward on the world stage, not back. 

Even before Russia’s second invasion of Ukraine, wars around the world were multiplying, lasting longer, and drawing in more outside powers. 

In the first decade of this century, five countries a year suffered simultaneous war or insurgency. Now it is 15 a year. In the 1980s, the average conflict lasted 13 years; now they tend to stretch on for 20.

The defining foreign policy challenge of the next decade will be how Britain reasserts its leadership

When peace fails, poverty rises. The number needing emergency aid has doubled since 2020 to 340 million and the International Rescue Committee estimates an extraordinary 80 per cent of this is driven by conflict. This trend is devastating; by 2030, the World Bank expects two-thirds of the world’s poor to live in fragile nations riven by conflict and violence. More violence triggers more poverty, and more poverty triggers more need for help.

Crucially, the upsurge in violence today is just one of the "seven giants” blocking the road to achieving our sustainable development goals by 2030 and The Paris Agreement deadline. This why it is such a mistake for the United Kingdom to slash its aid budget.

There is now a raging debate about how we transform the scale of both development and climate finance available to countries that need it. Best estimates are that the multi-lateral development institutions – like the World Bank and the IMF – need to at least triple the amount they lend.   

There are three things the UK could do to step forward and supply some real global leadership.

First, we should share more of the £19bn in Special Drawing Rights (SDRs) we were gifted in 2021. Where China and France have said they would share 25 per cent of the SDRs they received, the UK has offered only 20 per cent. If we matched Japan (40 per cent) – as we should – we would unlock £3.8bn in new lending for the IMF.

Second, we should share some of our SDRs with the African Development Bank. They have developed a new scheme to use SDRs as the collateral for loans worth three to four times the face value of the SDRs. If everyone then followed our lead, up to $40bn worth of SDRs could go to the African Development Bank, allowing them to lend an incredible $140bn of new low-cost finance.

Third, we have to accept that if we want the World Bank to do more, then we need to build a bigger World Bank. Contributions to the World Bank and other multilateral development banks are one of the most efficient ways of maximising development finance ever invented.

If the World Bank were to raise another $20bn, that would unlock new lending of $200bn over the next decade. That is an incredible boost. The UK share of new capital would be about $1bn which could be paid in over five years. Where could this money come from? Look no further than the cash we are getting back from the European Investment Bank. As part of the Brexit deal, our paid-in capital of $3.9bn is due to come back to us in 12 annual instalments. Two chunks have come in, with around $3.2bn still to come. We would need just one-third of this to help lead a new round of capital raising.

So, in three simple steps, the UK could transform the development finance debate and send a clear message that we are not going to let rising powers like China become the lender of last resort to the global South. The defining foreign policy challenge of the next decade will be how Britain reasserts its leadership in a complex, multi-polar world. If we want to avoid that world becoming ever more violent, hot and hopeless, we need to act, and act now.  

The timing of this is vital. In June, president Emmanuel Macron is bringing world leaders to Paris, including Barbados' prime minister Mia Mottley and India's president Narendra Modi, to discuss the future of the global financial architecture. We should be leading these discussions, not leaving leadership to others. It is time for Britain to step forward.

 

Liam Byrne, Labour MP for Birmingham Hodge Hill

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