Brown hopeful of Saudi cash for IMF

Gordon Brown in the Middle East


* Allegra Stratton in Riyadh
* guardian.co.uk,
* Sunday November 02 2008 15.30 GMT
* larger | smaller

Gordon Brown said today he was hopeful of success in his attempts to persuade dollar-rich Gulf states to prop up ailing national economies through a massive injection of capital into the International Monetary Fund (IMF).

The prime minister spent three hours in one-to-one talks with Saudi Arabia's King Abdullah, trying to persuade the monarch to invest in a revamped IMF.

On the first leg of a four-day visit to the Middle East, and aiming to secure hundreds of billions of dollars for the fund, Brown called off a planned dinner with business leaders accompanying him so as to allow maximum negotiating time with the Saudi king.

The IMF currently has around $250bn in its emergency reserves but there are fears that, with Hungary, Iceland and Ukraine having already sought assistance and more nations expected to follow, the sum might not be sufficient.

Brown hopes to persuade Gulf leaders to use some of the estimated $1tn they have made from high oil prices in the last few years to boost the reserves, indicating that he would like to see the current sum increased by "hundreds of billions" of dollars.

The prime minister said following the talks that he was hopeful of having secured Saudi backing.

Speaking on the BBC television's Sunday AM programme, Brown said: "I think people want to invest both in helping the world get through this very difficult period of time but I also think people want to work with us so we are less dependent on oil and have more stability in oil prices."

He added: "The Saudis will, I think, contribute, so we can have a bigger fund worldwide."

However, a senior government source party to the negotiations said the Saudis were very sensitive about being regarded as a "cash cow" and that the country, in which two thirds of the population are below the age of 25, would prioritise domestic investment if necessary.

The business secretary, Peter Mandelson, accompanying Brown on the trip, echoed this caution. He played down expectations, indicating that the government was unlikely to learn whether the Saudis would contribute towards the IMF fund until a meeting of 20 countries in Washington on November 15. Mandelson told reporters that talks with the Saudis were a "process not an event".

Both Brown and Mandelson indicated that the Saudis would only buy into the scheme if significant reform of the global institutions was achieved to bring on board rising powers such as Saudi Arabia, India and Brazil.

Business leaders on the trip - described by Brown as the "highest profile group of business leaders ever to accompany a delegation overseas" - said the prime minister was receiving something of a "hero's welcome" for his part in the global response to the recent economic downturn, and that this was softening his dealings with Saudis.

Brown arrived later in the afternoon in Doha, Qatar for the second leg of his tour.