The End of the Party

by Andrew Rawnsley

  Obama, as savvy about the media as any politician on the planet, quickly grasped that the White House’s fumbling had inadvertently hurt his guest. About an hour into Brown’s flight back home, one of the comms team brought a satellite phone to the Prime Minister. To his surprise, it was the American President on the line, wanting another word. Apologetic about what had happened, Obama said: ‘I want you to know, Gordon, that I’ve got the pen holder on my desk.’19 He made a point of saying how much he was looking forward to seeing him again at the G20 in London. Brown ‘visibly relaxed’ and was put ‘in a much better temper than on the way out’.20 He had champagne opened to celebrate and then took some bottles of the fizz down to the junior staff – the clerks and secretaries – who were sitting in the middle of the plane.21

  The G20 was previously a junior event in the calendar of international talk-fests: a fixture of such slight significance that anti-capitalism demonstrators couldn’t be bothered to turn up to protest at its meetings. A forum for finance ministers and central bankers to debate technical minutiae, their dull discussions and dry communiqués rarely attracted interest beyond the business pages of the newspapers. It was back in the autumn that Brown saw an opportunity to use Britain’s chairmanship of the organisation for both personal and global advantage. There were warnings that promoting the G20 might offend the Italians, who held the chair of the traditionally more prestigious G8. Brown didn’t care. He hatched a design to invite the heads of government of the twenty countries, a move which would elevate the G20 into the geopolitical equivalent of the Olympics. This was one of his smartest gambits. The twenty together represented countries with more than 80 per cent of the world’s output. It made huge sense to bring them together to address the global crisis. In the words of one senior civil servant who worked with him at close quarters: ‘Gordon may not be much good with people, but he is a great believer in process.’22 Relegating the older and narrower G8 and promoting the G20 was also a logical acknowledgement of China’s rise to great power status and the increasing importance of other nations such as Brazil, India and South Korea. As ever with Gordon Brown, global vision was twinned with parochial calculation. Hosting the world in London might give him a much needed boost in the eyes of his domestic audience. It would allow him to reprise the role of finance minister to the globe which received such plaudits the previous autumn. This could boost his claim to be the man who saved the world while casting the Tories as petty and marginalised.

  Barack Obama’s commitment was crucial to the pre-summit diplomacy. Once the American rock star was on the billing, every other leader was gagging to come to the gig. In fact, more leaders clamoured to attend than were on the original guest list. The Spanish, the Dutch and the Ethiopians gatecrashed the party. It was a tribute to Gordon Brown’s cunning eye for an opportunity and the thickness of his international contacts book that he manoeuvred a mighty cavalcade of presidents and prime ministers to convene in Britain under his chairmanship.

  That left the Prime Minister with a dilemma. Set the bar too low and there would be no pressure on the leaders to come to meaningful agreements. Set the bar too high and it risked being a flop. He chose to aim high – very high indeed. In the build-up to the summit, he raised the stakes by talking up the prospect of a ‘grand bargain’ being struck in London and the sealing of ‘a global new deal’.23 He further hyped it by repeatedly suggesting in the months before the summit that it had the potential to be a ‘new Bretton Woods’, as significant as the 1944 conference in New Hampshire which established the post-war financial order.24 His answer to criticism that he was over-inflating expectations was to quote Michelangelo: ‘It is better to aim too high and fall short than to aim too low and succeed.’25

  Jon Cunliffe, his senior adviser on international finance, took charge of the team of ‘sherpas’ preparing for the summit. David Miliband and the Foreign Office were marginalised. For weeks, Brown and his inner team devoted themselves to preparing for the summit to the exclusion of most other work in Number 10. Members of the Cabinet quietly moaned that Brown was too busy calling the President of China or the Prime Minister of India to have any time to talk to them.26

  Harriet Harman decided that she wanted a slice of the action and attempted to give the summit a more feminine flavour. At a meeting of the National Economic Council, Gordon Brown looked at the schedule of events, turned to Peter Mandelson and asked: ‘Why are we having this Women’s G20, Peter?’ Mandelson sighed: ‘I have had to say no to Harriet on so many things, I can’t say no to her on this.’ Brown groaned in sympathy: ‘Oh God, I understand how you feel.’27

  By the end of March, the potential for failure at the summit proper looked high. The mood music was increasingly discordant. The key European leaders were volubly opposed to the Anglo-American view that the world needed another massive round of fiscal stimulus. The Chinese and Russians needled Washington by arguing for a new global reserve currency to replace the dollar. One senior civil servant says: ‘Two weeks beforehand, we thought we were in serious trouble. There was no agreement.’28 Number 10 suddenly went into reverse spin and tried to massage down the expectations inflated by the Prime Minister. Ministers close to him like Mark Malloch-Brown began to fear that they would end up with ‘a lot of grinning world leaders with frozen smiles on their faces accompanied by an empty communiqué and this would be a devastating blow to whatever was left of global confidence’.29

  The week before the world was due in London, Gordon Brown embarked on a sun-chasing tour of the globe. This frantic airborne quest took him to three continents in the space of just five days, a trip of 17,500 miles in all. It was reminiscent of the globetrotting by Tony Blair in the weeks after 9/11 when he also cast himself as the international co-ordinator in a crisis. Brown’s first stop was Strasbourg to deliver a speech to the European Parliament, where he called for world leaders to do ‘whatever it takes to create growth and the jobs we need’,30 the formula for arguing there should be further government spending to try to avert a depression. He was given advanced warning that he would have to stay for responses from members of the parliament, but that had not prepared him for what followed his politely received address. A Conservative MEP, the laissez-faire nationalist Daniel Hannan, erupted with a ferociously abusive denunciation of Brown as a ‘Brezhnev-era apparatchik’. Hannan’s performance was posted on YouTube and linked to by right-wing websites, which made it a brief sensation on the internet. Brown tried to look unbothered in front of the cameras, but he strode out of the parliament in an angry mood.

  Ambushed by a Tory in Strasbourg, the Prime Minister was also banjaxed back at home. Mervyn King chose the same day to go public with his opposition to more spending in the next Budget. The Governor declared that ‘another significant round of fiscal expansion’ was unaffordable because ‘we are facing very large deficits.’31 For some months, Brown had been attempting to improve his relations with the Governor in order ‘to get Mervyn on his side against the Treasury’.32 But the Governor agreed with the Treasury’s resistance to splashing any more red ink on the public finances. For the delighted Tories, George Osborne crowed that the Governor had ‘cut up the Prime Minister’s credit card’ and ‘leaves Gordon Brown’s plans for the G20 in tatters’.33 Vince Cable called it ‘a very British coup d’état when the Governor sent his tanks down the Mall … and put the Government under house arrest.’34 Brown was ‘very furious’ with the Governor for what allies regarded as ‘unforgivable behaviour’.35 In an attempt to deflect the interest of the media, his team briefed journalists about a supposed plan to reform the monarchy, trying to use the Queen to take attention away from King.

  The second leg of the three-continent tour was the United States. As the chartered Boeing 747 cruised across the Atlantic, Brown sat in the first-class cabin, his customary black marker pen in hand, writing his next speech. This was an intellectual lecture delivered at a five-star New York hotel to an audience which included the presidents of Citibank, Nasdaq and Goldman
Sachs. Brown began to sound a retreat from injecting more borrowed money into the economy, but insisted that he was already making pre-summit progress when he contended that tax havens were now under pressure to agree to tighter regulation. Before the crisis, he devoted scant attention to tackling these shadowy hidey-holes in palm-fringed islands and snow-capped principalities. During his decade at the Treasury, he had done little to crack down on tax havens. Britain was inextricably linked to eleven of the thirty-seven ‘suspect jurisdictions’ being targeted by a proposed American law against tax evasion. Brown had blocked the efforts of other members of the EU, notably the Germans, to force banks to be more transparent. This sudden enthusiasm for having a crack at tax havens represented a tremendous volteface. If he was not a hypocrite, he was certainly a late convert. Most of his New York speech was devoted to his argument that the world needed to reform international institutions such as the IMF and the World Bank.36 Here Brown was being consistent. He had been saying for many years that it was essential to modernise organisations set up in the aftermath of the Second World War. As long ago as 1998, in the wake of the Asian crisis of that period, he pressed for a more rigorous system of global oversight. Alas for him and for the world, those events were seen not as early warnings. They were shrugged off as hiccups because the boom years then merrily carried on. Now, at last, Brown had a global audience for his argument that the world needed to renew its financial architecture. He was warmly received by his audience at the Plaza Hotel. Again, though, he was dogged by bad news from Britain. An auction of Government gilts that Wednesday failed because the Treasury could not find enough buyers for British debt for the first time since 1995. This underscored Mervyn King’s warning of the day before.

  On Thursday, Brown’s whistlestop tour of the planet landed in Brazil, one of the ascending G20 powers. His talks with President Luiz Lula da Silva went well: they were agreed about the imperative to resist protectionism. Brown regarded this as the most productive meeting of the tour.37 Yet its public face again seemed strained. The Brazilian leader was a former shoeshine boy from an impoverished background who made his name as a populist trade union leader. He liked to emphasise his credentials as a champion of the working class by waving his left hand with the missing finger lost in a factory accident. At their joint news conference, Brown looked mildly discomfited when Lula blamed the crisis on ‘the irrational behaviour of people that are white and blue-eyed’ in the rich West and declared that they should pay to clean it up.38 Brown flew on to Chile, where a news conference in Santiago generated more headlines he did not like. President Michelle Bachelet boasted that her economy was in good shape ‘because of our decision during the good times to save money for the bad times’.39 This echoed the Tory line that Brown ‘failed to fix the roof when the sun was shining’. The Prime Minister was moody with journalists who asked him what he was achieving with his globetrotting. He snapped: ‘I haven’t been going round the world talking to leaders in every country simply to say we are having a communiqué.’40

  The 747 took off for home on Saturday. Damian McBride walked to the rear of the plane to try to spin the accompanying media, who were also being briefed by Peter Mandelson. When the Business Secretary saw the spin doctor he had dubbed ‘McPoison’ coming down the aisle, Mandelson jumped into a vacant seat, put up a newspaper and pretended that the other man did not exist.41

  Gordon Brown sat closeted in the first-class cabin. As most of his entourage and the journalists tried to catch some sleep on the long flight home, the Prime Minister sat awake, hunched over a sheaf of papers, furiously attacking them with his black marker pen.

  The three-continent tour had seen serial ambushes and battered expectations. He returned home to a swelling chorus suggesting that the project in which he had invested so much time and hope was teetering on the edge of failure. ‘A lot is riding on the London summit,’ opined one typical American commentary the day before the leaders started to arrive in Britain. ‘Right now, the G20 is on the precipice of irrelevance.’42 George Soros, the man who made $1 billion by betting against sterling on Black Wednesday, ominously forecast that the summit was a ‘make or break event’ for world markets.43

  As with most international meetings, there were months of preparatory negotiation behind the scenes in the lead-up to the climactic burst of highly orchestrated activity of the actual summit. Before a single foreign leader made landfall in Britain, there were tentative deals to increase the financial firepower of the International Monetary Fund and set up ‘early-warning systems’ to forestall future crises. Even so, ‘a lot was still in flux’ with just forty-eight hours to go.44 Many of the leaders barely knew each other; each one had particular interests to champion and domestic audiences to satisfy. The British were very conscious that ‘all the leaders showed up needing to have a win that they could take home.’45 No-one was sure whether Gordon Brown possessed the skill to be a successful ringmaster of the colossal number of international egos descending on London.

  At the head of the cavalcade was Barack Obama. He landed in Britain on Tuesday night with an epic entourage which included a security force of 200, six surgeons and a clutch of chefs. Early on Wednesday morning, the black gates at the mouth of Downing Street drew open to admit the President’s fortified Cadillac, known as ‘The Beast’. Obama, the world’s most glamorous politician making his first visit outside North America since his election, was the most valuable ally to Brown. They broadly agreed about the diagnosis and the prescription for the crisis. As they breakfasted in Number 10, Obama sympathised with the challenge facing his host. ‘Just Roosevelt and Churchill sitting in a room with a brandy, that’s an easy negotiation,’ he mused. Getting some two dozen leaders to agree: ‘That must be like herding cats.’ Brown did not argue.46

  Obama knew that Brown still felt bruised about the White House’s clumsy handling of the Washington visit. The American more than made up for it when the two men held an hour-long news conference at the Foreign Office. Speaking in the gilded grandeur of the Locarno Room, Obama turned on his megawatt smile, exuded easy calm and lavished praise on his host for the ‘energy and leadership and initiative’ Brown displayed in creating the summit. ‘The world owes you an extraordinary debt of gratitude.’47 A beaming Brown radiated rapture as he was licked all over by the most powerful man in the world.

  The Obama–Brown double act was rivalled by a continental tag team with a competing agenda. There were many differences of style, policy and temperament between Angela Merkel, the solid, shrewd and unshowy Christian Democrat who led Germany’s coalition government, and Nicolas Sarkozy, the mercurial and flamboyant Gaullist in the Elysée Palace. They nevertheless forged a common front for the summit to demand action to cleanse the murky worlds of tax havens and the shadow banking system. Learning that Brown and Obama were planning a joint appearance, Merkel and Sarkozy flew into London early to stage their own news conference in order to attack the draft communiqué for being too feeble about curbing turbo-capitalism. When he got wind of their pre-emptive attack, Brown rang both Sarkozy and Merkel to try to deter them. He failed.48 ‘France and Germany will speak with a single voice,’ declared Sarkozy. They duly did, pouring cold water on the idea of further fiscal stimulus and amplifying their calls for greater regulation of international finance.

  Sarkozy made a theatrical threat to walk out. ‘This has nothing to do with ego, this has nothing to do with temper tantrums,’ he claimed. ‘This has to do with whether we’re going to be up to the challenges ahead or not.’ Merkel pointed out: ‘The tendency is not to deal with the roots of the evil. We need to learn something from this crisis.’49 They were essentially right. The world had been far too indulgent of what the French called paradis fiscaux. Tax havens were popular only with banks, corporations and the wealthy who did not want to pay their fair dues to society, and with dictators, terrorists, drugs lords, fraudsters and other criminals who used them to hide and launder their loot. It was reliably estimated that more than $10 trillio
n of private wealth was concealed in paradis fiscaux, the lost tax on which was more than double the world’s global aid budget.50 After many years of being subjected to arrogant lectures about the superiority of the Anglo-Saxon model of capitalism, this was the great opportunity for the French and the Germans to try to reset the global rules.51 Their stances were also influenced by domestic politics. Merkel faced elections in the autumn; Sarkozy was becoming unpopular in France.

  Brown lightly dismissed the threat that the Frenchman would flounce out and referred to the dinner at Downing Street that evening. ‘I’m confident that President Sarkozy will not only be here for the first course, but will still be sitting as we complete our dinner.’52 For Gordon Brown, that was a good joke.

  This show of insouciance about the Gallic theatrics masked his private nerves. What if Sarkozy pushed things so hard that he had to make good on his threat to storm out? ‘It was alarming.’53 Brown also worried that Sarko was feeding the media narrative about a split between the Europeans and the Anglosphere and that would make it more difficult to get agreement among the leaders.54

  The glamour quotient at the summit was filled by Michelle Obama. The comic relief was provided by Silvio Berlusconi, back in power in Italy at the age of seventy-two. Advancing years had not withered his capacity for acting the clown. The Italian Prime Minister’s central ambition was to engineer his way into as many encounters and photo opportunities with Obama as he could contrive. Berlusconi spotted his first chance on Wednesday afternoon when the Queen hosted a reception at Buckingham Palace and the leaders were ushered into the Throne Room for a group photo. The Queen sat in the middle at the front, with the leaders arrayed around her. The ineffable Berlusconi, standing in the back row of the group, became loudly insistent in his attempts to grab the attention of Obama. When the American tried to quieten him, the Italian simply got noisier. ‘Mr Obama! Mr Obama!’ he cried from the rear. ‘Mr Berlusconi!’ The Queen turned to locate the source of the noise and sighed when she identified the Italian enfant terrible. Her arms raised in frustration, she complained: ‘What is it? Why does he have to shout?’55 Even the Italian press was unsure whether to laugh or cry over the antics of their septuagenarian clown. One Italian cartoonist depicted the Queen with fingers in her ears and the other leaders looking astounded by Berlusconi.56