In crisis, who speaks for Europe?
British leaders are usually known for keeping Europe at arm’s length. So what was Prime Minister Gordon Brown doing glad-handing and backslapping his way through the room at a meeting of European leaders in Brussels last week?
The answer is that Brown, a normally crabby-looking Scotsman, was clearly basking in the glow of being anointed by many as the savior of the world financial system, the man whose economic touch could heal sick banks and lift the paralysis of international credit markets.
His plan to inject government cash into British banks and provide loan guarantees has become the blueprint for financial bailouts on both sides of the Atlantic. Praise for the plan has helped push him out from under the long shadow of his predecessor, the globe- trotting, media-savvy Tony Blair. Some of the most flattering descriptions have come from an ordinarily British-baiting European media, which have dubbed the British leader a “wizard” and his bailout package a “triumph.”
But Brown’s new stardom has sparked some sniping that this side of the English Channel is too busy hogging a spotlight coveted by other European leaders, notably French President Nicolas Sarkozy.
“They’re apparently talking in Brussels about the ‘Brown plan,’ the solution that he offered and that other countries followed,” said Lorraine Mullally, director of Open Europe, a London think tank. “Apparently, Sarkozy didn’t like that and he’s been referring to it consistently as the ‘European plan.’ ”
A cartoon in the Times of London on Monday took aim at the credit-claiming derby, with Brown and Sarkozy dressed as surgeons ready to operate together on an ailing economy but describing the procedure as either a “Brown Angloplasty” or a “Sarkoplasty.”
Wherever the ultimate credit lies, there is no doubt that the 57-year-old Brown is in his element. Economic issues are his bread and butter, the result of his decade-long tenure as Britain’s chancellor of the exchequer. Credit-default swaps, derivatives markets and other arcana of the financial sector hold no mystery for him.
Britain’s $435-billion bank bailout, unveiled two weeks ago, couples direct capital infusions with short-term loans to help financial institutions continue their day-to-day operations. In effect, several of the country’s biggest banks will be partially nationalized.
That shift came more easily to Brown’s Labor Party, which historically supported nationalization of industry, than for a Bush administration imbued with the ethos of unfettered capitalism. Although Brown presided over Labor’s move to embrace free markets in the mid-1990s, the governing party has been able to fall back comfortably on old interventionist instincts.
“Brown is in his comfort zone, transformed from Anglo-Saxon villain to European visionary,” Ian Traynor, Europe editor of the Guardian, wrote. “In Brussels, it is a very long time since a British prime minister looked so good,” an admiration aided, perhaps, “by the impression that he is the only head of government among [those of the European Union] who understands what he’s talking about.”
Brown insists this is just “Stage 1” of what needs to be a complete overhaul of the global financial sector, which morphed and grew more rapidly than oversight kept pace.
Stage 2, as Brown envisions it, would see setting up an “early warning system” to spot potential financial trouble spots. He advocates common accounting and reporting standards and stronger cross-border supervision of global finance houses, which must fully disclose their holdings and transactions.
“We’re in the first financial crisis of the new global age,” Brown told foreign reporters here last week. “If risks are globalized, responsibilities need to be globalized as well.”
Brown has long been a champion of greater oversight of the financial sector, though it is also true that he was against it, at least some of the time. In a speech to bankers last year, as chancellor of the exchequer, Brown lauded their “vigor, ingenuity and aspiration,” which had ushered in a “new Golden Age,” and touted his record of “resisting pressure” to toughen regulations.
Now he castigates what he calls an era of irresponsibility, says his government’s bailout of British banks will come with strings attached and works the room at EU meetings he seemed previously to disdain.
“Being called Superman without irony and being popular at an EU meeting -- how times have changed,” political writer Edward Davie said in a recent commentary. “An hour really is a long time in politics.”
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