Gordon Brown was Prime Minister of the UK from 2007 to 2010. During his premiership, he oversaw the withdrawal of troops from Iraq, the devolution of powers to Northern Ireland and the world's first ever Climate Change Act. But he will be most remembered for his leadership in responding to the global financial crisis, a role for which he had been well prepared in the previous decade as the longest serving Chancellor of the Exchequer of modern times. He spoke to the IBA’s Executive Director, Mark Ellis.

Mark Ellis: Are you hopeful that, not only because of what the United States election has given us, but also worldwide, we can start moving back towards multilateralism and globalisation? How important is that in solving the many challenges the world faces?

Gordon Brown: We've had two stabilising forces in the last few weeks that are bringing 2020 to an end with more stability than we thought we might have. The first is the vaccine and the thought that it could be available to people in every part of the world in the next few months. And the second is you have leaders in place now, President Xi in China, President Biden in the US. You will have some change perhaps in Germany with Chancellor Merkel in 2021 as she retires. President Macron is there until 2022 in France and Britain's government is in until 2024. So, you've got the possibility of building something.

Really, we've got to get away from what has been the features of the last decade. After 2010, when there was international cooperation to deal with the global financial crisis, we moved to what I call ‘defensive nationalism’, that is closing the borders, immigration controls and tariffs on trade.

More recently, we've moved to what I would call an aggressive nationalism, which is, ‘us versus them’ and ‘America first’ for example. Go through the world and you find that you have an international coalition of anti-internationalism, where nationalism came to the fore.

I don't think it's made the world a safer place or a better place or a more prosperous place, and we've seen throughout the pandemic the need to cooperate even though we've had vaccine nationalism. I'm hoping that we can recognise that we have mutual interests and there are, to a large extent, shared values – at least in much of the world – and we can actually work together more successfully with a Biden presidency, with Europe more united. But a lot depends on what relationships can be built with China.

ME: You're suggesting that you're seeing some movement to where, perhaps over the next ten years, we can re-emerge in a much more cooperative way?

GB: That’s possible. But you've got to look at the underlying structural features that affect the way the world economy and governments are going to work in the future.

To a large extent, nationalism is not simply the product of a group of xenophobic leaders. It's the result of people feeling that they've been left out and lost out. Until we address what has caused populism and nationalism, and therefore protectionism to follow, we still have a real danger that the world can slip back into these nationalist silos. Even if you have a change of president or a change of prime minister in a country, there are still these underlying tensions that are not being resolved because people feel that globalisation has not benefitted them.

You've got to deal with the structural forces at work, which include that the West is losing out relatively with the rise of China and Asia, and that a Western middle class, or a middle income or lower income worker feels that their job is less valuable than it used to be. Certainly, that the rewards from that job are not as good as they were. Until we deal with some of these basic structural forces, which include inequality and security of employment, being less than it was, the divide between those people who are educated and can command high earnings, and those people with less educational skills that command lower earnings – these are the problems that are the basic root cause of nationalism.

ME: Do we have the resources to start shifting this populist movement? If so, how is that going to be done?

GB: Not if we continue to manage things the way we've done during this pandemic. Where there is a strong sense in the West that large numbers of people have not been properly valued. Care workers and delivery workers feel they've been called on during this crisis to give extraordinary service. They feel that their rewards are too little. You can understand the sense of frustration that builds up when people feel that lots of returns are going to those people who've got huge amounts of wealth in the first place.

This is also about cultural identity. You've got to get the right balance between people's patriotic pride in their own country, which means that you can't just talk about an empty internationalism that has no context, in the sense that people are expected to be global citizens and somehow desert the national identities that they've fostered for so long. And you've got to get the right balance between the pride that you want and the autonomy you want because of your national identity, your pride in your country, and the cooperation we need internationally, so that we can solve global problems that cannot be solved without globally coordinated action: climate change, pandemics, financial instability, the sustainable development goals, tax evasion. These can't be solved unless people have some framework within which they can agree international answers that can be applied. You've got to appreciate people's cultural identities, the economic pressures they're under. And you've got to persuade people that where you have a global problem, you need a global response.

ME: During your political career, you’ve set out a policy aimed at environmental sustainability. Can we find a balance, as we move forward, between environmental protection and economic growth?

GB: In the last 30 years, I've had to think of economic policy as a trinity of objectives. You've got economic growth, you've got social justice and you've got environmental sustainability. And that's not going to change in our lifetimes or in the lifetimes of my children. The environment will be at the centre of every country's economic policy, and people will have to judge what they do. Not simply by the growth you achieve, but by the improvement in the environment itself, by getting to net zero carbon and carbon neutrality in the next 30 years or over the time that we have set these objectives.

How do you do that? You've got to have countries working together. There's no point in having a free rider who benefits from all the sacrifices that either the American or the European peoples make.

The weakness of the Paris Climate Agreement is there’s no obligation on any individual country to create a certain carbon reduction or to meet a certain reduction target. There's lots of good words and general objectives. There's quite a bit of money now flowing around to help mitigate and adapt for countries that are in difficulty. But we've got to get to a more powerful understanding of what each country has to do if we're going to meet these targets and then we've got to back it financially. That's why I favour a ‘combat climate change’ fund for mitigation and adaptation in the low-income countries of the world, such as the coastal states and Africa, where if we're going to fight drought and fight sea levels rising and everything else, we've got to be able to help them do this alongside us.

ME: The World Bank reports that global poverty is at 9.2 per cent. That's 689 million people living in extreme poverty. Half of those are children. To come back to this widening inequality that exists in the world today – how do we possibly counter that?

GB: To take one example: we lose about $400 billion a year to the world economy – money that could be spent on health and education, on public services and dealing with poverty – to tax avoidance and tax evasion. The only way you can deal with the issue is through international cooperation. If someone is sending the money or a company is transfer pricing out of one country into another, the only way you can actually end a practice which is unfairly depriving one treasury of finance is by cooperating together.

When I was in government, we did make a breakthrough: automatic exchange of tax information. So, every country wanted to exchange tax information with the other, so that nobody could unfairly escape paying the taxes. We had to make it automatic so that all countries would accept it. We then had to deal with beneficial ownership of people hiding the ownership of their assets under assumed names, under company names and everything else.

But it is now possible to see how you could isolate, and you could ban and sanction those tax havens who continue to hide money that should be subject to proper taxation in the country from which that person has made the money or comes from. We could, if we work together and this involves lawyers and accountants, as well as regulators and policymakers, recover a very substantial amount of that money back to countries.

What we need now is a United Nations convention or the Organization for Economic Cooperation and Development to move faster and in a tougher way in isolating those countries who have refused to abide by the rules.

The sanctions could include trade sanctions and other sanctions against them so that they are forced into the international community, to do what is necessary to be compliant. When I started this process with President Sarkozy of France in 2009 at the G20, a number of countries were objecting. They thought their own tax havens were at risk. Now these countries are seeing that they are being undercut by even worse behaviour from rogue states who are not meeting all the rules.

ME: It seems China and the US during the Trump administration became permanent rivals. I'm not sure if it's an irreversible deterioration in relationships between the two, but it seems that China now sees the US as a waning power. How does the world now deal with China, an extremely important commercial partner, but with significant issues in regards to the rule of law and human rights, but also because of the pressure that China can exert economically?

GB: The problem is that there is not just one issue, like trade or the currency or forced technology transfer or Hong Kong or human rights or Taiwan. There are a whole series of issues. I conjured up ten separate points of contention between America and China alone. And therefore, you've got to think, what is the long-term future of this relationship going to be and are we going to move to a future that is one world, but two systems? And sometimes it really does look that way.

The Chinese government are aware of problems that confront them. They need to show they can develop their economy to the point at which people have the same kind of consumer incomes and the ability to spend like people in the West. That is going to take 20 or 30 years for them – although they are rising very, very fast.

My view is that the relationship between America and China, and also China's role in working with the rest of the world, will be something like as much cooperation as possible and as much containment as necessary. That's the sort of relationship I see President Biden forming with President Xi. It will not be a standoff in the sense that everything will be red lines, but it will not be a grand bargain where every issue has been resolved.

What will happen is that there will be cooperation on a whole series of issues, including climate change and on the economy, and perhaps on other issues. Like what we do about Africa – where China and America should be able to work together – and the West as a whole, to help a continent where in a few years’ time, 85 per cent of the world’s poor will be located.

This is a heavily abridged version of a longer interview. The full version is available on the IBA website: ibanet.org