International relations are feeling the strain of the economic crisis says the CBI’s director general

The world faces a number of difficult political challenges as the economic crisis unfolds, said Richard Lambert, director general of the CBI.

Shock waves from the economic downturn are increasing geopolitical risks around the world, he said.

Nowhere is this more evident than in Pakistan. Financial turmoil and higher oil and food import prices have rocked the nuclear armed state badly. The International Monetary Fund (IMF) cleared a $7.6bn loan to help the South Asian country pay for vital imports and repay some of its debt.

Lambert also indicated that the crisis would re-jig the international playing field. ‘Middle East states will want a much stronger voice going forward,’ he said.

British Prime Minister Gordon Brown visited Saudi Arabia, Qatar and the UAE this month in an effort to get them to plough more money into the IMF’s bailout pool. Financial support from the oil rich Gulf states could be dependent on a bigger role in international affairs.

The director general also predicted that financial problems would contribute towards more economic nationalism, which could put overseas assets at risk.

He added that tougher economic times could seriously sap the political will for tackling climate change and sustainability. ‘There is going to be a real pushback against everything to do with sustainability.’

Lambert was delivering the keynote address at Marsh’s client conference.