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Monday 18

February, 2019 5:09 AM

IMF's Lagarde urges US, others to reject 'dystopian' path

IMF's Lagarde urges US, others to reject 'dystopian' path

Countries that go it alone and fail to adapt to new economic realities could face a "dystopian" future where an angry majority are left behind, IMF chief Christine Lagarde warned Tuesday.

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05.12.2018 12:00 PM

Countries that go it alone and fail to adapt to new economic realities could face a "dystopian" future where an angry majority are left behind, IMF chief Christine Lagarde warned Tuesday.

She urged world leaders to remember the lesson of the global recession that followed the 2008 financial crisis: "international cooperation is essential, not optional."

The managing director of the Washington-based global crisis lender issued yet another plea to governments, notably the United States, to back away from protectionism and confrontation.

At a time when US President Donald Trump is engaged in global trade conflict that the IMF says puts world economic growth at risk, Lagarde delivered her message wrapped in praise for the key leadership role the US plays in the world.

In the economic prosperity that followed World War II, "We learned from the past, got creative, and changed for the better," she said in a lecture at the US Library of Congress.

"None of this would have been possible without the United States. This country challenged the international economic order when it needed challenging. It forged compromise when compromise was necessary."

And it was in the US interest to take a leading role because "a stronger and more stable world paid dividends for the US," she said.

"This success did not come at the expense of other nations," Lagarde said. "On the contrary. This country's collaborative leadership paved the way not only for decades of opportunity here in America, but also for growth that spread across the world."

That contrasts sharply with Trump's "America First" rhetoric and his view of trade as a zero sum game in which imports equate to countries taking money out of the country.

Policies like that could lead to an "age of anger," where inequality soars and the millions left behind are angry, Lagarde cautioned.

To avoid the "dystopian scenario" countries must adapt, improving cooperation among governments, to strengthen oversight, reduce corruption and reform tax collection. That will free up resources to improve infrastructure and education.

That also means fixing the trading system to reduce tensions, including getting rid of subsidies and protecting technology, issues Trump has complained about.

The rapidly changing global economy offers "a fundamental choice: stand still and watch discord and discontent bubble over into conflict; or move forward," Lagarde said.

"Because more than ever before, what happens in one nation can impact all nations."
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