IMF boss sounds the alarm over a new Cold War

The head of the International Monetary Fund has warned of the dangers of a second Cold War in the wake of Covid and Russia’s invasion of Ukraine.

Kristalina Georgieva, who grew up in Bulgaria in the Soviet era, spoke out as countries ramp up efforts to secure supply chains amid geopolitical tensions.

At the IMF and World Bank spring meetings in Washington, she drew on experiences of being brought up behind the Iron Curtain, saying: ‘I know the consequences of a Cold War.’ She recalled the loss of creativity and openness as talented people were cut off from the world economy.

‘The question is, can we be more determined to enhance security of supplies but not push the world that far that we are into a second Cold War?’ Georgieva said. ‘I believe it is possible.’

Her comments came after the G7 advanced countries warned that as global supply chains were repaired there was a risk of the world dividing into power blocs.

Russia’s war on Ukraine has changed the attitude of many European countries on oil and gas supplies from Russia. 

The US is working to diversify technology and other manufacturing away from China amid concerns about Beijing’s threats against Taiwan.

‘What we have learned from Covid and the war is that security of supply and the reliable functioning of global supply chains are taking a higher priority in economic discussions and decision making,’ Georgieva said. 

‘Regrettably we have to recognise that we can’t take peace for granted.’