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With Congress out, this week in Washington will be dominated by economic and financial discussions, with with dozens of finance ministers and central bankers — and the occasional national leaders such as Poland’s Mateusz Morawiecki and Barbados’ Mia Mottley — in town for the IMF and World Bank Spring Meetings.
Read on for the insights of IMF managing director Kristalina Georgieva, who sat down with Global Insider to preview the week and share her thoughts on China’s new leadership.
Key questions confronting visiting officials:
— Can they keep a united front in dealing with vulnerabilities in banks and other lenders?
— Can the IMF and World Bank play nice together and revitalize the development finance system? Or will they be divided on climate, and engaged in turf wars?
— Is the IMF lending at a record rate (as its officials insist) or in the middle of a paralyzing identity crisis (as The Economist alleges)?
THE WEEK AHEAD
MONDAY
It’s a full week for the global lending institutions, with officials arriving from today and continuing discussions until Thursday evening. The goal: put on a united front, to calm markets and prevent a lost decade of growth.
It’s an easier morning at the White House: President Joe Biden and first lady Jill Biden will host the 2023 White House Easter Egg Roll. Forever a teacher, the first lady will continue her theme of “EGGucation” for the event.
TUESDAY
Secretary of State Antony Blinken and Defense Secretary Lloyd Austin will meet with their Philippine counterparts in a show of unity amid heightening tensions between Manila and Beijing.
WEDNESDAY
Biden begins a visit to Ireland (after arriving late Tuesday). If Biden has a happy place for foreign visits, this is it: at the intersection of history, diplomacy, allyship and retail politicking. Here’s how Ireland is getting ready for a visit from the most Irish U.S. president since Kennedy, timed to align with the 25th anniversary of the Good Friday peace agreement.
THURSDAY
POLITICO is co-hosting an IMF and World Bank meetings cocktail reception for top officials and their teams at the residence of EU Ambassador Stavros Lambrinidis.
If you’d like to request an invitation, email Global Insider.
FRIDAY
Treasury Secretary Janet Yellen briefs the IMF/World Bank meetings.
EMMANUEL MACRON’S RISKY SPHERES OF INFLUENCE
Speaking to POLITICO on his way back from China over the weekend, French President Emmanuel Macron gave an interview that’s raising big questions about the transatlantic relationship. Read the full story (or here en français) by our European Editor-in-Chief Jamil Anderlini and Senior France Correspondent Clea Caulcutt.
On strategic autonomy: Macron emphasized the need for Europe to develop independent capabilities that would enable the EU to become the world’s “third superpower” (after the U.S. and China) to avoid the “greatest risk” Europe faces: getting “caught up in crises that are not ours” and becoming “just America’s followers.”
Taiwan is where the rubber hits the road: The U.S. has pledged to defend Taiwan: “The question Europeans need to answer,” Macron said, is “is it in our interest to accelerate [a crisis] on Taiwan? No. The worst thing would be to think that we Europeans must become followers on this topic and take our cue from the U.S. agenda and a Chinese overreaction.”
Marco Rubio fires back: Sen. Rubio (R-Fla.) dropped a video in which he says, if “their position now is they are not going to pick sides between the U.S. and China over Taiwan, maybe we shouldn’t be picking sides either. Maybe we should basically say we’re going to focus on Taiwan and the threats that China poses, and you guys handle Ukraine.”
“So we need to find out: Does Macron speak for Macron or does Macron speak for Europe?” Rubio added.
SAVE THE DATE, MAYBE: Several European diplomats told POLITICO that an EU-US summit is about to be scheduled for October. No date has been sent, but the likely venue is Washington.
Why an October summit? The next big transatlantic trade fight is primed to explode, per POLITICO’s trade team. Negotiators from Brussels and Washington are scrambling to solve a five-year dispute over steel and aluminum dating back to former U.S. President Donald Trump’s decision to slap tariffs on European imports. They have until October to get a deal but are still so far apart that European officials now fear the chances of an agreement are slim.
Without a deal, both sides could reimpose billions of dollars worth of trade tariffs on each other’s goods — potentially spreading well beyond steel to hit products including French wines, U.S. rum, Polish vodka and American denim jeans.
VIEW FROM THE TOP — INTERVIEW WITH IMF’s KRISTALINA GEORGIEVA
Global Insider sat down with Georgieva, the IMF managing director, on Thursday to get her take on the status of the world economy and the IMF’s role in it. Georgieva had just arrived back from meetings with China’s new economic leadership team — making her the first global leader to gain those insights.
Watch the full interview (25 minutes) | Read POLITICO’s takeaways, or grab the highlights below
Real risks ahead: “There is simply no way that interest rates would go up so much after being low for so long and there would be no vulnerabilities. Something is going to go boom.”
But this is not a repeat of the 2008 financial crisis: “I am more optimistic today … but when you look under the hood, there are vulnerabilities. The financial system, both banking and non-banking, is much cleaner,” compared with 2008 when the system was full of overvalued assets.
Is the IMF paralyzed? “No we are not. No, we are not in an identity crisis. What we hear from our members is a very different story. Ninety-six countries have turned to us (in recent years). That article came on the day my staff reported to me that we had record lending.”
Risk of U.S. debt default: “They cannot default. If the U.S. was to default, when you talk about inflation: it’s going to be multiple times harder.”
Who should we follow in Beijing, now that you’ve met the whole leadership? “I was very positively impressed by the new Premier Li Qiang. Very friendly, very approachable, very clearly committed to China opening up to foreign investors. I am more hopeful: It’s one thing to read someone’s biography, it’s another to sit down with them. He’s very committed to the IMF.”
China’s approach to third country debt: “It takes far too long for debt resolution. They have to speed up their participation” working with countries in trouble. “They came around on Sri Lanka, they came around on Chad. Now we want to see the same progress on Ethiopia, on Ghana.”
On Dilma Rousseff being appointed head of the BRICS development bank: “She has the stature of having been president of a large emerging market (Brazil). I have a personal reason to be a fan: her father is Bulgarian (Georgieva is Bulgarian). We will be getting lunch.”
GLOBAL ECONOMY DATA POINTS
— The IMF projects global growth to remain around 3 percent over the next five years, the lowest medium-term growth forecast since 1990.
— A new report by the Debt Relief for a Green and Inclusive Recovery Project, notes that “external debt levels and service payments have more than doubled since the 2008 global financial crisis” in emerging economies to nearly $4 trillion, and “climate vulnerable countries have some of the most significant debt distress”
U.S.-PHILIPPINE TIES SOAR ON GROWING CHINA FEARS
Coinciding with the start of the largest ever U.S.-Philippine joint military exercises, Philippine Secretary of Foreign Affairs Enrique A. Manalo and the country’s top defense official Carlito Galvez, are in town for the U.S.-Philippines Ministerial Dialogue.
My colleague Phelim Kine writes that the meeting will reaffirm the U.S.’s “ ironclad commitment” to its Philippine alliance, per a State Department statement published Thursday. The event follows Philippine diplomats’ complaints last month about increasingly aggressive actions by Chinese maritime forces in the South China Sea, and the country allowing U.S military forces access to an additional four Philippine military bases under an existing joint forces agreement.
While President Ferdinand “Bongbong” Romualdez Marcos pledged to “strengthen the relationship between China and the Philippines” during a trip to Beijing in January, overall his actions suggest a decisive shift away from the Beijing-friendly policies of his predecessor Rodrigo Duterte.
U.S.-Philippine ties hit an historic low in 2016 when then-Philippine President Rodrigo Duterte called President Barack Obama a “son of a bitch” for his criticism of the soaring death toll of Duterte’s anti-drug campaign. Duterte then announced a “separation” between the Philippines and the U.S.
Chinese Foreign Ministry spokesperson Mao Ning warned on Thursday that Marcos’s policy shift may reap “grave irreparable consequences” for the Philippines. Marcos “wants to have a good relationship with China, but China’s provocative behavior in the South China Sea ratchets up the domestic pressure in the Philippines for him to be a little bit tougher vis-à-vis China and a little closer to the U.S.,” said Scot Marciel, a former principal deputy assistant secretary for East Asia and the Pacific at the State Department.
AFRICA — HOW TO HELP A JUNTA WITHOUT CROSSING RED LINES: The Biden administration is quietly helping Burkina Faso’s ruling junta battle al Qaeda and Islamic State in a hotly-contested corner of West Africa, the Wall Street Journal reported Sunday.
“The U.S. has included Burkinabe commandos in American-led exercises, but excluded the West African country’s top officer from an international gathering of defense chiefs after a military takeover last year. The Pentagon has a team of U.S. Green Berets stationed in Ouagadougou, Burkina Faso’s capital, but won’t allow them to train their beleaguered local counterparts,” per Michael M. Phillips.
CLIMATE — CHAT GPT’S MASSIVE CARBON FOOTPRINT: Stanford University’s latest report on AI trends has some bad news for anyone loving both ChatGPT and the planet.
The report catalogs the carbon footprint of selected large language models, including ChatGPT, comparing it to emissions from catching a plane, the life of a car and so on.
ChatGPT is 20 times more carbon intensive than comparable AI models such as BLOOM, the researchers concluded.
KLEPTOWATCH — WHAT RUSSIA SANCTIONS? Great reporting from Miles Johnson and Chris Cook in London, and Anastasia Stognei in Riga, for the Financial Times has revealed.
a British business registered to a suburban house in a north London suburb appears to have arranged the sales of about $1.2 billion of electronics into Russia since February 2022.
Around $1 billion of that trade was in goods subject to restrictions on export by U.K. companies or individuals to Russia. “These findings raise questions over the effectiveness of the attempts to clamp down on Russia’s ability to obtain critical technologies used by the country’s military industrial complex,” the FT concluded.
JUSTICE FOR KILLERS OF ITALIAN ENVOY: The trial of the killers of Italian Ambassador Luca Attanasio and two others in an ambush on a U.N. convoy in eastern Congo in 2021 has concluded with life sentences for six people. Public prosecutors had originally sought the death penalty
MOVES
Monica Medina, the assistant secretary for oceans and international environmental and scientific affairs, is stepping down after a year and a half on the job. Medina is the Biden administration’s top diplomat for negotiations on a global plastics treaty and regulations around deep-sea mining. Medina will become president and CEO of the Wildlife Conservation Society.
In a wide open race to become secretary-general of the International Maritime Organization, a U.N. agency, seven candidates have been nominated: Moin Uddin Ahmed (Bangladesh), Zhang Xiaojie (China), Cleopatra Doumbia-Henry (Dominican Republic), Minna Kivimäki (Finland), Nancy Karigithu (Kenya), Arsenio Dominguez Velasco (Panama) and Suat Hayri Aka (Turkey).
BRAIN FOOD
What’s a billion people between friends? The world’s peak population may be smaller than expected, with sub-Saharan Africa’s population peaking maybe in 2060, 40 years earlier than U.N. projections.
Thanks to editor Heidi Vogt, Phelim Kine, Jordan Wolman and producer Sophie Gardner.
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