When it comes to the International Monetary Fund (IMF), Europe continues to dominate the election of who occupies the top position.
The re-election of Kristalina Georgieva, 70, for another five-year term is not a surprise.
Efforts to oust her for allegedly manipulating data on China, in a previous job at the World Bank, were unsuccessful.
And since the candidates for the November 2024 US presidential election are a late septuagenarian and an octogenarian, she is a mere wench.
The IMF’s spring session this week, as was the case at last year’s annual meeting in Morocco, will be disrupted by developments in the Middle East.
Challenges: Kristalina Georgieva (pictured) has been re-elected as managing director of the International Monetary Fund for another five-year term
As Georgieva aptly noted in brief comments about the victory, her tenure has been dominated by shocks including “pandemic, war and conflict.”
Covid-19 may be behind us, if not its consequences for the cost of living, but geopolitical uncertainty dominates.
The war in Gaza, sparked by the horrific events of October 7 last year, continues. A weekend of Star Wars-style conflict, when Iran directly attacked Israel, is part of the same thing.
Furthermore, Russia’s war against Ukraine, which precipitated an energy crisis and gave new impetus to inflation around the world, continues. However, the West’s commitment to supporting Ukraine is waning.
The US Congress is considering decoupling President Biden’s proposed aid package for the Middle East (about $14.1 billion for Israel and $9.2 billion in humanitarian aid for Gaza) from the $60 billion for Ukraine to which Donald Trump opposes it.
The weekend’s events were a wake-up call to Western democracies about the real and present danger in the Middle East.
As unfortunate as Israel’s war on Gaza has been, it is Iran that poses the real threat to peace, the energy market and the global economy.
Its proxy wars against Western shipping in the Red Sea via Houthi rebels, support for anti-Western rebel forces in Sudan (which borders the Suez Canal), Hezbollah’s occupation of much of southern Lebanon and Syria are all the same.
The direct attack on Israel with 170 explosive-laden drones, 120 ballistic missiles and 30 cruise missiles was repelled not only by Israel but also by critical assistance from the United States, Britain and its Arab partners.
The need for such a coordinated response shows how ineffective Western sanctions have been in containing the ayatollahs and their terrorist arm, the Iranian Revolutionary Guard Corps (IRGC).
We can expect a tightening of such measures as both the EU and the US seek to prevent Israel from climbing an escalation ladder.
So far the markets are calm. The price of oil fell a little, encouraged by the ‘Iron Dome’ defenses, but there is a possibility of rising to $110 a barrel or more, giving a new boost to inflation.
Paradoxically, despite the potential cost-of-living consequences of broader conflict, it could accelerate postponed cuts to official rates. In times of crisis, the classic response is to make monetary policy more flexible so as not to exacerbate the situation. All of which will be a major test for global economic and financial leadership in the coming days.
Treasure hunt
Ahead of the IMF summit, Jeremy Hunt is in New York drumming up support for the UK.
It doesn’t hurt that RAF aircraft were in action in defense of Israel, aligning Britain’s strategic interests with those of the United States.
The Chancellor also has a decent economic story to tell. Tomorrow should be boosted by another drop in headline inflation in March towards the 2 percent target.
Hunt’s calls show a keen interest in bolstering the UK’s successful creative industries and supporting financial services.
Unleashing new capital for UK startups, innovation and infrastructure is critical to scaling up future production.
Too bad Britain’s disjointed post-Brexit politics delayed such initiatives.
disco dance
The revival of stock markets, deal-making, bond trading and initial public offerings has dispelled the pessimism surrounding Goldman Sachs boss, retired disc jockey David Solomon. First-quarter profits soared 28 per cent to £3.3bn and shares rebounded 4 per cent.
This could signal better days for undervalued Barclays, the UK’s only full-service investment bank.
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