00:00We have the IMF World Bank meetings in Washington next week. A year ago, if you remember, it was
00:05just after Liberation Day. Now, this time we have a shooting war instead of a trade war.
00:11How will that affect these meetings? I think that at the beginning of the year,
00:16as people were getting ready for these meetings, what officials, finance ministers, central bankers
00:23were getting ready to talk about is global trade. How resilient is it? AI, what is the impact going to
00:30be on the world economy? I think those were probably the big issues. But with the war in Iran,
00:37that has now pushed everything off the agenda. And I think the central focus is going to be
00:46what is happening to the global economy. I think you're going to see, you know, nervous is maybe
00:54the wrong word, but some very concerned finance ministers and central bankers. I spoke to one
01:03person who is a principal participant in these meetings. And I asked this person, I said, you
01:10know, I want to talk about these meetings, what you're thinking, what you're getting ready for.
01:13And this person said to me, the first thing the person said is, I'm expletive deleted.
01:21So I think that gives you a sense of, you know, the degree, I would say of potential crisis
01:28that leaders are preparing to deal with. Talk about the state of the global economy
01:32as far as we can see it right now. We see, for example, OECD estimates out where we're taking
01:36growth down, inflation up, and people at least are talking about stagflation, that dreaded term.
01:42The concern that I would have if I were headed there as finance minister would be that there
01:49is a triple whammy that the world is facing right now. One, stagflation, that is hard enough to deal
01:56with. Two, it is coming at a time when the fiscal capacity of countries is really strained. You know,
02:05remember, COVID was not that long ago. And in addition to, you know, treasuries having been
02:12depleted by COVID, governments are spending a lot on defense. So the money available to deal with a
02:19crisis is really, really not there in the way it was before. And then the third thing is,
02:27you know, it's not just that there is a vacuum in leadership. There are a lot of fights going on.
02:36In 2008, the big global financial crisis, the G20 really rallied to pull the world through.
02:46During COVID, when I was finance minister, it was much more the G7. You'll remember that Russia
02:53invaded Ukraine early on in COVID. And that made the G20 much less effective. But the G7 really acted.
03:02Today, it's really hard to see where the leadership comes from. The G7 itself is deeply divided. And
03:10there are obviously deep divisions in the G20 between Russia and the NATO countries, between China
03:18and the United States. It strikes me the IMF and World Bank and other institutions like that were the
03:24essence of multilateralism coming out of World War Two. And now, as you say, it's not so clear where
03:29the leadership comes from. I wonder whether they could even get together in the same room. I mean,
03:33you have the United States and Israel in one place and you've got the rest of the West in another
03:37place.
03:38Before you get to China and Russia, I mean, what is the future of multilateral organizations in that sort of
03:43world?
03:43Really, really rough. And, you know, the IMF and the World Bank are not just multilateral institutions.
03:51At the end of the day, these are the Bretton Woods institutions that were created by US leadership
03:59in the world. These were the institutions created as the allies looked at the carnage, the destruction of
04:08World War Two and said, we have to build a world that works better. You know, there's a great line
04:15from Dean Acheson that I love, where he said, we have to at least build a world that works for
04:20our half
04:21of the world, for the free world. And I know it's quite in vogue to criticize that US-led international
04:31order. But actually, it worked pretty well. You know, the time from World War Two to today, certainly for
04:40North America, for Western Europe, has been a time of unprecedented peace and prosperity. And that is
04:47in part because of the Bretton Woods institutions. Now, what is unprecedented is that this order that America
04:58built these institutions that America was the leader in creating is being really wrecked by the country
05:07that created them, by the United States. In another time, another place, we would be talking about
05:12development, some of the less fortunate countries around the world and what they needed. When the big
05:17powers conflict, often it's the little guys who really take it in the neck, as it were. What's going
05:25on in Asia? What's going on in Africa as we see this war in Iran unfold? That is a hugely
05:31important
05:31question. I hope that it is a question that we hear a lot of people talking about next week. The
05:38reality
05:39is that challenging as this moment in the global economy looks in Washington, in New York, in San
05:48Francisco. It is much, much worse in Asia, in Africa. These are the countries that depend on fuel coming
05:58through the Strait of Hormuz. They depend on fertilizer that comes through the Strait of Hormuz.
06:03And that is where you are really seeing the stagflation. Because in those countries, in addition to
06:11seeing higher prices, because energy has become much more expensive, you're also seeing governments
06:18acting to slow down the economy. You're seeing governments saying that people need to be working
06:22from home. You're seeing governments saying that people can't be driving their cars.
06:26And that, of course, has major repercussions for countries that need to import oil and natural gas.
06:31But also, we've talked about fertilizer before. As you say, you're a farmer's daughter. You know this world
06:36of fertilizer. And it's one thing for April, which is critical in North America for planning.
06:40What about for the rest of the world, where the planning may come a little later,
06:44could we be facing more than just higher prices? Could we be facing real food shortages?
06:49A hundred percent. You know, the combination of fertilizer, having a hard time getting through
06:56the Strait of Hormuz, and also fuel prices translate very directly into higher food prices. It takes fuel,
07:05usually diesel fuel, to farm. So you're already seeing that. That is already a challenge right now
07:13for countries in Africa, for countries in Asia. I don't want to just talk about bad news. Something
07:20that is promising that is happening right now is the UN is involved in some negotiations trying to get
07:30a deal with Iran to allow fertilizer to pass through the Strait of Hormuz. There's some precedent there
07:37because a deal was done to allow commodities to pass through the Black Sea after Russia launched its
07:47full-scale invasion of Ukraine. So that would be a piece of good news, first and foremost,
07:56for the countries of the global south, but for the whole world. So let's hope that the UN can do
08:01it. And,
08:02you know, it would be a sign that multilateral institutions can work.
08:06Christian, let me pose on you for a moment. Put your old hat on as finance minister from Canada.
08:12If you were going to these meetings, what would be your goal? What do you think you might be able
08:16to accomplish
08:16in these meetings? My goal this year would be to spend a lot of time, first and foremost, talking to
08:32the, having meetings within the G6. I'd be spending a lot of time talking to France. I think Macron's
08:39leadership right now is extraordinary. I think, by the way, my own prime minister, Mark Carney, is showing
08:43extraordinary leadership. I think we're seeing the UK stepping up, working hard on the Strait of Hormuz.
08:50I think the EU, Germany, Italy, all of those countries are playing an important role. I would say
08:58Spain is another country to watch. It has been a leader in saying it's time to say to the White
09:08House,
09:08enough is enough. And I think we're seeing a lot of European countries follow that advice. So if I were
09:16headed to the meetings, the personal thing that I would be planning and how I would start my remarks at
09:25the G7 finance minister and central bankers meeting would be by saying thank you to Jay Powell, thanking him
09:32for his leadership, thanking him for his integrity, thanking him for his courage. And I bet I'm not the
09:40only person thinking that. So I am pretty sure that behind closed doors, a lot of people are going to
09:47be
09:48congratulating him, wishing him well. And I wouldn't be surprised if you hear people saying that
09:54in public too. And I'd like to take this opportunity to say thank you very much, Jay Powell. You're an
10:00example of American integrity. The world needs you more than ever.
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