Washington DC - According to the head of the International Monetary Fund (IMF), Kristalina Georgieva, the fragmentation of the global economy into rival trading blocs could prompt a new cold war, as security of supply and the reliable functioning of global supply chains are taking a higher priority in economic discussions and decision making. The COVID-19 pandemic, the war in Ukraine, and shortcomings with globalization have led to a potentially dangerous splintering, and the G7 group of leading industrial countries has heightened fears of fragmentation by wanting to reduce dependency on China by building alternative supply chains.

Georgieva pointed out that Russia’s invasion of Ukraine is not just a tragedy for the people of Ukraine but also for the global community, as it has led to a rise in defence expenditure, and the peace dividend is gone. She further highlighted that globalization didn’t benefit everyone and didn’t focus enough on those that were left out or left behind. As someone who lived behind the iron curtain during the Cold War, Georgieva expressed her concerns about a repeat of such circumstances and said, "I am among those who know what the consequences are of a cold war."

Georgieva stressed that it's possible to enhance security of supply without pushing the world into a new cold war, and she urged policymakers to prioritize cooperation and to use multilateral institutions such as the IMF to address economic imbalances and reduce the risk of conflict. The UK chancellor, Jeremy Hunt, shared Georgieva's concerns about fragmentation but said that the desire for greater supply chain security was understandable and necessary.

Georgieva was born and raised in Bulgaria, a former Soviet satellite state.