Podcast Summary: Populism and Nationalism Are Threat to Global Cooperation – Podcast with IMF’s Christine Lagarde

Podcast: The CGD Podcast
Host: Center for Global Development (Rajesh Merchandani)
Guest: Christine Lagarde, Managing Director of the IMF
Release Date: July 18, 2016

Main Theme / Purpose

In this episode, IMF Managing Director Christine Lagarde discusses how rising nationalism and populism are threatening global economic cooperation, especially in the wake of Brexit and increasing anti-globalization sentiment. She highlights the unique challenges low-income countries face in this environment, the importance of adhering to global commitments like the Sustainable Development Goals (SDGs), and the role of the IMF in supporting vulnerable economies.

Key Discussion Points & Insights

1. The Challenge to Global Cooperation (01:05–02:40)

• Lagarde’s concern: Rising nationalism, populism, and protectionism threaten global development efforts, making it harder for nations to cooperate on issues like poverty, health, and climate change.
• SDGs & Addis Abeba Commitments: Despite ambitious agreements, political realities in wealthier countries make fulfilling these global commitments difficult.
• The interconnected nature of problems: Issues like Ebola and climate change ignore national borders, necessitating strong international cooperation.

Quote:
"Problems are global issues and ignore borders… you need to have that degree of cooperation. And it's really important for us all to be fixated on these goals that were set out in 2015."
—Christine Lagarde [01:23]

2. Globalization’s Local Backlash and Poor Countries (02:40–03:58)

• Brexit as a symptom: Brexit exemplifies the perception in rich countries that globalization is not working for everyone.
• Benefits of interdependence: Low-income countries rely on external financial support, solid domestic policies, and global economic connections (trade, remittances, aid).
• No viable alternative: Lagarde stresses that isolation is not a realistic option for development.

Quote:
"What's the alternative is my question… low income countries… will do that in a very interrelated world… the solutions and the tools are very much based on interconnections."
—Christine Lagarde [02:53]

3. Aligning Domestic and International Interests (03:58–06:04)

• Politicians’ priorities: Domestic issues often overshadow international cooperation.
• G20 example: Lagarde mentions the agreement to increase growth by 2% within five years, which would have global spillover benefits.
• Other commitments: Increasing women's economic participation, reducing remittance costs, and 0.7% of GDP for aid to low-income countries—most countries have not delivered.

Quote:
"If your neighbor's house is burning, you're not safe. And it's critically important that… there is that collective understanding."
—Christine Lagarde [05:38]

4. The Impact of Brexit on Development and Aid (06:04–08:02)

• Sterling depreciation: The UK’s aid commitment (0.7% of GDP) is undermined by the weaker pound, effectively reducing the money available for development.
• Broader uncertainty: The impact of Brexit on low-income countries and global growth is difficult to predict and depends on future negotiations and economic stability.

Quote:
"The fact that the pound has depreciated has an immediate sort of almost mechanic effect on development aid."
—Christine Lagarde [06:48]

5. Economic Forecasts and Preventing Recession (07:56–08:38)

• Potential recession: Lagarde acknowledges that a “bad outcome” scenario with prolonged uncertainty could tip the UK into recession, affecting global recovery.
• Need for clarity: Quick resolution of Brexit terms would reduce uncertainty for global markets.

Quote:
"The sooner that happens, of course, the less uncertainty there is and the better the scenario will be."
—Christine Lagarde [08:26]

6. The Evolving Role of the IMF (08:38–11:20)

• Mission expansion: The IMF remains focused on stability, but now includes “macrocritical” factors like gender equality, financial inclusion, and climate change.
• Collaboration, not competition: The IMF’s engagement with issues like women’s empowerment and fossil fuel subsidies is not infringing on the World Bank’s role, but rather essential for sustainable growth.
• Addressing inequality: Income inequality contributes to rising nationalism, making it crucial for the IMF to research and advise on policies that foster inclusive, sustained growth.

Quotes:

• "The empowerment of women, for instance, in the economy…the elimination of discrimination against them, is going to generate significant growth in various corners of the world."
  —Christine Lagarde [09:29]
• "If…income generated by that growth actually are very inequally distributed, then we risk this rise of nationalism, protectionism that is not consistent with solid sustainable growth."
  —Christine Lagarde [11:00]

Notable Quotes & Memorable Moments

• On SDGs and global interdependence:
  "Problems are global issues and ignore borders… you need to have that degree of cooperation." —Lagarde [01:23]
• On alignment of interests:
  "If your neighbor's house is burning, you're not safe." —Lagarde [05:38]
• On Brexit and aid:
  "The fact that the pound has depreciated has an immediate sort of almost mechanic effect on development aid." —Lagarde [06:48]
• On economic uncertainty:
  "The sooner that happens [clarity about Brexit], of course, the less uncertainty there is and the better the scenario will be." —Lagarde [08:26]
• On gender and macroeconomics:
  "The empowerment of women…is going to generate significant growth…We have to pay attention to that." —Lagarde [09:29]
• On rising nationalism:
  "If…income generated by that growth…are very inequitably distributed, then we risk this rise of nationalism, protectionism…" —Lagarde [11:00]

Timestamps for Key Segments

• 00:43–01:23: Opening question about SDGs and threats from global economic trends
• 01:23–02:40: Lagarde on the urgent need for global cooperation
• 02:40–03:58: Discussion of Brexit, globalization, and developing countries
• 03:58–06:04: Aligning domestic politics with global development
• 06:04–06:48: UK aid, sterling depreciation, and Brexit’s real-time consequences
• 07:56–08:38: Recession risk and the need for certainty
• 08:38–11:20: Evolving scope of the IMF and the importance of macrocritical issues

Conclusion

Christine Lagarde emphasizes that global challenges—whether economic, health-related, or environmental—require nations to look beyond domestic priorities and sustain international cooperation. She highlights the dangers posed by rising nationalism and populism to both global stability and the world’s most vulnerable. The IMF, under her leadership, adapts its mission to address new economic realities, including promoting gender equality, reducing inequality, and tackling climate risks, to ensure that growth is both strong and inclusive.