IMF chief says give peace a chance
By Colin Brinsden, Economics CorrespondentThu Sep 24 00:06:01 EST 2009
Wed Sep 23 14:06:01 UTC 2009
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CANBERRA, Sept 23 AAP - It could have been scripted by the late John Lennon, but the International Monetary Fund's (IMF) chief has used a speech in New York to talk about "peace".
The fund's managing director, Dominique Strauss-Kahn, admits that some people might find the topic "strange", but his belief is that peace and economic stability are "intimately entwined".
"If you lose one, you are likely to lose the the other," he said in a prepared speech to the Global Creative Leadership Summit on Wednesday.
"Peace is a necessary precondition for trade, sustained economic growth, and prosperity."
It can also work the other way.
Economic stability, and rising prosperity that is broadly shared, both within and among countries, can foster peace.
History showed how the Great Depression created fertile ground for a devastating war, and in many parts of the world more recently, economic instability had provoked political upheaval, social unrest and conflict.
"With increased international cooperation since the Second World War, it is no coincidence that we have seen fewer conflicts among nations together with greater prosperity, encompassing an ever-increasing share of the world's population," Mr Strauss-Kahn said.
However, the current economic crisis did raise risks to social stability.
While there was "light at the end of the tunnel" with financial conditions improving and economic growth starting up again, it would take time for employment to follow.
The IMF is forecasting a global recovery in the first part of 2010.
"Unemployment might very well continue rising next year, even as the economy bounces back," Mr Strauss-Kahn said, adding the crisis was not over for people losing their jobs.
"In many countries, particularly those without adequate social safety nets, poverty will persist, and with this comes risks to social stability."
The United Nations and World Bank believed up to 90 million people might be pushed into extreme poverty as a result of the crisis.
Economic "marginalisation and destitution" could lead to social unrest, political instability or a breakdown of democracy, Mr Strauss-Kahn said.
"We could see war ... we must strive to avoid war at all costs," he said.
The IMF was created to fight the economic roots of war and that sat at the heart of multilateral efforts to achieve economic stability within and between countries, Mr Strauss-Kahn said.
At a broad level, the IMF was helping countries maintain or consolidate economic stability by providing financing when needed.
"Without this, governments might be forced to cut social safety nets and essential public services."
