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Presentation of the IMF economic outlook: Growth forecasts have been slashed
Photo: Cory Hancock/IMF Photo HANDOUT/EPA
Not so long ago, Russian financial politicians could travel to Washington full of self-confidence.
Russia was part of the Brics, a group of aspiring emerging economies that seemed to own the future.
The Brics at times represented almost half of global growth.
Before the spring meeting of the International Monetary Fund (IMF) and the World Bank, they formulated self-confident demands for reform of the venerable financial institutions.
There is nothing left of this shine.
When representatives from Russia took the floor during a meeting of the G20 states at the IMF spring meeting on Wednesday, Western politicians demonstratively left the room.
Among them are US Treasury Secretary Janet Yellen and European Central Bank (ECB) governor Christine Lagarde.
The world's democracies would not "stand by and watch Russian war crimes in Ukraine," tweeted Canada's Finance Minister Chrystia Freeland, who herself has Ukrainian roots.
In addition, she publishes a photo of the campaign, which also shows Bundesbank boss Joachim Nagel.
Federal Finance Minister Christian Lindner (FDP) remains in the room.
According to the German delegation, it was agreed with Nagel that Lindner wanted to react to the Russian statements.
He has already sent clear words to Moscow in advance.
"Russia must be isolated," says Lindner.
The country would be "not offered a stage to spread propaganda and lies".
These are sentences from the Cold War era.
When Lindner speaks it, he sounds less like a finance minister than a foreign minister - a change of role that was occasionally observed in his predecessors.
But probably none of them was confronted with such a dramatic situation as the Ukraine war on their first big trip abroad.
Fear of stagflation
The global economy, which is actually on the recovery course from the corona pandemic, is in danger of being thrown back far as a result of the consequences of the war.
In its new outlook for the global economy, the IMF is therefore scrapping the growth forecasts, including for Germany.
The war is exacerbating two political conflicting goals, the experts write:
On the one hand, monetary policy has to react to rapidly rising inflation rates.
The IMF expects inflation of 5.7 percent this year in industrialized countries, and even 8.7 percent in developing and emerging countries.
This feeds concerns about stagflation – a mixture of stagnant growth and high inflation.
And it increases the pressure on the ECB to finally raise interest rates.
Bundesbank boss Nagel makes it clear in Washington that he thinks the first step in the summer is the right one.
However, the recovery of the economy after the corona crisis could be stalled if the increases were too rapid.
On the other hand, according to the IMF, states should support the weakest - be they refugees, those affected by the high prices or the pandemic.
However, many states have already spent enormous sums in the fight against Corona.
Debt levels are "at an all-time high, and governments are more exposed than ever to higher interest rates," according to the IMF report.
At his IMF premiere, Lindner formulated surprisingly clearly what the mixture of high debt and rising interest costs could mean in the worst case: »There is a risk of a global debt crisis in emerging and developing countries.« The G20 countries must prepare for this now, also China.
The People's Republic is one of the largest creditors to poorer countries, but little is known about the details of its loans - which increases concerns in the West about unexpected upheavals.
»All of this has one source: Russia«
Lindner attaches particular importance to a message that his ministry has already spread in the run-up to the trip: Vladimir Putin alone bears responsibility for the new economic risks.
"All of this has a source: Russia," says Lindner.
Hardly any of Lindner's colleagues would disagree with this recrimination.
However, there are quite different views on the question of how to react to the situation.
So far, Germany's answer has been above all: with money.
In Washington, Lindner brought with him a promise from the federal government for loans of around 6.3 billion euros for an aid fund for developing and emerging countries.
In addition, there are interest subsidies of around 100 million euros.
In addition, Lindner has announced around two billion so-called training aids, with the help of which Ukraine is to buy weapons.
However, if the Ukrainian government had its way, Germany itself would supply heavy weapons and immediately impose a gas embargo on Russia.
The traffic light coalition has so far rejected both, which has led to criticism that it indirectly supports the warmonger Putin.
Lindner's pithy announcements in the direction of Moscow also seem like an attempt to draw attention back to those actually responsible for the war.
And something else speaks from Lindner's statements: the concern that the mood of the population could change if the economic situation worsens.
So far, a majority of Germans have supported tough sanctions against Russia.
But will it stay that way if prices continue to rise rapidly?
Like his predecessor Olaf Scholz, Lindner also sees the danger that a protest movement similar to the French yellow vests could form in Germany.
"Higher food and energy prices increase the risk of social unrest," warns the IMF.
How dramatic the effects of a complete embargo would actually be is disputed.
Renowned economists are of the opinion that the consequences for Germany would be manageable.
According to SPIEGEL information, an analysis by the Bundesbank, which was published at the end of the week, did not come to dramatic results either.
Accordingly, Germany is likely to slip into recession if an embargo leads to production losses.
However, the slump would be less severe than in the corona crisis.
Return of block thinking?
For the time being, the finance ministers and central bankers gathered in Washington have contented themselves with denouncing Putin's regime in words.
"We regret Russia's participation in international forums," said a statement by the G7 states, which were chaired by Lindner and invited the Ukrainian finance minister as a guest.
But Russia is not prevented from participating.
Behind this is also the concern that such a step could split the international community.
The buzzword »blocks« is said to have been used frequently in the discussions – another reminder of the Cold War.
What effect the debates in Washington will have on Russia's leadership can at best be guessed at.
Only the Russian Deputy Minister of Finance is present on site.
His boss is connected via video, as is the head of the central bank, Elwira Nabiullina.
She is considered an opponent of the war and was highly regarded among colleagues abroad.
But now there is no longer any exchange between the Russian central bank and the ECB or Bundesbank.
Some of the isolation of Russia demanded by Lindner is already a reality.
Another crisis then catches up with the minister in Washington, and it's very personal.
On Wednesday evening it was announced that Lindner had tested positive for Corona.
His employees cannot initially say whether he can fly back to Germany on Thursday as planned.
Lindner may have to isolate himself first.
