During last week’s Spring Meetings, Kristalina Georgieva, managing director of the International Monetary Fund (IMF), expressed concerns about “fragmentation”—the global economy splintering into rival trading blocs—warning that it could worsen the global inflation crisis. The IMF chief attributed this risk to a combination of factors, including the ongoing war in Ukraine and flaws in the current model of globalization.

Advocating for a “cool-headed” approach to the problem, the director urged world leaders of developed nations to avoid stoking a renewed Cold War. While speaking with The Epoch Times on Friday, she elaborated on her position.

“What I mean is that we have to be rational in strengthening security of supplies—which is something that we have to do—but do it in a way that doesn’t generate unnecessary costs,” Georgieva told The Epoch Times.

In her Thursday speech at the IMF headquarters in Washington, D.C., the director emphasized the growing importance of supply-chain security amid geopolitical tensions. Her primary concern is ensuring global trade remains efficient and robust so that developing nations—who are most vulnerable to disruptions—avoid unexpected price spikes and lose access to critical resources.

“What we have learned from COVID-19 and the war is that security of supply and the reliable functioning of global supply chains are taking a higher priority in economic discussions and decision making,” Georgieva said. “Regrettably, we have to recognize that we can’t take peace for granted. Russia’s invasion is not just a tragedy for the people of Ukraine but a tragedy for the global community. Defense expenditure has gone up. The peace dividend is gone.”

Her comments clashed with recent calls by the G7 group of major industrial countries, which recently expressed their desire to reduce dependency on China by exploring alternative supply chains through partnerships with lower- and middle-income countries. While such a move could increase fragmentation, a G7 report last week argued that increased reliance on lower- and middle-income countries could bolster overall supply-chain resilience.

Georgieva, who was born in the then-Soviet satellite state of Bulgaria, encouraged world leaders to avoid regressing into primitive hostilities but held out hope that the world could avoid such an outcome.

“I am among those who know what the consequences are of a Cold War,” she said. “Can we enhance security of supply without pushing the world into a new Cold War? I think that’s possible.”

UK chancellor Jeremy Hunt also spoke at the Spring Meetings on Thursday, and he echoed Georgieva’s concerns about fragmentation. He argued for more dialogues and open trade lines between adversarial nations.

“It would be irresponsible not to recognize the need to address this,” Hunt said. “We could do it in a protectionist way which would send the global economy back to the dark ages by saying we are all going to try to make sure we do everything ourselves—or we can cooperate with our friends and allies to make sure we continue to benefit from free trade.”