(March 6): European Central Bank (ECB) President Christine Lagarde urged global leaders to find a “basic code of conduct” to work with each other at a time when technological innovation needs cooperation and geopolitical fragmentation carries high costs.
Lagarde said the crumbling world order, alongside the rise of artificial intelligence (AI), recalls the 1920s, when groundbreaking technologies emerged just as the fallout of World War I poisoned global financial relations.
“We can repeat the errors of the 1920s, treating technology and geopolitics as separate tracks until they inevitably collide,” she said Thursday in a speech in Bologna, Italy. “Or we can embrace layered cooperation, recognising that in an era of systemic uncertainty, the most robust strategy is resilient integration.”
Lagarde proposed reforming existing global institutions, deepening cooperation among allies and finding viable ways to interact with rivals — calling the latter the hardest but also the most important part of her three-step approach.
The ECB chief is making her plea days after the US and Israel began a war with Iran that risks engulfing the whole Middle East. Supply chains and energy shipments have come under threat — raising fears inflation will spiral and economic growth will weaken.
Iran is the latest chapter in President Donald Trump’s reshaping of the international order as he uses tools like tariffs to assert US interests amid challenges from countries like China.
See also: How the Iran conflict is disrupting the Strait of Hormuz
Lagarde said it’s in everybody’s interest — including Trump’s — to avoid fragmentation so the benefits of innovation can be reaped.
“The more AI becomes central to global growth, the more geopolitical fragmentation becomes systemically costly, and this leads to a paradox we cannot ignore,” she said. “At precisely the moment when the case for international cooperation is strongest — when the potential gains from integration are larger than at any point in living memory — the will to cooperate is at its weakest.”
That’s a mistake, she argued, saying “every major economy, including the US, has a direct and urgent interest in containing fragmentation — not out of attachment to the global order, but because the alternative is economic self-harm”.
See also: War cover is available for ships crossing Hormuz, says LMA
Lagarde admitted that finding ways to cooperate won’t be easy, but said her approach will “provide the resilience that a world of genuine uncertainty demands”.
“Multilateral reform will move slowly. Allied coalitions will face political setbacks. Cooperation with rivals will be tested by every escalation,” she said. “But if one layer weakens, the others hold. That is the logic of layered cooperation, and it is the most robust response we have to the uncertainty of our time.”
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