IMF managing director Christine Lagarde implored the United States to help back-stop debt-ridden European countries, wading neck-deep into bubbling US political waters.
Speaking in the US capital, Lagarde said the 187-nation International Monetary Fund needed more firepower to tackle financial crises raging around the globe, arguing it was in the US interest to pitch in and help Europe.
Lagarde’s comments came 64 years to the day after president Harry Truman signed the Marshall Plan, an unprecedented loan to rebuild post-war Europe.
But her comments will be anathema to politicians in Washington, as the country hurtles toward elections this November.
US officials, including Treasury Secretary Timothy Geithner, have for months trod a thin line between supporting the IMF’s efforts to bolster its resources and actually kicking in some more cash.
Washington has yet to ratify 2010 reforms which would see it send $63 billion more to the IMF’s coffers, under a new quota agreement.
With the United States itself mired in high levels of debt, increasing IMF funding or shipping tens of billions of dollars abroad to help Europe could be tantamount to political suicide.
Unperturbed, Lagarde said Europe’s recent efforts to shore up its own financial “firewall” must prompt the rest of the world to pitch in.
Lagarde has asked members to give her $500 billion in extra funds to fight financial crises, including for possible future eurozone bailouts.
But at a fraught meeting of finance ministers and central bank chiefs in Mexico City in February, Group of 20 economies said they would only boost IMF funding if the eurozone first put its hand in its pocket.
After a month of wrangling and some German resistance, the eurozone Friday clinched a deal it claimed was worth more than one trillion dollars, putting the ball back in the IMF’s court.
Trying to seal the deal, Lagarde echoed a point frequently made by Geithner: that the IMF offers a solid bet.
Lagarde added that the global economy is looking better, but said the recovery is still very fragile.