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IMF warns global crisis could lead to war

The managing director of the International Monetary Fund has warned that the global financial crisis can exacerbate social unrest in emerging economies and even lead to war.

Speaking at a meeting of the International Labour Organization yesterday, Dominique Strauss-Kahn called for increased co-operation between the IMF and ILO, warning of the dire consequences of allowing the crisis to develop into a “wasteland of unemployment”.

He said the international economy could start to recover in 2010, but this is dependent on bold policy decisions, reiterating his call for a global fiscal stimulus of 2 per cent of international GDP.

Strauss-Kahn warned that there are particular dangers in emerging economies, that have been dependent on the international community for capital.

He said:“IMF support in this case is not enough.

“These countries need to rebuild their model and learn to live with less capital inflow. Financial help alone without a change of policy is not useful.”

He said that poor countries not only face the risk of unemployment and social unrest, but also threats to democracy and even war.

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