Lagarde urges pragmatic reforms to preserve global order

The international order, often caricatured as an imposition by the strong, was in fact co-constituted over centuries by nations great and small.

Principles like formal limits on force and self-determination emerged from revolts against colonial power, formalised after the World Wars with institutions like the United Nations, Bretton Woods system, and WTO.

This system achieved unprecedented reductions in interstate war and expanded trade, lifting millions from poverty.

However, this consensus faced strain from China's extraordinary rise, which challenged the multilateral trading framework designed for comparable market economies.

The United States, a long-time guarantor, began to lose faith, putting the entire order in jeopardy.

Despite eroding trust, the world remains deeply interconnected, with almost half of all trade embedded in global value chains and cross-border financial positions at historic highs.

Attempts to reduce vulnerabilities, such as US tariffs on China, reveal the limits of autonomy, as dependencies prove too deep.

The International Monetary Fund estimates severe trade fragmentation could reduce global output by up to 7% of GDP.

Even under extreme pressure, the international legal order shows resilience; the International Court of Justice has a record number of cases.

Europe's choice to immobilise, rather than seize, Russian assets, underscores the normative power of international law, protecting principles vital for financial soundness.