The following is a transcript of an interview with World Bank President David Malpass that aired Sunday, February 27, 2022 on “Face the Nation”.
MARGARET BRENNAN: For more on the potential global financial impact of the war in Ukraine, we turn to World Bank President David Malpass. Hello to you. So much has happened in the past few days with even heavier sanctions against Russia. Tomorrow morning, when they wake up in Moscow, do you expect to see a run on the banks?
PRESIDENT, WORLD BANK GROUP DAVID MALPASS: Good morning, Margaret. We haven’t seen the details of the sanctions, but they also talked about them yesterday and said they would hit the Central Bank of Russia. So one thing to watch is the ruble which really affects the Russian people. They had a hard time. You know, it’s a tragedy right now for the Ukrainians, for Ukraine’s neighbors, but also for the Russians. Their per capita income has fallen below that of China. So if you think about the sanctions, they hit the banks and Russia, but apparently not the oil and gas industry. But if they leave, if they are able to stop the Central Bank of Russia from working, it would really have an effect on Russia and the people. We’ll see what happens tomorrow.
MARGARET BRENNAN: There was a sensitivity to disrupting the oil markets and also an exposure to certain European countries, which is why they weave those sanctions in carefully there. What do you think will be the impact if you hear about sanctions on petroleum products? I mean, the Iranian oil industry was sanctioned.
MALPASS: In the short term, there is upward pressure, including on LNG liquefied natural gas which US ships to Europe and Europe will need much more of, but it is available. The markets are looking ahead so they can look at the five year time horizon and realize that there is a lot of energy available if it is mobilized, there are alternatives to Russian market dominance of the gas, for example. And so, that these changes are made will be important. I think Iran is also important. How fast are nuclear weapons going as it is also a source of oil in the world.
MARGARET BRENNAN: — because these diplomatic negotiations are at a key decision.
MALPASS: — And Russia is an actor in its own right. So, how are you going to negotiate in this context? We do not know.
MARGARET BRENNAN: No, that’s a good thing to have on the horizon. Another cause for concern. One of the other things you’ve been working on is that you personally met with the President of Ukraine about a week ago. I believe in Munich…
MALPASS: –That’s right–
MARGARET BRENNAN: — So what are you doing to help the Ukrainian government?
MALPASS: We are doing everything we can. So…and we are well placed to do so. Right now, we have an instrument that is able to act quickly in the next few days if it’s–if it’s necessary and-and the-the circumstances are right. I- I briefed our board on Thursday and it can be supplemented by- by other countries that want- countries that want to support Ukraine. And we also have mobile instruments that can help the flow of refugees. You know, like us – as you heard earlier, this big flow right now is going to Poland. But there is also the possibility – Ukraine has a lot of borders with Romania, with Moldova. We have programs in those countries that can be added to that to support the flow of refugees. So this – it can work, there can be this – the G7 meets with the finance ministers on Tuesday morning, so I’m going to meet with them and they’re in the G7 central banks and they can decide how much aid goes in- in Ukraine there- The IMF has also- we are working closely with them to assess needs and think about instruments.
MARGARET BRENNAN: This is one of the decisions to be made, what to do after the fall of the government? What will happen if it is a government in exile or if it is an insurrection? Does aid to the Ukrainian people continue?
MALPASS: I’m not at that point at all. So we weren’t trying to look at assumptions or contingencies. It’s- we’re doing everything we can to support the Ukrainian people, the people of the region and also to think about this tragedy for the Russian people that he- he didn’t choose war. You know, the expression in Russia is “net voyne”, which means no to war. And so we don’t know how it’s all going to play out. One thing is that – you know, the arc of the story is Russia getting closer to Europe – there’s all this talk about China, but it’s not a natural alliance. It’s – it’s more true in 1989, I was on the border of China and Russia, and people were wondering, are they going to get together and work together?
MARGARET BRENNAN: It’s true…
MALPASS: –No sign of that in the long term. Russia wants to use China with its- the- the SWIFT- they have a simple system that can connect payments with China. I’m not sure it will go very far.
MARGARET BRENNAN: Overall, what is the impact on the global economy? Are we seeing a spike in food prices and oil prices?
MALPASS: Yes, big problem. And he was already at a fragile point because inflation is really hitting the poor and that’s going to drive up energy and food. We can – we can wait and see what Russia does, what China does. Right now, China is buying more from Russia and allowing the sanctions to be – to be eroded or – or circumvented a bit. We’ll have to see where that leads too. A great thing is that the United States can provide a lot more if they put their mind to it.
MARGARET BRENNAN: We will see to that.
MARGARET BRENNAN: David Malpass, thank you for your time today. We will be back.