WEBVTT - IMF Managing Director Kristalina Georgieva Talks US Trade War

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio News. I am here at

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<v Speaker 1>the International Monetary Fund with its managing Director, Christlina Giergeva,

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<v Speaker 1>at a pretty intense moment for global trade, for global relationships,

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<v Speaker 1>and at the time where some of the major members

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<v Speaker 1>of the International Monetary Fund are entering into what looks.

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<v Speaker 2>Like a trade war with one another.

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<v Speaker 1>So at this moment, how different is the IMF's role

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<v Speaker 1>that has been traditionally given the landscape we're looking at.

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<v Speaker 3>Thank you for having me on the program.

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<v Speaker 4>We are created to bring countries together, and it is

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<v Speaker 4>valuable when there are non problems, even more valuable when

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<v Speaker 4>they need to find solutions to issues that divide them. So,

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<v Speaker 4>in that sense, very timely meeting, I very much look

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<v Speaker 4>forward to hear from the membership how they see steering

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<v Speaker 4>through this more turbulent time.

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<v Speaker 1>One thing that you talked about in the curtain raiser

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<v Speaker 1>was this idea that some members or some people actors

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<v Speaker 1>were maybe gaming the system in terms of free trade

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<v Speaker 1>and weren't necessarily being honest actors.

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<v Speaker 2>Does the IMF have a role to play in policing.

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<v Speaker 4>That The major role is for the World Trade Organization.

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<v Speaker 4>I started the day with Anghazi, and we talked exactly

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<v Speaker 4>about that what can be done so some of the

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<v Speaker 4>shortcomings of.

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<v Speaker 3>The past can be corrected. We also have a role,

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<v Speaker 3>it is.

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<v Speaker 4>In our Articles of Agreement to promote trade, and our

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<v Speaker 4>role is true the surveillance function we perform. We take

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<v Speaker 4>the post of every economy almost every year, and then

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<v Speaker 4>we come up with an assessment.

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<v Speaker 3>Of what are the.

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<v Speaker 4>Trends for this economy, how they interject with the rest

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<v Speaker 4>of the world.

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<v Speaker 3>And as we do that, of course we look at trade.

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<v Speaker 4>Why because trade is an engine for growth, and what

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<v Speaker 4>we see these days is that when trade goes backwards

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<v Speaker 4>or slows down, that has implications for global growth. As

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<v Speaker 4>you know, we just projected the growth expectations for twenty

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<v Speaker 4>twenty five. We are downgrading by half a percentage point

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<v Speaker 4>from three point three to two point eight percent our

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<v Speaker 4>forecast for the world.

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<v Speaker 3>We are downgrading our.

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<v Speaker 4>Forecast for almost all countries, including the United States, as

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<v Speaker 4>a result of trade tensions.

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<v Speaker 2>Yeah. One thing that in our world economic outlook.

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<v Speaker 1>You put the transfers in the United States up to

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<v Speaker 1>about forty from twenty seven percent back in January when.

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<v Speaker 2>You first publish it.

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<v Speaker 1>If the terriffs stay as they have been proposed from

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<v Speaker 1>the United States.

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<v Speaker 2>Do you expect that chance to go up materially?

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<v Speaker 4>This is based on the announcements of tariffs that have

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<v Speaker 4>been then suspended, but not for China, so.

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<v Speaker 3>It's a complicated story.

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<v Speaker 4>The short answer is that we are operating at the

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<v Speaker 4>time of very high uncertainty. If we see faster resolution

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<v Speaker 4>of trade tensions, that would possibly lift up projections for

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<v Speaker 4>global growth, great for investors, great for families. If, however,

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<v Speaker 4>we do not succeed and uncertainty remains very high, tarif

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<v Speaker 4>problems hang on our head for much longer, then we

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<v Speaker 4>actually can see even further reduction in global growth, and

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<v Speaker 4>then the danger of recession looms bigger.

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<v Speaker 3>What is our advice?

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<v Speaker 4>Please talk with each other, find a way to resolve differences,

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<v Speaker 4>and above all, reduce uncertainty.

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<v Speaker 1>Uncertainty is bad for business, and I think a lot

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<v Speaker 1>of people have raised that issue. There has been speculation,

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<v Speaker 1>including by this administration, but the United States could potentially

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<v Speaker 1>even withdraw from the IMF.

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<v Speaker 3>Do you see that as.

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<v Speaker 2>Likely or possible? Do you have contingency plans for that?

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<v Speaker 4>We have very good relations with the United States. We

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<v Speaker 4>have traditionally worked very closely with each and every US administration.

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<v Speaker 4>We have now established relations with this administration. The United

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<v Speaker 4>States is carrying count reviews if its.

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<v Speaker 3>Partici pation in international organization. This is very fair.

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<v Speaker 4>They have the writer as a member to look into

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<v Speaker 4>the mirror and say do we have value from participation

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<v Speaker 4>at the IMF.

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<v Speaker 3>And I can tell you I'm convinced that they look

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<v Speaker 3>at this and they say yes. Why. First, we're the

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<v Speaker 3>only institution that can rescue countries in trouble.

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<v Speaker 4>There are many countries that US cares about that the

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<v Speaker 4>Fund is there to help them in a moment of

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<v Speaker 4>high trouble. Two, we're the only financial institution. Listen, that

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<v Speaker 4>is like a savings bank. US puts money, we lend,

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<v Speaker 4>then we give it back to the US with interest.

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<v Speaker 3>The last two years we have paid three point.

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<v Speaker 4>One billion dollars in interest in the United States. So

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<v Speaker 4>you know, the concern is are taxpayers of the United

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<v Speaker 4>States paying In the case of the fund, no tree.

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<v Speaker 3>We are promoting.

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<v Speaker 4>Things that US cares deeply about private sector let growth, discipline, transparency, accountability,

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<v Speaker 4>and I think for all these reasons, and also let

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<v Speaker 4>me not forget where are we we are sitting with

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<v Speaker 4>you two blocks from the White House. I think that

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<v Speaker 4>the outcome of this review for the IMF would be

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<v Speaker 4>as great institution.

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<v Speaker 1>We stay, it's become more difficult and incompatible for China

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<v Speaker 1>and the US to both remain members.

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<v Speaker 4>Well, they talk to each other within the IMF membership arrangement,

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<v Speaker 4>and even if they are in very tense place, it

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<v Speaker 4>is good to be able to talk with each other.

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<v Speaker 3>Also to know where this country is headed.

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<v Speaker 4>I'll tell you I was, as you know, I'm a Bulgarian.

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<v Speaker 4>I grew up on the other side of the Iron Curtain,

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<v Speaker 4>and I remember vividly during the Cold War there was

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<v Speaker 4>something created called Economic Commission for Europe.

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<v Speaker 3>That had Europe and.

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<v Speaker 4>The Soviet Union and the form of the Soviet Bloc,

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<v Speaker 4>the United States and Canada. Why was it created? So

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<v Speaker 4>that is space to talk with each other.

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<v Speaker 3>Now we at this.

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<v Speaker 4>Space, we exist, and I think that the benefit of

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<v Speaker 4>also putting pressure for directions for the United States to

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<v Speaker 4>have a place for that is actually higher than maybe

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<v Speaker 4>the naked eye would see.

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<v Speaker 1>Another role of the International Monetary Fund is to monitor

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<v Speaker 1>financial stability. It's an important role, especially right now given

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<v Speaker 1>all of the turmoil that we've seen in markets. There's

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<v Speaker 1>been some speculation about whether President Trump could fire the

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<v Speaker 1>that chair, and I'm wondering, does that concern you as

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<v Speaker 1>a threat.

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<v Speaker 2>To financial stability? Ifter and power were to be removed

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<v Speaker 2>from his office before instrument.

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<v Speaker 4>We know from many, many, many decades of experience that

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<v Speaker 4>central banks are essential for price stability, They're essential for

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<v Speaker 4>financial stability, and they have very important instruments for it.

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<v Speaker 3>They have the.

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<v Speaker 4>Rates that they can impact, they can step up. They

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<v Speaker 4>have one instrument that I want to emphasize, which is credibility.

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<v Speaker 4>And credibility comes with independence. So if we want the

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<v Speaker 4>comfort that when the next financial stress comes, then the

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<v Speaker 4>fact can act decisively as it did last summer when

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<v Speaker 4>we had the California story popping up.

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<v Speaker 3>This particular instrument.

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<v Speaker 4>Credibility is really very valuable to protect.

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<v Speaker 1>At this point, looking out, what is your biggest concern

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<v Speaker 1>when it comes to actru stability at a time where

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<v Speaker 1>there might be a seismic change in terms.

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<v Speaker 2>Of the trade structure of the global economy.

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<v Speaker 4>My biggest concern is that the level of uncertainty is

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<v Speaker 4>virtually off the charts, and we have to see how

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<v Speaker 4>that uncertainty can be brought down because as long as

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<v Speaker 4>it is so high, investors would be reluctant to make

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<v Speaker 4>investment decisions, consumers would be postponing their purchases, and we

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<v Speaker 4>will drive the economy into what you ask me, could

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<v Speaker 4>it happen that is a recession. We do not project

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<v Speaker 4>recession in our assessment of where the world is headed.

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<v Speaker 4>But if we have this cloud of uncertainty coming lower

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<v Speaker 4>and lower, making it difficult for the business community and

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<v Speaker 4>for households to take decisions, we could have a self

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<v Speaker 4>inflicted injury that I guarantee you we would regret. I

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<v Speaker 4>hope here in these meetings people would talk with each

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<v Speaker 4>other and they would.

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<v Speaker 3>Lift up that cloud of uncertainty.

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<v Speaker 2>Is there ever a moment like that? If experienced before?

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<v Speaker 3>You know? Here I am. I have been.

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<v Speaker 4>Fortunate to see massive transformation. My own country came from

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<v Speaker 4>central planning into markets.

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<v Speaker 3>And it was a very dramatic experience.

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<v Speaker 4>What did I learn That a shock is an incredible opportunity,

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<v Speaker 4>The impossible becomes possible.

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<v Speaker 3>Germany lift it up.

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<v Speaker 4>It's that break And I hope that countries would look

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<v Speaker 4>into this moment and then they would take them and say,

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<v Speaker 4>what is it that I can do for my own

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<v Speaker 4>country that I have been reluctant, shy doing, and then

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<v Speaker 4>maybe we would see advancements of reforms that would bring

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<v Speaker 4>better opportunities to people.

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<v Speaker 2>Kretolini, Yorkeva, thank you so much for taking the time