‘can’t Make A Squeak’: Trump’s Fossil Fuel Push Puts Imf, World Bank On Defensive

The war in Iran is sparking new calls by international financial institutions for lower-income countries to loosen their fossil fuel dependence as they reel from the conflict.

One of the biggest obstacles is President Donald Trump.

The International Monetary Fund and the World Bank — charged with cushioning poorer nations from economic crises — are warning of the mounting threats to those economies as the war sends energy costs soaring and creates shortages.

How the institutions address those concerns will dominate their annual spring meetings that begin this week in Washington. And one remedy, their leaders say, is that the countries should use all sources of energy available to them.

“As the world responds, it is important that we maintain our collective quest for energy efficiency and energy diversification,” IMF chief Kristalina Georgieva said Thursday. “Different countries have different paths to energy security, but all must strive for it.”

World Bank President Ajay Banga also pointed to the need for diversification and said the bank could help countries harness their natural energy sources — geothermal, nuclear, gas, solar or wind — to deliver the power they need.

“If anything, this war will make people feel even more the need to ensure that their energy security and their national security are thought through in a constructive way together,” Banga said Tuesday during an event at the Atlantic Council.

Yet the Iran crisis comes a year after U.S. Treasury Secretary Scott Bessent criticized the IMF for focusing too much on climate change and pressed the World Bank to prioritize investments in fossil fuels as the cheapest and most abundant energy source.

The Trump administration’s views are crucial because the U.S. is the largest shareholder in both the IMF and World Bank and exerts outsize influence over their operations.

Trump has already pressured the World Bank to drop requirements ensuring that its investments also combat climate change, which was a significant focus under Banga, a Biden administration appointee. Trump, who has labeled climate change “the greatest con job ever perpetrated,” instead wants to flood the world with more oil and gas — the U.S. is the top global producer of both — while limiting the spread of renewable energy, supplied largely by Chinese manufacturers.

“Buy oil from the United States of America,” Trump told countries struggling to get Middle East supplies in a speech earlier this month.

All of the above

In its regular assessment of the U.S. economy April 2, several of the IMF’s executive directors called for “greater consideration of global climate objectives” in the administration’s energy policies. But the institutions themselves have been less vocal, putting a greater emphasis on energy access and smart development.

“They can't make a squeak that would be conceived as anything other than supportive of the U.S. effort,” said a G7 government official, who was granted anonymity because they were not authorized to speak with the press. “So anything drawing attention to the impacts — I can imagine that that would not go down well with their largest shareholder. So I think they've been very quiet.”

White House spokesperson Taylor Rogers said the fallout from Iran’s closure of the Strait of Hormuz has underscored the need for countries to secure stable oil and gas supplies either domestically or from reliable trading partners.

"The Trump Administration is working with several countries on new oil and gas deals that emulate the President’s energy dominance agenda and enhance their energy security,” she said in a statement. "The reality is that countries that tried to transition to renewable energy have failed to break their reliance on the oil and gas that flows through a chokehold like the Strait of Hormuz."

Nonetheless, many countries are looking for ways to secure their energy future by building up renewables or tapping more domestic resources.

The Philippines has fast-tracked 1.4 gigawatts of renewable energy projects — a 40 percent increase over the country’s installed solar capacity in 2024 — in an attempt to soften the blow of fuel price spikes. Indonesia has doubled down on a program to build 100GW of solar in the coming years. Pakistan’s energy minister recently credited a consumer-led drive to expand solar power — along with investments in nuclear, hydropower and coal — for helping cushion his country from the energy shock.

The pivot to clean energy is looking more attractive for import-dependent countries dealing with volatile commodities. The war has started to sap many low- and emerging economies’ resources as governments draw on dwindling foreign exchange reserves to cushion their people from the blow of rising fuel costs.

Borrowing costs for many countries have gone up, just as debt-saddled nations were trying to gain some breathing room following the pandemic and food and fuel price spikes from the Ukraine war.

Countries have been accelerating green investments, World Bank data show. Nearly half — 48 percent — of its financing between July 1, 2024, and June 30, 2025, carried climate co-benefits, surpassing its own targets.

"We will finance what works best for countries, using a least-cost, reliable mix to meet their needs, while managing emissions responsibly,” said a World Bank spokesperson, who was granted anonymity because they were not authorized to speak publicly, per the organization’s policies. "It is not an either/or, and we are continuing to see strong demand for support for adaptation and mitigation from our clients.”

A spokesperson for the IMF said the organization is tasked with safeguarding members’ economic stability and that for some, such as small island nations, extreme weather events and other environmental shocks "can have devastating effects" on macroeconomic stability and balance of payments. "These countries rely on our tailored support to navigate these challenges,” the spokesperson said.

An all-of-the-above strategy doesn’t necessarily mean countries will turn only to renewables. Those with abundant coal or natural gas may lean more on those resources. Countries such as India and Thailand have already signaled they will use coal-fired power, the most carbon-intensive form of producing electricity, in response to gas supply disruptions. And Mexico is planning to tap its natural gas to curb reliance on imports, largely from the U.S.

But the crisis could provide an opportunity for member countries to highlight the economic value of clean energy, said Maurice Obstfeld, a former chief economist at the IMF, now at the Peterson Institute for International Economics.

“It’s quite obvious that countries that have more capacity to produce renewable energy are in a better position to weather the shock,” he said. “And I think the fund and the bank should take some leadership in pointing this out. It shouldn't be controversial.”

That doesn’t mean they have to take an explicit position on climate change, he added. “You just take the position that in a geopolitically turbulent world, energy supplies may be uncertain, and having a diversified portfolio of energy sources is in every country's interest.”

Not just a slogan

The World Bank and IMF are on watch.

Last month, the World Bank in a statement acknowledged that client countries have reached out under duress, noting a 40 percent jump in oil prices, a 50 percent surge for nitrogen-based fertilizers and a nearly 67 percent increase for liquefied natural gas shipments to Asia. Earlier this month, the World Bank and IMF announced new coordination with the International Energy Agency to monitor shortages and provide technical and financial assistance.

As with any crisis, resources will be needed. Georgieva said Thursday that money from shareholders allows it to tackle whatever the future brings.

“We want to be so strong that the crisis comes, looks at us, puts its tail between its legs and goes away,” she said.

The Iran war may well increase the pressure on existing programs. The bank is co-leading a project called Mission 300, which aims to bring electricity to 300 million people in sub-Saharan Africa who lack it by 2030. Andy Herscowitz, the project’s CEO, said the program prioritizes squeezing more out of domestic financial and natural resources as an antidote to rising debt and scarce foreign cash.

Many of the low-income countries suffering from fuel shortages want to pursue localized energy projects, said Agnes Dasewicz, chief investment officer with the Global Energy Alliance for People and Planet, a philanthropy. The governments she works with see those options as less costly and more secure over the long term than dealing with unpredictable commodity price fluctuations. That includes small, localized power systems known as “microgrids,” distributed solar energy and batteries, which utilities or governments can install without building pricey electric grid infrastructure.

Those smaller projects fall outside the World Bank sweet spot, said Ethan Zindler, head of country and policy research at BloombergNEF. The institution largely focuses on larger-scale energy builds than the type of ground-up efforts that lesser-resourced countries desire. He suggested that those initiatives face an uphill battle while the World Bank is responsive to Trump.

“Institutional inertia is always an issue for these organizations, and an orientation toward large-scale project development is in their DNA,” he said. “Those are challenges, along with whatever external pressures they’re facing from funders and organizational changes.”

At a time when countries are scrambling not just to pay for fuel, but to find it, some former officials say it’s important to pursue reforms that can lead to long-term change and stick with them.

“I’m looking at the longer term, and I think, 'okay, what can we do about this?’ So we are back to the same conversation we had during the Russian invasion of Ukraine, which was actually energy diversification, including away from fossil fuels,” said Alexia Latortue, former assistant secretary for trade and development at the Treasury Department. She now heads the Future of Development Cooperation Coalition, which focuses on rethinking development cooperation to meet current realities.

“Energy diversification is not a slogan - it's central to resilience, security, and economic stability,” she said.