Oil Exporters to the Euro's Rescue?
Energy-exporting countries have more at risk than any other participant in the world economy if the euro crisis plunges Europe into recession. These countries would likely experience greater losses in 2012 should Europe fail. Oil and natural gas prices would plummet, and the price collapse would likely be larger than the 2008–09 decline. Energy-exporting countries therefore should be working feverishly with the International Monetary Fund (IMF) and the European Union to rescue the euro. They, along with China and other large holders of foreign exchange reserves, should lend to the IMF to help it construct an emergency lending facility with capacity of more than €1 trillion. The fund, administered by the IMF, would be used to buy bonds issued by Greece, Italy, Spain, Portugal, and Ireland. The goal should be to bring interest rates on long-term bonds down to 3 percent. Simultaneously, efforts should be redoubled to fix the economic problems in the troubled nations and restore balance to their budgets. An energy price collapse would increase disruptions in energy-exporting countries, promote economic ills in some consuming nations, such as Canada, and almost certainly start yet a third, even more violent, economic cycle.
|Date of creation:||Dec 2011|
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