ABSTRACT
The unspent oil billions does not just threaten the world with recession and they also represent the biggest investment problem in world history. The Arab oil producers are in the same position as a poor man who has just won a lottery. This chapter looks at the way in which recycling has been operating and at the dilatory attempts of the international monetary community to provide an alternative to the Euromarkets. The concept of borrowing on the Euromarkets to cover a balance of payments deficit was pioneered by Dr. Guido Carli, the Governor of the Bank of Italy, two or three years before the oil price rise. Steady stream of Italian public utilities made their way to Eurocurrency market and borrowed larger and larger sums. The first instinct of some Middle-Eastern producers, faced with the prospect of a torrent of oil money, by setting up barter deals with their customers, to reduce the amount of cash they would receive.
