By James McKee
Trouble continues to strike at the heart of European finance as Italy (a country already in trouble) begins to feel the problems being experienced in the Middle East. Italy was once the colonial occupier of Libya and as a result is the number one recipient of Libyan oil. Italy’s other long-standing ties to the country are also suffering due to the instability in Libya. Considering the fact that Italy is already teetering on the edge of requiring a massive bailout the Libyan debacle is just the start of what could be a catastrophic decline in Italian economic solvency that will have a negative effect on the Euro.
Italy is very dependent on Libyan oil due to their unique and long standing relationship. Cutting these ties and discontinuing this dependency could prove to be extraordinarily difficult for Italy who enjoys little to no revenue stream when compared to other countries of similar size. This fact has caused many to be concerned for Italy’s inevitable request for financial assistance from the EU and possibly from China. China has already bailed out Portugal and is considering shifting the aid they are giving to the United States to Europe instead.
China is concerned with their geographic back yard first at this point in time, an unstable Europe would harm China more in some ways than an unstable US. Italy has quite a few changes they need to make prior achieving any sort of financial stability. Countries such as Germany will not be able to pick up the slack forever and this could spell out absolute disaster for the Euro and the EU. Those on the forex currency exchange should keep a close eye on the decisions Italy makes to cope with the financial losses it will suffer from a drawn out Libyan conflict. If these problems continue for much longer the EU itself could be in a very bad position.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
