Petrodollar recycling
[3] It generally refers to the phenomenon of major petroleum-exporting states, mainly the OPEC members plus Russia and Norway, earning more money from the export of crude oil than they could efficiently invest in their own economies.
Alternatively, global economic growth would have suffered if that money was withdrawn from the world economy, while the oil-exporting states needed to be able to invest profitably to raise their long-term standards of living.
The International Monetary Fund (IMF) estimated that the foreign debts of 100 oil-importing developing countries increased by 150% between 1973 and 1977, complicated further by a worldwide shift to floating exchange rates.
Funded by oil-exporting states and other lenders, it was available to governments suffering from acute problems with their balance of trade due to the rise in oil prices, notably including Italy and the United Kingdom as well as dozens of developing countries.
"[18] As political journalist William Greider summarized the situation: "Banks collected the deposits of revenue-rich OPEC governments and lent the money to developing countries so they could avoid bankruptcy.
Oil exporters opted to make most of their investments directly into a diverse array of global markets, and the recycling process was less dependent on intermediary channels such as international banks and the IMF.
[25] Some oil exporters were unable to reap the full benefits, as the national economies of Iran, Iraq, Libya, Nigeria and Venezuela all suffered from multi-year political obstacles associated with what economists call the "resource curse".
[12][29][30] Oil exporters have also aided poorer countries indirectly through the personal remittances sent home by tens of millions of foreign workers in the Middle East,[31] although their working conditions are generally harsh.
[39] The term petrodollar warfare refers to a theory that depicts the international use of the United States dollar as the standard means of settling oil transactions as a kind of economic imperialism enforced by violent military interventions against countries like Iraq, Iran, and Venezuela, and a key hidden driver of world politics.
