OPINION: An Iran-related economic crisis would catch EU officials unprepared.
Throughout the financial crises of the past ten years, European policy makers have been deft at devising new ways and procedures to deal with financial shocks - but reactively.
A major economic shock is still far from certain. US-Iran tensions might not lead to outright conflict. And oil doesn’t play in the global economy the role it had back in 1979, when the Iranian revolution triggered a severe global crisis. But the imbalances built into the global financial system, including massive corporate leverage, stock markets at record levels, and heightened uncertainties, put the economy at the mercy of a butterfly effect.
What’s worse, Europe is still facing headwinds, such as a possible hard Brexit or US tariffs threats on its automobile industry. Heightened tensions in the Gulf region would only exacerbate an already difficult economic situation.Governments have also failed to agree on the type of common fiscal facility that could cushion a financial hit caused by external factors.
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