By Michael Heggie
Europe turned to Asia and the Middle East for help yesterday as the financial crisis threatened to overwhelm Hungary and other struggling economies.
Western leaders including Gordon Brown urged China and the oil-rich Gulf States to provide billions of dollars for struggling countries.
Mr Brown urged oil-rich nations with big foreign exchange reserves to replenish the coffers of the International Monetary Fund (IMF) to facilitate loans to struggling European countries such as Iceland. Many other European nations are expected to seek help.
Mr Brown said: “We have seen in recent days the financial crisis spreading to other countries – middle-income countries, Eastern European countries. In the last few days I have discussed the risk of contagion and the need to stabilise economies right across Eastern Europe.”
The Prime Minister and other European leaders believe that the IMF’s current $250 billion (£157 billion) bailout fund will be insufficient to tackle the crisis emerging in many countries, which makes the untapped reserves of the East so attractive.
Mr Brown is set to raise the issue during a trip to the Gulf, when he will visit the leaders of Saudi Arabia, Qatar and the United Arab Emirates. He also plans to speak to Wen Jiabao the Prime Minister of China.
The Chancellor, Alistair Darling has called for the emergence of a new “economic world order” claiming that fresh ideas are required if financial market is to be maintained.
The IMF has a ‘general agreement’ to borrow, under which countries with large reserves of cash make sums available to lend to states in financial difficulties.
Mr Brown has said that there are reserves of $250 billion available. However it is believed that this will not solve the problem.
He added: “This may not be enough … it is becoming increasingly clear to me that we cannot delay and that we now need substantial resources.
“We don’t rule out anything in this, because everybody has got to play their part in helping. But I think that, as happened in the Seventies, the big surplus countries, those with big reserves, are in a position to help most and we will be urging them to do so.”