Resolution on the European response to international economic instability, with particular reference to the case of Latin America
Date: 1998-10-22
Institutions: European Parliament
Subjects: Latin America, economic recession, monetary crisis













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51998IP0969

Resolution on the European response to international economic instability, with particular reference to the case of Latin America  


Official Journal C 341 , 09/11/1998 P. 0135 





B4-0969, 0970, 0971 and 0972/98Resolution on the European response to international economic instability, with particular reference to the case of Latin AmericaThe European Parliament,A. concerned at the impact of the financial crisis in Latin America,B. whereas, if the Union has thus far concentrated largely on the internal aspects of the euro, developments at world level such as the crisis in Latin America call for it to play a more active part in the international monetary cooperation process,C. whereas the European response to these challenges must take account of the new responsibilities bound up with the creation of the euro,D. whereas the Latin American economies, in the wake of the external debt crisis, have undergone a radical transformation over the last decade, undertaking processes of structural reform resulting in high social costs, following which they are now in a better position to handle the present crisis, and, therefore, merit confidence and support at international level,E. whereas, despite these efforts, Latin American economies have increasingly been suffering from the contagion effects of the international financial crisis, especially in terms of reduced demand for their exports, continued speculative attacks on their currencies (mainly in Brazil), major losses in their stock markets, and the panic-driven flight of financial capital from emerging markets, as foreign investors have attempted to reduce their risk exposure internationally,F. whereas it appears that - given the scope and international dynamic of the crisis - the way out of the current situation appears to be largely outside the control of Latin America's policy-makers,The European Parliament,1. Considers that the EU and the international community should ensure that the international financial institutions are in a position to lend their support to countries facing major problems, as is the case with Latin America at present; urges the Council and the Commission, in this connection, to ensure that international financial support directed towards Latin America will be sufficient and timely in order to prevent a liquidity crisis emerging in the region;2. Calls for a message of confidence to be sent out with regard to the capacities of the Latin American economies to overcome the crisis and the present instability on their markets; calls for the Union to demonstrate its willingness to provide increased support if necessary;3. Calls on the countries affected by the crisis to continue with the economic reforms already undertaken with a view to establishing and consolidating an open social market economy; urges that these reforms should include a solid legal framework, as well as transparency on the financial markets, to ensure that confidence is regained among investors;4. Stresses that all economic policies must ensure, in the context of the social market economy, that the social conditions of the least-favoured strata are improved;5. Considers that, following the costly political and economic reforms undertaken by the countries of Latin America, it would be doubly unjust if, having been victims of the adjustment process, they were now to become victims of the financial system;6. Reiterates its support for the consolidation of the regional blocs now in process of formation, and calls on those blocs to make further progress with the coordination of their economic and monetary policies, as the best means of guaranteeing sustainable growth;7. Considers that the present crisis points up the need for increased vigilance, greater transparency and a set of reform programmes to strengthen the international monetary system and discourage financial speculation; reiterates its call for thorough reform of the international financial architecture; insists, in this context, particularly on the need to set up adequate mechanisms capable of preventing contagion spreading throughout emerging economies and jeopardising national and international efforts towards economic and social development;8. Supports the creation of a special fund to be coordinated by the International Monetary Fund, with contributions from the World Bank, the Inter-American Development Bank, Member States and private banks;9. Draws attention to the desperate situation of the least developed countries (LLDCs), which are the first to bear the brunt of the crisis;10. Calls on the Commission, independently of whatever strictly monetary measures are found necessary, to make every effort to propose, in the Community field (budget, European Investment Bank, cooperation in the economic, commercial, scientific/technical and other areas), further measures which could contribute to alleviating the effects of the crisis in Latin America;11. Instructs its President to forward this resolution to the Commission, the Council, the Governments of the Member States and of the countries of Latin America, the Latin American Parliament, the International Monetary Fund, the World Bank and the Inter-American Development Bank.