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Eurozone

The EU and Latin America:

Political and Economic Trends in Times of Global Uncertainty
Publisher: 
IAI
City: 
Rome
Volume, number, page: 
n.14, pp.1-9.
Considered Countries: 
Abstract: 
The conference “Managing Multiple Crises in Times of Global Uncertainty: the EU and Latin America in comparison”, was organized on 16 April 2018. It brought together experts, academics and journalists from both Europe and Latin America to discuss the multifaceted crises that have recently been affecting the countries of the two regions, in order to define a roadmap for closer regional cooperation. Both Latin America and the European Union have been hit hard by the global financial crisis and its social consequences, and both have witnessed the rise of populist forces triggered by social discontent – albeit in various forms and with different agendas. The complex and multidimensional nature of the current global context offers considerable scope for stronger EU–Latin America cooperation and for common political ground

Coping with Financial Crises: Latin American Answers to European Questions

Publisher: 
l’Institut de hautes études internationales et du ‎développement - Graduate Institute of International and Development Studies
City: 
Geneva
Volume, number, page: 
4.2, pp,7-28
Abstract: 
Europe faces challenges reminiscent of Latin American financial crises, namely unsustainable sovereign spreads, banking system distress, sudden stops in capital flows and growth rate collapse. The failure of recent liquidity support to normalize the situation suggests the need to refocus the policy debate on fundamentals: structural reform for growth and, where needed, restructuring to resolve banking crises and the debt overhang. Latin America’s experience yields relevant policy lessons for Europe on all these fronts, tempered only by the slight exception that sharp real devaluation, which was key to spearheading recovery in Latin America, is unfeasible in the eurozone. Struggling eurozone countries are caught between a rock and a hard place, as the currency union imposes strict policy constraints while the reintroduction of national currencies under conditions of crisis would be catastrophic. Nevertheless, contemporary Europe stands a better chance of recovery because, in contrast with the Latin America experience, the European Union possesses greater avenues for international cooperation. With respect to financial support, a resourceful European Central Bank able to avoid chaotic adjustment by brute force is a decisive advantage of Europe relative to Latin America, which only had access to the weaker and less reliable IMF. Arguably, the limited nature of external support strongly contributed to the depth of Latin America’s great collapses. European cooperation can explore and exhaust alternatives to a euro exit to the benefit of all union members and, if dissolution becomes unavoidable, ensure amicable support to ease the transition. The path to success remains uncharted, however, and implementation of the necessary regional mechanisms will require innovation and political will. If the available means of cooperation are not used effectively, crisis countries in Europe may fare worse than those in Latin America.
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