Economic & Financial Committee
Chair: Diana Paola López 6030
Moderators: Karla Gamiz 305 & Constanza Crúz 305
Topic A: Russian Retaliation Economically Benefiting Latin America
Due to the recent conflicts going on, some governments have applied sanctions against Russian and Ukrainian companies.
These sanctions were approved, amongst others, by the United States and the European Union.
Therefore, Russia responded with sanctions to some countries, which ban the total importation of food products from the United States, Norway, Canada, Australia and the European Union.
The sanctions against Russia started in March 2014, in consequence of the annexation of Crimea by the Russian Federation. And they include seizure of weapons, restrictions on financial markets and reductions of agreements in the energy sector.
The republic of Crimea has been administrated by Ukraine since 1954 to 2014 when Crimea declared its independence and decided to join Russia.
This ban to the U.S.A., E.U., Canada, Norway and Australia has provided an opportunity for Latin American economies, especially for Argentina, Brazil, Chile, Ecuador, Paraguay and Uruguay.
Russia announced that it would lift restrictions on importing meat, fish and products from Latin American countries immediately.
Latin America was an alternative option to mitigate the impact of Russian consumers.
Russia started negotiating with countries in Latin America such as Brazil, Ecuador and Uruguay who can export their food products.
Useful links:
http://rt.com/business/179684-eu-latinamerica-sanctions-russia/
Topic B: European Crisis: A Threat to the Global Economy
Since World War II, Europe's main goal was to be in peace between their two potential countries, France and Germany. In 1999, the Euro was introduced as the new currency for use in the European Union. Of the 27 member states of the EU, currently the euro is a shared currency used by 17 of them. These 17 countries are referred to as the “euro zone”.
In the beginning, the Euro was only used in the stock market and the coins and notes were not introduced until 2002.
The idea of the euro zone governments was that a shared currency would be beneficial for trade ties and to strengthen the economies of euro zone members. Specifically, the euro zone would make it easier for small economies to borrow money from international financial markets.
Everything started going wrong when many euro zone members did not stick to the guidelines for borrowing, which had been set priory. The Euro crisis has been going on for a couple of years now as the number of countries being perceived as having a major debt problem has increased.
Contrary to belief, Ireland was the first country in the European Union to go into crisis. The United Kingdom, holding billions of government debts from Eurozone countries, now seems to be in a threat, as they are still doing well but might plummet at any time.
The European Union is weakened and already established that urgent measures are needed. Germany is on the brink of recession, France has a stagnant economy, and Italy has had no growth in the last 15 years. These three countries account for more than half of the GDP of the European Union. Until now they have not given a possible alternative to lessen the problem. Specialists speculate that if stability is not reached, the euro as currency may even disappear, since in recent years it has only brought stagnation, unemployment and deflation. The whole world is being affected by this economic crisis, and countries must urgently take the necessary measures to combat this problem.
As of 2012, the ESM (European Stability Mechanism) started running. It was designed as a bailout fund for any Eurozone government, which can’t get investors to buy its debt. Anything up to 1 trillion Euros will be in the ESM — with nearly half of the money coming from Germany and France.
Useful links:
http://injapan.gaijinpot.com/live/banking-investments/2012/02/16/euro-crisis/
http://www.bbc.co.uk/news/business-18094883
http://ec.europa.eu/economy_finance/crisis/index_en.htm