Resolution 1209 (2000)
Democracy and economic development
The recent financial crises in various countries around
the world - Mexico, Southeast Asia, Japan, the Russian Federation and Brazil - have not only caused major
suffering for the populations affected, but they have also added to the instability of an
increasingly integrated and volatile world economy driven by rapid technological
development, especially in computers and telecommunications, vast amounts of instantly
mobile capital and ever more liberalised trade and investment. In order that this
development may benefit the largest number of countries and ordinary citizens rather than
jeopardise the world economic fabric, the international community must jointly search for
common principles and new solutions.
The Assembly notes that the crises in question have hit
countries where democracy is weak, incomplete or even absent, while the more fully
developed democracies have on the whole withstood their international impact. This points
to the importance of democracy for lasting economic development, including respect for
human rights, the rule of law, social justice and solidarity, transparency and
accountability in public affairs, an independent judiciary, a free press and a firm stance
against "cronyism", corruption and economic crime. Similarly, economic
development can lead a country to a stage where more democracy will not only be possible
but even necessary for economic development to go further.
Member states of the Council of Europe - an
organisation founded on these very values - must work actively with other like-minded
countries and international institutions to draw attention to the importance of democracy
for economic and social development and the stability of the international economic
system. They must also do their utmost, individually and jointly, to improve further the
functioning of their own democracies in all the above respects.
The Assembly notes that international financial
institutions gave insufficient advance warning to the world before the recent financial
crises, and that even private credit rating and country risk agencies largely failed to do
so - either because of faulty analysis or out of concern not to provoke the crises they
feared. It is clear, however, that the damage to the countries concerned and the world
would have been much less pronounced had early warnings been sounded.
With this in view, the Assembly calls on the
international financial institutions - in particular the International Monetary Fund
(IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD) and the
Council of Europe Development Bank - to reinforce their "early attention" role
as regards any departure from democratic standards in individual countries especially as
it may affect the soundness of an economy and its financial system or those of
neighbouring countries or the world economy. In this context, it welcomes the Declaration
at the June 1999 G-7 Summit in Cologne on strengthening the international financial
architecture, as well as the IMFs recent proposals for country ratings on variables
relevant to financial stability and for a code for governmental relations with the banking
sector and investors. The Assembly also recognises the contribution made by the IMF and
the World Bank to overcoming past financial crises and welcomes the recent increase in IMF
funds so as to be in a better position to face any future emergencies.
Finally, the Assembly welcomes the new emphasis placed
by Council of Europe member states and others on the need for adequate world-wide social,
labour and environmental standards to be established through forums such as the World
Trade Organisation, the World Bank, the IMF, the International Labour Organisation and the
EBRD. It sees progress in these areas as essential for the strengthening of democracy,
development and hence, world economic stability.
Assembly debate on 24 January 2000 (1st
Sitting) (see Doc. 8458, report of the Committee on Economic Affairs and Development,
rapporteur: Mr Elo).
Text adopted by the Assembly on 24 January 2000 (1st Sitting).