Economic and Financial Affairs Council
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WMHSMUN XXXIV Economic and Financial Affairs Council Background Guide “Unprecedented committees. Unparalleled debate. Unmatched fun.” Letter From the Director Dear Delegates, Hello! My name is Barrett Fife, and I’ll be directing the Economic and Financial Affairs Council (ECOFIN) for WMHSMUN XXXIV. I cannot wait to (virtually) meet all of you in just a few short weeks, and I look forward to pioneering the brave new world of online Model United Nations with each of you. I’m currently a sophomore at the College of William & Mary majoring in Government with an expected minor in either Philosophy or Theatre. After looking at various other politically and rhetorically focused clubs during my freshman orientation, I joined the International Relations Club at W&M after my first week of college and never looked back. No organization at William & Mary combines intellectual rigor, professional training, potential for leadership, and all-around fun quite like the International Relations Club, and I’m thrilled that you’ll be able to experience and engage with the results of our team’s hard work. Now more than ever, we need the next generation of leaders (you!) to step up and start thinking about how we’re going to tackle the multitude of challenges and crises facing our world today. Model United Nations is the perfect opportunity for intelligent, forward-thinking students such as yourselves to begin drafting solutions for these problems, which is why we’ve opted to make these committee topics as relevant to the current geopolitical climate as the ones being addressed by the actual United Nations. While ECOFIN does take a primarily economic approach to addressing geopolitical issues, you should still be able to feel as though you are contributing to stabilizing a world that has been rattled by a global health crisis, financial uncertainty, and systemic injustice. The challenges undertaken by this committee—fostering globalism in a quarantined world and addressing the problematic behavior of China toward its Uighur population—are in desperate need of solutions. And those solutions start with you. Please let me know if you have any questions, thoughts, or concerns ahead of this committee; I am readily available at [email protected]. Thank you for joining WMHSMUN and ECOFIN. Now, let’s dive into the most ecoFUN committee around! Barrett Fife [email protected] Background Guide - ECOFIN Introduction The Economic and Financial Affairs Council (ECOFIN) first convened in 1945 as one of the United Nations’ original general assemblies. It is open to all United Nations member states and is formally tasked with tackling issues pertaining to economic growth and development, financing for development, sustainable development, human settlements, poverty eradication, globalization and interdependence, operational activities for development, and information and communication technologies for development. Within each of these topics, ECOFIN has the ability to form subgroups and tackle niche issues and challenges that exceed the purview of a typical economic committee. For example, ECOFIN also addresses human rights and geopolitical topics as they intersect with the economic and financial world. Somewhat recently, ECOFIN demanded that Israel no longer occupy any Syrian lands, as well as cease violating human rights laws in accordance with the Palestinian people.1 This broad-minded approach to the Economic and Financial Affairs Council should give delegates ample opportunity to be creative: try tackling geopolitical problems using an economic approach, or tackle economic problems using a geopolitical approach. Topic 1: Approaching Globalization in the Age of the Pandemic In an increasingly globalized world, where economies and supply chains are widely spread out between nations, a pandemic such as COVID-19 serves as an especially difficult challenge for the modern industrial society. In terms of shipping, production, and all other elements of manufacturing, how can we be sure to keep workers and citizens safe as they mingle and collaborate with people from around the world? And, more relevantly, how can we protect the international economy when such global challenges befall us? Already, experts and world leaders are witnessing the negative impact of the COVID-19 pandemic upon the global supply chain. One of the most explicit examples of this is international travel and airfare. One of the world’s largest travel hotspots, Changi, saw traffic take a 99.5% drop from 5.9 million passengers in January to 25,200 in April. Additionally, analysts are now projecting that international tourist arrivals will drop by as much as 80% between this year and last year. For comparison, tourist arrivals only dropped only 4% during the Great Recession of 2009 and by 0.4% during the SARS pandemic of 2002.2 2 Background Guide - ECOFIN Looking at specific industries and countries, Chile’s LATAM, Colombia’s Avianca, Virgin Australia, and Britain’s Flybe airlines have all declared bankruptcy. However, economic recession and a decline in international travel pose a threat to far more than just the hotel, service, and transportation industries; they also put conservation efforts at risk in places such as Namibia, where tourist dollars allow a poor nation to maintain vast natural preserves for the largest population of black rhinos in the world. The economic challenges created by the pandemic also threaten cultural exchanges, including the cancellation of internationally significant American study abroad programs that send hundreds of thousands of students from the United States overseas each year.3 All elements of economic life are being disrupted by the COVID-19 pandemic. In April, Mexican car exports fell by 90% and 21% of May’s transpacific container-sailings were cancelled. Chinese venture- capital investment in America dropped to $400 million in the first quarter of this year, which will put investment 60% below its level two years ago. Multinational firms are projected to cut their cross-border investment by a third this year. America has just instructed its main federal pension fund to stop buying Chinese shares, and so far this year, countries representing 59% of world GDP have tightened their rules on foreign investment.4 Experts are projecting that world trade will fall by 13.4% this year, which will be both the steepest drop in at least 60 years and will kick volumes back to 2014 levels. Foreign direct investment in emerging markets (meaning the new bridges, roads, factories and ports that help modernize developing nations around the world) is expected to plunge by about 20%, to 2006 levels. And foreign direct investment as a share of GDP is expected to reach its lowest level since the early 1990s.5 Finally, looking at individuals rather than countries or markets: up to 100 million people globally are poised to fall into extreme poverty. This will be first increase in extreme poverty since the Asian and Latin America financial crises of the 1990s, and the biggest increase since the World Bank began tracking the number in 1990.6 An additional threat posed by the pandemic to globalization and international supply chains comes from the rise of nationalism. Leading up to COVID-19, xenophobic, anti-immigrant sentiment was already on the rise around the world. With the forced closing of borders stagnating international migration and communication, this health crisis has delivered another blow to the globalized world order. Future leaders will have to consider how to best foster relationships between nations while also prioritizing the safety of their citizens. 3 Background Guide - ECOFIN Questions to Consider 1. Does ECOFIN have more of an obligation to protect the international economic order or to protect the workers and manufacturers that contribute to the larger financial structure? 2. How much should ECOFIN be prioritizing globalism during moments like these, when physical collaboration between nations can contribute to this public health emergency? Should we, for the time being, focus on fostering national production rather than international partnerships? 3. How can countries and manufacturers utilize technology to avoid furthering a public health crisis while also maintaining their financial relationships across the globe? 4. What specific industries should ECOFIN support in order to maintain international economic and cultural partnerships? Topic 2: Economic Ramifications of China’s Practices in the Uighur Xinjiang Province One of the most noteworthy global issues facing our world today is assessing and dealing with the Chinese government’s treatment of the Uighur Muslim population living in the Xinjiang region of China. For many years, the United Nations has grappled with whether or not to condemn or address the controversial practices of the Chinese government, actions that would profoundly affect the economic global order. Over the past few years, more and more reports from United Nations analysts and affiliates have come out condemning or criticizing the actions of the Chinese government towards the Uighur and Muslin ethnic minorities residing in China’s Xinjiang region. In 2019, United Nations experts (though not the U.N. itself) issued an unprecedented assessment of the Chinese government’s “counterterrorism” measures. These experts highlighted many abusive policies towards minority populations in particular, including denoting religious observances as terrorism, detaining large masses without due process of law, and arbitrary collection of biodata.7 In