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Rutgers Model United Nations - Institute for Domestic and ...

Rutgers Model United Nations - Institute for Domestic and ...

Rutgers

Rutgers Model United Nations 17 withdrawing from the IMF and Venezuela is attempting to establish Banco del Sur to drive the IMF out of the southern, lesser-developed portions of the world. 30 The developing world as a whole is very wary of working with the IMF and World Bank these days, which is part of the reason the two institutions have begun to amend their ways. 31 Proponents of Debt Forgiveness An idea first proposed by noted economist Jeffrey Sachs, debt forgiveness has become a popular movement that combines human right politics with global economics. The late Pope John Paul II and notable celebrities such as U2 singer Bono first began popularly advancing the ideas of Sachs by promoting global debt forgiveness in order to benefit developing countries. The movement quickly gathered steam as almost every human rights-related NGO, including the likes of Jubilee 2000, Oxfam International, and the massive worldwide series of concerts know as Live 8, has become involved with the platform, and has begun to win the platform some successes. The IMF and World Bank have begun clearing countries for limited or full debt forgiveness in order to help them with the developmental struggles. Their ultimate goal is the forgiveness of all debt in the developing world. 32 Possible Causes The Deliberate Furthering of Specific Economic Agendas The World Bank and IMF provide a weighted voting system to their members that essentially makes them policy tools of the members who contribute most to the funds. The biggest contributor to the IMF is the United States, who has by far the highest weight in voting at 16.77 per cent. The only non-European or U.S. members who break 3 per 30 Paul McIvor, “Venezuela’s Banco del Sur: The End of IMF in Latin America?” 3/21/07 Date Acessed 4/2/08 31 What leadership? Economist, 00130613, 4/20/2002, Vol. 363, Issue 826. Academic Search Premier

Rutgers Model United Nations 18 cent are Japan, at 6.02 per cent, and Saudi Arabia, at 3.16 per cent. 33 Both of these countries also have strong diplomatic ties to the United States. Many people therefore see the IMF as a pawn of the United States and Western Europe, and see the U.S. and Western Europe as bullies who are deliberately manipulating IMF policy to suit their needs and interests. For example, the IMF still employs developed world policies when they are making structured stabilization loans. A developed economy has a strong base from which to work, so when economic turbulence hits, slowing the economy and restricting growth is a viable strategy. In a developed economy, raising interest rates and taxes in order to make up for shortfalls and protecting an economy with austerity policies can be a successful strategy; in a developing economy, however, these practices lead to disaster. 34 Developing countries have no firm economic base on which to rely, and enacting austerity policies shuts down growth completely. Businesses collapse and no new businesses begin, and without production there cannot be consumption, even if the citizens had the money to spend. The World Bank’s development loans can be equally damaging. The Bank’s interest rates are fair, but it loans in amounts that are too large. Developed countries could generate the revenue to pay off enormous loans, but developing countries are buried under the interest payments, because the principle amount of the loans prove too big. As a result, interest skyrockets quickly and developing countries soon find themselves heavily indebted. 35 Many of the world’s prominent lending institutions have become successful with their ventures in the economies of developed, industrialized countries, rather than in 32 Gretchen Vogel, Science; 6/29/2001, Vol. 292 Issue 5526, p2420, 3p, 2c. Academic Search Premier 33 IMF, IMF Member Quota’s and Voting Power, Date Accessed 4/23/08,http://www.imf.org/external/np/sec/memdir/members.htm 34 Steve Forbes, Forbes; 1/21/2002, Vol. 169 Issue 2, p21-21, Academic Search Premier 35 Africa Research Bulletin: Political, Social & Cultural Series; Dec2007, Vol. 44 Issue 12, p17367-17368,

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