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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 23 and services such as education, healthcare, and access to water. Jubilee, a nongovernmental organization that promotes debt relief projects, says that “if current irresponsible lending practices continue, any number of a variety of economically harmful things could happen” 40 . The interest payments, which continue to pile up, will continue to choke off economic growth. For example, Africa has $295 billion USD in debt stock, and all of that is interest payments. Jubilee predicts that without debt relief measures, that number could rise to over $500 billion in less than five years. 41 They also state that if debt relief does not come to pass, the AIDS epidemic will continue to drastically worsen and Africa will enter “debt slavery” to its creditor nations. 42 The Global Call to Action Against Poverty (GCAP) is an umbrella organization of many groups and NGOs calling for debt relief to help poor countries accomplish the Millennium Development Goals established by the UN. “Without debt relief and an end to irresponsible lending practices,” the GCAP maintains, “meeting the UN’s millennium development goals will be impossible.” 43 Other disturbing statistics include the fact that Africa spends $13 dollars on interest for every $1 it receives in grants; if the UN allows this pattern to worsen, Africa will never recover. 44 The last time the world had a global debt crisis of this magnitude, it was created by the reparations of the Versailles Treaty. The IMF and World Bank were created partially in response to what transpired because of that debt, but it seems that they, and institutions like them, are adding to the situation again. 40 Why Drop the Debt?, Jubilee USA, 2007, Date Accessed 4/16/08, < http://www.jubileeusa.org/truth-aboutdebt/why-drop-the-debt.html> 41 Ibid. 42 Ibid. 43 Global Call to Action Against Poverty, Press Releases, Date Accessed 4/16/08 < http://www.whiteband.org/media/pressreleases> 44 Global Issues, Third World Debt Undermines Development, Date Accessed 4/23/08http://www.globalissues.org/TradeRelated/Debt.asp

Rutgers Model United Nations 24 Conclusion Irresponsible lending is a pressing issue in international politics and finance that needs to be addressed. Financial insolvency can create problems that ripple across the globe in a devastating wave, as proved by historical examples such as the Southeast Asian Financial Crisis. This crisis was created by bad policies of the IMF in Thailand, where the baht crisis quickly spread throughout Southeast Asia and did not stop there, but rather defaulted Russia, which in turn nearly defaulted Turkey. These kind of financial tremors shake the foundations of the world’s economy, and if the problem of irresponsible lending cannot be solved, these tremors will continue.

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