Download United Arab Emirates Delegation

Puglionesi 1
Country: United Arab Emirates
Committee: Economic and Financial
Topic: Sustainability in Transition Economies
Delegate: Jason Puglionesi, Haverford High School
Eastern European nations have failed to build sustainable transition economies in
the post-Cold War world; mistrust of outsider investment, administrative corruption, EU
and IMF requirements, and shock therapy have led to the region’s sporadic growth and
weakness. The United Arab Emirates is well situated to advise on Eastern European
economic woes and restructuring - forty years ago our country ranked below first world
HDI, but today is within the top fifty nations, at 0.868 on the index (“Human
Development Reports - 2005”). EcoFin must sponsor or recommend NGO media
campaigns to endear foreign investment and vilify corruption in Eastern Europe, attempt
to weaken EU and IMF standards that stymie the region’s regulatory tools, and set up a
checklist system to ensure dismantling of corruption and the reclamation of ill-gotten
assets in proportion to the granting of IMF loans. As an alternative or added measure, the
second committee should consider legislation stipulating or encouraging the creation of
free trade zones (FTZ) in Eastern Europe, to revitalize foreign investment. Energy is also
a concern for stabilizing the regional economy, as fuel and energy sources flow from the
Russian Federation to Eastern Europe – supply is volatile at best.
EU and IMF restrictions severely restrict regulatory tools at Eastern European
governments’ disposal, like small scale inflation to increase government spending. The
committee should suggest that the EU and IMF weaken conditions that restrict domestic
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manipulation, and replace them with benchmarks for dissolution of institutionalized
corruption (monitored by NGO groups like the UN organ Group of States Against
Corruption, called GRECO.) EcoFin should also encourage reclamation ill-gotten
former-state assets, taxpayers of Eastern Europe were effectively robbed of public assets
by a corrupt and decrepit system. If at all possible, the region’s nations must, through
internal legal mechanisms with outside NGO consultation and corroboration, reclaim
their property or receive equivalent compensation. Such action is undeniably the fiscal
responsibility of the region’s governments, but will also show the former Soviet bloc in a
positive light: righting the wrongs of the past two decades by tearing down the
oligarchies constricting their economies.
As part of much larger and long-term restructuring, the Second Committee should
consider the Eastern European establishment of free trade zones (FTZ) or export
processing zones (EPZ), like those within and around Dubai, where royalties and taxes
are reduced to encourage new business and foreign investment. These zones have
contributed greatly to economic growth in the UAE, 20 percent GDP growth in Dubai for
2006 - up from $37 billion USD in 2005, which is slightly higher than average growth
(Gimbel). This is largely the effect of FTZ (note that less than 6 percent of Dubai’s GDP
came from any oil-production revenues in these years), which also create thousands of
jobs in the area (Gimbel). UAE owned companies, like Dubai World, which has invested
$1 billion in a Djibouti FTZ port, have begun building FTZ ports in places like Saudi
Arabia, China, and Indonesia modeled after Dubai. A testament to the Dubai economic
model is the emirate itself, (Dubai is one of seven states in the federation that make up
the UAE) which collects no income taxes but maintains a strong fiscal surplus in realized
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and unrealized assets (“Dubai diversifies out of oil”). Described economically as
“centrally-planned free-market capitalism” by the International Herald Tribune, the
Dubai economic structure often increases real estate values and connotes urban
gentrification. Thirty years ago Dubai was a strip of desert struggling to survive, now as
an entrepôt it plays host to over 5500 companies from 120 countries and collects no
capitol or income taxes (“Dubai Executive Summary”). FTZ openings in Eastern Europe
will attract industry serving the geographic area (i.e. Western European or Russian
manufacturing/service sectors) to open branches, often to cut overhead from business-tax
heavy countries like those in Western Europe. With even light tax proceeds from these
FTZ, Eastern European states could establish sovereign wealth funds (SWF) and run
them by the Santiago Principles (or Generally Accepted Principles and Practices - GAPP)
of the International Working Group for Sovereign Wealth Funds (IWG), therefore
generating a small but steady stream of revenue for said governments. SWF, like the
United States’ Alaska Permanent Fund, which generated a 13.9 percent return in 2007,
represent a large, safe potential source of revenue for Eastern Europe – with the right
management and assistance from the international community ("State of Alaska FY2009
Governor's Operating Budget").
Though about 60 percent of UAE federal budget derives from fossil fuel
revenues, green or renewable energy resources are a viable supplement to fossil fuel
energy in Eastern Europe. EcoFin should support alternative energy sources there,
considering the economic and political instability that Russian fuel cutoffs create. Abu
Dhabi launched its Masdar solar city campaign in 2007, with an initial projected cost of
$5 billion (Elewa). Eastern Europe will need considerable assistance in building or
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maintaining alternative energy supply. The second committee should suggest support by
other UN organs for green movements in the region, perhaps with logistical help from
Denmark’s infrastructure planners.
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Works Cited
Dickey, Christopher. "Dubai's Last Hurrah." Newsweek. 06 Dec 2008. Newsweek. 14
Feb 2009 <http://www.newsweek.com/id/172641/page/1>.
"Dubai diversifies out of oil." AME Info. 07 Sep 2005. AME Information. 22 Feb 2009
<http://www.ameinfo.com/66981.html>.
"Dubai Executive Summary." LOWTAX.NET. Low Tax Network. 12 Feb 2009
<http://www.lowtax.net/lowtax/html/dubai/jdbnews.html>.
Elewa, Ahmed. "Abu Dhabi's Green Move Gathers Pace." Gulf News. 02 June 2007.
Gulf News. 20 Feb 2009
<http://archive.gulfnews.com/articles/07/06/02/10129398.html>.
"GAPP - Santiago Principles." International Working Group of Soverign Wealth Funds.
IWG. 22 Feb 2009 <http://www.iwg-swf.org/pubs/gapplist.htm>.
Gimbel, Barney. "Welcome to Dubai World." CNN Money - Fortune. 22 Feb 2008. CNN
Money. 22 Feb 2009
<http://money.cnn.com/2008/02/20/news/international/Dubai_djibouti.fortune/ind
ex.htm>.
"Gulf Cooperation Council goes for Growth." Access My Library. 01 Dec 2006. Gale, a
part of Cengage Learning. 14 Feb 2009
<http://www.accessmylibrary.com/coms2/summary_0286-28904230_ITM>.
"HDI-GDP - HDR." Human Development Reports. 2008. UNDP. 24 Feb 2009
<http://hdr.undp.org/external/flash/hdi_gdp/>.
Karabell, Zachary. "Dubai: Too Big to Fail." Newsweek International Edition. 06 Dec
2008. Newsweek. 14 Feb 2009 <http://www.newsweek.com/id/172643/page/1>.
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"Report for Selected Countries and Subjects." International Monetary Fund. 2009. IMF.
24 Feb 2009
<http://www.imf.org/external/pubs/ft/weo/2006/01/data/dbcoutm.cfm?SD=2003&
ED=2007&R1=1&R2=1&CS=3&SS=2&OS=C&DD=0&OUT=1&C=466111&S=NGDP_D-GGD-GGND-BCA&CMP=0&x=84&y=15>.
"State of Alaska FY2009 Governor's operating Budget." Alaska Revenue Department. 24
Dec 2007. Alaska Department of Revenue. 24 Feb 2009
<http://www.gov.state.ak.us/omb/09_omb/budget/Rev/comp109.pdf>.
"The UAE and Global Oil Supply." Embassy of the UAE in Washington D.C.. 11 Feb
2009. Embassy of the United Arab Emirates. 12 Feb 2009 <http://uaeembassy.org/uae/energy/global-oil-supply>.