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The French Republic
Saint Ignatius College Preparatory School
Economic and Financial Committee (ECOFIN)
Michael Flynn
Topic 1: Third United Nations Decade for the Eradication of Poverty
At the core of every international issue lies poverty. Exploitation of the poor and
insufficient funding to programs to aid those afflicted with poverty are major inhibitors to the
achievement of the Sustainable Development Goals (SDGs) as outlined by the United Nations
Development Programme (UNDP). While a significant degree of progress has been made
through joint concerted efforts between individual governments, NGOs, and UN bodies, these
efforts must be redoubled in order to achieve the end goal of eradication of poverty by 2030.
With more than 3 billion people living on less than $2.50 per day, poverty is by no means a
regional issue: it is a global threat to humanity as a whole.
The French Republic is fortunate to be a developed nation with a low Gini index of
roughly 30 and only 8.1% of population residing below the poverty line. With a 9.7%
unemployment rate and a .3% inflation rate, however, significant steps have been taken to
prevent those at risk from growing. The “Social Protection” system in France is quite costly,
totaling about 30% of the GDP, but has been proven in the past to be tremendously effective.
Following a Bismarckian system aimed at insuring those working as opposed to a Beveridge
system, however, those out of work or unable to find a job do lose a significant number of
provisions. That being said, France has been shifting in a more widespread direction over the
past decades. Social security covers most employees, students, and residents. Furthermore, state
education in France is one of the strongest systems in the world, focusing heavily on preprofessional training. The French Republic believes strongly in the power of education as a force
of change in the world.
The primary focuses for eradicating poverty should be focused on improving
infrastructure and education in order to strengthen the job force. Additionally, encouraging
fractional reserve systems in countries that do not yet have such standards are paramount in order
to decrease the amount of instability present within the banking system. The French Republic
would strongly discourage the use of microfinance. While it has proven to be minimally effective
in limited case studies, broader studies have proven microfinance to primarily be a loan-sharking
front that leads to increased loan defaults, economic instability, and higher suicide rates,
particularly with farmers and those working in developing nations. ECOFIN can work with
countries in order to negotiate minimal-interest loans to the governments with the focus on
establishing infrastructural development as well as education systems. These will increase the
level of human capital and help to increase the long-run aggregate supply, in turn increasing
aggregate demand at equilibrium, improving real GDP, and raising overall price level. This will,
in turn, lead to higher wages for workers. To prevent embezzlement of funds, the repayment of
these loans will be monitored by ECOFIN as a term of negotiating the contracts between the
World Bank. Furthermore, actual development within the country can be overseen by the
primary supranational organization to which the country belongs. This will ensure that the funds
are being used for their primary intent and increase transparency on an international level.
Topic 2: External Debt Sustainability and Development
Along with poverty, external debt is a primary inhibitor of growth and development
within underdeveloped countries. Well efforts involving microfinance at first appeared viable,
more recent studies have shown that they primarily lead to debt crises as well as a plethora of
other negative externalities that do more harm than good. Due to this combination of factors, the
French Republic would be strongly against the use of microfinance as a way of circumventing
the creation of external debt at the government level. Corruption serves as a major roadblock to
the dissipation of external debt. Countries with higher corruption indexes tend to struggle more
with debt, as a great deal of money within the country that would otherwise be put towards
ameliorating debt or improving infrastructure to generate revenue in the long run disappears into
officials’ pockets. Furthermore, greater protection must be put in place for the 38 heavily
indebted poor countries (HIPC). While the International Monetary Fund’s (IMF) collaboration
with the World Bank on the Multilateral Debt Relief Initiative (MDRI) is a step in the right
direction, many more provisions must be generated to aid these countries in the long-run.
Perhaps collaboration between the Paris Club and MDRI can lead to further benefits for these
countries, but the fragility of the global economy is currently a large detractor to much of this
progress.
The French Republic is tremendously fortunate to not be heavily encumbered by debt.
That being said, French external debt was 5.7 trillion USD as of 2014. This is 222% of the GDP.
With a Net International Investment Position (NIIP) of -353.7 billion euros, France currently has
a greater amount if liabilities in the international debt market than assets. Due to this fact, the
French Republic is not an ideal lender as of the moment. Especially due to Brexit and the
financial crisis generated by the great influx of refugees into certain member states of the
Eurozone, France hopes to be able to correct its debts in the long term.
A ratings system must be implemented to aid countries in determining what countries are
the best lenders. This system, based primarily on the NIIP, would be established, recorded, and
monitored by ECOFIN with aid from the IMF and World Bank for financial statistics. Any
country with an NIIP (as percentage of GDP) of over +33% would be considered a Class A or
“Prime Lender.” These countries would be the first countries referred to for borrowing money in
the international community. Any country with an NIIP above 0% would be considered Class B,
which distinguishes them as a generally safe lender but slightly less established than those
designated as Class A. Class C would be those between -15% and 0%. Class D would fall from
anywhere between -50% and -15%, and these countries would primarily be seeking debt aid and
otherwise. Finally, any country under -50% would be considered a country at major risk and
would be an aid seeker and provisioned for in similar ways to the HIPC countries. Furthermore,
the Paris Club should be extended to include nearly all major lenders. While, ideally, this would
lead to the complete forgiveness of debts owed by the HIPC countries, the French Republic
knows this is not entirely reasonable given the fragility of the international economy. That being
said, collaborations between the Paris Club and MDRI can aid in restructuring debt contracts and
clauses within agreements between debtor and lender countries in order to reduce the burden of
debt and interest on the economy of the country in both the immediate future and the long term.
Topic 3: Protection of Global Climate for Present and Future Generations of Humankind
The threat of climate change is often viewed as purely a long-term threat, but the reality
of the issue is that the direct threat of climate change is looming much more imminently than
most of the world expects. Climate change has been directly cited as one of the major causes of
an increased rate of natural disasters seen in recent years. This has left many people without
homes, livelihoods, and led to the loss of countless lives. These disasters can cripple economic
growth within regions of developing countries, and in countries without adequate health care or
infrastructure, can lead to major disease epidemics. Further provisions must be made by
ECOFIN for international economic response and reaction to these disasters, or else the global
debt crisis will only continue to grow.
The French Republic has been one of the leading developers within the realm of climate
change and clean energy. The sheer magnitude of legislation incentivizing the development of
renewable energy has made it one of the most rapidly growing sectors within the French
economy. Furthermore, as the host country and a primary driver within the Paris Climate Talks,
France has been a catalyst of international collaboration in the realm of climate change. Smaller
laws including green roof incentive and microgeneration grants have led to growth of small scale
measures that aid in protecting the environment. Finally, France committed to cap their
emissions at the same level theirs was in 1990, to reduce that by 25% in time for 2020, and to
decrease emissions by up to 80% by 2050. Finally, in 2004, France shut down its last coal mine
and has shifted nearly 80% of national energy to nuclear power.
ECOFIN must work with NGOs such as the Red Cross as well as organizations and
lending bodies such as the IMF to grow the Central Emergency Response Fund (CERF) in order
to provide further provisions for those impacted by natural disasters augmented by climate
change. Furthermore, through collaboration with the United Nations High Council on Refugees
(UNHCR), the definition of refugee must be expanded to include those displaced by climate
change. This will primarily impact those displaced from smaller island nations due to rising
ocean levels. Furthermore, through collaboration with the United Nations Development
Programme (UNDP), education regarding issues of climate change can be brought forth in the
international sphere. While obviously ECOFIN cannot sanction those who do not choose to
decrease negative impact on the environment, ECOFIN must redouble its enforcement of the
Kyoto Protocol in collaboration with signatory nations as well as the United Nations
Environmental Programme (UNEP). Additionally, ECOFIN should provide funding for any body
that provides loans or grants primarily to companies working on experimental technologies that
would aid in the battle against climate change. Finally, ensuring that loans going to bodies
working to develop technologies, particularly nuclear technologies, are at minimum rates is
prime. Especially regarding development of thorium reactors, nuclear technology is the future.
While widespread use of thorium is not currently practical given the state of nuclear technology
and the difficulty of adapting nuclear reactors to thorium, growth of technology, research, and
information regarding thorium reactors and development of nuclear fusion as opposed to fission
technologies are paramount to future growth.