Economic and Financial Affairs Council

Topic A: Belt and Road Initiative

The Belt and Road Initiative is China’s plan for a global trade network consisting of ports, roads, railroads, and railways. It is aimed at developing trade routes that connect China to the rest of the world. The initiative consists of projects such as upgrading infrastructure, lending through loans, and making investments ultimately leading to better productivity. There are about 155 countries that signed up for the initiative which is about 75% of the world's population. These countries also consist of half of the world's GDP. The initiative is split into two parts: one being the “Belt” and the other being the “Road.” The belt consists of plans for trading routes that connect China to Central Asia, South Asia, the Middle East, and Europe. The Road or Maritime Silk Road consists of sea-based infrastructure that connects China to Southeast Asia, Africa, and Europe. One of the stand-out infrastructure projects where the economic belt meets the maritime is the flagship project of the China-Pakistan Economic Corridor. This consists of infrastructure projects of ports, highways, and railways networks. The Belt and Road Initiative is believed to help the world by lifting millions out of poverty and boosting global trade. However, there are many critiques about China's intentions. Some say China is seeking to gain more economic, political, and geopolitical influence and power through the Belt and Road initiative. This is due to the economic dependence certain countries have as a result of loans taken for these projects. Sri Lanka, for example, gave China control over its Hambantota Port Development project since it owed China loans that it had difficulty paying off. Djibouti also owes China over 80% of its GDP. The initiative is in agreement with countries in conflict and vulnerable countries making it a risky plan for many countries. Countries such as Germany, the UK, and France refused to sign trade statements because of unclear public procurement and due to environmental concerns. Other countries, for example, Russia are on board as they benefit from investments and projects. China also relies on Russia’s involvement because of its historical influence in Central Asia. The Ecofin committee must come together to discuss these risks and concerns to promote economic development while protecting the world economy as a whole. 

Topic B: Economic Crisis in Greece

Fiscal and Monetary policies in the 1980s caused Greece to suffer many forms of crisis such as low economic growth, fiscal and trade deficits, and a rise in inflation rates. In 2001, Greece joined the European Monetary Union (EMU) which offered hope to lower inflation and interest rates, to encourage private investment, and to stimulate its economic growth. After Greece adopted the Euro, it was able to borrow at lower interest rates than it had before leading to better financing access and its GDP per capita to rise above 110%.  This increase in spending spurred economic growth as they borrowed from public markets at low interest rates and used these for social programs, to lower their taxes, and to expand their pension system. In 2004, Greece hosted the Summer Olympic Games in Athens. This led to a rise in public debt due to high infrastructure investments. Greece continued to have an economic downturn for the following years. However, the main economic crisis is commonly acknowledged to have begun around 2009 as Greece entered a period of lasting recession in 2009. It had consequences on mental health caused by unemployment, financial issues, and income loss. Furthermore, there was an alarming rise in suicide rates. The government disclosed the fiscal deficit to have been 15.6%, which was more than double what it had been thought to be.  In 2010, Greece’s government sought bailout funding due to a liquidity crisis. The European Commission, the European Central Bank, and the International Monetary Fund, known as “the Troika,” came up with a 3-year bailout plan in May of 2010. The plan was composed of harsh austerity on the Greek government and its people to reduce the Greek budget deficit. It included tax increases, wage cuts, reduced pensions, and loose regulations to restore competition and economic growth. They lent $110 billion committing the government to higher taxes and lower spreading to bring the country back into a surplus. This brought Greece's GDP up to 172% in 2011. The Greek economy is stabilized and slowly recovering today. However, the huge amounts of debt it owes has shrunk living standards and social services leaving many worried about their futures. The risk of poverty and social exclusion was 28.1% in 2008 and rose to 36% in 2014. Later on, in 2015, it became 25.7%. There were also rises in unemployment rates from 7.8% in 2008 to 24.9% in 2015. The Ecofin committee must come together to discuss possible solutions to alleviating or eliminating the Greek economic crisis and its results that remain today.

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