Background Guide - TJHSST Activities

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TechMUN 2015
International Monetary Fund
HS International Monetary Fund
Thomas Jefferson High School Model United Nations Conference
TechMUN 2015
High School Specialized
Chair: Jeewoo Kim
Chair: Holly Frank
TechMUN at Stuart
Thomas Jefferson High School for Science and Technology and JEB Stuart High School
Fairfax, VA | April 10-11, 2015
TechMUN 2015
Message from the chairs:
Dear Delegates,
Our names are Jeewoo Kim and Holly Frank and we
are so excited to be serving as your chairs for the
International Monetary Fund at TechMUN this year! We
are both currently juniors at TJ. Before we get into what we
would like to see in our committee, we would like to
introduce ourselves:
Jeewoo: I’ve been doing Model UN since 8th grade
and aside from chairing for one session at TechMUN last
year, this is the first time I will be chairing at TechMUN. I
am also a Relay for Life team captain and committee
member, French Honor Society member, treasurer of TJ’s Neuroscience Society, and an
instructor for Kids are Scientists Too and NeuroInspire. I
have been running on cross country and track since
freshman year, and I love eating.
Holly: This is my second year in Model UN, and
my first year chairing my own committee at TechMUN.
Besides MUN, I am also activity coordinator for TJ’s
student government association, on the Relay for Life
committee, and an officer of Jewish Culture Club. I am
also involved in Nothing But Nets. I enjoy reading,
napping, and rowing.
We understand that the topics for this committee are difficult because they are so current
and constantly changing, so we cannot stress research enough! We are looking for evidence of
quality research and a strong understanding of the topics in your papers and speeches. It is so
important that you understand not only why these issues exist, but also what your country’s
specific stance is. There is no clear approach to either topic, and because of this, we expect to see
strong debate that is true to the policies of each country. We also will be looking for innovative,
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yet feasible solutions to the problems. Plagiarism will not be tolerated under any circumstances.
We want to emphasize strong ethical behavior and diplomacy, as those are key indicators of a
good delegate.
If you have any questions about this committee, this conference, or us in general, please
do not hesitate to contact us at [email protected]! We look forward to meeting you
in April!
Your chairs,
Jeewoo Kim and Holly Frank
TechMUN at Stuart
TechMUN 2015
Topic A: Falling Oil Prices
Background and Current Information
Oil has been used to meet the various energy needs of all countries. It is one of the
leading sources of energy and with the current drop in oil comes the issue of the economic
consequences that nations face. Over 200 countries produce oil, but the countries in Organization
of Petroleum Exporting Countries (OPEC) and the United States contribute the most and China
consumes the most (“US Energy”, “Other FAQs”). The impact of the current oil price drop
affects not only exporting nations in OPEC, but also importing nations and smaller countries that
rely on their oil market. With its benefits and consequences, this specific oil price drop has its
predecessors.
In 1973, OPEC placed an oil embargo on the United States, resulting in a sharp and then
steady incline of oil prices. This is the initial event that led to an increased amount of domestic
focus that the United States developed, leading up to its powerful position in the oil industry
(“Oil Embargo”). The energy crisis of 1979 was caused by the Iranian revolution in 1978, as the
oil output of Iran sharply declined resulting in an increase in oil prices (“OPEC States”). As a
response, there was suddenly an excessive increase in oil production in many nations and supply
overcame demand. The mid 1980’s saw a sharp drop in oil prices (similar to the situation today)
and this was deemed the 1980’s oil glut. Afterwards, prices fluctuated up and down (mainly
down) as various events in the Middle East occurred, such as Iraq’s invasion of Kuwait.
In the 2000’s countries such as China presented an ever-growing demand for oil that oil
producers could not match until almost another decade (Gold). Over the last five years, oil prices
have remained stable at around 110 dollars per barrel. However, in the last few months, oil prices
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have been cut by more than 50% (Bowler). This extreme drop in prices can be attributed to
multiple factors, including the United States surpassing Saudi Arabia as the largest oil producer
in the world in July of 2014 (Smith). This, coupled with declining global demand for oil,
particularly in the Asian market, sparked the decline (IMF Survey). Oil prices were then driven
lower by OPEC’s failure to respond to this crisis.
On November 27, 2014, the members of OPEC met in Vienna, Austria to discuss
potential reactions to the fall. Many member nations whose economies are primarily based on oil
exportation and stand to lose hundreds of billions of dollars by the drop pressured OPEC, but
primarily Saudi Arabia, to cut oil production in order to boost prices. However, Saudi Arabia
refused to lower production, and OPEC eventually decided to keep production as is for six
months (Plumer). This decision has led to continual decline in prices. Many nations in OPEC
have economies hinging almost entirely on the export of oil. For those nations in debt or with
little federal reserve, the collapse in prices devastates the economy. However, for countries who
mostly import oil, the fallen prices should serve as an economic boost (BBC).
The current IMF stance on dropping oil prices is that it will stifle the growth of the
international economy by 0.3%. The IMF also stated that the oil price changes are an extremely
crucial factor for when it provides estimated economic patterns (Shmuel). In a different
perspective, the IMF has shown favorable actions towards energy sources aside from oil that
may prove to be more stable in price. The IMF has stated that alternative energy source subsidies
stimulate economic growth therefore encouraging the use of such programs (“Energy Subsidy
Reform”).
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Questions to Consider:
1. How can the IMF work towards stabilizing the economy regarding the unpredictably oil
price changes that happen frequently?
2. How can the IMF be involved in individual national economic plans regarding reactions
to the oil crisis?
3. How can the IMF protect the nations that are affected by the dropping price of oil?
4. How should nations that rely heavily on oil production structure their approach towards
combatting this economic hurdle?
5. How should nations that rely heavily on oil importation and benefit from low costs
approach this issue?
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Works Cited
Bowler, Tim. "Falling Oil Prices: Winners and Losers." BBC News. BBC, 19 Jan.
2015. Web. 11 Feb. 2015.
"Energy Subsidy Reform--Lessons and Implications, Summary Note." Energy Subsidy
Reform--Lessons and Implications, Summary Note. International Monetary Fund, 27
Mar. 2013. Web. 20 Feb. 2015.
Gold, Russell. "Back to the Future? Oil Replays 1980s Bust." WSJ. The Wall Street
Journal, 13 Jan. 2015. Web. 20 Feb. 2015.
"IMF Survey : Falling Oil Prices Hurt Exporters across Mideast, Central Asia." IMF
Survey : Falling Oil Prices Hurt Exporters across Mideast, Central Asia. International
Monetary Fund, 21 Jan. 2015. Web. 20 Feb. 2015.
"Oil Embargo, 1973–1974 - 1969–1976 - Milestones - Office of the Historian." Oil
Embargo, 1973–1974 - 1969–1976 - Milestones - Office of the Historian. US
Department of State, 31 Oct. 2013. Web. 18 Feb. 2015.
"OPEC States Raise Oil Prices." History.com. A&E Television Networks, 2014. Web.
20 Feb. 2015.
"Other FAQs." IEA. International Energy Agency, 2015. Web. 18 Feb. 2015.
Plumer, Brad. "Why Oil Prices Keep Falling - and Throwing the World into Turmoil."
Vox. Vox, 23 Jan. 2015. Web. 11 Feb. 2015.
Shmuel, John. "IMF Cuts Global Growth Forecast amid 'sizable Uncertainty' about Oil
Price Path." Financial Post IMF Cuts Global Growth Forecast amid Sizable
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Uncertainty about Oil Pricepath Comments. Financial Post, 19 Jan. 2015. Web. 20
Feb. 2015.
Smith, Grant. "U.S. Seen as Biggest Oil Producer After Overtaking Saudi."
Bloomberg.com. Bloomberg, 4 July 2014. Web. 19 Feb. 2015.
"U.S. Energy Information Administration - EIA - Independent Statistics and
Analysis." Countries. US Energy Information Administration, 2013. Web. 20 Feb.
2015.
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Topic B: Combating the Financing of Terrorism
Background and Current Information
Terrorism is often associated with the Middle East, particularly the infamous
organizations ISIS and Al-Qaeda, but it exists in almost every nation in some form. One
definition of terrorism activities is “Involve violent acts or acts dangerous to human life that
violate federal or state law, appear to be intended (i) to intimidate or coerce a civilian population;
(ii) to influence the policy of a government by intimidation or coercion; or (iii) to affect the
conduct of a government by mass destruction, assassination, or kidnapping” (“Definitions”).
Terrorism, both domestic and international, has many different root causes and agendas.
However, all terrorist organizations, no matter what the size, need financing in order to carry out
their activities. An approach that needs heightened attention when combatting terrorism is
working towards eliminating the monetary resources that organizations and members illegally
receive.
Terrorists receive funds through a variety of means, one being donations from individual
and group charities. Saudi Arabia citizens and charities were once the largest source of money
for Al-Qaeda, and though the Saudi officials tried to curb this voluntary terrorist financing,
donations and charities remained strong investors in terrorist organizations. Currently the largest
source of terrorist financing is illicit activity such as drug trade. The Taliban used to profit
almost entirely on Afghanistan drug fields. Other forms of illicit activity are displayed by the
Islamic State in Iraq and Syria as they collect “tax” from locals (usually involved threats and
ransoms) and sell oil on the black market (“Oil, Extortion, and Crime”).
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Other forms of trafficking include human trafficking, and combined with drug
trafficking, they are generally the most profitable of illicit activities. Human trafficking is a
billion dollar industry and provides alternative means for terrorist groups to sell and resell people
to finance their actions. The Taliban is one notorious example of how terrorist groups kidnap
young girls to compensate for other measures that have been taken to decentralize terrorist group
funding and the work that has been done to stop donations from charities and rich individuals. It
is also important to note that human trafficking is not limited to women, young male children are
also abducted and forced to join militaries of terrorist groups. Al-Shabaab, a terrorist group
centralized in Somalia, threatened parents and teachers until they sent their children to training
camps. The Kurdish Worker Party (PKK) in Turkey is also known to utilize human trafficking to
employ children in their militia (Gonzalez).
However, because the revenue generated off these activities is dirty money, which can
link organizations to crime and terrorism, the organizations need to “clean” the money, or hide
the true nature of their profits (“Anti-Money Laundering”). This is done in various ways,
including the use of shell corporations, offshore accounts, and even through unsuspecting legal
enterprises. All of these mechanisms are ways to obscure the nature of the cash, yet the hardest
part of the money laundering process is introducing the cash to the economy without detection.
Once the money has been sufficiently cleaned, groups usually either spend or invest the money
(Thony). Terrorist organizations also participate in the market economy, setting up companies
and economic ventures to raise revenue legally (Kaplan).
Terrorism crosses many international borders, and is present in countries that are not
limited to members of the Middle East or the United States. Argentina has faced terrorist attacks
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from Iran over the past 20 years, the most infamous being a bombing of an Argentine Jewish
center in 1994. Iran was, at the time, receiving resources and trade partners through Latin
American countries while undergoing a sanction by the rest of the West, and had formerly
reasonable ties with Argentina. Further investigation showed that Iran had planned and financed
the bombing and executed by working with Hezbollah, a Lebanese terrorist organization (Gilbert
& Romero).
Currently, the International Monetary Fund has protections in place against the funding
of terrorism, with a focus on preventing money laundering. Through a few different mechanisms,
the IMF provides member countries with advice on financial security. The IMF works with the
standards set by the Financial Action Task Force (FATF) and monitors member countries’
economies to ensure compliance with these guidelines (20, 2014 February). These
recommendations include coordinated policies on preventative measures on money laundering
and the proliferation of terrorist organizations, as well as international cooperation (“The
FATF”). If a deficiency is found in adherence to these regulations, the IMF works with member
nations to rectify the problem through the development of programs. Specifically, the creating of
Financial Intelligence Agencies on a national level is highly encouraged as a domestic
investigative body for financial information believed to have criminal ties.
Questions to Consider:
1. What measures has your countries taken in the past to combat the financing of terrorism,
both domestic and international?
2. How can the IMF ensure that countries comply with the guidelines put in place by
FATF?
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3. How can the IMF prevent the funding of terrorism through charities and legitimate
businesses?
4. How can the IMF prevent the funding of terrorism through illicit activities, such as drug
or human trafficking?
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Works Cited
20, 2014 February. "REVIEW OF THE FUND’S STRATEGY ON ANTI-MONEY
LAUNDERING AND COMBATING THE FINANCING OF TERRORISM." IMF
POLICY PAPER (n.d.): n. pag. IMF. International Monetary Fund, 20 Feb. 2014.
Web. 21 Feb. 2015.
"Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Topics." Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) Topics. International Monetary Fund, n.d. Web. 21 Feb. 2015.
"Definitions of Terrorism in the U.S. Code." FBI. FBI, 20 Aug. 2013. Web. 11 Feb.
2015.
"The FATF Proposes Major Changes to Its Forty Recommendations." Trusts &
Trustees 8.9 (2002): 25-26. IMF. International Monetary Fund, Feb. 2012. Web.
Gilbert, Jonathan, and Simon Romero. "Argentine Phone Calls Detail Efforts to Shield
Iran." The New York Times. The New York Times, 21 Jan. 2015. Web. 21 Feb. 2015.
Gonzalez, Elsie. "The Nexus between Human Trafficking and Terrorism/Organized
Crime: Combating Human Trafficking By Creating a Cooperative Law Enforcement
System." Seton Hall Law ERepository. Seton Hall Law, 5 Jan. 2013. Web. 21 Feb.
2015.
Kaplan, Eben. "Tracking Down Terrorist Financing." Council on Foreign Relations.
Council on Foreign Relations, 04 Apr. 2006. Web. 21 Feb. 2015.
"Oil, Extortion and Crime: Where ISIS Gets Its Money." NBC News. NBC, 11 Sept.
2014. Web. 21 Feb. 2015.
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Thony, Jean-François. "Money Laundering and Terrorism Financing: An Overview."
Money Laundering and Financing of Terrorism: An Overview by Jean-François
Thony (n.d.): n. pag. IMF. International Monetary Fund. Web. 21 Feb. 2015.
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Background Guide - TJHSST Activities

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