BRIBES AND BARRIERS:
Corruption’s Grip on Foreign Direct Investment
Foreign Direct Investment (FDI) is arguably one of the most successful ways to promote economic development and growth, especially in the case of developing and emerging nations. FDI refers to the investment made either by an individual or a company from one country into business interests in another country. FDI fosters employment, improves infrastructure, allows for the transfer of technology, and facilitates international trade through access to foreign markets. For example, investment into Vietnam is a key driver of Vietnam’s economic growth contributing close to 4-6% of GDP annually and fueling the growth of Vietnam’s secondary manufacturing sector. The relationship between corruption and FDI has been a contentious area of research with intense debate about whether corruption “sands the wheels” or in fact “greases the wheels” of economic development.
There are many studies that conclude corruption has a negative relationship with FDI. These studies show that corruption deters highquality FDI due to several reasons, most notably by decreasing investor confidence. All things equal, foreign investors will be reluctant to invest in countries that experience high levels of corruption, where the likelihood of losing their investment or the potential risk of extortion by corrupt and dishonest officials is high. A study sponsored by Control Risks concluded that corruption was the main factor deterring many foreign companies from investing due to the fears of unproductive expenditures and the misallocation of resources from government officials. For example, in Brazil, “Operation Car Wash” unveiled widespread corruption whereby Petrobras (a state-controlled oil company in Brazil) executives were accepting bribes from major construction companies and other providers of goods and services to Petrobras in exchange for favourable contracts with inflated prices. Due to Petrobras being a state-owned company, this in effect meant Brazilian taxpayers were being overcharged because of excessive public spending on inflated contracts. This scandal uncovered the depth of corruption in Brazil’s business sector which in turn discouraged future foreign investments and caused current investors to re-evaluate the risks associated with making investments in Brazil. The scandal undermined both domestic and foreign investor confidence due to the fall in Petrobras’s market value, which failed to attract investors and resulted in a decrease in FDI. As a result of the economic instability, this scandal plunged Brazil’s economy into a recession and even led to the conviction of Lula da Silva, the Brazilian president at the time.
Furthermore, corruption dissuades foreign investors by acting as a form of taxation leading to unnecessary costs and increased uncertainty. This is particularly impactful in sectors that require large up-front capital expenditures that are irreversible, and which result in considerable sunk costs.
Moreover, research has also shown that corruption, whilst it might not dissuade FDI strictly speaking, results in the misallocation of resources and inefficiencies. For example, contracts might be awarded to less capable firms, thereby resulting in higher costs and faulty infrastructure. This undermines the success of the investments regarding their efficiency and the quality of their intended use. For example, in 2006, the unit for investigating fraud in World Bank projects uncovered evidence that an Indonesian firm had made bribes to Indonesian officials of the Ministry of Public Works to obtain contracts for a $6 million transportation project funded by the World Bank. Before 2006, 43% of road networks in Java were congested leading to reduced productivity and higher costs. The World Bank recognised that improving these roads through investment was crucial for development since the roads accounted for a large amount of freight and passenger transportation in Indonesia. As a result of the bribes, however, the contract was given to a less capable firm which may have resulted in lower quality road infrastructure with a lack of regulation during the construction period. Therefore, the intended positive outcome of the FDI was more than offset due to the fact these roads, whilst necessary for trade and transport, were of lower quality, which eventually had repercussions for the economic growth of Indonesia.
Considering these examples, it has become increasingly apparent that reducing and mitigating corruption will lead to more FDI which in turn will allow economies to grow. The World Bank recognises that corruption causes around $2.6 trillion globally to be lost annually. To make matters worse, corruption is particularly endemic in poor countries and has a disproportionate effect on the poorest population and most vulnerable sectors in society thereby leading to increased income and wealth disparity. It is therefore important that countries develop policies that help reduce corruption. There are many ways to combat corruption. For example, the World Bank has suggested increased transparency and stronger accountability measures as keyways to mitigate corruption. It is important that countries in need of FDI focus on implementing some of these policies.
BY CAROLINA CAMARA, YEAR 11
SUHARTO’S INDONESIA:
Dictatorship and Economic Development
During the early 20th century, Indonesia faced economic hardships as a result of slow recovery from the 1930s great depression and slow economic growth, specifically between 1950 and 1957. However, when Suharto was officially inaugurated in 1968, his authoritarian regime allowed Indonesia to prosper and heavily industrialise. While the regime is considered to be one of the most corrupt and brutal in history, many aspects of it aided economic development, despite not doing so equitably. Suharto remains a controversial figure in Indonesia, with plans to award him with the status of ‘national hero’ being strongly debated. However, the most central aspect of his legacy was how he became the ‘father of development’ and the new structures implemented during his ‘new order’ political regime.
After a period of political instability since 1965, Suharto was appointed as president, a title he formerly gained in 1968. At the time, Indonesia’s economy was weak and characterised by the ‘old order’, which focused primarily on agriculture and aimed for self sufficiency, something which was not achieved until the mid-1980s under Suharto. Poverty and hunger were common within the country and national debt had grown to become unsustainable. As a result, one of the main priorities of Suharto was his stabilisation program. This was aimed at restoring relative price stability as a precondition to long term economic growth and development and was influential in achieving a budget surplus during 1969.
Under Suharto, government was heavily centralised through a personalistic and dictatorial regime. During his term in office, he allowed his friends and family, including his 6 children, to assume control of key sectors of the economy, including 1250 of the country's domestic companies. He constantly depicted communists as a threat to his regime and heavily discriminated against them through various means of repression. Consequently, Suharto’s political party repeatedly scored landslide victories in elections between 1973 and 1993. While this did have detrimental impacts on the quality of life for some people, the stability that Suharto was able to exert over Indonesian society was rewarded with economic and diplomatic support of the west during the Cold War. This financial aid helped in stabilising the economy in the long run and funding various projects, such as education and infrastructure through the REPELITA, showing how the corrupt nature of government had some economic benefits. This new connection to the West also provided Indonesia with the opportunity to rejoin the United Nations and become a founding member of the ASEAN (Association of Southeast Asian Nations) in 1967.
In 1967, Suharto passed the Foreign Investment Law which provided investment incentives and protection and continues to be central to
Indonesian economic growth. Between 1967 and 1987, over 800 projects were approved which amassed to around US$16.2 billion. The law led to an influx in FDI which provided Indonesia with the capital and technological input necessary to modernise infrastructure and boost the number of jobs and therefore employment within the economy.
This increase in foreign investment into Indonesia was also central to Suharto being initially successful in reducing government debt. This was additionally achieved through cutting domestic subsidies and the securing of foreign loans, such as those from 1967 from the Intergovernmental Group on Indonesia. However, the bail out of the Pertamina Oil Company in 1975 led to national debt being almost doubled. The company was directed by Sutowo, a close political ally of Suharto and benefited greatly from the patronage system used at the time. It defaulted on its loans as a result of mismanagement and corruption and the bail out exemplified the financial corruption of the regime as a result of a lack of transparency over the situation. It demonstrates that, while the corrupt nature of Suharto’s regime did not stagnate the economy as a whole, certain aspects of it certainly limited the potential economic gains that could have been achieved with a fairer political system in place.
However, many other policies implemented had huge successes. Suharto also deregulated the banking sector in an attempt to encourage savings and slow inflation. This helped to reduce inflation from 660% in 1966 to less than 9% in 1972. This allowed for economic growth during the 1980s and early 1990s through increased business activity and a general increase in aggregate demand while also improving the long run outlook of the economy. However, in the long term, this deregulation led to instability which heavily contributed to the 1997 Asian financial and currency crisis which ultimately led to Suharto’s downfall.
Overall, Suharto’s economic achievements are clear. By the end of his time in office, Indonesia’s economy grew an average of 7% annually and life expectancy rose by 20 years. On the other hand, these achievements caused an inequitable distribution of income and disproportionate geographical locations of the population. However, other key economic development indicators were also positive, with primary school enrolment ratio to teaching rising by large proportions and virtually eliminating the gender education gap. Education and mass literacy programs had been used to propagate the national language and unify the country’s different ethnic groups. The improvement to quality of life for ordinary citizens can also help to explain how Suharto was able to sustain support for his regime across three decades. Therefore, despite the large scale of corruption and brutality endured during the regime, the economic progress that was seen under Suharto between 1968 and 1996 remains impressive and has been influential in shaping modern day Indonesia.
BY EMILY COURTNEY, UPPER SIXTH
THE OG NEPO BABIES
The Borgia Family
In recent years, the concept of nepotism has saturated public debate. Most often, this is associated with criticisms of Hollywood stars accused of earning their positions from their famous parents. However, lesser known is the fact that nepotism and its harsh critics have existed for far longer than the internet has been around. In fact, several ancient Greek philosophers dedicated time to dissecting the injustices that emerged from positions assumed through this form of patronage.
The strong link between nepotism and the ancient world is not only practical but also linguistic. The term nepotism is derived from the Latin word ‘nepo’ meaning Nephew. It was adopted into the Italian language as nepotista, to articulate the all-too-common practice within the Roman Catholic Church, of high-ranking clerical positions being granted to relatives of the Pope and papal nephews being elevated to cardinals. In this way, nepotism was particularly rampant during the Italian renaissance, perhaps the most infamous were the practices of the Borgia family.
House of Borja
The Borgia family originated from Spain, where they were known as the Borja. They later established themselves in Italy during the height of the Renaissance era, adopting the Italianized version of their name, ‘Borgia’. They eventually emerged as one of the most ruthless and infamous families in the Early Modern period of history.
The family’s move to Italy was initiated by Alfons de Borja (1378-1458), who was born in Valencia, Spain. He moved to Italy to follow his dream of advancing his ecclesiastical career. In 1455, he was elected as Pope Calixtus III, commencing the Borgias’ ruthless and unrelenting quest for power.
Despite their relatively obscure beginnings, the Borgia family were never strangers to scandal and speculation. Their first taste of popular discourse was allegations surrounding the legitimacy of their noble origins. The family claimed to be descendants of Pedro de Atarés - Lord Borja - who was in line for the crown of Aragon. However, rumours circulated that the family were perpetrating a false lineage, as it was revealed that Atarés had actually died childless. Not only was the legitimacy of their bloodline questioned, but the authenticity of their religious convictions was also called into question. Many accusations emerged claiming that the family were originally of Jewish descent and had adopted the Roman Catholic religion to assimilate into a world of power and wealth. This belief was weaponized by political opponents throughout the Borgias’ careers - they were often referred to as Marranos:
‘a Jew who converted to the Christian faith to escape persecution but who continued to practise Judaism secretly (derogatory)’
Borgia’s rise to power
Alfons de Borgia was the pioneer of Borgia ecclesiastical power and national influence. After studying canon and civil law at the University of Lleida, Alfons established himself within his local church, quickly advancing into the higher ranks. After impressively representing his parish in national affairs, he was appointed secretary to King Alfonso of Aragon, thus immersing himself in the country’s political affairs.
His power and position grew as he advanced from the King’s representative to Vice-Chancellor and eventually being assigned the role of regent in the King’s absence. During this time, Alfons showed early signs of undue patronage, even meddling in a murder trial to extricate his relative. After further impressive national negotiations, Alfons was appointed cardinal in 1444. Consequently, he moved to Rome in 1445, at the age of 67, changing the spelling of his name to Borgia - solidifying his desire to ingratiate himself into the world of the Italian elite.
Pope Calixtus III
On 8th April 1445, Alfons was elected Pope Calixtus III. This was a surprising decision given the brief time that Alfons had been a cardinal. However, this choice was made due to him not belonging to a Roman faction and the assumption that due to his old age, his reign would be short. His time as pope was short - he died three years later - but overall, it was regarded with respect.
He was commended for his devotion to Catholicism and expanding the church’s influence through military endeavours, such as his crusade to reclaim Constantinople from the Ottoman Turks. His efforts to improve the social and moral standards of the cardinals were also applauded, but their success was limited. However, his time as pope was not without criticism or scandal. Calixtus faced lots of backlash for his hypocrisy and unabashed nepotism. He abused his powers of appointment to hand out many influential positions to members of the Borgia family, including making two of his nephews cardinals. The most significant of which was his cardinal appointment of his nephew Rodrigo, who would later become one of the most infamous popes in history. These issues were integral in consolidating the family’s power.
Rodrigo Borgia
Calixtus’ decision to appoint Rodrigo as a cardinal was highly contested due to his young age (mid 20s) and his ensuing debaucherous behaviour. Rodrigo used his position to build up his wealth through assuming lucrative church offices and his power. His time as cardinal during his uncles’ pontificate facilitated his eventual election as pope himself. After Pope Calixtus III death in 1458, Rodrigo was the youngest cardinal and therefore not in a position to become pope himself. Instead, he strategically backed an unpopular candidate - Pius II - this was a risky move, however it paid off as this candidate won and Rodrigo earned himself a powerful ally. Pius helped to further elevate Rodrigo's promising
HORIZONS MAGAZINE: CORRUPTION AND JUSTICE
ecclesiastical career - selecting him as Vice-Chancellor. However, even Rodrigo’s cardinalate was not without scandal as he was obsessed with procuring personal wealth and glory as well as a known womaniser. In the subsequent, Rodrigo adopted a similar tactic and again ingratiated himself with the new pope, Paul II. In the 1484 elections, Rodrigo was finally in the running for pope. However, Innocent VIII was chosen over him. Rodrigo used this to build support, and in 1492 he ascended to the papacy, through a unanimous vote.
Pope Alexander VI
From the start, Alexander’s pontificate was riddled with scandal. Allegations swirled of him having bought his papacy through bribery. This was not entirely unfounded as there had to be a reason for the abrupt shift in support after three failed elections. As pope, Alexander VI did not abide by regular catholic standards let alone the strict moral one assigned to the pope. Rodrigo not only violated his vow of celibacy but also publicly acknowledged the children that he had fathered out of wedlock. Alexander VI was a huge proprietor of nepotism, elevating 10 of his relatives to cardinals. Although papal nepotism was not a new phenomenon, this level of abuse was unprecedented. His use of children was not limited to monopolising ecclesiastical power through frivolously handing out important clerical roles. He used his children in numerous ways to alleviate diplomatic pressures and sometimes even settle wars. Alexander’s simony was not the only crime that he committed. He also seized much of the land in Italy to carve out Fiefdoms for his relatives to preside over. Much of this land came from Papal states and the Kingdom of Naples - this move ostracised the then-King of Naples: Ferdinand I. Lucrezia
Despite only being a pawn in her father’s devious plans. Lucrezia had one of the worst reputations of the Borgia family. She was labelled as a whore, murderer, and witch.
She was accused of poisoning her family’s opponents with a mystery substance - Cantarella - this rumour was fuelled following her father’s decision to allow her to attend a meeting in his place. This was hugely criticised as it was scandalous to allow a woman to preside over the Catholic Church’s affairs.
Cesare
Cesare was by far the most infamous son of Alexander. Initially he was one of the ten related cardinals appointed by his father, however he renounced his title in favour of marrying the princess of France. Throughout his dad’s pontificate he made many enemies and committed various violent acts. He was accused of killing his sister’s husbands and any perceived opponents including his brother - Juan, as he was his father’s favourite son and was intended to be afforded the titles that Cesare consequently acquired. Ultimately, the death of his father was his downfall as he had no protection for his outrageous actions and had ostracised most of the Italian elites.
One of the main ways Alexander used his children as political pawns was through their strategic marriages, creating a Borgia dynasty. This tactic was largely reserved for his daughter Lucrezia for whom he arranged threw
different marriages. In 1493, 12-year-old Lucrezia was wedded to Giovanni Sforza, the son of one the most powerful families in the Italian renaissance. However, relationships between the two families turned sour following the French invasion of Italy, in which the Sforza family made an alliance with France against the pope, and Giovanni refused to oppose his family in favour of his father-in-law. Subsequently, the Pope annulled the marriage between the two as he no longer perceived it as useful. Next, Lucrezia was married to the prince of Naples - Alfonso of Aragonhowever, when Borgia policy towards the region changed, the prince was coincidentally murdered. This event was deeply suspicious. Lucrezia’s last husband was Alfonso d’Este Ferrara - this marriage was only made possible after the Pope bullied her husband into accepting her.
Were the Borgias as bad as history paints them?
Although the Borgias had a truly terrible reputation, the authenticity of these rumours is highly questionable. There are many theories as to how these stories were created. Firstly, it is hypothesised that the Sforzas spread the rumours as they felt snubbed by the Borgias. Secondly, as Spaniards during a time where Italian anti-Spanish sentiment was rife, Italian propaganda towards people of Spanish origin was brutal and cruel, this helped rumours to spread. Finally, the proceeding pope after the death of Alexander VI - Pope Julius II - was a known adversary to his predecessor. It is also thought that he was complicit in launching a smear campaign against the family. Overall, history’s presentation of the Borgias is hugely unforgiving, though some historians argue that this is slightly unfair. However, there is no denying that the Borgias were one of the most ruthless dynasties to emerge from the Italian renaissance.
BY EDEN FEO ISAAC, UPPER SIXTH
CONGRESSIONAL CRIMINALS: Insider Trading in
U.S. Congress
Since the beginning of time, the world has seen lawmakers dodge the very rules that they are supposed to enforce. When we think of the corrupt politician, the images that spring to mind are of bribes and dirty deals behind closed doors, or of threats, violence, and authoritarian dictatorship. What we do not think of is an 84 year old woman fiddling around with stocks. However, that is the breed of essentially undetected criminality that runs deep throughout the U.S. Government, where government officials use the confidential knowledge they are privy to as a part of their job to make millions from the stock market. In other words, a large quantity of the people who enforce laws banning insider trading are actually all insider trading themselves.
Insider trading is the trading of a company's securities by individuals with access to confidential or material nonpublic information. Thus, since Congress essentially has the ultimate knowledge of policy that could hinder a company, hence devaluing it, or loosen restrictions on a company, increasing its valuation, members of Congress have an unparalleled ability to predict the trajectory of an asset. The main reason for the ban on insider trading is the inequality it causes, as smaller investors are unlikely to have access to inside information and are thus heavily disadvantaged by their comparative ignorance. It also would favour investors with generational power and wealth, who have far greater access to contacts higher up in positions of power. Insider trading can also undermine trust and justice in markets, distorting prices and discouraging participation in financial markets. Thus, insider trading ordinarily carries a sentence of up to 10 years in prison.
On the other hand, there are also arguments that it actually makes markets more efficient. Proponents claim that it reflects the non-public information in the price of the security, hence making the price more accurate and the market more efficient, and thus banning it is only causing a time lag by delaying the inevitable fluctuation in price that will occur. However, it is also a possibility that because of this early price fluctuation, the market would become more volatile. As prices would change whenever anyone received usable non-public information, but also when the information finally becomes public, the fluctuation would likely be stretched out in a way which may worsen confidence, causing a price distortion, and thereby increasing the volatility even further. The criminalisation of it and the extent of the prison time is also highly costly to the government, which some claim is a waste of resources considering the fact that it is technically a victimless crime.
Congress passed the Stop Trading on Congressional Knowledge Act (STOCK Act) in 2012, following more than 10 years of allegations of insider
by members of Congress and staff, however this has had very little effect aside from increased transparency. No one has actually been prosecuted under the STOCK Act, and it is widely regarded to be a failed policy. The most notable example of this is Nancy Pelosi. Pelosi has recently attracted attention from social media and news outlets for her husband, Paul Pelosi,’s absurdly successful stock portfolio, which he claims is completely uninfluenced by his wife. Pelosi’s portfolio gained an outrageous 65% in 2023, while the S&P 500 average return was 23%. The couple’s most recent notable trade was the massive purchase of NVIDIA call options, where the price surged by almost 200% and their estimated stake would now be worth around $12.2 million. As the STOCK Act states that Pelosi must disclose her trades, she deceptively disclosed this immediately before Christmas weekend to ensure the media did not have the capacity to report it.
The gains have been so prominent that the public began to take notice, prompting the creation of Autopilot, an app dedicated to tracking and imitating the trades of Pelosi and politicians with gains similar. The aim of the app’s creators was to “democratise wealth management”, allowing the public to piggyback off of the exploitation of non-public information by members of Congress such as Pelosi. It is nowhere near uncommon for regular investors to build a portfolio mimicking the stock picks of superinvestors, however this is made far easier by the declaration required by the STOCK Act.
The sad fact is that this problem will likely never be resolved, as the only ones with the power to legislate against this are the very people who benefit the most: the members of Congress. There was an attempt in 2022 by Senators Ossoff and Mark Kelly to introduce the Ban Congressional Stock Trading Act, which would have forced members of Congress to either divest their shares or place them in a blind trust. Unsurprisingly, this never got very far. The use of privileged information by these officials not only subverts the principles of fairness and equality in the financial markets but also erodes public trust in the integrity of both the markets and the legislative body. Ultimately, for true reform to take place, there must be a concerted effort to not only enforce existing laws, but also to create a culture of accountability within the highest echelons of government. Only then can we begin to restore confidence in our lawmakers and ensure a level playing field for all market participants.
BY RANIA SINGH, UPPER SIXTH
THE POWER OF THE PRESS:
The Media’s Influence on US Foreign Policy during the Arab Spring
The world in which we live today is dominated by the media and characterised by instant communication and around the clock news. Because of this, nearly all global events are accessible at a local level. This practically instant access to global events and incidents has enabled people to form opinions and react in real time as these events unfold, with the media serving as a lens through which the public views and understands global events. Whether it's a repost on instagram or a quick look through the news app headlines, people are able to witness and respond to worldwide events, regardless of whether the impact of these events is felt directly or not. This response that people and the media generates can be hugely influential regarding government responses and action surrounding events, particularly those which involve corruption or injustice. In the case of America this has been seen multiple times, often relating to U.S. foreign policy priorities.
Beginning in 2010, a series of anti-government, pro-democracy protests and uprisings took place in the Middle East and North Africa, known as the Arab Spring. These uprisings started in Tunisia and Egypt, when protests in response to corruption and economic stagnation led to the toppling of these countries' regimes in quick succession, inspiring similar attempts in other Arab countries. While the success of these protests varied, demonstrators who expressed their political and economic grievances were frequently met with violent reactions from their countries security forces. At the beginning of the Arab Spring, after the self-immolation of Mohamed Bouazizi in Tunisia acted as a catalyst for the movement, the Western media described the event as a local tragedy, and emphasised how it was symbolic of widespread economic despair and political repression in the region. However, as the protests developed and spread to countries such as Egypt, Libya, Yemen, Syria, and beyond, media outlets changed their narrative and began to frame the Arab Spring as a broader movement for democracy and human rights.
Media coverage across the world played a significant role in amplifying the voices of protesters by bringing these events to global attention and shaping international opinions. Within the U.S. there was extensive media coverage of the events, with major newspapers such as The New York Times and The Washington Post featuring front-page stories and analysis of the implications of the protests for U.S. foreign policy and regional stability. Cable news channels such as CNN and Fox News offered continuous live coverage, including on the ground reporting and interviews with key figures involved in the movements. The use of social media platforms by protestors was also heavily emphasised by the Western media, and created the narrative of the Arab Spring as a "tech-driven"
revolution led by young, educated activists seeking freedom from oppressive regimes. This media portrayal of the protestors as modern-day revolutionaries resonated with the American ideals of democracy and freedom, and was a narrative that made it politically challenging for U.S. leaders to stand by established authoritarian allieswithout risking potential domestic backlash. Because of this, media coverage surrounding the events of the Arab Spring can be seen to have an influence on U.S. foreign policy dynamics as it played a role in increasing public pressure, especially in the cases of Tunisia and Egypt.
In Tunisia, where the protests began, the U.S.’s response was initially cautious, with senior officials stating just days before the fall of President Zine El Abidine Ben Ali that the U.S. was “not taking sides”. The media coverage at the time led to an increase in public pressure, as images and reports of protests, government crackdowns, and human rights abuses in Tunisia spread rapidly through news outlets and social media. This media spotlight led to increased calls for support of the democratic movement from the U.S. government. Consequently, the Obama administration had to balance its long standing security and counterterrorism interests in the region with the growing domestic and international expectations for supporting Tunisia’s quest for democracy. The media’s framing of the protests as a popular struggle for freedom against authoritarian rule pushed the U.S. to express support for democratic reforms while maintaining diplomatic relations and managing broader regional stability. After declaring their support for Tunisia's transition to democracy the U.S. then began to provide election support and economic aid, and has since proceeded to commit over $1.4 billion to support Tunisia’s movement towards democracy.
In Egypt a similar trend of media influence on the U.S. government can be identified. The original position of the U.S. was one of support for President Hosni Mubarak, with the Secretary of State Clinton announcing that their “assessment is that the Egyptian government is stable”, with Vice President Biden echoing this message stating that he “would not refer to [Mubarak] as a dictator”. Throughout this period, Western media outlets focused extensively on Tahrir Square, where hundreds of thousands of Egyptians gathered to demand the resignation of Mubarak. The media coverage included live broadcasts of the protests, alongside interviews with protest leaders and ordinary Egyptians, painted a picture of a largely peaceful, grassroots movement calling for democracy, transparency, and an end to corruption. This narrative pressured the Obama administration to publicly distance itself from Mubarak, a key U.S. ally for decades. Shortly after the announcements of support for President Hosni Mubarak, President Obama changed direction and began to hail the Egyptian revolution and praised the Tahrir Square protesters for their democratic aspirations. The U.S. then proceeded to provide the country with billions of dollars in both economic and continued military aid, with the Obama administration announcing that it would offer Egypt $1 billion in debt relief
to ease the economic pressure that resulted from the political chaos and economic disruptions.
This pattern of media influence on U.S. foreign policy, continued to be seen throughout the Arab Spring, and occurred in other areas such as Libya. In May of 2011 President Obama stated in a speech that “It would be the policy of the United States to promote reform across the region and to support transitions to democracy”, which put the U.S firmly on the side of those seeking to topple the oppressive status quo. While there are a multitude of other factors which influenced U.S. foreign policy decisions at this time, the role played by the media in rallying public support and subsequently putting pressure on U.S. policymakers can be seen as significant.
BY LOTTIE STOKELD, UPPER SIXTH
JAVIER MILEI’S POLICY: Economic Rectification in Argentina
“The model of decadence has come to an end” - Javier Milei “Prosperity is ahead for Argentina”- Elon Musk
Javier Milei was surprisingly successful in the 2023 Argentine presidential contest, amassing an astounding 56% of the vote. His victory interrupted the Peronists (a left-wing populist party) 28-year grip on power and marks a new, more hopeful era for Argentina who faces a constant battle against inflation, poverty and social unrest.
In the last 70 years, the country has faced severe financial turmoil marked by market collapses, soaring prices, currency devaluation, and an exodus of professionals, scientists and wealthier citizens to more stable nations, causing a human capital drain. Amidst this debt crisis, past governments have printed money as a short-term remedy to encourage investment. However, this actually led to rampant inflation and a consequent collapse in the value of the local currency.
The nation has struggled to recover, its efforts impeded by the COVID pandemic, which temporarily diminished demand for Argentine commodities, and a tightening of energy markets which have furthered inflation and enlarged its current account deficit. Adding to these external pressures, the previous populist Peronist government instituted programs it could not sustain financially in exchange for political support. Argentina heavily subsidised healthcare, energy, universities, and public transportation for its citizens, all funded through the printing of more pesos, ever higher taxation which contributed to record inflation levels. Furthermore, various exchange rates, coupled with harsh capital controls, price controls and a restrictive regime on imports have hampered investment and overall economic vitality. Ultimately, the economic illiteracy of the Peronists has left Argentina indebted to the International Monetary Fund to the tune of $44 billion and with a staggering 140% inflation rate.
Milei, a self-declared anarcho-capitalist and socially ultra conservative, meaning he subscribes to the political-economic theory that advocates for the voluntary exchange of goods and services being regulated by the market instead of the state, focused his campaign on the use of extreme libertarian policies to restabilise Argentina’s volatile economy. His key economic promises consisted of advocating for the abolition of the Central Bank of Argentina and the adoption of the dollar as national currency (i.e. dollarisation). Milei vows to take a ‘chainsaw’ to government spending to address Argentina's soaring inflation and escalating poverty. He is seen as an eccentric, savvy and youthful political outsider whose experience as a TV commentator allowed him to expand and engage directly with his supporters.
Milei began his term in office by devaluing the peso by over 50 percent, cutting state subsidies for fuel and transport, reducing the number of ministries by half, and scrapping over 300 rules to deregulate the economy. This also included removing restrictions on the privatisation of state enterprises. These intense measures were enforced to reduce the cost of Argentina’s exports, shrink trade deficits and to address the plethora of exchange rates that were present in the economy which distorted the flow of capital and goods. Milei’s ‘economic shock therapy’ also consisted of stopping all currency printing and aiming to reduce the fiscal deficit to zero in one year's time.
If Milei were to dollarise Argentina’s economy, pesos would stop being issued and U.S. dollars would be adopted instead. However, before doing that he would have to have the stock of dollars to replace the local currency in circulation. He has made some progress towards that by accumulating around $10 billion in reserves thus far. However, this rash ‘shock therapy’ of dollarisation could backfire: at present, the country lacks access to global capital markets to obtain the stocks that would be required to keep the economy going and roll over some maturing debts. Furthermore, no country of Argentina’s size, with an immense 45.81 million inhabitants, has ever tried to dollarise as such nations are forced to abide by the Federal Reserve's monetary policy. Moreover, Argentina would be pegged to American interest rates which may not be in her best interest as their economic cycles, defined as the fluctuation between periods of growth and periods of downturn, may not coincide. For example, if America is experiencing economic growth and the Fed decides to enact high interest rates to combat potential inflationary pressures, Argentina will also have these higher interest rates. This can be problematic if the Argentine economy is in a recession and would benefit from the greater demand that lower interest rates would due to the decreased incentive to save and a greater incentive to borrow and thus spend.
BY LOTTIE GALPERIN, UPPER SIXTH
NOTE FROM THE EDITORS:
Thank you for reading! We have seen such incredible passion for these subject expressed through the amazing submissions we have received, and we really hope we can inspire the same passion in others through our magazine! We have had an incredible time making our first edition and we hope you enjoy it with many more to come.
-Rania, Emily, Lottie S, and Lottie G.
THANK YOU TO: Carolina Camara, Eden Feo Isaac, Mrs Koutsiouki, Mr Storey and Ms Armstrong.