Rostra Economica 301: Trade wars

ROSTRA ECONOMICA Propaganda

– an indispensable weapon

What would happen if Russia closed its air space?

Issue 301 November 2014 respond? rostra@sefa.nl

The winners and losers of mixing

politics and finance

TRADE WARS

AN ECONOMIC BATTLE FOR UKRAINE

-------------------------------------------------------------------------------------------------------------------------------2 ROSTRAECONOMICA editorial -------------------------------------------------------------------------------------------------------------------------------text Milian Bachem editor-in-chief -------------------------image Curtis Perry

Milian Bachem is a BSc Student in Economics and Finance

THE INVISIBLE HAND A

new academic year entails new challenges and opportunities. In the creation of this new issue I have certainly met mine. First I would like to thank Dovile Venskutonyte, who dedicated much of her soul and heart into last years issues of Rostra, and continues to dedicate some of her time in helping me. Together with all of the lovely new editors that have joined the comity this year I look forward to be affected positively by the opportunities presented to us and meet our challenges head on.

One of my favourite courses during the second year of my Bachelors in Economics has been International Trade.

I was struck by one of the stories in the book and it has been in the back of my mind ever since. The book by Krugman and Obstfeld illustrates a setting in the US where a local content requirement had been imposed. This requirement basically states that a certain part of a good had to be manufactured domestically. One of the industries this requirement had effected was that of the manufacturing of buses. At first this caused the buses to be poorly designed and badly made, thus few people thought that they could be exported to western countries any time soon. This changed when a group of Hungarian investors found a loophole in the local content requirement laws.

The laws required 51 percent of the buses to be to be built domestically. The group of Hungarians realised that the buses could be better and cheaper if only 51 percent was made in the U.S. and 49 percent was created in eastern european countries. They set up two locations, one in Hungary producing the shells of the buses and an assembly operation in Georgia. American axles and tires were shipped to Hungary where they were put onto the bus shells; these were then shipped back to the U.S. where American engineers completed the production. Through these steps a perfectly legal bus was made that was cheaper and more efficient than the buses that were previously made. For me this piece of history is a perfect example of “the invisible hand” illustrated by Adam Smith in his book

“The wealth of nations”. When regulations are imposed the agents in the economy will always strive for the most efficient outcome. So that they can earn the profits.

The message the course conveys is that our governments should strive for free trade and lift trade sanctions.

According to the theories this not only raises our welfare but also that of our partners. The events that have transpired while we were enjoying our holidays have been quite adverse to these fundaments of trade theory to say the very least. The growing unrest in Ukraine has lead the EU, the USA, Canada and Australia to impose strong trade sanctions on Russia and vice versa. Trade wars are becoming the alternative to real wars with boots on the ground, when diplomatic alternatives are no longer viable.

In my eyes this development is one we should be avoided at all cost as it has never been proven to truly resolve disputes and could lead to inefficiencies on the long term. The solution to international disputes, when military wars and trade wars are out of the question, are not easily found and that is perhaps why the current economic superpowers prefer impose sanctions than search for alternatives. Having said that the UK has found a way to put pressure on the Russian government without harming the economic efficiencies to much. They have blocked the access of the Russian elite to capital market in London, a topic nicely illustrated in this issue.

Much like the invisible hand has changed industries and companies drastically trough centuries, the time has now come for Rostra to be influenced by the invisible hand.

As much as one likes to believe that printed magazines add a certain amount of authority, the time has also come for Rostra to adapt. That is, the Rostra will be transitioning to a website in early January, and the signs so far have made me feel very positive. I consider this transition to be a step forward rather than a step back and look forward to offering you, the reader, increasingly diverse and dynamic content.

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COLOPHON Editor in chief Milian Bachem Copy editor Michael van Rhee Editors Ruslan Azarov Philipp Garack Demid Getik Pieter Huijink Astrid Mangnus Yoeri Min Michael van Rhee Dovile Venskutonyte Secretary Astrid Mangnus Treasurer Pieter Huijink Supervisor from Sefa Ruben Cardol Supervisory Board Wouter Smeets Lennart Verhoef Reactions, letters and ­applications can be sent to: Plantage Muidergracht 12 Room S0.08 1018 WB Amsterdam 020 525 40 24 rostra@sefa.nl www.rostraeconomica.nl

8 15 22 26 29 34

Ukraine’s need for structural political reform

Feb Abroad: Why not go on exchange twice?

A historical perspective on trade sanctions

The Russian economy: are sanctions working?

ISIS: The richest terrorists in the world

Meet the new Sefa Board!

Columnists Arthur Schram Design def., Amsterdam Advertisement Costs Contact Sefa Commercial officer Ralph van Burik 020 525 40 24 commercial@sefa.nl Copyright Notice Any redistribution of part or all of the contents in any form is prohibited. You may not, except with express written permission by the editor in chief, distribute or commercially exploit the contents. Nor may you transmit it or store it in any other website or other form of electronic retrieval system.

AND MORE 5 ADVICE FROM A PROFESSOR TO STUDENTS 12 HOW WILL THE SANCTIONS AFFECT CAPITAL MARKETS? 18 STUDYING AT THE DUISENBERG SCHOOL OF FINANCE 20 POTENTIAL AIR SPACE SANCTIONS FROM RUSSIA 25 FEB FLASH 37 MEET THE NEW FACULTY STUDENT COUNCIL

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THE ROSTRA CHART

Source Eurogas, the Congressional Research Service v -------------------------image def.

Percentage of total gas consumption from Russian imports

66%-100% Slovakia Hungary Bulgaria

--------------------------

100% Estonia Latvia Lithuania* *In October Lithuania has opened a floating terminal to import liquefied natural gas from Norway, which could satisfy all its gas demand, but exact data on current consumption is not available.

---------------------------------------------------------------

--------------------------

0%-33% --------------------------------------------France Netherlands Belgium Luxembourg Romania Italy

Winter is coming A crucial factor in any decision Europe has to make with regards to Russia is its addiction to Russian energy, mainly natural gas. Even though limiting the supply of gas would be more painful to Russia itself, due to its large economic dependence on gas revenue, countries opinions on sanctions and the conflict in Ukraine can often, although with some exceptions, be predicted by the extent of their dependence.

33%-66% Germany Poland Austria Czech Republic Slovenia Greece

---------------------------------------------

0% United Kingdom Ireland Portugal Spain Denmark Sweden

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Arthur Schram

WHAT MAKES THE PROFESSOR TICK?

E

very student has noticed that some lectures are better than others. That is, any student that once in a while attends lectures must have noticed this. To some extent, this is simply because some professors are better than others. Though anyone can improve their lectures by training and experience, that’s not what I want to talk about. The interesting thing is that one lecture by a specific professor can be much better or worse than a different lecture by the same professor.

Why is this? What inspires a professor to excel in some lectures? Is it the idea of providing knowledge to students yearning to learn? Is it that handsome young man or the pretty young women so eagerly anticipating what you will say next? Is it the sudden realization that good student evaluations may help get that promotion you so desperately desire?

The truth is, I don’t know. I myself am sometimes surprised at how well or how poorly a lecture is going. I do know that the key is in the interaction between professor and class. There has to be chemistry, even when the lecture is mostly a one-way transfer of information. Of course, this means that the professor has to adjust to the students. This is very important, but it’s not the whole story. I think that students can contribute a lot to this chemistry and can help improve any lecture. More importantly, I think

there are things that students should try to avoid.

So, if you want a good lecture, try to avoid: 1 Dozing off. To state the obvious: it is not very inspiring to see someone tuning out while you are doing your best to be inspirational. I realize that some topics are boring (and some professors even more so). You’ll just have to bite the bullet. If you notice

---------------------------“NOTHING PISSES ME OFF MORE THAN A STUDENT WHO THINKS (S)HE HAS SOMETHING BETTER TO DO THAN TO PAY ATTENTION” that you’re having a hard time focusing, then do something to break the pattern. Ask a question (that will pimp up your adrenaline) or try to guess where the professor is heading. Do anything to regain focus.

2 Playing with your phone. More generally: doing things you could just as well do elsewhere. Nothing pisses me off more than a student who thinks (s)he has something better to do than to pay attention.

For most lectures, attendance is not mandatory. If you do not intend to

Arthur Jan Hendrikus Christoffel Schram is a professor of experimental economics at the Amsterdam School of Economics as well as the director of CREED. He launched his career by graduating cum laude with a Masters in Econometrics from the University of Tilburg and later achieving a Ph.D. degree (cum laude) at the University of Amsterdam.

pay attention, just don’t come. No hard feelings! If you’ve decided to attend, then pay attention. If you’ve lost track, ask a question. There are no stupid questions (only stupid people). In other words, if you are not getting out of the lecture what you had hoped to, then don’t give up, but do everything you can to repair this.

3 Trying to appear smart by asking the obvious. Asking questions and making comments is good. These should be used to clarify and contribute, however, not to show how smart you are. Some students seem to think that if they appear smart, the professor will remember them and forgive mistakes in the exam. It doesn’t work that way. I don’t remember names and when correcting exams I typically have no idea who the student is. A smartass remark in the lecture is just annoying and makes me want to stop and go do something more useful.

4 Asking whether material is important for the exam. We know you want to pass the exam. We also want you to pass, and so we will prepare you the best we can. Being asked whether you need to know something for the exam gives the impression that you do not want to know it otherwise.

There goes my inspiration. I thought you were more genuinely interested in what I was saying…

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The Berlin wall crumbled 25 years ago, yet countries in Europe are still seen as belonging to American, or Western, and Russian, or Eastern, spheres of influence. The choice of partners and allies should unquestionably be the autonomous decision of sovereign states regardless of their historical experiences. It is unacceptable for one country to try and compromise treaties or alliances that their neighbors democratically choose to create.

This issue is central to the tragic conflict happening in Ukraine today. The crucial step towards stability in Europe is to bury the west-east divide together with the wall that helped create it.

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 7 -------------------------------------------------------------------------------------------------------------------------------image Roberto Maldeno flicker page

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THINK LOCAL, UKRAINE

How important it is for Ukraine to reform its selfgovernance structure, if truly considering a state based on Western European standards of regional self-determination and individualism

R

ussia’s foreign minister Sergei Lawrow has repeatedly been lobbying for a federalization of the Ukrainian state, as an answer to the recent Crimean and Donbas crisis.

The Crimean referendum to be held on March 16, 2016 has not been the essence of transparency and high standards of democratic referenda, as reported by OECD and other international non-governmental institutions. As long as the outcome of the still ongoing crisis remains unclear, and the international community doesn’t accept Russia’s involvement in the action of the separatists, a lack of efficient selfgovernance institution is clearly observable. Thus, it is one of the main goals of PM Yatsenyuk’s government

to create and redefine the role and structure of Ukranian local administrative structures.

Janukovych’s heritage Ukrainian local government structures do theoretically exist; superficially they are even similar to those present in Europe. This similarity can be seen in the usual three-level division. The largest local governments are the oblasts – a loose equivalent of Dutch provinces. These administrative regions are divided into reions, and finally subdivided into into urban-type settlements and rural councils or silradas, which represent the smallest administrative subdivision. Another similarity is the fact that each selfgovernance representative is appointed

through a general electoral system.

However, Marcin Swiecicki, a former mayor of Warsaw who gave substantial input into the creation of the Polish self-governance reforms of the early 90’s, states: “The Ukrainian local government system cannot be called a true a self-governance system, seeing as it is not a system but rather a way of ensuring that family members of Ukrainian politicians are not kept jobless.” This common opinion arises in a rather negative way from several distinctive characteristics of local political institutions in Ukraine.

Firstly, none of the self-governing structures possess any kind of executive power without the blessing of the centralised Kiev government.

The most important implication of it is a complete lack of financial independence. Local governing structures do not possess any legal competences that would allow them to

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 9 -------------------------------------------------------------------------------------------------------------------------------text Philipp Garack --------------------------image Trey Ratcliff flicker page

create budgets. Although no financial decision can be undertaken without Kiev’s supervision, regions are not solely financed from the capital’s budget. As much as 10% of their income comes from various local taxes, such as regionally established real estate and utility taxes. However, these margins seem strongly economically insignificant, especially considering that one obwod is populated by around 10 million people, and that expenses are centrally regulated.

In order to visualise these difficulties, it has to be mentioned that even payments for flowers ordered for the then appointed governor of Odessa, Eduard Hurwic, were made extremely late – that is, 90 days late. The scale of public illiquidity becomes even greater when considering payments for serious regional strategic expenditures, with delays reaching up to a few years.

Another large drawback of the existing

system is the lack of a clear division of competences and tasks for each level of self-government. This results in a bureaucratic machine that pursues the same processes and controls, thus allowing local bureaucrats to become local corruption centers. If the duplication of bureaucratic activities seems detrimental for the regional economy, then imagine a situation where those duplications occur in twelve thousand (yes, 12,000!) administrative regions. It all seems to be very much like Ukraine. The duplication of these activities of dubious quality at such a great level leads to a disability for regions to pursue any kind of rational and aligned economic policy.

European reinforcements The temporary government of Yatsenyuk, along with the recently elected Ukrainian president Petro Poroshenko, appointed vice prime minister Volodymyr Groisman to

Philipp Garack is a BSc student in economics

create a plan of drastic changes in those inefficient regional structures, which they identified as crucial drivers of potential Ukrainian economic and social growth. Groisman, the former mayor of Vinnytsia, likes to talk much about his positive experience with joint regional cross-border economic and scientific projects. Furthermore, he decided to arrange a group of mostly Eastern European selfgovernance experts, who had experience in reforming local government in the early 90’s in former post-soviet countries. Groisman especially stresses the success of professor Regulski’s local governance reforms, which allowed for a very decentralised and efficient local government system aligned with the Polish central government – without destabilising control from centralised authorities. This group has already been advising self-governance in Serbia, Kazachstan and Montenegro, where it pursued a mostly successful

-------------------------------------------------------------------------------------------------------------------------------10 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------Ukraine is divided into 25 provinces (oblasts) and further into 490 districts (reions).

---------------------------------------------------“EVEN WITH THE AMOUNT OF SILRADAS REDUCED BY TWO THIRDS AND REGIONY BY HALF, IT WILL NOT BE POSSIBLE FOR REGIONS TO CREATE INDEPENDENT AND COMPETITIVE REGIONAL POLICY, WITHOUT A DRASTIC CHANGE IN THE TAX SYSTEM”.

policy of regional decentralization, while keeping an unfederalised unitary state organism.

The local government, fool!

The group has identified the uncountable amount of silradas to be the most urgent issue. It is a priority to start bundling these administrative regions, because only then these institutions, closest to the human being, will be able to pursue effective local government policies without having a collective of contradictory regional policies. Gromads are meant to be divided using objective parameters, such as relative regional wealth, industry advance, and population. The emphasis here is to avoid any cultural division in this already divided country, aiming at reducing the amount of gromads by at least two thirds. This should go together with making national treasuries (e.g. real estates) available for local governments, allowing them to professionalise their services for citizens.

Only after these administrative changes will the Kiev government be able to give up competences and distribute tasks to local governments, where it is believed that local

governments will be more efficient than centralised authorities. Examples of such tasks and competences might be education, basic health services, or possibly local moratoriums for land transactions – whereby it has to be stated that the Ukrainian system of moratoriums on land has been identified in IMF’s global report to be one of the most crucial spaces for reforms enabling economic growth.

Furthermore, the amount of reions should be reduced by at least half towards a level of 245 administrative regions. However, no bundling of oblasts is expected, as twenty-five of them seem to represent a rational amount similar to European selfgovernance systems.

Misiage, a member of Groisman’s task group, stated: “Even with the amount of silradas reduced by two thirds and reions by half, it will not be possible for regions to create independent and competitive regional policy, without a drastic change in the tax system”. He believes that only if the regional government is able to redistribute some of their income directly, then the reform will be going in the right direction. Furthermore, he believes that leaving all real estate taxes for local government income might be a

good start, whereby he stresses the need to go even further and leave some of the PIT and CIT regionally in a not-so-far future.

A last identified necessary reform is the creation of a wealth redistribution system, which would decrease regional economic inequalities. This move is especially important for Ukraine, which seems to be divided by political and national conflict as never before in its short post-soviet history.

Dismantling regional inequalities could be a way to keep the country together.

Creating future value Several problems are, however, arising.

Firstly, the government has to pursue a drastic change of the constitution, whereby it should give local governments legal rights towards some degree of executive power in terms of economic and social regional development. Unfortunately, the Ukrainian parliament, Verkhovna Rada, is still full of members of the pro-Russian Regions Party, whereby it has to be said that the term ‘regions’ in the party’s name seems very ironic.

This means that it might be very difficult for the post-Maidan coalition to acquire a constitutional majority, which is necessary for an effective selfgovernance reform.

Another arising problem is the reduction process of administrative regions. The central government might face various interest groups, which are benefiting from the current inefficient self-governance system, by creating a system of disappearing public spending, whereby the multiplier of Ukrainian government

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spending is below 0 – meaning a negative effect on the economy as a whole – due to immense levels of corruption and public mismanagement.Yatsenyuk’s government will have a very difficult job in balancing between interest groups and reformation ideas. This is strongly related to the relatively strong moratorium institution for land, a major production factor of the still quite agrarian Ukrainian economy.

Those regional interest groups use this to increase their own wealth, while decreasing business confidence and creating inefficient resource allocation.

Last but not least, Ukraine has to find a way of settling its territorial disputes with Russia. Without Russia accepting Ukraine’s pro-reformatic strive, it might be extremely difficult to pursue self-governance reforms.

Starting is the trickiest The Ukrainian self-governance system has found itself on the edge, as

probably did the whole state. It is now in the hands of the Ukrainian’s elites to create efficient local government structures, while trying to balance out various economic interest of stakeholders, for whom the current system is beneficial. This reform cannot, however, stand on its own.

Without reducing the vast amounts of corruption, nepotism and other economic and political problems, the effects of reform might not be in accordance with expectation.

Moreover, the government needs to find a way of balancing between decentralization and centralization, while not allowing the country to split economically and politically to an even greater extent. The selfgovernance reforms can be expected to happen at a greater pace at the silradas level than at the higher administrative levels. For this reason, the government needs to be constantly reminded that the reform has to be pursued as a package of radical

changes regarding all administrative regions of the state.

Kiev cannot allow Moscow to use the reform for further destabilisation of oblasts, especially of those lying in between a potential route connecting the Crimean peninsula with Russian mainland. Thus, it must decrease antiKiev tensions, which are being directed from Moscow. A relative elasticity with official regional languages might help with that, while keeping the country’s territorial integrality.

Last but not least, it has to be clearly stated that the goals of prime minister Volodymyr Groisman’s task group will be very difficult to achieve. Considering both Ukraine’s short-term and longterm economic and political difficulties, it seems rational to state that the country and its political elites need to redefine self-governance with, paraphrasing Deng Xiaoping, “Ukrainian characteristics”.

-------------------------------------------------------------------------------------------------------------------------------12 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------text Pieter Huijink --------------------------images def.

Pieter Huijink is a MSc student in Development Economics and Finance

RESTRICTING CAPITAL MARKETS FOR RUSSIAN COMPANIES EFFECTIVE AT THE COST OF CREDIBILITY

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 13 -------------------------------------------------------------------------------------------------------------------------------Russian companies new debt sales fell to 10$ billion in 2014

T

he EU and US governments have opted for a targeted strategy when trying to force Russia out of the Ukraine conflict. Unlike Russia, they have not chosen wide restrictions on imports and exports. The initial sanctions attempted to restrict travel of senior Russian corporate leaders close to Putin. Recently, they have focused on restricting selected Russian companies from using European and American capital markets.

Restricting access to capital markets for some firms is not a one-dimensional operation. Capital markets consist of a wide variety of financial institutions and entities. Sanctions imposed by the governments of the respective countries have to be executed by those financial institutions. In practice, this means that financial institutions are prohibited from providing investment or brokering services to the selected Russian companies. One could easily see a problem in this strategy. By attempting to hurt the Russian economy, the Western governments are also hurting their own financial markets.

Serious trouble for Russia in the short run Russian companies, like companies from all over the world, need funding to operate. Although these funds can be acquired from various sources, large companies usually resort to international capital markets. The vast amounts of capital required for their operations can only be acquired against reasonable conditions on this platform. The current sanctions imposed on Russia thus present these companies with a huge problem.

Under the sanctions, the selected companies are unable to acquire any new finance from EU or US capital markets.

Finance includes both equity and debt financing. Of most immediate concern is the restriction of debt financing. New debt does not just include any additional level of debt the company wants to acquire to expand its operations. It also includes new debt to replace old debt that is due.

Companies, and countries for that matter, often use debt to pay off debt. In the process, they are able to adjust their interest rates and the maturity of the debt.

Usually, this is a straightforward action that does not cause any problems. Every so often, this is not the case. A prime

-------------------------------------------“THE MEASURES WILL INCREASE RUSSIA’S POLITICAL ISOLATION AS WELL AS THE ECONOMIC COSTS TO RUSSIA, ESPECIALLY IN AREAS OF IMPORTANCE TO PRESIDENT PUTIN AND THOSE CLOSE TO HIM.” BARACK OBAMA

example in recent history involves the financial crisis in the EU. Interest rates on loans for various southern European countries rose above acceptable levels. Greece used to have interest rates for long-term debt of 4 to 5% prior to the crisis; this increased to close to 30% at the height of the European crisis. This means Greece would have to replace their debt issued at 4% by new debt issued at 30%, a huge increase in interest costs for a country already in trouble.

Greece was effectively shut out from capital markets, like the Russian companies, and forced to lend money from the IMF and Western European countries.

The Russian companies face a similar problem. They too have to pay off their debt, and preferably with new debt.

There are several alternatives to using new debt. One is the use of cash, which has its limits and reduces the liquidity of the company. Illiquidity in itself is perceived as a market risk, increasing the risk levels for the company, and as a result increasing required returns. Another option would be to replace debt by equity, which is also not an option under the current restrictions. It seems only sensible that Russian companies are looking for alternative markets for funding, being shut out from the Western markets. Those markets will not be easy to come by; one does not easily replace a financial hub like London.

The short-term impact for the Russian economy will no doubt be severe. Even if the companies are able to meet

-------------------------------------------------------------------------------------------------------------------------------14 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------0.030 0.029 0.028 0.027 0.026 0.025 0.024 0.023

APRIL

MAY

JUNE

JULY

AUG

SEPT 2014

Exchange Rate Russian Ruble / US Dollar The Ruble has depreciated strongly over the past few months, mainly due to the capital market sanctions imposed on Russia. (Source: Quandl)

their debt obligations, it will come at the cost of cash balances and new debt at worse conditions. Russian companies currently not affected by the sanctions will be readjusting their debt levels and sources in anticipation of possible new sanctions. This readjustment could mean higher financing cost and lower investments, implying a possible stagnation of the Russian economy.

The West will face the consequences in the long run In the long run, it seems the sanctions imposed by the Western countries are bound to hurt the same Western countries the most. Already, Russia is looking for alternative ways of funding for their companies. Within Russia, they have the option to use government funds or insurance funds, along with funds from Russian financial institutions. Externally, the Russians will look for countries not participating in the current sanctions battle.

Specifically, they will be looking at the Chinese financial markets to fill the gap.

Like the Russian companies, Western financial institutions will lose out in the short run. They are simply not allowed to serve the Russian companies, at the cost of huge fines. At the moment, the debt obligations of these Russian companies are spread across a great number of financial institutions. Of much greater concern is the long run impact of not serving these customers. Russian companies now facing the difficulties and costs of finding alternative ways of funding will not fall into the same trap twice.

Looking at the future, they will make sure their funding is more diversified and, importantly, much more focused on partners the can rely on. The current sanctions prove that Western financial markets are not necessarily a reliable means of funding. Rather, they can be used in a political battle. As a result, Russian companies will always consider the risk of losing access to the capital markets in the EU and the US. And they will act accordingly.

Companies are always looking for the cheapest, or – more accurately – most cost-efficient way to fund their activities.

The size and depth of capital markets in the US and EU will not suddenly cease to be attractive to companies.

Looking at the difficulties Russian companies have in reacting to the sanctions, proves the point that a replacement is not easy to come by. But for Russian companies, the sanctions will have increased the risk in Western financial markets. Risk is a cost. It is a cost for Russian companies, as well as a cost for the Western financial markets. So far, we have considered Russian companies and losing their business. However, there is every reason to be just as worried about the reactions of Chinese companies or companies in the Middle East. They too will look closely at the current situation and assess what the possible consequences could be for them. They too will see that the financial markets are used as a political instrument in the West and start looking for alternatives.

Financial markets in the West have been taken on an insecure road by their governments. Just recovering from a financial crisis, strengthening their balance sheets and decreasing their exposure to risk, the last thing they need now is insecurity. Political leaders in the West have seen it fit to impose sanctions on Russia for the situation in Ukraine. It seems the current sanctions are effective in the short run, but are self-damaging in the long run. Using the financial markets as a political instrument will be a clear message to any country that does not consider itself an immediate ally of the West. The longer these sanctions are in place, the more damage is done to the credibility of financial markets in the West. As a result, the sanctions force the Western countries to reach an agreement with Russia as soon as possible.

Although that sounds positive in the spirit of peace, it weakens the negotiation position of the West. The West may think it is hurting Russia, but it is probably more accurate to say they have done Russia a favor.

-------------------------------------------------------------------------------------------------------------------------------FEB student abroad ROSTRAECONOMICA 15 -------------------------------------------------------------------------------------------------------------------------------Katarzyna Chojnacka is a University of Amsterdam graduate in Economics and Business Studies. She comes from Warsaw, Poland. She spent two semesters abroad: at Universidad Carlos III de Madrid, Spain in 2012, and University of New South Wales in Sydney, Australia in 2013.

DOUBLE EXCHANGE: FROM MADRID TO SYDNEY

I

f somebody asks me for just one life tip, without any hesitation I would say “live abroad, at least for some time”. By living I do not mean travelling with your friends or observing locals in a place you currently reside in without learning the language – what I mean is truly immersing into the local culture – knowing not only the “what” but also the “why” of local customs and traditions.

Being a Polish girl with a Bachelor from University of Amsterdam and a heavy bag of adventures from my student exchanges in Madrid and Sydney, I would like to share my experiences, which will hopefully encourage you to explore the world yourself.

Coming to Amsterdam for my studies has already shown to me the main differences between Eastern and Western Europe. As an Economics student, it was really a great experience to see how international relations, history, culture, sociology of a nation shapes its attitude to various economic issues. However it was going on exchange to Spain during the crisis that made me realise how serious the differences in the EU are: from fastlydeveloping Poland, through the stable Netherlands, to recessionary Spain.

Especially economics/business-related

lectures were conducted in separate ways, emphasising different issues as crucial for development. It is sometimes not even about economic data or facts I am talking about: there is no better tutorial than having a random chat with a taxi driver/ bartener/shop assistant/person you met at the bus stop about the current situation in their country. One can just feel the atmosphere of a country in the air – so respectively Polish entrepreneurship, Dutch wealth and Spanish crisis.

Moreover, exchange in Sydney revolutionized my whole perspective on world economics. From the Oz you consider Europe as one piece and you start noticing how global all the movements are now. When I used to live in an international college on UNSW campus, it was nothing as interesting as discussing news by a morning cereal with an Aussie, German, Kiwi, Mauritian, Vietnamese, South African, Fijian, Canadian, Peruvian and Omani friends of mine. Thanks to the fact that I took a modern history and development studies courses at UNSW, I learned a lot about development models, colonisation/ decolonisation and its aftermaths, which are still heavily visible in the

world economics. That really broadened my horizons and made me look on economic data much more critically, knowing how many various global aspects I still have to consider.

While living abroad, you notice that people tend to believe in different values than you do, which leads to having a different lifestyle. Tolerating and understading that teaches you the most priceless soft skill on your CV – open-mindedness. The vast amount of opinions makes you question your own values as well. In Australia I understood what does it mean “to live a life” – , having a close relationship with nature (typical Aussie weekend would be going hiking/surfing/ sailing), being hospitable and friendly to all the people you encounter (Europeans are so grumpy in comparison to Aussies) and having the “no worries” attitude. By dipping into the lake of various opportunities the world has to offer, you suddenly start thinking that nothing is impossible and you chose a path that leads you to your deepest dreams – for me it was living in Australia.

UvA gives us an amazing chance to experience an adventure of a lifetime – get out of your comfort zone, go as far as possible, learn the local culture and enjoy your exchange to the fullest :)

-------------------------------------------------------------------------------------------------------------------------------16 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------text Astrid Mangnus --------------------------image The Library of Congress flicker page

Astrid Mangnus is a BSc studnet in economics and business

SHAPING SANCTIONS

TRADE WARS FOUGHT OUT BY SNIPERS INSTEAD OF BOMBS

A

n “economic, peaceful, silent, deadly remedy” is how U.S. president Woodrow Wilson described trade sanctions in 1919. In the aftermath of World War I, he presented them at a conference in Indianapolis as the alternative that would make actual war redundant.

One definition of these sanctions that still holds today is that they are measures in which one country publicly suspends a major portion of its trade with another country to attain political objectives. These objectives can either be compliance, subversion, deterrence or sending a strong international or domestic signal. However, throughout the twentieth century, the variety of conflicts and a continuing search to hit the opponent where it really hurts have made the ways to achieve these objectives increasingly specific. In particular, sanctions nowadays do not have to be imposed from one country on another; part of a package of sanctions usually includes measures from one country against specific citizens of another. But did these developments over the past century shape a more efficient tool?economy, the Western governments are also hurting their own financial markets.

Maximum damage When further advocating the League of Nations, the UN’s predecessor

president Wilson proved himself an advocate of so-called total boycotts.

Trade, business or even communication had to be made impossible for all the citizens of a sanctioned country. Much like in a physical war, the main idea was that trade wars should inflict as much damage on a country and its inhabitants as possible. However, total boycotts proved less effective in preventing war than initially thought in the run-up to the next World War. In the thirties, sanctions failed to make Mussolini withdraw his troops from modern-day Ethiopia.

Furthermore, trade sanctions by the U.S. against Japan prompted the latter to enter World War II. Japan’s minister of foreign policy, Teijiro Toyoda, called the sanctions on oil imposed by the U.K. and the U.S. an “encirclement”, and the fear of losing all access to petroleum resources sent the country into a paranoia that contributed to its eventual willingness to fight.

Next to an absent or adverse effect, a third possible unwanted outcome was to hurt the wrong people. In the sixties, Norwegian sociologist Johan Galtung was the first to argue that sanctions “hit the innocent along with the guilty”. From the conflicts of the decades that followed it became clear that this concern was justified. It culminated in the first sanctions issued against Iraq. In this case, comprehensive sanctions were

imposed, preventing the flow of all commodities and products to and from a sanctioned country – as opposed to particular sanctions which only block particular goods and commodities from the target country.

With the sanctions that were imposed upon Iraq after its invasion of Kuwait, civilians were hit much harder than intended, arguably even harder than in a physical war, in which civilians are protected by law and commonly spared by both fighting parties. For the first six years after the installment of the sanctions, Iraq was shut off from all foreign trade, including exporting its own oil, which devastated the country’s economy and society.

Terrorists and targets When the U.N. started to acknowledge the mistakes made in Iraq in the mid-nineties, the terms ‘smart’ and ‘targeted’ sanctions gained momentum. They are comparable to the particular sanctions mentioned earlier. At the end of the decade, when sanctions were imposed to ban blood diamond trade from a number of African countries, the U.N. explicitly stated that no civilians should become collateral damage. Perhaps not surprisingly, this development of targeting the source more specifically was accelerated by the events of 9/11.

To target terrorists, Juan Zarate, George W. Bush’s adviser on

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 17 --------------------------------------------------------------------------------------------------------------------------------

WOODROW WILSON The 28th president of the United States

combating terrorism, announced that smart sanctions would go “on steroids”. Part of this operation was the U.N.’s demand that its 189 member states would freeze the assets and restrict the movement of a list of specific terrorists. This had been tried before against leaders of Haiti’s junta, but with little success. In that first attempt at targeting individuals, the U.S. discovered some problems that are still pressing today, such as accidentally sanctioning a pastor instead of a military lieutenant with the same name.

Targeting the list of terrorists proved to be easier demanded than done, due to differences in the spelling of the targets’ names and the informal ways in which Middle Eastern terrorist networks conduct their monetary transactions (hawala). A second problem is exemplified by former Libyan dictator Muammar Quaddafi’s frozen assets, which now have to be returned to the country after his

death. Some of the accounts had been frozen for over 30 years. Since his death, it has turned out to be very hard to decide what part of his 200 billion ‘fortune’ is dirty money and which part of it belongs to whom exactly. Additionally, bank software, such as the worldwide news media, showed to have some difficulty with the correct spelling of the former dictators’ name – a common problem throughout this story.

I’m on the list In the trade wars of today, the sanctioning of individuals continues to be a significant part of the measurements. In the conflict between Russia and the West over the Crimea, both parties take turns at it. Even Wikipedia now keeps an up-to-date list of sanctioned individuals on both sides of the conflict. The people on this list are mainly close allies of Putin or Obama, and have their assets as well as their travel rights frozen.

---------------------------------------------------“A NATION THAT IS BOYCOTTED IS A NATION THAT IS IN SIGHT OF SURRENDER. APPLY THIS ECONOMIC, PEACEFUL, SILENT, DEADLY REMEDY AND THERE WILL BE NO NEED FOR FORCE.” WOODROW WILSON

However, Putin and Obama are not listed. The official explanation for this is that only suspects in the Crimea conflict are sanctioned. In reality, this leads to only minor impact, since both countries have enough resources of their own to operate, and truly vital companies (such as Gazprom) can still operate freely. Some people are even happy with their position on the list, such as former presidential nominee John McCain, who said he was “proud to be sanctioned by Putin”, adding jokingly that he regretted that he would have to cancel his spring break in Siberia.

Thus, individual sanctions seem to be strongest as a symbolic measure; a signal instead of a way to world peace and reconciliation. Among the more absurd examples are the sanctioning of Obama by Chechen leader Ramzan Khadyrov for his ‘slander’ campaign against Russia, and the list of 60 specific luxury goods that the U.S. banned from export to North Korea, containing James Bond movies and Hennessey’s cognac – on which Kim Jong Il allegedly spent 800,000 dollars a year. Targeted or smart sanctions may not have made Woodrow Wilson’s wish for a total substitute to war come true yet, but as odd as and impossible to impose some individual sanctions may be, they are still the far more preferable option.

-------------------------------------------------------------------------------------------------------------------------------18 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------text Dovile Venskutonyte --------------------------images Duisenberg School of Finance

Dovile Venskutonyte is a Masters student in economics

THE DUISENBERG SCHOOL OF FINANCE TOP TALENT, NEW THINKING

D

uisenberg school of finance (DSF), located in the Amsterdam financial center, is an excellent school to start a successful career in the financial and corporate worlds. DSF provides a one-year MSc program in Finance with three specialisation options: Corporate Finance and Banking, Financial Markets and Regulation, and Risk Management. The school also provides an LLM programme in Finance and Law for aspiring legal and business professionals.

Rostra Economica sat down with two of DSF’s current students, Nicolas Hinse and Redmar Poot, to learn more about what it’s like to study at Duisenberg School of Finance.

Can you tell me about your previous experience, and how it led you to DSF? Redmar: I studied economics at the Erasmus University Rotterdam and was active in their student association.

During my time serving as board member at the economics faculty association, we had opportunities to meet board members of other student association in the Netherlands.

It was at one of these events that I first met students from DSF, learning more about the programmes and their study experiences. A friend of mine also graduated from DSF’s Corporate Finance and Banking track, and he highly recommended the school. Later on, I won a case competition called the Duisenberg Battle, which awarded me a scholarship to study here. Since I’d always been fascinated with finance and the dynamics between finance solutions and strategy, I decided to study the Finance and Banking track.

Nicolas: I studied economics at the UvA, where I was active in student organisations like Sefa, where I served on the Masters of Finance committee. During my Bachelor’s degree study, I did an internship at Leonardo & Co. where I had a colleague, who graduated from Duisenberg. Through him I learned about the level of education, as well as the ambitious and driven student body. The international setting and practical approach motivated me to apply. I’m also doing the Corporate Finance and Banking track.

Why did you choose to study at DSF, as opposed to other Masters programmes in the Netherlands?

Nicolas: For me personally, it was the practical approach and structure of the programme. Here they really concentrate on teaching students not only theoretical knowledge, but also how to apply it in real-world scenarios.

I also like that the curriculum is more focused on banking subjects rather than general finance. Other master programmes are generally more geared towards theoretical knowledge and preparing students for careers in academia or research, while Duisenberg is very focused on making sure their students get the most desired jobs after they graduate.

Redmar: It’s the same for me; I think the practical approach is very beneficial. For example, at Erasmus we once had to prepare a valuation case and write a 40-page report with a lot of redundant parts to it, while at Duisenberg we did a valuation case and then had to present it with a PowerPoint presentation. In a real job, you will never have to hand in academic reports, but rather present and discuss your work in a team.

Could you elaborate more on the study environment at DSF? Nicolas: it is intense, and the level of education is very high, but they are there to help you throughout your entire study. Our professors always emphasis how we can use the knowledge we’re gaining in our future careers. For example, we recently did an assignment on corporate valuation: we had to run the valuation, where you learn all the theory behind it, and then we had to present it to the class, which is something that would happen in a real company.

Redmar: The classes are very interactive, and there are many group assignments. It’s very motivating to work in a group of active and ambitious students with diverse experiences. This way you can learn not only from the lecturers, but also from your fellow students. The professors here are also amazing; they’re really engaging and passionate about their subjects and always try to explain the bigger

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 19 --------------------------------------------------------------------------------------------------------------------------------

---------------------------“IT IS INTENSE, AND THE LEVEL OF EDUCATION IS VERY HIGH, BUT THEY ARE THERE TO HELP YOU”

Nicolas Hinse (left) and Redmar Poot

picture. Some of them are industry professionals, and some come from different universities like LSE. How does DSF increase and expand your job opportunities?

Nicolas: DSF has a very dedicated career team, which helps students get internships that are a compulsory part of the degree, and then get them in contact with future employers.

For example, we have several events throughout the year where we can meet DSF industry partners, learn about their companies and discuss with them our own career ambitions.

Redmar: Recruiters are keen to meet DSF students because of the school’s great reputation. Furthermore, we have a leadership programme that aims at developing the necessary skills for a successful career. We start with learning how to market ourselves: writing a CV and cover letter, creating a positive impression in an interview, creating convincing presentations and learning how to negotiate well.

How would you describe the DSF student community?

Nicolas: It’s very international, with around seventy percent of students coming from outside the Netherlands.

I believe there are 28 different nationalities at DSF but despite our different backgrounds, all students know what they want and are very driven to succeed. You will not find a student at DSF who is satisfied with simply passing courses. It’s a competitive environment, but it goes handin-hand with cooperation and pushing each other to do our best. There are also many extra curricular activities like the career and social committees. This year, a committee is organising a field trip to Istanbul, where we’ll will visit

companies and just enjoy our time together.

Redmar: The student body is very diverse. Some may get the impression that all the students previously studied finance and served on student boards, but actuality there are students of different academic experiences, we even have students with a background in medicine. The community at DSF is very tight-knit, and everybody has a social responsibility to help Duisenberg make the next step.

Some students become committee members, while some become research assistants or contribute in some other way.

What are your plans after leaving Duisenberg?

Nicolas: I want to pursue a career in investment banking, and I already have a job lined up at J.P. Morgan. I am starting in June at their London office, so I’m really excited.

Redmar: I’m also thinking about working in investment banking. I’ll be doing an internship at Nomura in the summer, and I’ll see where to go from there.

What advice could you give to potential applicants?

Redmar: Be sure that you want to work in finance. The masters’ programme is challenging, so you need to be very motivated to excel. Participating in Duisenberg events will also help you decide whether Duisenberg is the right fit for you and how to create a successful application.

Nicolas: They search for students with a combination of good academic performance and practical experience, like the skills to find a job after graduating. Before you decide, you should come to Duisenberg and talk with the current students. There are open days, but you can also just stop by on a regular day, and the students will be happy to have a chat with you and answer your questions.

-------------------------------------------------------------------------------------------------------------------------------20 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------text Yoeri Min --------------------------illustration def.

Yoeri Min is a Masters student in business administration

RUSSIA CLOSING ITS AIRSPACE: A POSSIBILITY OR AN INCREDIBLE THREAT? As a reaction on new European Union sanctions looming over Russia, on Monday September 8th, Russian prime minister Dimitry Medvedev threatened to decline access for European flights through Russian Airspace. Medvedev stated that ‘bypassing our airspace could drive many struggling airlines into bankruptcy’.

And indeed, because of the sheer size of the world’s largest country, it would cost a lot of money for European airlines, if they had to bypass Russian airspace. Such a restriction would especially hit European airlines offering direct flights to Asia.

Figure 1, flights in Russian airspace 0 Lufthansa Air China KLM Air France Cathay Pacific Turkish Airlines British Airways China Southern Airl.

Korean Air Finnair United Airlines Czech Airlines Delta Airlines Thai Airways Eva Airways SAS EasyJet Wizzair

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t the moment, airlines extensively use Russian airspace.

According to data by flightradar24.com, on September 1st 2014, European and US airlines accounted for the majority of foreign flights operated over Russia. As can be seen from in figure 1, European and US airlines, account for 59% percent of foreign flights operated over Russia.

The shortest route from Amsterdam Airport Schiphol (AMS) to Narita International Airport in Tokyo (NRT), Incheon International Airport in Seoul (ICN), and Beijing Capital International Airport (PEK), clearly pass through Russian airspace (figure 2).

Shutting down Russian airspace for European airlines would affect normal flight operations. European airlines like KLM, British Airways, Lufthansa and Air France, which are frequently operating flights to Asia, would have to divert to more northern or southern routes. These routes are longer, take

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 21 -------------------------------------------------------------------------------------------------------------------------------Figure 2, The shortest route to Asian capitals

more time, and burn more fuel than regular flights. According to KLM, rerouting a flight to northern Asia to bypass Russian Asia would add €30.000 to the total flight costs. In addition, ticket prices would have to rise in order to cope with the increased costs of operation. Concluding, Russia’s measures would definitely hurt the financial and competitive position of European airlines.

In practice, airlines generally do not fly the shortest route to their destination. Airlines are, depending on the kind, demanded and or requested to not fly through no-fly zones. Most common no-fly zones are used for military purposes. Route decisions are taken by airlines. Generally, airlines avoid no-fly zones. For example, Syria is avoided by all airlines at the moment. However, North Korea and Somalia, are not avoided by all airlines. Airlines use a variety of sources in order to assess the safety of an air transport route. These sources include National air transport authorities, and international aviation organizations like the International Air Transport Association (IATA) and International Civil Aviation Organization (ICAO). It is not clear how often airlines ignore no-fly zones out of commercial interest.

Cutting off their nose to spit their face Restricting access to Russian airspace is not something new. In 2007, it banned Lufthansa’s cargo unit from its airspace, in an apparent attempt to pressure the airline to move its hub to Siberia. In fact, Russian airspace was closed during the cold war. However, after the collapse of the Soviet Union, Russia liberalized its airspace rules,

-----------------------------------------------------------“BUT THAT WOULD BE CUTTING OFF ONE’S NOSE TO SPITE ONE’S FACE. THESE ROUTES GENERATE SIGNIFICANT REVENUE FOR RUSSIA IN ROYALTY PAYMENTS.” ROBERT MANN, PRESIDENT OF AVIATION CONSULTANT R.W. MANN & CO

resulting in an vast amount of generated revenue from over-flight charges. To illustrate, according to I. Stupachenko, analyst at Otkritie Capital in Moskow, ‘Aeroflot collects royalties from foreign carriers from Siberian overflights, receiving about €170 million in 2013’. By restricting access to European carriers, Russia would significantly hurt its national airline, for which the royalty payments are equal to 18 percent of full-year earnings.

As a consequence of shutting down Russian airspace, the European Union would most likely, as a response, close its own airspace to Russian airline Aeroflot and their partners.

Research has shown that there is a direct connection between the amount of direct flight connections and economic growth. For example, a report from Frontier Economics demonstrated that UK businesses trade 20 times as much with emerging market countries that have a direct daily flight to the UK as they do with

those countries that do not. While flight connections are not a sufficient condition to create trade and economic growth, connectivity ìs an essential component of developing trade relationships. Without excellent connectivity to the world, other economies are likely to step. Therefore, if the EU decides to pursue airspace counter measures, the Russian economy would cripple. The question arises whether or not Russia is willing to take that risk by closing their airspace first.

In conclusion, restricting European airlines access to Russian airlines would indeed affect the financial and competitive position of these airlines and the European Union as a whole.

However, shutting down the airspace would have at least the same amount of adverse effects on Russia. Not only would Russia receive less revenue from over-flight charges, they would also lose lots of connections to vital destinations, resulting in a decrease in economic value.

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SANCTIONED: A LOOK AT THE CONSEQUENCES OFÂ EU AND US SANCTIONS ON THE RUSSIAN ECONOMY

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he initial response of the Russian authorities and staterun media to the sanctions imposed by the European Union and other Western countries for actions allegedly taken in the east of Ukraine was brave. There were countless episodes of statements made by high-ranked authorities and members of the Russian Duma that the economy of the country will not deteriorate as the results of restrictions imposed, and that those, in turn, will have a boomerang effect – Europe and the United States themselves will undergo greater losses than the object of their punishments. This rhetoric that invokes the image of the selfsufficient Soviet Union which only thrives in spite of the crafty plots of its ever-vigilant nemeses was warmly welcomed by the portion of the Russian population still oriented towards the besieged fortress model of global politics.

However, as recent developments have shown that the

discourse quite likely targeted the internal audience rather then sent a signal to the rest of the world. Even though the impact on individuals and groups ostensibly responsible for decision making in the Russian political establishment did not reach the desired level, the effects on the well-being of the general populous appears to be somewhat more sensitive.

So what is it exactly that arose in the consequence of the sanctions? Upon the announcement of the implementation of what is now known as the first round of sanctions, the Russian largest market index MMVB fell by approximately eight per cent over the course of several days. It is worth mentioning that initial restrictions were yet of a mild character, as they mainly concerned suspension of negotiations on certain joint projects, and established an entry ban for concrete officials. The strength of the market

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 23 -------------------------------------------------------------------------------------------------------------------------------text Demid Getik --------------------------image NASA’s Marshall Space Flight Center flicker page

Demid Getik is a BSc studnet in economics and business

foreign market entities, but also national businesses and individuals who may prefer to discontinue their activities.

A decrease in investor and business confidence results in an outflow of capital from the country. This is, in turn, consequential in several respects. A diminished supply of foreign currency causes the exchange rate to drop and the rouble to weaken. Since the beginning of the Crimean crisis, the rouble lost approximately twenty per cent of its value with respect to the euro and the dollar. This development is rather crucial for a major exporter. On one hand, it can temporarily improve the budgeting due to the ability of the government to simply throw in more Roubles into the Economy and thus dilute some of the pressuring issues and appease certain displeased elements. However, in the medium run and long run, such currency drop has its detrimental implications.

response to the measure is motivated by the ephemeral nature of investor confidence in the Russian economy.

According to the World Bank, Russia is placed 93rd in the Business Confidence ranking, neighbouring such states as Jamaica and Albania.

Uncertain investors The intrinsic political risks associated with lack of transparency and accountability implies a higher cost of business conduct for enterprise, which not everyone can afford to bear. Thus, receiving a signal of impending confrontation, the market reacted by withholding. The respective sentiment is enforced by the model of a closed country with marginalised private market that the world could observe not so long ago. The fright that there may be movement towards restructuring the existing construct with the usage of late-soviet templates impacts not only

Problems for consumers Certain conditions, such as high maintenance cost of production due to the local climate or the Soviet neglect of consumer industries, cause Russian production of consumer goods to be scarce and uncompetitive. Thus, lack of domestically produced consumer goods is compensated through purchasing from abroad, making them the largest component in the Russian import. A strong decline in the national currency results in a decrease of relative purchasing power of those in its possession. Thus, there is an almost immediate direct income effect on those used to purchasing Norwegian salmon and German cars. Furthermore, weaker Rouble implies a rise in prices of production factors, which now affects domestic manufacturing costs. In the end, this promotes inflation and, hence, deterioration in living standards. Besides that, the trick of throwing in cheap roubles employed by the government is hardly efficient anymore – the additional value accumulated is eaten up by the increasing meaninglessness of papers in your wallet.

The diminishing of the purchasing power was reinforced by the response ban on food imports imposed by Russia.

Reducing supply from abroad brought up domestic prices and created a lot of uncertainty in the market, since the ban also concerned raw materials used for much of domestic production. These disturbances in the food market resulted in food inflation rising from 5.3% at the beginning of the year to 11.5% in accordance to the recent estimates.

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It is, however, not only consumers that suffered. The total external debt of the Russian private sector is, according to the country’s Central Bank, 343 billion USD. This is sizeable to the external debt on the public sector.

Denominated in foreign currencies, it is going to increase in its real value making repayment more complicated, specifically for private sector companies who, unlike the government, cannot rely on previously accumulated reserves. This implies further turmoil in the market associated with supply drops reducing the output and pushing up the prices.

The estimate of the Russian inflation as of the end of September is 8%, which is almost two per cent larger than the respective value in 2013. The announced target for this year was 5%. After each round of the sanctions, the monetary authorities would inform that they were consistently working on balancing the inflation growth, and working to commit to their pre-set goal. However, given the previous dynamics and market developments, this promise is unlikely to be fulfilled.

What the future holds The further path for the Russian economy, as well as the society, is now very dependent on the strategy that the authorities will select to tackle the issue. The tactics of gradual diminishing of the Russian military involvement in the Ukraine with further easements from the Western Countries could constitute the moderate scenario of gradual alleviation. However, the negotiations held over the conflict have suggested this outcome as unlikely.

Maintenance of the status-quo is unlikely: Europe, United

-------------------------------------------THE SANCTIONS CAUSED FOOD PRICE INFLATION TO GO UP TO 11.5% ACCORDING TO RECENT ESTIMATES States and several other countries have demonstrated their commitment to advancing with the punitive strategy given lack of compliance. Recently imposed restrictions are starting to affect international operations of governmentowned gas and oil companies that are the primary source of income for the Russian budget, which can have a range of consequences, from cuts in social welfare to inability to meet debt obligations.

There is also a possibility of speeding up the deterioration that is frequently observable in left-populist proposals on governmental or parliamentary level. Amongst those were ban on Western clothing and cars, elimination of foreign companies from particular industries, sharp rise in income taxation, VAT and corporate taxation complemented by imposition of a 10% sales tax. The latter measure has already been approved by the parliament and is to take place starting next calendar year. It is difficult to forecast the development associated with this path due to vast uncertainty involved. However, it is clear that heading this direction cannot stabilise the situation in the Russian economy, which may have far-reaching consequences for a large and resourceful country somewhere on the periphery of Europe.

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FEB FLASH

ROEL BEETSMA APPOINTED SUPERVISOR FOR RETAIL TRADE SECTOR PENSION FUND Effective 1 July 2014, Roel Beetsma, chair of the Amsterdam School of Economics, has been appointed as a supervisor for the Industry-level Pension Fund foundation for the retail trade sector.

DOCTORAL STUDENTS A. EL HAJI AND B. KUIJKEN WIN INNOVATION COMPETITION WITH ‘VEYLINX’ Two Amsterdam Business School doctoral candidates Anouar El Haji (Strategy and Marketing section) and Bram Kuijken (Entrepreneurship and Innovation section) have won the Insight Innovation Competition with their research tool Veylinx.

HENRIËTTE MAASSEN VAN DEN BRINK NEW CHAIR OF EDUCATION COUNCIL OF THE NETHERLANDS Professor Henriëtte Maassen van den Brink has been appointed chair of the Education Council of the Netherlands, starting in January 2015.

NEW DEGREE PROGRAMME COMBINES POLITICAL SCIENCE, PSYCHOLOGY, LAW AND ECONOMICS The start of the 2014-2015 academic year at the University of Amsterdam (UvA) saw the first cohort of students start the Bachelor’s programme in Politics, Psychology, Law and Economics (PPLE). About 100 talented students were selected from over 400 applicants.

NVAO ACCREDITATION FOR THE RESEARCH MASTER BUSINESS AND SOCIETY The Accreditation Organisation for the Netherlands and Flanders has granted accreditation to the new University of Amsterdam and VU University Amsterdam joint Research Master Business in Society. This means that this programme of study will start on 1 September 2015.

AMSTERDAM BUSINESS SCHOOL GRANTED CEDEO CERTIFICATION On 1 July 2014 the Amsterdam Business School was granted Cedeo certification for the coming three years. This certificate for continuing professional education is a guarantee for quality assurance, continuity and business focus.

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GAME OF LIES Until recently, Ukraine and Russia have been as close as two nations can be: the Russian language is commonly spoken in Ukraine, there are many cultural similarities and the challenges for political and social development produced by the collapse of the USSR. However, with global geopolitical interests drawing the two countries apart, the media resources of both have started an ongoing battle of propaganda.

A

cccording to a recent poll, 88% of Russians learn about the events in Ukraine trough local television and 73% consider the information reliable. Therefore it is no surprise that as much as 77% of the Russian public blames Ukrainians for the conflict, which erupted between the two sisterly countries in March.

There is a lot of talk about the Russian state propaganda machine all around the world, especially in liberal democracies, however not only the Duma is manipulating public opinion through disinformation and propaganda.

Ukrainians do not look at Russia as favorably as before. In March 80% of the population considered themselves friendly to Russians, however in August that number fell to 40%.

Therefore both, media and the political arena, in Kiev shifted from supporting a tight relationship with Russia to favoring as little to do with it as possible. It is important to understand that while, Euromaidan,

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 27 -------------------------------------------------------------------------------------------------------------------------------text Ruslan Azarov --------------------------image Thierry Ehrmann flicker page

“A LIE TOLD OFTEN ENOUGH BECOMES THE TRUTH”

Ruslan Azarov is a student of economics and finance

VLADIMIR LENIN

-40% The percentage of Ukrainians that consider themselves to be friendly to Russia has also dramatically decreased – from around 80% in March to less than 40% in August.

the revolution, with which the conflict begun, had a “euro-“ prefix to it, the annexation of Crimea and the war in the Eastern Ukraine have shifted the nations’ focus from the importance of western leaning reforms to the rivalry with the oppressive neighbor.

Instead of debating pressing issues such as social security and financial stability, politicians are trying to gain favor with the public by donating to the military or creating an image of a war hero. In the recent elections the winning party, called “The Peoples Front”, built its platform upon the militaristic rhetoric of its leader, the Prime Minister, Arseniy Yatsenyuk.

TV talk shows now also predominantly feature soldiers, but what is worse is that the media space is going somewhat insane. While blaming Russian propaganda for posing images from the Chechen war as supposed evidence of Ukrainian military cruelty, mainstream media in Ukraine has tries to pull the same trick with image from Syria. There is a

plethora of such examples and most Ukrainians can spot them. However, unfortunately, there will always be some consumers willing to buy into such lies.

A distraction The turmoil of the conflict serves leaders of Ukraine well by allowing them to draw attention away from important and urgent issues such as the absence of hot water and heating in some regions. However, there is no clear military agenda either. There is no war formally declared on any country and the Ukrainian government hasn’t officially accused Russia of illegal military activity within its borders, although the cabinet officials do not restrict themselves from such accusations on television, sometimes even presenting evidence. During a recent meeting with students the Prime Minister has replied to a question about president Putins’ remark on Russian military superiority:

“The one with more muscles and guns is not the strongest, the one who has faith is. We have faith and we will win this war” Perhaps it was a demonstration of faith when his government authorized the construction of a wall along the entire Ukrainian-Russian border.

Around $8 million were dedicated to the project. Initially the idea was proposed by a governor from Dnepropetrovsk, Igor Kolomoyskiy, and when it became too popular to ignore the Prime Minister took on to supervise the construction himself. A short moth later, the wall is old news and doesn’t seem to be on the table anymore, yet the political capital gained remains intact.

Leadership failure Another, even larger, scandal erupted, when the government purchased bulletproof vests. Not only where did they cost three times the market price, they also had a defect: they didn’t

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actually stop the bullets. The media attributed the scheme to the eccentric governor, whose political support has skyrocketed after the revolution, the same governor who came up with the idea of constructing the wall alongside the border. Even though investigations were carried out, nobody was held accountable and the deal was not reversed.

Moreover, the military campaign in the east has not proven to be effective.

There were numerous incidents of friendly fire due to miscommunication in the chain of command, cases of encirclement of Ukrainian forces by the opponents and further heavy losses that could have been avoided. It is not disputed that these large mistakes were not simply accidents, but rather results of incompetence and lack of leadership in the Ministry of Defense.

However, officials should not be too worried, since they are not pressured by an outraged public. Peoples’ thoughts are concentrated on the enemy, which has to be defeated, instead of the commanders, which have to do it.

More is needed Ukrainian international politics have a more diverse agenda. Even though a deal with Russia to supply gas until March 2015 has already been struck, Ukraine is still facing an energy supply shortage, which it tries to solve by negotiating deals with Europe to reverse supply Russian gas. At last the IMF has successfully reached out to the Ukrainian government and credit requirements are being set in place as a step to solving the countries large financial woes. Yet, of course, the largest political issue is the relationship with Russia and the ongoing sanctions. There is some criticism for Ukraine’s European allies for not

-----------------------------------------------------------“ALL THESE SANCTIONS ARE LIKE BANDAGES TO A DEAD MAN, THEY DIDN’T HELP…” ARSENIY YATSENYUK

doing enough to pressure Russia.

Many view Europe’s sanctions as weak, however each new measure is welcomed and further action heavily endorsed. There is a feeling of a big brother punishing a bully, who stole your lunch money. That is pleasing, but the lunch money doesn’t come back.

A new path Interestingly, Ukrainian government, while lobbying for sanctions in Brussels, did not impose any sanctions against Russia itself. It was only in mid-August when the parliament has voted in favor of a “Law on Sanctions”, which most media outlets had promoted as the ultimate strike against the oppressor. The law was signed into action only a month later by the president, Petro Poroshenko, but as it turned out, did not have any real effect. The law does not include any specific sanctions to be implemented, but merely declares the possibility of doing so and explains the procedures for parliamentary vote on possible trade restrictions in the future. However, no further discussion was held and no vote to impose any sanctions was even scheduled. In a video that was accidently leaked on the Internet the Prime Minister said: “These events in Donetsk and Lugansk are signs of direct Russian military aggression. Their [Russian] regular army forces are close to Mariupol …

All these sanctions are like bandages to a dead man, they didn’t help…”

Notably, it was PM Arseniy Yatsenyuk

himself who proposed the “Law About Sanctions” and capitalized on the public support for it.

There is no denying that a war is being fought in the east of Ukraine or that a new path for the country’s development has been chosen. With Crimea occupied and the densest Russian-speaking territory proclaiming its independence, there is no political future left for those who supported Russia as the choice for Ukraine’s main geopolitical ally. Now the agenda is completely European. But for Ukraine this, first of all, means internal change – fighting corruption and bureaucracy, creating competitive enterprises and new jobs.

Unfortunately this is near impossible at times of war and those times are not nearing an end.

The revolution started when the former president, Viktor Yanukovych, decided last minute not to sign an important trade and political treaty with the EU. Even though he supported this decision while running for the presidency, after Russia’s objections and convincing, the signing was canceled and the Euromaidan erupted. Today, the treaty is signed, however, its implementation is postponed. It is said that the Ukrainian people are not prepared for a large change in the system during such turbulent times. For better or for worse the number one priority in Ukraine right now is defeating the enemy in the east.

-------------------------------------------------------------------------------------------------------------------------------ROSTRAECONOMICA 29 -------------------------------------------------------------------------------------------------------------------------------text Michael van Rhee -------------------------image Thierry Ehrmann, Dying Regime, Isafmedia flicker pages

Michael van Rhee is a Bachelor student of economics.

THE FUNDING OF ISLAMIC STATE BUYING POWER AT THE EXPENSE OF BRUTALITY

“I

am convinced that this 69th session of the General Assembly could be the most consequential in a generation,” said Secretary-General of the United Nations Ban Ki-Moon during the official opening of the assembly in question in New York last September. Referring

to the many humanitarian crises in the world of today, he stated the coming year must be a time for action and results. With the outbreak of Ebola, ongoing fights in Gaza, and of course the uproar in Ukraine – just to name a few of these crises – there is indeed plenty of work to do,

-------------------------------------------------------------------------------------------------------------------------------30 ROSTRAECONOMICA -------------------------------------------------------------------------------------------------------------------------------Barack Obama: “This counter-terrorism campaign will be waged through a steady, relentless effort to take out Isil wherever they exist, using our air power and our support for partner forces on the ground. This strategy of taking out terrorists who threaten us, while supporting partners on the front lines, is one that we have success­ fully pursued in Yemen and Somalia for years.”

and that enumeration does not even include the uprise of the widely criticised Sunni jihadist group Islamic State (IS) in Iraq and Syria. They too have been a frequent topic on almost all major news channels over the course of last year, and for good reason.

IS, perhaps best known for their frequent capturing and beheading of soldiers and journalists, is widely considered to be an extremist terrorist organization, and has been designated as such by the world’s major forces, including the United Nations, the United States, and the European Union. Its actions, authority, and theological interpretations have sparked fear and outrage across the world, and prompted US military intervention as a result, as well as that of other countries more recently. But while the Western consensus on IS seems clear, many aspects of this group – its organizational structure, the way they operate, how they are funded, and so on – remain unclear to many. Particularly the funding aspect could be of interest to many (future) economists, and as such, it should be insightful to explore and address it. But before we do that, let’s first delve a little deeper into the organisation’s relatively short history.

Rapid uprise Originally founded in 1999 by Abu Musab al-Zarqawi, IS was the forerunner of al-Qaeda in Iraq (AQI). It took part in the Iraqi insurgency against US-led forces and their Iraqi allies following the 2003 invasion of Iraq. One year later, Zarqawi pledged allegiance to Osama bin Laden and formed AQI, which became a major force in the insurgency. After Zarqawi’s death in 2006, AQI joined other Sunni insurgent groups to form the Mujahideen Shura Council, which consolidated further into the Islamic State of Iraq (ISI). At its height, ISI enjoyed a significant presence in several major Iraqi governorates, but it suffered a temporary decline when its violent methods led to a backlash against it in 2008. However, it has recently started

to grow significantly again under the leadership of Abu Bakr al-Baghdadi (who was held prisoner by US forces from 2005 to 2009), gaining support in Iraq as a result of perceived economic and political discrimination against Iraqi Sunnis. Through entering the Syrian Civil War, which started out as an anti-government movement that turned violent, it also established a large presence in the Syrian governorates. It was not long before US troops withdrew, while violence perpetrated by IS rose.

The group’s original aim was to establish a caliphate (a state ruled by a single political and religious leader according to Islamic law, or Sharia) in the Sunni-majority regions of Iraq, but following its involvement in the Syrian Civil War, this expanded to include controlling Sunni-majority areas of Syria as well. IS claims religious authority over all Muslims worldwide, and demands that all swear allegiance to its leader. It aims to bring most Muslim-inhabited regions of the world under its political control, beginning with the Levant region, which approximately covers Syria, Jordan, Israel, Palestine, Lebanon, Cyprus, and small parts of southern Turkey. As of today, eight million people are believed to be under IS-control.

At this point, you might be wondering whether (and if so, how) IS is capable of generating the income that is required to finance its activities and expand on such a large scale, but make no mistake: it is actually the richest terrorist organisation in history! With an estimated 2 billion dollars available for military operations, it is nothing less than a very healthy organisation – at least financially. That could be thought of as an achievement in itself, because after all, fighting out wars requires a lot of public investment. So, what is the key to the group’s financial success?

No city is safe As it makes its way through the Iraqi deserts, IS aims to capture entire cities, and it has been very succesful in doing

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so. The group succesfully invaded Mosul and Tikrit in June of this year, the former of which many experts believe to be crucial for IS to be in control of. That makes sense, given the fact that it is a large city in a central position, lying right in between Syria, Turkey, and Iran. Mosul not only provides the group with a solid base to operate from, it has also proven to be a highly valuable source of money for them, and it continues to be just that. They unhesitantly looted the city’s banks upon capturing the place, giving them a whopping 430 million dollars (!) overnight.

Furthermore, it secured the city’s water, flour, and hydrocarbon resources, leaving the local population dependent on them, and it seized control of the city’s dams and roads, allowing them to raise tolls. At the same time, it lowered the taxes that were raised under Assad’s regime, seeking to win over the hearts and minds of the locals. As a result, it got a bigger following, that has shown to pay itself back in the form of donations anyway. This includes donations worth millions of dollars simply handed over in cash, particularly from its wealthy supporters from the Gulf states – although this has somewhat diminished since 2013.

Remember that even though IS is getting hold of these cities, that does not mean it will just sit there waiting to be

attacked back. The group understands all too well that spreading out where possible reduces the chance of being attacked effectively, especially considering the fact that they know the direct environment like no-one else. At the same time, though, it has a large enough following to ensure that these important cities are protected by enough soldiers.

According to military experts, the best way to hurt IS would therefore be to target their supply convoys and damage its infrastructure, rather than chase after its soldiers. The US should know all about this too by now, considering their negative experiences with warfare in recent decades.

Utmost valuable oil It is equally important to note that IS is developing in one of the world’s most vital oil and gas areas, and you bet it is taking advantage of it. As it moved from eastern Syria into Iraq over the course of 2014, its territorial reach increased significantly, and with it its access to valuable oil fields and refineries. At least five oil fields were captured, and these are proving to be highly lucrative, with reports estimating a total turnover of 3 million dollars per day solely through selling this oil. The money is collected by smuggling the oil into Iraq and Turkey, where it is sold on black markets,

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likely through intermediaries – so buyers are not necessarily aware of the origin. An estimated 9,000 barrels of oil are exported every day, at a price that lies significantly under the current international price of 100 dollars per barrel.

With the prices so low, (rather ironically) both Islamic State and its enemies benefit greatly from the transaction. Some of the cash goes to Kurdish middlemen up towards Turkey, some of it goes to domestic IS consumption, and some of it goes to the Assad regime, which in turn sells weapons back to the group. Clearly, to understand how the Islamic State economy functions is to delve into a world where shady business dealings between murky middlemen are at the heart of everyday action.

Cruel kidnappings Needless to say, IS is not as innocent as all of the aforementioned might make them sound, and that is saying something. It has – rather unsurprisingly – established a reputation for extreme brutality, carrying out a long list of brutal crimes. This list includes robbery, extortion, kidnapping, torture, execution, beheading, crucifixion, and mass murder, of guilty and innocent people alike. Women are also frequently raped and dumped in wells, sometimes even together with their babies. The group shamelessly

publicises its actions through social media, something it has been doing since the terrorist attacks of 9/11. It says it does these things in the name of God, adhering to an extreme interpretation of Sharia. Either way, taking people hostage does provide IS with substantial sums of money. It is estimated to earn 8 million dollars per month by extorting people – more often than not very violently. However, even the most violent extortion does not come close to the level of brutality displayed during some of the group’s kidnappings.

There is a good chance you first heard of IS through these kidnappings. It is estimated to have made at least 125 million dollars from taking people hostage, with each foreign hostage valued at some 5 million dollars. The first foreign hostage story that went viral was that of James Foley, an American journalist who worked as a freelance war correspondent in the area. He was abducted as a response to American airstrikes in Iraq. As for most of its hostages, IS requested a ransom for Foley, but it demanded a significantly higher cheque than usual: 125 million dollars for him alone. The US government refused to pay it. According to Foley’s family, that decision goes back to a long-standing American policy of not paying ransoms.

The basic idea behind the policy is a rather simple one: do

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THEY HAD ALWAYS HAD CLOSE LINKS TO IS UNTIL THEN, BUT EVEN AL-QAEDA LEADER AYMAN ALZAWAHIRI, WHO DISAVOWED THE GROUP OVER ITS ACTIONS IN SYRIA, WARNED ZARQAWI IN 2005 THAT SUCH BRUTALITY “LOSES MUSLIM HEARTS AND MINDS”

ISIS is the richest terrorist organisation in the world with an estimated fortune of 2 billion dollars.

not fund terrorism. The US initiated a military rescue mission instead, but to no avail; Foley was beheaded soon after. In a reaction to his death, President Obama promised that the US would relentlessly pursue his cold-blooded killers to get justice for the Foley family.

Some small cracks?

It is a measure of Baghdadi ‘s success and charisma that IS has become the group of choice for thousands of fighters, even if not all of them are fanatics. According to US officials representing the CIA, the group could have as many as 31,000 fighters, but only an estimated 30% of them are considered to be ideologues; the rest is thought to be obeying out of fear or coercion. Nevertheless, the pull of IS, a group that has outperformed all others in combat and put into place a slick media campaign in dozens of languages to attract young men and women to its cause, has proven to be highly successful, resulting in an extremely dedicated core of 10,000 fighters all ready to die for its socalled state. In every activity – from fighting, to organisation and hierarchy, to media messaging – IS is ahead of opposing factions operating in the region.

However, the group is not invincible, and some small cracks have already started to appear here and there. Rather interestingly, both al-Qaeda and its branch organisation alNusra cut all ties with the group in February of this year after an eight-month power struggle, citing its failure to consult and its lack of compromise. They had always had close links to IS until then, but even al-Qaeda leader Ayman al-Zawahiri, who disavowed the group over its actions in Syria, warned Zarqawi in 2005 that such brutality “loses Muslim hearts and minds”. Besides, it is not just allies that are starting to rebel against their authority.

Some early signs of protest and rebellion have already been reported in Mosul, the city that IS so desperately wants to

remain in control of. To achieve that, it is believed that it must not only possess the required resources to run an army, but also the knowledge and experience of forces with sufficient administrative and managerial skills. Some experts have predicted that the group’s lack thereof will settle its ultimate fate.

The future is uncertain As we have seen, IS is self-financing; it cannot be isolated and cut off from the world so easily, seeing as it is intimately tied into regional stability in a way that benefits not only itself, but also the people it fights. The larger question, then, is whether such an integral pillar of the region can be defeated at all. It seems unlikely without military intervention from the West, and even though Sunni tribes in Iraq are already pondering their allegiance to the group, they do not have the firepower or finances to topple IS, and neither does the Iraqi army, nor its Syrian counterpart. Islamic State’s many fighters know fully well that there is no way back from here; the only way now is forward. Recent attacks on Kobani, a city lying immediately south of the border with Turkey, illustrate precisely that IS does not intend to stop forcing its brutal ways on other people anytime soon, even when facing increased criticism and resistance from the West. A successful seizure could well breathe new life into the group’s many aspirations, and it would undoubtedly provide them with yet another big bag of money, but the group also has to come up with an answer to the everincreasing pressure from the West. While they continue to hold that the rest of the world seeks to destroy Islam, there is no question that they are doing tremendous amounts of damage to the world themselves. Only time will tell whether or not IS will collapse under its own gruesome violence, but one thing is for sure: they will need very broad shoulders indeed not to.

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SEFA FRONT

f.l.t.r: Ruben Cardol; Secretary, Ralph van Burik; Commercial Officer/Vice Chairman, Roline Deken; Project Officer, Jurjen van der Werf; Chairman, Mathijs Pladdet; Information & Strategy Officer, Nicky Caron; HR Officer, Mark Verweij; Marketing Officer, Maurice Bernards; Treasurer.

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A WORD FROM THE 93RD SEFA BOARD Since the start of the summer the new Sefa Board is in office. We work full time to offer all students of the Faculty of Economics and Business an environment that goes beyond studying. A challenging job, but we feel honoured that we were chosen for it.

The environment in which students operate is changing quickly. Just seven years ago phones were only a tool to mobilise long distance communication, now the phone is a computer more advanced than a seven-year-old desktop.

Today the digital and physical worlds coexist in synchrony.

Online networks are now both, more intensive and extensive, than our “real world� networks.

For students this offers great opportunities; there is a whole new world to discover. However, technological progress brings along many challenges: how to present oneself online; how to secure private data; how to handle the abundance of information and, most importantly, how to best exploit all the new possibilities to the highest degree.

Sefa believes in expanding access to the latest innovations for FEB students. Therefore a new position was created in the 93rd board. For the first time there is the Information and Strategy Officer, who is responsible for the further development of the digital tools that our members use and the online services that we offer. This way Sefa can keep up the pace with technological growth.

Rostra Economica is also making the transition to the digital world. Today an online platform is being developed that will be launched in the second semester.

The purpose of the new Rostra will be to constantly inform students on the latest developments in economics, finance and business, provide a perspective and foster discussion. Furthermore, it will concentrate on issues that matter to students in particular, ranging from finding employment to having a great time in Amsterdam.

In short, the online platform will be a helpful tool and a good read.

This year along with our goal to enhance the technological capacity of Sefa, we will continue to provide students with a variety of old and new academic, social, international and career opportunities. We are looking forward to welcome you, as organiser or participant, on one of our many events and activities.

On behalf of the 93rd Sefa board, Ruben Cardol

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YOUR REPRESENTATIVES: THE FACULTY STUDENT COUNCIL 14|15

F

orty-five years ago, in 1969, the Maagdenhuis bezetting (Maagdenhuis occupation) took place in Amsterdam. Maagdenhuis, the administrative center of University of Amsterdam, was occupied for five days by students who demanded a right to speak and take part in the decisionmaking process of the University Administration. Their actions resulted in achieving Medezeggenschap (participation) and creation of the institution of the Student Council at the University of Amsterdam.

What makes UvA special among many other academic institutions is the From left to right are: Renée Bijvoets, Artur Rymer, Samantha van den enthusiasm and readiness of its Hoek, Sophie Mikulski, Arkin Zoodsma, Lisa Leering, Jeroen Hendriks, students to participate and become Sten-Erik Mägus. involved. Involved not only in the student community and work of different associations but Faculty is maintained on a good level. Renee Bijvoets, our also involved in the decision-making process of the Secretary, is writing the minutes of our meetings and helps University Administration. After all, those decisions have with organisation. Together we work as your representatives direct influence on our student lifes and, therefore, our in the Faculty Student Council. futures. Thanks to the Maagdenhuis occupation and work of many generations, each year we, the students of UvA, But you may ask: what does the Student Council actually can choose our representatives to the Student Councils, do? Aside from responsibilities assigned to our positions we both on the central and on the faculty level. Thus, we shape all work on different projects, solve all the problems that the face of the University of Amsterdam. students face and implement new ideas to improve your life at the Faculty. From Course Evaluations to Faculty As of 1st of September we are the new Student Council of Strategic Plan. From Roeterseiland Complex renovation to the Faculty of Economics and Business at the University of Lunch with the Dean. We are always trying to meet the Amsterdam. But let us first introduce ourselves. Sophie needs of all of you. However, we do not know all the Mikulski is the Chairman, the head of the Council as problems ourselves. That is why it is important that we primus inter pares, first among equals. Artur Rymer, the receive input from you. If you have any suggestions or Vice-Chairman, makes sure that we work together as a complaints never hesitate to contact us. We will work hard team. Lisa Leering, the Project Officer, keeps an eye on all to enhance communication, quality of education, the the projects and deadlines. Samantha van den Hoek, the student experience and anything else you think that should CSR Representative, is our voice in the Central Student be changed at FEB. Being a member of the Student Council. Jeroen Hendriks, the PR & Communication Council is not easy and requires a lot effort and sometimes Officer, communicates students’ problems to the Council even sacrifices. But is it worth it? Absolutely! and the Council’s work to students. Vlad Marin, the FSR CONTACT INFO Treasurer, takes care of the Council’s budget. Arkin Address: Roetersstraat 11, Room E 3.23 (soon to change) Zoodsma, the Facilities Officer, manages all the issues Website: www.studentenraad.nl/feb concerning the Faculty’s facilities. Sten-Erik Mägus, the E-mail: fsr.feb@studentenraad.nl Quality of Education Officer, ensures that education at our