Alum abroad discusses economics and politics

Gianna Cilluffo ‘22 | Amelia Cabral ‘22 | Abigail Gallo ‘22

Britain’s Brexit crisis and Boris Johnson’s unorthodox leadership are issues that students may be only vaguely aware of, given how the various crises in our own country dominate the news.  Matthew Vegari ‘13 is uniquely positioned to offer insight on current issues in Britain because he is currently a student at the London School of Economics. 

While the United States’ economy is currently flourishing, the United Kingdom’s is struggling. This is due in part to the bold Brexit proposal. The UK still needs the EU despite their desire to leave the union.

This is why it has taken so much time to decide how the EU will settle the situation. Vegari explains, “The UK was uncompromising in what they were demanding, but they didn’t have much leverage because the EU knows they need Britain just as much as Britain needs them.” 

Both bodies are fighting for what they want, with little to no effort to find a middle ground.  “A good deal for the UK is ‘brexiting’ and a good deal for the EU is not giving up too much in allowing the UK to do that.” 

There is a limit on how much control the EU is willing to hand over, because as put by Vegari, “they’re worried about the UK starting a trend. They don’t want other countries to be incentivized to do that.” 

Vegari provided his perspective on the differences in Donald Trump and Boris Johnson’s policies as they relate to trade deals with China. The tension between the US and China over the trade deal is because “China takes advantage of tax laws and exploits the country’s [US’] reliance on things like patents and regulations that don’t exist in China.” 

Trump recognizes the problem and has the leverage to do something about it. While the US economy is thriving and therefore is not as reliant on China, China depends on the US to increase its GDP. “Six or seven years ago a deal like this wouldn’t be possible,” states Vegari, “because the US economy didn’t hold the power it does now.”

Vegari feels that the benefit of a new deal with China to the US relates to the stealing of intellectual property by the Asian powerhouse. Chinese rip-offs of American products run rampant, and Trump is looking to use the US’ current political and economic leverage to amend this situation. To contrast this, Boris Johnson’s negotiations hold little power because of Britain’s current economic situation. The European economy itself is not improving either, and so in order to make a deal with China, the UK would have to “give a lot to gain a little.”

With ongoing threats between America and Iran, and rumors of “World War III” swirling, the economic situation in Iran has become strained. Although he doesn’t believe it will have too large of an effect on the global market, Vegari, whose father is from Iran, notes, “The sanctions Trump has imposed, which started in the Obama administration, are pretty crippling to the Iranian economy.” 

As more developments come and the dispute unfolds, the situation is bound to change, but as for now, Vegari thinks that “changes in the price of oil could probably come out of these shocks, but otherwise the American market won’t really be affected, unless military action is taken.” Vegari, like the majority of the population, is unsure of what future actions will be done. “It’s really unclear right now, since they’re at something of a ceasefire, but I’m kind of expecting some sort of cyberattack from Iran, whether it be now or in six months.”

Vergari is not sure there will be a recession in the near future, but says, “I think we’re just going to enter a period of slower growth.”