Tuesday, July 14, 2015

Iran Deal

It is still early in the day to fully assess this fairly important deal between Iran and World Powers (USA, Europe, Russia and China). But here are first impressions:

1. For the core of the deal, here is a take:
a. Basic contours of the deal in terms nuclear program containment, inspections and lifting of sanctions are retained as agreed in the April 2015 deal.
b. For the first 10 years, break out period - time needed for Iran to rush through to the first nuke - remains at least 1 year. After that Americans are aware that it will start reducing, implicit to that is the classified part of Iran's long term nuclear program which would calm down American Congress. 
c. Snapback arrangements are in place so that if Iran breaks terms of the deal, West will be able to restore sanctions despite hesitant Russia and China.
d. Missile embargo on Iran will remain for 8 years and arms embargo for 5 years, potentially both of which can be reduced if Iranian adherence to the accord is truthful.

In general seeing that the 'core of the April 2015 accord' is retained is a good thing, avoiding Sec. Kerry the caricature of a 'sold out American diplomat'. 

2. The harder part of the deal is still maneuvering it through Congress. At least one or possibly both chambers are expected to vote against the deal and it will be only President Obama's veto on the back of Democrats which will stop Republicans from damaging the deal. We are looking at least 3 months or so before the dust settles. By then Papa Pope Francis is expected to come to the dean of American Hawks and ruffle enough feathers among GOP members on topics of Global Warming and Poverty that Iran issue would go on the back burner. We would also have potentially Fall Government Shutdown, an 'annual Republican show' by hardliners in Republican Party when budget negotiations come up. All in all, there are enough 'shiny things' in Congress making Republican Members opposed to Iran Deal lose the focus.

3. There is a big component of follow through of the deal through UNSC followed by a year long preparatory and inspection steps in 2016. Obama Administration's UN Ambassidor has her task cut out as well as Sec. Kerry needs to put in place Iran Czar Diplomat to implement the deal on the watch of Obama Administration. This administration is not well known for it's administrative competence and follow through, so danger of Obama Administration bungling the deal in execution is there. That is what Sec. Kerry will have to ensure if he intends to secure his legacy (about that Nobel Prize, we will see this Fall if anything comes there).

4. Tantrums of Bibi, is a nice 'side show' to this Iran Deal; entertaining world public in otherwise a grave and somber process. President Obama needs to continue to keep distance from that 'loud mouth' and if possible leave Oval Office without meeting Bibi at all. All low level contacts and institution to institution interactions are in place so as USA can coordinate security level cooperation with Israel as the war in Syria and Iraq continues. But it should be 'that's all'. Until Israel political class and society wake up to the new reality and embark upon peace initiatives; there is nothing what USA or rest of the world can do - all the opposition by Israel and critics to this deal; it is all vain. 

5. Addressing anxieties of Saudi Arabia and other Arab States is a different matter. President Obama, Sec. Kerry and Sec. Ash Carter; all of them need to do whatever it takes to keep American ally Saudi Arabia in good understanding. Otherwise this whole endeavour of bringing Iran in a peace deal would loose it's other necessary half part - that Arab States continue to be partners of USA - squandering all substantial benefits.

6. Kernel of the deal and President Obama's faith is that as Iranian Economy opens, sufficient stakes are created for Iranian Youth so as they would be reluctant to go back to past where Iran pursues nukes at the cost of wellbeing. Some question this basic premise, but overall that is the risk worth taking as other choices are not helpful too

7. As far as American domestic politics goes, American Public will back President Obama while Republicans, especially presidential candidates, will continue their shrill rhetoric making the process of 'going away from broader Americans' uninterrupted for Republicans.

8. It is good for Syriza PM Tsipras and Greece that the world media attention goes away from them. That will give some breathing room for Greek Parliament to start drinking the chalice of European Medicine.  

9. If the progress of the deal in coming months goes smoothly, it will help potentially to thaw relations between Russia and America. As Obama Second Term starts winding down, both Putin and Obama would have incentives to undertake some tentative steps in mending relations between these two countries. As Greece issue recedes and Iran Deal on track, Chancellor Merkel and Europe also would find the room to start repairing relations with Russia for issues like Ukraine.

Back to back progress in Greece and Iran Deal would provide badly needed stability to fried nerves of global investors while Chinese Government works through its peculiar band of State level heavy arm twisting to calm down Chinese Stock Markets. This all should be good for global capital markets in the short term.

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