You’ve heard all about it in depth on CNN, Sky, Bloomberg, CNBC and Al Jeezera: Iran will shortly be open for business and investors are champing at the bit. No doubt MTN is congratulating itself on having patiently kept up its investment in that country for several years. It owns 49% of Iran’s second-biggest network IranCell. Meanwhile, the South African government has already said it’ll welcome the resumption of trade with Iran that in the past was our biggest supplier of oil.
We’re not the only country interested in renewing trade ties with Iran. Asian manufacturers are looking forward to supplying vehicles to that country and South Korea is betting on growth in Iran’s construction sector. Meanwhile Reuters is reporting that both Renaissance Capital and the investment consultancy Ecstrat have seen a sharp pick-up in demand for Iran-related research from asset managers preparing to ‘make the leap.’
In the aviation sector, both Airbus and Boeing will benefit as Iran will need to replace over 400 commercial planes over the next decade.
So how did this situation come about? My guess is that President Obama wants to be remembered as the president who made peace with Iran – and so his administration led five other powers (the UK, France, China, Russia and Germany) into inking a deal with the Tehran government that limits its nuclear activities for the next decade. The idea is to make sure that the country is a minimum of a year away from collecting enough nuclear fuel to manufacture a bomb.
In return, the US and the other five countries will lift international sanctions on Iran. Experts say this will lead to Iran’s economy growing by around 8% annually for the next few years.
Some (like Hilary Clinton) are naively hoping that the lifting of sanctions will ‘put a lid on’ Iran’s nuclear ambitions. Others, like Former Florida Governor Jeb Bush – who may well be the next president of the US – slammed the deal as ‘dangerous’.
The deal will now be put before Congress – which is pretty pointless – because President Obama insists he’ll veto any legislation to derail the agreement.
So why do I say the ‘euphoria’ over this new deal is ‘misplaced’? Most significantly, the agreement will strain relations between the US and its traditional Middle East allies, Israel and Saudi Arabia. Iran will definitely be ‘in the money’ as not only will sanctions be a thing of the past, but it’ll also get its hands on over 100 billion dollars in previously locked assets overseas. This means the country can easily increase funding for its proxies in Yemen, Lebanon and Syria. While Tehran could have its Shia militia groups fight ISIS, there’s no guarantee that this will end the organisation’s caliphate.
There is strong evidence that Iran was crippled by the sanctions imposed on it, with inflation drifting to over 40% and unemployment rising to over 10%. Most importantly, the country wasn’t able to build a bomb. So isn’t it just possible that if sanctions had been left in place they might have led to the fall of the Tehran government? I think the answer is ‘yes’.
Unfortunately both Obama and Hilary Clinton seem to have forgotten their history and the fact that Iran really is good at making the West look stupid, (they’ve obviously forgotten about the 1980 failure of Operation Eagle Claw). One should also think of this: Iran is still holding four American hostages: a former marine, a pastor, a Washington Post journalist and a former FBI agent who hasn’t been heard from in eight years. I wonder how the families of these four feel about this new agreement?
The rationale used by the appeasers is that the chance to resume trading with the rest of the world will provide Tehran with the initiative to put the brakes on nuclear proliferation.
This is a load of twaddle. Iran has for almost 20 years followed a stealthy uranium enrichment programme. Yes, in terms of the new deal, inspectors from the West can enter the country, but will they be permitted to go where they wish?
This is what will happen in a few years time – and I’m willing to bet the farm on it: we’ll be back to where we were before this agreement. Sanctions will once again be applied on a troublesome and unaccommodating Iranian regime. However, this regime would have prospered during the period of relief from sanctions – and it definitely won’t be stopped from building its bomb.
Perhaps the most sinister content of the deal is the way the US has agreed that nuclear inspections be handled. The responsibility now lies with the US to decide whether or not Tehran is following the rules by giving Iran access to US intelligence. The US must show exactly why there is a need for inspections. Iran has always wanted to know who ratted on its nuclear enrichment programme and now, if the US sticks to the rules, Tehran will have those important details.
‘The One Stop Shop’ for financial advisers
Q: Where do South Africa’s leading financial advisers find a list of contacts for financial products, services and tailored solutions?
A: MoneyMarketing’s Financial Advisers Directory 2015, of course.
The rich get richer
The proposed amendments to the Preferential Procurement Regulations pose questions as to how government determines policy. Draft amendments to the Preferential Procurement Regulations were recently published for comment by the Treasury – and they’re rather different from the present 80% price and 20% non-price assessment rule.