#GREXIT And The #IRANDEAL

July seems to be so generous this year because in one week Greece saved its behind, Iran struck a deal with the “Greater Devil”, New horizons sent us live pictures of Pluto and Bastian Schweinsteiger became a red devil (this last piece of info can be a source of conflict though!).

If anything, the Greek and Iranian deals are purely business driven. Make no mistake, no party involved in any of both deals struck a “yes” purely because of goodwill or good citizenship. A Greek exit from the EU would have signaled the beginning of the union’s end and would have opened the door for other less convinced members to leave the group (Britain comes right on top of my head) and the domino would have rolled and although France and Germany seem somewhat eager to trim off the extra fat, deep down they knew that they had to keep Greece tucked in.  Perhaps the biggest catalyst for the Greek deal came from Russia; it was more than enough for President Putin to hint in one of his press conferences that a Greek exit meant more currency freedom for the country and meant that they were acquitted from all agricultural quota agreements with the EU to make all members eager to solve the situation. Last year’s EU’s sanctions against Russia have hurt both the EU’s and Russia’s economies and Putin might have seen in an independent Greece a possible ally especially that Russia lost important agricultural suppliers in Europe.

On the surface, one might think that Putin was dealt a hand, but the truth is that comrade Putin was a winner because he was smart enough not to slide in the Greek mud while successfully pushing the troubled EU further deep inside.

On the other hand, Putin’s real trophy was the Iranian nuclear deal; and I’m not talking in the political terms but rather in the economic terms. You see, Iran has tons of cash stacked in banks all over the world and years of sanctions have created a very thirsty economy that is ripe to use these funds in attracting investors and in investing heavily in the country. On the other hand, all the global economy is suffering and they are all in dire need for new markets and new money sources. These were the exact reasons that forced USA to restore diplomatic relationships and of course business with CUBA and they were also the reason here. Even France, the biggest ever opponent of the deal was the first country to announce that French companies might still get a chance to invest in Iran despite France’s official stand on the deal and French foreign minister Laurent Fabius has already announced that he will be visiting Iran next week (wait a minute dude, did you consult with your Israeli friends before taking such a hasty decision?). It’s very strange how the slight notion of money and profit can make one turn against their closest allies – just like the current situation of France and Israel.

But before everyone starts drooling over the Iranian pie, take a minute to remember that this is Iran – the country which until recently has been considered the heart of axis of evil and was named all sorts of names and remember that they are not known to be forgetful, so if anything then the biggest chunk will go to their staunch ally – yes you guessed it, it’s comrade Putin again. Russia has already announced that there will be deals that involve planes and if the sanctions are lifted then this will definitely mean both civilian and military planes. In addition, the country that has been for the longest time ever suffering from oil shortages will be able to fulfill its needs both in production and consumption with all the ramifications that will come from such a thing.

Iran might not really replace the EU in terms of trade size with Russia but Putin will definitely benefit the most especially that Iran has high agricultural production which Russia can definitely benefit of. On the other hand, Poor Obama has worn himself out to get that deal done and it so far seems that the Americans will not benefit financially whatsoever despite Obama’s relentless offers to market the deal in USA as a means to prevent war and promote peace, not unless Iran decides to lure them in even more.

A few years ago, Britain released the Lockerbie bomber who was Iranian; the official reason back then was humanitarian – the man was supposedly suffering from terminal cancer. The real reason though was to allow BP to strike a deal in Iran and that was what happened exactly. In 2015, the same is going to happen and nuclear Iran will be allowed to become so in return for financial benefits that the whole world desperately needs.

A lot can be said about diplomacy, about peace, about war and negotiations; a lot has been said about these in the last few weeks but the truth is it was all purely business; the country that until recently represented radicalism and extremism has become the world’s sweet heart and Israel which also until recently was Europe’s and America’s protégée has been shoved aside because it is not economically interesting anymore. For after all, and as one of my MBA finance professors used to frequently say: “It is not unethical, it is just business.”

Masters of Tax Evasion “Houdini” Style

“What the eyes see and the ears hear, the mind believes” a well known quote by the famous illusionist and escape artist Harry Houdini. In a nutshell he never did any magic, he simply tricked people into looking in a certain place while the real action happened somewhere else. What the big companies are doing these days is the same exact concept but each of them has a style.

For 20 years now Amazon has been dazzling the world with its new services and innovative and most of the time weird ideas (remember the delivery drone they paraded recently?) and for all that time Amazon has never reported profit or distributed equity to any of its shareholders. For 20 years Mr. Bezos has been able to convince his shareholders (who interestingly enough keep flocking in) that not recording any profit is a cool thing. By doing so, he has been able to avoid paying anything to the IRS, and avoid their scrutinizing. That in short is his “escape plan”.

Mr. Zuckerberg on the other hand likes the limelight and glamour in all what he does. Ranking the second biggest philanthropist in 2013 and the biggest in the under 30 years old category, Mark Zuckerberg donated almost half a billion dollars. He surely has reserved himself a big spot in the headlines and attracted more attention and interest in his social networking site, (Imagine this as a reason to start a facebook account: Mark is so sweet in all what he does, I am going to support him by starting my own FB account and maybe post a few unsuitable and nude pictures while I’m at it….) But before you jump into such hasty and life changing decisions such as having your own profile, take a minute to reflect on that fact that he is entangled in tax evasion issues in New Zealnd, Ireland, UK and Singapore among others. In Ireland alone, Facebook paid only 1.9 million british pounds on a gross profit of 1.75 billion pounds. How he did that? Very simple, create a company wherever you want in the world and incorporate it or create a mother company for it in a tax haven country to funnel your money to it. Ireland’s Facebook used the Cayman Islands whereas Google went for Bermuda. Perhaps this is the reason all major companies choose Ireland, the country itself has made many rules on lowering taxes in order to attract investors and does much less work to go after those who funnel their funds outside the country. Just like Houdini, they make people focus on their good deeds in order to distract them from what’s happening elsewhere. The same applies to Apple and Microsoft for that matter.

Dick Cheney always does things the “hard way”, by the end of 2007 and while the company was coming under heat for its “not so transparent” accounting techniques and tax issues, they decided to take drastic decisions that included moving their headquarters from Texas to Dubai. Of course the excuse was to “intensify their focus on Middle East markets” but the truth was to be found somewhere in the courts in the middle of all the litigation that the company was entangled in. Needless to say, that deprived Uncle Sam from a very big and important source of revenue and hiked up the company’s revenues.

The US government prides itself for it notoriety in enforcing its Foreign Corrupt Practices Act which bans all companies whether American based or have business in USA to pay any form of bribes outside the US territory (don’t be fooled with the shiny titles, most companies are evading that by creating “PR” budgets and those are not for lunches and dinners only. Ironically that’s another Houdini trick), yet they don’t seem to be so stringent on tax evasion. Of course everyone hates taxes and everyone wants to get rid of them. But it has been a trend in the last few years whether in the USA or anywhere else on the world that whenever the government needed the money they went after the poor regular individuals and enforced tax hikes on them.

There is no need to increase taxes on big companies; actually it is not a good thing because they are the biggest employers and the movers of economies. But forcing them to be transparent about their profits and paying their fare share of taxes will be more than enough and a good place to start at.