#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.”

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USA, Cuba and Russia, the Everlasting Threesome

“War and Economy: The All Time Best Friends” is a term that will always hold true no matter what era the world is living in nor what situation is occurring. Money, wealth and the need for more resources for cheaper costs have and will always propel the world, not necessarily forward but it definitely is a pushing force.
In 1962, the world held its breath as the standoff between the USSR and the USA nearly wiped off the modern world in a nuclear war; the star of the story back then was Cuba. Ruled by the communist hard liner Fidel Castro and euphoric from its previous success in fighting off the Americans in the Bay of Pigs incident, Cuba was considered a direct threat to the “communism paranoid” USA. As a communist regime, it was just normal that Castro would align with the USSR. As part of the ongoing political war between the USSR and the USA, the Russians tried to benefit from the situation by trying to deploy a set of nuclear missiles that would put Washington D.C. within their reach. After a few tense days, Russia agreed to remove those missiles and secretly the USA agreed to do the same by removing some missiles they had deployed in Turkey just at the borders of Russia.
In 1962 the 2 world superpowers were the USSR and the USA, the Castro’s were in power, President Kennedy was a democrat and both powers used Turkey and Cuba in their stand-off. In 2015, a democrat is in the white house, Putin who’s a former KGB (the offspring of the USSR) has been steering Russia since 1999, Cuba is still ruled by the Castro’s and the USA has used the NATO as a cover to redeploy a defensive missile system in Turkey. So the scene is still almost the same minus the Russian missiles in Cuba.
In an interesting twist of events, President Obama announced in the beginning of 2015 that USA was going to ease restrictions against Cuba and allow more trade exchanges with the isolated island. There are many reasons that can interpret such a move but only one reason is the most valid and it’s the economic one. The proof lies in the set of rules that allowed for exchanges and money transfers.
To begin with, the ailing US airlines can find a new travel line where they can actually make money and profits since they are losing on their own turf (the CEO of Delta Airlines recently went ballistic in his criticism of some Arabic airlines and claimed that that’s where the September 11 terrorists came from and that no Arabic airlines should come to the USA) and as Mexico becomes more and more of a dangerous place, Cuba can be the next ideal destination for spring breakers. The always suffering US car industry is thirsty to reenter a market it has lost more than 50 years ago. Images coming from Cuban streets show them bustling with good old American cars, question is will the Cuban consumers like what the new American car industry looks like?
In recent years the US economy has been coming under lots of pressure from outsourcing jobs, to foreign competition to a larger and alarming budget deficit – most of which is owed to communist China, another country aiming at being a superpower but with no luck yet. This explains why the USA is in dire need of finding new markets, but Russia is not standing and watching, they too want a piece of the Cuban pie. A recent report announced that the trade embargo imposed on Russia by the European Union has cost the old continent about 21 billion dollars in losses and although Russia has been so secretive about the effects on its economy but a weakening Ruble and a statement by Putin that the country needs 2 years to get out of this mess is a clear indication. In short, both countries need an escape plan.
So both economies are in trouble, and both are looking for new markets. The Middle East is already set ablaze, and although Africa is a promising market it is for now left for the Japanese and Chinese to feud over it. China and Japan in their turn are expected to have slower growth than what was initially estimated and India is still struggling to find its identity. Europe shot itself in the foot when they imposed the sanctions on Russia and Australia – as always – seems like a continent on a different galaxy (too much sun can have it effects if you know what I mean). This leaves very few options for the two giants and makes Cuba seem the most interesting of them all.
As USA tries to aggressively enter the Cuban market by easing business and travel restrictions to American citizens combined with more freedom of capital flow from and to the mysteriously romantic island, Russia is not willing at all to sit on the side bench and they have already set plans for Cuba. In recent years, the once communist nation has been opening up to globalism but not in the terms of allowing multinational companies in as much as it was by trying to compete on the international scene although they have not been a great success so far. Russian Automaker Avto Vaz is now a part of the Nissan-Renault conglomerate which has significant meaning for an automaker that has been one of the very few to survive the post soviet era and might now become a global player. On the telecom front, The Wall Street Journal ran an article late in 2012 about the Russian Telephone maker YOTA which was planning an aggressive entrance to the already crowded telephone industry. So far their presence has been limited and just recently they signed a deal to enter the Chinese market which is highly dominated by local makers. One should not forget that the makers of the Kalashnikov are one of the largest exporters of weapons. Although they are not major yet, those moves are significant signs as to where the country is planning to head to.
Perhaps the most significant indication is the recent news that Russia is in talks with a group of investors from Abu Dhabi to partner up in a $200 million dollar investment that includes the development of a major airport and might include later a seaport and a railway. This announcement has sent messages in all directions; first it was announced in a military trade exhibition signaling Russia’s aggressive strategy to earn a market share in an area that has been predominantly an American turf. The second is a loud message by the Russians that they are still at the center of action in whatever happens in Cuba, and the third and probably the strongest message of them all is that Russia is dealing with Arabic Countries as trade partners and allies rather than just customers as has been the custom before- something that Uncle Sam has not done before (remember in 2006 when Dubai Ports company was forced to drop a deal to manage some US ports terminals just for being an arab company? What is it that they say about Karma?)
In terms of politics, Putin has loudly announced many times that the missile system in Turkey and many countries of the Eastern European block are an act of aggression against his country, he has shown resilience and unwavering determination is Syria, was among the first highest ranking officials to visit Egypt after the presidential elections which brought an army general back to the presidency and has shown ice cold nerves in the recent Ukranian crisis and was able to hurt the already ailing European economy. Cuba will not be any different; there are no signs that the Russians are willing to give the country up no matter what. During the soviet era, they supported the country in billions of dollars and there is no reason for why they should stop now.
After all, just like the USA is surrounding them they have a great interest in returning the service to uncle Sam; the Cuban market is thirsty for investments, the democrats are still in the white house, the castro’s in Cuba, the communist ghost in the Kremlin and the missiles in Turkey. It is obvious that little has changed in the last 50 years or so……