The Iran Nuclear Deal: Obligation or Opportunity?

by John Brian Shannon | Reposted from JohnBrianShannon.com

It’s always helpful to look at a country’s actions over the past 200 years to help understand what its intentions may be here and now, and in the future.

The burgeoning but relatively isolated country of Iran hasn’t militarily attacked another country for over 200 years, and it was Saddam Hussein’s Iraq that militarily attacked Iran in September 1980 — a conflict that finally ended in August 1988 with 1 million casualties and an economic cost of $680 million to $1 trillion dollars — with no clear winner and no benefit to either country.

After all that blood and treasure, no benefit to either country(!) although via the UN-sponsored peace accord and as a penalty to Iraq for starting the war, Iran gained access to the Shatt al-Arab waterway which runs into the Persian Gulf.

Since 2000, Iran has purportedly financed organizations (some listed as terrorist organizations, and others not) throughout the Middle East and most recently in Syria, Iraq, and perhaps Lebanon, in an attempt to exert some control on the various forces operating around their region. (Every country uses various methods to control what happens in its own region, so no news there)

But nothing captures the world’s attention like the Iran nuclear deal.

U.S. President Donald Trump says the deal is a bad one for the West and shouldn’t have been signed and wants to walk away from the deal, reserving the right to act unilaterally if he feels the country is a danger to the U.S.A. or its Middle East allies.

Last week, France’s President Emmanuel Macron flew to Washington to meet with the U.S. President to convince him to stay in the deal or to embrace a ‘third way’ which means renegotiating some of the agreement to better suit U.S. concerns.

Iran barely signed the previous agreement… so it will be interesting to see how the U.S. can get everything it wants from a renegotiated deal while still obtaining Iran’s signature to a new agreement. A deal isn’t a deal unless both sides sign on the dotted line.


Why Would the U.S. Care About Iran? (and Syria, for that matter)

From a strategic perspective, there isn’t a country in the world that could be less important to the security of the United States than Iran, and ditto for Syria.

Neither country has the kind of military that could threaten America, nor could they project their power anywhere near the North American continent.

Unless the United States is actively working for Israel — a country which has an irrational fear of Iran (again, Iran hasn’t invaded any other country for over 200 years) and is willing to spend billions or even another trillion dollars to wage another Iraq War-style conflict against Iran, there’s no reason for the U.S. to have any dealings with Iran whatsoever.

If the United States is actively working for Saudi Arabia — a country that views Iran as an unwelcome competitor in the race to dominate the region, the same advice applies. Why should the U.S. spend multi-billions and sacrifice thousands of young soldiers to satisfy the Saudi ambition to be the local hegemon?

Iran is a regional power at best, and will remain so for approximately the next 30-years as it hasn’t the capacity to be anything else.


Why is Iranian Oil in Such High Demand?

It’s not like Iran is withholding oil deliveries. On the contrary, Iranian oil is easily obtainable with a phone call — the country is highly motivated to sell every drop of oil due to high spending on social programmes by the Iranian government which are largely funded by oil revenue.

And Iran’s crude oil is rated either #2 (sweet) or #3 (semi-sweet) which means it’s in high demand around the world. Global oil producers have already pumped all their #2 sweet crude out of the ground years ago; only Iran and Venezuela have significant reserves of sweet crude in the 21st-century.

As for oil refineries, they need Iran’s (or Venezuela’s) #2 sweet crude oil to blend with the oil supplied by their producers which is almost always #4 (sour) or #4.75 (very sour) like the Canadian oil sands product.

Most refineries won’t accept sour crude oil unless plenty of #2 or #3 sweet crude is blended into the sour crude. It’s just too toxic to refine ‘sour’ as it requires a much more stringent maintenance protocol, meaning the refinery needs to shut down and go into ‘maintenance mode’ more often. That downtime represents a significant loss of revenue for oil refineries.

Therefore, as long as Iran continues to ship huge quantities of sweet crude, the United States should be facilitating that oil business instead of trying to curtail it.


The EU View of Iran is a Mature View

Say what you want about the Europeans, but they don’t allow themselves to be used by countries like Israel that have an irrational fear of Iran and want to use the United States and the EU to keep the Iranians ‘down’ and in their ‘proper’ place and thereby become the regional superpower, or countries like Saudi Arabia that want to use the United States and the EU to keep the Iranians ‘down’ and in their ‘proper’ place and thereby become the regional superpower.

To oversimplify the EU view; As long as Iran’s sweet crude continues to flow (it is) and as long as Iran isn’t actively invading any other country (it isn’t) then there’s no reason to use some imagined breach of the Iranian nuclear deal to launch another trillion dollar war in the Middle East. And, as always, the EU continues to refuse to allow itself to be used by regional powers such as Israel and Saudi Arabia.

In the final analysis, the EU’s position on the Iranian nuclear deal is the most enlightened of all and it is the view the United States should support.

Streamlining Towards Brexit

by John Brian Shannon | Reposted from LetterToBritain

Time is running down on the Brexit clock (395 days and counting!) and the default path seems the only way that will allow a smooth and orderly Brexit in any sort of timeframe that could be construed as reasonable to British voters. (See how many more days until Brexit here)

If the UK government chooses to simply photocopy existing EU trade regulations and then change those laws incrementally over a period of years, the UK should rightly expect to be invited by the European Union to continue their mutually beneficial trade relationship.

After all, how could the EU possibly be upset that the UK will voluntarily continue to follow European Union trade regulations in the pre-Brexit period?

However, this implies that until Brexit actually occurs, the UK will be obligated to consult with the EU on every incremental change made on those photocopied laws and regulations from now until the UK officially leaves the European Union on March 29, 2019. It’s not about polite diplomatic behavior, it’s about pragmatic self-interest.

The UK must begin today to re-prove that it intends — in all cases — to be a fair and reliable trading partner with the EU, and other countries are sure to be watching as this process unfolds. No amount of effort can be spared in this regard, because as so goes the UK trading relationship with the EU, so it will go between Britain and every other country in the world, after Brexit.


Trade After Brexit

Once March 29, 2019 has passed and the UK has officially left the European Union there will be no longer be any requirement for lengthy consultations with the EU on changes to British trade laws or regulations far in advance of them coming into effect.

That doesn’t mean that the UK shouldn’t continue to consult with the EU, it means that it doesn’t need to consult with the EU during the entire policy formation period. But once UK policy has been decided, the EU should continue to be the first to know about pending changes due to the bloc’s importance to the British economy.

As above, no effort should be spared in showing the EU every possible courtesy on even the most incremental of trade policy adjustments under consideration in the pre-Brexit timeframe.

And in the post-Brexit timeframe, a high level of communication and consultation must continue to define the relationship between the two sides.


Customs Law After Brexit

Unlike trade, the present customs union will end the day after Brexit which will be a very positive thing for the UK. After Brexit, the UK alone will be fully in charge of who can and can’t enter the country, and it should mount a Herculean effort now to identify and locate every single foreigner in the country, matching them to their home and workplace (or school) address.

Every non-British born resident in the country should be required to pay 100 pounds sterling per year, and also be required to provide their updated home and work/school address as often as it changes, no matter which country they originally hailed from. It’s the 21st century(!) all of this can be done on a UK.gov webform in less than 10 minutes per year.

Especially for those foreigners living in the United Kingdom anytime prior to Brexit day, the UK government should make the entire process as streamlined as possible.


Commonwealth Nations in the post-Brexit Timeframe

As the UK returns to its Commonwealth roots, immigration to the UK should thenceforth be sourced from Commonwealth nations.

Of course, there will always be a number of immigrants from the EU, America, and other countries. But as much as possible, the focus should be on the ‘all for one and one for all’ approach of Commonwealth nations — and one great way to keep that viable is by sourcing 2/3rds of the UK’s immigration requirements from the Commonwealth.


In addition, the UK should continue to spend .7 per cent of GDP on foreign aid — but spend it in Commonwealth nations exclusively.

This means that the British government must find other nations to take over its existing foreign aid commitments in non-Commonwealth nations so that Britain can concentrate on building a better Commonwealth.

Done right, every pound sterling spent in Commonwealth foreign aid should return a minimum of two pounds sterling to the UK, as a rising tide in a finite environment like the Commonwealth will lift all boats, which is quite unlike spending that same amount of foreign aid in the wider world.

One example of how Britain could benefit in the post-Brexit timeframe with a policy that favours Commonwealth nations is that UK universities, colleges and trade schools should see a vast increase in enrollment from the 2 billion citizens of Commonwealth nations.


Time is Tight

Although Brexit once seemed far-off, time is getting a little tight. Much needs to be accomplished in the remaining 395 days until Brexit.

The best way to do that is to harmonize UK trade law with EU trade law and then make incremental changes over time. That’s how not to lose.

How to win is to engage with Commonwealth nations as never before in ways that work to benefit both the United Kingdom and every Commonwealth member nation.

Keeping our EU friendships healthy on the one hand while updating our Commonwealth friendships for the 21st century on the other hand, is irrevocably in Britain’s best interests, thereby creating a new paradigm that will allow the UK to work to its strengths over the next 100 years.

‘No-Deal’ Brexit scenario would cost both UK and EU billions

Reposted from Letter to Britain | by John Brian Shannon

A new report by a prestigious polling firm says that a so-called ‘No-Deal’ WTO-style Brexit will cost one EU country €5.5 billion over the next two years, as opposed to a Brexit with a trade agreement where losses for that country would likely total €1.5 billion over the next two years.

That country is the Republic of Ireland.

“A hard Brexit could cost the Irish economy more than €5.5 billion over the next two years, a government-commissioned report has said.

A “soft” Brexit including a transition arrangement would cost less than €1.5 billion over the period, highlighting the importance to Ireland of the UK’s withdrawal talks with the EU.

The study by Copenhagen Economics, which examined four possible scenarios, also warns that the UK will probably take at least five years to implement new trade agreements, complicating Irish efforts at contingency planning.

[Ireland’s ‘Taoiseach’ which is the official title of the Irish Prime Minister] Leo Varadkar said last night that a comprehensive free-trade deal with the UK would be the best way to avoid a hard border. After a meeting with Theresa May, the UK prime minister, he said: “We both prefer [the option] by which we can avoid a hard border in Ireland, and that is through a comprehensive free trade and customs arrangement.

“That is the best way we can avoid any new barriers — north and south, and also east and west.”” — The Times


Other EU Nations Take a Hit in the ‘No-Deal’ Scenario

We can extrapolate that other EU countries would also take an economic hit in a ‘No-Deal’ scenario, but due to their much larger economies when compared to Ireland, such losses would amount to tens or even hundreds of billions over the same two-year period. Just think of all those German cars that wouldn’t be sold in the UK due to the higher tariffs that would automatically be imposed on EU countries in a ‘No-Deal’ Brexit!

Almost every country in the world uses WTO rules as the foundation of their trading relationship with other countries (but important to note) those same countries also diligently pursue bilateral trade deals with their important trading partners that allow both sides to legally sidestep the more costly WTO tariff ruleset in favour of something that works better for both partners. (And that trading relationship/tariff structure can be anything the two sides want in regards to any trade that happens between them)

So if country A and country B decide they want to trade, they’re completely free to build a better tariff structure than the comparatively expensive WTO ruleset, and that agreement will thenceforth supercede the WTO tariff structure. However, it only applies on trade between those two countries — the rest of their trade with the world would still be conducted under the auspices of the WTO.


It’s a pretty basic thing. Countries that do anything more than a smattering of trade between them negotiate bilateral free trade agreements to bypass the more onerous WTO trade rules and tariff regime.


Still Time to Negotiate a Trade Deal with the EU

How many days until Brexit?
How many days until Brexit? Image courtesy of HowManyDaysStill.com

As of this writing there are 409 days remaining until Brexit and either we will have a trade agreement with the EU, or we won’t. If not, it will be costly for both sides, but more costly for the EU by one order of magnitude!

However, saying that there are 409 days remaining ’til Brexit — isn’t the same as saying there are 409 days left to negotiate a free trade agreement. Far from it!

The two sides have 258 days to arrange a free trade agreement. Let’s hope our politicians (and theirs) are up to the job (and if not, why are we paying them?) otherwise almost everything that citizens and businesses purchase will become much more expensive on both sides of the English Channel in the post-Brexit timeframe.

UK Prime Minister Theresa May has said repeatedly that October 29, 2018 is the latest both sides can agree a trade and customs deal before they must begin to get ready to implement WTO trade rules. And on that point both sides agree. In fact, even a preparation time of five months (during the period from October 29, 2018 to March 29, 2019) would barely suffice to put in place the necessary measures and standards to allow industry to prepare for life after Brexit.

Both UK and EU voters should remember who did, and who didn’t, get a free trade agreement signed when they head to the polling booth at the next election.


Related Articles:

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Theresa May’s New Year of Hope

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Should the UK’s Theresa May Consider a 2nd Brexit Referendum?

Brexit: An Opportunity to Create a Better UK / EU Relationship?

Brexit: An Opportunity to Create a Better UK / EU Relationship?

As European Union negotiators can’t see any reason to support Brexit, they will continue to keep the European Union’s best interests in mind — which is to say, they will try to stop, slow, obfuscate, or otherwise derail the Brexit process by almost any means possible.

And why shouldn’t they feel that way? The EU is a net beneficiary of £8.6 billion annually courtesy of the UK, so there’s little incentive to stop a contribution that is larger than that of all other EU-member countries except Germany.

If there are any Brexit benefits to the European Union, nobody has bothered to tell EU negotiators or EU media channels.

So how would anyone know if there will be Brexit benefits for the EU when the UK government hasn’t mentioned them once? And yet there are likely many Brexit benefits — for both sides — that just aren’t being discussed.


How to Sell a Product or Idea

When you’re trying to sell apples to a potential customer, giving them a nonstop spiel about how much *you* like apples won’t help you sell many apples!

But if you hand your potential customer a hot glass of mulled apple cider and walk them past appealing displays of fresh apples, followed by a pleasant tour through the on-site bakery bursting with the aroma of piping hot apple pies and offer them a tantalizing sample at the exact moment their interest in apples is high, you’ll sell more apples.

If you’re selling cars, you don’t spend your time telling the customer about the specifications of the car and how it can transport you here and there with ease. Any ol’ car can do that.

Instead, you answer their questions about the car, you offer a test drive so they can experience how much better it drives, sounds, and looks than their present car, all of which work together to help them fall in love with the car you’re selling.

If you’re a really smart salesperson, you’ll slap a dealer plate on the new car and let your customers take it home for the weekend so they can show it off to their comrades who will help convince them the new car is much better than their old jalopy.

And have you ever noticed that beer commercials don’t show you endless cans of beer and a quick snapshot of the brewery?

Breweries are highly experienced marketers and they want to show you good-looking people having a great time socializing with their friends and family in a picturesque setting or while engaged in enjoyable activities.

Look at that product placement! There’s the can of beer right beside those sizzling steaks on the barbecue while those great people in the background are enjoying their evening.

Considering a run to the beer store? Well yes you should — because you’re a good person, you work hard, you love spending quality time with your friends and family and you deserve a summer’s evening just like the people on that commercial. That’s the message.

Marketing types call this Feature/Benefit selling, ‘Selling the sizzle, not the steak’ which isn’t about what the product or service actually is, it’s about what it can do for you and how it can make you look or feel happier and better.


What Isn’t Theresa May Doing?

She isn’t selling the benefits of Brexit to the EU.

We know there are many benefits for Britons but even that has been under-sold.

In the early days following the Leave referendum it might’ve looked to Remainers as though Brexit could still go either way, so Theresa May was probably wise to move cautiously at first. But that time has passed. Almost every person and business in Britain wants to get beyond the present period of uncertainty and get on with creating a fresh start for the UK outside the European Union.

The right time to begin crafting a trade agreement that works even better than the present trading system has arrived. And now that we’re at this point in time, under-selling the benefits of Brexit to UK and EU citizens is not the way forward.


What Is The Way Forward?

In a word, Vision.

Theresa May needs to put on her ‘Steve Jobs hat’ and figure out what the best possible Brexit vision looks like from both the UK and EU perspectives.

Starting with a completely clean sheet; What would that look like in its entirety? What would it look like five years on?

If she doesn’t offer an inspiring vision that a majority of people on both sides of the English Channel can ‘buy-in’ to her government will be paddling upstream all day, every day, for as long as she remains Prime Minister. (And that’s definitely a no-fun lifestyle, even for a British PM)

Once the vision has been considered by Theresa May, only then should it be communicated to her Cabinet, while the Department for Exiting the European Union (DExEU) should oversee all other UK ministries and departments as they compile reports that describe what their best-case scenario would look like in practical terms.

Then it’s simply a matter of working to those ideals as much as is practicable to create a Vision Statement that can be released to the public, sans the excruciating detail required in government policy papers.

“This is the Vision we’re working toward…” (Giving UK and EU citizens a view of what a better Brexit looks like)

‘How do you like those apples?’ someone cheekily asked.


The Three Principles Common to all Organizations

  1. Vision (or Mission)
  2. Leadership
  3. Management

Without equal weight given to each of those three factors any organization or project will ultimately fail.

It can’t be emphasized enough; Endless discussion about the best Brexit from the UK standpoint are irrelevant to European Union citizens and businesses. Brexit must work for the EU too, or it will be increasingly uncomfortable and expensive for the UK as time rolls forward.

Theresa May needs to find what things will work better for the EU in a post-Brexit world and promote those items on every visit to the EU. If there aren’t any Brexit positives for the EU, she better create some as they negotiate forward to a final trade and financial services agreement.

Without an overarching vision even the best management and leadership will underperform. Perhaps severely.

But as soon as May gives the order to each of her 25 Ministerial Departments and 20 non-Ministerial Departments to submit their best-case scenario (their best hopes and aspirations showing what their jurisdiction could look like five years on from Brexit) and from that she will be able to write a one page vision for each of the 45 departments.

From there she will need to direct the Department for Exiting the European Union to create a list of items that could be seen as positives by EU governments, EU businesses and EU citizens. Those are the apples she needs to sell on every visit to the European Union. And then sell the ‘sizzle’ Theresa, not the steak.


Summary

Theresa May must ‘create’ and ‘sell’ (Vision + Leadership + Management + Marketing) a Brexit that will benefit both the UK and the EU and begin to disseminate that better vision throughout both blocs.

Throwing £40 billion at the EU now and (potentially) another £40 billion to obtain a trade and financial services agreement isn’t visionary — it’s ‘buying an agreement’ with taxpayer’s money — which is fine if that’s the only option. But it isn’t the only option.

Getting citizens, businesses, and governments on both sides of the English Channel to buy-in to a grand vision that works even better than the present paradigm without it costing another £40 billion, must be Theresa May’s Number One Priority before the October 2018 Brexit deal-making deadline arrives.


[P.S. to Michel Barnier, chief negotiator for the European Union] Jeez, Michel, for £40 billion shouldn’t the UK have received a bespoke customs deal, a bespoke trade deal, a bespoke financial services agreement *and* a chocolate mint on every UK pillow?


Written by John Brian Shannon

Theresa May’s New Year of Hope

As far as years go, UK Prime Minister Theresa May must be glad to see the end of 2017 as are many others in Britain and around the world. In matters Brexit, it was a year of low-level chaos and unfulfilled expectations — lots of ‘churn’ but not much actual progress.

Yet the Prime Minister did make some exceptional speeches and unexpectedly reached-out to EU citizens to assure them that while Britain was leaving the European Union, it wasn’t leaving Europe. Well done on both counts, Theresa May.

She also told EU citizens living in the UK that their situation wouldn’t change, aside from having to register their residency with the Home Office and pay a nominal fee to retain their ‘settled status’. And while that didn’t seem to impress small numbers of EU negotiators, it brought great comfort to millions of expats living in Britain.

Of course, it’s all contingent upon reaching a final ‘Withdrawal Agreement’ between the United Kingdom and the European Union, but it’s not too much of a stretch to suggest that the UK would act unilaterally to guarantee the rights of EU citizens working or studying in Britain in the case of no agreement.

Theresa May also offered £40 billion of UK taxpayer money to the European Union; Everyone is unclear what this is for, as nobody from the government has bothered to explain it to citizens.

Many people think that the UK’s share in the EU Parliament buildings and in other EU properties and assets should be sold off to the other EU27 members and the £9.65 billion (estimated) value could be used to pay future UK liabilities to the EU and that there is no need to pay £40 billion. Which seems reasonable.

If there is an actual need for the UK to pay £40 billion to the EU, surely British taxpayers have the right to know what they’re paying for, and to whom.

But if Theresa May has agreed to continue paying the £8.6 billion annual net payment to the European Union until Brexit completes within 2 years (approximately) plus 2 more years to cover the transition period, then that seems pretty reasonable too. If that’s how the £40 billion is being arrived at, there’s not much to complain about there.


With all this reasonableness going ’round it’s no wonder EU negotiators agreed to move to Phase II of Brexit negotiations — trade — a hyper-important part of the post-Brexit relationship on both sides of the English Channel.

Negotiating a mutually beneficial trade agreement between the UK and the EU in 2018 is Job Number One for negotiators on both sides.

Trade between the United Kingdom and the EU27 ranks as one of the most robust trading relationships in the world

  • 44% of UK exports are sold to the EU27, making them Britain’s most important trade partner.
  • 16% of EU exports are sold to the UK, making Britain the EU27’s most important trade partner.

Which makes the whole ‘getting an agreement’ discussion largely academic — as there will be an agreement or hundreds CEO’s on both sides of the English Channel will be breathing fire down the necks of UK and EU negotiators every day until an agreement is reached. “Don’t even think about coming home without an agreement!” (Yes, just like that)


UK/EU Trade: Where do United Kingdom Exports Go?


Where do UK exports go? UK Office for National Statistics 2015.


UK/EU Trade: Where do European Union Exports Go?


The EU's largest single export market is the UK. European Commission Export Helpdesk.


So There We Have It: They Can’t Live With Each Other, But They Can’t Live Without Each Other!

Which is a very good thing.

And because companies on both sides need to keep their biggest export market open and flourishing, there absolutely will be a reasonable trade deal — one that both sides can live with. There is simply no alternative.

Which neatly explains the title of this blog post ‘Theresa May’s New Year of Hope’ because Job Number One for Brexit negotiators on both sides must be working a successful trade deal — and every CEO in Europe will be watching with keen interest, to put it very mildly.

You don’t want to be the trade negotiator coming home without a deal and having to tell the CEO of Volkswagen or BP that you were too incompetent to get a deal. Yikes!

There will be an excellent UK/EU trade deal in 2018, a trade accord that both sides will be rightly proud of — one that works for CEO’s, citizens and governments throughout Europe.


Trade As Saviour

As the focus will be on trade in 2018 (something that both sides must preserve if today’s politicians want to keep their jobs) the new year looks to be one of the better years for relations between the UK and the EU27.

Let’s hope that Phase II of the Brexit negotiations move smartly along and that (if a Phase III is required) the momentum that gets built throughout 2018 works to facilitate friendly and workable solutions to any remaining issues between the two blocs.

Politicians and negotiators on both sides of the Brexit divide have everything to gain by bringing home a fair and workable trading agreement and everything to lose if they don’t.

Therefore, let 2018 be ‘The Year of Hope’ as 512 million European citizens are counting on their politicians and negotiators to open windows of opportunity as big as the sky, and to create even more justice and fairness for all Europeans, no matter where in Europe they may live, work, or play.

No matter which side of Brexit you’re on, the kleef&co team wish you a Happy, Safe, and Prosperous New Year!

Written by John Brian Shannon