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Brexit – Well That Wasn’t Meant to Happen But There’s Democracy For You.

The cliches maybe old and tired but they usually contain an element of truth this time on what happens now in UK politics – it’s anyone’s game, all is possible, the cat is out of the bag and who knows what tomorrow brings or the worst possible outcome of all would be cry havoc and let slip the dogs of war as Europe has often witnessed, and recently too with Bosnia in 1990’s and Ukraine now although on the EU periphery it’s geographically part of Europe.
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Brexit: The Great Tory Tear up and Why Britain is Better Bumbling Along.

The polling cards have been delivered and the debate is at large for the referendum on the United Kingdom remaining or leaving the European Union on the 23rd June 2016.
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Building a Wall to Stop Immigrants is the Last Piece of Infrastructure the USA Needs.

Republican Presidential Nominee apparent for the 2016 election (unless the Republicans can depose him at their convention) Billionaire property tycoon Donald Trump as part of his electioneering bravado has promised to construct a wall along the Mexican border to stop illegal immigrants from entering the US.
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Out and Proud with Ruth: Has the Tory Tide Turned in Scotland?

The election result was never in doubt in the May 2016 Scottish Parliament elections it was more about who came in second place. The governing SNP won the election easily with 63 out of the 129 seats only 2 short of an outright majority although losing its parliamentary majority did take the shine off an otherwise good result again for the SNP.
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What kind of a billionaire would you be?

US Republican nominee frontrunner Donald Trump appears at the moment to be the billionaire who has both the magic and the pong touch. He appeals to a section of disaffected voters across America, yet causes dismay and bemusement elsewhere. However, with his comments on whether women should be punished for abortion or not he has, bluntly put, handed Democratic front runner Senator Hilary Clinton a big club to beat him with.
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Floods, Brexit and Migration with Weak Economic Growth and Tumbling Markets Makes 2016 A Tough Year Already.

There may have been a brief stock market rally late in 2015 and any expressed wishes for its continuance have been dashed as 2016 so far has been a tough one for many people and not just investors. Here in the UK floods have battered the country especially in Yorkshire, Cumbria and Scotland.
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2016: What’s Coming – the Good, the Bad or Mediocrity.

Another year starting so what’s in store for investors and markets?

In 2015 the GDP of the US economy grew at 2.4%, the UK did 2.5% and the EU managed 1.5% with all its currency and migrant upheavals (GS, 2015). China slowed down yet still reported 6.9% causing investors or speculators a heap of disappointment or margin call troubles depending on what figures one believes. India performed better at 7.4% and seems to have the confidence of pundits for an improvement in 2016 to 7.8% (GS, 2015). Let’s hope so, as India the world’s largest democracy, has disappointed before and there’s still plenty of debt and cronyism in its large institutions.
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Corbyn’s Secret War Yet Public Disarray.

The Labour party is in trouble and HM Opposition isn’t functioning properly. In an autumn statement where the UK Chancellor George Osborne announced U-turns on tax credit reform and public spending budgets including the police and with cash for military spending too. The Labour party had a golden opportunity to attack and ridicule the Conservative government for its change of heart and to question the soundness of their economic policies and assumptions for future growth.
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Better to Be an Investor or a Speculator in Volatile Markets and Now with Marching Migrants?

During the spring of 2015 major equity market indices such as the S&P500 and the FTSE100 made record highs and most equity investors had a reasonable start to the year. However over the course of the summer, especially since August, these same indices along with share valuations have tumbled sharply. Widely discussed by politicians, economists and pundits is how it will effect or portray the true state of the economy now and in the coming months.
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Summer Pursuits: Iran

Part 2: Iran’s Nuclear Deal: Road to Peace or Road to War?

The long protracted Iranian deal over nuclear development restrictions coupled with sanction lifting between Iran and the 5 permanent members of the UN Security Council, namely the US, China, France, the UK, Russia plus Germany (G5+1), has been reached. It was announced on the 14th July 2015 to the world by both the Iranian President Hassan Rouhani and US President Barack Obama to jubilation in Tehran and sharp criticism in the US and unsurprisingly Israel.

Basically, the nuclear deal reduces the number of Iranian centrifuges by 66%. It places bans on uranium enrichment at key facilities, and limits further research and development (CNN, 2015). More complicated and where difficulties are sure to arise are with the inspections of nuclear facilities and military bases, Iran needs to agree to them beforehand, and if conditions are violated economic sanctions, which are to be lifted as part of the deal, will be reapplied.

The potentially contentious issue of inspections and access to military bases, reminiscent of the UN weapons inspectors in Iraq before the 2003 US-led invasion, was predicated by a remark from supreme leader Ayatollah Ali Khamenei to senior Iranian politicians, one whom relayed the story to an FT journalist, recalling when Iraq attacked Iran in 1984 they were unprepared and had to scrounge missiles from other countries like Libya and this has not been forgotten by the Iranian leadership.

It is why any future granting any inspections to its military sites, under the nuclear agreement, would be a major achievement for Iran and Group 5+1 for garnering the most co-operation since the 1979 revolution changed Iran’s relationship with the West.

Yet achieving agreements to access each military base, research or nuclear facility will remain a point of contention whether as not Iran can bear to open its military and industrial secrets to scrutiny, and reliving a past humiliation under the gaze of the Great Satan (FT, 1980’s War, 2015). The country wants to both defend itself and develop its capabilities against its perceived enemies to avoid annihilation or invasion as befell its neighbours, Iraq and Afghanistan, remains potent.

Therefore, credit is due to the Group 5+1 group to achieve these concessions under the announced deal with Iran, the negotiations were headed by US Senator John Kerry and Iranian foreign minister Mohammad Javad Zarif with presidential backing. However, Supreme Leader Ayatollah Ali Khamenei gets the final say on entry to the military bases.

What wider issues will make him allow inspectors in and the deal to remain intact including lifting trading sanctions?

This has much to do with the large young population wanting to take part in the wider world as seen in the democracy demonstrations in recent years, especially after the 2011 re-election of President Mahmoud Ahmadinejad.

The Economist magazine’s front cover for 18th-24th July 2015, “Hiyatollah” showing Ayatollah Ali Khamenei giving a peace sign, wearing a CND badge and sunglasses is an irreverent poke at the difficulties ahead yet reflecting the opportunity that is presented, certainly initially, with this historic deal (Economist, 2015).

Predictably Israel is concerned, and understandably, as they face a threat of annihilation from Iran and its satellite groups of Hezbollah and Hamas, and their support of the Assad Regime in Syria along with Russia too (see summer pursuits part.1).Prime Minister Benjamin Netanyahu’s tweet of the deal being,” a historic mistake” underscores the frustration as its announcement.

Saudi Arabia has misgivings too as Iran is a religious and regional political rival with vast oil supplies, the proxy war in Yemen is a manifestation of these tensions. The US Congress in both houses and parties will fight this deal all the way through its approval stages. In the US memories remain fraught of the Iranian hostage crisis in 1979-81 and trust of Iranian motives is low. It will take some real progress on inspections to convince the US that Iranian motives are genuine and have changed to participatory state from pariah.

Where’s the hope and motivation then to make these changes in behaviour?

The Theocracy and its Republican Guard Corps (IRGC) have more to lose than regional wars as the burgeoning young population want to experience not only more democracy but also its lifestyle, media and fashions. Many Iranians, although not all, has a different revolutionary zeal from 1979 which created the Sh’ite regime, one of pleasure and for shared experience and travelling to the West. An article in the FT magazine on the 30/31st May 2015 highlights my thoughts of a country looking to move away from theocracy, if theocrats and IRGC allow it (FT Magazine, 2015).

Its economy needs investment for its infrastructure especially its oil and energy sectors and to provide the opportunities it requires after years of crippling sanctions. Iran certainly has the cultural and historical heritage to have a burgeoning tourist industry. Iranian oil and its effects on production levels and global prices will affect the global oil and gas industries and have wider economic impacts on inflation and global demand in the months ahead after this historic deal.

Unhelpfully, the regime will spend some of the proceeds of sanction lifting on supporting its armed satellite forces which will then be lost to the ravages of war in places like Syria until a peace of sorts, inevitably involving Iran’s co-operation, for the containment of ISIS occurs and elsewhere where its influence is present (see summer pursuits part.1). This is a bullet worth biting to achieve a bigger benefit.

The shortcomings of the regime remain yet not to give this an opportunity to flourish would just lead to further regional tensions and wars which would hamstring and hold back (or even utterly destroy) a large chunk of the Iranian population keen to break out of its pariah status. Further wider regional benefits would follow if the deal can remain intact and normal diplomacy and trade was achieved.

I think President Rouhani and Ayatollah Ali Khamenei know this and keeping their theocracy intact as much as possible in the long run is better than losing it through changes in demographics and the ravages of time. For the EU and the US it’s an export market in a world of low or lowering growth prospects (e.g. China).

For President Obama this will be his foreign policy legacy if it holds, for Saudi Arabia and the wider Middle East –let’s see and hope for the best for a better behaved Iran.

LDC

Note: The August blog-will look at UK construction, housing, and infrastructure prospects with a comment on architecture.

Further reading and references:

Cable News Network; (2015); “Landmark Deal Reached on Iran Nuclear Program”, by J. Mullen & N. Robertson, Turner Broadcasting System, Inc. Website accessed 19th July 2015: edition.cnn.com/2015/07/14/politics/iran-nuclear-deal/

Economist Newspaper; (2015); “Hiyatollah!,” Front Cover, The Economist Newspaper Limited, London UK. Website accessed 22nd July 2015: www.economist.com/printedition/covers/2015-07-16/ap-e-eu-la-me-na-uk

Economist Newspaper; (2015);“ Hiyatollah! The nuclear deal with Iran is better than the alternatives—war or no deal at all”, Leader, The Economist Newspaper Limited, London UK. Website accessed 22nd July 2015: www.economist.com/news/leaders/21657803-nuclear-deal-iran-better-alternativeswar-or-no-deal-all-hiyatollah

Financial Times; (2015); “Hurdle in Iran Nuclear Talks Harks Back to 1980s war with Iraq”, by Najmeh Bozorgmehr, Financial Times Ltd, London UK. Website accessed 25th June 2015: www.ft.com/cms/s/0/aa598862-1984-11e5-a130-2e7db721f996.html

Financial Times; (2015); “An Iran Deal That is both Historic and Imperfect,” by Editorial, Financial Times Ltd, London UK. Website accessed 25th June 2015: www.ft.com/cms/s/0/9f221ad6-2a32-11e5-8613-e7aedbb7bdb7.html#axzz3gNVF6NZo

FT Magazine; (2015);“Iran’s Generation Normal’, by Roula Khalaf, Financial Times Ltd, London UK. Website accessed 22nd July 2015: www.ft.com/cms/s/2/b110ec2e-04b0-11e5-95ad-00144feabdc0.html