Iran Sanctions Regime Could Unravel with Failed Nuclear Deal

Representatives from Iran and the P5+1 pose for photos after talks concluded in Lausanne, Switzerland on April 2, 2015. Credit: US State Dept/public domain

Representatives from Iran and the P5+1 pose for photos after talks concluded in Lausanne, Switzerland on April 2, 2015. Credit: US State Dept/public domain

By Jasmin Ramsey
WASHINGTON, May 26 2015 (IPS)

Internationally supported sanctions against Iran could begin to crumble if talks over Iran’s nuclear programme fail to produce a final deal, according to Germany’s envoy to the United States.

“The alternatives to the diplomatic approach are not very attractive,” said Ambassador Peter Wessig Tuesday.While domestic politics in the key capitals of Tehran and Washington could ultimately prove to be the greatest barriers to a final deal, all sides seem to be waiting until after the deadline to make more moves.

“If diplomacy fails, the sanctions regime might unravel…and we would probably see Iran enriching once again as it has done before the negotiations started,” said the diplomat during a panel discussion in Washington at the Atlantic Council.

The sanctions that have ravaged the Iranian economy face far less risk, however, if Tehran were seen as responsible for the failure, according to the United Kingdom’s envoy to the U.S.

“If there is not a deal because the Iranians simply will not live up to [their obligations] or [fail to] implement…then I think we carry on with the sanctions regime and in certain areas it may be right to try to raise the level of those sanctions,” said Ambassador Peter Westmacott.

But Westmacott agreed with his German counterpart that if Iran were not to blame, the sanctions regime could fall apart.

“At the same time, if we were to walk away or if the [U.S.] Congress was to make it impossible for the agreement to be implemented…then I think the international community would be pretty reluctant, frankly, to contemplate a ratcheting up further of the sanctions against Iran,” he said.

“A number of countries” already “don’t respect” sanctions and are buying Iranian oil, he added.

Looming Deadline

Ahead of the June 30 deadline for reaching a final deal, Iran will resume the negotiations with representatives from the P5+1 or E3+3 (the five permanent members of the U.N. Security Council plus Germany) Wednesday in the Austrian capital of Vienna.

Talks with Iran over its controversial nuclear program have been ongoing since 2003, when France, Germany and the United Kingdom (the E3) began to engage Iran in an attempt to limit its nuclear programme.

Iran contends its programme has always been peaceful. The United States intelligence community has assessed that Iran was previously working towards mastering the nuclear fuel cycle, but has not restarted a nuclear weapons program.

“It’s a political decision for them. Not that they don’t have the technical wherewithal, the technical competence, because they do,” said the U.S. Director of National Intelligence James Clapper March 2 on PBS’ “Charlie Rose” show.

Although Iran and its negotiating partners have made several historic diplomatic strides since an interim nuclear agreement was reached 2013 in Geneva—notably the ongoing high-level direct contact between previously hostile Tehran and Washington—the talks have yet to produce a final deal.

It’s unclear how much progress has actually been made in the complex private negotiations since a preliminary framework agreement was declared on April 2, but the parties are currently in the drafting phase.

The French ambassador to the United States, Gerard Araud, wasn’t optimistic during the Atlantic Council event.

“It’s very likely that we won’t have an agreement before the end of June or even (right) after,” he said.

“Even if we get the best deal … afterwards, you will have to translate it into the technical annexes, so it may be … we could have a sort of fuzzy end to the negotiation,” he added.

High Stakes

While domestic politics in the key capitals of Tehran and Washington could ultimately prove to be the greatest barriers to a final deal, all sides seem to be waiting until after the deadline to make more moves.

But patience is running thin among key Iranian and American lawmakers, who have made no secret of their opposition to the talks. If no deal is reached by Jun. 30, the door to a wave of domestic criticism in both capitals will once again be wide open.

Peter Jenkins, who previously served as the U.K.’s permanent representative to the International Atomic Energy Agency and the United Nations, told IPS that even if Iran were blamed for the breakdown of the talks, it wouldn’t end up totally isolated.

“I doubt the non-Western world will be ready to believe that the blame for a break-down lies solely with Iran,” said Jenkins.

“They will suspect that some of the blame should be ascribed to the U.S. and E.U. for making demands that go well beyond the requirements of the Nuclear Non-Proliferation Treaty. So those of them that have been applying sanctions may break away,” he said.

“In the West, however, most countries will believe what the U.S. instructs them to believe and will continue to apply sanctions if required to do so by the U.S.,” he added.

As for an impending blame-game, Jenkins said the stakes are too high for everyone to submit to a complete breakdown at this point: “I think it much more likely that they will make a herculean effort to cobble together an agreement over the ensuing weeks.”

“Both sides have so much to gain from an agreement and so much to lose if they squander all that they have achieved to date,” he said.

Edited by Kitty Stapp

Opinion: Finance Like a Cancer Grows

By Roberto Savio
ROME, May 26 2015 (IPS)

It is astonishing that every week we see action being taken in various part of the world against the financial sector, without any noticeable reaction of public opinion.

It is astonishing because at the same time we are experiencing a very serious crisis, with high unemployment, precarious jobs and an unprecedented growth of inequality, which can all be attributed, largely, to speculative finance.

Roberto Savio

Roberto Savio

This all began in 2008 with the mortgage crisis and the bursting of the derivatives bubble in the United States, followed by the bursting of the sovereign bonds bubble in Europe.

It is calculated that we will need to wait until at least 2020 to be able to go back to the levels of 2008 – so we are talking of a lost decade.

To bail out the banks, the world has collectively spent around 4 trillion dollars of taxpayers’ money. Just to make the point, Spain has dedicated more than its annual budget on education and health to bail out the banking sector … and the saga continues.

Last week, five major banks agreed to pay 5.6 billion to the U.S. authorities because of their manipulations in the currency market. The banks are household names: the American JPMorgan Chase and Citigroup, the British Barclays and the Royal Bank of Scotland, and the Swiss UBS.“To bail out the banks, the world has collectively spent around 4 trillion dollars of taxpayers’ money”

In the case of UBS, the U.S. Department of Justice took the unusual step of tearing up a non-prosecution agreement it had reached earlier, saying that it had taken that step because of the bank’s repeated offences. “UBS has a ‘rap sheet’ that cannot be ignored,” said Assistant U.S. Attorney General Leslie Caldwell.

This is a significant departure from the Justice Department’s guidelines issued in 2008, according to which collateral consequences have to be taken into account when indicting financial institutions.

“The collateral consequences consideration is designed to address the risk that a particular criminal charge might inflict disproportionate harm to shareholders, pension holders and employees who are not even alleged to be culpable or to have profited potentially from wrongdoing,” said Mark Filip, the Justice Department official who wrote the 2008 memo.

Referring to the case of accounting giant Arthur Andersen, which certified as valid the accounts of the Enron energy company that went into bankruptcy for faking its budget, Filip said that “Arthur Andersen was ultimately never convicted of anything, but the mere act of indicting it destroyed one of the cornerstones of the Midwest’s economy.”

This was in fact a declaration of impunity, which did not escape the managers of the financial system, under the telling title of “Too Big to Fail”.

Two weeks ago, a judge from the Federal District Court of Manhattan, Denise L. Cote, condemned two major banks – the Japanese Nomura Holdings and the British Royal Bank of Scotland – for misleading two mortgage public institutions, Fannie Mae [Federal National Mortgage Association] and Freddie Mac [Federal Home Loan Mortgage Corporation], by selling them mortgage bonds which contained countless errors and misrepresentations.

“The magnitude of falsity, conservatively measured, is enormous,” she wrote in her scathing decision.

Nomura Holdings and the Royal Bank of Scotland were just two of 18 banks that had been accused of manipulating the housing market. The other 16 settled out of court to pay nearly 18 billion dollars in penalties and avoid having their misdeeds aired in public.

Nomura Holdings and Royal Bank of Scotland refused any settlement and instead went to court against the U.S. government, arguing that it was the housing crash which caused their mortgage bonds to collapse. Judge Cote, however, wrote that it was precisely the banks’ criminal behaviour which had exacerbated the collapse in the mortgage market.

It is worth noting that, until now, the cumulative fines inflicted by the U.S. government on just five major banks since 2008 amount to a quarter of a trillion dollars. No one has yet gone to jail – fines have been paid and the question closed.

Now the question: is all this due to the misconduct of a few greedy managers or is it due to the new “ethics” of the financial sector?

By the way, let us not forget that it was revealed recently that 25 hedge fund managers took close to 14 billion dollars only last year and that the highest paid manager took for himself the unthinkable amount of 1.3 billion dollars, equal to the combined average salaries of 200,000 U.S. professionals.

Well, just a week ago, the respected University of Notre Dame was reported as having published a startling report, based on a survey of more than 1,200 hedge fund professionals, investment bankers, traders, portfolio managers from the United States and the United Kingdom, in which about one-third of those earning more than 500,000 dollars a year said that they “have witnessed or have first-hand knowledge of wrongdoing in their workplace.”

The report went on to say that “nearly one in five respondents feel financial services professionals must sometimes engage in unethical or illegal activity to be successful in the current financial environment” and in any case,  nearly half of the high income professionals consider authorities to be ”ineffective in detecting, investigating and prosecuting securities violations.”

A quarter of respondents stated that if they saw that there was no chance of being arrested for insider trading to earn a guaranteed 10 million dollars, they would do so.

And nearly one-third “believe compensation structures or bonus plans in place at their companies could incentivise employees to compromise ethics or violate the law.”  It should also be noted that the majority were worried their employer “would likely to retaliate if they reported wrongdoing in the workplace.” So, the bonus that goes to those in the financial sector every year practically amounts to a bribe for silence on misconduct.

At the same time, we have learned that in Guatemala the Governor of the Central Bank has been arrested for embezzling 10 million dollars. Of course, everything is a question of scale…but in sociology there is a mechanism called “demonstration effect”.

The example of Wall Street and the City will increasingly seep down once a new “ethic” is in place. It will propagate if it is not stopped … and this is not happening.

A final note. In the same week (how many things have happened in such a short space of time), the Federal Trade Commission of Columbia accused four respected cancer charities of misusing donations worth millions of dollars.

One of them, the Cancer Fund of America, declared that it spent 100 percent of proceeds on hospice care, transporting patients to chemotherapy sessions and buying medication for children. The Federal Trade Commission found in fact that less than three percent of donations was spent on cancer patients.

The “new ethic” is in reality a cancer, and it is metastasising rapidly. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.