NEWS,17.08.2012

What U.S. and Iranian Leaders Can Do to Avert War

 

It is clear that if U.S. and Iranian political leaders continue down the present course they will almost certainly lead us into another bloody war. Out of empathy for those who will do the fighting and dying, here are a few things they can do to avert conflict:

• U.S Political Leaders: Have the courage to stand up publicly to AIPAC lobbyists and their supporters who would pressure you to send our troops into another preventive war. While it remains unclear whether the Ayatollah Khamenei is sincere or engaging in strategic deception when he says that nuclear weapons are forbidden to Iran, he is almost certainly more likely to pursue them if he feels that his government is being backed into a corner with no way out.

• Iranian Political Leaders: Disavow statements made by President Ahmadinejad that have been interpreted as genocidal toward Israel. Your president's threatening statements in the context of your nation's nuclear pursuits -- whether peaceful or not -- have arguably done more harm to your cause than almost any other statement you've made or action you've taken. Israel not only appears to be poised to attack you unilaterally but will probably draw the U.S. in as well if it does. Your president's inflammatory and threatening rhetoric may result in a conflict that will likely cause great suffering to you and your people. On the other hand, the international community would undoubtedly be more open to your pursuit of nuclear energy if you distanced yourself from such irresponsible and seemingly irrational statements.

• U.S. Political Leaders: Stand up for American principles by imposing real political and economic costs on Israel for its settlement expansions and denial of Palestinian rights. Continued economic aid should no longer be a given but, rather, should be contingent upon the Israeli government's demonstrated progress in this area. American policymakers' selective application of human rights standards on this issue is an affront to the Muslim world as well as to American values and can only exacerbate the U.S.-Iran diplomatic situation.

• Iranian Political Leaders: Fully comply with IAEA inspections to allay the international community's concerns over alleged clandestine nuclear weapons sites. Time is needed to build trust. Set aside your pride and compromise on higher levels of uranium enrichment in order to avoid provoking U.S. and Israeli alarm. Viewing the unfolding of events from the U.S., it appears that American policymakers are poised to make the same foolish mistake they made with Saddam Hussein: that the absence of proof that your government is not engaged in nefarious activities means that you must be. Don't play into the hands of U.S. and Israeli hawks by playing Saddam's guessing game.

• U.S. Political Leaders: Acknowledge the courage behind such concessions if Iranian leaders commit to them and offer them more in return: not only alleviation of sanctions but positive economic and political incentives as well.

While there is no guarantee that these steps will lead to a peaceful outcome, continuing down the current road will only lead to greater economic deprivation and bloodshed. Though the current diplomatic impasse may appear insurmountable, commit to a renewed effort while there is still time. You owe it to the men and women you will be sending into battle if you fail.

Is Italy in Denial of Its Public Debt?

 

This week, the amount of government debt of Italy at the end of June was published: 1,972 billion euros. By this time it must have exceeded 2,000 billion euros ($2.4 trillion).Mario Monti, the Prime Minister cum Minister of Finance, toured the capitals of Europe to obtain support for Italy, indicating that Italian sentiment would turn anti-Euro without such help. He chose Berlin to accuse Germany of profiting from the European sovereign crisis. Needless to say, it immediately backfired. It was, to put it bluntly, particularly stupid. In an interview with the Wall Street Journal he stated: What we ask is that European authorities certify Italy's good conduct by translating that into interventions to keep spreads within reasonable limits. I have often told Merkel that, if this isn't done, she risks finding herself before an Italian parliament that repudiates Europe, monetary stability and the euro and is not friendly toward Germany.What is worse, however, is that he sent completely contradictory messages: he said that the European crisis was reaching the end of the tunnel.The reality is much scarier: Italy is facing 500 billion euros of refinancing and deficit financing between now and the end of 2013. The measures taken by the Italian Government did not translate into an interest rate decrease, let alone a debt decrease.When he states that Italy does not need a bail out he is right: not that Italy is not in need, but that there is no way the current resources, even if they were entirely allocated to Italy, would be sufficient to bail the country out.What is currently missing, however, is a serious crisis debt management. It would be perfectly possible to launch a consolidation bond issue, open to holders of 2012 and 2013 debt. With a maturity of 5 years and an interest rate of 5 percent it would not require any haircut from the banks and it would help the country bridge the reimbursement gap of the next two years.But Italy is scared to propose what would be a voluntary transaction. Should there be an increase in its refinancing rates, it would be a disaster.This lack of debt management might create the perfect conditions for a European tornado that would affect global markets everywhere. France would definitely be next. The main source of discontent for the investors is not only those facts. It is the benevolent way with which the Italian Treasury is handling the problem, shortening the maturities of its bonds,and not increasing its refinancing risk.We are talking about actions, not words. E la nave va...

World execs have confidence in Obama

Twice as many business executives around the world say the global economy will prosper better if incumbent US president Barack Obama wins the next election than if his Republican challenger Mitt Romney does, a poll showed on Friday. Democrat Obama was chosen by 42.7% in the 1 700 respondent poll, compared with 20.5%for Romney. The rest said "neither". The result was different among respondents in the United States, where a slim majority thought Romney would be better for their businesses than Obama.Obama maintains a seven-point lead over Romney among registered voters in the race for the November 6 presidential election, despite the fact Americans are increasingly pessimistic about the future, according to a Reuters/Ipsos poll conducted last week. The FT poll was conducted before Romney picked Wisconsin Congressman Paul Ryan as his vice presidential running mate at the weekend, a move that could dramatically shift the election debate between two sharply contrasting views of government spending and debt. Romney's choice for running mate gave him no immediate boost to his White House prospects.