Let’s agree to disagree. That was the tone of politics this week as the saga continued in both Iran and Greece. US President Obama was quick to claim the historic significance of an accord between Iran and 5 nations from the United Nations security council. The low level of expectations around the talks is perhaps best illustrated by the relative surprise of journalists at the few measurable specifics, in particular the reduction in quantities of fissile material and facilities. But to say that there is an “agreement” is overstating the situation. In reality, it is a framework around which other agreements must be made to have an actual deal. Whether this progress report is a political move to draw out critics and temperature check the constituencies on both sides is yet to be seen. Understandably, skepticism is high and vocal. There is not much clarity on the lifting of sanctions that Iranian President Rouhani has set as a platform. From a security perspective, it seems to us that the 15 year horizon on nuclear program limitations is just a blip of time in the historical scheme. How will Middle Eastern neighbors with a longer memory react? A race to nuclear weaponization in the Middle East may not be as “cold” as the US/Russian experience. Somewhat lost in all the politics is the human cost of people on all sides wanting a safe prosperity that has not existed for quite some time.
A different sort of confrontation continues in Greece. Greek Prime Minister Alex Tspiras is running out of options as the brinkmanship reaches a break point. Next week Thursday, Greece owes 450mm EUR to the IMF under the current bailout terms. The Greek banking system remains under stress as worried depositors pull money. The European Central Bank (ECB) has continued to support the financial institutions through the national central Bank of Greece under the Emergency Liquidity Assistance (ELA) program, for now. Meanwhile, PM Tspiras is set to travel to Moscow in a likely attempt to show that perhaps Greece can have other friends than the Troika. While this would appeal to the ego of Russian President Vladimir Putin in a show against the strength of Germany, it is a tough time for Russia to extend financial assistance during their sanction-driven recession (not to mention the potential irony of the Greek PM’s resistance to “oppression” by seeking help from Putin). While there is some notice of this proverbial fork in the road by the markets (Greek sovereign yields on the rise), it appears mostly localized giving the market’s opinion that this situation remains contained. Let’s hope Pandora did not have a second box.