- The Old Normal Andrew Bacevich, Harper’s
- “Iran Doesn’t Want War but has a big appetite for risk” War on the Rocks
- Nice try, economists Arnold Kling, askblog
- Against “aggregate demand” Chris Dillow, Stumbling and Mumbling
Iran has asked the International Monetary Fund (IMF) for emergency funding (it is for the first time since 1962 that Iran has sought IMF assistance) to fight the deadly Corona Virus outbreak (COVID19).
As of Saturday, March 14, 2020, Iran reported over 600 deaths (611) and over 12,000 cases arising out of the deadly virus. That makes Iran the third most affected country in the world after China and Italy. A number of prominent personalities, including the country’s Vice President (Eshaq Jahangari) and two other senior cabinet members, have contracted the virus.
On Wednesday, March 4, 2020, the IMF’s managing director, Kristilina Georgieva, stated that developing countries will be supported in their efforts to take on the Corona Virus through the Fund’s Rapid Financial Instrument. The IMF announced a $50 billion aid package with the aim of specifically assisting ‘low income’ and ‘emerging market’ economies. (On Monday, the World Bank had announced a $12 billion package to deal with the epidemic.)
Iran’s Central Bank chief, Abdolnaser Hemmati, said on Thursday that he had written to the IMF requesting $5 billion in emergency funding via the latter’s Rapid Financing Instrument. In a tweet on Thursday, the Iran’s Foreign Minister, Javad Zarif, urged the IMF to release this amount immediately. The Iranian Foreign Minister also said that Iran was facing a severe shortage of medicines and equipment. US sanctions on Iran, which have prevented it from selling oil or participating fully in the world’s financial ecosystem, have had a detrimental impact on the country’s economy. Iran, in a letter to the UN Secretary General Antonio Guerres, stated that US sanctions should be suspended keeping in mind the current crisis.
Even if the IMF were to agree to releasing $5 billion for Iran, there are a number of obstacles that may result in Iran not being able to get the money from the IMF. First, the US is part of the IMF’s decision-making board (interestingly, in his tweet Zarif had stated that the IMF/IMF board should act responsibly) and even if the IMF agrees to disburse the amount, given the strains between Washington and Tehran it is quite possible that the US will veto such a move by the IMF. If Trump is willing to annoy US allies like the EU (on Wednesday, Trump took a decision to suspend flights from 26 Schengen countries to US, for a period of 30 days without consulting the EU), there is no reason why he will adopt a nuanced approach towards Iran.
Second, the Financial Action Task Force (FATF) has blacklisted Iran, which means that even if IMF agrees to provide the loan, banks and financial institutions can block such transactions.
Corona Virus is an opportunity for the US to exhibit statesmanship and maturity, and also lower tensions with Iran. While Trump has claimed to being open towards engaging with the Iranians, and seems to have changed his approach towards Tehran, he has not really exhibited much statesmanship in dealing with Tehran. Ever since the killing of Iranian General Qasem Soleiman (a major general in the Islamic Revolutionary Guard Corps) in a drone attack, in January 2020, ties went further downhill.
Opportunity for the US
This is an opportunity for the US to send a positive message to the international community, and to also distinguish between the Iranian public and its political class. China’s messaging with regard to helping the international community has been far better. On March 12, 2020, a team of Chinese doctors reached Italy (Italy, which is the most worst hit nation after China, had requested assistance from the latter). A number of Italian leaders have also criticised EU countries for being slow in reacting to Italy’s call for assistance.
Positive steps taken by China
What is also significant is that at a time when Washington and Beijing have been engaged in unnecessary mud-slinging with regard to the virus, with the US Secretary of State Mike Pompeo dubbing the Corona Virus as ‘Wuhan Virus’, and a senior Chinese diplomat responding by calling it a ‘conspiracy’ by the US army, on Friday March 13, 2020, Chinese billionaire Jack Ma stated in a tweet that he would donate one million face masks and 500,000 corona virus testing kits to the US. Earlier, Jack Ma’s charitable foundation, and his China-based company’s foundation, the Alibaba Foundation, had already donated supplies to a number of countries including Japan, Korea, Italy, Iran, and Spain.
In case, the US does not agree to provide immediate assistance to Iran, other countries should step in including US allies like the UK, EU member states, and Japan. It is also important for multilateral organizations to show their teeth and not allow petty politics to come in the way of the fight against COVID 19. The Corona Virus is a clear reiteration of the point that while there may be numerous problems with economic globalization, we live in a truly interconnected world however much we may try to obliterate this fact. Humanity should trump petty politics and bickering, and this is an opportunity to revive the true spirit of internationalism.
- The perils of sacrificing sovereignty to gain sovereignty Michael Koplow, Ottomans & Zionists
- State capacity libertarianism and the Chinese model Scott Sumner, MoneyIllusion
- A thought experiment in distributed government Rick Weber, Notes On Liberty
- Trapped in Iran Nicolas Pelham, 1843
Classical liberals will not be surprised by the repeated occurrence of violence and war in the Middle East and will understand the realities of the unstable region where Iran is an important player. Their analysis will view the regional balance of power in the context of the global balance of power. They will also take account of the history of US-Iranian relations […]
This is from fellow Notewriter Edwin, writing for the Institute for Economic Affairs in London. It was part of a nightcap a few days ago, but I thought I’d give it some more love with a post of its own.
Edwin likes to use the “balance of power” strategy to explain the classical liberal position (check out his now classic article in the Independent Review), but I don’t know how true this is. Traditionally, hasn’t the balance of power method been favored by conservatives like Metternich and Kissinger?
I know he’ll respond by telling me that I have a socially liberal view of IR because I favor more federation, but I don’t know how true this is either. Shouldn’t trade-offs and cooperation in the context of power take precedence in classical liberal theories of IR? What sounds more liberal to you, then: a strategy of balancing power between separate actors, or a strategy of finding trade-offs and binding actors together in a manner (federal) that maximizes those trade-offs?
The past few days have been witness to some important statements made in the context of the Joint Comprehensive Program for Action (JCPOA) — also referred to as the Iran Nuclear deal. US allies, including the UK and some EU member states, do not seem to be in agreement with the US President’s Iran policy in general, and especially his inclination towards scrapping entirely the JCPOA.
Boris Johnson’s interviews and his comments on the JCPOA
In an interview to the BBC on January 14, 2020, British Prime Minister Boris Johnson stated that the JCPOA could be renegotiated, and seemed to be accommodative towards Trump. Said Johnson: ‘Let’s work together to replace the JCPOA and get the Trump deal instead.’ Johnson’s remarks came a day after the UK, Germany, and France had issued a joint statement announcing that all three countries were totally in favor of keeping the JCPOA alive. The UK, Germany, and France had also said that they were keen to ensure that the nuclear non-proliferation regime is kept intact, and that Iran is prevented from developing nuclear weapons.
Earlier, in a telephonic conversation last week with Johnson, US President Donald Trump told him that the deal was ‘foolish‘ and that the other signatories should also walk out of it.
During the course of his interview with the BBC, which happened to be Johnson’s first interview with the media after the victory of the Conservative Party in the UK’s recent general election. Johnson, while having a dig at Trump, said that the US President thought himself of as a good negotiator, as did many others. Johnson also made the point that the current deal had been negotiated by Trump’s predecessor, Barack Obama, and alluded that this was one of the key reasons why Trump wanted to renegotiate the JCPOA.
Members of Johnson’s cabinet and their comments on the Iran deal
UK Foreign Secretary Dominic Raab, while criticizing Iran for failing to meet with the compliances related to the JCPOA, also stated that the UK is keen to keep the deal intact. Before Raab, another member of Johnson’s cabinet, British Defence Secretary Ben Wallace, had also indulged in some straight talk, lambasting the Trump administration for its increasingly isolationist approach towards global issues, and Trump’s tendency of taking Washington’s allies for granted. Wallace had also stated that US support for the UK’s coalition should not be taken for granted.
Responses of Trump and Rouhani to Johnson’s remarks
Trump’s response to Johnson’s suggestion regarding a fresh JCPOA was predictable: he welcomed it. Meanwhile, Iranian President Hassan Rouhani, in an aggressive address on January 15, 2020, lashed out at the EU and UK, saying that all Trump knew was violation of contracts, so there was no question of a new Iran deal.
Interestingly, Johnson in his interview to the BBC, had also said that there was no real need for the UK to have been informed in advance by the US with regard to the killing of Iranian General Qasem Soleimani. It would be pertinent to point out that not just members of the Labor Party, but even a senior Tory MP, Tom Tugendhat, who is also a former chairman of the Commons Foreign Affairs Committee, criticized the US for not consulting the UK.
This brings us to another important point. While Johnson’s main challenge is perceived to be the withdrawal of the UK from the EU by January 31, 2020, there are likely to be important differences between Washington and London over dealing with Iran. A close advisor of Trump, Richard Goldberg, who until recently was a member of the White House national security council (NSC), has already stated, for example, that if Johnson wants a UK-US Free Trade deal, the UK should immediately pull out of the Iran deal.
US-UK FTA and Trump’s support for the same
Trump has been in favor of a Free Trade Agreement (FTA) with the UK (which happens to be the 5th largest trading partner of the US) for some time. In fact, in his congratulatory tweet to Johnson after his victory in December 2019, Trump had said that Britain and the U.S. will now be able to forge a significant new trade deal after Brexit. At the G7 Summit in 2019, Trump had spoken about how the US would sign a pathbreaking trade deal with the UK, post Brexit.
It has been argued that while the conservative lobby in both the US and UK has been in favor of bilateral FTA, there are lobbies in both countries which are fervently opposed to such an idea. It also remains to be seen whether the Trump Administration is serious about imposing conditionalities on the UK regarding the FTA — such as, supporting the US stance vis-à-vis Iran. Given the reactions by some members of Johnson’s cabinet (to Trump’s handling of the Iran issue), it is tough to really predict the UK’s reaction.
Not just Iran, US-UK also differ over Huawei
Another issue that could be an impediment to the further consolidation of economic and strategic relations between the US and the UK is the British use of Huawei’s hardware for the development of next-generation 5G wireless networks. Johnson’s predecessor, Theresa May, had stated that non-core technologies of 5G were acceptable while core parts would be banned. At a meeting of the National Security Council (NSC) in 2019, some of May’s colleagues, including Jeremy Hunt (then Foreign Secretary), Sajid Javid (then Home Secretary and now treasury secretary), Gavin Williamson (then Defence Secretary), and Penny Mordaunt (then international development secretary), had opposed May’s decision. Interestingly, Williamson had been sacked for allegedly leaking the proceedings of the meeting.
Johnson’s approach towards Huawei
In the interview to BBC, Johnson stated that he did not want to jeopardize cooperation with any of the other “5 Eyes Intelligence alliance partners” (Australia, Canada, New Zealand, and the US are the other members of this network). While hinting at the US stand on Huawei, Johnson said that those criticizing one technology also needed to provide an alternative.
Differences between US and other allies over other crucial economic and strategic issues
It is not just the UK but other allies, like India, who will be closely watching Trump’s approach on crucial geopolitical issues. For instance, the US had earlier stated that India would get a waiver from CAATSA (Countering America’s Adversaries Through Sanctions Act) even if it went ahead with the purchase of S400 missiles from Russia, but a State Department spokesperson recently commented on the waiver to India and stated that there was no blanket waiver. Of course later, the State Department spokesperson did clarify that the US views these issues on a case by case basis.
If one were to look at the scenario for bilateral relations between the UK and the US (defined as a ‘special relationship’ first by Winston Churchill in 1946), there are numerous challenges. There is a tendency to oversimplify bilateral relationships by looking to the personal chemistry of leaders or to leaders’ ideological inclinations, as in the case of Johnson and Trump. There are likely to be a number of obstacles which may come in the way of the bilateral relationship (discussed above).
In addition to this, there is a note of caution for other allies like EU member states (especially Germany and France), Canada, and Japan, which have already borne the brunt of Trump’s insular economic policies, and his myopic and transactional approach towards complex geopolitical issues.