Midweekly Overview

Estimated Reading Time: 4 mins, 54 sec.

Biden’s diplomatic team is on point

• So far, every notable appointee dealing with foreign policy/national security issues has delivered reassuring comments in public.

• Blinken admitted that Pompeo/Trump policy on China was correct.

• He even complained that Trump admin did not go far enough in protecting Hong Kong’s democratic movement [agreed].

• Blinken further agreement with Pompeo’s designation of Chinese actions against Uyghurs as a genocide, was just perfect.

• China now is in a silly position with a terrible start - it sanctioned Pompeo [and other Trump gov officials] for that designation.

• Yet here we are with the future State Sec backing that assessment.

• So what will it do now?

• How can it reconcile softening its rhetoric against the new administration, without appearing inconsistent after these sanctions on the old admin leaders?

• Then there is Jake Sullivan and Avril Haines.

• Sullivan responded instantly to Navalny’s arrest demanding an immediate release.

• Avril Haines concurred that being aggressive in China policy is the correct approach.

• She also promised to release reports on the Jamal Khashoggi murder.

• Which obviously was the doing of Saudi Crown prince MBS.

• This is great. Not just because it is a good thing to do.

• But also because it signals that there is a new sheriff in town to Arab ‘‘allies’’ of convenience.

• Arab states relying on American protection and military hardware must not get cocky and dictate terms of the relationship.

• Let’s be real. MBS’s calculations before ordering the brazen and barbaric assassination of Jamal Khashoggi, would have been much different if Trump was not grinning in photos holding massive checks for weapon sales..

• America cannot and must not tolerate barbaric acts from its allies/partners.

• Neither should this sound as overly idealistic.

• This is in fact a matter of realpolitik - America cannot successfully prosecute a case against Chinese atrocities, if its own allies are acting like savages.

• You cannot successfully/convincingly condemn Iran for executing journalists if Saudi Arabia is doing just that - even with more sadism.

Iran is a sinking ship - yet it insists that the "ball is in the U.S. court"

• In a televised cabinet meeting speech, Iranian President Rouhani delivered the following remarks:

• “The ball is in the U.S. court now. If Washington returns to Iran’s 2015 nuclear deal, we will also fully respect our commitments under the pact.”

• As I have been writing in the previous cables, all of the violations up to this day were aimed at creating the new normal - an anchor point for the negotiations.

• A favorable new starting point, where retreat to the old status quo [and by old I mean couple of months] will be presented as a good faith concession.

• Going back to 3.67% enrichment levels will be framed as a difficult decision that Iran would no doubt visibly struggle to make.

• Idea is to operate within the new ‘‘Overton window’’ of the ongoing negotiations - where it is unthinkable to reintroduce demands around Iranian ballistic missile programs/proxy activities.

• Ok, but is it true? Is the ball really in the U.S. court?

• Well who really needs an end to sanctions asap?

• Contrary to what Rouhani claimed, the maximum pressure campaign was far from a failure.

• We can skip on the 2020 Economic KPI figures - partly because COVID-19 undoubtedly had a powerful negative effect on the Iranian finances.

• Also because with the current dire conditions, Iran has even more incentive to falsify key statistics.

• But even a cursory look at the 2018-2019 data [after Trump’s reinstatement of sanctions] shows how much weaker Iranian economy really is.

• Iran's (GDP) contracted an estimated 4.8% and 9.5% in the years 2018 and 2019 respectively.

• Unemployment reached at least 16.8% in 2019.

• Oil production fell from 3.8 bpd in 2018, to 2.1 bpd in 2019. Only a tiny fraction was being exported [impossible to know accurately - since some % was clearly smuggled in secret]. Iranian Rial [national currency] halved in value.

• Living standards plummeted with rising prices - as inflation rose from 9% in 2017 to 35.7% in 2019

• No wonder Iranians took to the streets in November 2019 - only an overwhelming violence ended [or rather postponed] these protests.

• All of that before COVID-19 too.

• Iran must be suffering so bad that it has to resort to a maritime piracy - detaining a crew of South Korean sailors effectively as hostages, in return for its frozen funds in South Korean banks.

• How much longer can it tolerate all this pressure and strain on the economy.

• Once enough % of the population is vaccinated and out of lockdown, where is the guarantee that protests will not resume? With more fervor and determination? Especially in the election year..

• So Iran can claim whatever it wants - real life geopolitics is markedly different from poker.

• In poker, you can hide a bad hand.

• Here, everything is in the open. We know how badly Iran needs this deal.

• Biden administration must not rush into a deal on unfavorable terms.

• As I have said before, concessions around the Ballistic missile program + proxy activities must be demanded with decisiveness.

• It is reassuring that the future State Sec Blinken said he would not rush into the deal - correct approach.

• The ball is and must be kept on Iranian court.

Turkey flirts with Germany

• Turkish President Erdogan made some interesting comments when delivering remarks about Turkey’s desire to join the EU.

• When addressing EU ambassadors, Erdogan asserted that Turkish membership of the EU could resolve increasing ‘‘uncertainties’’ after Britain’s departure from the bloc:

• ‘‘Uncertainties that are increasing with Brexit can only be dissipated with Turkey receiving its rightful place in the European family”.

• What uncertainties? Who is uncertain?

• Sure, there are lots of bureaucratic headaches in Brussels, but if anyone is uncertain about future, then it is probably Britain, not the EU.

• Even though I have criticized EU’s policy on China, they did finalize that investment agreement even with heated Brexit negotiations going on in the background.

• They did not look uncertain then, nor do they look now.

• They don’t look uncertain in their foreign policy, and any domestic issues with Poland and Hungary would have taken place regardless of Brexit.

• EU as a bloc, is not suffering from a post Brexit uncertainty.

• Inconveniences? More red tape on Trade with the UK? yes and yes.

• Uncertainty? no.

• So if EU as a bloc is just fine, perhaps there are individual countries that may be facing uncertainties?

• Indeed, and that country is Germany.

• It is a presumed leader, but it is not certain about its role.

• With French President Macron’s recent international activism, Germany is not certain that it can pull the whole bloc behind it on key foreign policy moves.

• UK was not just a competitor - it was also a balancer. That counter-balance to France [when needed] is gone.

• It is not clear which country could take up that role.

• Ergo, when Erdogan says he can help with uncertainties of Brexit, he means German uncertainties.

• It makes sense. It is a natural alliance. Turkey’s economy is already much more significantly linked with that of Germany [than with France].

• With France, it has new conflicts in the mediterranean - no such conflict with Germany.

• Even though Germany and Turkey had some distasteful incidents in the recent past [e.g. when Erdogan threatened to send over three million Syrian refugees], there exists no serious structural geopolitical rivalry between Turkey and Germany.

• In fact, Turkey’s geopolitical utility within the EU will extend beyond its role as a counter-balancer to France.

• It can also provide a reliable support for pressure on Russia.

• UK was the strongest anti-Russia ally available to Germany.

• Spain and Italy are not sufficiently invested. Greece and Hungary are clearly pro-Russia. France is a mixed bag.

• Turkey is on a collision course with Russia in three different arenas: Libya, Syria and South Caucasus / Karabakh.

• Erdogan’s business with Putin will never exceed its transactional nature.

• Sure it can buy S400s [and their Defense minister recently complained there were no better offers - hint: make a better offer] and other weapons.

• But when it comes to long-term strategy, Turkey will always side with NATO and the EU. Its own geopolitical interests demand it.