The Iranian nuclear deal is in its 12th consecutive day of negotiations, but it has been largely dismissed by mainstream media, due to Greece and China’s unpredictable stock market. Little does the world know the stakes are high and as there are no measures implemented to contain the situation if talks go sour, it can potentially generate larger ripple effect than a Grexit.
Throughout history, the United States and Iran haven’t always seen eye to eye and its not just regarding nuclear issues.
To the Iranians, the U.S. is relentlessly hostile and the likelihood of accepting the Islamic Republic is low. They have been under persistent sanctions and threats. Believing and being a peaceful country, they see their nuclear programme as a source for clean energy. Furthermore U.S. is allies with Iraq in the Iran-Iraq war, which means their history together was anything but peaceful.
In perspective to the U.S., Iran is a threat and a sponsor to terrorism. This is due to major U.S. troop fatalities there. They also believe Israel is under constant threat from Iran and with a bad history of violating agreements, the trust U.S. has for them is closer to zero. The U.S. fears the nuclear programme Iran’s been developing will offer a weapons option which may threaten the region and beyond.
In broader perspectives, the aim for this discussion of curbing Tehran’s decades of nuclear work is so economic sanctions can be lifted which have previously obviated Iran’s economy and limited its oil exports.
Despite Tuesday being the deadline set by the negotiators after last week’s deadline of June 30th, this has already been surpassed. However, with the rumoured “heated exchange”, it is clear they have not made much progress and will still require some time. It is expected the negotiation will be completed by Friday at the latest.
No matter when the negotiations end, there are only two possible outcomes: the acceptance of the agreement or back to sanctions (if worse, military strikes). However, the ultimate decision will not only impact the regional – global proliferation and security risk, but also impact upon local human well being.
Hypothetically, if the deal goes well and sanctions are lifted by the end of the week, we can see a new market opening. This is a much needed boost in global economy, given the current bearish market.
If there is a successful outcome, one can expect drop in oil and gas prices, as Iranian supply enters the global market. With the world’s fourth largest oil reserves and second largest natural gas reserves, Iran has great potential for large-scale production at low cost. The Iranian government claim they can increase their current production of 2.8million barrels a year to 3.8million barrels a year. Even before the negotiation talks began, BP and Shell were among the European oil majors showing interest in Iran, contingent on a deal being reached. Shipping will no doubt benefit from the oil boom. Fuel efficiency may increase as routes are shortened due to being less restricted. Countries such as Turkey may receive oil via tankers instead of being solely reliant on a pipeline. It is believed for Iran to increase their oil production to 6million barrels a day, similar to that seen prior to the sanction era, they will require Western capital and technology, which may be made available if sanctions are lifted.
Though the oil prices may fall due to higher supply, this will definitely benefit car manufactures who are all gearing up to return to the market. It was well known, Iran’s car and lorry market was ranked 10th in the world before the imposed sanctions. Therefore companies like Renault and General Motors may seek to return and profit off the country’s lucrative opportunities. It is expected Iran will mass purchase advance technology from the West to boost the quality of their own goods.
Furthermore, the result of sanctions led to unstable growth and high inflation rates in Iran due to international banking restrictions and hard currency shortages. Should an agreement be reached, businesses will soon be able to develop without restrictions, and the nation’s economy could grow as much as by 5-8% per year.
Lifting sanctions will strengthen Iran economically and socially, especially as it would have the opportunity to expand its trade, revenue and overall economic growth. This may however take a negative turn with Iran building up an influential seat in the global political arena, given their reserves. Speculations and predictions can be made but in reality what’s important is the final decision at the negotiating table. It would be advised to keep an eye on the talks and by Friday they will hopefully make history.
Breakfast Briefing: Space Race, Google in China and Zuckerberg
Google to Open in Beijing
Alphabet announced that it will open an AI research facility in the Chinese capital yesterday.
Editor’s Remarks: Under CEO Sundar Pichai, Google has been recommitting itself to China after it had most of its services blocked in 2010 when it refused to censor search content. In recent months, the tech giant has been marketing its new TensorFlow AI tools to the Chinese market, which aligns with the state’s ambitions to become a world leader in AI by 2030. Google’s new facility will consist of a small number of AI researchers, supported by hundreds of Chinese engineers. Google expects to face stiff competition for talent given how local tech giants, Baidu and Tencent, are ramping up their own AI efforts.
Telegram Is Not for Sale
Telegram’s elusive founder, Pavel Durov, insists that his messaging service will remain non-profit.
Editor’s Remarks: Durov and his brother Nikolai founded VK, Russia’s answer to Facebook, before they were forced to sell their stakes to a Kremlin-friendly oligarch. The pair has since relocated and built Telegram, an encrypted messaging service that they insist will never be sold. A libertarian – having enabled Telegram users to even send messages that will self-destruct – Durov and his product have gained popularity among cryptocurrency enthusiasts. Durov himself is bullish about the prospects of cryptocurrencies and owns at least 2,000 bitcoins. Pundits, meanwhile, reckon that Telegram is worth in the region of $5bn.
Japanese Space Startup Raises $90m
Ispace Inc raised $90m from Japan’s largest corporates in a bid to reach orbit by 2019.
Editor’s Remarks: Ispace is backed by Japan Airlines, Tokyo Broadcasting System Holdings and also government-backed Innovation Network Corp. of Japan. The company plans to sell advertising space on its spacecraft, which will then feature prominently in distributed images. However, Ispace also envisages the use of rovers that will offer a “projection mapping service”, which will essentially produce a tiny billboard on the surface of the moon. This is the latest announcement in what is rapidly shaping up to be a wider commercialisation of space exploration. Elsewhere, SpaceX and Blue Origin are developing reusable rockets, while Planetary Resources intends to mine asteroids.
Roy Moore Loses Alabama
Moore, who was backed by Trump, narrowly lost to Doug Jones, a largely unknown Democrat.
Editor’s Remarks: Moore’s election efforts appeared to have succumbed to allegations of child abuse that were made against him last week. Newcomer Jones won 49.9% of the vote against Moore’s 48.4% in deeply conservative Alabama, marking the Democrats’ first Senate victory in the state since 1992. Moore is a household name in Alabama but the accusations recently levelled against him have ruined his once impeccable reputation. Reluctant to concede defeat in his home state, Moore has said that Alabama must “wait on God and let the process play out”. Meanwhile, Democrats are jubilant that they have managed to reduce the Republican majority in the Senate to 51-49, which could impact Trump’s tax reform.
Zuckerberg Backs VR Firm
Dreamscape Immersive, a virtual reality (VR) company, is backed by 21st Century Fox, Warner Bros. and Mark Zuckerberg.
Editor’s Remarks: Dreamscape is developing new VR arcades for shopping centres and has just closed a $30m Series B funding round – 50% more than planned. Among its initial backers were Steven Spielberg, 21st Century Fox and Warner Bros. The company has now added to that impressive list the likes of Mark Zuckerberg and Nickelodeon. Dreamscape is capitalising on Hollywood’s interest in VR, which the film industry reckons will draw in greater numbers of viewers and provide an opportunity to raise margins. Dreamscape intends to open seven VR centres in locations across North America and the UK.
Google to Open Artificial Intelligence Centre in China
Google will be opening its first artificial intelligence (AI) research centre in China, despite many of its services being blocked there.
Fei-Fei Li, Chief Scientist of Google Cloud, said:
“I believe AI and its benefits have no borders. Whether a breakthrough occurs in Silicon Valley, Beijing or anywhere else, it has the potential to make everyone’s life better for the entire world. As an AI first company, this is an important part of our collective mission. And we want to work with the best AI talent, wherever that talent is, to achieve it.”
The research centre will focus on basic AI research, and will consist of a team in Beijing, who will be supported by Google China’s engineering teams.
Google’s search engine and its Gmail are banned in China. However, the country has 730 million internet users, making the market too large to ignore.
Google is not the only tech giant facing restrictions in China. Facebook is also banned, while Apple’ App Store has been subject to censorship. In order to comply with government requests, Apple removed many popular messaging and virtual private network (VPN) apps from its App Store in China earlier on this year.
China has recently announced plans to develop artificial intelligence, and wants to catch up with the US. However, human rights groups are concerned by China’s use of artificial intelligence to monitor its own citizens.
Europe Warns Trump on Tax
Finance ministers from Europe’s largest economies have said that Trump’s tax plans breach global agreements.
Europe’s leading finance ministers, including UK chancellor Philip Hammond, penned a letter to the White House in which they raised the possibility of retaliation if the Republicans push on with their tax reforms. Europe is worried that Trump’s “America First” doctrine will undermine global trade patterns and escalate ongoing tensions between the US and its key allies. With the UK looking to its closest ally for support post-Brexit, it is unlikely that Hammond’s latest move will sweeten any future US-UK trade deal. Meanwhile, Trump is unlikely to care about shaking up current trading arrangements, given that he ran for office on the platform of making the US more competitive.
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