Nuclear Issues

Last May, Chinese solar panel manufacturer LONGi signed an agreement with Saudi trading company El Seif Group to establish large-scale solar manufacturing infrastructure in Saudi Arabia. The deal came several months after the Trump administration's imposition of global tariffs on imports of Chinese solar panels and cells.

If the intended aim of the new round of U.S. sanctions were to change Iran’s behavior, it already has. Just not the behavior the Trump team had in mind—Iran abandoning its pursuit of pro-market economic reforms. President Hassan Rouhani, who was elected twice, in 2013 and 2017, on a platform of liberal economic reforms, has piece by piece put aside his reform agenda. Because of the economic havoc wreaked by the re-imposition of U.S. sanctions, he finds himself in the odd position of overseeing price controls, punishing commodity hoarders, subsidizing imports of a variety of goods, including mobile phones, and has lost the most liberal members of his economic team

The end of the year is a good time to consider the risks that lie ahead of us. There are of course important economic risks, including the mispricing of assets caused by a decade of ultra-low interest rates, the shifts in demand caused by the Chinese economy’s changing structure, and European economies’ persistent weakness. But the main longer-term risks are geopolitical, stemming from four sources: Russia, China, the Middle East, and cyberspace.

Although the Soviet Union no longer exists, Russia remains a formidable nuclear power, with the ability to project force anywhere in the world. Russia is also economically weak because of its dependence on oil revenue at a time when prices are down dramatically. President Vladimir Putin has already warned Russians that they face austerity, because the government will no longer be able to afford the transfer benefits that it provided in recent years.

"China, a great power in the making, and Russia, a fading but nonetheless aspiring power, have repeatedly positioned themselves on 'the wrong side of history' in regard to the Iranian nuclear program, events in Syria, and more. Great power status confers not just prestige and influence, but also a need to share responsibility for international security and the 'global good.' With their uncaring pursuit of narrow national interests, neither is demonstrating a predilection to do so."

"...[T]he real solution is for Tehran and Washington to opt for direct diplomacy over the nuclear issue....The Americans too must not overlook the delicate point that if they voluntarily promote the role of China in Iran's nuclear and strategic programs, they would somehow help develop Beijing's strategic role....it would be a strategic blunder for the US to let China get involved in the political and strategic issues of the Middle East."

"...if China continues to prioritise friendly commercial relations with North Korea and Iran, it will threaten its own long-term security. A chronically proliferating North Korea would provoke Japan to reassess the need for a nuclear deterrent, while a nuclear-armed Iran could destabilise the Gulf and global energy markets. Crafting an approach that includes a sustained US-China engagement to clarify each side's intent, provides for China's energy security and maintains a focus on the threat of nuclear proliferation in North Korea and Iran is more likely to achieve our shared non-proliferation goals."

US and Iranian representatives meet this week at a time when trust between the two countries is at a low ebb following the revelation last week of a previously undisclosed Iranian nuclear facility under construction and the test firing of Iran's long-range missiles on September 28. Meanwhile, the Obama administration's policy of engagement with Iran has emerged as little more than the old policy of "carrots and sticks."

"...a new look at global atomic energy supplies is sorely needed."