Dangers and Disruptions Ahead if Iran Deal Passes!

by Victor Sperandeo with editing by the Curmudgeon

Disclaimer: The views expressed herein are that of Victor Sperandeo. However, the real CURMUDGEON is strongly against this deal and has written to his Congressional representatives to vote NO on it!

A previous Curmudgeon article on this topic, published March 6, 2015, is here.

Overview:

Most readers know the essence of the Iran nuclear "deal," which President Obama is presenting to the U.S. Congress for approval after the P5+1 agreement in July. The objective is for Iran to SUSPEND their nuclear weapons program for the next 10-15 years in return for lifting of sanctions. But there's a lot more to it than just that.

The key points to the Iran nuclear deal are to:

Dismiss all the current sanctions on Iran; worth billions of dollars. [U.S. Treasury Secretary Jack Lew said that since 2012, Iran’s economy is 15% to 20% smaller than it would have been without the sanctions.]
Give Iran an estimated $150 Billion that the U.S. withheld from Iran. That's an estimated 34% of Iran's 2015 GDP of ~$417 billion.
Take definitive steps (dismantling uranium centrifuges, inspections, etc.) to “insure” that the world gets a TEMPORARY reprieve from Iran building a nuclear bomb. That's if they truly keep their side of the agreement.

A recent Weekly Standard blog post provides an excellent yet concise summary of the “deal”:

What we (rest of world) get:

- Iran reduces by about half the number of centrifuges actively enriching uranium

- Iran reduces its stockpile of enriched uranium from about five tons to 300 kilograms

- Iran repurposes its heavy water reactor in Arak so it does not produce plutonium

- An unspecified increase in inspections by the IAEA (which still hasn't been able to talk to Iran scientists about their alleged clandestine nuclear program).

What Iran gets:

- Almost every type of U.S., EU, and UN sanctions lifted

- Repeal of six UN Security Council resolutions

- Top IRGC and Quds Force terrorists removed from the sanctions list, including Qassem Suleimani, leader of Iran’s campaign against U.S. soldiers in Iraq, and Ahmad Vahidi, mastermind of the 1994 Jewish community center bombing in Argentina that killed 85 people

- The removal from the sanctions list of approximately 800 people and legal entities, including 23 out of 24 Iranian banks

- $100 to $150 billion to be unfrozen and given to Iran with no restrictions on its use to purchase arms and fund terrorism, including funding for Hezbollah, Hamas, and the Assad regime in Syria

- Iran keeps every one of its nuclear centrifuges

- Iran keeps its entire physical nuclear infrastructure, including the enrichment facilities at Fordow and Natanz and the nuclear reactor at Bushehr

- Iran permitted to continue research and development on all of its advanced centrifuge designs, reducing nuclear breakout time at the end of the deal to weeks

- Iran permitted to transition its allowed enrichment of uranium from older centrifuge designs to advanced designs

- No “anywhere, anytime” inspections. Iran can delay inspection of any site for at least 24 days

- No requirement that Iran fully disclose past nuclear weapons research and development (known as the PMD issue)

- The P5+1 western powers pledge to collaborate with Iran on nuclear technology

- Restrictions on enrichment – part of the “sunset” of the deal – are lifted after eight years

- If Iran is thought to have violated the deal, in order to “snap back” sanctions a dispute resolution process must be undertaken that can last two and a half months, after which the matter can be referred to the UN Security Council. At the UNSC, the re-imposition of sanctions can be vetoed by Russia, which stands to earn billions of dollars from arms sales to a non-sanctioned Iran.

Concessions to Iran that are unrelated to their nuclear program:

- Ballistic missile embargo lifted after eight years;

- Conventional arms embargo lifted after five years;

- Iran doesn't have to return U.S. hostages;

- No restrictions on continued funding of Islamic terrorists groups like Hezbollah, Hamas, Houthis, etc.

Comment and Analysis:

I must stress that I'm not at an expert in this kind of analysis, but I feel it is worthwhile to comment on this deal, from the perspective of someone who keenly observes markets and geopolitical/world events in order to make a living.

Does this “deal” sound fair to you? Proponents say it's to stop the U.S. from going to war against Iran. What about Israel? It seems that Obama's desire and purpose is to give Iran whatever they wanted to achieve his "POLITICAL LEGACY."

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Sidebar: Obama's tough talk on those opposed to the Iran nuclear deal

At a speech at American University on Wednesday, Obama compared those against the Iran deal with supporters of the U.S. invasion of Iraq.

"Many of the same people who argued for the war in Iraq are now making the case against the Iran nuclear deal," Obama said.

Yet he provided no evidence or support for that allegation (e.g. are they really the same people?) or what one position has to do with the other? Are we to infer that those against the Iran deal are all war mongers?

In that same speech, Obama linked congressional Republicans opposed to the deal with Iranian hard-liners who chant “death to America,” saying they are “making a common cause with the Republican caucus.”

On Friday, Obama defended the comparison between Iran hardliners and GOP in a CNN article.

"What I said is absolutely true, factually," Obama told CNN's Fareed Zakaria in an interview that will air in full Sunday (today). "The truth of the matter is, inside of Iran, the people most opposed to the deal are the Revolutionary Guard, the Quds Force, hardliners who are implacably opposed to any cooperation with the international community," Obama said.

Victor's take: Obama's claim is not only false, it is 180 degrees contrary to the truth and facts! For example, the Revolutionary Guard (IRGC) greatly gain from sanctions relief so are hardly “most opposed to the deal.”

The IRGC play a prominent role in Iran's economy and manage enterprises in a variety of sectors. In particular, they run the oil, gas and weapons industries. Sanctions relief is good for Iran’s economy, which is great for the IRGC and their controlled companies.

Want corroboration? Reuters reported on Sunday:

“Dozens of companies tied to Iran's elite Revolutionary Guards, a military force commanding a powerful industrial empire with huge political influence, will win sanctions relief under a nuclear deal agreed with world powers. About 90 current and former IRGC officials, entities such as the IRGC itself, and firms that conducted transactions for the Guards will be taken off nuclear sanctions lists by either the United States, EU or United Nations, according to a Reuters tally based on annexes to the text of the nuclear deal.”

Yet Obama said that the IRGC - one of the biggest beneficiaries of the deal - is “most opposed” to it! Where is the logic in that statement?

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Opinions and Scenarios:

My view of the facts of the deal are decidedly negative (the CURMUDGEON agrees and has a slightly different set of “facts,” which are also all negative):

1. The verification process is bogus and a fraud. Inspections, which were supposed to be any time any place, have now been thrown out in exchange for permission and 24 days advance notice to inspect the nuclear sites.

On a webcast this past Tuesday, Israel PM Benjamin Netanyahu likened that to giving a drug dealer a 24 day notice before inspecting his dwelling/office and possessions for drugs.

2. Contrary to Obama stating the deal will AVOID war, I believe the “agreement” guarantees Iran will ultimately develop a nuclear bomb and that notion will precipitate war in the Middle East! I suspect that war will likely occur before the 10 to 15 years under which Iran is “prevented” from building a nuclear bomb. Here's why:

As soon as the deal is signed, Saudi Arabia (the arch enemy of Iran in the Sunni vs. Shia battle for Islamic supremacy) will most likely buy bomb technology from Pakistan. That would include nuclear bombs and some type of missile/rocket based delivery system.
Iran is also getting ICBM's capable of hitting "Big Satan" i.e. the United States, according to Israel PM Netanyahu.
Additionally, other Middle East oil/energy kingdoms (such as Kuwait, UAE, Qatar, etc.) will likely obtain nuclear bomb technology and delivery systems to protect themselves if Iran gets the bomb).
Based on past history of defying inspections, it's highly likely that as soon as the sanctions are lifted and the U.S. check clears, Iran will start to cheat. When caught red handed they will likely say something like:

“We have to protect ourselves from our enemies in the region (e.g. Sunni Muslim states) who are getting "the bomb. We need to prevent a "nuclear bomb gap” so we'll just use our bomb as a deterrent.”

3. With the sanctions lifted, Iran will be $150 billion dollars richer and more powerful than ever.

4. The Iran deal can't be undone if the next President is against it, as Iran would have the $150 billion of money and could care less at that point.

5. Israel, our strongest ally in the Middle East (and the only democracy there), will be forced to now make a Faustian like choice. Considering the nonstop rhetoric of Iran's Ayatollah’s calling for the destruction of Israel (“wipe 'em off the map”) it's thereby logical that Israel may have to make a decision of war in advance of Iran getting the bomb, or face certain annihilation by a much larger nation.¹

Note 1. Iran is 2.4 times bigger than Texas so it is a very large country. Also Iran has 10 times the population of Israel and is 79.4 times the land mass in size. If Iran's desire is "death to Israel" a war with nuclear weapons would have Iran as the survivor. Also since dying for Allah/Islam is thought of as a good thing, a war is likely since the odds are on the side of Iran if the weapons are nuclear for each.

6. In my opinion, Obama has forced a change on the world with no gain to the U.S. or Israel. The only other strategy is "hope for the best.” Is that really a strategy?

This is similar to inviting a hungry lion to dinner and hoping that giving him a 16 oz. steak is enough so that he doesn't eat you alive.

7. The people of the U.S. oppose the deal by 2-to-1 according to a Quinnipiac University poll.

-->This is very rare as “the people" almost always back the Commander-in-Chief (President) on military matters.

8. Future Chairman of the Democratic Party in the Senate, Charles Schumer opposes the deal. This is important and perhaps critical for the Congress to overcome the President’s veto if the deal is rejected in mid-September when both houses vote.

New York Democrat Charles Schumer says the Iran nuclear agreement does

not prevent the Islamic republic from building a bomb after 10 years.

Bypassing the Constitution- AGAIN!

It's important to understand that the GOP gave Obama power he shouldn't have had in making this deal. That's because all treaties have to be approved by 2/3 majority or 67 votes in the Senate. But the "Stupid Party" (as Pat Caddell calls them), led by Bill Corker (R-Tenn.), reversed the U.S. Constitution by giving power to the President for a deal that has the “odds on potential of creating World War III in the future (IMHO).” This skullduggery is documented in a Bloomberg video.

The same type of “bypassing the Constitution via executive overreach” occurred with the TPP and TPA trade deals, as we've reported previously here.

How did this Constitutional bypass occur? Obama changed the concept of a "Treaty" to what he calls an "Executive Agreement!” Why did Obama (with support of Secretary of State John Kerry) do this?

Mr. Kerry was asked by Reid Ribble, R-Wisconsin in front of the House Foreign Relations Committee "Why this was not considered a treaty?”

Kerry's reply was: "Well Congressman, I spent quite a few years trying to get a lot of treaties through the Congress of the U.S. Senate, and frankly, it's become physically impossible. That's why. Because you can't pass a treaty anymore."

Conclusions:

1. Evidence and authoritative corroboration has been provided herein to show that approving the Iran nuclear deal would be very dangerous for the entire world. The global economy would also be at risk of war and more terrorist attacks, despite the boost to Iran's economy (from sanctions relief) and those countries/international companies that do business with the Islamic Republic.

2. The U.S. Constitution intentionally makes it difficult to pass IMPORTANT LAWS. The Obama administration believes that if it's too hard to change the law of the land, we’ll just circumvent it with a “name change.” [Treaty --->Executive Agreement]. This occurs as the “stupid party” (Republicans) give away its power so as not to make waves and to permit those Senators to keep their jobs. Who are they representing?

3. The Iran deal is a game changer with many negative consequences. Ayatollah Khamenei (the “Supreme Leader”) and Iranian politicians are notorious for inspiring chants of "death to America.” Does that suggest Iran's government desire for peace???

4. That stark comparison dovetails with our President's central claim that the alternative to an Iran deal is war -- "maybe not tomorrow, maybe not three months from now, but soon," he said during his speech at American University (see Sidebar above).

This is what is going to keep destroying the fabric of the nation - evading the Laws of our great country. I firmly believe that evading the law of the land is the greatest threat to the future of the U.S.

To illustrate that point, kindly consider this statement by James Madison:

"It is a universal truth that the loss of liberty at home is to be charged to the provisions against danger, real or pretended, from abroad.”

Good luck and till next time...

The Curmudgeon
ajwdct@sbumail.com

Follow the Curmudgeon on Twitter @ajwdct247

Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.

Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.

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