Iran’s economy and trade in the Trump era
Iran’s economy and trade in the Trump era

خانه Iran’s economy and trade in the Trump era

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Iran’s economy and trade in the Trump era

Iran’s economy and trade in the Trump era

Iran Economy and Trade in the Trump Era: Hamid Bigleri, a prominent executive of financial and consulting companies in the United States, in an interview with “World Economy” examined the conditions of the US financial markets and economy with the Trump presidency and his views on the consequences of the election. The latter has described the financial and diplomatic openings that have taken place for Iran since the Borjam.

According to Bigleri, the possible behavior of the US government should be assessed by understanding the complex political system of this country, the composition of economic and diplomatic teams of the Trump administration, as well as Iran’s adherence to the Borjam agreement.

Iran's_economy_and_trade_in_the_Trump_era

Some journalists, by imitating their sports colleagues who attribute adjectives to certain personalities, tend to describe the influencers in their field of work as sports writers. For example, if Jose Mourinho is nicknamed Mr. Khas, French President François Hollande has been called an ordinary Mr. The behavior of former Manchester United manager Alex Ferguson in the last minutes of the team’s games and its effectiveness led to the introduction of a keyword called “Ferguson Time” or “Ferguson Time”. Trump’s sudden appearance and, most importantly, his unpredictable behavior and speech have caused the media to talk about living in the Trump era. This is undoubtedly the result of the character he displayed during the election campaign and after his victory. However, after the victory, Trump had less of a Trump campaign logo.

This distinction has led to him being described as an unpredictable gentleman. A president who apparently has as many surprises as before the election. For example, while the dollar and markets were heavily allergic to the Trump name, they returned immediately after the initial shock and the dollar index broke a 14-year record. The Dow Jones index also recorded its best weekly performance in the past five years the week after the election. The different behavior of the markets, which was completely contrary to the analysis, became the cornerstone of the “World of Economics” dialogue with Hamid Bigleri, a prominent Iranian active in the United States. With a background in management at major US financial institutions and consulting firms, he explored market volatility during the recent US election and reviewed the outlook for the post-Trump economy. Moreover, by emphasizing the complex political structure of the United States, Bigleri describes the explicit and implicit implications of Trump’s election on Iran’s international trade and diplomatic relations from his point of view.

Before the election, most analysts believed that with Trump’s victory, the markets would be shaken, but after the victory and after the shock of the election results, the market trend normalized and even the dollar index reached above 100 points. What happened that the stock market trend did not decline? Has Trump’s risk and the uncertainty surrounding his election been moderated?

Markets are very risk averse in the face of unexpected news. When a negative surprise occurs, market participants immediately start selling and then start asking questions. We saw the same thing with the US election. Markets waited until the last minute to hear the news of Clinton’s victory, and almost all investors did not even bother to analyze the possibility of Trump’s victory. When the first news of Trump’s victory was heard, global markets began to sell in large volumes. When the news of Trump’s victory was almost certain, Trump’s fear of the markets increased and the sale of assets was pursued more vigorously. Markets that were open on the eve of the US election, especially Asian markets, suddenly began to decline, and investors in US futures markets began to sell widely (a 4% decrease in the one-hour period, which is very unusual). But overnight, investors began to analyze the news and think more carefully about the implications of Trump’s presidency. Based on this, they found that Trump’s economic plans are really good for the markets. He raised issues such as tax reform, the removal of cumbersome regulations, and the $ 1 trillion investment in infrastructure. For the first time, stimulus policies relieved the central bank of its monetary policy and put financial stimulus once again at the center of economic planning.

On the other hand, given that Republicans have won a majority in both houses of Congress, the likelihood of passing these stimulus policies, such as tax and regulation reform, is very high. The morning after the election results were announced, stock markets reversed. Markets started the day with a one percent increase; 5% higher than the minimum that existed 10 hours before the markets opened. The bond market fell; Because Trump’s fiscal policies are expected to cause interest rates to rise faster than expected. As a result, the US dollar appreciated against other international currencies. Another aspect of Trump’s economic policies is the restriction of US international trade, especially with countries such as China and emerging markets, which have caused US trade deficits in recent years. This was one of the key elements of his campaign to attract people who had lost their jobs in the process of globalization, so as a result of two factors, the strengthening of the US dollar and the possibility of raising trade tariffs, the value of almost all emerging markets decreased.

One of the mysteries of public opinion these days is Trump’s economic policies. He’s apparently seeking to bring back some of the industries that have left the United States in order to maintain public satisfaction. Can he bar American transnational corporations from investing in overseas programs; While most of the income of these companies comes from foreign markets?

You need to know two things about the American political system:

First, there is a very weak correlation between what presidential candidates promise in their campaigns and what they do after taking office. Candidates make many promises in the run-up to the election, but when they come to power, they find that their freedom of action is much more limited than they imagined. Move left or right. The US Congress, especially the Senate, is a strong bottleneck for the president’s actions, and the president must obtain congressional approval to do most of the work. Of course, I want to emphasize that these points do not mean that the President of the United States has no power. The President of the United States is the most powerful president in the world. But the fact is that his degree of freedom will be limited when Congress does not approve of him.

Now look at two economic statistics:

First, about one-third of the sales of the top 500 US companies take place outside the United States; Thus, about $ 3.7 trillion is generated by the income of American companies in the international arena. No president in the United States, even if he wanted to, could harm a third of the income of American corporations without facing severe reactions and obstacles.

Second, there is the problem that American companies make more than $ 2 trillion in international profits from low-tax areas, which makes sense for their shareholders to continue. So when you put all these facts together, the question is. It was how the US president could pinpoint the root of the problem and return $ 2 trillion in foreign-invested money to the country without hurting a third of corporate revenue. Perhaps the solution is for Trump to succeed in cutting corporate taxes, as well as providing tax incentives for American companies to shift their profits domestically. No president wants to hurt the profits of successful American companies overseas, as well as the $ 2 trillion in assets; Therefore, arrangements should probably be made so that the ability of American companies to operate globally is not hampered, and at the same time, the issue of keeping their capital abroad is resolved through tax reform.

In Iran, one of the future concerns is trade with Iran. After Borjam, consultations with Iran began in various economic sectors such as automobiles, banking and insurance. With Trump, can we hope the talks will come to fruition?

To answer this question, three aspects must be considered:

First, international economic relations with Iran are conditional on Borjam remaining in place. In my opinion, as long as Iran fulfills all its obligations in Borjam, which has been the case to date, there will be no legal way to disrupt Borjam.

Second, the issue of Iran’s access to financial exchange mechanisms in the United States is an important obstacle to Iran’s international trade. Approximately 90% of international trade is dependent on the US dollar at least at one point, so the inability to access the US dollar continues to hamper Iran’s ability to trade internationally. In that sense, it does not matter if Trump is in office or Obama. This problem will probably remain unresolved without the capacity for cooperation between Iran and the United States on issues in the Middle East.

But most importantly, as I mentioned in my November 2015 Foreign Affairs article on Iran’s economy, I think Iran’s biggest problem in entering international trade is the country’s internal barriers such as transparency, ease of doing business, financial stability, and so on. Perhaps the political opposition is to economic reform and international investment. The more Iran can overcome these domestic barriers, the more motivated international companies will be to invest in the country.

One of the points in Iran is cooperation with Europe minus the United States. The goal of this scenario is to increase spending to counter the anti-Iranian policies of the new US president. Given your knowledge of European companies, is this a feasible scenario?

In itself, my assessment is that these effects will be limited. European countries are much more dependent on economic relations with the United States than vice versa. In other words, Europe is much more economically dependent on the United States than the United States is on Europe. Thus, American foreign policy is rarely influenced by the economic interests of Europeans. I think it is a strategic mistake to assume that cooperation with Europe could be an alternative to trade with the United States for international trade, especially if Iran wants to join the World Trade Organization (WTO).

The US Treasury Department’s review of Borjam’s directive last month provided for maximum flexibility for US companies abroad. The guidelines were issued in response to the question of whether US companies could change their procedures and operations several times in order to have financial and economic transactions with Iran.

The answer to this question is yes, and it seems that an effort has been made to show maximum flexibility so that subsidiaries of American companies outside the United States can trade with Iran. Will these revisions be scrapped under Trump and the Republican majority, or can American companies start cooperating if Iran so wishes?

There are three things to keep in mind:

First, the US Treasury Department is more of an executive arm of government than a policy lever. OFAC, in particular, is responsible for enforcing policies, not setting them.

Second, the center of gravity of economic policy decisions shifts from one state to another. It depends on whether the president is personally inclined to economic policies and whether he gives more priority to the economic team or foreign policy. Bill Clinton, for example, was keenly interested in economic policy and relied heavily on his economic advisers, such as Bob Rubin, to determine economic policy. On the other hand, George W. Bush had no interest in or knowledge of economic policy, and although he often left economic policy to his Treasury Department, his foreign policy team was very influential in international economic affairs. Third, we do not know yet. Who are Donald Trump’s economic and foreign policy teams?

So putting all that together, what we do know is that Trump is very interested in business and economics, and therefore, he will play a big role in economic decisions. But we have to wait and see what the composition of his economic team and foreign policy is, and before we judge how they interact with Iran, we have to see which of these two groups will be more effective. In any case, it is very likely that no major policy decision will be made in Iran’s favor before the Iranian presidential election. Although there is an understanding that the Supreme Leader of Iran is the final decision-maker in regulating relations, the orientation of the President and his cabinet clearly creates differences, as exemplified by the differences between President Rouhani and President Ahmadinejad.

What suggestions do you have for Iranian companies and economic institutions during the Trump era to trade with the world? Will they get closer to European markets? Do they look to politics to the east or do you suggest other scenarios?

You see, we live in a very intertwined world. Even countries that are politically tense with the United States have realized that their people would be better off if they had economic ties with the United States. Take Venezuela, for example. There is no doubt that its political leaders have been at odds with the United States for the past 17 years, but it is still Venezuela’s largest trading partner. About half of Venezuela’s exports and more than a quarter of its imports are with the United States. So in answer to your question, of course, Iranian businesses must have relations with any country with which they are inclined to trade, whether European countries or countries located in Asia or South America. But evidence shows that any country that does not have an economic relationship with the United States has acted to the detriment of its economic interests and its citizens. I want to say that not doing business with the planet’s greatest economic power is not helpful, and you can see this by looking at other countries that have a similar situation in terms of not having trade with the United States, such as North Korea, Syria, Lebanon, Cuba, Libya. Sudan and Somalia. This is not a big group to join, and even Cuba has decided to leave.

Given that the composition of the Congress is in the interest of the Republicans, and this group has also tried to block Iran’s economic cooperation in the current period, given the composition of the next Congress and the presence of Trump, do you think the United States will fulfill its obligations in the UN Security Council? Does the limiter work?

Well, I’m not a politician, but I can say my opinion as an international economist and investor. First, it must be said that Borjam is not a bilateral agreement between Iran and the United States, but a multilateral agreement between the six governments and Iran. So, as I answered you in the previous question, I expect that as long as Iran has a firm commitment to the agreement, “as it has done so far,” there will be no credible legal basis for the United States to take responsibility for lifting sanctions. Committed to step back. The problem is that many of the sanctions are not related to the nuclear deal, and they are in place, and it is up to the US Congress to lift them. The current Congress does not want to lift any sanctions, and neither will the newly elected Congress, so I do not think there will be any fundamental change. What has changed is that with Obama ousting power, the moderating and vital influence on Congress will disappear. President Obama has been willing to spend his political capital to moderate Congress just because of the trust-building talks between the two governments over the past four years. Hence, the possibility of lifting any further sanctions is basically unlikely unless the governments of President Rouhani and Trump can find new areas to work with. Of course, there are opportunities for the two governments to work together again, and this will be a measure of the diplomatic skills of both sides to seize these opportunities. (the world of economy)

Author: persian / Date: 2017-10-26
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