Iran Comes Back to the Nuclear Table and Brazil’s President Faces Complex Economic Challenges

Iranian Nuclear Negotiations to Commence on Friday

Iran has agreed to come back to the table for another round of nuclear talks that will begin Friday in Istanbul. I wrote an essay last week describing the way in which this is largely the result of a concerted and successful multiyear strategy by the Obama Administration. The negotiations have previously always collapsed over two main issues: How much uranium Iran will enrich and at what levels, and allowing international inspectors free access to verify compliance. In advance of the negotiations, the Iranian nuclear chief spoke out about the possible parameters of an agreement they'd be willing to accept, saying that they might be willing to give up continued enrichment at the 20% level;  When "the need is met, we will decrease production and it is even possible to completely reverse to only 3.5 percent." Even if the Iranians are willing to cease enrichment above the 3.5% level, their likely insistence on maintaining their existing stockpile -- in addition to a history of resistance to verification regimes - stand a good chance of sinking the talks once again.

This is not to say that talks are in vain. An understanding of the long-running patterns in the US-Iranian relationship suggests that Tehran coming to the table at all is a sign of their weakened international and economic position. Israeli Defense Minister Ehud Barak has concluded that he does not "believe that this amount of sanctions and pressure will bring the Iranian leadership to the conclusion that they have to stop their nuclear military program." Both American and Israeli intelligence report that Iran has not yet made a decision to pursue a nuclear weapons program, but Barak's pessimism is well founded. It is the willingness of the United States to keep the diplomatic option open, however, that creates the political space for convincing other countries to adopt increasingly restrictive sanctions. Iranian intransigence during these negotiations, then, could lay the groundwork for yet another round of sanctions - further tightening the noose around the Ayatollah's neck. 

Brazilian President Meets with Obama

Brazillina President Rousseff is in Washington today meeting with President Obama for what might appear to be a bit of a victory lap. Brazil has experienced tremendous economic growth over the last several years, brought an enormous number of poor into a burgeoning middle class, and ascended to new levels of international influence as one of the premier BRIC nations. This has all contributed to President Rousseff's enviable 77 percent approval rating.

Bill Hinchberger takes to the pages of Foreign Policy, however, to point out that while the good times may not be over for Brazil, they're likely to be winding down in the near future. The problem is with the fundamentals. Brazil's meteoric economic rise was largely on the back of what Tyler Cowen might describe as eating the low hanging fruit. The economy was bolstered by the ability to export enormous amounts of extractive natural resources to a hungry Chinese market and reap the efficiency gains of urbanization and technological innovation. These dynamics, though, lose their value over time and won't support 7% growth indefinably. In fact, GDP growth is now down closer to 2%. The aggressive export promotion has led to an overvalued currency which is now beginning to lead to deindustrialization in other key manufacturing sectors. As minerals become increasingly scarce, foreign direct investment will be more difficult to secure as a decaying industrial base combines with a regulatory environment that is ranked as one of the worst in the world. With the right investments, there's no reason to think that Brazil cannot solidify the gains of the last decade and cement its position as a significant regional power. In order avoid stagnation, however, they will need to pursue sound industrial policy, economic reforms,  and be willing to make the tough decisions to adjust to changing economic dynamics. Hopefully President Rousseff is prepared to use her substantial well of political capital to do just that.