14 July 2015   Leave a comment

The P5+1 and Iran announced that an agreement had been reached to assure Iranian adherence to the Non-Proliferation Treaty (NPT).  The announcement is a victory for those who believed that a diplomatic solution was possible, but there remain some who believe that the agreement is flawed.   The final agreement is very similar to the interim agreement achieved earlier this year, but the final details were the most important and most contentious.  These issues seem to have been resolved.  There are some objections to the agreement that are not genuinely rooted in the NPT, such as the insistence that Iran stop supporting groups such as Hezbollah and Hamas, and we have to hope that those objections are dealt with in a separate forum.  The Congress will have 60 days to approve the measure and it promises to be a difficult fight.

Peter Spiegel is reporting in the Financial Times that the IMF is thinking about breaking ranks with Germany and the ECB on the Greek debt deal.  Interestingly, the IMF believes that the current deal will not succeed unless a percentage of the Greek debt is actually cancelled (the position that the Greek government has been holding for some time).  According to Spiegel:

“But under its rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the appetite to do so has diminished.”

If true, then the IMF, Greece, and the US are united in believing that some of the Greek debt must be forgiven if economic growth is to return to Greece.  We will now see how Germany and the ECB respond to this challenge and whether any modifications to the bailout plan will be forthcoming.

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Posted July 15, 2015 by vferraro1971 in World Politics

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