Two World-Changing Deals: Greece and Iran

A demonstration outside the Greek parliament protesting the Greek accord, July 2015.
A demonstration outside the Greek parliament protesting the Greek accord, July 2015.

Jack Goldstone is an expert on revolutions at the Woodrow Wilson Center and George Mason University and a global fellow at PS21. He is the author of “Revolutions: A Very Short Introduction.” Follow him on Twitter at @jgoldsto.

After endless, and sometimes seemingly hopeless, negotiations, diplomats have produced two new multinational deals that go a long way toward righting what’s been going wrong in the world: one on nuclear development in Iran and the second to keep Greece in the euro.

Both of these deals provide better outcomes than failed negotiations would have. They demonstrate that dedicated diplomacy can still achieve positive solutions within an integrated global system that is more or less still functioning. The Iran nuclear deal announced Tuesday is good for everyone, even — despite the vituperation of Israeli Prime Minister Benjamin Netanyahu — for Israel. Today, the world has an angry, isolated, and very nearly nuclear-armed Iran. That Iran has been dangerous and untrustworthy and therefore was put under strong sanctions by the U.N. and U.S. That is not a situation that can be maintained indefinitely. Under the status quo, Iran will eventually get nuclear capabilities, and will be ever more angry and isolated when it does. That is not a good outcome for Israel or the region or the world.

Under the new deal — although not all details are released yet — Iran will become less isolated as sanctions are ended. In return, Iran will be forced to earn trust by limiting its stockpile of nuclear bomb-capable materials and opening its nuclear program to international inspections. The deal will change the status quo by making Iran less isolated and less likely to achieve nuclear weapons capability within the next decade. That is a better outcome than the status quo.

Of course, the deal could still go badly wrong. One of the first things needed immediately now is to start negotiating cooperation between Iran and Saudi Arabia against the Islamic State. The Iran-Saudi enmity must be managed and reduced to limit hostilities in the region. If the Shi’a-Sunni split continues to polarize the region, Iran will want to accelerate its conventional arms programs and its nuclear research so that when the deal lapses Iran can leap to become a nuclear power. So it is vital that the next 10 years see conventional arms agreements and peacemaking to reduce Iran’s perceived security needs for nuclear arms.

Iran will not abandon its desire to be an influential great power. But that can be useful as a counter-balance to Russia in the Middle East (one of America’s original reasons to ally with the Shah of Iran decades ago). And since Iran’s goal of sanctions relief is to rebuild its economy, and a major war will return it to isolation and undermine that economy, we can hope that Iran can be induced to undertake a peacemaker’s role in the region, rather than a troublemaker’s role, once the deal is concluded. Hardliners in the Iranian Revolutionary Guard may attempt to use incoming funds for their own, less noble, purposes but President Rouhani—who campaigned on economic revitalization by getting sanctions lifted—has serious political incentive to ensure the economy is not disrupted by conflict. Continued work by diplomats on implementing the deal, to ensure it meets its goals, is vital. We cannot pat ourselves and our colleagues on the back and walk away. The deal is a starting point—and only that—for improving security and peace in the Middle East and needs vigorous follow-through. Yet it is a vital starting point and improves the odds for better outcomes in the next few years.

The deal on Greece was also vital. The European Union remains the best hope for showing the world that nationalism can be overcome and that diverse peoples can coordinate their political and economic policies. If there is ever to be global integration and government, the EU has to lead the way. So showing that even when facing a crisis the EU can function to preserve unity is enormously valuable in itself. What lesson would have been sent to Ukraine or Moldova, or to Turkey or even China, about dealing with the EU if the union would turn on one of its own and expel them for failing to live up to certain economic standards? The EU has always moved forward by accepting countries that did not meet its desired standards for democracy or economic stability (going back to Spain and Portugal) and urging them forward and helping them reach higher.

Moreover, as the U.S. government found with Lehman Brothers, the consequences of allowing even a small piece of a deeply interconnected financial structure to fail can be enormous and much greater than expected. Who knows for sure how the global financial system would have fared if Greek bankruptcy also brought down several German banks or caused a run on emerging market assets? Better to preserve the system than risk a sudden change that, even if small, could be the proverbial straw that break’s the camel’s back.

Will the deal be ideal? Of course not. A sensible deal would include explicit debt relief and a plan to return Greece to economic growth that would restore prosperity. It would include — as the current deal does to some degree — external oversight of Greek’s taxing and spending, which have been riddled with corruption, fraud, and waste. And it would include continued engagement and flexibility to ensure a path to financial health is maintained. In short it would work very much like U.S. Chapter 11 bankruptcy plans, whose goal is not to punish companies that run into financial trouble and cannot meet their obligations, but to make the best use of remaining assets while lifting the burden of unpayable debts, and putting the company on a new path to growth.

The actual deal on Greece is not quite that sound. It has no explicit debt relief (although creditors say they don’t expect to be fully repaid); the external oversight is concentrated on sales of states assets; and there is still a tendency to want to punish Greece for its financial sins, rather than prioritizing easing the suffering of the Greek people. It will be up to the Greek leaders and European leaders to try to nudge the deal in this direction as it is implemented. The U.S can play a role here, educating Europeans about its very successful and flexible bankruptcy programs, explaining why such programs are a good idea and how they work, and suggesting them as an alternative model to “punitive” actions for Greece.

Both these deals are far better than no deals would have been. And they give hope at a time when the world needs so many additional deals — for peace among nations in the South China Sea; for cooperation on global climate change; for refugees and asylum-seekers in Europe; on Cyprus; on South Sudan; on Afghanistan to name just a few.

The diplomats and leaders have now taken the first step in doing their jobs. Let us hope they follow through to make sure that the potential benefits of these deals, so hard-won, are realized.

This piece originally appeared on on July 14, 2015.

PS21 is a non-national, non-governmental, non-ideological organization. All views expressed are the author’s own.

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