It got down there for October, and now we're going to get down there for tomorrow. And it's a very, very big deal, in my opinion, if you believe in the long-term aspects. Welcome to Access a Trader, the number one community for those who are committed to taking control of their trading in order to achieve success, profitability, and longevity. Thank you for joining us. Here's Dan Shapiro to help you find your edge, master your process and own your future. Hey guys, give me your body. Welcome to another edition of the access a trader dot com nightly wrap up show. Hope everybody is doing well. Again, this short work week, my catch on tomorrow is already the middle of the week, which is absolutely great. The year has not started off great for the bulls. The first two weeks of the year, you've seen selling again, usually, usually the first quarter of the January, right? Remember about the January effect? People always talk about how much speculation money is going to come hit the market. Remember, nothing happens, needs to happen. That's the most important part that we have to echo every single day in our daily thinking, because again, the market is the greatest reality show that's not on television. It doesn't need to go higher when it wants to. It doesn't need to go higher when it wants to. It doesn't need to go lower when it wants to. It's all about individual inspections that are hitting the landscape at any given year. Remember, there's certain years that are super bullish. The bulls can't do anything wrong by the dip. You could walk on water. Everything is great in your life.  The market can't get out of its own way, no matter what happens. Earnings are good. Earnings are bad. Stock prices are still going lower. And that's exactly what we are seeing at the start of the year. And if you guys remember the weekend update that I published yesterday, majority of the stocks were right in the middle of the ranges. We talked about how there was no definitive area of the market that you wanted to be strong. I mean, sure, there's some names that looked pretty good in the semiconductor space. And we talked about them yesterday, the amats of the world, the microns of the world. But if everything gets pulled, just keep this in mind. If everything gets pulled and everything's in the middle of the ranges, just kind of what we've been seeing now for the first part of the week, nothing gets spared. I don't care what stock you're looking at, what stock you think is strong, no matter how strong that stock is, it's not going to survive a tremendous tidal wave. And that's exactly what we got hit today with. And not only today, again, you could start compounding the whole start of the year. But the index that's definitely leading us lower is the Russell, right? Is the IWM. And this was supposed to be the one that is going to outperform the January effect, right? The January effect. This is where every pumper and small cap, low float, everything is going higher by this. But look, if there's money coming out of speculation capital, well, what do you think is going to happen with the average stock? What do you think is going to? Who's going to support bids if the market that is supposed to be the hottest market at this given time of the year can survive? And when you look at a 3% decline in the Russell, right? In the IWM, it's not a good thing. And it took out the December 20 lows in the process. And now, when you look at, you know, if you look at the monthly chart, right? You got yet this whole area of this 202 area that's potentially measured potential for the next move lower. If you look at the cues, right? Same thing, right? You got the same thing. This is a monthly chart. And on the monthly chart, everything looks good. Again, if I showed you this chart here, and this is a daily chart of the stock, you could easily make an argument. Hey, what's the big deal? The stock has just had a really, really big monster run. And now it's coming into rising support. And if we hold this rising support, it's going to turn around.  This is the monthly chart of the cues. And every single time, right, it got down to the bottom of this rising wedge on January, February, March, right? March of 2021, it got down there for October. And now we're going to get down there for tomorrow. And it's a very, very big deal. In my opinion, if you believe in the long-term aspects of the bull market, and I'm not saying long-term as in five, 10 years, again, I do believe that we will be higher in five, 10 years than you are today. But it's all about tomorrow, right? Especially if you are an active, intraday trader, it's all about how you're seeing the market on a short-term basis. Again, if you're a long-term investor, it's probably not going to affect you. But maybe it will if you're short-term and long-term investors are kind of playing at almost the same time from you. You have to be very, very careful there. But this area here is going to be very important. And if you look at the daily chart of the market, it kind of correlates exactly the same way. And if you look at the lows from January the 10th, only a week ago, and the lows today, the NASDAQ 100 held exactly the same level twice. Now, back-to-back days. So that's the line in the sand. This whole 369 level is going to be a very, very, you know, make-it-or-break-it battleground area tomorrow for the markets. So the last thing you want to see tomorrow if you are a permanent bull is if we do have a little bit of a gap up, a little bit of a relief rally at the open, the last thing you want to see is today's prices or the January the 10th prices confirm, and then you start making moves lower. Again, remember, we had a 2.5% decline today on the NASDAQ 103% decline on the Russell. That's speculation money. These are the stocks that people want to own. These are stocks that fund managers want to be long for three to five years. And if there is a buyer strike in technology and there's a buyer strike in quote-unquote speculation money, the low flows, you know, this after the third, where's the action, right? Where's the confidence from the investor's side of the market that we want to go higher? And the most important part of what we saw from today's session we'll get to individual pivots in a second. The most important part we saw is what we needed to see. A lot of these stocks that we're sitting in the middle of the ranges are starting to get to the bottom of the ranges. And that's the point, right? Look at Apple starting to get to the bottom of the range. Not there yet, but starting to. Look at NVIDIA, right? Very, very close of breaking down. Look at the home builders. And this is a group that I usually don't regularly look at, but they really stood out today like sore thumbs when I started doing my chart work. Like look at a stock, for example, like a Lenard, right? Like, look where the Lenard is. It's coming on this bottom range here. This thing loses this whole bottom range here.  Nothing, you have literally no support until you go all the way down to October 2021 lows. Very, very good. Look at DHI, right? Look at DHI, exactly the same thing. So we're starting to get to other levels, other groups that have nothing to do with technology, right? That maybe you've been a safe haven for a very long time because again, if you're like me and you live in a lot of parts of the United States, real estate market has been hot. We had very, very, we still have very, very low rates despite what the Fed is saying. We're going to raise rates 28 times in the next 30 minutes. So until we see that, we don't believe it. But again, if the housing stocks, right? The housing market participants can't catch a bid, that's going to be a problem, right? That's obviously going to be a problem and rising rates is obviously not a good thing for brand new home buyers or just buyers in general. And this is why you're seeing, we're starting to see weakness in home builders as well. So it's one group definitely to look at. But I think the names that are starting to go clear, I really like NVIDIA, okay? I really, really like this NVIDIA. Again, it's one of the cleanest channels you can see here. Very, very clean channel. We started seeing last week 240 puts this week's 250 weeklies started trading. I'm telling you, if NVIDIA gets below this channel and starts building down, you got at least 11 to 15 points until the next support looks really, really good. We talked about Rivian for the last couple of weeks. Rivian broke down every macro channel today. It took out that 77 level that held three times. It held two weeks ago lows of 75. This is the lowest close in this whole formation. This thing has room all the way to 63 if the market starts building lower. Look at a name like Spotify, right? Spotify as well. This is the lowest close in this whole formation. Now, granted, it's not the thickest stock in the world to trade. It only traded like a million and a half shares today. But the whole point is you're going to start seeing a lot of stocks go from their middle of the channels all the way back to the bottom of the channels. And remember, it's pretty basic technical analysis. When stocks take out the top of the range, they go higher. If stocks take out the bottom of the range, well, they go lower. So going into tomorrow, again, you're not going to see tons of charts at the bottom of the range, but you're going to see plenty. We talked about Spotify. We talked about NVIDIA. We talked about the home builders. Look at a name like Airbnb. Again, it's all real estate developed. It's all real estate related. Look at this whole bottom of the channel here. It's setting up as well. So that looks good as well. But again, the key is going to be for the Qs back to back days. It stopped around that 369 level. That's the number in the line of the sand. Again, guys, technical analysis, it's not opinionated. It's not subjective. It's either going to confirm a channel. This time it's a daily channel. It's either going to confirm a daily channel or they're going to hold it. There is nothing in between. You can't be a little bit pregnant. We're either going to see a pretty good aggressive pull tomorrow off this 369 level, or if we test this 369 level, again, the markets hold. We're probably going to go red to green for a pretty good dead cat rally. That's it is. That's kind of our reality. So you have to kind of be set for both sides of the market tomorrow. But again, gunked on my head, I do think this 369 folds. And if it does fold, we're going to start seeing a lot more aggressive opportunities tomorrow to the short side. So let's talk about taste channels. As you can imagine, we weren't going to see tons and tons of value to the downside because, again, there was a lot of downside channels that were still stuck in the middle. But we got enough. And that's the most important. You don't need 30 trades. You don't need 60 trades. You just need one. You need two. You need the ones that are going to give you value when they break that value. That's where you're going to see your initial cash flow setting up into a macro move. So let's talk about this. Rivian, this is a really, really good move. I still think it goes lower. 77 and 75 macro areas if it builds below can see 65. I still think we could see 65 to 62. If today's price channel confirms tomorrow, nice move down all the way down to the 73 area today. BA. BA was actually pretty good until the market completely reversed. Dow got hit as well. As you can see, 227 needs to build. Nice initial pop on Boeing. 227 got to the 230 level. Nice move before it obviously came in with everything else. AMAC, keep an eye on this thing, read the green. Obviously, never got to read the green. Navidia's second entry, 262, if it builds, can see that 256. That's the spot, guys. That is going to be the magic number. Here was Navidia. Took out the 262. Closed at the lows, not at the lows. Closed about a dollar away from the lows. Got down all the way down to 57s. Again, this whole channel is the line of the sand for tomorrow. This thing breaks, lights out from Navidia. And again, we want to see more continuation from the options market. Microsoft, stubborn little bastard, but they finally got it below the channel. 303.75, it builds below, can flush. Microsoft, again, there's a lot of buyers. They were defending that 404 level. This is the lowest close in this whole formation here on this rise in support here. This thing starts confirming that 301 level. I think we go 299s tomorrow on Microsoft. Boeing, again, take on the way up. Take on the way up. Rivian, right? Rivian, 77.75 macro. Any close on the 75 is bearish. Obviously, that's the case. The one stock is actually two stocks that are holding up fairly well. One is this DWAC. For all you guys who follow the stock, this is kind of like the alternative to Twitter, right? It's like Trump got banned from Twitter and this is now like the anti-Trump. I know nothing about this thing. I literally know nothing about this thing, but it's been going nuts. And there was a buyer who came in today, right? It was kind of wild. But a buyer came in today for the Jennifer, for the March 175 calls. Quarter of a million dollar bet. Not for the 75s, the hundreds. The dude came in for 175 calls. Read into that or read as whatever you'd like. But the facts of facts, it's on the tape. So this thing looks like it's speeding up.  Oddly, this kind of feels like what GameStop did in its little heyday after they would just started running up these ridiculous options bed. And the next thing you know, it kind of ignited. Who knows, right? Who knows? Anything is possible in this world. But the most important part here on Planet Earth is watching these channels just kind of deplete every single day. And as they start getting lower and lower every single day, you're going to have more and more aggressive channels setting up, especially in technology. But again, the biggest worry should be what the Russell is doing. What the Russell actually is not doing is having its traditional hot rally, the January effect. So far January has been a complete dud for the speculation money and the overall bulls. We'll see. Again, value tomorrow obviously is to the downside, but that $369 area on the Qs is going to be a very, very important area for both bull and bear. Guys, have a great night. God bless. And I will see you all tomorrow.


I'm very pleased to welcome you to today's event on how Europe will respond to the Iran nuclear agreement, an event jointly hosted by the International Crisis Group and the Carnegie Endowment. Thank you very much for coming today. Thank you very much for your interest in a topic which has been discussed considerably over the past weeks in this town, at least, much less so on the European side of the Atlantic, but which I'm sure many of you have attended similar meetings. If not today or even yesterday, we had Senator Harry Reid speak here at Carnegie. We had former Senator Hillary Clinton speak at Brookings this morning. There is a lot of talk about how this Iran deal is seen here in the United States, but also at least some mention of how this is being seen in Europe. My name is Cornelius Adubar. I run the Europe program here at Carnegie. And as I say, I'm very pleased to be working with the ICG on this and to add a perspective to a topic which is genuinely international, genuinely multilateral as the Europeans would like to claim. It is also very topical in the sense to look at Europe's views on the Iran file. It is not only a debate that takes place here in DC. It is, you all know that Europe is preoccupied with other crises at the moment. It has never reached this level of engagement, the debate about Iran in Europe as it has here. There are some comparisons being made to the debate here being similar to the debate about Iran, sorry, about Iraq 12 years ago. And if I then think of Europe, I think of a split that went through Europe at the time and a much more unified political class here in Washington. This time around, it is a little bit different. The split seems to go through the Atlantic where you have a unified Europe, unified in the belief that this deal is a good enough deal and worth being implemented and a lot of debate taking place here in Washington. So we're very pleased to have with us two speakers from Europe today, Jean-Marie Gehenno and Wolfgang Ischinger, who are both accomplished European diplomats, career diplomats for their respective countries. Having reached pinnacles in their career, Jean-Marie Gehenno, he ultimately served for the United Nations, responsible for peacekeeping for over, for about eight years. And Wolfgang Ischinger is known to many as the German ambassador to the United States for a very, yeah, very convulsive period from 2001 to 2006. More interestingly, after their diplomatic careers, they pursued, they went beyond diplomacy, if I can say, Wolfgang Ischinger at the moment is the head of the Munich Security Conference, which is an annual gathering of security policy makers. And Jean-Marie Gehenno is the CEO, the president and CEO of the International Crisis Group. So thank you very much to you both for having come over to present your views on Europe. And at the same time, I'm very pleased to welcome Susan Maloney from Brookings, our next door neighbor. Susan has also had a career in the State Department, where she served on the policy planning staff, and now she's a senior foreign policy fellow at Brookings. We will go about having a discussion here on the podium and then turning to the audience. And the one thing that I would like to start out with and giving the panelists a chance to come in with their views is to enlighten us a little more why this debate has been so uncontroversial, why there hasn't been much of a debate in Europe about this deal, not only because there is a summer break, not only because there are other issues on the agenda, but what is it that makes it so easy for the Europeans to see this deal in a positive light? Jean-Marie, if you wanna start, and then I'll hand over to Wolfgang. Thank you. Well, I think the, first, it's a great pleasure to be here with all friends. You mentioned that Susan was on the policy planning staff, I would add that Wolfgang and myself, we first met when we were both heads of German policy planning staff, planning staff, and the French planning staff. So this goes back. So planning staff is probably the best entry point in nuclear discussions, must be. I think the Europeans are very committed to this deal because for them it is, in a way, the outcome of not just four years of difficult negotiation, but I would say 12 years of engagement, of trying to find a diplomatic way to make sure that Iran will never have nuclear weapons. It all started actually in 2003, and of course, 2003 is not an indifferent date. This was a time when North Korea decided to get out of the non-proliferation treaty. This was, of course, the year of the Iraq War, and there was at the time, there were deep divisions between the US and Europe, between Europeans on the issue, but there was a sense that if a war could be avoided with Iran on the question of weapons of mass destruction, that would be a good thing. And it was interesting at a time when the Europeans were divided on the Iraq War, the three, the UK, Germany, and France united on the idea of engaging diplomatically Iran on the nuclear issue. And that was the start. It didn't produce a result for a variety of reasons. We're not going to go through those 12 years. Ahmadinejad came to power in 2005. The proposals of the Europeans were not fully supported at the time by the US. The Iranians were not prepared to accept some of the demands of the Europeans, a variety of reasons. Anyway, it doesn't work out then. And then in 2006, it moves to the Security Council and it becomes an international issue. And eventually, with the new Iranian administration, we have the negotiation of which we are now seeing the result. What that means, what is behind that, is a sense, I think, among the Europeans that if I may say, they are frontline states in that issue. They are frontline states on the issue of proliferation because they are much closer to the theater where nuclear proliferation could happen in the most dangerous place in the world in the Middle East. They feel much closer. You don't need ICBMs to reach Europe from that part of the world. So there's a deep sense in Europe shared by the E3, but also by the, I would say, the whole 28 members of the European Union that achieving non-proliferation through robust diplomatic agreements is a top priority. Through robust diplomatic agreements. And then I would say just one word about my own country, about France, because in this whole negotiation, France has sometimes been seen, including by the US, as a kind of spoiler that was taking a very tough position on a number of occasions in the negotiation. And that reflected a very fraught history with Iran. I mean, Ayatollah Khomeini left for Tehran from Paris, Burb, but after that, the relations between Iran and France were less than optimal to put it mildly. There were incidents of terrorism. There was really very, I mean, France was after the United States, probably one of the countries that Iran had the most hostility to. So there was certainly no sense of trust between France and Iran. And that explains a lot of the continued pressure throughout the negotiation by France to make sure that the provisions of the agreement would be as tight as possible. So achieve non-proliferation through negotiation, but not as some kind of aspirational goal, but through an agreement that would not be built on trust, but would be built on very robust verification mechanism, and we can go back to that in the discussion. So frontline state on proliferation. And I think the second reason is frontline state vis-a-vis the whole situation in the Middle East.  But this enormous crisis that is washing up on the shores and borders of Europe gives a very concrete sense, concrete illustration to the Europeans that indeed the Middle East is a direct security interest of Europe, and that the nuclear Middle East, proliferating Middle East would be a much more dangerous Middle East than Middle East, which is already very dangerous, but at least there's only one nuclear power, Israel. And that brings me to my last point. I think the engagement of the Europeans on this deal is going to be complemented by a strong regional engagement. The French never closed their embassy in Tehran. The Brits have just reopened it. There is now a steady flow of senior European diplomats to Tehran, not to court business in Tehran. The Europeans have made enormous sacrifices in terms of the impact of sanctions in their trade with Iran. I mean, I think the European trade with Iran was something like $32 billion, and it went down to something like $9 billion. So that's not insignificant. The key there is an understanding in Europe that this deal is about non-proliferation, but if it is to produce all its result, now there's a strong need for very engaged diplomatic work because this deal doesn't claim and doesn't actually do anything in terms of changing the regional dynamics of the region. And if the regional dynamics of the region are left unattended, they could eventually destroy the deal. The deal, as you all know, has long time frames, five, eight years for some of the weapons and ballistic missiles related sanctions, 10, 15, 25 years for a number of constraints that are gradually lifted. The real policy question that is not discussed enough, in my view, in this town, is what are we going to do of those 10, 15, 20, 25 years? Are we just focusing on the rigorous implementation of the deal and we should indeed focus on that? But this is not enough. This is necessary, this is not sufficient. And I think you're going to see a lot of diplomatic efforts on the European side and I would hope that this would be done in close coordination and with full support from the US to now work on the regional dimension so that this deal, which we have to be honest, produces a certain nervousness on the part of the Gulf countries, although they are now all supportive of the deal, but indeed the fact that Iran could be reintegrated in the community of nations, although its military forces are technically much weaker than what the Saudis have or even the Emirates and a number of Gulf countries. Nevertheless, Iran is a big country and so we all know that there's a great deal of nervousness in the Gulf on what that means in terms of the influence of Iran in the Gulf and the balance of power in the Gulf. And there there is a real challenge because on the one hand, you do want to make sure that there is a balance of power.  You do need some kind of traditional balance of power. At the same time, you don't want to trigger a kind of escalation, arms race in the region that could become quite unstable. So you will need to complement reassurance from allies with effective diplomacy to gradually try to build a diplomatic framework for relations in the region. So that's why the Europeans believe that this deal is a foundation that opens the possibility of a different Middle East. It doesn't guarantee in any way a new Middle East and we shouldn't oversell it. We have to recognize that this is a deal about non-proliferation. This is not a deal about a new Middle East, but a Middle East as it is with proliferation is a much more dangerous Middle East than a Middle East with no proliferation. That's what's behind, in my view, the European strong support for the deal. Thank you very much, Jean-Marie. And we will go into more detail what you described as regional initiatives and regional engagement before I want to give the floor to Wolfgang and present his views and maybe a little bit of a German view also, but in general, the European view on the deal so far. Yeah, thank you very much. First of all, let me say I'm delighted to be here with Suzanne, my old friend Jean-Marie at Carnegie. I think this is a historic moment. We have had between Europe and the United States a huge difference as far as Iran is concerned for the last several decades. We, collectively the Europeans, we have found it reasonable and okay to maintain our diplomatic relationships. We've had ambassadors in Tehran, and I've just had a discussion with the Iranian ambassador in Berlin just a couple of weeks ago as a matter of routine. That is significant. You asked Cornelius what's the specific nature of the European or, in my case, the German position. Having had continuous diplomatic relations with Tehran makes it slightly easier for us Europeans to understand that what we have before us is not the case of an unconditional surrender by Iran to a kind of victorious coalition of outside powers. Quite frankly, when I read what some unidentified members of the U.S. Congress and others, former vice presidents, for example, Unnamed, of course. Unnamed, what they have said, I think they assume mistakenly that they are dealing with a case of unconditional surrender. If you're not dealing with a case of unconditional surrender, then you understand more or less automatically that only if a miracle happens will you achieve 100% of your objectives because in a diplomatic negotiation, and believe me, I've had my measure of experience as the chief negotiator for my country in a large number of diplomatic negotiation processes, you are a good negotiator if you can achieve more than 50%. You are not ever going to be 100%. 100% requires unconditional surrender of the other party. So let's understand that what we're dealing with here is obviously, as always, not the perfect 100% achievement of everything that we wanted to get for Christmas. This is not a perfect agreement. I think we all agree. But the perfect agreement is not doable unless you go to war and you demand as a victorious power, unconditional surrender. So I think it's a pretty important point. My second point is just very briefly that from my vantage point, trying to follow the American debate from Europe, from Berlin, I want to say two things. First, I think it's actually very good that you have in this town a thorough examination of the pros and cons and of the details and of the verification arrangements, et cetera, et cetera, et cetera. I am actually not so much impressed with the lack of this thorough debate in some of the European capitals, including my own. I think this is such an important agreement that it deserves thorough examination and review. There's nothing against this thorough debate. But second point, in my view, the emphasis in the debate here in the United States has to a certain extent been on uranium enrichment or not enrichment, how much enrichment. It has been often overlooked or not significantly addressed, explained that this agreement, if implemented, if implemented according to plan, will lead Iran to abandon all plans which they have either already executed or wanted to execute regarding plutonium reduction. Now, all those of you who have ever taken a course on nuclear weapons and nuclear strategy know that practically all nuclear powers existing today have found it attractive to actually not to go the uranium road, but to go down the plutonium road because it gives you a lot more bang for one and a few other things. So the abandoning plutonium, I believe, deserves a lot of attention. This is a major achievement which sometimes hasn't received sufficient attention. Last point, and I don't disagree with anything Jean-Marie has said, so I can be very brief here. I do want to underline one point he made. From the European and from my specific German point of view, from the point of view of the German political elite, this agreement is obviously not the panacea to the solution of all the ills of the Middle East or all the bad behavior of Iran in the past and present. But it does represent a hugely important opportunity and whether we can benefit from this opportunity, whether we can use it depends essentially on the acceptance and ratification of this agreement by the US. Believe me, if you, the United States, leaves us alone with a shattered agreement that is not going to be recognized, implemented itself by the US, all the possible steps forward regarding future role of Iran in the various crises spots in the region. The question of a quote unquote security architecture for the region. The Israeli-Palestinian conflict, the Syrian tragedy, et cetera, et cetera. None of these possible opportunities can be exploited if we fall apart, if we fall apart over the implementation of the agreement. So it's not a panacea, but it is an opportunity. And let me finish by making a very serious point. I believe having served in this country repeatedly as a diplomat, including as was mentioned as ambassador, I believe that there are few political objectives more important to my country than a close and trustful transatlantic relationship. At the same time, I believe that we have had more than enough transatlantic, you know, the Snowden and NSA affairs and so on. You can see how fragile the transatlantic consensus has become when you look at the various arguments in the TTIP process, for example. So the last thing we need in the transatlantic relationship is that we fall apart over this agreement. If you believe that you have seen transatlantic crises in the past, let me tell you, you ain't seen nothing yet. If this agreement falls apart, if the European left, far left, extreme left, will love the opportunity to say, see, we knew it. The United States is an irresponsible power. It is not a good power. It is not a benevolent hegemon or leadership nation. And all those forces in France, in Germany, in other countries, all the ugly elements will come up and will have a real big, big mess, which leads me, simply to conclude, to believe that if we want to be strong as the West in confronting the multiplying crises situations in the Middle East and elsewhere, we need to stand together and we need to do this agreement together. This is important because it's about Iran, but it is far more important than just about Iran. This is about the global positioning of the West for the next decade or two. So this is really historic. Thank you very much. Thank you very much, Wolfgang. You've raised the bar and you've alluded to the importance that the steel has for transatlantic relations. I'll pass the floor to Suzanne by asking, there was some mentioning of Europe in the debate over the past weeks here in Washington with regard to that particular perspective, but what is your general view of the role that Europe has played, say, ever since the agreement has been signed? How has it been viewed? Is the contribution of Europe being seen to the steel? What is the perspective that DC has on Europe for the near future? Thank you, Cornelius, and I'm very pleased to be here and honored to be on a podium with such distinguished speakers. I think I want to echo some of what's already been said because I think that it often gets downplayed or disregarded here in Washington. The critical transatlantic cooperation that produced the negotiations and the agreement is unique and historic and absolutely must be sustained and it's going to face some real challenges, but I'll leave that to potentially later in the discussion. I feel as though I'm constantly harkening back in history when it comes to the US policy toward Iran, but it is too easy to forget that for most of the past 36 years, we have been at odds with our closest allies in Europe on precisely how to deal with Iran, sometimes very fractious relationship when particular crises have emerged or when particular initiatives have been adopted on the part of the US government, and so to see the level of coordination that produced not just the agreement, not just the negotiations that proceeded it, but the strategy over the course of arguably 10 years that generated the conditions that brought about the negotiations and the agreement is extraordinary and it should be celebrated and it should be preserved. In specific answer to your question, I think that we've seen already that European diplomats have played an important role in helping to shape the debate here in Washington. You've seen a number of folks on the Hill allude to conversations with American partners in the P5 plus one, and I'm quite certain that all of those partner countries are European countries that help to inform their understanding of the value of the deal, but also the absolute permanence of the deal, at least with respect to the initial phase of implementation. That is to say, the understanding that the rest of the world and that our European allies are committed to seeing this deal forward, irrespective of what the Congress chose to do, certainly swayed the votes of a number of senators. I've said that publicly and so I think that has been an important, quiet and constructive way that we can engage with one another, and I hope to see more of it in the future. What I think is quite interesting is the fact that we didn't see the sort of controversy surrounding Iran policy over much of the past decade in Europe. So I'm not so surprised that the deal itself isn't as controversial there as it is here. I am surprised that Europe adopted some of the measures that it did, particularly in 2010 and beyond, without enormous dissension and at some substantial cost to European economies. Again, I think that that isn't fully appreciated here in Washington. We come to this problem with a slightly different historical context. For Americans and for the American political elite, there hasn't been a continuous process of negotiations with Iran. We have had intermittent diplomatic context, but we don't have an embassy. We don't have an ongoing formal diplomatic relationship. And so in effect, this deal is examined in isolation rather than in the full spectrum or continuum of 36 years of history. And so it is seen as sort of the necessity of being the Be'al Endal or a Panacea to all of the Iran problems. Compounding that is the fact that we came to the diplomacy on the Iran issue or on the Iran nuclear issue somewhat late to the game, an unfortunate decision which the Bush administration rectified in 2006 in creating and generating through cooperation with the process that the Europeans had already begun, what we now call the P5 plus one or the EU three plus three. But that of course, I think complicates some of the reaction here to the deal because what you hear in terms of the response to the deal is a debate about timelines and terms and implementation procedures. But really what you hear is a debate about the focus of the deal on the nuclear issue itself. That is in itself controversial here in Washington simply because we had the luxury of disengaging from the Iranian nuclear crisis for the first couple of years during the Bush administration. Whereas all of our European partners were there, as Jean-Marie said, from the very beginning. And so it comes almost belatedly, this sort of critica that you're hearing, particularly from Republican critics, but also Democratic critics of the deal who say why doesn't this deal address Iran's regional malfeasance? Why aren't the range of other problems, Iran's domestic treatment of its own citizens? Why aren't they incorporated in this deal? And that is simply the failure here in Washington to understand and appreciate how this process came to be and to in fact celebrate how effectively it worked despite the multiplicity of crises that emerged on the outside, on the periphery of the Iranian issue, that might very well have imploded the P5 plus one, that might very well have made these negotiations non-viable from the get-go. Instead the very close cooperation and ongoing dialogue that took place at the highest levels but all through the working levels of the negotiations enabled this process to work. And I think the real challenge now, as we see policies potentially moving in slightly different directions, those of you who heard former Secretary Clinton's speech next door earlier this morning may have a bit of a taste of what that would look like here in Washington. I think we're going to really need to work very hard to ensure that what we've achieved, what we've managed to do over the course of the past five years, is sustained even as the context changes once again. Thank you, Suzanne, and thank you for giving us the DC picture also on Europe. I'd like to move forward now into the debate. Lots of points have already been raised and we want to look at how Europe will deal with this deal basically. This is not about dissecting the deal once more. Our institutions, the International Crisis Group, Carnegie Brookings, we have all done this in writing over the past week so far. The end result, I guess, is bottom line positive. You can see the charts over here. If you cannot read them, you will understand that the top line is always about what happens if there is no deal and the bottom, the positive line is what happens with the deal. So the analysis, at least on the side of the panelists, I guess, is quite clear that this is a deal worth implementing. What we want to look at is how this can be taken forward. A few points were mentioned already, how the deal can be implemented and how the regional picture plays into this. And still, I want to do so because the deal is not yet through neither in Washington nor in Tehran, for that matter. I want to do this by picking up on some of the counterarguments and then have our panelists respond how going forward these concerns can actually be addressed. One of the recurring issues is that the deal ultimately is not implementable. Iran will cheat on it. There is no unified will among certainly the Europeans and other world powers to fully implement it. Yes, there are snapback sections, but will they ever work? So what is your sense of how both the US and the EU can work together to make this deal implementable, to say, to maybe anticipate responses to minor violations, how to frame the implementation, that this is something which gets fully implemented once it is signed off. So looking forward into the implementation phase, how do you see Europe's role there? Jean-Marie or Wolfgang, if you want to start. Well, I think first, if you want good implementation, you will need a stronger IEA. And so this will be very important that the IEA be well funded so that it has the means, the resources to do its part of the job in the whole process of verification. That's a technicality, but that's an essential one. So it shouldn't be any battle on funding IEA for the implementation. That's the first thing. I think the second is that, well, this deal, as you know, is a very detailed deal. And so it means that all the, I mean, for instance, the verification procedure is a fairly complicated one with different steps that eventually allow, as you say, for the snapback of sanctions if everything fails. And I think what you will see there is if indeed there are problems, you can go and can walk you through through the different steps of that procedure, which precisely gives you the opportunity for diplomatic engagement to sort out the problem. And if it's not sorted out, I mean, I can speak certainly for front, there is a snapback provisions where an important part of the negotiation because it was seen as very important to make sure that there would not be a possibility of a veto to bring back sanctions. That's why the mechanism has actually, in effect, been reversed. It is if you want to stop sanctions. So it's the opposite of what one would expect. And that's been, that is an essential thing. So I see the Europeans being very engaged with Iran in the technicalities of the deal. There are issues, for instance, that have been discussed like Parchin. There there has to be, you cannot second guess the IAEA. The IAEA is comfortable with the arrangement it has made with Iran. And the IAEA is run by someone who is not suspected of being in any way complacent with Iran. He has a track record of not being at all complacent. So on that, I think you will see also quite a watchful approach of the Iranians. If I may, I would want to make one comment on those charges. As you said, the top line is no deal. The bottom line is a deal. But there's another interesting aspect to those charges. What happened before the deal? And what you see is that before the deal, the period of rapid growth of centrifugeurs, of accumulation of enriched uranium is the period of escalation of sanctions. So it's when there was no, when the negotiation, when there was no negotiation. It's the period between 2007 and 2013. 2014, that is actually a period where there was a race between the sanctions and Iran trying to build as many centrifuges as possible. That was in a way the worst. And so that's also, I think, an important message in terms of thinking what is the best way to control, to lengthen the breakout period? Is it without or with negotiation? And it's not just a projection in the future that shows that it's also an analysis of what happened in the past. Thank you. Hoskan, do you wanna? Well, come on. I completely agree. Couple of points just to spell it out. First, neither the US, as I understand it, the Obama administration, nor the European co-negotiators have illusions. I made the point about this not being a panacea earlier. We share the view helped by the Obama administration that this is not to be regarded as an agreement built on mutual trust. From now on, the Iranians will behave like a normal good citizen. No, the agreement is built on extremely intrusive verification measures, et cetera, et cetera. And I want to just underline the point, this snapback mechanism is really quite an unprecedented maneuver. I was surprised, speaking personally, that Russia and China would allow in this situation their traditional veto power to be suspended, if you wish. I don't know whether that's the correct description. But in other words, this is really a significant achievement, which strengthens the credibility of the agreement. Second, very brief point, there's always the argument made, so, well, this is only about 15 years, and then what? And then they can go back and do all the bad things. Well, quite frankly, speaking again, as like Jean-Marie, as a diplomat, I've been in this business now for 40 plus years, 15 years in diplomacy is a very long time. If we didn't have this agreement for the next 15 years, I bet you Iran could be, if they so wondered, a pretty significant nuclear power. I think gaining 15 years, if the agreement is observed and implemented, is a very long time. There will have been, in the meantime, more than just one successor to President Obama. And no one knows who will be exactly in the leadership 15 years down the road on the Iranian side. That's also important to keep in mind. Final point, because of course I've been hearing these arguments, it is not true that the only purpose of the Europeans, especially the Germans, because we were the European country with the biggest trading and investment relationship, it is not true that the hidden purpose is to get back in business. Yes, many of the German companies who have had to suffer rather significant losses because of the sanctions, of course, are interested in going back into business with Tehran. But you will not see, I promise you, you will not see the German government rushing to Tehran with large commercial delegations trying to regain the lost ground overnight. Except for the one which was there. Well, two days after the deal. I'm sure there will be more delegations, not only from Germany, of course, people want to go and now it's no longer impossible or politically dangerous, but we understand, I shouldn't say we, I think the German government and other European partners understand very well that the challenge is a much broader strategic one. Again, this is this opening which the agreement offers is an opportunity. If we use it correctly, maybe we can, maybe we can engage with Iran about what kind of relationship could evolve between Iran and Saudi Arabia. Which is at the moment a difficult relationship with mutual recriminations and adversarial positions. Maybe we can, together always with the United States, make a new effort once the Iranian problem, if I can call it that, is to a certain extent neutralized to tackle the Israeli-Palestinian problem. Maybe we can over time have discussions with at least with elements of Iranian society about how this country deals with human rights and terrorism and many of the other issues that have been a problem for all of us. So, I think it's important to understand that this is going to be a long-term process that we're not talking about a few weeks or months until Iran changes. We need to consider this in terms of years, maybe many years. Let's not forget just to conclude. When you discuss this with Iranians, it happens and I'm not an expert on the Iranian culture by no means. But it has happened to me a couple of times that senior Iranian interlocutors have, in passing, made a reference to the fact that they believe that their country has been around for a couple of thousand years, whereas the United Germany has existed since 1870 and the United States a hundred years longer. This is from an Iranian point of view nothing. So there is a certain sense of pride and role and place in world history, whether we like it or not, we need to take into account as we try to deal with this. This is hopefully a new opportunity. If I may, on that one, I think what's going to make the situation tricky and where we need engagement is that I think both in Saudi Arabia and in Iran, there is a mix of great, in the case of Iran, as you say, a great sense of confidence that Iran has been around for thousands of years, and at the same time a sense of insecurity and on both sides. And that's where outside engagement will be needed, outside engagement to temper down the self-confidence and at the same time to temper down what seems contradictory, the sense of insecurity. And that requires subtle, intelligent diplomacy. Certainly diplomacy. Suzanne, is it too early to talk about implementing the deal and what Europe could do in implementing the deal? Does that interest anyone here in Washington where the debate is still more about whether the deal is good or bad? What could Europe do at this point from looking forward to the implementation? I think the debate here in Washington is moving away from the deal up or down, although there are obviously still wrinkles that could emerge along the road to full-fledged American endorsement of the deal. It doesn't appear as though the Congress can really play an obstacle at this stage in terms of its boat of disapproval. But I do think that this is when it's absolutely critical for the U.S. and Europe to in fact intensify their engagement on the issue of Iran, on the nuclear issue first and foremost, but then looking beyond the nuclear issue. On the nuclear issue narrowly, we face a challenge because effectively we've had a somewhat level playing field at least since 2010 between the U.S. and Europe. The sanctions regime wasn't quite as tight for European firms, but they were impacted by American sanctions in many cases, and there were EU measures and unilateral single-country measures that restricted their business with Iran. And so in effect it's really been the West that was forced out of Iran over the course of the past five years. That will no longer be the case. We will be back to a considerable divergence in the business opportunities which redounds to the diplomatic relationships, whether we like it or not. All of your governments will be looking to promote opportunities, facilitate those opportunities for their businesses, and that's what businesses expect of their governments. In the case of the U.S. government, the embargo will largely remain in place. There will be a few selective loopholes for aircraft and airline parts, as well as a few other areas that I'm sure the American entrepreneurial community will exploit to their fullest extent. But there will be a web of sanctions as the international crisis group has described it, a spider's web of sanctions. It very much remains intact here. And in fact I think we can anticipate that both critics of the deal, as well as sincerely minded folks on Capitol Hill who are concerned about the other aspects of the Iranian challenge around the region, are looking to find ways to up the ante in terms of economic pressure on the Revolutionary Guard and other entities that are involved with support for terrorism. None of that is actually precluded by the deal, although depending on how you read certain passages, I imagine the Iranians and potentially even the Europeans will find the passage or the implementation of new measures on the part of the United States, even if they are not related to nuclear issues, somewhat controversial. There will be a huge change in so far as there will be a disparity in the climates for diplomacy and for business between the United States and Europe. And we need to keep that transatlantic relationship as robust as it has been. For that reason I think it's incumbent upon the EU3 plus Washington to come together in a really intense fashion over the course of the next few months and talk about how snapback, under what circumstances would we look to snapback? I think we've heard policymakers suggest we're not going to snapback over every single infraction. There are differences between issues with implementation and clear violations of the deal. Where do those lines exist and can we in fact come to some common understanding so that if and as business expands that we won't have this sense that suddenly our understandings are different now and it's a result of the economic relationships. I think as part of that we also ought to have a very clear conversation about does UN Security Council snapback? If in fact UN Security Council sanctions are put back in place what does that then imply for EU sanctions because it really was the EU measures as well as individual country measures in Europe that has such a powerful impact I think both psychologically and financially on Iran perhaps more so than anything and finally this sort of de-conflicting on what exactly the United States might be doing in terms of targeting Iran's support for terrorism, whether arms supplies to Hezbollah, I mean Hillary Clinton laid out a laundry list of a kind of post deal policy for Iran which is a fairly hard hitting policy but one in which transatlantic cooperation both in terms of clarity on what the US may be doing on its own sanctions but also a clear common sense of purpose on our shared interests in seeing the crisis in Syria ameliorated in some way shape or form that those kinds of conversations should in fact intensify as we move toward the implementation of the deal. Thank you, Wolfgang, you wanted to come in. Yes, I'd like to add one specific point to this. We're having this debate more here in Washington than in Berlin so how big is the probability that the Iranians are going to try to cheat and undermine the agreement? Well, the way of helping the Iranians to start trying to undermine the agreement and to cheat is if those prevail, if those were to prevail here in Washington, D.C. who are already now preparing some poison pills to introduce into this or that legislation. This is going to make it Iran also has politics and there are going to be people who are going to try to kill the agreement. Those people exist just like they exist here and we shouldn't make it easier for the enemies of the agreement in Tehran by offering them a wonderfully easy excuse to try to sabotage the agreement. So I think it's important that both the United States and the European Union are as tough as nails as far as observing the, you know, down to the last letter that precise implementation of the agreement but let's not go overboard let's not let's not add new conditionalities I think that's not only not a good idea it will probably it will probably increase the risks significantly that the agreement could could unravel less here than in Tehran. So this is just a little warning shot. Thank you. Speaking of warning shots. I have a few more questions on my list but I also promised to bring the audience in so if there are already some questions on your side of this room there are colleagues with microphones around please raise your hand if you have a question or a comment please say who you are. If this is not the case at the moment that's fine then I'll turn to my second question I wanted to especially ask Jean Marie to explore a little bit more the regional dimension because ultimately we know this deal was not about Iran's regional activities it was a deal about the nuclear program only but you said that the deal can unravel if we don't watch closely what happens on the regional side what is it that you foresee to advise the Europeans to do in terms of promoting regional collaboration that could ultimately help preserve the deal help promote the deal. The deal has long timelines and so we need to approach it in that perspective I think it's probably and unfortunately unrealistic to expect a radical change for the good in regional relations in the last couple of years considering the completely conflicting narratives that you have in Riyadh, that you have in Tehran the notion that you can bring those narratives to some common understanding of the issues of the region that is just not going to happen any time soon but that is not a reason to give up and just to stand still waiting for things to deteriorate and there I think the number of concrete issues that need to be addressed without addressing first a kind of grand scheme of a security architecture and I completely agree there with Wolfgang that in the end that's what we should be aiming at but that security architecture is not going to come as the first step it may be a crowning achievement after years of gradually diffusing the various crises where Iran is on one side the battle line you have of course two major crises at the moment where Iran is involved one is Yemen and one is Syria Iraq in Yemen in my view it's a good thing that the Houthis have been pushed back and so there is a moment there is a window now a kind of negotiation where the coalition that supported the government should not try to overreach because if it overreaches it will eventually probably fail and will have a protracted conflict there is now an opportunity for some kind of power sharing agreement in Yemen it's not easy but that's what the UN should be supported and that's where some engagement with the Saudis, with the Iranians is important can be tested there because in the on that particular issue and so I think that that's something that clearly this administration is willing to countenance although precisely how that takes place and under what sort of a process I think is very much an open question but I do think that there is an appreciation that the Syria problem cannot be solved without dealing with the combatants and Iran is a combatant in the Syria crisis so I think we are going to have to find a mechanism for doing that Iranians of course but again we have to see what happens when the rubber hits the road and if we can actually create a constructive dialogue pushed to facilitate Iranians access to life-saving medications and medical equipment is the government of Iran in terms of the difficulties in accessing that issue of that problem just adding as someone who lived in Tehran until 2013 so experienced sanctions first hand I wouldn't only blame the Iranian government I would also blame business attitudes because if you know that a good discourse you will hoard it and you will wait until prices rise so there are lots of mechanisms which make medicine much more difficult to get Wolfgang some of the questions were addressed to you too I'll try to offer a response to the question you need to understand that there are many in Europe as I tried to say earlier a million refugees on top of what we already have maybe we should take a clear look and realize that it's all the United States fault because they were the ones who went into Iraq and started you know the the other question I would like to offer I think what is desirable is that as we look at these various crises not only the Iranian crisis but let's say our problem with Russia a country with various goals


Maa, maa pepa nukes at export spilovas and the idea is to find out if domestic farms land from foreign old farms in both Kenya and Malaysia. And the outline of my presentation takes that approach, I start by giving the motivation, then the research objectives, the results, data and how I do the estimations. In terms of the motivation, I start by noting that these two countries have, they share more or less a similar history because after independence they obtain independence from the British. Then they adopted similar development strategies immediately after independence. But at the same time they also have many differences. And one of the differences of course has to do with the initial conditions, that it's possible to argue that the initial conditions at independence are not the same and therefore there's no need for comparison. But a more compelling reason why this comparison is necessary is because after 2002 when in Kenya when the new government took over power, the elites started developing a lot of interest on what was happening in Southeast Asia and Malaysia was one of the countries that Kenyans tend to compare themselves with. The argument is of course is that in the 60s they were doing better than Malaysia but all of a sudden Malaysia has been able to industrialize and Kenya has experienced stagnated growth over the years. So what has happened is that as a result there have been a lot of engagements between the two governments where Kenyans have gone to Malaysia to try and learn how they have been able to industrialize. And one of the fruits or the outcomes of this collaboration has been was the establishment of the free trade zones in Kenya after the Penang model in Malaysia. There was the establishment of the Kenyan National Economic Social Council which oversees the development of the country through the implementation of vision 2030 which collaborates with the National Economic Action Council in Malaysia and vision 2030 was also developed after Malaysia's vision 2020. So there is a lot of interest on what is happening in Malaysia and therefore this so in the process of learning I thought with this kind of comparison our policy makers can learn something about what happened in the manufacturing sector in Malaysia over the years. Now one of the arguments in literature is that the reason why Malaysia has been able to do very well is to do with their ability to not only attract foreign direct investment but also to use it in a productive manner. So and scholars like Jomo Rashia have talked about that and FDI was mainly went to the non-research resource rich sectors and it was mainly export driven starting from the 70s. So Kenya has also managed to attract FDI but for some reason Kenya has not been able to, the argument is that Kenya has not been able to take advantage of the FDI benefits and therefore the manufacturing sector has stagnated. Now when you think about FDI and the benefits that can accrue from FDI my study focuses on the indirect effects and export spillovas, one of them and according to Bloomstorm and Coco the definition is these are the benefits that would accrue to domestic farms in host countries through foreign owned farms export operations and which may pave way for local farms to enter the same export market. So there is a lot of learning that takes place so that foreign farms can also be able to start joining the market and this may be because of probably transport infrastructure or information that these farms get to know about new export markets as a result of interacting with foreign owned farms. Now what has happened in literature which of course is one of the contributions of this paper is that most of the studies that have looked at this issue tend to use random effects where the estimate a probit model and which captures the decision of farms to export so farms decision to export so it's either 01 probit estimations is that you can't do the fixed effects estimations because of the incidental parameter problem so what we try to do in this paper is we use a linear probability fixed effects model to do our estimations because of course once we do random effects model you tend to ignore the individual specific effects then of course for these two countries there is very limited literature and studies done in this area so it was also one of the comparing reasons why we looked at this. Now so we go to the research questions the first one then is do foreign farms influence the learning to export by domestic farms in Kenya and Malaysia and yes what are the transmission channels again a lot of literature does not look at the transmission channels so we also take advantage of the dataset we have to look at the transmission channels now I start by giving the results and the main result is that we find very limited evidence of exports pilovas in Kenya from foreign direct investment this well this was to a large extent surprising because Kenya has a reasonable level of FDI in Kenya and FDI tend to be very vocal so you'd expect that because of the presence of FDI for a long time they had learning also been taking place but based on our estimations there is very limited evidence of learning then the next thing that we see is that in Malaysia indeed there is evidence of export pilovas and these positive pilovas are mainly through backward linkages but you also have negative pilovas from what I'm referring to competition and information channels now I will discuss how I do the estimations and the proxies that I use for that as we progress then what you see in Malaysia is that the concentration of this pilovas the negative pilovas is actually in farms that have low productivity so it is the farms that struggle really that end up having suffering from the presence of FDI now we also find that this was our robustness test so we try to find out if indeed the relationship can also be the other way around that you can have domestic farms or foreign owned farms learning from domestic farms and we do not find evidence of that so indeed the learning effect takes place from foreign direct investment to domestic farms and not the other way around now we also try to speculate although the people does not really look at why this is why we have this kind of effects pilovas one of the reasons why we have positive pilovas in Malaysia we attribute that to the labour content requirements which have been enforced for quite some time and therefore seems like that kind of policy has paid off and in Kenya we do not have this so in terms of the data that we use we obtain some data from it Kenya from the Ministry of Industrialization the government used to collect this data awhile back but after 2005 they stopped collecting the data so we were fortunate enough to get a good sample of farms for both foreign farms and domestic farms then in Malaysia again the dataset we had was from 2000 up to 2006 again after 2006 the Malaysian government stopped collecting stopped releasing this data so I was fortunate enough when I was doing the study to access this dataset and what you see from this although most of the details are in the paper what you see from this is that the number of farms in Malaysia is way much more than in Kenya so there has been a lot of growth over the years but then we also have a reasonable number of foreign farms local farms in both countries so in terms of the variables that I consider I will focus mainly on the spillover variables we have RDF this one RDF which captures demonstration effects and this is defined as the share of expenditure by foreign farms in each sector the total expenditure of RDF in that sector then we have the the competition effects proxy which is the ratio of foreign owned farms share in employment in a sector to employment in the sector and the idea here is that if this will give us the importance or the significance of the foreign sector in the domestic market so if the sector is very important then you'd expect competition pressures going to the domestic farms then we also have FEX which is the proxy for information spillovers which is captured by the ratio of foreign owned farms in export sectors to total exports in sector J now the idea here is that we are looking at the export activity so if domestic farms are in sectors that have a high concentration of foreign owned farms engaged in export activity then you expect that they will tend to learn in the process then we also have the last proxy of the spillovers which is the domestic which is for backward linkages and that is the share of the cost of direct raw materials from domestic farms by foreign owned by foreign farms in a sector to the total cost of the direct raw materials so that captures the backward linkages and then of course we use the other variables we have other variables that we have control variables that we use how do we do the estimations okay fine so the empirical strategy that we follow is that we first estimate the determinants of farms decision to export in both countries so for all the farms then secondly we look at we do another estimation to find out whether foreign owned farms affect the decision of domestic farms to export and through which channels and then lastly we interact productivity measure with this spillover variables to try and see whether to try and see if because the literature suggests that the most productive farms could easily get into the export market and therefore you'd expect them to have a high concentration of spillovers and lastly we for the robustness test we estimate whether indeed the relationship can be reversed so whether domestic farms would influence foreign owned farms and Chia I would wish to stop here thank you very much for your attention


Hello and welcome to this global political economy, NewsDocs. I'm Lynne Fries. A global green new deal, COVID capitalism and a just transition, was the topic of a webinar, organized by the Transnational Institute. This NewsDoc is a report on some of what Richard Kozlerite had to say at that webinar. Richard Kozlerite is Unktad's chief economist and director of Unktad's Division of Globalization and Development Strategies. Richard Kozlerite is lead author of Financing a Global Green New Deal, Unktad's 2019 Trade and Development Report, and co-author of a new multilateralism for shared prosperity, Geneva Principles for a Green New Deal. We go now to our featured clips. I do think what the COVID-19 challenge does reminders of and speaks to the issue directly of ecology is how we deliver public goods and protect the public and the global commons. We don't live in a world of global government, and I think thankfully so in my opinion. But the difficulty of providing global public goods in the absence of global government and that governments are responsible for public goods at the national level is an old challenge that has haunted the multilateral system since its inception. How we think about that notion of representation at the international level really still has not been addressed. All we can say is that the current institutions really do not show the kind of degree of representation that is necessary to deal with certainly the problems that most policymakers in the developing world face on a day to day basis. Even before the COVID hit, the economic prospects across the world economy were deteriorating against this backdrop of interlinked and mutually reinforcing economic, social and environmental stresses and crisis. Solving these crisis needs to address the rules of this hyper-globalized world that has emerged over the last three or four decades and the vested interests that have formulated those rules, particularly around footloose finance. And effective solutions require that the public sector take the lead in finding solutions to these stresses with sufficient resources and adequate policy space to deal effectively with them. And this means, at least for us, it means a transformative agenda. You can't solve these problems incrementally if you're going to escape this so-called new normal that has emerged even more strongly since 2009. And we think the idea of a Green New Deal can provide that kind of unifying narrative and a set of policy proposals to address not only the immediate problems of global recession, but to mitigate the systemic stresses and to affect the required transformation. And when you look at the kind of packages that are bundled together under the rubric of the Green New Deal, and mainly in the north it has to be said, but not only. They have certain common elements, however. They reject austerity, first of all, and they look for kind of macroeconomic measures that are wage-led and job-rich. They involve always a massive investment push into climate mitigation and adaptation, but I think beyond that to notions of the care economy that are intimately linked with the need to address and build a healthier population and a healthier planet. They always involve progressive taxation, the need for progressive taxation systems. They always involve regulating finance and a much bigger role for public banking as central to a different type of financial system. And they involve some kind of strategic planning, including a central role for industrial policy. All these are the kind of elements you find under the rubric, I think, of a global Green New Deal. Now, what most of these measures are rooted in the national state. There's a strong state-centered argument and therefore a national argument to these Green New Deals. I think they all also point beyond the national level. And that's particularly true, of course, when it comes to developing countries and pulling up the people of the South and cooling down the planet, I think shifts the Green New Deal narrative to a global level. And in the process, calls on the multilateral system to provide a robust framework for policy coordination, resource mobilization, and regulatory oversight. The work that we've tried to do in UNTAD in the Trade and Development Report in particular has been to show why the economic stresses that have characterized this world of hyper-globalization, rising inequality, insecurity, indebtedness, are a product of the rules of hyper-globalization and they're very much reinforcing of each other. What we've also tried to do is to highlight a big paradox around those rules and I think an opportunity for progressives everywhere, which is despite being a validly pro-business, which the rules of neoliberalism and hyper-globalization certainly are, they have failed to boost productive investment. And that's both true of the private sector and it's true, particularly, of course, of the public sector. So that emphasis on the need for a strong role for investment is central to our understanding of the opportunities around the global green new deal. Now, the question, I guess, how has COVID impacted on this discussion? I think, obviously, it has forced governments in the advanced economies to tear up the neoliberal rulebook, first of all. When Tory chancellors suddenly discover they're in a Keynesian self and Steve Mnuchin becomes a kind of implicit advocate of basic income, you change your understanding of the kinds of policies that you need to pursue to address this problem. And beyond that, I think they've thrown a wedge between the ideas of what is needed for a healthy population and a healthy planet. And we know from COVID that these two things are closely related. And I think the big question now is how are we going to reconnect healthy people, healthy planet and a healthy economy? And in a certain sense, the global financial crisis was a dry run for this for the neoliberal tradition, supporting footloose capital and ensuring that it could make profits whenever, wherever and however it wanted was essentially the basis for the policy initiatives that came out of the 2009 crisis. Of course, with a little bit of help from the gargantuan expansion of central bank assets, she and with a huge piling up of debt, public, private, developed and developing countries. Now, I think the COVID-19 has dramatically exposed the limits of that kind of agenda and the fragility of the runaway hyperglobalized world we have been subject to. And it's provided a dramatic reminder, I think, that the health of people and the planet rests on this provision of public goods and the protection of the global commons and the global Green New Deal, I think, offers an alternative way of reconnecting people, the economy and the planet around this idea of a massive investment push led by the public sector. Now, the estimates of what is involved in terms of financing vary tremendously, but everyone acknowledges that it requires moving from billions of dollars a year to trillions of dollars a year to borrow a phrase from the World Bank. We think it's in the order of two to three percent of global GDP annually that is required over the next decade with a significant amount of that, obviously, going to the developing world. And of course, the first the first reaction you get to these kinds of numbers is, you know, is it can we afford this is the financing available. And again, the COVID-19 crisis to some extent helps in this in this regard because, you know, the response to the to the Keynesians after 2009 was that we don't have the kind of magic money trees that you need to be able to fund an expansionary response. What we see now is not simply magic money trees, but the whole emergence of magic money forests that have somehow magically concocted trillions of dollars to deal with the consequences and offset the problems that have emerged from this crisis. So so the issue of financial resources, at least to us, seems to have seems to be somewhat of a red herring. And when you look at the mechanisms of credit creation, the opportunities for taxation, the reshifting of government programs from what is unproductive to what could be potentially productive, the resources are undoubtedly out there. And people like Naomi Klein in in this changes, everything have gone through a particular combination of of taxes and subsidies that could be shifted into into a Green New Deal agenda. Bob Pollan from the University of Massachusetts has done the same. Bob has a bigger role for the credit system as do we in UNTAD in defining the potential resources to fund this kind of large scale investment drive. And the 2019 Trade and Development Report tried to set out the kinds of resources that we think need to be rechanneled into a global Green New Deal that are available to meet the investments, not simply in climate mitigation and adaptation, but in in in the provision of public goods. More generally, and we try to show in our modeling of that exercise why that kind of agenda is not only good in terms of increasing demand, of providing new jobs, of increasing wages, but also it does open the opportunities to reduce carbon emissions to ensure that the health of the planet is deliverable within a within a reasonable time frame. It's not a blueprint in the 2019 Trade and Development Report. It's a reminder of the economic linkages that need to be utilized to ensure that this kind of policy is credible from a kind of economic point of view. That said, the Wall Street consensus hasn't gone away. And it hasn't gone away in particular in the international monetary system. And indeed in the wider Bretton Woods multilateral system. And that's a problem particularly for developing countries where the resource constraint is much more binding still than it is in the advanced economies. And sadly, compared with what they were meant to do, the Bretton Woods institutions, which was to control footloose capital. That's what they were set up to do. They have over the last 30 years become handmaidens, essentially, of a very speculative and predatory form of capital that works against the kind of agenda that I've tried to outline. So that's that's an obvious problem for people like ourselves, because we don't think you can simply trash that system overnight. You have to find ways of reforming that system in ways that can deliver on the kind of agenda that we're talking about. Although that reform we think will also involve new institutions that can deliver more investment, more stability, more fairness, and a healthier planet, including for the course of the developing world. And we've tried to outline a set of principles for delivering shared and sustainable prosperity work that we've done with Kevin Gallagher and his team at Boston University, what we call the Geneva principles for a global Green New Deal that could that could provide this alternative. And we've tried to outline reforms of the international financial system that we think would be necessary. The first one, of course, is the need for developing countries to have sufficient policies based to be able to enact the kinds of policies that we see as part of a global of a Green New Deal. That means revising free trade agreements. It means revising bilateral bilateral investment treaties because these have very significantly cut into the policy space of developing countries. It means revisiting the need for capital controls as a necessary part of the toolkit of developing countries. The IMF has been ambiguous on that, although it's moved in that direction in recent years. We need to clamp down on corporate tax evasion and illicit financial flows going beyond the OECD BEPS initiative towards a common unitary taxation system with a global minimum tax rate. I think we need to talk about a global competition authority that can deal with the restrictive business practices of very large corporations. That's an idea we've thrown out in the past. We need a debt duly. I think Jayati Ghosh talked about this in her presentation a couple of weeks ago. That's long-standing, untapped demand. The need for a proper international system to deal with sovereign debt restructuring goes back to the 1980s. We've long argued that that is a missing part of the Bretton Woods jigsaw. I think we need a properly funded global climate bank. You can't, although the IMF and the World Bank have a role. I don't think they should be given sole responsibility to that. Funding that kind of bank is an important issue, weaning it from the dependence on credit rating agencies as a source of their risk management is critical. And we've also talked about, as I said before, the need for a green Marshall plan that will deal properly with issues of technology transfer and adaptation funds for developing countries with different funding mechanisms using SDRs, possibly ODA in a different kind of way. So that's the kind of architectural reforms that we want to see. A new deal, at least for me, implies an avowedly political project. I think that was true of the original new deal. It was responding to the anxieties of the times in the United States with a transformative agenda. That's what the new deal was all about. It acknowledged that there were vested interests that had to be confronted and it embraced popular voices in a way that had not been true of American politics, certainly before that. And it took policy details very seriously. And it's those combinations, I think, that make the idea of a new deal, and in this case, a global green new deal, a relevant framing of the agenda that we're talking about. We have to leave it there. That was Richard Koselwright participating in a webinar on the global green new deal. Richard Koselwright is Anktad's chief economist and director of Anktad's division of globalization and development strategies. Many thanks to the Transnational Institute as organizer of the webinar and to all the webinar co-sponsors and participants. And from Geneva, Switzerland, thank you for joining us for this episode of Global Political Economy or GPE News Dogs.


Good day, fellow investors! I thought to make the last episode for 2018 about something that should be the most important message when it comes to stock market investing in 2019 and beyond. That is the power of compounding. Einstein said compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn't pays it. Buffett clearly explains what his investing focus is in this excerpt from his last letter to shareholders. I quote, for the last 53 years the company has built value by reinvesting its earnings and letting compound interest work its magic. So what it is so important about compounding interest? Let me show you another example going back to Benjamin Franklin who was such a visionary that he understood the power of compounding back in 1790. So the real story goes something like this. Franklin decided to leave a deposit of 1,000 pounds back then about 4,400 dollars, one to his native hometown of Boston and then another 1,000 pounds to his adopted hometown of Philadelphia. On the condition that they keep those funds invested for the next 100 and then 200 years. So Franklin said that the funds should be used to make loans at 5% interest to young craftsmen under the age of 25 to help them set up their businesses. The loans were to be given only to those craftsmen who were married, had completed their apprenticeships and could obtain two co-signers to vouch for them. After 100 years each city was to take about 75% of the fund to use for public works like bridges or whatever. They were to then continue loaning the money for another 100 years. At the end of those 100 years each city would get about 25% of the money and their respective states would get the rest. Head Boston and Philadelphia followed through with Franklin swishes successfully. They would have each had nearly 20 million in their funds at the end of 200 years. Of course its politics, its states, its cities, its governments, they didn't follow through but still they managed to have about 5 million with Boston after 200 years and Philadelphia had just about 2 million. But still they started with just 4,000 and ended up with 5 and 2 million after 200 years. That is because they invested in different things, insurance, things like that that didn't work out as planned, plus they could take out parts of the money after a certain amount of time. Nevertheless, turning 9100 dollars with what they started to 7 million is something important and that's the power of compounding because Franklin said that they cannot invest the money for the first 100 years. And this shows the power of compounding. 1,000 dollars at 8% compounded annually after 10 years its already more than double 2,100 after 20 years, 4,000 after 30 years 1,000 dollars is already 10,000 which means that's 10 times your initial investment. After 50 years we are 46 times, 60 years 100 times and then the power of compounding really kicks in and then after 100 years you are 2 million something. Now you'll say Sven, okay, but how does this work for me? After 60, 70, 80 years I'll probably be dead. So who cares about compounding? Well, this is the problem with compounding. It is that it doesn't give instant gratification. You might see a dividend of 5 bucks as nothing. However, even something small grows and compounds over time. Look at this 30 year. The 1,000 goes to 10,000 over 30 years. So if you invest 100,000 today and you want to retire in 30 years you can count on a million with just 8% annually and this little bit of patience if the markets do well if your investments do well that can go even faster. But the key is to focus, okay, 8%, 10 times my money in 30 years that's amazing. This is how compounding actually works. You can check the CAN Academy, just write how compounding interest works, CAN Academy, video on YouTube, excellent video that explains it in detail, but just let me show you here. If the initial investment is 10,000, in this case 10% compounded monthly, then after one year already the interest is 1047 dollars. After year two the interest isn't 1047 times two. It is even a little bit more because the initial interest gained in the first year starts to compound more and more interest. So as the years compound by you get more and more money. Check the video of the CAN Academy. However, when it comes to investing the first, I just went to Bloomberg for the stock market. The first news I got today was this, US stocks futures really after Trump and Xi big progress phone call. This is not important for investing. The important thing is by how much you can compound interest invested in businesses. And that's my message for 2019 and whenever, wherever, when it comes to investing, compound the interest. Let the businesses you own compound the interest, grow dividends, earnings, etc. And then you will do good. Now it might be good. Trump's really okay. Two months ago it was bad. Two months from now it will be again bad, etc., etc. Don't listen to this noise, short-term stories. Try to set yourself up so that compound investments lead your portfolio. Just an example. This should be in the news and this should be compounded in the news all the time. But this should be boring. And that's why it's not in the news. Really, Trump, Xi, that's a big news and people will read it thinking that it matters to their investment life portfolio, whatever. This is what matters. Walmart has increased its annual cash dividend every year since first declaring a 5 cent per share annual dividend in March 1974. For additional historic dividend information, please see their annual reports. But look at how the dividend just went up, up, up, up and up. You find such investments, one Walmart that fits your portfolio well and you'll let it grow for 20-30 years and you'll do amazingly well, no matter what happens with China, with the US, etc. Try to focus on compounding and everything will be easy with your investments. Thank you for listening. If you like this mindset, please consider subscribing as we talk about stocks, investment strategy, investment education and long-term investment mindset. As this is the last day of 2018, if you're listening, still in 2018 or in the beginning of 2019, I wish you a great, great compounding interest 2019.