President Donald Trump today announced the U.S. will pull out of the Iran deal signed by President Barack Obama in 2015, and will reimpose stringent economic sanctions against the country.
CNN headlined the story, “Trump announces withdrawal from Iran nuclear deal, isolating him further from world.”
But Must Read Alaska reached Bob Gillam, chief executive officer of McKinley Capital Management, to get his view on how the decision will impact financial investment decisions around the world. McKinley is a privately-held investment company specializing in global and international growth equity strategies, and is focused on targeting risk factors.
Gillam, who manages billions of dollars of investments around the world, favored the president’s decision, in spite of the uncertainty it causes.
“This deal was one-sided, and allowed Iran to get nuclear weapons at the end of the agreement,” Gillam said. “The reality is that Iran having nuclear weapons is not in the long-term best interest of the U.S. or Europe.”
Gillam said he had dinner with Trump last month and the topic came up. He said Trump didn’t confide in him exactly what he would do, but was concerned the Iran deal was executed without the approval of the U.S. House or Senate, and clearly needed to be addressed because it was not a good deal.
“He wants a better deal for the world,” Gillam said of the president.
But for the short term, restoring sanctions will create a lot of volatility in the price of oil, something that matters to Alaska’s economy.
“Volatility impacts investment decisions. The higher the level of volatility, the less willing investors are to make investments — that’s true in the oil field or the cereal factory,” he said.
Gillam said oil prices are rising but he expects volatility in both directions as a result of the president’s decision. The price of Alaska North Slope crude hit $75.26 on Monday.
There are other forces impacting oil, however: “The world economy is on fire,” said Gillam, who had just returned from Europe and described the boom he witnessed “with construction cranes everywhere. Even with domestic shale production up, that has to make up for the increase in world demand, which is everywhere. You can’t point to a country in the world not doing better than it was two years ago.”
Many leading Democrats in Congress criticized the Obama deal with Iran back in 2015, “but it was a way of Obama kicking the can down the road. There was always going to be a day of reckoning, but it would come for the next president,” Gillam said.
Alaska petroleum engineer Randy Ruedrich said the sanctions — if they curtail Iran’s oil production — coupled with Venezuela’s current economic condition, could produce a spike in prices in the short term. But he added that OPEC and Russia can replace Iran’s oil fairly quickly.
DAN SULLIVAN, LONG A CRITIC OF IRAN DEAL
Sen. Dan Sullivan, a critic of the Iran deal when Obama signed it in 2015, was in meetings and not available for comment today, but told NPR in October that he still had issues with the deal put together by Obama and then-Sec. of State John Kerry:
“It’s not just the violations that I’ve had problems with with regard to the agreement. It’s the overall structure of the agreement. Remember; even if Iran is completely abiding by all elements of this nuclear deal, by the end of the decade, even less if they’ve complied with it, the agreement almost allows them to legally be on the threshold of being part of the community of nations that have nuclear weapons. I think having another rogue terrorist regime on the verge of having nuclear weapons is not in the interest of the United States. It was one of the big flaws of the deal. And right now they’re showing that they’re not in compliance with it,” Sullivan said.
TRUMP, IN HIS OWN WORDS
Trump said the Iranian regime is the leading state sponsor of terror.
“We will be instituting the highest level of economic sanction. Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States. America will not be held hostage to nuclear blackmail,” he wrote on Twitter.
In his statement today, he said:
“[Iran] exports dangerous missiles, fuels conflicts across the Middle East, and supports terrorists’ proxies and militias, such as, Hezbollah, Hamas, the Taliban, and al-Qaeda. Over the years, Iran and its proxies have bombed American embassies and military installations, murdered hundreds of American service members and kidnapped, imprisoned and tortured American citizens. The Iranian regime has funded its long reign of chaos and terror plundering the wealth of its own people. No action taken by the regime has been more dangerous than its pursuit of nuclear weapons. And the means of delivering them. In 2015, the previous administration joined with other nations in a deal regarding Iran’s nuclear program. This agreement was known as ‘Joint Comprehensive Plan of Action’ or JCPOA.
“In theory, the so-called ‘Iran deal’ was supposed to protect the United States and our allies from the lunacy of an Iranian nuclear bomb, a weapon that will only endanger the survival of Iran to continue enriching uranium and over time reach the brink of a nuclear breakout. The deal lifted crippling economic sanctions on Iran in exchange for very weak limits on the regime’s nuclear activity. And no limits at all on its other malign behavior, including its sinister activities in Syria, Yemen and other places all around the world.
“In other words, at the point when the United States had maximum leverage, this disastrous deal gave this regime — and it’s a regime of great terror — many billions of dollars. Some of it in actual cash. A great embarrassment to me as a citizen and to all citizens of the United States. A constructive deal could easily have been struck at the time. But it wasn’t. At the heart of the Iran deal was a giant fiction, that a murderous regime desired only a peaceful, nuclear energy program. Today, we have definitive proof that this Iranian promise was a lie. Last week, Israel published intelligence documents long concealed by Iran conclusively showing the Iranians’ regime and its history of pursuing nuclear weapons. The fact is this was a horrible one-sided deal that should have never, ever been made.”