Picking Up the Pieces in Iran

(Bloomberg) -- Want to receive this post in your inbox every morning? Sign up for the Balance of Power newsletter, and follow Bloomberg Politics on Twitter and Facebook for more.

Containing the economic damage at home: That’ll be Iran’s most pressing challenge now that Donald Trump has pulled the U.S. out of the nuclear deal.

The U.S. president has gambled that the reinstatement and expansion of sanctions will either lead to a popular uprising against Iran’s leaders, or force them to give up their nuclear ambitions, their ballistic missiles and their sponsorship of militant groups. Fending off his economic offensive won’t be easy.

Iran’s currency is at a record low. Banks are struggling with bad loans. And if foreign companies were reluctant to enter Iran's market because of U.S. sanctions that aren't linked to the nuclear program, then Trump's restoration of more penalties will almost surely scare most of them away.

He wants the economic pain to turn Iranians against hardline leaders, but they may push back by circling the wagons around the 1979 Islamic Revolution.

That could be a risk too: Rare pocketbook protests that erupted in December laid bare an undercurrent of dissatisfaction with the regime. What’s more, many Iranians are too young — and maybe too frustrated by corruption, economic mismanagement and limited job prospects — to heed the call.

Picking Up the Pieces in Iran

Global Headlines

Russia ties? | Stormy Daniels’s attorney, Michael Avenatti, says he has bank records that show a company tied to a Russian oligarch — and connected to Putin — sent $500,000 to Trump’s lawyer Michael Cohen in the months after the 2016 U.S. election. Avenatti caught the president’s team off guard when he revealed the paper trail yesterday on Twitter. Read more about the latest twist in a litigation brought by the adult film actress here.

No surprises here | Republicans wrapped up three crucial U.S. Senate primaries in West Virginia, Indiana and Ohio by nominating candidates who embraced Trump, while Democratic voters rejected insurgents from the left to stick with the party’s mainstream. Those races may be pivotal in determining whether Republicans hang on to their 51-49 majority and could bolster Democrats’ attempts to cast the midterm elections as a referendum on the president.

Breakthrough overshadowed | Japanese Prime Minister Shinzo Abe’s Tokyo summit with leaders from China and South Korea — the first in seven years — represents a diplomatic triumph in Abe’s quest to settle stubborn disputes over territory and past wars, Isabel Reynolds reports. But the meeting was largely overshadowed by the unfolding diplomatic dance between two men not in the room: Trump and North Korean leader Kim Jong Un.

Turkey troubles | U.S. patience is wearing thin over Turkey’s imprisonment of an American priest. With a judge ordering Pastor Andrew Brunson back to jail, U.S. officials may retaliate against what they see as “hostage diplomacy” by Turkish President Recep Tayyip Erdogan’s government. As Cagan Koc reports, it’s one of a trio of issues that could trigger unprecedented U.S. sanctions against a NATO ally, likely to be modeled on those imposed on Russia.

Humanitarians under fire | Aid workers fighting famine in South Sudan are being targeted in a four-year civil war that’s ripping apart the world’s newest nation. While both sides in the conflict have been accused of atrocities, the White House yesterday announced a review of its assistance programs to the African country, saying the government is fueling a disaster that’s killed tens of thousands of people by failing to respect a 2017 cease-fire.

What to Watch

  • Look for the outcome of talks between U.S. Secretary of State Mike Pompeo and officials in North Korea today on Trump’s summit with Kim and the release of three American detainees.

  • Polls have closed in Malaysia’s election, which will determine whether Prime Minister Najib Razak’s ruling alliance can extend its 61-year run in power.

And finally ... Turks have taken to social media to ask Erdogan to end his 15-year rule. “If one day our people say ‘TAMAM,’ we’ll step aside,” the president told his ruling party’s lawmakers yesterday. Within hours, the Turkish word for ‘enough’ had been tweeted almost 2 million times. Despite the frenzy, it's too early for the opposition to get excited. Erdogan may be Turkey’s most divisive politician, but he’s also its most popular.

Picking Up the Pieces in Iran


To contact the author of this story: Alaa Shahine in Dubai at asalha@bloomberg.net.

©2018 Bloomberg L.P.