MacroScope

The Iranian thaw

A landmark deal curbing Iran’s nuclear programme in return for a loosening of sanctions appears to be underway, an agreement intended to buy time for a permanent settlement of a decade-old standoff.

Under the deal, Iran must suspend enrichment of uranium to a fissile concentration of 20 percent. An Iranian official has just said Tehran will start its suspension of uranium enrichment up to 20 percent in a few hours.

EU foreign ministers meet in Brussels and are expected to suspend some sanctions against Iran in line with the Nov. 24 interim agreement if as expected, the United Nations’ nuclear watchdog confirms Tehran is meeting its end of the bargain.

Given the green light, Tehran will be able to retrieve $4.2 billion in oil revenues frozen in overseas accounts, and resume trade in petrochemicals, gold and other precious metals. Iranian President Hassan Rouhani will court global business in Davos later in the week.

If things go according to plan, the potential of a market of 76 million people in a country with some of the world’s biggest oil and gas reserves will be hard for foreign business to ignore. Iranian trade officials say delegations from Turkey, Georgia, Ireland, Tunisia, Kazakhstan, China, Italy, India, Austria and Sweden have visited Iran since early December.

Confidence in Italy?

Emboldened by the splitting of Silvio Berlusconi’s party and the media mogul’s expulsion from parliament, Prime Minister Enrico Letta has already won one confidence vote in parliament. Today, he has called another to cement his coalition’s standing.

Letta is expected to win with the help of a centre-right group which split from Berlusconi but tensions are rising between his centre-left PD, now by far the biggest party in the coalition, and the small group led by Interior Minister Angelino Alfano.

That’s partly because there’s a new man in town who may press for more left-wing policies that would enrage the centre-right.

Banking disunion

The full Ecofin of 28 EU finance ministers meets after Monday’s Eurogroup meeting of euro zone representatives didn’t seem to get far in unpicking the Gordian Knot that is banking union. Ireland’s Michael Noonan talked of “wide differences”.

The ministers are seeking to create an agency to close euro zone banks and a fund to pay for the clean-up – completing a new system to police banks and prevent a repeat of the bloc’s debt crisis.

But a German official rejected a euro zone proposal unearthed by Reuters that would allow the euro zone’s bailout fund, the European Stability Fund, to lend and help finance the cost of any future bank rescues or wind-ups. Berlin does not want to end up footing the bill for failures elsewhere and is still constrained because a coalition deal to form the next government has yet to win final approval from the Social Democrats.