It is becoming apparent that the administration’s proposed nuclear deal with Iran is likely to go forward. While there is considerable uncertainty and reluctance in Congress, at the end of the day, there do not appear to be enough votes to halt the process.
For investors, the key issue is uncertainty. Not uncertainty as to the agreement moving forward, but uncertainty as to just what is being agreed to. Even the simplest document, and this agreement is anything but simple, can be subject to a range of interpretations. Consider:
- Relatively straight forward English language contractual agreements between U.S. citizens or organizations, often wind up in court as the parties disagree as to what was supposedly agreed to.
- Legislation finds its way to court to reconcile differing interpretations.
- This is why we have an extensive court system to deal with a wide range of disputes over agreements that were originally believed to have been written in plain English and thoroughly vetted by each party’s legal representatives.
Now we have a deal that very few have actually read and no one can definitively be certain of what it says. Just for starters, it is virtually certain that the English language version is not identical to the Farsi version. Translations are inherently imprecise and are dependent on the translators’ understanding of what was intended. In addition to English and Farsi, there are other parties to the agreement and other parties with significant interests, all of whom are going to be looking at documents translated into their languages.
The deal is, by its political nature and its interpretation, subject to various agendas. News media reports of statements by the administration, and by Iranian leaders, are sufficiently divergent as to make one wonder if they are both talking about the same document.
In any event, there are going to be some changes in the relationships between many of the parties directly and indirectly involved. While it is difficult to anticipate all of the eventual outcomes, it is very likely that Iran will be attempting to sell additional oil production into an already over-supplied market. In addition, Iran is likely to increase trade with various parties.
In the absence of more specific information, investors would be well advised to continue established investment strategies.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®