The potential for global unrest upsetting financial markets is rising. From the Middle East to Asia ill winds are blowing. Last week in addressing the United Nations Israel’s prime minister drew a red line threatening military action if Iran produces weapons grade materials for a nuclear bomb. This corroborated my March blog post “Iran’s Nuclear Rubicon” where I argued fears over a military strike on Iran this year were unwarranted, as such action was unlikely until Iran crossed the red line or Rubicon of assembling weapons grade materials. My Iran mollification, along with my prediction from my March 2011 post “Forecasting the Reckoning” that risks in China were unlikely to occur until after that government’s 2012 power transfer should be of lesser comfort as 2012 moves into the rear view mirror and time passes. Looking around the world, global pressures are building and the risks of events negatively impacting financial markets is rising.
Clear analysis on Iran’s nuclear program is surprisingly difficult to find, and misperceptions are common. Among these misconceptions is that a metaphorical clock is ticking down, and if Iran’s nuclear program is not halted soon the country will field nuclear weapons. But while Israel’s government speaks of a clock it appears for the current U.S. administration the preferred analogy is that of Julius Caesar crossing the Rubicon. Iran’s nuclear program can be thought of as two parts. The first part, which is indeed nearly completed, is centered around manufacturing fissionable materials that could power a nuclear reactor. The second is utilizing that infrastructure to create much more refined, weapon’s grade materials. Similar to the crossing of the Rubicon River being Caesar’s point of no return, where he was committed to the overthrow of the Roman Republic, the initiation of weapon’s grade material production would commit Iran to fielding nuclear weapons and leave behind any pretences of a peaceful nuclear energy program.