Geopolitics

Greece, Iran And The Formula For Successful Negotiation

With the recent Iran and Greece agreements, diplomacy has regained its prior glory. Three former diplomats say negotiation is all about balancing tenacity and flexibility.

U.S. Secretary of State John Kerry with Iranian Foreign Minister Javad Zarif after a meeting on Iran's nuclear program
U.S. Secretary of State John Kerry with Iranian Foreign Minister Javad Zarif after a meeting on Iran's nuclear program
Simon Petite

GENEVA â€" It's been an auspicious summer for diplomacy. First, after a marathon, all-night negotiation, there was a last-minute settlement between the EU and Athens on a new aid plan for cash-strapped Greece. Then, just a couple days later, the world's major powers reached a landmark agreement with Iran over Tehran's nuclear program. The nuclear negotiations that began in Geneva in October 2013 broke a record for duration, and the more than 16 hours of talks meant to avoid a so-called "Grexit" also set a record for EU summits.

How these kinds of discussions unfold and the preparation involved for negotiators is a mystery to most of us, so we spoke with three former diplomats and asked them to shed some light on the process.

Above all, the negotiators who sought a deal with Tehran were prepared. "Americans have analyzed for years the parameters of Tehran's nuclear program," says Carl Ungerer, a professor at the Geneva Center for Security Policy (GCSP). "They also calculated how much time Iranians would need to build an atomic bomb." In general, he warns, diplomacy is doomed "if the issues at stake are not clearly stated and if there might be misunderstanding."

Preparation also includes knowing the personalities on the other side of the negotiation table, says Michael Ambühl, a professor at ETH Zürich (Swiss Federal Institute of Technology) and former secretary of state for financial and diplomatic affairs. "What interests do they need to defend, and do they really have leeway?"

In that regard, says Marc Finaud, another GCSP professor, the Iranians "were one step ahead" of the Americans. "Their negotiators knew the United States perfectly well, starting with their Foreign Affairs Minister Mohammad Javad Zarif, who had studied there," he says. In the case of Greece, Ambülh says, the government of Prime Minister Alexis Tsipras was probably far less prepared. "The Greeks underestimated Europeans' exasperation," he says. "But they still managed to get a new aid plan and to remain in the Eurozone. In terms of negotiation, it's not too bad."

Greek, German and French leaders and President of the European Council Donald Tusk at the Euro summit on Greece, on July 12 â€" Photo: EU Council Eurozone

Like the fragile peace process between Israelis and Palestinians, there are many examples of negotiations that stalled because political will was lacking.

For example, to engage in meaningful dialogue with Cuba, President Barack Obama had to stop demanding a change in Havana's political regime. "The art of diplomacy can be defined as a judicious balance between tenacity, flexibility and creativity," Ambühl says. "If you're stubborn, unless you're powerful enough to impose your viewpoint, you might ruin everything. With greater flexibility, you'll reach an agreement more quickly."

The former diplomat says listening is a crucial skill. "Imagine two people who share the same office," he says. "One of them wants to open the window; the other one doesn't want to. After some discussion, they realize one needs air and the other one is afraid of drafts. The solution involves opening the window of the next-door office." The interest-based negotiation model is one of many tools used in adversarial situations.

Casual exchanges

To reconcile disparate positions, there's nothing like a hallway conversation. In Geneva last February, U.S. Secretary of State John Kerry and Iranian Foreign Affairs Minister Mohammad Javad Zarif decided to take a walk in the city center.

"In July 2008, Iranians and Americans met for the first time since 1980," Ambühl recalls. "We had to proceed in small steps, with measures to build trust. We suggested Iranians freeze their development of uranium enrichment to avoid new sanctions. If we had started to discuss the final numbers of allowed centrifuges, everyone would have left."

Meanwhile, timing is the most delicate aspect of any negotiation, Finaud asserts. "Everything is about knowing when to play your cards and when to make concessions. A deal is elaborated on a give-and-take principle." He argues that being vague can sometimes be important, especially in writing, so that the various parties can interpret meaning to their own advantage.

In the modern world, secret negotiations can't remain secret for long. "Even diplomatic cables find their way to being published on WikiLeaks," Finaud says. "We need to train diplomats to communicate. That's what I teach to officials of countries that aren't really good at transparency." Of course, revealing the details of a negotiation isn't an option. The goal of communication is first and foremost to reassure public opinion.

After handshakes, heads of state need to sell the deal to the country, which can be a Herculean task. "By definition, an agreement results from compromise," Finaud says. "It will seldom trigger enthusiasm. What matters is being able to live with it."

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Society

Debt Trap: Why South Korean Economics Explains Squid Game

Crunching the numbers of South Korea's personal and household debt offers a glimpse into what drives the win-or-die plot of the Netflix hit produced in the Asian country.

In the Netflix series, losers of the game face death

Yip Wing Sum

-Analysis-

SEOUL — The South Korean series Squid Game has become the most viewed series on Netflix, watched by over 111 million viewers and counting. It has also generated a wave of debate online and off about its provocative message about contemporary life.

The plot follows the story of a desperate man in debt, who receives a mysterious invitation to play a game in which the contestants gamble their lives on six childhood games, with the winner awarded a prize of 45.6 billion won ($38 million)... while the losers face death.


It's a plot that many have noted is not quite as surreal as it sounds, a reflection of the reality of Korean society today mired in personal debt.

Seoul housing prices top London and New York

In the polished streets of downtown Seoul, one sees endless cards and coupons advertising loans scattered on the ground. Since the outbreak of the pandemic, as the demand for loans in South Korea has exploded, lax lending policies have led to a rapid increase in personal debt.

According to the South Korean Central Bank's "Monetary Credit Policy Report," household debt reached 105% of GDP in the first quarter of this year, equivalent to approximately $1.5 trillion at the end of March, with a major share tied up in home mortgages.

Average home loans are equivalent to 270% of annual income.

One reason behind the debts is the soaring housing prices. In Seoul, home to nearly half of the country's population, housing prices are now among the highest in the world. The price to income ratio (PIR), which weighs the average price of a home to the average annual household income, is 12.04 in Seoul, compared to 8.4 in San Francisco, 8.2 in London and 5.4 in New York.

According to the Korea Real Estate Commission, 42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s. For those in their 30s, the average amount borrowed is equivalent to 270% of their annual income.

Playing the stock market

At the same time, the South Korean stock market is booming. The increased demand to buy stocks has led to an increase in other loans such as credit. The ratio for Korean shareholders conducting credit financing, i.e. borrowing from securities companies to secure stock holdings, had reached 21.4 trillion won ($17.7 billion), further increasing the indebtedness of households.

A 30-year-old Seoul office worker who bought stocks through various forms of borrowing was interviewed by Reuters this year, and said he was "very foolish not to take advantage of the rebound."

In addition to his 100 million won ($84,000) overdraft account, he also took out a 100 million won loan against his house in Seoul, and a 50 million won stock pledge. All of these demands on the stock market have further exacerbated the problem of household debt.

42.1% of all home purchases in January 2021 were by young Koreans in their 20s and 30s

Simon Shin/SOPA Images/ZUMA

Game of survival

In response to the accumulating financial risks, the Bank of Korea has restricted the release of loans and has announced its first interest rate hike in three years at the end of August.

But experts believe that even if banks cut loans or raise interest rates, those who need money will look for other ways to borrow, often turning to more costly institutions and mechanisms.

This all risks leading to what one can call a "debt trap," one loan piling on top of another. That brings us back to the plot of Squid Game, "Either you live or I do." South Korean society has turned into a game of survival.

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