US midterms could scupper Iran talks: Citi
Posturing by U.S. politicians in the run-up to midterm elections could potentially scupper talks with Iran and delay the country's re-entry back into the global economy, a senior analyst at Citi has warned.
Tina Fordham, the senior political analyst at Citi Private Bank, told CNBC that the path ahead with regards to Iran and its position in the international community was unclear, although the interim deal on limiting its nuclear program was a "genuine breakthrough."
In an interim deal struck between Iran and the UN Security Council plus Germany in November, Iran agreed to freeze parts of its nuclear program in return for sanctions relief. The deal came into effect on January 20, giving the parties six more months to finalize the pact.
Fordham said, "We have seen some movement within the U.S. Congress to put pressure on new sanctions on Iran. This is not surprising; this is a midterm election year, so the dynamics there are kind of colliding.
"The diplomatic momentum is very good; the political dynamics in the U.S. could very well interfere to scupper it. So after June, when this interim deal runs out, then we will look to see whether there can be an extension as we get closer to November midterms in the U.S."
On November 4, 435 seats in the House of Representatives, 33 seats in the Senate and 38 Governorships will be contested.
(Read more: Nuke deal sanctions relief will do little for Iran)
Fordham emphasized that because of factors including a reluctance to intervene militarily, a shift in U.S. focus towards Asia and America's growing energy independence mean that diplomacy was the "way forward" regarding the situation with Iran and Syria.
(Read more: Energy group goes on offensive before elections)
"Certainly the Middle East is where a number of geopolitical risk factors converge," Fordham said. "But this - frankly - lack of capacity to intervene militarily, added to U.S. energy independence, means that…diplomacy is really the way forward."
Fordham also added that while numerous elections are taking place this year in countries other than the U.S., their outcomes would not hold any wider ramifications other than within the nations themselves.
"Most of these elections or political transitions are risks at the country level and I think that represents a very significant change compared to the last two or three years in political risk where we had much more potential for politically generated systemic risks," Fordham concluded.