http://uk.reuters.com/article/2011/10/18/uk-iran-us-plot-ahmadinejad-idUKTRE79G71620111018
Iran - U.S. plot allegations resemble Iraq WMD claims
Tue, Oct 18 2011
By Robin Pomeroy
TEHRAN (Reuters) - President Mahmoud Ahmadinejad said on Monday U.S. allegations of an Iranian assassination plot resembled its claims of weapons of mass destruction that formed the basis for the 2003 invasion of Iraq, and would prove to be equally untrue.
Ahmadinejad said Washington had fabricated the plot of an Iranian seeking to kill Saudi Arabia's ambassador to Washington in order to cause a rift between Tehran and Saudi Arabia and dominate the oil-rich Gulf.
"In the past the U.S. administration claimed there were weapons of mass destruction in Iraq. They said it so strongly, they offered and presented documentations and everyone said 'yes, we believe in you, we buy it'," Ahmadinejad said in a live interview on Al Jazeera television.
"Now is everyone asking them, were those claims true? Did they find any weapon of mass destruction in Iraq? They fabricated a bunch of papers. Is that a difficult thing to do?
"The truth will be revealed ultimately and there will be no problem for us at that time," Ahmadinejad said.
U.S. President Barack Obama hopes the foiled alleged plot will lead to tighter sanctions against Iran -- already under several rounds of U.N. measures over its nuclear programme -- and repeated that all options are on the table to deal with the Islamic republic -- a tacit threat of possible military action.
When asked whether he thought Iran and the United States were on an inevitable "collision course" towards military conflict, Ahmadinejad replied: "I don't think so.
"I think that there are some people in the U.S. administration who want this to happen but I think there are wise people in the U.S. administration who know they shouldn't do such a thing."
Nevertheless, the commander of the Iranian army ground forces said his troops were "fully prepared and ready to give a quick response to any aggression on Iran's soil."
"Today America is too unsteady to even think about launching an attack on Iran," Ahmad Reza Pourdastan told the semi-official Fars news agency.
HEINOUS
Saudi Arabia, Iran's main rival in the Gulf and with close ties with Washington, requested the United Nations look into what it called the "heinous conspiracy" and Secretary-General Ban Ki-moon said on Monday he had passed correspondence about the affair to the Security Council.
Ahmadinejad called on Saudis not to fall for a U.S. strategy which he said aimed to divide and conquer the Gulf.
"If the U.S. administration is under the impression that by doing this it can create conflict between us and Saudi Arabia then I have to say the U.S. administration is sorely mistaken.
"The U.S. administration is not interested in Iran or in Saudi Arabia. They see their interests in having a dispute between Iran and Saudi Arabia -- they want to dominate our region," he said.
Iran's relations with Saudi Arabia have been strained by the events of the "Arab Spring" as each tries to assert its position in the region amid a welter of sectarian and geo-political rivalries.
Even before the Arab uprisings began, a leaked U.S. cable published on WikiLeaks said Saudi King Abdullah had urged the United States to "cut off the head of the snake" by launching military strikes to destroy Iran's nuclear programme.
The plot furore appears to have killed any chance of a rapid return to talks between Tehran and world powers concerned about its nuclear programme, but Foreign Minister Ali Akbar Salehi said Iran would examine the allegations.
"We are prepared to examine any issue, even if fabricated, seriously and patiently, and we have called on America to submit to us any information in regard to this scenario," he was quoted as saying by the official IRNA news agency.
(Editing by Mark Heinrich)
Sunday, October 23, 2011
Tuesday, October 18, 2011
Who will write the rules for Asia-Pacific trade?
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Who will write the rules for Asia-Pacific trade?
By Peter A. Petri
(Note: This analysis originally appeared in the Honolulu Star-Advertiser on Oct. 16, 2011 as part of a monthly series on regional Asia Pacific issues leading up to the APEC leaders’ meetings in Honolulu in November.)
In the last half century, world trade has grown twice as fast as output and helped to lift the majority of the world’s people from poverty—a feat unimaginable a generation ago. When APEC leaders meet in Honolulu next month, they will represent countries that account for half of world trade. Can APEC help to keep the engine humming for another half century?
The trade engine is more important than ever, but the rules that govern trade are less certain. Efforts to strengthen global rules—the World Trade Organization’s Doha negotiations—have collapsed. Beset by domestic concerns, the United States and Europe have retreated from leadership on trade. And the new Asian giants have yet to step up.
This vacuum undermines investment and growth worldwide. For better or worse, it is now up to the United States and China, along with partners in the Asia-Pacific, to write the next chapter in the history of the world trading system—starting in Honolulu in November.
APEC itself may announce agreements that make it easier to trade “green goods,” such as wind turbines, and ease regulatory barriers. But APEC is not a negotiating body—it can only suggest voluntary guidelines.
On the sidelines of APEC, however, two efforts are underway to write binding rules. One is the Trans-Pacific Partnership (TPP), a possible trade agreement among eight small Pacific-rim countries and the United States. The members hope to announce a preliminary agreement in Honolulu next month.
Another negotiation is underway in Asia. It builds on trade agreements among 10 Southeast Asian countries and other Asian partners. It is still missing an agreement among China, Japan and Korea, but a “CJK” accord is now in discussion.
These groups will write different rules—each trying to please its members at the expense of excluded countries. Asian rules, for example, will avoid liberalizing agriculture and services, which are important U.S. exports. The TPP rules will protect, for example, branded U.S. pharmaceutical products against Asia’s generic drugs.
This competition makes observers nervous. U.S. business worries that Asian rules will divert exports away from American companies. Asians worry that the U.S. will use the TPP to isolate China, or as one journalist put it, as “a kind of economic warfare in the region.”
So what will be the effect of these negotiations? Are we drawing “a line down the middle of the Pacific,” or avoiding one, as Secretary of State James Baker pleaded we should when the United States joined APEC in 1989?
A new study we’ve done at the East-West Center suggests a subtle, positive scenario. It shows that the U.S.-led TPP will generate benefits for its participants and create incentives that bring in more members, including perhaps Japan, Canada, Mexico, Korea, Thailand and the Philippines.
The study also shows that the Asian-led discussions may lead to an “East Asian Free Trade Agreement” and generate large benefits. And policies by both groups are likely to cause little damage to excluded countries.
The most interesting finding involves the endgame. As the two groups grow, most Asia-Pacific economies, except for the United States and China, are likely to join both. So in the end the two giants will be left among the very few countries without preferential access to both of their huge markets.
The United States and China will then have great incentive to consolidate the groups into a region-wide or global agreement. That end result, in turn, would generate benefits at least as great as those that could have been produced by the failed Doha Round.
It might take a decade or more to reach this cooperative endgame and, in the meantime, competition will rule the day. Competition is part of economic life and should not be interpreted in apocalyptic terms. Paradoxically, competition will increase the value of cooperation to the United States and China.
Our two countries will compete on roughly equal terms for many decades, in trade and other spheres. But we are also fundamentally interdependent and need to keep cooperation in sight. Economics favors Asia-Pacific economic integration, and the TPP and Asian tracks both provide dynamic, complementary pathways toward it.
Economist Peter A. Petri is a Nonresident Senior Fellow with the East-West Center and a Professor of International Finance at Brandeis University.
###
The EAST-WEST CENTER promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue. Established by the U.S. Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.
Who will write the rules for Asia-Pacific trade?
By Peter A. Petri
(Note: This analysis originally appeared in the Honolulu Star-Advertiser on Oct. 16, 2011 as part of a monthly series on regional Asia Pacific issues leading up to the APEC leaders’ meetings in Honolulu in November.)
In the last half century, world trade has grown twice as fast as output and helped to lift the majority of the world’s people from poverty—a feat unimaginable a generation ago. When APEC leaders meet in Honolulu next month, they will represent countries that account for half of world trade. Can APEC help to keep the engine humming for another half century?
The trade engine is more important than ever, but the rules that govern trade are less certain. Efforts to strengthen global rules—the World Trade Organization’s Doha negotiations—have collapsed. Beset by domestic concerns, the United States and Europe have retreated from leadership on trade. And the new Asian giants have yet to step up.
This vacuum undermines investment and growth worldwide. For better or worse, it is now up to the United States and China, along with partners in the Asia-Pacific, to write the next chapter in the history of the world trading system—starting in Honolulu in November.
APEC itself may announce agreements that make it easier to trade “green goods,” such as wind turbines, and ease regulatory barriers. But APEC is not a negotiating body—it can only suggest voluntary guidelines.
On the sidelines of APEC, however, two efforts are underway to write binding rules. One is the Trans-Pacific Partnership (TPP), a possible trade agreement among eight small Pacific-rim countries and the United States. The members hope to announce a preliminary agreement in Honolulu next month.
Another negotiation is underway in Asia. It builds on trade agreements among 10 Southeast Asian countries and other Asian partners. It is still missing an agreement among China, Japan and Korea, but a “CJK” accord is now in discussion.
These groups will write different rules—each trying to please its members at the expense of excluded countries. Asian rules, for example, will avoid liberalizing agriculture and services, which are important U.S. exports. The TPP rules will protect, for example, branded U.S. pharmaceutical products against Asia’s generic drugs.
This competition makes observers nervous. U.S. business worries that Asian rules will divert exports away from American companies. Asians worry that the U.S. will use the TPP to isolate China, or as one journalist put it, as “a kind of economic warfare in the region.”
So what will be the effect of these negotiations? Are we drawing “a line down the middle of the Pacific,” or avoiding one, as Secretary of State James Baker pleaded we should when the United States joined APEC in 1989?
A new study we’ve done at the East-West Center suggests a subtle, positive scenario. It shows that the U.S.-led TPP will generate benefits for its participants and create incentives that bring in more members, including perhaps Japan, Canada, Mexico, Korea, Thailand and the Philippines.
The study also shows that the Asian-led discussions may lead to an “East Asian Free Trade Agreement” and generate large benefits. And policies by both groups are likely to cause little damage to excluded countries.
The most interesting finding involves the endgame. As the two groups grow, most Asia-Pacific economies, except for the United States and China, are likely to join both. So in the end the two giants will be left among the very few countries without preferential access to both of their huge markets.
The United States and China will then have great incentive to consolidate the groups into a region-wide or global agreement. That end result, in turn, would generate benefits at least as great as those that could have been produced by the failed Doha Round.
It might take a decade or more to reach this cooperative endgame and, in the meantime, competition will rule the day. Competition is part of economic life and should not be interpreted in apocalyptic terms. Paradoxically, competition will increase the value of cooperation to the United States and China.
Our two countries will compete on roughly equal terms for many decades, in trade and other spheres. But we are also fundamentally interdependent and need to keep cooperation in sight. Economics favors Asia-Pacific economic integration, and the TPP and Asian tracks both provide dynamic, complementary pathways toward it.
Economist Peter A. Petri is a Nonresident Senior Fellow with the East-West Center and a Professor of International Finance at Brandeis University.
###
The EAST-WEST CENTER promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue. Established by the U.S. Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.
Pakistan, India and Kashmir: Will Nature force an Aceh Effect?
RSIS presents the following commentary Pakistan, India and Kashmir: Will Nature force an Aceh Effect? by Rajesh Basrur and Yang Razali Kassim. It is also available online at this link. (To print it, click on this link.). Kindly forward any comments or feedback to the Editor RSIS Commentaries, at RSISPublication@ntu.edu.sg
No. 151/2011 dated 18 October 2011
Pakistan, India and Kashmir:
Will Nature force an Aceh Effect?
By Rajesh Basrur and Yang Razali Kassim
Synopsis
A recent seismic study has raised questions about the possibility of a “big earthquake” in the Kashmir region, “anytime”. Should one occur with the magnitude that caused the massive Indian Ocean tsunami of 2004, could it lead to the end of the Kashmir conflict, a la Aceh?
Commentary
IN LATE September 2011, Afroz Ahmad Shah, a scientist with the Earth Observatory of Singapore who has worked extensively on fault mapping of the earth, affirmed that “a big earthquake” could occur in the Kashmir region of South Asia “anytime”. While Shah observed that it is too early to anticipate the location and size of such an event, the effects of a “megaquake” in the region could be horrendous. In October 2005, a 7.6 magnitude earthquake with its epicentre 19 km from Muzaffarabad in the Pakistani portion of Kashmir resulted in over 80,000 deaths. Fatalities on a lower scale occurred in India and Afghanistan as well.
A megaquake could well be worse. From a strategic standpoint, we know that such an event can produce a significant political fallout -- as was seen in Indonesia in 2004. In the event of a megaquake in the Kashmir region, will we see what some have come to call an “Aceh effect” on the conflict over Kashmir between India and Pakistan?
Lessons from Aceh 2004
On 26 December 2004, a megaquake on a 9.1 magnitude shook the Indian Ocean just to the west of Aceh in northern Sumatra, Indonesia. The tsunami that followed was so devastating that it led to the deaths of 100,000 people in Aceh and a total loss of 230,000 lives across 14 countries in the Indian Ocean rim. Both the megaquake and the tsunami were unprecedented in scale. The impact was so severely shocking that it precipitated the end of the long-running political conflict in Aceh.
The Acehnese struggle for independence that stretched from the Dutch colonial period and into the Sukarno and Suharto eras, was entering its endgame after the fall of Suharto in 1998. International parties brokered a fragile peace deal between the Indonesian central government and Acehnese separatists. The peace initiative could not come to a conclusion due to mutual intransigence – until the 2004 tsunami.
The devastation forced the Acehnese separatists into a ceasefire while humanitarian pressure compelled the central government, under President Yudhoyono, to reciprocate with a political solution to the Aceh crisis, leading to a final peace agreement in 2005. Aceh gave up its quest for independence and was eventually allowed autonomy. In the provincial elections that followed, a former separatist commander successfully contested the governorship and has since been running the province of Aceh. In a nutshell, one of the most intractable separatist problems in Southeast Asia was finally resolved when Nature “intervened”.
Aceh and Kashmir
Conceivably, a megaquake in Kashmir could bring a dramatic change of perception in both Pakistan and India and dissipate the long-standing bitterness between them – as in Aceh. The 2005 earthquake in Kashmir did bring some positive changes in the relationship. India quickly offered disaster relief and Pakistan accepted. Indian soldiers crossed the Line of Control (LoC) to assist Pakistani counterparts in their mitigation efforts, and India agreed to allow Pakistani helicopters to cross the LoC to hasten assistance to the quake affected.
But there were limits imposed by inter-state rivalry. For example, Indian helicopters were not permitted to fly into Pakistani territory for fear that they might engage in reconnaissance and India was unwilling to allow free movement across the LoC because it feared terrorists would take advantage. Clearly, the long-standing bitterness between the two countries was not about to ease even in the shadow of a great humanitarian catastrophe.
Still, the first hesitant moves did facilitate some sort of a fresh beginning. In months to follow, Islamabad and New Delhi began negotiations that led to unprecedented cooperation. Trade links across the LoC were enhanced; people’s movements by bus and train were made easier, and both sides agreed that a “soft border” was a viable proposition. But the approaching detente crumbled as Pakistan’s President Pervez Musharraf slid into a domestic political crisis from which he was never to emerge. Tensions over their competition in Afghanistan rose and the commando-style attack on Mumbai by Pakistan-based terrorists that killed 160 people led to a fresh chill in the relationship.
No two events alike
No two events are exactly alike, so it is still possible that a megaquake of the type predicted by Shah might have more positive long-term effects. But it may not be necessary for an earthquake to bring a turning point in the Pakistan-India relationship. There are a number of reasons to be optimistic, though not unreservedly so.
Most fundamentally, the advent of nuclear weapons has brought to the forefront the stark reality that the struggle over Kashmir could bring a much bigger disaster than an earthquake if war were to break out. Secondly, terrorist groups have exploited the widening scope available to them and gained substantial ground within Pakistan, which has been rocked by political instability, economic crisis and escalating daily violence.
Thirdly, the Pakistan Army, which has long claimed to be the nation’s chief stabilising force, has clearly been unable to offer daily security to its people, which raises the hope that it will retreat into the barracks and that a civilian-led entente with India is on the cards.
Fourthly, for all its own failings – such as endemic corruption and an inability to deal effectively with a still-growing Maoist insurgency– India is widening its economic and strategic gap with Pakistan. This makes it less and less amenable to pressure on territorial disputes. Sixthly, with China a somewhat reluctant ally as far as financial backing is concerned, and the US holding back on the dispensing of aid, Pakistan’s economic choices are limited and the pressure for enhancing trade with India is increasing.
As a result, there is a growing sense that a turning point is close at hand. The two sides are in a position to focus on common gains, mainly from an improved economic relationship and a renewed effort to create a “soft border” in Kashmir. On the military side, confidence building to minimise the risk of inadvertent war, already an established process, can move forward with talks on restraining the risks associated with short-range ballistic missiles and cruise missiles.
It should not take an earthquake to finally resolve the long-running conflict in Kashmir.
Rajesh Basrur and Yang Razali Kassim are both Senior Fellows at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
No. 151/2011 dated 18 October 2011
Pakistan, India and Kashmir:
Will Nature force an Aceh Effect?
By Rajesh Basrur and Yang Razali Kassim
Synopsis
A recent seismic study has raised questions about the possibility of a “big earthquake” in the Kashmir region, “anytime”. Should one occur with the magnitude that caused the massive Indian Ocean tsunami of 2004, could it lead to the end of the Kashmir conflict, a la Aceh?
Commentary
IN LATE September 2011, Afroz Ahmad Shah, a scientist with the Earth Observatory of Singapore who has worked extensively on fault mapping of the earth, affirmed that “a big earthquake” could occur in the Kashmir region of South Asia “anytime”. While Shah observed that it is too early to anticipate the location and size of such an event, the effects of a “megaquake” in the region could be horrendous. In October 2005, a 7.6 magnitude earthquake with its epicentre 19 km from Muzaffarabad in the Pakistani portion of Kashmir resulted in over 80,000 deaths. Fatalities on a lower scale occurred in India and Afghanistan as well.
A megaquake could well be worse. From a strategic standpoint, we know that such an event can produce a significant political fallout -- as was seen in Indonesia in 2004. In the event of a megaquake in the Kashmir region, will we see what some have come to call an “Aceh effect” on the conflict over Kashmir between India and Pakistan?
Lessons from Aceh 2004
On 26 December 2004, a megaquake on a 9.1 magnitude shook the Indian Ocean just to the west of Aceh in northern Sumatra, Indonesia. The tsunami that followed was so devastating that it led to the deaths of 100,000 people in Aceh and a total loss of 230,000 lives across 14 countries in the Indian Ocean rim. Both the megaquake and the tsunami were unprecedented in scale. The impact was so severely shocking that it precipitated the end of the long-running political conflict in Aceh.
The Acehnese struggle for independence that stretched from the Dutch colonial period and into the Sukarno and Suharto eras, was entering its endgame after the fall of Suharto in 1998. International parties brokered a fragile peace deal between the Indonesian central government and Acehnese separatists. The peace initiative could not come to a conclusion due to mutual intransigence – until the 2004 tsunami.
The devastation forced the Acehnese separatists into a ceasefire while humanitarian pressure compelled the central government, under President Yudhoyono, to reciprocate with a political solution to the Aceh crisis, leading to a final peace agreement in 2005. Aceh gave up its quest for independence and was eventually allowed autonomy. In the provincial elections that followed, a former separatist commander successfully contested the governorship and has since been running the province of Aceh. In a nutshell, one of the most intractable separatist problems in Southeast Asia was finally resolved when Nature “intervened”.
Aceh and Kashmir
Conceivably, a megaquake in Kashmir could bring a dramatic change of perception in both Pakistan and India and dissipate the long-standing bitterness between them – as in Aceh. The 2005 earthquake in Kashmir did bring some positive changes in the relationship. India quickly offered disaster relief and Pakistan accepted. Indian soldiers crossed the Line of Control (LoC) to assist Pakistani counterparts in their mitigation efforts, and India agreed to allow Pakistani helicopters to cross the LoC to hasten assistance to the quake affected.
But there were limits imposed by inter-state rivalry. For example, Indian helicopters were not permitted to fly into Pakistani territory for fear that they might engage in reconnaissance and India was unwilling to allow free movement across the LoC because it feared terrorists would take advantage. Clearly, the long-standing bitterness between the two countries was not about to ease even in the shadow of a great humanitarian catastrophe.
Still, the first hesitant moves did facilitate some sort of a fresh beginning. In months to follow, Islamabad and New Delhi began negotiations that led to unprecedented cooperation. Trade links across the LoC were enhanced; people’s movements by bus and train were made easier, and both sides agreed that a “soft border” was a viable proposition. But the approaching detente crumbled as Pakistan’s President Pervez Musharraf slid into a domestic political crisis from which he was never to emerge. Tensions over their competition in Afghanistan rose and the commando-style attack on Mumbai by Pakistan-based terrorists that killed 160 people led to a fresh chill in the relationship.
No two events alike
No two events are exactly alike, so it is still possible that a megaquake of the type predicted by Shah might have more positive long-term effects. But it may not be necessary for an earthquake to bring a turning point in the Pakistan-India relationship. There are a number of reasons to be optimistic, though not unreservedly so.
Most fundamentally, the advent of nuclear weapons has brought to the forefront the stark reality that the struggle over Kashmir could bring a much bigger disaster than an earthquake if war were to break out. Secondly, terrorist groups have exploited the widening scope available to them and gained substantial ground within Pakistan, which has been rocked by political instability, economic crisis and escalating daily violence.
Thirdly, the Pakistan Army, which has long claimed to be the nation’s chief stabilising force, has clearly been unable to offer daily security to its people, which raises the hope that it will retreat into the barracks and that a civilian-led entente with India is on the cards.
Fourthly, for all its own failings – such as endemic corruption and an inability to deal effectively with a still-growing Maoist insurgency– India is widening its economic and strategic gap with Pakistan. This makes it less and less amenable to pressure on territorial disputes. Sixthly, with China a somewhat reluctant ally as far as financial backing is concerned, and the US holding back on the dispensing of aid, Pakistan’s economic choices are limited and the pressure for enhancing trade with India is increasing.
As a result, there is a growing sense that a turning point is close at hand. The two sides are in a position to focus on common gains, mainly from an improved economic relationship and a renewed effort to create a “soft border” in Kashmir. On the military side, confidence building to minimise the risk of inadvertent war, already an established process, can move forward with talks on restraining the risks associated with short-range ballistic missiles and cruise missiles.
It should not take an earthquake to finally resolve the long-running conflict in Kashmir.
Rajesh Basrur and Yang Razali Kassim are both Senior Fellows at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
From the Mediterranean to the Hindu Kush: Rethinking the Region
from STRATFOR
From the Mediterranean to the Hindu Kush: Rethinking the Region
October 18, 2011 | 1205 GMT
By George Friedman
The territory between the Mediterranean and the Hindu Kush has been the main arena for the U.S. intervention that followed the 9/11 attacks. Obviously, the United States had been engaged in this area in previous years, but 9/11 redefined it as the prime region in which it confronted jihadists. That struggle has had many phases, and it appears to have entered a new one over the past few weeks.
Some parts of this shift were expected. STRATFOR had anticipated tensions between Iran and its neighboring countries to rise as the U.S. withdrew from Iraq and Iran became more assertive. And we expected U.S.-Pakistani relations to reach a crisis before viable negotiations with the Afghan Taliban were made possible.
From the Mediterranean to the Hindu Kush: Rethinking the Region
(Click here to enlarge image)
However, other events frankly surprised us. We had expected Hamas to respond to events in Egypt and to the Palestine National Authority’s search for legitimacy through pursuit of U.N. recognition by trying to create a massive crisis with Israel, reasoning that the creation of such a crisis would strengthen anti-government forces in Egypt, increasing the chances for creating a new regime that would end the blockade of Gaza and suspend the peace treaty with Israel. We also thought that intense rocket fire into Israel would force Fatah to support an intifada or be marginalized by Hamas. Here we were clearly wrong; Hamas moved instead to reach a deal for the exchange of captive Israel Defense Forces soldier Gilad Shalit, which has reduced Israeli-Hamas tensions.
Our error was rooted in our failure to understand how the increased Iranian-Arab tensions would limit Hamas’ room to maneuver. We also missed the fact that given the weakness of the opposition forces in Egypt — something we had written about extensively — Hamas would not see an opportunity to reshape Egyptian policies. The main forces in the region, particularly the failure of the Arab Spring in Egypt and the intensification of Iran’s rise, obviated our logic on Hamas. Shalit’s release, in exchange for more than 1,000 Palestinian prisoners, marks a new stage in Israeli-Hamas relations. Let’s consider how this is related to Iran and Pakistan.
The Iranian Game
The Iranians tested their strength in Bahrain, where Shiites rose up against their Sunni rulers with at least some degree of Iranian support. Saudi Arabia, linked by a causeway to Bahrain, perceived this as a test of its resolve, intervening with military force to suppress the demonstrators and block the Iranians. To Iran, Bahrain was simply a probe; the Saudi response did not represent a major reversal in Iranian fortunes.
The main game for Iran is in Iraq, where the U.S. withdrawal is reaching its final phase. Some troops may be left in Iraqi Kurdistan, but they will not be sufficient to shape events in Iraq. The Iranians will not be in control of Iraq, but they have sufficient allies, both in the government and in outside groups, that they will be able to block policies they oppose, either through the Iraqi political system or through disruption. They will not govern, but no one will be able to govern in direct opposition to them.
In Iraq, Iran sees an opportunity to extend its influence westward. Syria is allied with Iran, and it in turn jointly supports Hezbollah in Lebanon. The prospect of a U.S. withdrawal from Iraq opened the door to a sphere of Iranian influence running along the southern Turkish border and along the northern border of Saudi Arabia.
The Saudi View
The origins of the uprising against the regime of Syrian President Bashar al Assad are murky. It emerged during the general instability of the Arab Spring, but it took a different course. The al Assad regime did not collapse, al Assad was not replaced with another supporter of the regime, as happened in Egypt, and the opposition failed to simply disintegrate. In our view the opposition was never as powerful as the Western media portrayed it, nor was the al Assad regime as weak. It has held on far longer than others expected and shows no inclination of capitulating. For one thing, the existence of bodies such as The International Criminal Court leave al Assad nowhere to go if he stepped down, making a negotiated exit difficult. For another, al Assad does not see himself as needing to step down.
Two governments have emerged as particularly hostile to al Assad: the Saudi government and the Turkish government. The Turks attempted to negotiate a solution in Syria and were rebuffed by al Assad. It is not clear the extent to which these governments see Syria simply as an isolated problem along their border or as part of a generalized Iranian threat. But it is clear that the Saudis are extremely sensitive to the Iranian threat and see the fall of the al Assad regime as essential for limiting the Iranians.
In this context, the last thing that the Saudis want to see is conflict with Israel. A war in Gaza would have given the al Assad regime an opportunity to engage with Israel, at least through Hezbollah, and portray opponents to the regime as undermining the struggle against the Israelis. This would have allowed al Assad to solicit Iranian help against Israel and, not incidentally, to help sustain his regime.
It was not clear that Saudi support for Syrian Sunnis would be enough to force the al Assad regime to collapse, but it is clear that a war with Israel would have made it much more difficult to bring it down. Whether Hamas was inclined toward another round of fighting with Israel is unclear. What is clear is that the Saudis, seeing themselves as caught in a struggle with Iran, were not going to hand the Iranians an excuse to get more involved than they were. They reined in any appetite Hamas may have had for war.
Hamas and Egypt
Hamas also saw its hopes in Egypt dissolving. From its point of view, instability in Egypt opened the door for regime change. For an extended period of time, it seemed possible that the first phase of unrest would be followed either by elections that Islamists might win or another wave of unrest that would actually topple the regime. It became clear months ago that the opposition to the Egyptian regime was too divided to replace it. But it was last week that the power of the regime became manifest.
The Oct. 9 Coptic demonstration that turned violent and resulted in sectarian clashes with Muslims gave the government the opportunity to demonstrate its resolve and capabilities without directly engaging Islamist groups. The regime acted brutally and efficiently to crush the demonstrations and, just as important, did so with some Islamist elements that took to the streets beating Copts. The streets belonged to the military and to the Islamist mobs, fighting on the same side.
One of the things Hamas had to swallow was the fact that it was the Egyptian government that was instrumental in negotiating the prisoner exchange. Normally, Islamists would have opposed even the process of negotiation, let alone its success. But given what had happened a week before, the Islamists were content not to make an issue of the Egyptian government’s deal-making. Nor would the Saudis underwrite Egyptian unrest as they would Syrian unrest. Egypt, the largest Arab country and one that has never been on good terms with Iran, was one place where the Saudis did not want to see chaos, especially with an increasingly powerful Iran and unrest in Syria stalled.
Washington Sides with Riyadh
In the midst of all this, the United States announced the arrest of a man who allegedly was attempting, on behalf of Iran, to hire a Mexican to kill the Saudi ambassador to the United States. There was serious discussion of the significance of this alleged plot, and based on the evidence released, it was not particularly impressive.
Nevertheless — and this is the important part — the administration of U.S. President Barack Obama decided that this was an intolerable event that required more aggressive measures against Iran. The Saudis have been asking the United States for some public action against Iran both to relieve the pressure on Riyadh and to make it clear that the United States was committed to confronting Iran alongside the Saudis. There may well be more evidence in the alleged assassination plot that makes it more serious than it appeared, but what is clear is that the United States intended to use the plot to increase pressure on Iran — psychologically at least — beyond the fairly desultory approach it had been taking. The administration even threw the nuclear question back on the table, a subject on which everyone had been lackadaisical for a while.
The Saudi nightmare has been that the United States would choose to reach an understanding with Iran as a way to create a stable order in the region and guarantee the flow of oil. We have discussed this possibility in the past, pointing out that the American interest in protecting Saudi Arabia is not absolute and that the United States might choose to deal with the Iranians, neither regime being particularly attractive to the United States and history never being a guide to what Washington might do next.
The Saudis were obviously delighted with the U.S. rhetorical response to the alleged assassination plot. It not only assuaged the Saudis’ feeling of isolation but also seemed to close the door on side deals. At the same time, the United States likely was concerned with the possibility of Saudi Arabia trying to arrange its own deal with Iran before Washington made a move. With this action, the United States joined itself at the hip with the Saudis in an anti-Iranian coalition.
The Israelis had nothing to complain about either. They do not want the Syrian regime to fall, preferring the al Assad regime they know to an unknown Sunni — and potentially Islamist — regime. Saudi support for the Syrian opposition bothers the Israelis, but it’s unlikely to work. A Turkish military intervention bothers them more. But, in the end, Iran is what worries them the most, and any sign that the Obama administration is reacting negatively to the Iranians, whatever the motives (and even if there is no clear motive), makes them happy. They want a deal on Shalit, but even if the price was high, this was not the time to get the United States focused on them rather than the Iranians. The Israelis might be prepared to go further in negotiations with Hamas if the United States focuses on Iran. And Hamas will go further with Israel if the Saudis tell them to, which is a price they will happily pay for a focus on Iran.
The U.S. Withdrawal from Afghanistan
For the United States, there is another dimension to the Iran focus: Pakistan. The Pakistani view of the United States, as expressed by many prominent Pakistanis, is that the United States has lost the war against the Afghan Taliban. That means that any negotiations that take place will simply be about how the United States, in their words, will “retreat,” rather than about Pakistani guarantees for support against jihadists coupled with a U.S. withdrawal process. If the Pakistanis are right, and the United States has been defeated, then obviously, their negotiating position is correct.
For there to be any progress in talks with the Taliban and Pakistan, the United States must demonstrate that it has not been defeated. To be more precise, it must demonstrate that while it might not satisfy its conditions for victory (defined as the creation of a democratic Afghanistan), the United States is prepared to indefinitely conduct operations against jihadists, including unmanned aerial vehicle and special operations strikes in Pakistan, and that it might move into an even closer relationship with India if Pakistan resists. There can be no withdrawal unless the Pakistanis understand that there has been no overwhelming domestic political pressure on the U.S. government to withdraw. The paradox here is critical: So long as Pakistan believes the United States must withdraw, it will not provide the support needed to allow it to withdraw. In addition, withdrawal does not mean operations against jihadists nor strategic realignment with India. The United States needs to demonstrate just what risks Pakistan faces when it assumes that the U.S. failure to achieve all its goals means it has been defeated.
The Obama administration’s reaction to the alleged Iranian assassination plot is therefore a vital psychological move against Pakistan. The Pakistani narrative is that the United States is simply incapable of asserting its power in the region. The U.S. answer is that it is not only capable of asserting substantial power in Afghanistan and Pakistan but also that it is not averse to confronting Iran over an attempted assassination in the United States. How serious the plot was, who authorized it in Iran, and so on is not important. If Obama has overreacted it is an overreaction that will cause talk in Islamabad. Obviously this will have to go beyond symbolic gestures but if it does, it changes the dynamic in the region, albeit at the risk of an entanglement with Iran.
Re-evaluating the Region
There are many moving parts. We do not know exactly how far the Obama administration is prepared to take the Iran issue or whether it will evaporate. We do not know if the Assad regime will survive or what Turkey and Saudi Arabia will do about it. We do not know whether, in the end, the Egyptian regime will survive. We do not know whether the Pakistanis will understand the message being sent them.
What we do know is this: The crisis over Iran that we expected by the end of the year is here. It affects calculations from Cairo to Islamabad. It changes other equations, including the Hamas-Israeli dynamic. It is a crisis everyone expected but no one quite knows how to play. The United States does not have a roadmap, and neither do the Iranians. But this is a historic opportunity for Iran and a fundamental challenge to the Saudis. The United States has put some chips on the table, but not any big ones. But the fact that Obama did use rhetoric more intense than he usually does is significant in itself.
All of this does not give us a final answer on the dynamics of the region and their interconnections, but it does give us a platform to begin re-evaluating the regional process.
Read more: From the Mediterranean to the Hindu Kush: Rethinking the Region | STRATFOR
From the Mediterranean to the Hindu Kush: Rethinking the Region
October 18, 2011 | 1205 GMT
By George Friedman
The territory between the Mediterranean and the Hindu Kush has been the main arena for the U.S. intervention that followed the 9/11 attacks. Obviously, the United States had been engaged in this area in previous years, but 9/11 redefined it as the prime region in which it confronted jihadists. That struggle has had many phases, and it appears to have entered a new one over the past few weeks.
Some parts of this shift were expected. STRATFOR had anticipated tensions between Iran and its neighboring countries to rise as the U.S. withdrew from Iraq and Iran became more assertive. And we expected U.S.-Pakistani relations to reach a crisis before viable negotiations with the Afghan Taliban were made possible.
From the Mediterranean to the Hindu Kush: Rethinking the Region
(Click here to enlarge image)
However, other events frankly surprised us. We had expected Hamas to respond to events in Egypt and to the Palestine National Authority’s search for legitimacy through pursuit of U.N. recognition by trying to create a massive crisis with Israel, reasoning that the creation of such a crisis would strengthen anti-government forces in Egypt, increasing the chances for creating a new regime that would end the blockade of Gaza and suspend the peace treaty with Israel. We also thought that intense rocket fire into Israel would force Fatah to support an intifada or be marginalized by Hamas. Here we were clearly wrong; Hamas moved instead to reach a deal for the exchange of captive Israel Defense Forces soldier Gilad Shalit, which has reduced Israeli-Hamas tensions.
Our error was rooted in our failure to understand how the increased Iranian-Arab tensions would limit Hamas’ room to maneuver. We also missed the fact that given the weakness of the opposition forces in Egypt — something we had written about extensively — Hamas would not see an opportunity to reshape Egyptian policies. The main forces in the region, particularly the failure of the Arab Spring in Egypt and the intensification of Iran’s rise, obviated our logic on Hamas. Shalit’s release, in exchange for more than 1,000 Palestinian prisoners, marks a new stage in Israeli-Hamas relations. Let’s consider how this is related to Iran and Pakistan.
The Iranian Game
The Iranians tested their strength in Bahrain, where Shiites rose up against their Sunni rulers with at least some degree of Iranian support. Saudi Arabia, linked by a causeway to Bahrain, perceived this as a test of its resolve, intervening with military force to suppress the demonstrators and block the Iranians. To Iran, Bahrain was simply a probe; the Saudi response did not represent a major reversal in Iranian fortunes.
The main game for Iran is in Iraq, where the U.S. withdrawal is reaching its final phase. Some troops may be left in Iraqi Kurdistan, but they will not be sufficient to shape events in Iraq. The Iranians will not be in control of Iraq, but they have sufficient allies, both in the government and in outside groups, that they will be able to block policies they oppose, either through the Iraqi political system or through disruption. They will not govern, but no one will be able to govern in direct opposition to them.
In Iraq, Iran sees an opportunity to extend its influence westward. Syria is allied with Iran, and it in turn jointly supports Hezbollah in Lebanon. The prospect of a U.S. withdrawal from Iraq opened the door to a sphere of Iranian influence running along the southern Turkish border and along the northern border of Saudi Arabia.
The Saudi View
The origins of the uprising against the regime of Syrian President Bashar al Assad are murky. It emerged during the general instability of the Arab Spring, but it took a different course. The al Assad regime did not collapse, al Assad was not replaced with another supporter of the regime, as happened in Egypt, and the opposition failed to simply disintegrate. In our view the opposition was never as powerful as the Western media portrayed it, nor was the al Assad regime as weak. It has held on far longer than others expected and shows no inclination of capitulating. For one thing, the existence of bodies such as The International Criminal Court leave al Assad nowhere to go if he stepped down, making a negotiated exit difficult. For another, al Assad does not see himself as needing to step down.
Two governments have emerged as particularly hostile to al Assad: the Saudi government and the Turkish government. The Turks attempted to negotiate a solution in Syria and were rebuffed by al Assad. It is not clear the extent to which these governments see Syria simply as an isolated problem along their border or as part of a generalized Iranian threat. But it is clear that the Saudis are extremely sensitive to the Iranian threat and see the fall of the al Assad regime as essential for limiting the Iranians.
In this context, the last thing that the Saudis want to see is conflict with Israel. A war in Gaza would have given the al Assad regime an opportunity to engage with Israel, at least through Hezbollah, and portray opponents to the regime as undermining the struggle against the Israelis. This would have allowed al Assad to solicit Iranian help against Israel and, not incidentally, to help sustain his regime.
It was not clear that Saudi support for Syrian Sunnis would be enough to force the al Assad regime to collapse, but it is clear that a war with Israel would have made it much more difficult to bring it down. Whether Hamas was inclined toward another round of fighting with Israel is unclear. What is clear is that the Saudis, seeing themselves as caught in a struggle with Iran, were not going to hand the Iranians an excuse to get more involved than they were. They reined in any appetite Hamas may have had for war.
Hamas and Egypt
Hamas also saw its hopes in Egypt dissolving. From its point of view, instability in Egypt opened the door for regime change. For an extended period of time, it seemed possible that the first phase of unrest would be followed either by elections that Islamists might win or another wave of unrest that would actually topple the regime. It became clear months ago that the opposition to the Egyptian regime was too divided to replace it. But it was last week that the power of the regime became manifest.
The Oct. 9 Coptic demonstration that turned violent and resulted in sectarian clashes with Muslims gave the government the opportunity to demonstrate its resolve and capabilities without directly engaging Islamist groups. The regime acted brutally and efficiently to crush the demonstrations and, just as important, did so with some Islamist elements that took to the streets beating Copts. The streets belonged to the military and to the Islamist mobs, fighting on the same side.
One of the things Hamas had to swallow was the fact that it was the Egyptian government that was instrumental in negotiating the prisoner exchange. Normally, Islamists would have opposed even the process of negotiation, let alone its success. But given what had happened a week before, the Islamists were content not to make an issue of the Egyptian government’s deal-making. Nor would the Saudis underwrite Egyptian unrest as they would Syrian unrest. Egypt, the largest Arab country and one that has never been on good terms with Iran, was one place where the Saudis did not want to see chaos, especially with an increasingly powerful Iran and unrest in Syria stalled.
Washington Sides with Riyadh
In the midst of all this, the United States announced the arrest of a man who allegedly was attempting, on behalf of Iran, to hire a Mexican to kill the Saudi ambassador to the United States. There was serious discussion of the significance of this alleged plot, and based on the evidence released, it was not particularly impressive.
Nevertheless — and this is the important part — the administration of U.S. President Barack Obama decided that this was an intolerable event that required more aggressive measures against Iran. The Saudis have been asking the United States for some public action against Iran both to relieve the pressure on Riyadh and to make it clear that the United States was committed to confronting Iran alongside the Saudis. There may well be more evidence in the alleged assassination plot that makes it more serious than it appeared, but what is clear is that the United States intended to use the plot to increase pressure on Iran — psychologically at least — beyond the fairly desultory approach it had been taking. The administration even threw the nuclear question back on the table, a subject on which everyone had been lackadaisical for a while.
The Saudi nightmare has been that the United States would choose to reach an understanding with Iran as a way to create a stable order in the region and guarantee the flow of oil. We have discussed this possibility in the past, pointing out that the American interest in protecting Saudi Arabia is not absolute and that the United States might choose to deal with the Iranians, neither regime being particularly attractive to the United States and history never being a guide to what Washington might do next.
The Saudis were obviously delighted with the U.S. rhetorical response to the alleged assassination plot. It not only assuaged the Saudis’ feeling of isolation but also seemed to close the door on side deals. At the same time, the United States likely was concerned with the possibility of Saudi Arabia trying to arrange its own deal with Iran before Washington made a move. With this action, the United States joined itself at the hip with the Saudis in an anti-Iranian coalition.
The Israelis had nothing to complain about either. They do not want the Syrian regime to fall, preferring the al Assad regime they know to an unknown Sunni — and potentially Islamist — regime. Saudi support for the Syrian opposition bothers the Israelis, but it’s unlikely to work. A Turkish military intervention bothers them more. But, in the end, Iran is what worries them the most, and any sign that the Obama administration is reacting negatively to the Iranians, whatever the motives (and even if there is no clear motive), makes them happy. They want a deal on Shalit, but even if the price was high, this was not the time to get the United States focused on them rather than the Iranians. The Israelis might be prepared to go further in negotiations with Hamas if the United States focuses on Iran. And Hamas will go further with Israel if the Saudis tell them to, which is a price they will happily pay for a focus on Iran.
The U.S. Withdrawal from Afghanistan
For the United States, there is another dimension to the Iran focus: Pakistan. The Pakistani view of the United States, as expressed by many prominent Pakistanis, is that the United States has lost the war against the Afghan Taliban. That means that any negotiations that take place will simply be about how the United States, in their words, will “retreat,” rather than about Pakistani guarantees for support against jihadists coupled with a U.S. withdrawal process. If the Pakistanis are right, and the United States has been defeated, then obviously, their negotiating position is correct.
For there to be any progress in talks with the Taliban and Pakistan, the United States must demonstrate that it has not been defeated. To be more precise, it must demonstrate that while it might not satisfy its conditions for victory (defined as the creation of a democratic Afghanistan), the United States is prepared to indefinitely conduct operations against jihadists, including unmanned aerial vehicle and special operations strikes in Pakistan, and that it might move into an even closer relationship with India if Pakistan resists. There can be no withdrawal unless the Pakistanis understand that there has been no overwhelming domestic political pressure on the U.S. government to withdraw. The paradox here is critical: So long as Pakistan believes the United States must withdraw, it will not provide the support needed to allow it to withdraw. In addition, withdrawal does not mean operations against jihadists nor strategic realignment with India. The United States needs to demonstrate just what risks Pakistan faces when it assumes that the U.S. failure to achieve all its goals means it has been defeated.
The Obama administration’s reaction to the alleged Iranian assassination plot is therefore a vital psychological move against Pakistan. The Pakistani narrative is that the United States is simply incapable of asserting its power in the region. The U.S. answer is that it is not only capable of asserting substantial power in Afghanistan and Pakistan but also that it is not averse to confronting Iran over an attempted assassination in the United States. How serious the plot was, who authorized it in Iran, and so on is not important. If Obama has overreacted it is an overreaction that will cause talk in Islamabad. Obviously this will have to go beyond symbolic gestures but if it does, it changes the dynamic in the region, albeit at the risk of an entanglement with Iran.
Re-evaluating the Region
There are many moving parts. We do not know exactly how far the Obama administration is prepared to take the Iran issue or whether it will evaporate. We do not know if the Assad regime will survive or what Turkey and Saudi Arabia will do about it. We do not know whether, in the end, the Egyptian regime will survive. We do not know whether the Pakistanis will understand the message being sent them.
What we do know is this: The crisis over Iran that we expected by the end of the year is here. It affects calculations from Cairo to Islamabad. It changes other equations, including the Hamas-Israeli dynamic. It is a crisis everyone expected but no one quite knows how to play. The United States does not have a roadmap, and neither do the Iranians. But this is a historic opportunity for Iran and a fundamental challenge to the Saudis. The United States has put some chips on the table, but not any big ones. But the fact that Obama did use rhetoric more intense than he usually does is significant in itself.
All of this does not give us a final answer on the dynamics of the region and their interconnections, but it does give us a platform to begin re-evaluating the regional process.
Read more: From the Mediterranean to the Hindu Kush: Rethinking the Region | STRATFOR
Monday, October 17, 2011
Floods and Regional Disaster Preparedness: Too Little, Too Late?
RSIS presents the following commentary Floods and Regional Disaster Preparedness: Too Little, Too Late? by Mely Caballero-Anthony & Sofiah Jamil. It is also available online at this link. (To print it, click on this link.). Kindly forward any comments or feedback to the Editor RSIS Commentaries, at RSISPublication@ntu.edu.sg
No. 150/2011 dated 17 October 2011
Floods and Regional Disaster Preparedness:
Too Little, Too Late?
By Mely Caballero-Anthony & Sofiah Jamil
Synopsis
As the floods in Thailand and Cambodia continue, the state of regional cooperation is proving critical in addressing the difficulties faced by affected countries. Disaster preparedness is increasingly vital.
Commentary
HEAVY RAINS in the Thailand and Cambodia since July 2011 have resulted in high socio-economic costs from flood damage and has claimed at least 500 lives. For Thailand with areas only two metres above sea level, the flood is said to be the country’s worst in the past 50 years, with a third of its provinces declared disaster zones. However, such incidents are not all that new nor unexpected, for two main reasons:
Firstly, various studies have highlighted the increasing vulnerability of Southeast Asian countries to weather–related disasters. Among these is the Report by the International Development Research Centre, which has highlighted areas in Southeast Asia that are highly vulnerable to various environmental hazards. Similarly, other reports, such as those by the World Bank, United Nations and World Wide Fund have highlighted the socio-economic factors that increase vulnerabilities, such as rising population densities in cities. Secondly, there is existing knowledge and solutions to control floods, based on the region’s long experience with disasters. These factors are particularly significant in Southeast Asia, which is home to at least three megacities – Bangkok, Jakarta and Manila.
Inertia and its sources
Yet, in spite of such information, there remains a strong dose of inertia within states to effectively integrate climate change adaptation strategies with disaster preparedness. Climate change adaptation refers to responses to reduce vulnerabilities to the effects of climate change.
It is particularly vital for disaster-prone areas as it not only enhances a community’s level of preparedness but also resilience in coping with the increasing frequency and intensity of disasters. It is therefore important to understand why there is this inertia, much of which can be alleviated through increased regional cooperation and collaboration.
A primary factor contributing to the inertia to integrate climate change strategies into disaster preparedness is the often complex task of coordination across multiple agencies and stakeholders. The issue of climate change extends beyond the environmental realm and needs changes and inputs from various sectors related to the economy. For flood management, this even comes down to issues such as waste management, irrigation systems and the extent of groundwater extraction and urbanisation.
The relocation of urban poor communities living in areas highly vulnerable to floods, for instance, requires a substantial amount of resources and time. Attention includes ensuring that new housing and dwellings are located near sources of economic livelihood. Such an overhaul of systems in the medium and long term is thus often not in the interests of policymakers whose terms in office are usually three to five years.
Adaptation and Mitigation
A second factor for the inertia is the belated importance given to climate change adaptation compared with climate change mitigation. While climate change mitigation emphasises reducing carbon emissions – the source of climate change - it does not prevent existing effects of climate change. Hence, this necessitates measures for adapting to climate change. Countries now have to make up for lost time as they had only recently channelled efforts to measure and control their carbon emissions in the lead up to the 2009 Copenhagen climate change summit
Reducing carbon emissions has also allowed policymakers to steer the focus to development-related issues such as energy security and meeting the increasing energy demands of developing/industrialising countries. While these issues are significant, they overshadow the effects of climate change which many communities in Southeast Asian countries are highly vulnerable to.
This relates to a third contributing factor to the inertia - economic growth as a priority. In terms of erecting flood defences, cities or other significant centres of economic activity are the first to be protected. Bangkok has occasionally been criticised for this, as its flood defences have caused a diversion of flood waters to other parts of Thailand such as Ayutthaya. While protecting the megacity is vital to prevent millions of economic losses, it does not ensure similar regard for communities that are most vulnerable to disasters in less urban areas.
Their losses are not just about economics, but about survival – that is access to essential supplies such as food, water and electricity. Recent studies have thus emphasised the need to build climate resilience in medium-sized cities, which may not have as much resources as the megacities.
Reducing inertia through regional cooperation
What message can be drawn from the slack in integrating climate change strategies into disaster preparedness? It is the fact that policymakers often relegate the problem to the lack of capacity. While this is true within national boundaries, it is vital for countries to collaborate across borders to build capacity.
Regional frameworks in Southeast Asia currently exist, some of which are in operation like the ASEAN Coordinating Centre for Humanitarian Assistance on disaster management under the ASEAN Agreement on Disaster Management and Emergency Response (AADMER). While such initiatives have been operationalised since disasters such as Cyclone Nargis in 2008, regional frameworks need to be further strengthened to enhance preparedness and climate change adaptation mechanisms, rather than just responding in times of disasters. In this regard, ASEAN’s efforts to streamline and integrate its broad strategies on food and energy security with sustainable development must be matched with greater effectiveness in implementation. In addition, regional cooperation can facilitate the transfer of best practices.
While regional cooperation at the official level has been significant, more can be done to increase the level of cooperation between ASEAN civil society and business communities. ASEAN must increase its engagement with the scientific community to understand better how climatic changes, in addition to other existing natural and man-made disasters, will affect regional security. Greater engagement with the private entities that are keen on corporate social responsibility will also open doors for targeted funding in projects which may not have had enough government support.
It remains to be seen how regional cooperation in disaster preparedness in Southeast Asia will progress. Can ASEAN shift from merely reacting to disasters to be more pro-active in preparing for disasters? In light of the frequency of devastating natural calamities, ASEAN countries should not wait for another Cyclone Nargis or Typhoon Ketsana to move forward on this front.
Mely Caballero-Anthony is Associate Professor and Head (on leave) and Sofiah Jamil is Associate Research Fellow at the Centre for Non-Traditional Security (NTS) Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
No. 150/2011 dated 17 October 2011
Floods and Regional Disaster Preparedness:
Too Little, Too Late?
By Mely Caballero-Anthony & Sofiah Jamil
Synopsis
As the floods in Thailand and Cambodia continue, the state of regional cooperation is proving critical in addressing the difficulties faced by affected countries. Disaster preparedness is increasingly vital.
Commentary
HEAVY RAINS in the Thailand and Cambodia since July 2011 have resulted in high socio-economic costs from flood damage and has claimed at least 500 lives. For Thailand with areas only two metres above sea level, the flood is said to be the country’s worst in the past 50 years, with a third of its provinces declared disaster zones. However, such incidents are not all that new nor unexpected, for two main reasons:
Firstly, various studies have highlighted the increasing vulnerability of Southeast Asian countries to weather–related disasters. Among these is the Report by the International Development Research Centre, which has highlighted areas in Southeast Asia that are highly vulnerable to various environmental hazards. Similarly, other reports, such as those by the World Bank, United Nations and World Wide Fund have highlighted the socio-economic factors that increase vulnerabilities, such as rising population densities in cities. Secondly, there is existing knowledge and solutions to control floods, based on the region’s long experience with disasters. These factors are particularly significant in Southeast Asia, which is home to at least three megacities – Bangkok, Jakarta and Manila.
Inertia and its sources
Yet, in spite of such information, there remains a strong dose of inertia within states to effectively integrate climate change adaptation strategies with disaster preparedness. Climate change adaptation refers to responses to reduce vulnerabilities to the effects of climate change.
It is particularly vital for disaster-prone areas as it not only enhances a community’s level of preparedness but also resilience in coping with the increasing frequency and intensity of disasters. It is therefore important to understand why there is this inertia, much of which can be alleviated through increased regional cooperation and collaboration.
A primary factor contributing to the inertia to integrate climate change strategies into disaster preparedness is the often complex task of coordination across multiple agencies and stakeholders. The issue of climate change extends beyond the environmental realm and needs changes and inputs from various sectors related to the economy. For flood management, this even comes down to issues such as waste management, irrigation systems and the extent of groundwater extraction and urbanisation.
The relocation of urban poor communities living in areas highly vulnerable to floods, for instance, requires a substantial amount of resources and time. Attention includes ensuring that new housing and dwellings are located near sources of economic livelihood. Such an overhaul of systems in the medium and long term is thus often not in the interests of policymakers whose terms in office are usually three to five years.
Adaptation and Mitigation
A second factor for the inertia is the belated importance given to climate change adaptation compared with climate change mitigation. While climate change mitigation emphasises reducing carbon emissions – the source of climate change - it does not prevent existing effects of climate change. Hence, this necessitates measures for adapting to climate change. Countries now have to make up for lost time as they had only recently channelled efforts to measure and control their carbon emissions in the lead up to the 2009 Copenhagen climate change summit
Reducing carbon emissions has also allowed policymakers to steer the focus to development-related issues such as energy security and meeting the increasing energy demands of developing/industrialising countries. While these issues are significant, they overshadow the effects of climate change which many communities in Southeast Asian countries are highly vulnerable to.
This relates to a third contributing factor to the inertia - economic growth as a priority. In terms of erecting flood defences, cities or other significant centres of economic activity are the first to be protected. Bangkok has occasionally been criticised for this, as its flood defences have caused a diversion of flood waters to other parts of Thailand such as Ayutthaya. While protecting the megacity is vital to prevent millions of economic losses, it does not ensure similar regard for communities that are most vulnerable to disasters in less urban areas.
Their losses are not just about economics, but about survival – that is access to essential supplies such as food, water and electricity. Recent studies have thus emphasised the need to build climate resilience in medium-sized cities, which may not have as much resources as the megacities.
Reducing inertia through regional cooperation
What message can be drawn from the slack in integrating climate change strategies into disaster preparedness? It is the fact that policymakers often relegate the problem to the lack of capacity. While this is true within national boundaries, it is vital for countries to collaborate across borders to build capacity.
Regional frameworks in Southeast Asia currently exist, some of which are in operation like the ASEAN Coordinating Centre for Humanitarian Assistance on disaster management under the ASEAN Agreement on Disaster Management and Emergency Response (AADMER). While such initiatives have been operationalised since disasters such as Cyclone Nargis in 2008, regional frameworks need to be further strengthened to enhance preparedness and climate change adaptation mechanisms, rather than just responding in times of disasters. In this regard, ASEAN’s efforts to streamline and integrate its broad strategies on food and energy security with sustainable development must be matched with greater effectiveness in implementation. In addition, regional cooperation can facilitate the transfer of best practices.
While regional cooperation at the official level has been significant, more can be done to increase the level of cooperation between ASEAN civil society and business communities. ASEAN must increase its engagement with the scientific community to understand better how climatic changes, in addition to other existing natural and man-made disasters, will affect regional security. Greater engagement with the private entities that are keen on corporate social responsibility will also open doors for targeted funding in projects which may not have had enough government support.
It remains to be seen how regional cooperation in disaster preparedness in Southeast Asia will progress. Can ASEAN shift from merely reacting to disasters to be more pro-active in preparing for disasters? In light of the frequency of devastating natural calamities, ASEAN countries should not wait for another Cyclone Nargis or Typhoon Ketsana to move forward on this front.
Mely Caballero-Anthony is Associate Professor and Head (on leave) and Sofiah Jamil is Associate Research Fellow at the Centre for Non-Traditional Security (NTS) Studies at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University.
US Begins Huge Military Maneuvers Aimed at Iran
http://www.infowars.com/us-begins-huge-military-maneuvers-aimed-at-iran/
US Begins Huge Military Maneuvers Aimed at Iran
Battle-ready troops on standby as tensions rise following dubious assassination plot
Paul Joseph Watson
Infowars.com
Monday, October 17, 2011
The United States will this week commence huge military maneuvers aimed at Iran, with a massive air fleet patrolling middle eastern skies ready to land at any time, in response to Iran’s involvement in an alleged assassination plot that experts have labeled dubious, amidst fears that US and Israeli targets could be hit by attacks.
As we reported last week, during US Defense Secretary Leon Panetta’s October 3 Tel Aviv visit, Israeli hawks attempted to persuade Panetta to give the green light for a military strike on Iran. Within ten days, details of an alleged assassination plot against a Saudi ambassador emerged and the foiled attack was blamed on Iran. Innumerable experts immediately voiced their doubts about the authenticity of the plot, with 21-year CIA veteran Robert Baer labeling the story “a truly awful Hollywood script”.
The US military will respond this week with a series of significant military maneuvers designed to threaten Iran, including, “an American air fleet in Middle East skies ready to land at any moment for any contingency,” reports DebkaFile.
“The United States launches a large-scale exercise over the Middle East deploying 41 giant transports of the 22nds Airlift Squadron Monday Oct. 17,” states the report, adding that the aircraft will be packed with fully equipped, battle ready troops.
A further seven warships from the Stennis Battle Group will also “provide ground troops with combat support and strike land and sea targets.”
The Israeli, Egyptian and Saudi armies have also been placed on maximum preparedness, echoing reports that U.S. troops being sent to the region have also been put on full alert.
The maneuvers are also linked to the scheduled release of Israeli soldier Gilad Shalit by Hamas on Tuesday, an event that US intelligence officials fear could set off a chain of attacks in the region against US and Israeli targets. Should embassies be targeted, US troops will be in place to react swiftly.
Geopolitical experts have been consistent in their warnings that Israel was preparing to strike Iran this fall.
Back in July, CIA veteran Baer told KPFK Los Angeles that Israeli Prime Minister Benjamin Netanyahu was planning an attack on Iran in September to coincide with the Palestine bid for UN membership.
Whether the maneuvers are merely designed to be an act of belligerence against Iran or represent preparations for an actual military strike in support of Israel remains to be seen, but as Gulf News reporter Patrick Seale pointed out Friday, the window of opportunity for an attack on Iran is closing.
“Some western military experts have been quoted as saying that the window of opportunity for an Israeli air attack on Iran will close within two months, since the onset of winter would make such an assault more difficult,” writes Seale, adding that the Israelis’ eagerness to launch the attack has “caused considerable alarm in Washington and in a number of European capitals.”
Both Republican and Democratic US lawmakers have issued strong statements against Iran in recent days, with several all but calling for war. Last week, New York Republican Peter King called on the Obama administration to put troops on standby, labeling the alleged Iranian assassination plot “an act of war”. On Sunday, Democrat Dianne Feinstein, the head of the Senate Intelligence Committee, warned that the US and Iran were on a “collision course”.
US Begins Huge Military Maneuvers Aimed at Iran
Battle-ready troops on standby as tensions rise following dubious assassination plot
Paul Joseph Watson
Infowars.com
Monday, October 17, 2011
The United States will this week commence huge military maneuvers aimed at Iran, with a massive air fleet patrolling middle eastern skies ready to land at any time, in response to Iran’s involvement in an alleged assassination plot that experts have labeled dubious, amidst fears that US and Israeli targets could be hit by attacks.
As we reported last week, during US Defense Secretary Leon Panetta’s October 3 Tel Aviv visit, Israeli hawks attempted to persuade Panetta to give the green light for a military strike on Iran. Within ten days, details of an alleged assassination plot against a Saudi ambassador emerged and the foiled attack was blamed on Iran. Innumerable experts immediately voiced their doubts about the authenticity of the plot, with 21-year CIA veteran Robert Baer labeling the story “a truly awful Hollywood script”.
The US military will respond this week with a series of significant military maneuvers designed to threaten Iran, including, “an American air fleet in Middle East skies ready to land at any moment for any contingency,” reports DebkaFile.
“The United States launches a large-scale exercise over the Middle East deploying 41 giant transports of the 22nds Airlift Squadron Monday Oct. 17,” states the report, adding that the aircraft will be packed with fully equipped, battle ready troops.
A further seven warships from the Stennis Battle Group will also “provide ground troops with combat support and strike land and sea targets.”
The Israeli, Egyptian and Saudi armies have also been placed on maximum preparedness, echoing reports that U.S. troops being sent to the region have also been put on full alert.
The maneuvers are also linked to the scheduled release of Israeli soldier Gilad Shalit by Hamas on Tuesday, an event that US intelligence officials fear could set off a chain of attacks in the region against US and Israeli targets. Should embassies be targeted, US troops will be in place to react swiftly.
Geopolitical experts have been consistent in their warnings that Israel was preparing to strike Iran this fall.
Back in July, CIA veteran Baer told KPFK Los Angeles that Israeli Prime Minister Benjamin Netanyahu was planning an attack on Iran in September to coincide with the Palestine bid for UN membership.
Whether the maneuvers are merely designed to be an act of belligerence against Iran or represent preparations for an actual military strike in support of Israel remains to be seen, but as Gulf News reporter Patrick Seale pointed out Friday, the window of opportunity for an attack on Iran is closing.
“Some western military experts have been quoted as saying that the window of opportunity for an Israeli air attack on Iran will close within two months, since the onset of winter would make such an assault more difficult,” writes Seale, adding that the Israelis’ eagerness to launch the attack has “caused considerable alarm in Washington and in a number of European capitals.”
Both Republican and Democratic US lawmakers have issued strong statements against Iran in recent days, with several all but calling for war. Last week, New York Republican Peter King called on the Obama administration to put troops on standby, labeling the alleged Iranian assassination plot “an act of war”. On Sunday, Democrat Dianne Feinstein, the head of the Senate Intelligence Committee, warned that the US and Iran were on a “collision course”.
Sunday, October 16, 2011
USTBonds: The Monster Spleen
USTBonds: The Monster Spleen
By Jim Willie CB
Oct 6 2011 11:21AM
www.GoldenJackass.com
The USTreasury Bond rally over the last few months has been celebrated. Some call it a contradiction of the Standard & Poors debt downgrade of USGovt debt. Some hail the rally as proof that the USDollar remains respected as global reserve currency. Some regard it as a sign of bond market health in general. Some claim the US remains the safe haven. These are all errant views to the extreme, held by cheer leaders of the system, distractions from reality. The United States is stuck in a powerful recession, with huge federal deficits set to expand further. The USTBond is in strong rally mode because the United States is in the process of systemic failure, leading ultimately to some form of official debt default. The Greek Govt Bond yield rises from its fractured insolvent ruined status. The USTreasury Bond yield falls from its fractured insolvent ruined status also. It is a Black Hole, attracting funds from productive chambers of the USEconomy and pulling them into the dark place loaded with federal deficits. TheUSTBond is the expanding spleen that removes the life blood from the body economic. The organ serves as a reservoir, whose size must be contained.
The blood (tainted money) in capitalist systems has been circulating for two years throughout the economies, spreading toxins through the veins. More money thrown at the problem has accomplished nothing except to raise the cost structures, to retire working capital, to raise the government deficits, and to raise the demand for USTBonds. The only proper medical thermometer is Gold, with its Silver handle. Prepare for a repeat episode in a powerful rebound like in 2009 as four enormous destinations are presented: 1) bank bond redemptions, 2) bank recapitalization, 3) economic stimulus, and 4) debt monetization. The monetary growth will be absolutely astonishing and staggering.
HORRIBLE CONSEQUENCES OF USTBOND RALLY
For a valid remedy to be embarked upon, the nation's industrial base must return to US shores, and the nation's biggest banks must be liquidated. Both are mandatory pre-requisites for any recovery. The priority has changed once again from the summertime. The USGovt favors short-term stimulus, alongside long-term restraint, a total deception to continue. Stimulate the economy and deceive on future projections. Important factors prevent the bond rally from doing anything but consuming the entire nation in an indirect confiscation of wealth. Consider the horrible realities behind the USTreasury Bond bull market, signals of ruin.
USTreasury Bond is the sanctioned approved asset bubble. The USTBond will be the last asset bubble. The USGovt approves of its expansion, since they believe it confirms legitimacy of the debt. The bubble is proof positive of failed monetary policy, failed fiscal policy, failed economic policy. The USTreasury Bond market is not a safe haven.
The bond rally grew from extreme Interest Rate Swap abuse. The kickstart earlier this year came from such leveraged instruments. The additional $9 trillion in 1Q2011 by Morgan Stanley from derivatives, 85% of which are typically IRSwaps, never seemed newsworthy. The hidden tool borrows at 0% and buys at the long maturity end, to create artificial demand for the USTBonds themselves.
The Fed Valuation Model has become a deceptive tool to assess valuations. It proclaims stocks are cheap according to Price Earnings Ratio that integrates the ultra-low interest rates. This model is a embarrassment. The earnings projections are lofty and exaggerated. The stock market is vulnerable to a 20% decline on a constant basis.
The US Federal Reserve intentionally has spewed devious deception about Quantitative Easing III. They wish to build political support for the massive expansion of the money supply. They wish to attract deep channels from stock funds to fund the gigantic USGovt deficits, at a time when Q4 federal deficits are due to rise by $1 trillion, in keeping with past years. Significant demand must be grown and developed, even if all-consuming. This failed central bank continues to apply liquidity in high volume in treatment of a grotesque insolvency problem.
Improper cost of money has been present for over a decade, now at a climax in artificial low amount. The entire USEconomy, cost of capital, and payout for asset risk have been distorted to the extreme, inducing speculation. The wrongly priced money element ripples throughout the entire system, pushing the distortions and false values into almost every corner.
The US Federal Reserve trades blame for failure with the USGovt, in particular the USCongress. They are both failed performers. The central bank franchise system has run its full course, at a dead end. The gargantuan federal deficit will surpass $2 trillion next year (the fiscal year just started). The Bernanke Fed has declared it has no more tools to use, a spent arsenal, and foresees yet another recession. They point the finger at the USGovt for fiscal restraint, not yet austerity since harmful to jobs.
The USEconomy suffers a damper effect from nil interest granted to savers. Almost twice as much volume is devoted to savings and to consumer loans. They receive less in interest payouts for their savings, less for the risk taken, less for erosion. Productive elements are discouraged. The stimulus to the financial sector is preferred, badly oversized, while the industrial sector became undersized. The source of legitimate income is inadequate to foster any recovery.
Inter-bank market lending has dried up both in the US and Europe, as the corporate bond market has been crowded out. Banks distrust each other, since toxic assets are loaded in self-evaluated balance sheets. The corporate bond market is denied. The capitalist engine for business expansion has sputtered. The corporations see little prospect for expansion within the United States, where taxation and regulation are deemed oppressive. The main expansion is of federal deficits, which must be accommodated. All else dries up like a desert pond.
This is not Japan redux, but much worse, since the US has a trade gap and lacks an adequate industrial base.Japan forced investment from postal pensions and federal worker pensions, in order to sustain demand in a Jap Govt Bond, stuck with low yield. Unlike Japan, the USTBond cannot persist. The yawning USGovt deficits grow in mammoth volume. The US bond bubble must find additional funds, and will depend upon debt monetization, the manifestation of hyper-inflation. The USTBond bubble has finite life span, unlike Japan.
Watch the canaries led by Morgan Stanley. Not only is Morgan Stanley seeing a sharp decline in its stock price and rising Credit Default Swap debt insurance, so is Goldman Sachs. The CDSwap market is quite sophisticated. This market accurately foretold of the 2008 disaster, led by Lehman Brothers. Prepare for a repeat on US soil. But Europe has 20 Lehmans lurking. The financial structures of Europe and the US are interconnected.
GOLD TARGETED BUT FIRM
In September, the COMEX officials raised Gold futures margin requirements in a falling market, a repeat episode of what occurred in the first week of May. Notice, in keeping with the theme of this article, that the COMEX decided to leave USTBond margins intact even though an obvious bubble. The Commitment of Traders shows very little if any abandonment by Speculators in Gold. It also shows a stunning drop in the net short position by Commercials. That adds up to a firm foundation for a potential V-shaped recovery in the Gold & Silver market, which the Jackass admits was much worse than expected. Sadly, most US financial markets lack honesty and freedom from constant interventions, even ambushes.
A strong ugly 25% decline in late 2008 and early 2009 resulted in the Gold locomotive downshifting into second gear. Rewards were huge for those who showed patience, or bought into the engineered decline. In the late summer 2011, a move of greater than 20% to a record $1900 high was canceled. The gold decline led by the paper futures market was a retreat to a still high gear, that merely removed the summer gains. The comparison to 2008 is loaded with propaganda and inaccuracies. Behind the curtains, important players are being removed from the game, or legs cut off, setting the stage for future gains. The strong established uptrend is clear. The Gold price has returned to the middle range of the stable upchannel. Gold is preparing for destinations being stuffed with massive new money. The next round will be universal in broad monetary expansion. Gold is ready to jump quickly back toward the $2000 level. Notice the potential for a technical rebound that could be extremely quick, very exciting. A strong rebound move is likely from $1680 to $1820 in a flash, since no resistance is evident. The sudden move might take your breath away.
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS
http://www.GoldenJackass.com
SIGNUP: http://www.GoldenJackass.com/subscribe.html
Jim Willie CB Editor of the "HAT TRICK LETTER"
Subscribe: Hat Trick Letter
October 4, 2011
***
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com
By Jim Willie CB
Oct 6 2011 11:21AM
www.GoldenJackass.com
The USTreasury Bond rally over the last few months has been celebrated. Some call it a contradiction of the Standard & Poors debt downgrade of USGovt debt. Some hail the rally as proof that the USDollar remains respected as global reserve currency. Some regard it as a sign of bond market health in general. Some claim the US remains the safe haven. These are all errant views to the extreme, held by cheer leaders of the system, distractions from reality. The United States is stuck in a powerful recession, with huge federal deficits set to expand further. The USTBond is in strong rally mode because the United States is in the process of systemic failure, leading ultimately to some form of official debt default. The Greek Govt Bond yield rises from its fractured insolvent ruined status. The USTreasury Bond yield falls from its fractured insolvent ruined status also. It is a Black Hole, attracting funds from productive chambers of the USEconomy and pulling them into the dark place loaded with federal deficits. TheUSTBond is the expanding spleen that removes the life blood from the body economic. The organ serves as a reservoir, whose size must be contained.
The blood (tainted money) in capitalist systems has been circulating for two years throughout the economies, spreading toxins through the veins. More money thrown at the problem has accomplished nothing except to raise the cost structures, to retire working capital, to raise the government deficits, and to raise the demand for USTBonds. The only proper medical thermometer is Gold, with its Silver handle. Prepare for a repeat episode in a powerful rebound like in 2009 as four enormous destinations are presented: 1) bank bond redemptions, 2) bank recapitalization, 3) economic stimulus, and 4) debt monetization. The monetary growth will be absolutely astonishing and staggering.
HORRIBLE CONSEQUENCES OF USTBOND RALLY
For a valid remedy to be embarked upon, the nation's industrial base must return to US shores, and the nation's biggest banks must be liquidated. Both are mandatory pre-requisites for any recovery. The priority has changed once again from the summertime. The USGovt favors short-term stimulus, alongside long-term restraint, a total deception to continue. Stimulate the economy and deceive on future projections. Important factors prevent the bond rally from doing anything but consuming the entire nation in an indirect confiscation of wealth. Consider the horrible realities behind the USTreasury Bond bull market, signals of ruin.
USTreasury Bond is the sanctioned approved asset bubble. The USTBond will be the last asset bubble. The USGovt approves of its expansion, since they believe it confirms legitimacy of the debt. The bubble is proof positive of failed monetary policy, failed fiscal policy, failed economic policy. The USTreasury Bond market is not a safe haven.
The bond rally grew from extreme Interest Rate Swap abuse. The kickstart earlier this year came from such leveraged instruments. The additional $9 trillion in 1Q2011 by Morgan Stanley from derivatives, 85% of which are typically IRSwaps, never seemed newsworthy. The hidden tool borrows at 0% and buys at the long maturity end, to create artificial demand for the USTBonds themselves.
The Fed Valuation Model has become a deceptive tool to assess valuations. It proclaims stocks are cheap according to Price Earnings Ratio that integrates the ultra-low interest rates. This model is a embarrassment. The earnings projections are lofty and exaggerated. The stock market is vulnerable to a 20% decline on a constant basis.
The US Federal Reserve intentionally has spewed devious deception about Quantitative Easing III. They wish to build political support for the massive expansion of the money supply. They wish to attract deep channels from stock funds to fund the gigantic USGovt deficits, at a time when Q4 federal deficits are due to rise by $1 trillion, in keeping with past years. Significant demand must be grown and developed, even if all-consuming. This failed central bank continues to apply liquidity in high volume in treatment of a grotesque insolvency problem.
Improper cost of money has been present for over a decade, now at a climax in artificial low amount. The entire USEconomy, cost of capital, and payout for asset risk have been distorted to the extreme, inducing speculation. The wrongly priced money element ripples throughout the entire system, pushing the distortions and false values into almost every corner.
The US Federal Reserve trades blame for failure with the USGovt, in particular the USCongress. They are both failed performers. The central bank franchise system has run its full course, at a dead end. The gargantuan federal deficit will surpass $2 trillion next year (the fiscal year just started). The Bernanke Fed has declared it has no more tools to use, a spent arsenal, and foresees yet another recession. They point the finger at the USGovt for fiscal restraint, not yet austerity since harmful to jobs.
The USEconomy suffers a damper effect from nil interest granted to savers. Almost twice as much volume is devoted to savings and to consumer loans. They receive less in interest payouts for their savings, less for the risk taken, less for erosion. Productive elements are discouraged. The stimulus to the financial sector is preferred, badly oversized, while the industrial sector became undersized. The source of legitimate income is inadequate to foster any recovery.
Inter-bank market lending has dried up both in the US and Europe, as the corporate bond market has been crowded out. Banks distrust each other, since toxic assets are loaded in self-evaluated balance sheets. The corporate bond market is denied. The capitalist engine for business expansion has sputtered. The corporations see little prospect for expansion within the United States, where taxation and regulation are deemed oppressive. The main expansion is of federal deficits, which must be accommodated. All else dries up like a desert pond.
This is not Japan redux, but much worse, since the US has a trade gap and lacks an adequate industrial base.Japan forced investment from postal pensions and federal worker pensions, in order to sustain demand in a Jap Govt Bond, stuck with low yield. Unlike Japan, the USTBond cannot persist. The yawning USGovt deficits grow in mammoth volume. The US bond bubble must find additional funds, and will depend upon debt monetization, the manifestation of hyper-inflation. The USTBond bubble has finite life span, unlike Japan.
Watch the canaries led by Morgan Stanley. Not only is Morgan Stanley seeing a sharp decline in its stock price and rising Credit Default Swap debt insurance, so is Goldman Sachs. The CDSwap market is quite sophisticated. This market accurately foretold of the 2008 disaster, led by Lehman Brothers. Prepare for a repeat on US soil. But Europe has 20 Lehmans lurking. The financial structures of Europe and the US are interconnected.
GOLD TARGETED BUT FIRM
In September, the COMEX officials raised Gold futures margin requirements in a falling market, a repeat episode of what occurred in the first week of May. Notice, in keeping with the theme of this article, that the COMEX decided to leave USTBond margins intact even though an obvious bubble. The Commitment of Traders shows very little if any abandonment by Speculators in Gold. It also shows a stunning drop in the net short position by Commercials. That adds up to a firm foundation for a potential V-shaped recovery in the Gold & Silver market, which the Jackass admits was much worse than expected. Sadly, most US financial markets lack honesty and freedom from constant interventions, even ambushes.
A strong ugly 25% decline in late 2008 and early 2009 resulted in the Gold locomotive downshifting into second gear. Rewards were huge for those who showed patience, or bought into the engineered decline. In the late summer 2011, a move of greater than 20% to a record $1900 high was canceled. The gold decline led by the paper futures market was a retreat to a still high gear, that merely removed the summer gains. The comparison to 2008 is loaded with propaganda and inaccuracies. Behind the curtains, important players are being removed from the game, or legs cut off, setting the stage for future gains. The strong established uptrend is clear. The Gold price has returned to the middle range of the stable upchannel. Gold is preparing for destinations being stuffed with massive new money. The next round will be universal in broad monetary expansion. Gold is ready to jump quickly back toward the $2000 level. Notice the potential for a technical rebound that could be extremely quick, very exciting. A strong rebound move is likely from $1680 to $1820 in a flash, since no resistance is evident. The sudden move might take your breath away.
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS
http://www.GoldenJackass.com
SIGNUP: http://www.GoldenJackass.com/subscribe.html
Jim Willie CB Editor of the "HAT TRICK LETTER"
Subscribe: Hat Trick Letter
October 4, 2011
***
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com
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