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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: marek_wojna who wrote (37392)8/23/2003 2:59:11 AM
From: TobagoJack  Read Replies (3) of 74559
 
Hello Marek_W, I think many things are not right, and quite a few things are going wrong. I think it is best that we reflect on the current observable facts, seek the truth, figure out a road map to prosperity, marking off all the way-points, and keep vigilant as we go.

Stratfor is normally pretty balanced and matter-of-fact, with perhaps a slight conservative bent:

Geopolitical Diary: Friday, Aug. 22, 2003
Aug 22, 2003

stratfor.biz

The Israeli-Palestinian truce is finished. The war has resumed and it is difficult to see any safety net beneath it. To the extent that the war can be limited, it will be limited as the Israelis and Palestinians decide to limit it. The war now is pretty much beyond the control of outside powers.

Simultaneously -- but not, we think, intentionally related -- the guerrilla war in Iraq is at the very least continuing unabated. In its more visible aspects, it is intensifying. Some nations, like Japan, that had promised peacekeeping forces now are reconsidering. The United States is pretty much on its own dealing with the insurrection in the Sunni region.

Months ago, Stratfor spoke of the "perfect storm" in the Middle East. There were three elements in this scenario. First was an ongoing guerrilla war that forces the United States to go on the defensive in Iraq. Second was an intensifying war between Israelis and Palestinians in which the United States is seen as Israel's ally. Rounding out this picture would be an uprising in the Shiite south of Iraq, in which mass demonstrations created an Iraqi intifada.

Were this to happen, we argued, the foundations of the U.S. war on al Qaeda would be severely threatened. First, the psychological purpose of the war -- to demonstrate the U.S. ability to successfully win a war in the region -- would not have been achieved. Indeed, the perception of ultimate impotence would have intensified. Second, the strategic purpose of the war -- to place pressure on the Saudis, Syrians and Iranians -- would be severely undermined. Bogged down in a guerrilla war in Iraq, the U.S. capacity for follow-on offensive operations would be severely hindered, if not negated altogether. The perfect storm would place the United States on the defensive and make it appear that the momentum and initiative Washington was trying to seize actually was with the Islamist force.

The cease-fire that began at the end of June created a respite for the United States. The Shiite threat in Iraq was contained by skillful diplomacy inside of Iraq and Iran. Therefore, the Iraqi situation was isolated temporarily, giving the United States the opportunity to deal with it as a stand-alone challenge. The collapse of the cease-fire between the Israelis and Palestinians has moved the situation back to the perfect-storm scenario. Under current circumstances, the fundamental decisions being made on the Palestinian side are being made by Hamas, an Islamist group. Hamas might not have the dominant position among the Palestinians, but it is the decisions of this group that will determine the direction of Palestinian strategy.

The Islamist character of this round of the Palestinian rising, coupled with the increasing perception -- whether true or false -- that the Iraqi guerrillas are closely linked to Islamist forces creates the perception that the Islamic forces now are rising in concert. At the very least, it leads to the perception that Islamist forces cannot be contained. The inability of the United States to crush the guerrillas in Iraq over the summer -- as unreasonable a demand as it might have been -- leaves the United States appearing to be on the defensive in Iraq and without influence in Israel and the Palestinian territories.

This is causing regional powers to reconsider their positions. Both the Saudis and Syrians calculated last May that the United States was the ascendant power in the region and that they would have to accommodate U.S. demands. Indeed, one of Hamas' reasons for entering into the cease-fire was the perception that the United States was not to be trifled with. Those calculations will change as the reality on the ground changes. At the moment, Washington is not seen as the ascendant force. It is perceived as being trapped without a strategy.

The most important impact will be on the Iranians, who influence -- if not control -- the Shiites in Iraq. The Iranian view, like the Saudi and Syrian, was that there was no choice but to make the best deal possible with the United States. However, if the Iranians start to believe that the situation in the region is out of control from the U.S. point of view, then either their price for keeping the lid on the Shiites will become astronomical or, more likely, they will decide not to bet on what they see as the losing horse.

The situation in the region is, in our view, reaching the crisis stage for the United States. Things are going very wrong for the Bush administration. The threat of an Islamist rising from the Mediterranean to the Persian Gulf no longer is an interesting theoretical concept. Except for Jordan, it is becoming a reality. Under the circumstances, Jordan's stability and security should not be assumed in the next year or so. If Iran -- or native Iraqi leaders -- send the Shiites into the streets, then all of Iraq will be in chaos and a perfect storm will have formed.

Our perception of the U.S. strategy has been that the basic assumption was that the United States has the time to let the guerrillas burn themselves out or that it has enough time to craft an effective strategy. We do not think that basic assumption is valid any longer. The collapse of the cease-fire between the Israelis and Palestinians creates a regional force that can be contained only by decisive U.S. action in Iraq.

The Bush administration knows what is needed. We don't know how the administration can do it. We do know what the critical issue is now: watch the Iraqi south. Watch the Shiites. If they go into the streets en masse, then the war that began on Sept. 11, 2001, will have reached its first major crisis, one that will test the United States' ability to improvise solutions quickly and skillfully.
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