Life is funny

By Libby

I'm fighting the effects of too much sleep this afternoon. I spent ten solid hours, catching up on lost REM time and dreaming heavily, mostly about politics, which left me more exhausted than refreshed. So I'm having a hard time warming up to the news today but this post at Buck Naked Politics amused me and provides the quote of the day.

"President Bush talked about having a road map to peace. It took him seven years to take it out of the glove compartment." ~Madeline Albright

Great line. I think Albright may be wasting her talents in academia. Maybe she should be writing monlogues for the late night comics.

US Ship Shoots At Small Boat In Suez Canal

By Cernig

The US Fifth Fleet is co-operating in the Egyptian investigation of an incident in the Suez canal after dark on Monday. The Egyptian authorities say that one man was killed by fire from the US-flagged Global Patriot, under contract to the US military, but the American embassy in Cairo says that "Initial reports from the “Global Patriot” indicate that no casualties were sustained on either vessel." The embassy's website describes the encounter:

The “Global Patriot,” a ship on short term charter to the US Navy’s Military Sealift Command, fired warning shots at a small boat approaching the ship as it was preparing to transit the Suez Canal Monday evening. Initial reports from the “Global Patriot” indicate that no casualties were sustained on either vessel.

The “Global Patriot” was approached by several boats while preparing to transit the Suez Canal. The boats were hailed and warned by a native Arabic speaker using a bullhorn to warn them to turn away. A warning flare was then fired. One small boat continued to approach the ship and received two sets of warning shots 20-30 yards in front of the bow. All shots were accounted for as they entered the water.

The incident is under investigation. The US Navy’s Fifth Fleet Command is cooperating fully with Egyptian authorities, including the Suez Canal Authority and other local authorities, as well as the national authorities through the US Embassy in Cairo.

But the BBC reports:

Egyptian officials and witnesses say a man aboard the boat, Mohammed Fouad, was killed as his boat approached the ship in order to offer goods for sale. Two other men were injured, they say.

This is also the version of events reported by the official Egyptian news agency, citing preliminary reports.

Egyptian sources say Fouad's body was taken to a hospital morgue and then a mosque to await burial on Tuesday.

"We are praying over his body right now," Abbas al-Amrikani, the head of the union of seamen in Suez, told AP news agency, over audible sounds of prayer.

"I saw the body. The bullet entered his heart and went out the other side."

There's certainly a difference in accounts there.

The roll-on-roll-off Global Patriot and its owners, Global Container Lines, have done several charters for the U.S. military and other U.S. governmental bodies, including USAID food relief and transporting a Patriot missile battery. This time, they were carrying US military equipment (i.e. vehicles, given the vessel type) back to the States for repair or disposal. As such, it seems likely to me they'd have some form of security on board rather than just relying on armed crewmen.

So here's the question not being asked - were the shooters crewmen, US military servicemen or security contractors? These early reports (denial even in the face of a body and eyewitness accounts) are reminiscent to me of Blackwater's infamous shoot-up in Baghdad which caused so much controversy and occasioned a US State Dept. attempt at a cover-up.

A Special Relationship

By Cernig

Quote of the day via the UK's Channel Four News:

Mr Cheney, speaking to reporters after arriving in Jerusalem for a meeting with Israeli Prime Minister Ehud Olmert, said: "America's commitment to Israel's security is enduring and unshakeable.

"The United States will never pressure Israel to take steps that threaten its security.".

What, not ever, over anything no matter how small or how remote the threat?

The tail wags the dog, and the prospect of Middle East compromise gets shaken off like an unwanted flea.

Update The BBC and Associated Press follow up. Both think Cheney's more interested in bolstering Israel's campaign to have it's proxy superpower attack Iran on its behalf. The AP has some expert thoughts on ramifications for the peace process.

Edward Abbington, a former U.S. consul general in Jerusalem and now an adviser to Abbas, said the mood among the Palestinians in Ramallah was grim. Neither the Israelis or Palestinians are convinced that Cheney is an integral player in the peace process, he said.

"They told me when I was in Ramallah they had no idea why Cheney was even coming to see them," Abbington said. "The Israelis are more interested in what Cheney has to say about Iran and blessing their continued strikes against Gaza than anything he has to say about the peace process."

There are three other diplomatic initiatives aimed at achieving a peace deal that the United States has been tightlipped about. Russia has floated the idea of a Moscow conference as a follow-up to Annapolis. The Egyptians are playing middleman in a pair of negotiations between Israel and Hamas and between Hamas and Abbas' moderate Fatah party. Yemen also is working to mediate talks between Hamas and Fatah.

"I would not expect Cheney to have a lot to say about any of these, simply because while the U.S. attitude ranges between sharp suspicion and quiet acquiescence to these initiatives, they appear to be dying on their own," said Nathan Brown, an expert on Arab politics at George Washington University in Washington.

Problems with analogies

Analytical analogies can be very useful things as they convey a great deal of information in an understandable and memorable manner. The 'pushing on a string' analogy of ineffective central bank monetary policy when the problem is not a liquidity problem but a solvency problem, is one of those very useful analogies. Behind it lies a mass of very important technical work and analytical assumptions as to how the economy behaves. However these assumptions correlate fairly well to a reality picture described by pushing on string.


However analogies and comparisons need to be grounded in reality to be useful. And to be valuable, they need to be grounded in multiple facets of reality. Michael Goldfarb at the neo-con house organ of the Weekly Standard (intentionally) makes this mistake to argue for the McCain plan to stay in Iraq for 100 years on the basis of the boogey man charge that AQI is all powerful and will take over in ten seconds after the US pulls out X number of combat brigades.

The Israeli experience of the last few years offers a real lesson here. They pulled out of Lebanon--unilaterally and not out of military necessity--and Hezbollah claimed victory. More than that, Hezbollah became the vanguard of global jihad. Likewise in Gaza. The Israelis withdrew--unilaterally and not out of military necessity--and Hamas claimed victory. More than that, they overthrew Fatah and radicalized the Palestinian population (really, they are more radical).

If we pull out of Iraq, al Qaeda will claim victory

For an analogy to work, it has to mesh on relevant points. It does not.


He is analogizing the experiences of two nationalistic groups who are in the terms of Al-Qaeda grand strategy focuesed on fighting the 'near' enemy of Isreal above all else while also investing in significant social services by building parrellel or tapping into existing social support networks to a group that everyone who has been paying attention for years contends is composed of 'useful idiots, with emphasis on idiots' from the POV of their primary support base, is comparatively small (5% to 10% of the 2003 to 2007 active shooters) and are primarily motivated by the war itself. AQI is a 'near enemy' unit in the terminology and stragetic perspective of Bin Laden et al.


Conflating nationalist/tribalist groups whose area of operations and scope of activities are measured in miles and not continents with a group whose strategy dictates 'deep strikes' and intercontintal reach is one hell of a stretch, and if he was an honest analyst, he would know it. But we are looking at propaganda to support a policy regime that has failed in its goals.

Revisiting Profits of Instability and Extortion

A couple of years ago, I did some quick calculations at what the US invasion and occupation was doing to the oil market via the direct fear premium . Updating those assumptions with a little bit more depth, we get a more useful number. Assuming a $10/bbl risk premium and a short term elasticity of demand of .10, the Iraq War has pumped an extra $30 to $60 billion dollars per year into Russia's coffers, and $40 to $70 billion dollars per year into Saudi coffers. The rest of the price appreciation has been a combination of tight supply/demand, and a weakening dollar, with the potential of Peak Oil sitting atop of any major net production increases.

The results --- a Russia that is flush with money who sees itself as a great power with a recently embarrassing decade or two instead of a weak power with a grandiose past, and the OPEC-11 running massive current account surpluses. Fairly predictable that a major shooting war in the Middle East will have negative impacts on oil pricing.

BJ @ Northman's Fury saw some vultures circling around this pool of money and making demands at the Astute Bloggers ( I had to make sure this was not a parody site first)

I think that Saudi Arabia and Kuwait and Qatar and the rest of the nations in the region - (including Iran!) - should help underwrite the costs of this heroic and noble effort. They should give the USA $400 billion.

They have the money. Especially now with oil at/near/or over $100/barrel.

AND WITH THE DOLLAR SO WEAK, IT'LL BE EVEN LESS PAINFUL FOR THEM.....

ARABS: ARE YOU DOGS, OR ARE YOU HONORABLE MEN? ARE YOU EVEN CAPABLE OF HONOR? THEN SHOW US. Actions speak louder than words. If you don't send us the money, then you have really told us who you all really are: ungrateful dogs.

About the only ones who strategically benefited from the removal of Hussein and continued instability in Iraq is Iran and Isreal. And neither of them have any reason or ability to pay up. The GCC lost a counterweight to Iran's power, Turkey is routinely launching division sized raids into Kurdistan, and Syria and Jordan are facing mass refugee movements. Even the extra revenue that is being derived from a war that most countries did nothing to get in the way of, but little to support is insufficient to provide the extortion payment that the Astute Bloggers demand.

Rove's Math is faulty again

One of the M.O.'s of George W. Bush's political and business careers is the ability and willingness to create an 'after me, the deluge' so don't replace me situations. Fear, Uncertainty and Doubt is created so that although Bush and his associates have created a bad situation, the FUD keeps people from being willing to switch to other management for the fear of the higher associated costs of cleaning up after Bush. This was best captured by the Economist [h/t Unqualified Offerings]

In 2000 he beat an incumbent vice-president after eight years of peace and prosperity: the wry slogan among his inner circle was: “Things have never been better. Vote for change.” Four years later, with the economy stalled and Iraq in flames, he won again. This time, the backstage slogan was: “Things have never been worse. Stay the course.”

And we are getting the same playbook in Iraq. It is a clusterf*ck, the state has been delegitimatized to a ridiculous Nth Degree, the US is funding both the insurgency, and the counterinsurgency efforts (usually the same people), Iran's President was welcomed with flowers and chocalate while President Bush, Sec. State Rice and Sec. Def Gates have to make nighttime unnanounced visits and the success that is being trumpeted is returning to violence levels of 2005 when Iraq had already become a failed state. Oh yeah, two major US allies (Turks and Iraqi Kurds) are setting themselves up for a multi-division slug-fest once the ground dries out in the spring.

And yet, Bush allies are arguing that doing more of what Bush is doing with the same management team is the course with the lowest cost of action. Karl Rove is arguing that pulling out of Iraq would send oil to $200 a barrel. This after seeing the price of oil triple in the past five years, and ignoring either a static or dynamic analysis of the situation.

If we were to give up Iraq with the third largest oil reserves in the world to the control of an Al Qaida regime or to the control of Iran, don’t you think $200 a barrel oil would have a cost to the American economy?

This is wrong on several levels. First, Al-Quaida as the right's talking points like to trumpet this week, is not that strong in Iraq. It never has been until it was a convienent bogeyman. Instead the primary combatants shooting at the US in Iraq have been native-born Iraqis, Sunni Arab nationalists/revanchists/Ba'athists, [at least one, usually two, sometimes all three], Sadr's Mahdi Army which is overwhelmingly urban Shi'ites, and criminal/smuggling operations. The foreign fighters have been at times extremely useful idiots, but always idiots in the eyes of the Sunni Arabs. Al-Queada can't take over the central government; their best objective is hollowing out the central government.

Secondly, the economics don't work out. Iraq is exported in 2007 an average of 1.6 million barrels per day. More recently Iraqi oil exports were roughly 1.9 million barrels per day out of total production of about 2.4 million barrels. Global oil and oil near substitute production in January 2008 was 87.2 million barrels. Iraq produces 2.7% of global crude in January 2008.

If we were to assume for the argument that complete US withdrawal would lead to a complete shutdown of Iraqi oil production and exports and thus lead to a doubling in spot prices, this implies an elasticity of demand of less than .03 in the short run. Elasticity of demand is an economic concept that estimates how much prices would change in response to a percentage change in supply. For instance an elasticity of demand of 1.0 would have prices increase 1% for every 1% of a good that is no longer available. An elasticity of demand of .5 would have prices increase by 2% for every 1% of supply removed from the market etc.

The best short run estimates of the elasticity of demand for crude oil range from .10 to .16. Over the longer run, these elasticities increase, but in the short run using the lowest accepted estimate, removing all Iraqi oil from market would lead to a price increase of 27% +/- a bit, and using the .16, removing all Iraqi oil from market would lead to a price increase of 17% +/- a bit.

And these estimates assume all Iraqi oil comes off the market when we have proven history that there is a good deal of capacity for limited Iraqi production no matter how many people are being shot and pipelines being blown up.

And this is just the simple static counter-argument against Rove. If one wants to get a little more complex and attribute at least a portion of the nominal dollar price increases in oil over the past five or six years to a weakening US dollar, and low US interest rates, we can construct an interesting counterfactual. Right now the entire Iraq expenditure is being placed on the US credit card. Iraq is costing in cash terms about $200 billion per year right now. Removing a significant amount of that cost from our ongoing and recurring expenses will reduce US debt loads, and marginally reduce the downward pressure on the dollar. A strong US dollar means US consumers pay less per gallon/barrel than in a scenario with a weaker US dollar.

This part of the argument that Joseph Stiglitz has been making recently. The Federal Reserve failed in 2003/2004 to counteract the massive fiscal stiumulas of war spending by tightening monetary policy. This led to a bubble, and the subsequent credit crunch.

The war has fed into the weakness of the wider economy, he said, adding, "To cover that up, the Fed and the regulators flooded the economy with liquidity - giving cheap money to anybody this side of a life support system."

He said there was a direct correlation between the extent of the current crisis in financial markets and the cost of the conflict.

So in this counterfactual, the US dollar is a little stronger and oil is a little cheaper. Rove is factually wrong, but he is throwing out a marker of blame against anyone advocating that they want to clean up George W. Bush's failures. Par for the course.

At long last, a warm welcome in Baghdad

By Libby

Hey the President was finally welcomed into Baghdad with sweets and flowers. Too bad it wasn't our President.

BAGHDAD, March 2 (Reuters) - Pomp and ceremony greeted Iranian President Mahmoud Ahmadinejad on his arrival in Iraq on Sunday, the fanfare a stark contrast to the rushed and secretive visits of his bitter rival U.S. President George W. Bush.[...]

His warm reception, in which he was hugged and kissed by Iraqi officials and presented with flowers by children, was Iraq's first full state welcome for any leader since the U.S.-led invasion to topple Saddam Hussein in 2003.

Wow, what a concept. An announced state visit and quite a contrast to the way Bush sneaks in for his "surprise" visits. Has Bush even set foot in Baghdad since 2003?

Ahmadinejad's motorcade took Iraq's notoriously dangerous airport road to Talabani's palace at the start of his two-day visit, eschewing the helicopter trip usually taken by other visiting dignitaries as a security measure.

I see this guy is grumbling about why should Ahmadinejad worry? The terrorists love him. But it's the Iraqi government that's showering him with love and kisses. Marc apparently forgot that it was the invasion that made it all possible. I don't recall Saddam rolling out the welcome mat for Iranian heads of state.

Shaun has a photo and asks the $3 trillion dollar question. What does this say about the state of affairs in the Middle East?

Exporting Inflation

The New York Times has an interesting report on inflation in the Middle East, with a focus on how the basic neccessities in Jordan are skyrocketing.

Mr. Abdul Raheem, the clothing store employee in Amman, said, “No one can be in the government now and be clean.”

Meanwhile, his own life has been transformed, Mr. Abdul Raheem said. He ticked off a list of prices: potatoes have jumped to about 76 cents a pound from 32 cents. A carton of 30 eggs went to nearly $4.25 from just above $2; cucumbers rose to 58 cents a pound from about 22. All this in a matter of weeks.

The basic analysis of the reporter is that inflation is increasing because of a combination of corruption, government subsidies and generically higher prices for basic commodities throughout the entire world. There is one major element that he is missing, and that is the role of fixed exchange rates.

On Wednesday the state-owned newspaper Al Thawra published a poll that found that 450 of 452 Syrians believed that their state institutions were riddled with corruption....

Corruption, inefficiency and monopolistic economies worsen the impact, as government officials or business owners artificially inflate prices or take a cut of such increases.

“For many basic products, we don’t have free market prices, we have monopoly prices,” said Samer Tawil, a former minister of national economy in Jordan. “Oil, cement, rice, meat, sugar: these are all imported almost exclusively by one importer each here. Corruption is one thing when it’s about building a road, but when it affects my food, that’s different.”

Corruption, inefficiency, and monopolistic economies are short term constants. There is little reason to believe that Jordan is any more or less corrupt today than it was a year ago, and the same applies to Syria, Bahrain, Saudi Arabia, and the United Arab Emerirates. The price of corruption has not doubled in the past couple of weeks.

However one thing has changed significantly in the past year and that is the exchange value of local currencies. Most Middle Eastern currencies are either explicitly pegged to the US dollar, linked to Special Drawing Rights at the IMF, which is an indirect link to the dollar, or are carefully managed to float against a narrow range of a basket of currencies, of which the US dollar is the constant.

Dollarization, or pegging local currencies against the US dollar is part of the Washington Consensus for responsible government to provide better growth opportunities. The theory is that the Federal Reserve has massively more expertise and inflation fighting credibility than the king's idiot of a brother-in-law and therefore a fixed exchange rate will increase predibilitability, lower costs to capital and make a region more attractive to foreign investment.

This is not that bad of a theory when the US economy moves in roughly the same cycle as the local, dollarized economy, and when the US dollar is able to hold its own value against the currencies of the major trading partners of the fixed rate country. Right now the pegged Middle East is not seeing either condition being met.

The US economy is slowing down, but cash inflows are still rising in the Middle East due to high demand for oil. A slower US economy means the proper policy response is lower interest rates, which we have seen. A faster growing Middle Eastern set of economies needs either stable or increasing interest rates to minimize inflation. The US dollar has crashed hard against the Euro, which is a massive trading partner for most of the Middle East (chart from Yahoo.com.)

The combination of lower interest rates, and a weaker dollar means that anything imported from Europe or other non-dollarized/hard peg economies will become comparatively more expensive, all else being equal. And until/unless the US economy strengthens, or the Middle Eastern economies dramatically weaken so that the Federal Reserve's mandated policy focus of the US economy coincides with the policy needs of the dollar-linked Middle East, inflation will continue in the region. The other option is for the fixed rate countries to start breaking away from the US dollar and either freely float over the course of time, or peg against another currency or set of currencies.

What Was Bombed In Syria Matters Less Than Why

By Cernig

It being Super-Tuesday, Sy Hersh's latest article on what exactly the Israelis bombed in the Syrian desert last September is likely to be mostly overlooked. Which is a great pity because it's the most in-depth investigation I've seen of what went on and why. It even has - gasp - named sources. Both Smintheus at DKos and Ken at Bonehead Compendium wrote to flag this one up for me and I heartily recommend giving it a full read.

The short version - reports that the site was a nuclear reactor are almost certainly israeli or neocon spin. It was far more likely to be either a missile factory, a chemical weapons factory or a combination of both. (This was the conclusion I came to some months ago after reading as much as I could grab on the subject, so I'm predisposed to a favorable reading of Hersh on this). But what it actually was no longer matters. Two messages have come out loud and clear from the large amount of speculation surrounding the raid.

The first is that Israel, following its questionable success against Hezboullah, needed to restore a perception of its military competence.

“I hesitate to answer any journalist’s questions about it,” Faruq al-Shara, the Syrian Vice-President, told me. “Israel bombed to restore its credibility, and their objective is for us to keep talking about it. And by answering your questions I serve their objective. Why should I volunteer to do that?” Shara denied that his nation has a nuclear-weapons program. “The volume of articles about the bombing is incredible, and it’s not important that it’s a lie,” he said.

...That notion was echoed by the ambassador of an Israeli ally who is posted in Tel Aviv. “The truth is not important,” the ambassador told me. “Israel was able to restore its credibility as a deterrent. That is the whole thing. No one will know what the real story is.”

The second is that America may be wagging the Israeli tail but it doesn't have complete control over Israel's actions.

Shortly after the bombing, a Chinese envoy and one of the Bush Administration’s senior national-security officials met in Washington. The Chinese envoy had just returned from a visit to Tehran, a person familiar with the discussion told me, and he wanted the White House to know that there were moderates there who were interested in talks. The national-security official rejected that possibility and told the envoy, as the person familiar with the discussion recalled, “‘You are aware of the recent Israeli statements about Syria. The Israelis are extremely serious about Iran and its nuclear program, and I believe that, if the United States government is unsuccessful in its diplomatic dealings with Iran, the Israelis will take it out militarily.’ He then told the envoy that he wanted him to convey this to his government—that the Israelis were serious.

“He was telling the Chinese leadership that they’d better warn Iran that we can’t hold back Israel, and that the Iranians should look at Syria and see what’s coming next if diplomacy fails,” the person familiar with the discussion said. “His message was that the Syrian attack was in part aimed at Iran.”

Which puts Bush's recent pronouncements that America must not be seen as a "paper tiger" in the region into a whole new perspective, especially when his own ambassador to the UN Zalmay Khalilzad is freely admitting that the wars in Afghanistan and Iraq have strengthened Iran's hand in the Middle East. Is Bush more worried about Iran's perception of America's toothlessness, or of Israel's perception of America's value in the region?

What about Khalilzhad? It seems to me that he might finally have parted company with the pro-Israel lobby within the neocon circles he has always been a part of. But from Cheney on down they must be aware that he knows where all the bodies are buried - he was integral, for instance, in the Taliban's original lionising as heroes against Russia (even inviting Taliban leaders to dinner in Texas) and was intimate of the process whereby they and Al Qaeda became enemy number one after getting US aid for so long. They'll be wary of alienating him to the point where his resignation is followed by a tell-all memoir.

Israeli MADness and Rightwing War Hype

By Cernig

John Bolton and Israeli rightwingers have found a new way to escalate tensions in the Middle East.

Despite being one of the world's largest manufacturers of crude oil, Iran's capability for refinement is limited. More than 40 percent of the petroleum products consumed by Iran are produced in refineries located in neighboring countries. The American (and British) fleet could impose a naval blockade and keep oil tankers transporting the refined petroleum products to Iran from entering the Persian Gulf via the Straits of Hormuz.

Blocking the supply of refined petroleum products to Iran would prompt its leaders to conclude that the U.S. is planning a military strike against them. In order to prepare for such an eventuality, they would place the country's entire stock of refined petroleum at the disposal of the Revolutionary Guard Corps and the army. This would create a severe fuel shortage in the civilian market and the state would sink into chaos. Such a situation could inspire Iran's leaders to reach the conclusion that their nuclear program is a recipe for national disaster and could potentially provoke the collapse of their regime - and that it should therefore be halted.

If the naval blockade does not produce this effect, then the U.S. (and Israel) could still reserve the option of a military strike as a last resort. This is the scenario being promoted by John Bolton, the former U.S. ambassador to the United Nations and one of the Bush administration's more hawkish members, who is also due to attend the conference.

Doesn't it seem more likely, though, that a naval blockade of Iran's ports would spark exactly what it is supposed to be preventing? Utter insanity, unless that's the idea all along.

And yet the ex-Mossad man who will propose this plan at an upcoming conference, Dr. Shmuel Bar, aslo admits that even if Iran was to ever develop a nuclear weapon then a form of Mutually Assured Destruction could be engineered in the region were Israel to upgrade its conception of deterrence, at the center of which must be "a sharp and unmistakable message, so that it will be clear to all parties from the outset that they must not get caught up in a spiral of crisis." By a remarkable coincidence, Israel tested a new ballistic missile yesterday.

Attending the same behind-closed-doors meeting will be "several of the American intelligence officers who were involved in the drafting of the National Intelligence Estimate (NIE), according to which Iran suspended its secret nuclear military program back in 2003".

Oh, to be a fly on the wall for that discussion.

Google Maps Draws A Blank On Israel

By Cernig

I got an email from Ken at The Bonehead Compendium today. In the process of reseraching a story he had occasion to look up the location of an Israeli coastal town, and found a weird thing.

Guess what (maybe you already knew this)? Neither towns nor roads nor any other details appear to exist in Israel according to google maps. Even though Tel Aviv is clearly visible in the satellite images, in the pure map Israel appears to have no population centers. Roads and towns in Jordan, Sinai, Lebanon all are indicated but Israel is one big void.

What is that all about? I mean, I can guess. It's probably the same thinking that has Dick Cheney's VP residence blotted out in google maps and earth, like no one will know where Dick is if Number One Observatory Circle is fuzzy in google earth. But how paranoid are these people?

So I checked, and damned if he isn't right.

View Larger Map

Yet a quick search showed no indication that this was ever announced as Google policy or even that many have noticed before now. Back in 2005 Google said it was limiting resolution on satellite pictures of Israel to two meters, but this is very much more than just that kind of obvious military-driven precaution. I'm with Ken, just how paranoid is this?

More On Who Spun The Hormuz Incident

By Cernig

Gareth Porter at IPS has done great work following the various threads of the incident last week involving Iranian speedboats and three US capital warships. Yesterday, he wrote a must-read article on who exactly spun what and when.

Senior Pentagon officials, evidently reflecting a broader administration policy decision, used an off-the-record Pentagon briefing to turn the Jan. 6 U.S.-Iranian incident in the Strait of Hormuz into a sensational story demonstrating Iran's military aggressiveness, a reconstruction of the events following the incident shows.

The initial press stories on the incident, all of which can be traced to a briefing by deputy assistant secretary of defence for public affairs in charge of media operations Bryan Whitman, contained similar information that has since been repudiated by the Navy itself.

Then the Navy disseminated a short video into which was spliced the audio of a phone call warning that U.S. warships would "explode" in "a few seconds". Although it was ostensibly a Navy production, IPS has learned that the ultimate decision on its content was made by top officials of the Defence Department.

Whitman is a long-term spinmeister for the DoD who was also responsible for the Pentagon's "media support plan" in the run up to and during the invasion of Iraq. He also worked as a Public Affairs Specialist in the Office of the Assistant Secretary of Defense for Public Affairs during Clinton's first term.

Porter writes that a full day after receiving first reports of the incident - one which wasn't at all unusual - the Pentagon took "a decision to play it up as a major incident". An initial Fifth Fleet report:

did not refer to a U.S. ship being close to firing on the Iranian boats, or to a call threatening that U.S. ships would "explode in a few minutes", as later stories would report, or to the dropping of objects into the path of a U.S. ship as a potential danger.

That press release was ignored by the news media, however, because later that Monday morning, the Pentagon provided correspondents with a very different account of the episode.

At 9 a.m., Barbara Starr of CNN reported that "military officials" had told her that the Iranian boats had not only carried out "threatening maneuvers", but had transmitted a message by radio that "I am coming at you" and "you will explode". She reported the dramatic news that the commander of one boat was "in the process of giving the order to shoot when they moved away".

CBS News broadcast a similar story, adding the detail that the Iranian boats "dropped boxes that could have been filled with explosives into the water". Other news outlets carried almost identical accounts of the incident.

The source of this spate of stories can now be identified as Bryan Whitman, the top Pentagon official in charge of media relations, who gave a press briefing for Pentagon correspondents that morning. Although Whitman did offer a few remarks on the record, most of the Whitman briefing was off the record, meaning that he could not be cited as the source.

In an apparent slip-up, however, an Associated Press story that morning cited Whitman as the source for the statement that U.S. ships were about to fire when the Iranian boats turned and moved away -- a part of the story that other correspondents had attributed to an unnamed Pentagon official.

And the famous voice?

On Jan. 9, the U.S. Navy released excerpts of a video of the incident in which a strange voice -- one that was clearly very different from the voice of the Iranian officer who calls the U.S. ship in the Iranian video -- appears to threaten the U.S. warships.

A separate audio recording of that voice, which came across the VHS channel open to anyone with access to it, was spliced into a video on which the voice apparently could not be heard. That was a political decision, and Lt. Col. Mark Ballesteros of the Pentagon's Public Affairs Office told IPS the decision on what to include in the video was "a collaborative effort of leadership here, the Central Command and Navy leadership in the field."

"Leadership here", of course, refers to the secretary of defence and other top policymakers at the department. An official in the U.S. Navy Office of Information in Washington, who asked not to be identified because of the sensitivity of the issue, said that decision was made in the office of the secretary of defence.

The big question now is - how separate in time and space from the five minute encounter with the buzzing Iranian speedboats was the "voice" transmission. Certainly those white boxes that were hyped as a threat weren't regarded as such by commanders on the scene, who say they sailed blithely through them. Moreover, the only mysterious objects in the water on the full on-scene video are separated by more than 20 minutes - much of it at flank speed of 38 knots - from the "buzzboat" encounter and seen at a time when no Iranian speedboats are nearby at all.

Porter concludes:

The decision to treat the Jan. 6 incident as evidence of an Iranian threat reveals a chasm between the interests of political officials in Washington and Navy officials in the Gulf. Asked whether the Navy's reporting of the episode was distorted by Pentagon officials, Cmdr Robertson of 5th Fleet Public Affairs would not comment directly. But she said, "There is a different perspective over there."

That may be true, but Fifth Fleet and its officers are still being less than forthcoming about questions surrounding the Pentagon spin, as is to be expected.

France Gets Military Base, Nuke Deal, In UAE

By Cernig

Aha, that explains why Sarko has been so gung-ho to follow Bush into demonising the Iranian menace. Nothing closes a deal quite like fear.

France will set up a permanent military base of up to 500 troops in the United Arab Emirates, the French government announced Tuesday during a visit by President Nicolas Sarkozy.

The military base deal will make France one of the first Western countries other than the United States to have a base in the Persian Gulf region. The presence would give Paris the ability to project its forces into a crucial oil-producing region where many countries are wary of Iran's rising influence.

France and the United Arab Emirates also signed a civilian nuclear cooperation agreement Tuesday would be a first step toward building a nuclear reactor in the oil-rich Emirates with an estimated price tag of up to $6 billion.

Always follow the money, indeed.

We are not safer now

By Libby

In fact, we're at greater risk than ever. Via Tim F. this bit of bad news. If we're faced with a new enemy, we had better hope it comes by sea because the Navy is the only branch of our military that has any semblence of combat readiness to open a new front outside of the current combat theaters. The rest of our forces are dismally unprepared to counter a fresh threat.

“Iraq is sort of sucking all the oxygen out of the room,” said Tammy Schultz, who studies ground forces for the Center for a New American Security, a relatively new Washington think tank dedicated to “strong, pragmatic and principled” security and defense policies.

“My huge fear is that ... we’re really putting the nation at risk,” Schultz said. “It could reach absolutely tragic levels if the United States has to respond to a major contingency any time in the near future.” [...]

The Congressional Budget Office reported in 2006 that Army readiness rates had declined to the lowest levels since the end of the Vietnam War, with roughly half of all Army units, active and reserve, at the lowest readiness ratings for currently available units.

So should we, as Bush contends he does, listen to the military commanders? Shultz has asked around the officer corps.

“All of them are terrified that we’re currently on the third rotation” in Iraq, she said. “This is unprecedented for an all-volunteer force, with the exception, I think, of the Revolutionary War.”

If another ground threat comes, we have to rely on air power and Air Force readiness is far short of optimal. Of course we do have a lot of unused nukes, but who wants to go there? Even more troubling is our equipment readiness. Everything from our tanks to our aircraft are aging and/or disintegrating under heavy use in the occupations. Yet our GOP candidates and their trained pundits blithely counsel us to stay in Iraq forever and rattle their sabres at Iran.

The only comfort I take from this piece is the sense I get that the commanders are indeed becoming concerned enough to possibly revolt should the situation become untenable, as the moderate hawks I know predicted they would. I just hope they're right because the alternative is too ugly to contemplate.

CIA Knew About Israeli Nukes In '74

By Cernig

Via the Arms Control Wonk, comes a piece in Haaretz.

The Central Intelligence Agency, backed by bodies including the State Department's Bureau of Intelligence and Research and the Defense Intelligence Agency, determined in August 1974 that Israel had nuclear "weapons in being," a "small number" of which it "produced and stockpiled."

Israel was also suspected of providing nuclear materials, equipment or technology to Iran, South Africa and other then-friendly countries.

This top secret document, consigned to the CIA's vaults for almost 32 years, was suddenly released to the public this week, during U.S. President George W. Bush's visit to Israel and on the eve of his trip to the Persian Gulf.

...In both the original 1974 document and the 1975 State Department paper (in which it was retyped), the entire intelligence community determined, "Israel already has produced nuclear weapons." This analysis was based on "Israeli acquisition of large quantities of uranium," in part covertly; on Israel's ambiguous efforts to enrich uranium; and on the huge investment in the "Jericho" surface-to-surface missile "designed to accommodate nuclear warheads." Short of a grave threat to the nation's existence, Israel was not expected to confirm its suspected capability "by nuclear testing or by threats of use."

While Israel's nuclear weapons "cannot be proven beyond a shadow of doubt," several bodies of information point strongly toward a program stretching back over a number of years, the document states.

The 1974 document describes the Jericho project, from its inception in France through its migration to Israel to the replacement of the original inertial guidance system by an Israeli design "based on components produced in Israel under licenses from U.S. companies."

...The authors of the NIE wrote that the U.S. helped France expedite its nuclear program, France in turn helped Israel, and much like France and India, Israel, "while unlikely to foster proliferation as a matter of national policy, probably will prove susceptible to the hue of economic and political advantages to be gained from exporting materials, technology and equipment relevant to nuclear weapons programs."

Only a few months ago a portion of the document had been released under an FOI request "as an attachment to a 1975 State Department paper ostensibly disputing the the portrayal of Israel's nuclear weapons as a fact. This served the Department of State's effort to avoid addressing Israel's nuclear status in response to a query by Congressman Alan Steelman." Now the whole document has been released and Dr. Lewis at Arms Control Wonk has helpfully converted it to a PDF.

Haaretz speculates that the release of this information may be blowback for Israel's harsh words over the recent NIE on Iran, but it seems to me that it's just as likely to be pressure designed to bring Israel to the negotiating table with Arab states, who have been increasingly vocal of late about the pass afforded by the U.S. to the single actual nuclear power in the region when it comes to nonproliferation issues.

And Now For The Spin Cycle (Updated)

By Cernig

After saying yesterday that they actually had no idea where the mysterious voice on the DoD's tape of the encounter in the Gulf originated from, the US military are now saying that of course it had to be connected to the Iranian boats somehow. Then threatening dire consequences if it happens again.

Adm. William J. Fallon, chief of U.S. Central Command, said a threatening radio call heard during an encounter Sunday between U.S. Navy ships and Iranian boats in the Strait of Hormuz was likely connected to Iran's provocative actions. He said the exact origin of the message was still unknown.

"This kind of behavior, if it happens in the future, is the kind of event that could precipitate a mistake," Fallon told The Associated Press. "If the boats come closer, at what point does the captain think it is a direct threat to the ship and has to do something to stop it?"

...The Pentagon has released a video showing small Iranian boats swarming around U.S. warships in the Strait of Hormuz. In the recording, a man threatens in accented English, "I am coming to you. ... You will explode after ... minutes."

Fallon said Friday that the U.S. was still trying to determine the source of the threatening radio call but remained convinced that it was related to the actions of the Iranian boats.

"The voice is very strange. I don't know whether it came from the boats or one of the shore stations," he said in a telephone interview from Central Command headquarters in Florida. "But the timing of it is pretty suspicious. In my mind it is related to the maneuvers."

"It certainly doesn't sound like a third party that just happened to say something threatening at that moment," he added.

The radio call was heard over an open frequency often used by mariners to identify themselves and avoid accidents.

Iran has denied that its boats threatened the U.S. vessels and accused Washington of fabricating the video.

The military's claims are purely circumstantial - they can't prove a causal connection but will continue to claim there is one anyway. There's not a single mention anywhere of any investigation of the white boxes that were such a mysterious possible-threat in the water - they may or may not even exist because no-one salvaged one, shot video of them - or even took evasive action, according to the Fifth Fleet commander who told reporters yesterday the ships didn't treat them as threatening at all. No mention of or explanation for the strange non-Persian accent of the threatening voice. No mention of the lack of motor, wind or wave noise on that bit of audio when all are omnipresent elsewhere in the tapes. All of these are circumstantial evidence that the U.S. artificially hyped the incident.

It looks very like yesterday's admission that they didn't know where the voice originated was entirely spin cycle. The intent may be to defuse criticisms that the U.S. had itself faked that part of the tape in order to give ammunition to Bush's push in the Mid East, where he is attempting to get sceptical Arab nations to join the U.S. against Iran. I expect the mainstream media to lather, rinse and repeat.

Update Via Kevin Drum and Emptywheel at FDL - who both, like me, assume the Iranian video is as cherry-picked and faked up as the U.S. one and vice versa - comes some sense from Fred Kaplan.

And yet, as Adm. Gary Roughead, the chief of naval operations, told the Boston Globe's Bryan Bender and Farah Stockman on Monday, the U.S. commanders have no systematic way to halt a conflict if it begins to spiral. "I do not have a direct link with my counterpart in the Iranian Navy," he said. "I do not have a way to communicate directly with the Iranian Navy or [Revolutionary] Guard."

Through the darkest days of the Cold War, Washington and Moscow maintained a hot line. During most of those times, there were parallel forums for communication between the two sides' senior officers. Iran doesn't pose anything remotely resembling the threat that the United States and the Soviet Union posed to each other in those years. Here is yet another reason to establish diplomatic relations with Iran. You don't have to be friends to talk.

And broader history also teaches that you rarely gain what you want from fabricating war hype when there was no causus belli there to begin with.

Perhaps the most remarkable thing about all of this is that the Bush administration, Ahmadinejhad regime, and their foreign policy fellow-hawks have to have these things explained to them at all.

Update 2 AP: The U.S. Navy said Friday that one of its ships had fired warning shots at a small Iranian boat in the Strait of Hormuz in December during one of two serious encounters with such craft that month.

The ship involved was the dock landing ship USS Whidbey Island. In another incident the same month, according to the Navy, the USS Carr "sent warning blasts on the ships whistle" to fend off three speedboats.

Two things:

1) So it looks like both the US Navy and the Iranians are right - this kind of thing is both a common incident and highly provocative, even dangerous, with the chances of a shooting war starting over one of these incidents pretty high.

2) So why did the Pentagon decide to make such a big deal about Sunday's incident, when no weapons were fired? I'd argue December was the correct time to make this stuff big news. Did the Pentagon get its orders from the White House as Bush visited the Middle East on a trip partly designed to create a coalition against Iran? Enquiring minds want to know.

Various media outlets are also reporting that the Pentagon has released what it says is the full video record of the 20 minute incident. The audio track is still spliced on - remember the two were originally quite seperate. If I find a copy, I'll link to it.

The BBC says:

Although some images in this longer version - lasting more than 30 minutes - are not very clear, they do not appear to show anything very different from what was already seen in the extract of some five minutes already released, the BBC's Vincent Dowd in Washington says.

The audio track is present throughout and very short exchanges of dialogue can be heard on the bridge of the USS Hopper, the destroyer from which the pictures were taken, our correspondent says.

He says the latest video does not shed more light on the origin of the voice hear on tape which initially the Pentagon came from one of the speedboats.

I'd love to see and hear for myself - especially where on the timeline the mystery voice happens and what the aftermath is.

Bush From The Arab Street

By Cernig

How is Bush's visit to the Middle East playing on the Arab Street? Omar Hassan, a Kuwaiti op-ed writer for AFP, gives us some hints.

His tour of Washington's closest friends in the oil-rich Gulf region comes amid escalating tensions between the US and Iran over a naval confrontation in the strategic Strait of Hormuz.

But several commentators in the region have voiced strong misgivings about his intentions, amid fears Washington could resort to military action in the long-running stand-off over Iran's disputed nuclear drive.

Although Kuwait is welcoming Bush as a friend, officials have said the emirate will not allow the United States to use its territory as a launch pad for any strike against Iran.

"Mr president, the region needs smart initiatives not smart bombs," Kuwaiti newspaper al-Rai said in a front-page editorial.

...Dubai's Gulf News, in a front-page letter to Bush, launched a stinging attack on his administration's policy in the Middle East, chiefly its support for Israel despite the "oppression" of the Palestinians.

"We realise that containing Iran, selling more weapons and securing cheap oil supplies are the main issues on your mind as you tour the region," the paper said, dismissing Bush's "claim" to want to solve the Israeli-Palestinian conflict.

Al-Khaleej, another UAE daily, said Bush was "striving to transform the Arab-Israeli conflict into an Arab-Iranian conflict, since nuclear Israel, which is armed to the teeth with weapons of mass destruction, which is aggressive, expansionist, racist and an international outlaw, does not threaten world peace."

Sounds to me like they've got a pretty clear idea of Bush's motives for his trip and aren't being fooled at all by US plans to play "look, over there!" Would that the US press were so clearsighted.

Bush Looking For Legacy In Israel

By Cernig

George W. Bush, well aware that he's in the last 12 months of possibly the worst U.S. presidency ever, has turned his ambitions to that Holy Grail of U.S. presidential "legacy" aspirations - peace between Palestine and Israel.

Bush is in the Mideast for eight days, trying to bolster his goal of achieving a long-elusive peace agreement by the end of his presidency in a year. Speaking at his hotel in Jerusalem, he said again that he thinks that is possible.

``I am committed to doing all I can to achieve it,'' Bush said. Within minutes, Bush's national security adviser Stephen Hadley said the president would return to the Middle East ``at least once and maybe more'' over the next year. He wouldn't elaborate on possible destinations, but another White House official said Bush is likely to attend Israel's 60th anniversary celebrations in May.

And I have to tell you, what he's saying sounds pretty sensible to me.

Bush gave his most detailed summation yet of what a final peace should include, including U.S. expectations for the resolution of some of the hardest issues in the violent conflict, one of the world's longest-running and most intractable. He used tough language intended to put both sides on notice that he sees no reason they cannot get down to serious business, ``starting right now.''

In his set of U.S. bottom lines were security for Israel, a ``contiguous'' state for the Palestinians and the expectation that final borders will be negotiated to accommodate territorial changes since Israel's formation. He also suggested international compensation for Palestinians and their descendants who claim a right to return to land they held before Israel's formation.

He made a point of using a loaded term - occupation - to describe Israeli control over land that would eventually form the bulk of an independent Palestinian state. That he did so in Jerusalem underscored that he is trying not to seem partial to Israel.

On borders, Bush said any peace agreement ``will require mutually agreed adjustments'' to the lines drawn for Israel in the late 1940s. He was referring primarily to Israeli neighborhoods on disputed lands that Israel would keep when an independent Palestinian state is formed.

Earlier in the day, Bush had said Palestinians deserve better than a ``Swiss cheese'' state fitted around Israeli land and security bulwarks.

``The point of departure for permanent status negotiations to realize this vision seems clear,'' he said. ``There should be an end to the occupation that began in 1967. The agreement must establish a Palestine as a homeland for the Palestinian people just as Israel is a homeland for the Jewish people.''

I can't believe the neocons are happy. Does anyone have any insight on who is behind Bush's newfound vision, or can tell me what I'm missing?

Dire Staits (Of Hormuz) - Updated

By Cernig

The Iranians have denied making any inflammatory radio calls or being in possession of any mysterious white boxes in the Straits of Hormuz yesterday. Meanwhile the Bush administration are telling them that, whatever it is they deny doing, they better not do it again (or else, presumably).

Paul Kiel at TPM and some others are speculating about US incitement to a causus belli. If so, then maybe that's the reason for the US Navy's stockpiling far larger than usual reserves of aviation and naval fuel in the Gulf back in November.

Personally, I don't trust either story just because the authorities say so. Both have poor records on truthfulness. But I do know that the disputed and constricted waters of the Gulf are the perfect storm of an international incident waiting to happen. Robert Baer has previously written that there are still those within the Bush administration who want to see that happen, and today he writes about what he thinks the Iranians believe they can gain.

Maybe both nations' current administrations should knock off the mutual and self-serving provocative posturing? After all, both Presidents look likely to be replaced with more moderate voices by 2009.

Update Via Eric Martin, I see the US Navy says it has audio and video records. If they in fact bear out all US officials have been saying, then expect some minor IRGC commander to be dropped under the bus.

Update 2 Chunks of the 20-odd minutes of video and audio, totalling 4 minutes and spliced together into one seemless whole, have now been released and show a few small bright blue speedboats, with no visible weaponry and crewed by three to five people each, playing tag with the big US warships.

The official WMV file is here.

Although reports quote the audio as clearly containing:

"You are approaching coalition warships," the USS Hopper's crew warns. "You are straying into danger and may be subject to defensive measures. ... Request you alter course immediately to remain clear."

It is at that point that a heavily accented voice can be heard over the radio, apparently coming from the Iranians.

"I am coming to you," the voice says. "You will explode after a few minutes."

An American voice can be then heard repeating the words, incredulously, "You will explode in a few minutes."

those words aren't accompanied by any video - just a blank screen - and are far clearer, far less noisy, than the rest of the audio. The accent, to me, sounds faked. Also, and interestingly for an official tape of record, there are no time marks anywhere on the vdeo footage.

Now even so it's certainly a "provocative" incident - I don't think anyone has said any different. Even if there were no weapons visible, (hells, even if the boats were crewed by hotdogging rich-but-dumb students rather than URGC members) the boats could have been packed with explosives, for instance. But I'm not at all sure that it's as serious a thing as the Bush administration and many rightwing pundits seem to want it to be. The latter certainly seem to relish the chance of another war.

The US military are being rather more circumspect than the White House:

U.S. military officials, including [Vice Adm. Kevin] Cosgriff [the commander of U.S. 5th Fleet], cautioned, however, that they have not been able to connect definitively the radio call with one of the Revolutionary Guards boats.

``The ships were close enough to shore that the call could have come from a shore station, it could have come from another boat,'' said Cdr. Lydia Robertson, the 5th Fleet spokeswoman. ``But the call did happen while the small boats were there.''

That, given my own misgivings about the clarity of just that one part of the audio tape and about the heavy accent heard, seems to me to be a significant caveat.

Occam's Buck

What is the more believable explanation --- a call for higher real interest rates to reduce national inflation due to a comparatively weak currency, or a grand conspiracy to take down the United States through exchange rate manipulations independent of the US's current accout and trade deficit fundamentals. If you choose the first option, you're thinking like an economist. If you choose the second option, you have forgotten that the entire world does not revolve around your own pre-conceptions, as the Torygraph columinst Evans-Pritchard exhibited this morning:

To all intents and purposes, the Wahabi religious establishment of Saudi Arabia has just issued a fatwa against the US dollar. This bears watching.

A message issued by 26 leading clerics warns that inflation has reached intolerable levels in the Gulf kingdom.

While it does not vilify the dollar explicitly, the apparent political aim is to undermine the country’s dollar peg.

“The rulers should seek to try to remedy this crisis in a way that would ease people’s suffering.”

“We direct this message to the rulers and officials: we remind you of Prophet Mohammad’s words that you are shepherds who are responsible for your flock,” it said....

CPI inflation is 5.35pc in Saudi Arabia, the highest in over ten years. It has reached 10.1pc in the United Arab Emirates and 12.2pc in Qatar.

The dollar pegs – designed to anchor the currencies – are now forcing the Petrodollar economies to import US devaluation and monetary stimulus....

My own hunch is that the next al-Qaeda strike will not be a symbolic blow to a great building or city, but rather a carefully-timed economic blow: either by cutting – or trying to cut - the oil jugular, or by trying to precipitate a run on the dollar

It is not all about you. The surface explanation is a highly probable explanation and is consistent with similiar patterns of behavior of high current account surplus countries that are either dollarized, dollar pegged or dollar reserve dominated to shift their assets and income out of dollars. Kuwait broke their dollar peg in May f this year to avoid the inflationary impact of low US interest rates while their foreign trade in oil has continued to boom. The common currency discussion group for the GCC has talked about breaking the dollar peg; South Korea has been trying (unsuccessfully) repeatedly to get off the soft dollar peg cartel lead by Chinese central bank accumulations. OPEC as a whole is thinking about pricing some of their oil in Euros instead of dollars.

The motivations vary between countries but locking or banding around the dollar was supposed to provide some type of advantage compared to other options. For Saudi Arabia and other oil producing countries, the advantage was the removal of exchange rate risk and increased stability of income to allow for better access to foreign financial markets to finance imports. For that to work, the dollar has to be relatively stable and credible. The past couple of years has seen a stable downward trend in the dollar and an uncredible US government. The advantage just is not there, and the price to be paid for irresponsibility is inflation.

Much like anyone else, the Saudi clerics don't like paying for mistakes (even their own), but especially paying the consequences of someone elses' action. Removing the dollar peg is a way for the Saudis to avoid paying for US excesses. It is not a grand scheme or conspiracy, or a terrorist plot to create a momentary and unjustified domino run on the dollar. It is a reflection of reality.