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Deflation IS WINNING - Are You?

The Major Diplomatic and Strategic Evolution in Iraq

Politics / Iraq War Aug 10, 2007 - 12:09 AM

By: John_Mauldin

Politics

This week in a Special Outside the Box good friend George Friedman addresses the Byzantine geopolitical ramifications of recent three party discussions between the Americans, Iraqis, and Iranians. With no obvious reason to trust one another and a good deal of reasons not to, why are we seeing evidence of more discussions.

As George tells it, there is more than meets the eye to these talks. The different parties all strive to extract the most favorable concessions from the Iraq War befitting their respective, and divergent interests; alas, both Iran and the US have come to the realization, albeit belated, that neither party can achieve their objective and the even far more politically grievous realization that no single party can aspire to control or stability in Iraq without the explicit cooperation of all parties, working in unison toward collective initiatives. Further, the risk that everything spins out of control is forcing negotiations among enemies.



This Stratfor piece is an objective, thought provoking assessment of the geopolitical ramifications of the American, Iraqi, Iranian three party talks that will have drastic implications on our political landscape, Middle Eastern stability, and the ubiquitous "War on Terrorism." Stratfor always provides insightful and pertinent research on economic and geopolitical events and their respective ramifications and is my favorite source for geo-political information. Stratfor continues to generously provide significant savings to readers of Outside the Box, for further information please clicking here .

I hope you find this article enlightening and thought provoking.

John Mauldin, Editor

The Major Diplomatic and Strategic Evolution in Iraq
By George Friedman

U.S. Ambassador to Iraq Ryan Crocker met Aug. 6 with Iranian Ambassador to Iraq Hassan Kazemi Qomi and Iraqi National Security Adviser Muwaffaq al-Rubaie. Separately, a committee of Iranian, Iraqi and U.S. officials held its first meeting on Iraqi security, following up on an agreement reached at a July ambassadorial-level meeting.

The U.S. team was headed by Marcie Ries, counselor for political and military affairs at the embassy in Baghdad. Hossein Amir-Abdollahian, who handles Iraq for the Iranian Foreign Ministry, led the Iranian team. A U.S. Embassy spokesman described the talks as "frank and serious," saying they "focused, as agreed, on security problems in Iraq." Generally, "frank and serious" means nasty, though they probably did get down to the heart of the matter. The participants agreed to hold a second meeting, which means this one didn't blow up.

Longtime Stratfor readers will recall that we have been tracing these Iranian-American talks from the back-channel negotiations to the high-level publicly announced talks, and now to this working group on security. A multilateral regional meeting on Iraq's future was held March 10 in Baghdad, followed by a regional meeting May 4 in Egypt. Then there were ambassadorial-level meetings in Baghdad on May 28 and July 24. Now, not quite two weeks later, the three sides have met again.

That the discussions were frank and serious shouldn't surprise anyone. That they continue in spite of obvious deep tensions between the parties is, in our view, extremely significant. The prior ambassadorial talk lasted about seven hours. The Aug. 6 working group session lasted about four hours. These are not simply courtesy calls. The parties are spending a great deal of time talking about something.

This is not some sort of public relations stunt either. First, neither Washington nor Tehran would bother to help the other's public image. Second, neither side's public image is much helped by these talks anyway. This is the "Great Satan" talking to one-half of what is left of the "Axis of Evil."

If ever there were two countries that have reason not to let the world know they are meeting, it is these two. Yet, they are meeting, and they have made the fact public.

The U.S. media have not ignored these meetings, but they have not treated them as what they actually are -- an extraordinary diplomatic and strategic evolution in Iraq. Part of the reason is that the media take their cues from the administration about diplomatic processes. If the administration makes a big deal out of the visit of the Icelandic fisheries minister to Washington, the media will treat it as such. If the administration treats multilevel meetings between Iran and the United States on the future of Iraq in a low-key way, then low-key it is. The same is true for the Iranians, whose media are more directly managed. Iran does not want to make a big deal out of these meetings, and therefore they are not portrayed as significant.

It is understandable that neither Washington nor Tehran would want to draw undue attention to the talks. The people of each country view the other with intense hostility. We are reminded of the political problems faced by Chinese Premier Chou En-lai and U.S. President Richard Nixon when their diplomatic opening became public. The announcement of Nixon's visit to China was psychologically stunning in the United States; it was less so in China only because the Chinese controlled the emphasis placed on the announcement. Both sides had to explain to their publics why they were talking to the mad dogs.

In the end, contrary to conventional wisdom, perception is not reality. The fact that the Americans and the Iranians are downplaying the talks, and that newspapers are not printing banner headlines about them, does not mean the meetings are not vitally important. It simply means that the conventional wisdom, guided by the lack of official exuberance, doesn't know what to make of these talks.

There are three major powers with intense interest in the future of Iraq: the United States, Iran and Saudi Arabia. The United States, having toppled Saddam Hussein, has completely mismanaged the war. Nevertheless, a unilateral withdrawal would create an unacceptable situation in which Iran, possibly competing with Turkey in the North, would become the dominant military power in the region and would be in a position to impose itself at least on southern Iraq -- and potentially all of it. Certainly there would be resistance, but Iran has a large military (even if it is poorly equipped), giving it a decided advantage in controlling a country such as Iraq.

In addition, Iran is not nearly as casualty-averse as the United States. Iran fought a war with Iraq in the 1980s that cost it about a million casualties. The longtime Iranian fear has been that the United States will somehow create a pro-American regime in Baghdad, rearm the Iraqis and thus pose for Iran round two of what was its national nightmare. It is no accident that the day before these meetings, U.S. sources speculated about the possible return of the Iraqi air force to the Iraqis. Washington was playing on Tehran's worst nightmare.

Saudi Arabia's worst nightmare would be watching Iran become the dominant power in Iraq or southern Iraq. It cannot defend itself against Iran, nor does it want to be defended by U.S. troops on Saudi soil. The Saudis want Iraq as a buffer zone between Iran and their oil fields. They opposed the original invasion, fearing just this outcome, but now that the invasion has taken place, they don't want Iran as the ultimate victor. The Saudis, therefore, are playing a complex game, both supporting Sunni co-religionists and criticizing the American presence as an occupation -- yet urgently wanting U.S. troops to remain.

The United States wants to withdraw, though it doesn't see a way out because an outright unilateral withdrawal would set the stage for Iranian domination. At the same time, the United States must have an endgame -- something the next U.S. president will have to deal with.

The Iranians no longer believe the United States is capable of creating a stable, anti-Iranian, pro-American government in Baghdad. Instead, they are terrified the United States will spoil their plans to consolidate influence within Iraq. So, while they are doing everything they can to destabilize the regime, they are negotiating with Washington. The report that three-quarters of U.S. casualties in recent weeks were caused by "rogue" Shiite militia sounds plausible. The United States has reached a level of understanding with some nonjihadist Sunni insurgent groups, many of them Baathist. The Iranians do not want to see this spread -- at least not unless the United States first deals with Tehran. The jihadists, calling themselves al Qaeda in Iraq, do not want this either, and so they have carried out a wave of assassinations of those Sunnis who have aligned with the United States, and they have killed four key aides to Ayatollah Ali al-Sistani, a key Shiite figure.

If this sounds complicated, it is. The United States is fighting Sunnis and Shia, making peace with some Sunnis and encouraging some Shia to split off -- all the time waging an offensive against most everyone. The Iranians support many, but not all, of the Shiite groups in Iraq. In fact, many of the Iraqi Shia have grown quite wary of the Iranians. And for their part, the Saudis are condemning the Americans while hoping they stay -- and supporting Sunnis who might or might not be fighting the Americans.

The situation not only is totally out of hand, but the chance that anyone will come out of it with what they really want is slim. The United States probably will not get a pro-American government and the Iranians probably will not get to impose their will on all or part of Iraq. The Saudis, meanwhile, are feeling themselves being sucked into the Sunni quagmire.

This situation is one of the factors driving the talks.

By no means out of any friendliness, a mutual need is emerging. No one is in control of the situation. No one is likely to get control of the situation in any long-term serious way. It is in the interests of the United States, Iran and Saudi Arabia that the Iraq situation stabilize, simply because they cannot predict the outcome -- and the worst-case scenario for each is too frightening to contemplate.

None of the three powers can bring the situation under control. Even by working together, the three will be unable to completely stabilize Iraq and end the violence. But by working together they can increase security to the point that none of their nightmare scenarios comes true. In return, the United States will have to do without a pro-American government in Baghdad and the Iranians will have to forgo having an Iraqi satellite.

Hence, we see a four-hour meeting of Iranian and U.S. security experts on stabilizing the situation in Iraq. Given the little good will between the two countries, defining roles and missions in a stabilization program will require frank and serious talks indeed. Ultimately, however, there is sufficient convergence of interests that holding these talks makes sense.

The missions are clear. The Iranian task will be to suppress the Shiite militias that are unwilling to abide by an agreement -- or any that oppose Iranian domination. Their intelligence in this area is superb and their intelligence and special operations teams have little compunction as to how they act. The Saudi mission will be to underwrite the cost of Sunni acceptance of a political compromise, as well as a Sunni war against the jihadists. Saudi intelligence in this area is pretty good and, while the Saudis do have compunctions, they will gladly give the intelligence to the Americans to work out the problem. The U.S. role will be to impose a government in Baghdad that meets Iran's basic requirements, and to use its forces to grind down the major insurgent and militia groups. This will be a cooperative effort -- meaning whacking Saudi and Iranian friends will be off the table.

No one power can resolve the security crisis in Iraq -- as four years of U.S. efforts there clearly demonstrate. But if the United States and Iran, plus Saudi Arabia, work together -- with no one providing cover for or supplies to targeted groups -- the situation can be brought under what passes for reasonable control in Iraq. More important for the three powers, the United States could draw down its troops to minimal levels much more quickly than is currently being discussed, the Iranians would have a neutral, nonaggressive Iraq on their western border and the Saudis would have a buffer zone from the Iranians. The buffer zone is the key, because what happens in the buffer zone stays in the buffer zone.

The talks in Baghdad are about determining whether there is a way for the United States and Iran to achieve their new mutual goal. The question is whether their fear of the worst-case scenario outweighs their distrust of each other. Then there is the matter of agreeing on the details -- determining the nature of the government in Baghdad, which groups to protect and which to target, how to deal with intelligence sharing and so on.

These talks can fail in any number of ways. More and more, however, the United States and Iran are unable to tolerate their failure. The tremendous complexity of the situation has precluded either side from achieving a successful outcome. They now have to craft the minimal level of failure they can mutually accept.

These talks not only are enormously important but they also are, in some ways, more important than the daily reports on combat and terrorism. If this war ends, it will end because of negotiations like these.


I hope George Friedman's Stratfor piece has provided you an alternate vantage point on the Iraq quagmire through which to assess the situation.

Your cynical about improvement in the American-Iranian relationship analyst,

By John Mauldin
http://www.investorsinsight.com

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Copyright 2007 John Mauldin. All Rights Reserved
John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. John Mauldin and/or the staff at Millennium Wave Advisors, LLC may or may not have investments in any funds cited above. Mauldin can be reached at 800-829-7273.

Disclaimer PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS, INCLUDING HEDGE FUNDS, YOU SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME PRODUCTS: OFTEN ENGAGE IN LEVERAGING AND OTHER SPECULATIVE INVESTMENT PRACTICES THAT MAY INCREASE THE RISK OF INVESTMENT LOSS, CAN BE ILLIQUID, ARE NOT REQUIRED TO PROVIDE PERIODIC PRICING OR VALUATION INFORMATION TO INVESTORS, MAY INVOLVE COMPLEX TAX STRUCTURES AND DELAYS IN DISTRIBUTING IMPORTANT TAX INFORMATION, ARE NOT SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

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