Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18
DasCoin: A 5-Minute Guide to How It Works - 15th Mar 18
Stock Market Downward Pressure Mounting - 15th Mar 18
The Stock Market Trend is Your Friend ’til the Very End - 15th Mar 18
6 Easy Ways to Get What Women Want, for Less! - 15th Mar 18
This Isn’t Your Grandfather’s (1960s) Inflation Scare - 15th Mar 18
Eye Opening Stock Market Index, Volatility, Charts and Predictions - 15th Mar 18
Gold Cup At Cheltenham – Gold Is For Winners, Not For Gamblers - 15th Mar 18
Upcoming Turnaround in Gold - 14th Mar 18
Will the Stock Market Make Another Correction this Year? - 14th Mar 18
4 Ways To Writing An Interesting Education Research Paper - 14th Mar 18
China Toward Sustainable Economic Growth - 14th Mar 18
Stock Market Direction Is No Longer Important - 14th Mar 18
Trade Tariffs Defeat Globalists and Return Prosperity - 14th Mar 18
Stock Market Crash is Underway and Cannot be Stopped! - 14th Mar 18
Are Energy Sector Stocks Bottoming? - 14th Mar 18
Nasdaq Stocks Soars to New Record High After Strong Job Reports - 14th Mar 18
Bitcoin BTCUSD Elliott Wave View Calling for Rally toward $15,000 - 13th Mar 18
Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony - 13th Mar 18
Record Low Volatility in Precious Metals and What it Means - 13th Mar 18
Tips for Writing and Assembling the Classification Essay - 13th Mar 18
Gerald Celente "If Rates go up too High, the Economy goes Down, End of Story" - 13th Mar 18
Stock Market Selloff Showed Gold Can Reduce Portfolio Risk  - 13th Mar 18
Silver Does it Again! Severe Consequences - 12th Mar 18
Has the Stock Market Rally Run Out of Steam? - 12th Mar 18
S&P 500 at 2,800 Again, Stock Market Breakout or Fakeout? - 12th Mar 18
The No.1 Energy Stock To Buy Right Now - 12th Mar 18
What Happens Next When Stock Market Investor Sentiment is Neutral - 12th Mar 18
Economic Pressures To Driving Gold and Silver Prices Higher Long-Term - 12th Mar 18
Labour Sheffield City Councils Secret Plan to Fell 50% of Street Trees Exposed! - 12th Mar 18
Stock Market Uptrend Resuming? - 11th Mar 18
Bond Market Interest Rate Yields Are Rising Again… Stocks Are on Thin Ice - 11th Mar 18
Death of Europe's Greenest City, Police State Sheffield Labour Council to Fell 50% of Street Trees - 11th Mar 18
Do All Bull Stocks Markets Need to Have a Bearish Divergence? - 11th Mar 18
An Inflation Indicator to Watch, Part 3 - 11th Mar 18
Online Stock Trading Tips - Tips about Online Trading & Day Trading - 11th Mar 18
NDX makes a new high. What does that mean? - 10th Mar 18
Blue Chip Companies on Track for $800 billion Buyback Record in 2018 - 10th Mar 18
Cheap Gold Stocks Basing - 10th Mar 18
An Introduction to Online Forex Trading - 10th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

Washington’s Plan to Isolate Iran is Drifting Towards a Stalemate

Politics / Middle East Jan 11, 2012 - 04:49 AM GMT

By: Patrick_Henningsen


Best Financial Markets Analysis ArticleFrom the surface, the latest spat between the West and Iran looks like a step closer to war, with tensions reaching a fever pitch on both sides of this potential conflict. But upon closer examination however, present conditions are not particularly ideal for a preemptive strike against Iran. There is still much money to be made from the current crisis – on both sides, before the winds of war could be unleashed on the region.

As military posturing by the United States and Israel near the Strait of Hormuz reached a new level this week with announcement of Austere Challenge 12, a naval drill which looks designed to apply increased pressure on Iran to abandon their alleged nuclear weapons ambitions. At the same time, Iran has announced it will be shoring up its defensive positions by conducting its own war games in neighboring waters.

Real military conflict not looking favourable

Unlike Iraq or Afghanistan – two countries which offered little or no real military resistance when attacked by the US, Iran actually has the means to fight back and sustain its defensive position, as well as retaliate regionally, over a long period of time. Such a scenario may lead to a multi-regional World War III condition, and without a doubt, will be hugely unpopular in the West, plunging a global economy into a worldwide depression. In addition, the US and Israel have yet to secure Syria and eliminate the military might of loyal Iranian allies Hezbollah in Lebanon – which must be done in order for the US and Israel to gain the upper hand regionally. Both these points are key factors in achieving a green light for any preemptive strike against Tehran, and both lights are currently red.

Most experts are also in agreement that any serious clash between the West and Iran could result in a disruption in the flow of oil to a petroleum-dependent global economy that surely needs it now – more than ever.

These stark realities could be pushing the current standoff closer towards a stalemate, than towards the hot conflict that many mainstream media analysts are expecting to take place between now and spring 2012.

Signals from traditional US military and ‘coalition’ ally Great Britain are also not looking great. Addressing a recent conference entitled, “NATO and the Case for Collective Defense in the 21st Century” at Atlantic Council in Washington, the UK’s Defense Secretary Philip Hammond clearly noted, “We would not be in favor of a preemptive strike on Iran.”

Sanctions will not isolate Iran for long

US-led calls for economic sanctions against Iran may partially isolate Iran politically in the short term, but they do not have the teeth to sustain enough severe pressure over the long run.

Already this week, South Korea announced that it will still be buying Iranian crude oil in 2012. China is also defying the US call for sanctions, stating its plans to make Iran its second largest oil importer in 2012. In addition to these, another trading partner of Iran – Japan, is expecting to receive an exemption from US penalties on Japanese banks doing business with Iran. “We are not considering banning imports,” Japan Times quoted a Japanese Foreign Ministry late last week.

Major oil companies are also represented throughout America’s elite clique of foreign policy think tanks, and like their corporate siblings in the defense industry, they will also reap huge dividends from the appearance of instability and crisis around the Persian Gulf.

Unlike the steady dollar slide between 2007-2008 which help drive the oil price spike of over $140 per barrel during the summer of 2008, this week’s oil highs are a direct result of the war hype and threats. This will result in an overnight bumper economy for many of the OPEC petrol nations, as well as the major US oil distribution and retail corporations.

A New Cold War is emerging

The West’s last real military standoff was against the former Soviet bloc which came to a political finale in 1991 following the disintegration of the Iron Curtain. It was the world largest-ever arms race, fueled by 20th Century power politics, played out in the form of a Cold War.

The real winners of this long Cold War between the West and the Soviet bloc was the military defense contractors who became incredibly wealthy and influential as a result of decades of 20th Century global power politics. Their influence remains to this day, and already, a handful of companies have reaped incredible rewards from the current protracted diplomatic deadlock with Iran. Some of these same corporations actually dictate most US foreign policy to a large degree, as their CEO’s and board members also belong to the dominant think tanks including the Council on Foreign Relations and the Atlantic Council who actually dictate their international recommendations to Washington and London, whose governments then adopt these as official foreign policy. Their names include Lockheed Martin, General Electric, Raytheon, Boeing and others.

As the threat of a regional confrontation with Iran continues to drag it self out, the trend of profitability looks likely to continue as most of the West’s regional partners continue to both re-arm and upgrade their own defense  systems.

The Arab GCC countries like Saudi Arabia, the UAE, Qatar and Kuwait have already begun their process of re-arming. In December 2011, the United States announced a $3.48 billion arms deal with the UAE, which included state-of-the-art THAD missile defense systems, as part of a wider American effort to build up missile defenses among Gulf allies to counter Iran. In addition, the US and Saudi Arabia signed a $1.7 billion deal earlier in 2011 to boost their Patriot missile batteries, and Kuwait put in their order to purchase 209 GEM-T missiles – at a cost of $900 million. These regional missile defense strategies will also need land-based interceptors to knock out incoming missiles, backed up by a detection network… aboard a group of US Navy Aegis-class warships. By the time this current round of re-arming is complete US defense contractors will have seen a rise in profits which also means a rise in their all-important share prices.

Still, despite all these significant acquisitions on the part of the GCC so far, by no means do they provide blanket protection from an Iranian retaliatory strike. They are simply the latest chapter in that time-honoured tradition of Washington stoking regional tension on one hand, and America’s arms industry bleeding the Arab states of hard cash for still more expensive military hardware on the other. The Arabs will obvious pay for their new military hardware from the recent surge in world oil prices…. caused by the continued hyping of a potential military confrontation which could block the oil industry’s most key transit waterway – the Strait of Hormuz. One can see the geopolitical relationship between these events happening right now.

Here we have the ideal set of conditions for a New Cold War to emerge – one where the Western Axis powers of the US, Europe, Israel and the Emirates sit on one side, and Iran, Syria, China, Russia sit on the other. This Cold War will be more about sub-regional dominance in terms of economics – natural gas, mineral and trade relationships, than it will about the political ideologies that seemed to dominate the long infamous 20th Century face-off.

How long this current stalemate drags on is anyone’s guess right now, but one thing is for sure- while it continues to brew, their is still massive profits to be made by key players in both the global defense and petroleum industries.

Editor Patrick Henningsen

21st Century Wire

© 2012 Copyright Patrick Henningsen - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules