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Lovely little war
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Brace yourself for the "October Surprise." Will it help McCain? Who cares! It will put all our lives at risk. Here's the scenario…

Sometime before January 20, 2009, Israel will probably attack Iran, targeting the nuclear facilities that they fear will give Iran the nuclear capability to attack Israel. Ironically, the more likely that Obama is to be elected President, the more likely is this scenario, as the Israelis will want to do it while they have the continued unquestioning support of Bush and Cheney.

It is Bush and Cheney who have been the primary source of threats to attack Iran, but given their lame duck status, the stretched state of the US military and the adamant opposition of the Pentagon, it is unlikely that the US will do it directly. But evidence is mounting that Israel will.

Thomas Powers argues convincingly in "Iran: The Threat" (NY Review of Books, July 17, 2008, 9-11) that the US lacks the military and economic capacity to take on Iran, being stretched to the max in Iraq and Afghanistan. Yet the alarmist rhetoric of war continues unabated. John Bolton likens Iran's danger to a new September 11 with nuclear weapons (http://www.msnbc.msn.com/id/11849446/).

But Iran, like Iraq, has never been a threat to the United States - it is a threat to Israel. The link to the United States is the "joined at the hip" policies that result in US foreign policy being formulated in Jerusalem. The reasons for that extend beyond international relations to religious beliefs in the "Last Days" and inception of Armageddon, typified by the preaching of John Hagee, who is supporting John McCain. (http://www.jedreport.com/2008/03/john-mccains-em.html)

Which brings us around to the price of oil. The consensus of the economics profession is that the soaring price of oil is not due to speculators. "buying a futures contract doesn't directly reduce the supply of oil to consumers ." (http://www.nytimes.com/2008/06/27/opinion/27krugman.html?_r=1&oref=login)
But futures contracts reflect beliefs about the future trends of supply and demand. And while it is undoubtedly true that growth in China, India and the developing world increase demand and drive up prices, and while it is also true that unrest in Nigeria raises worries about supply disruptions, that does not seem to be enough to cause $4 and $5 dollar jumps in prices in a single day.

Instead it appears that the oil markets are expecting severe supply disruption that could only result from an impending major war in the Middle East. All signs indicate that such a war would be triggered by an Israeli attack on Iran's nuclear facilities. "Israel has conducted ostentatious long-range air exercises over the Mediterranean, and one former chief of staff has called an attack inevitable if Iran continues its nuclear work." And John Bolton thinks it could happen after the American election but before the inauguration. ("It's Later than You Think" The Economist, June 28th, 2008, 16). Iran appears to expect such an attack and has issued a warning that is guaranteed to drive oil prices up again …According to the Financial Times ("Tehran Issues Warning to Israel, June 30, 2008) Iran would close the Straits of Hormuz and the Persian Gulf and strike Israel with long range missals.

Play that one out in your mind. Israel strikes Iran, Iran strikes back and shuts off oil exports from the Middle East. Hamas and Hezbollah come out shooting on Israel's northern and southern borders and bring in Syria, which in any case has a mutual defense treaty with Iran. The US comes to Israel's defense from bases in Iraq and Afghanistan. Do the Russians stand by during a major shooting war on their southern border? Seems unlikely. There is a mutual defense treaty that exists through the Shanghai Cooperation Organization that addresses mutual defense issues among China, Russia, Kazakhstan, Kyrgyzstan, and Tajikistan, and which has included summit meetings with Iran (Iran Seeks Membership http://www.wmdinsights.com/I19/I19_EA2_BishkekSummit.htm).

Meanwhile, the US Senate stages a hearing aimed to address the surge in oil prices by blaming speculators and closing obscure loopholes in regulation that allow parallel oil trading in London. The hearings are chaired by the Senator from Israel, Joe Lieberman (I, CN). ("Lieberman Seeks Limits to Reduce Speculation" http://www.nytimes.com/2008/06/12/washington/12trade.html)

It will be a lovely little war.

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SUPPLEMENT
By Doc Martin Jun 30th 2008 at 12:06 pm EDT
.S. Is Said to Expand Covert Operations in Iran - washingtonpost.com
Link
The Bush administration told Congress last year of a secret plan to dramatically expand covert operations inside Iran as part of a long-running effort to destabilize the country's ruling regime, according to a report published yesterday. The plan allowed up to $400 million in covert spending for activities ranging from spying on Iran's nuclear program to supporting rebel groups opposed to the country's ruling clerics, veteran investigative journalist Seymour Hersh reported in the New Yorker magazine. While the administration has been waging a low-grade covert campaign against Iran for at least three years -- consisting mainly of cross-border raids targeting groups tied to attacks against U.S. forces in Iraq -- the new policy represents a significant expansion, the report contends. The prospect of a broader covert presence inside Iran also has raised concerns among some congressional and military officials about a possible escalation leading to a broader military conflict, it states. The article drew a sharp reaction from administration officials, who denied that U.S. forces were engaged in operations inside Iran.
  
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