[+ Font] :: [- Font] :: Printable

Countdown to Iran ... and Unprecedented Spikes in Oil and Gold Prices

Lou Passi
June 27, 2005

Background: On June 7, 1981, in a surprise air attack the Israeli Air Force using F-15 and F-16 fighter jets destroyed Iraq’s Osirak nuclear reactor located 30 kilometers south of Baghdad. Fast-forward 20 years later. Meir Dagan, the Chief of Mossad (an Israeli intelligence and counter terrorism agency), reveals to parliament members in his inaugural appearance before the Israeli Knesset Foreign Affairs and Defense Committee that Iran is close to the “point of no return” and that the specter of Iranian possession of nuclear weapons is the greatest threat to Israel since its inception. In a 2002 address to the nation, U.S. President George W. Bush called Iran, Iraq and North Korea an “axis of evil”.

During a 2003 visit to the United States, Israel’s Defense Minister Shaul Mofaz stated “under no circumstances would Israel be able to tolerate nuclear weapons in Iranian possession.” Six weeks earlier, Mossad had revealed plans for preemptive attacks by F-16 bombers on Iranian nuclear sites.

In September 2004, Iran rejected the International Atomic Energy Agency’s call for closing down its nuclear fuel production program, which many in the U.S. and Israel believe to be linked to a covert nuclear weapons program. Iran then test fired a ballistic missile with sufficient range to hit targets in Israel as well as U.S. military installations in Iraq and throughout the Middle East.

What follows is a chronology of signs and events over the past few months pointing to an imminent conflict with Iran and, as a result, the potential interruption of oil flowing from the Gulf region.

February 2005: Former U.N. Chief Weapons inspector in Iraq (1991-1998) Scott Ritter, appearing with journalist Dahr Jamail in Washington State, dropped a shocking bombshell in a talk delivered to a packed house in Olympia’s Capitol Theater. The ex-Marine turned UNSCOM weapons inspector said that U.S. President George W. Bush has “signed off” on Pentagon plans to have military capability in place by June 2005 to launch a massive aerial attack against Iran. Tehran responded that it would retaliate, if attacked, in the form of ballistic missile strikes directed against Israel. These attacks could also target U.S. military facilities in the Persian Gulf. President Bush followed this stating, “The notion that the United States is getting ready to attack Iran is simply ridiculous.” He quickly added, “Having said that, all options are on the table.”

March 2005: U.S. troops begin their biennial air-defense exercise with Israel with the focus on testing Israel’s Arrow II missile-killer system in conjunction with upgraded U.S. Patriot batteries. Both sides described the month-long game codenamed Juniper Cobra as routine. But Israeli security sources said Juniper Cobra would treat Iran’s most advanced Shehab-3 missiles as the main “threat”. Clearly, the drill will not ignore the possibility of an Iranian Shehab-3 missile armed with a nuclear warhead reaching Israel in the near future.

March 2005: European diplomatic initiatives, IAEA inspections, and U.N. sanctions are publicly discussed options to compel Iran to cooperate on eliminating its nuclear program. But U.S. Vice President Dick Cheney in an interview with Fox TV confides, “At the end of the day, if the Iranians don’t live up to their obligations and their international commitments to forgo a nuclear program, then obviously we’ll have to take stronger action.” News leaks in Israel regarding an initial authorization by Prime Minister Ariel Sharon of an Israeli attack on Iran’s Natanz uranium enrichment plant “if diplomacy failed to stop Iran’s nuclear program”.

April 2005: Israel Prime Minister Ariel Sharon meets U.S. President George W. Bush at his Texas ranch. Iran is on the agenda of bilateral talks. More significantly, the visit of Sharon was used to carry out high-level talks between U.S. and Israeli military planners pertaining to Iran. If Israel were to act alone and attack Iran’s nuclear facilities, it would face a much greater challenge than it did with Iraq in 1981. Yiftah Shapir, an Israeli analyst, explains, “Israel’s options to counter the threat are limited. A preemptive strike against Iran’s missile or nuclear assets is problematic because the targets are too far away, too numerous and dispersed, and too well protected – some of them in deep underground installations.”

April 2005: U.S. Secretary of Defense Donald Rumsfeld makes an official visit to Iraq, Afghanistan, Pakistan, Kyrgyzstan and Azerbaijan. His diplomatic endeavors were described by the Russian media as “literally circling Iran in an attempt to find the best bridgehead for a possible military operation against that country.” Meanwhile, Russian President Vladimir Putin makes an official visit to Israel. He announces Russia’s decision to sell short-range anti-aircraft missiles to Syria and to continue supporting Iran’s nuclear industry. Beneath the gilded surface of international diplomacy, Putin’s timely visit must be interpreted as “a signal to Israel” regarding its planned aerial attack on Iran. Coinciding with Putin’s visit to Israel, the U.S. Department of Defense announced the sale of an additional 100 bunker-buster bombs to Israel. This decision was viewed by the U.S. media as “a warning to Iran about its nuclear ambitions”.

May 2005: The deepening animosities prevailing in relations between the White House and the Kremlin and Moscow’s assistance in Iran’s nuclear projects, including the sale of nuclear fuel and technology, makes a Russian veto of any U.N. Security Council penalty against Tehran more than likely. China too is strengthening its economic ties with the Islamic Republic and sees itself as a big buyer of Iranian oil. Moreover, Beijing entertains objections in principle to U.N. sanctions. The heads of the Islamic regime in Tehran sense a major victory in the offing for their plans for a nuclear weapon.

June 25, 2005: Ultra-conservative Tehran mayor Mahmoud Ahmadinejad is swept to a stunning landslide victory in Iran’s presidential elections and immediately vowed to turn Iran into a strong and exemplary Islamic state. His victory puts in doubt Iran’s fragile liberalization process, started by outgoing reformist President Mohammad Khatami, and raises questions about whether Iran will harden its stance on its nuclear impasse with the West. “This all but closes the door for a breakthrough in U.S.-Iran relations,” said Karim Sadjadpour, Tehran-based analyst for the International Crisis Group. In his victory speech, Ahmadinejad hinted at a shake up in the oil sector, saying oil deals needed to be clarified.

Looking ahead, U.S. President Bush is scheduled to deliver a major address Tuesday, June 28, to U.S. troops and the nation from the Fort Bragg military base in North Carolina. White House Press Secretary Scott McClellan said the speech would be delivered about 8 p.m. EST and U.S. television networks have been asked to air the speech live. Speculation is that the speech will focus on Iraq and the administration’s decision not to set a timetable for troop withdrawal. But given the progression of events noted above, Tuesday’s speech may be the opportune time to prepare the nation for war with Iran.

Conclusion

Iran is the next military target and already surrounded by U.S. military bases. The U.S. has troops in Turkey, Pakistan, Azerbaijan, Afghanistan, and Iraq. These countries as well as Turkmenistan are members of NATO’s Partnership for Peace Program and have military cooperation agreements with NATO. We are dealing with a potentially explosive scenario in which a number of countries, including several former Soviet republics, could be brought into a U.S. led war with Iran.

Military action against Iran would directly involve Israel’s participation, which in turn is likely to trigger a broader war throughout the Middle East. Israel is a nuclear power with a sophisticated nuclear arsenal. The use of nuclear weapons by Israel or the U.S. cannot be excluded, particularly in view of the fact that tactical nuclear weapons have now been reclassified as a variant of the conventional bunker buster bombs and are authorized by the U.S. Senate for use in conventional war theaters as “they are harmless to civilians because the explosion is underground.”

An attack on Iran must be viewed in relation to the existing active war theaters in the Middle East, namely Afghanistan, Iraq and Palestine. The conflict could easily spread from the Middle East to the oil-rich Caspian Sea Basin. An attack on Iran would have a direct impact on the resistance movement inside Iraq. It would also put pressure on America’s overstretched military capabilities and resources since the 150,000 U.S. troops in Iraq are already fully engaged and could not be redeployed.

Moreover, U.S. military action on Iran threatens Russian and Chinese geopolitical and economic interests in the Caspian Sea Basin and bilateral agreements with Iran. It also backlashes on European oil interests in Iran and is likely to produce major divisions between Western allies, between the U.S. and its European partners as well as within the European Union.

The U.S. media has been generally “missing in action” when it comes to alerting the American public to these events and the catastrophic possibilities to follow. While John Q. Public may be unaware that we are on the verge of nuclear war in the Middle East, a few savvy investors already see the potential for a serious and perhaps lengthy interruption in the flow of Middle East oil. I suspect that awareness, and not normal market forces such as supply and demand, is what’s behind crude oil’s recent move to record-high prices and gold’s unusual price rise in every major currency. Any serious curtailment in the flow of oil could result in the global economy grinding to a halt within days.

The first U.S.-Israeli air strike on Iran will surprise many complacent and uninformed investors. Don’t be one of them. You have been informed, now take appropriate action to protect your wealth and perhaps even profit from the inevitable. Today’s gold and oil prices will look very cheap in the aftermath of a attack on Iran and their expected retaliatory actions.

Lou Passi

June 26, 2005

Disclaimer: All investors are encouraged to do their own research and due diligence.

Lou Passi is a private investor and retired pharmaceutical executive living in Chicago. You can contact Mr. Passi via email at louispassi2004@comcast.net.