Will United States Attack Iran?

The United States has openly accused Iran for the drone and cruise missile attacks on Saudi Arabia’s largest oil refinery. Now the question is what will it do in response? 

The attacks have not affected the sole surviving super power. On the contrary, the US will benefit the most from the hike in oil prices, which has overtaken Saudi Arabia as the largest oil producing country.

There is a temptation for the US to let the attacks slip into history. The US has formed an anti-Iran alliance in which Saudi Arabia is a key player. Doing nothing would put the coalition into question. Failing to respond to an Iranian attack on a vital Saudi facility could help Iran increase its power throughout the region.

Donald Trump’s inclination has been to avoid initiating direct military action against Iran but applying economic pressure. He has maneuvered to minimize and halt active military engagement. Military action would not only contradict the US strategy, but also endanger other alliance members.

An alternative option would be to introduce new sanctions, but there are two problems with this move. First, sanctions do not have the psychological impact and second, the US has already imposed sanctions on Iran and any more sanctions would have only limited effects.

The US could impose a blockade on Iranian ports and close of Strait of Hormuz. This strategy has three weaknesses. First, a large naval force of multiple carrier battle groups would have to be deployed for a potentially unlimited time. Second, the fleet could come under attack from Iranian missiles. To counter this, anti-missile air attacks as well as defensive measures would be needed, creating a second potentially costly dimension to this operation. Finally, such a blockade is by definition without a terminal point. If Iran does not fold under the pressure, the blockade could continue indefinitely, since ending it without a successful outcome would be seen as a defeat.

Another possible response would be to launch air strikes against Iran. The most appropriate target would be the factories producing drones and cruise missiles, along with storage facilities and so on. However, the biggest problem will be getting accurate intelligence. Acting on poor information could result in an Iranian strike on US forces or another sensitive site under informal American protection.

As regards an air campaign, history has shown that these tend to take much longer than expected and sometimes fail altogether. Any US attempt to eliminate Iran’s strike capability can be costly and hidden Iranian missiles can attack regional targets. An air campaign can go on indefinitely without yielding the desired results.

As for sending in ground troops, the US military fully deployed can defeat the Iranian military and take terrain, but to hold it against a hostile militia would create interminable conflict with casualties that cannot be sustained. Iran is a big and rugged country, with a population of 82 million people, more than twice as large as Iraq or Afghanistan. And the idea that US troops would be greeted as liberators is mere fantasy.

The US has been concerned about Iran’s expanding political influence, which also creates potential targets that are of high value to Iran. Hitting these targets would be less daunting as compared to attacks on Iran. Iran has its own or proxy forces in Iraq, Syria, Lebanon and Yemen. It has invested a great deal of time, resources and risk in creating these forces that are now holding territory in these countries.

Doing nothing could well destroy the anti-Iran bloc the US has worked hard to create. The likely but not certain answer to this problem will be a symbolic retaliation. The problem with retaliations, however, is that they get out of hand

Who has attacked Saudi oil facility?

Western media controlled by those having vested interest was prompt in spreading the disinformation about attacks on Saudi oil facilities. It has used following pointers: 1) Yemen’s Iran-aligned Houthi group has claimed responsibility of attacks, 2) Kingdom’s output will be knocked out more than half, 3) oil prices will surge and 4) tension will rise in the Middle East.

This is exactly what western media has been doing for ages, only the operators have been changing. One must not forget that these attacks have come in the aftermath of earlier cross-border attacks on Saudi oil installations and on oil tankers in Gulf waters, which have failed in skyrocketing oil prices.

Mike Pompeo, Secretary of State of United States was prompt in accusing Iran of the attacks. In the same breath he ruled out Yemeni involvement and denounced Tehran for engaging in false diplomacy. He claimed “Tehran is behind nearly 100 attacks on Saudi Arabia. He accused Iran’s President Hassan Rouhani and Foreign Minister Mohammed Javad Zarif for pretending to engage in diplomacy.”

Apparently the Zionists were happy when US President Donald Trump withdrew his country from a 2015 pact and imposed a series of sanctions that could cripple Iran’s economy. But in recent weeks they were annoyed when Trump said he would be open to meeting with Rouhani on the sidelines of the United National General Assembly in New York later this month. Pompeo had also said such talks could take place without any preconditions.

Let us review the immediate response of the US which alleges Iran for the attack. The sole purpose is to diminish any and every possibility of reconciliation with Iran and keep it out of oil trade. The ultimate beneficiary of high crude price is United States as 1) its Shale oil producers remain competitive and 2) it keeps on selling arms to Saudi Arabia.

One could also recall that President Trump has often said “Saudis can’t survive without their (US) help.” As the Kingdom was going for IPO of Aramco, its production has to be suspended to make the IPO a big failure. The attack is also aimed at proving that Saudis can’t protect their assets and must ask the US to provide security. Interestingly, it is beyond comprehension how a Houthi drone attack could curtail Saudi crude production to half?

The sole purpose of spreading disinformation is to jack up crude price. Certainly, if output is curtailed by 5.7 million barrels per day the price could raise up to US$10/ barrel on Monday. Since the US has the largest surplus production capacity, it will be the only beneficiary. The attack is also aimed at reducing the importance of newly appointed Saudi Oil Minister.

To create uncertainty and make crude price volatile, the news have started pouring in. “Abqaiq is the nerve center of the Saudi energy system. Even if exports resume in the next 24-48 hours, the image of invulnerability has been altered,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters.

A Saudi-led coalition battling Yemen’s Houthi group said it was investigating drone attacks against Saudi oil installations and would confront terrorist threats to global energy security. “Investigations are ongoing to determine the parties responsible for planning and executing these terrorist attacks,” said coalition spokesman Colonel Turki al-Malki. Analysts can’t rule out putting the entire blame on Iran.

Iranian foreign ministry spokesman Abbas Mousavi dismissed the US allegation as pointless. A senior Revolutionary Guards commander warned that the Islamic Republic was ready for full-fledged war. He went to the extent of saying, “All the US bases and its aircraft carriers in a distance of up to 2,000 kilometers around Iran are within the range of our missiles.”

While the probability of any attack on Iran remains low, the US will be able to achieve its prime objective, jacking up crude oil prices. Western media has already started saying, “Aramco has given no timeline for output resumption, but return to full oil capacity could take weeks, not days.” Traders and analysts say crude price may spike to as high as US$100/barrel if Riyadh fails to quickly bring back supply.

Stimulus Package of European Central Bank

The European Central Bank (ECB) rolled out a massive stimulus package on Thursday. The actions not only reflect the desperation but also the resolve to boost the Eurozone economy and mitigate the risk of recession.

The announcement could be summed up in five steps and the combination drove EUR/USD to a low of 1.0927. The ECB also lowered its inflation and GDP forecasts for 2019 and 2020.

According to ECB President Draghi, these actions were prompted by 3 elements - a more marked slowdown in the Eurozone economy, the persistence of downside risks and their baseline scenarios that included downward revisions to all of their inflation projections. However, instead of extending its losses below 1.09, EUR/USD reversed sharply after Draghi's press conference and traded well above 1.10.

ECB Stimulus Package

1. Interest rates cut by 10bp to -0.5%
2. ECB dropped their calendar guidance
3. Restarted bond purchases
4. Changed their TLTRO rate to eliminate 10bp spread and provide more favorable bank lending conditions
5. Introduced a 2 tier reserve system that would exempt part of bank holdings from negative rates

One can find at least three reasons for the turnaround in the EUR. First and foremost, ECB President Draghi called on governments to go big with fiscal stimulus. He said "reform implementation must be stepped but substantially" to raise long term growth potential. The central bank has long felt that monetary stimulus alone won't be enough and by doubling down on a massive stimulus package, he's put the ball in their court. With his bold curtain call, Draghi took the problem of low growth seriously and said the governments would have to act.

Euro also u-turned on the hope that the stimulus will work as the promise of unending QE should go a long way in boosting the economy. The market believes that all of this guarantees a rate cut from the Federal Reserve next week and the prospect of Fed easing is bullish for EUR/USD.

EUR Recovery

1. ECB lays on fiscal stimulus pressure
2. Unending QE will have positive impact on the economy
3. ECB actions guarantee Fed cut next week

Looking ahead, analysts believe that the actions could mark a bottom for EUR/USD. One of the biggest near term risks for the EUR was looming. Christine Lagarde takes over as head of the ECB in November and like Draghi, she's a big supporter of fiscal stimulus. The difference between Draghi and Lagarde is that she's more politically rooted and could have a greater influence on Germany.

If the Eurozone existed in a silo, analysts would declare ECB move a sustainable bottom for euro. However, US President Trump made it very clear that he's not happy the ECB is "weakening the euro," so we need to be mindful of the risks including retaliatory actions from the US (including tariffs) and Brexit.

Likely rate cut by European Central Bank

European Central Bank monetary policy announcement scheduled today is one the most important event risks of the week. Analysts should not be surprised if EUR/USD pair broke below 1.10 ahead of this rate decision.

Investors have big expectations for this meeting because of widespread deterioration in the Eurozone economy and talk of recession in Germany. EUR hit a 2-year low last week against the USD as German bund yields tumbled deeper into negative territory.

Back in July, Mario Draghi, Chief of European Central Bank brought up the benefits of a combination of measures and since then the need for stimulus intensified. While investors are preparing for a massive dose of stimulus, there's also a reasonable chance the ECB may under deliver.

The Eurozone economy needs help. Retail sales, inflation, employment and manufacturing activity slowed across the region and in Germany, growth contracted in the second quarter. The region's largest economy is crippled by weak global growth and a collapse in manufacturing. Not only did the PMI manufacturing index fall for the eighth month in a row but it reached to its weakest level in 7 years.

The Bundesbank said there's a very good chance that Germany will fall into a technical recession in the third quarter. With a tense trade war and weakening US and global growth, the grim outlook for the region is why the ECB needs to find ways to stimulate the economy.

The European Central Bank has many options including a rate cut, stronger forward guidance, a new program of asset purchases and compensation for banks to relieve the negative effects of negative interest rates. They prefer a combination of measures because they feel that a package is "more effective than a sequence of selective actions."

The market expects a minimum of a 10bp rate cut. If the central bank combines this with rate tiering or a new Quantitative Easing program, EUR/USD will sell off aggressively but if all they do is cut rates and strengthen their low rate pledge, euro will soar in disappointment.

With EUR so weak, less aggressive measures could trigger a sharp short squeeze in the currency. Unfortunately, there's resistance to a package that includes QE - one of the strongest forms of easing.

Bank of France Governor Villeroy is skeptical of the immediate need for QE while German and Dutch policy makers also believe its too early for the move.

Given the market's lofty expectations, EUR/USD traders could be setting themselves up for disappointment. Draghi could also opt for a stimulus package that does not include the most aggressive measures to leave his successor Christine Lagarde with ammo to fight a deeper slowdown.

  

Rising mental disorder in young Israelis

Nearly three-quarters (73%) of Israeli children aged between 13 to 18 experience some sort of a mental problem or crisis, according to a survey carried out by Enosh – The Israeli Mental Health Association.

The research, which surveyed 500 teenagers and 500 parents of teenagers, found that 78% of teenage girls reported previous mental health issues, compared with 66% of teenage boys. Almost one-third of respondents (32%) said they had experienced mental health problems on at least three separate occasions.

The survey was carried out to coincide with the opening of the “headspace” center in Jerusalem, a facility designed to assist young people aged 12 to 25 who are experiencing mental health issues. Treatments are provided free of charge, and are supervised by the health, welfare and education ministries.

A total of 45% of teenage respondents said they believed or were certain that they would not seek treatment or counseling if they experienced a mental health problem. Only 12% said they would certainly seek treatment or counseling. Willingness to turn to professional help was higher among those 13-14 than those 15-18, the survey revealed, and higher among secular respondents than religious teenagers.

The first source of assistance that teens said they might turn to was a psychologist (48%). Approximately one-third (34%) said they would first approach a school member, and only 17% said they would turn to their family physician. Older teenagers were increasingly likely to turn to psychologists and doctors than school staff.

The leading barrier to receiving treatment was fear of shame, 40% of teenagers said. Other obstacles include the belief that treatment does not help (38%), fear that treatment will negatively impact their future (24%), and that treatment is too expensive (23%).

“The statistics prove that mental health is an issue that affects all of us,” said Enosh executive-director Hilla Hadas. “It’s not a niche issue that matters to only a few, but rather to the wider public.”

The vast majority of patients (94%) said they would probably or definitely refer their child for treatment if they experienced a mental health problem or crisis. Parents expressed a preference for referring their child to private treatment (59%) rather than the public health system (23%). A further 16% of parents said they had no preference, while 2% said they would choose another form of medical assistance.

“It is encouraging to see that Israeli parents understand the importance of mental health care when it comes to their children,” said Hadas. “It is of critical importance to seek assistance in the case of mental health, and we must ensure that there are no barriers preventing teens from receiving help and care at such a critical stage in their lives.”

Is the world ignoring Iran Israel tension?

Media across the Middle East during this past week was focused on Israel-Iran tensions, including inflammatory comments from Beirut to Baghdad about the war on the horizon. Yet much of the tension failed to attract the attention of international community. That doesn’t mean that behind the scenes the US, France and others were not working to calm the issue, but it does appear that most did not take the crises seriously.

The reason is that in Europe is engrossed Brexit, while Trump-centric news cycle spent time wondering if the US would buy Greenland, or if hurricanes would be nuked, or if the G7 would hold a meeting with Russia at a Trump resort.

In addition, there are protests in Hong Kong and a crisis in Kashmir. These are important issues, some of them with ramifications as important as what is taking place in the Middle East. Pakistan and India, for instance, have nuclear weapons.

The airstrike by Israel on 24^th August, and Hezbollah’s claims that it downed Israeli drones on August 25, also did not lend themselves to much of a crisis. A few little drones that looked more appropriate for a wedding planner and an airstrike where only a grainy video seems to underpin Israel’s claims of “killer drones” is not major news globally.

Also, the allegations of Israeli airstrikes in Iraq are opaque. Some storage containers blew up, but there are not many details. And there is fatigue in Western media for stories about violence in the Middle East. In addition, the US is trying to end the Afghan war in the coming months, a war that also gets almost no media attention anymore.

Nevertheless, the Israel-Hezbollah tensions and US-Iran tensions have major ramifications. Jerusalem has said that Tehran is entrenching in Syria, and that it sends precision guidance technology to upgrade Hezbollah’s arsenal of 130,000 missiles. Hezbollah says it can strike all of Israel. Iranian-backed Shi’ite paramilitaries in Iraq are important, as is their long-term affect on Iraq and the region. Hezbollah holds the US and Israel responsible.

That could have an impact on US-Iraqi relations, and the long-term strategy to defeat ISIS. It is no surprise that ISIS is trying to expand again in Syria and Iraq with small attacks. Baghdad has launched major offensives to crush the ISIS networks, but Iraqis are dying in these battles every day. These tensions also relate to other tensions in the Gulf, as well as between Saudi Arabia and Houthi rebels in Yemen.

The Houthis tried to use drones or rockets to attack Saudi Arabia almost every day over the last week. These conflicts are linked, from Hezbollah to Houthis to Iraq and Syria. Yet they are so complex and have so many different leaders and groups involved that many feel they are too complicated to understand.

Outside of simple binaries like “Hezbollah vs. Israel” or “Iran vs. America,” the story is difficult to explain. Trump’s comments about Greenland, or Boris Johnson suspending parliament, seem easier to understand. A million people protesting in Hong Kong seems more important than two Hezbollah operatives killed.

Deal of Century or an attempt to remove Palestine from world map

The United States believes that “Deal of Century” should create a strong barrier against Iran’s expansionism and must secure interests of US and Israel in the region. Arab countries should pay US$50 billion to US and Israeli companies with regard to Kushner’s plans and prosperity of Palestine. 

Several resolutions and agreements have been signed between Israel and Palestine since 1967 in the process of Peace Talks, the solution of two states, one government, and even confederation have been included in these agreements. In this regard, each of former presidents of the United States presented a peace plan to solve the problem and this time, it was Trump’s turn. 

The family of Donald Trump and Jared Kushner formulated and compiled the ‘Deal of Century’. It was not considered important that the differences between Palestinians and Israelis are a difference in the width of history and in the extent of ideological differences. 

In formulation of the ‘Deal of Century’ not attention was paid to the issue that resolving problem of Israel with the Islamic countries is not the problem that is confined or limited only to the United States or Israel.

From the political point of view, the issue is not even comprehensible for them, despite all international efforts and political initiatives taken in the recent decades, resolving this crisis has become more complicated with the passage of time. 

The situation in Palestine is tied with the Resolution 242 of the United Nations inked in 1967, stipulating that Israel must withdraw from the Golan Heights, Jordan River, Gaza Strip, and the West Bank. The resistance of Palestinian people, which began with the throwing of stone, has now been turned into resistance with the power of deterrence that owns pinpointing rockets and missiles. 

Even if the Palestinians relinquish their inalienable rights, the future of Bait Al Muqaddas (Jerusalem), as the first Qibla of Muslims and the Ascendant of the Holy Prophet of Islam as well as Palestinian citizenship within a ‘geographical area under Israeli mandate’ will turn the Palestinian problem from a territorial problem into an ideological and trans-regional problem. Such a situation would add to the desire Palestinians for more resistance and also would confront Israel with new trans-regional political and armed groups as well. 

Jared Kushner unveiled the plan of ‘Deal of Century’ to the representatives of Arab and European countries in Manama, capital of Bahrain on 25th June 2019. In this initiative plan, Kushner considered economic solution as ‘alternative’ of political solution for ending the conflict between the two parties, Palestine and Israel. In the opening remarks of the ‘Deal of Century’, he clearly put the value of land and territory of Palestine and its identity at US$52 billion. By insulting the Palestinians and their struggles, he called Palestinians as people who have lived without understanding what the peace means.

In the ‘Deal of Century’, Kushner defines Palestine as land and territory which is confined to a geographical area without a nation, government, army and also conceptual boundaries. Moreover, in his defined project, Kushner said that Palestine is an area in the West Bank and Gaza Strip that are connected with each other through railway. This area is supposed to be managed and administered by multinational companies whose staff is from the people of Palestine under the strict supervision of the United States and Israel. In Kushner’s plan, people of Palestine have been supposed as ‘unable, unhealthy’ people and emphasized, “We need a healthy economy and healthy people for empowering them.” 

The ‘government and accountability of the government towards people’ have been highlighted in formulation of the ‘Deal of Century’, while Palestinian land and territory and also Palestinian government have not been taken into consideration. In this Plan, it has only been emphasized that Palestine was established through foreign investment. In formulation of ‘Deal of Century’, Kushner has considered Palestinian land as a free trade zone than a state with clear-cut government, nation and identity. The “Deal of Century” is about turning the Palestinian nation and people into an Israeli-led development project. 

In Kushner’s plan of ‘Deal of Century’, share of Palestinian people in empowerment and reconstruction of Palestine has been considered ‘negligible and insignificant’. In this plan, share of Palestinian people to create equality and justice in the newly-established companies and lending facilities has been considered just $100 million out of US $52 billion that is supposed to be put available to US companies. 

The “Deal of Century” was unveiled in Bahrain Conference with US$52 billion investment of Trump’s family to resolve Palestinian problem. However, it should be considered that what achievements this plan would bring about for Palestine, Israel and other countries if the plan is succeeded. The “Deal of Century” will resolve the problem of Resolution 242 for Israel, allowing Tel Aviv, capital of Israel, to legalize its settlements with the geographical privileges it receives. Under the Plan, Israel can maintain its border security more than before. In addition, risk of outbreak of a civil war, from withdrawing the areas that are home to hundreds of thousands of Jews, will also be removed. 

From the United States point of view, recognizing Al Quds as capital of Israel and relocation of embassies of other countries to Jerusalem (Al Quds) is raised and it is not supposed that a state named ‘Palestine’ will be recognized as the capital of Al Quds. 

In Manama Conference, Kushner emphasized, “After ceding their land and territory, Palestinians can export their traditional foods, which have unique tastes and flavors, along with their handicrafts to the world markets.”

Interestingly, after the plan of “Deal of Century’ was unveiled it was even criticized by the US President Trump and Secretary of State Mike Pompeo. In media circles and public opinion of the United States, this plan has also been nicknamed as “Waste of Time”.