Rising fears of war in Iraq

Reportedly, the United States has started making preparations to withdraw diplomats from Iraq after warning Baghdad it could shut its embassy. Any move by the US to scale down its diplomatic presence is being seen as an escalation of its confrontation with Iran.

“The American threat to close their embassy is merely a pressure tactic, but is a double-edged sword,” said Gati Rikabi, a member of Iraq’s parliamentary security committee. He said US moves were designed to scare Iraqi leaders into supporting Prime Minister Mustafa al-Kadhimi.

However, there are growing concern among Iraqis is that pulling out diplomats could be followed by military action against forces Washington blamed for attacks and turn their country into a battle zone.

Many fear the possibility of military action, with just weeks to go before an election in which US President Donald Trump has campaigned on a hard line towards Tehran and its proxies.

US Secretary of State Mike Pompeo has threatened to close the embassy in a phone call a week ago to President Barham Salih.

Populist Iraqi leader Muqtada al-Sadr, who commands a following of millions of Iraqis, issued a statement last week pleading for groups to avoid an escalation that could turn Iraq into a battleground.

One of the Western diplomats said the US administration did not “want to be limited in their options” to weaken Iran or pro-Iranian militias in Iraq, Washington is expected to respond militarily.

Earlier it was said the US would reduce its presence in Iraq to 3,000 troops from 5,200. Pentagon reinforced its committed to support Iraq’s long-term “security, stability, and prosperity”.

In a region polarized between allies of Iran and the US, Iraq is the rare exception, a country that has close ties with both. But that has left it open to a perennial risk of becoming a battleground in a proxy war.

That risk became more evident after Washington killed Iran’s most important military commander, Qassem Soleimani, with a drone strike at Baghdad airport. Iran responded with missiles fired at US bases in Iraq.

Since a new prime minister has taken power in Iraq, supported by the US, Tehran is still maintaining close links with powerful Shia factions.

Rockets regularly fly across the Tigris towards the heavily fortified US diplomatic compound, constructed to be the biggest US embassy in the world in central Baghdad’s so-called “Green Zone” during the US occupation after a 2003 invasion.

“Preemptive strike against Iran still an option”, says Israeli Prime Minister

Reportedly, Israeli Prime Minister Benjamin Netanyahu has warned that his country has not ruled out a preemptive strike against Iran. He was addressing a memorial service for those who fell in the 1973 Yom Kippur War.

“A preemptive strike is a difficult thing to do,” said Netanyahu. “I know that if Iran wants to base itself in the North, we are ready to fight them. This is a direct lesson of the Yom Kippur War. We will do everything in order to protect the State of Israel; we are not ruling out a preliminary strike.”

He reiterated, “This is the power on our side,” added the prime minister. It is the power that has brought peace with Jordan, Egypt, agreements with the UAE and Bahrain. This power will bring peace with additional states.”

While families across the country were prevented – due to the coronavirus lockdown – from visiting the graves of loved ones who fell in war, Netanyahu was joined at the state ceremony by President Reuven Rivlin, Defense Minister and Alternative Prime Minister Benny Gantz and Chief of Staff Lt. Gen. Aviv Kochavi at Mount Herzl in Jerusalem

“We embrace you from afar,” Rivlin told bereaved families. Harking back to events of 47 years ago, Rivlin reflected on how swiftly synagogues had emptied as people spontaneously went to war.

In the families of those who fought and fell in the Yom Kippur War, he said, there are already grandchildren and even great-grandchildren.

Rivlin called the war a decisive victory “for which we paid a terrible price. The Yom Kippur War will remain with us forever.”

Alluding to Israel’s lack of preparedness at the time, Rivlin cautioned that “we must always be alert to danger” and do something about threats before they become a reality.

 “The surprise that was our lot in that war must not be forgotten and must not be repeated: not in security, but also not in health or in the economy,” he said.

“I fought in the killing fields of that terrible war, and here I am today,” Rivlin said.

 “Almost a jubilee later, and I well remember how we won that war. In the trenches, we fought shoulder to shoulder. No one checked to see if you had peyote folded under your helmet or if you were wearing your red pad, a symbol of the Histadrut. We stormed together, knowing that if we did not rush forward, there might not be anywhere to return to.

“Our national security requires a rebuilding of the contract between the public and its elected representatives, respect for the law and obedience to guidelines, and the reconciliation of the deep rifts among the people,” the president said.

“We will wake up the day after the plague,” Rivlin said. “I do not know when this day will arrive, but it will arrive. And when it arrives we must make sure we wake up to it as brothers to each other, responsible for one another.”

Will China and Russia be the next targets if United States succeeds in imposing sanctions on Iran?

Reportedly on 14th August 2020, the 15-member UN Security Council (UNSC) unanimously rejected a resolution moved by United States to extend an arms embargo on Iran. All other JCPOA participants and most of the UNSC members argued that since the US was no longer a JCPOA participant it cannot use these provisions.

The majority of the UNSC members said they would not support the US move to snapback sanctions. One can still recall that US President, Donald Trump had signed a document reinstating sanctions against Iran after announcing its withdrawal from JCPOA on 8th May 2018. It is also on record that the US after ending its participation in the JCPOA had spared no effort to destroy the agreement.

One has to explore the validity of the US claim. It is believed that there is no legitimacy of the US claim. The imposition of sanctions and the defacto blockade of Iran is a long-standing act of the US to usher regime change, similar to those it had carried out in Iraq, Afghanistan and Libya. 

The next question to be explored is; will other members of the UNSC back the US move? It is doubtful that Russia or China would back anything the US aims at hitting Iran. The repeated failures of the US in UNSC have prompted it to move unilaterally to pursue its agenda against Iran.

Yet another question arises, can the US force other JCPOA members to back its actions? Historically, the US has used a variety of tools to threaten and coerce nations around the globe to support its demands. Its current trade war with China is in many ways designed to pressurize Beijing to make concessions. It is becoming evident that both China and Russia know that if the US is successful in imposing sanction on Iran, it will also become easier to take similar actions against them.  

The last question to be answered is, why has Trump focused on the Iran issue months before the 2020 presidential election? Trump had started talking about "ending the Iran deal" even before becoming president. If one looks at US foreign policy agenda, all US presidents eventually end up adopting the US policy papers like the Brookings Institution's "Which Path to Persia?" Declaring a desire to first create, then withdraw from a deal with Iran in order to make the US look like it tried to be reasonable before moving on to more extreme tactics. 

Barack Obama and Donald Trump merely played their role in this game - Obama created the deal and Trump withdrew from it. There are reasons to believe that the US had no intention of honoring its commitments even before its representatives sat down with their Iranian counterparts. Trump may win or lose the upcoming election, maximum US pressure will continue on Iran. Other JCPOA participants will have to deal with the US aggression pragmatically.

US aircraft carrier enters Persian Gulf

Reportedly a US aircraft carrier has entered the Persian Gulf for the first time in ten months, as tensions soar between Tehran and Washington over a number of issues.

US 5th Fleet announced on Friday that USS Nimitz passed through the Strait of Hormuz with the guided-missile cruisers USS Princeton and USS Philippine Sea and guided-missile destroyer USS Sterett.

“The [Carrier Strike Group] will operate and train alongside regional and coalition partners, and provide naval aviation support to Operation Inherent Resolve,” the statement said.

Nimitz is the first carrier to operate in the Persian Gulf since USS Abraham Lincoln made the Strait of Hormuz transit last November. The last capital ship to sail in the Persian Gulf was USS Bataan in April.

“The Nimitz Strike Group has been operating in the 5th Fleet area of operations since July, and is at the peak of readiness,” strike group commander Rear Admiral Jim Kirk said.

“We will continue our support to the joint force while we operate from the (Persian) Gulf alongside our regional and coalition partners,” he added.

Tehran and Washington have been at loggerheads since Donald Trump became president. The Trump administration is set to re-impose UN sanctions against Iran under the Iran nuclear deal, despite the fact that other parties to the deal have resoundingly rejected the US measure as illegal.

It is the latest move in the “maximum pressure” campaign against Tehran, which the US pursued after it withdrew from the nuclear deal, officially called the Joint Comprehensive Plan of Action (JCPOA), in May 2018.

It came after Washington failed to extend the conventional weapons embargo set to expire next month under the JCPOA.

“We expect every nation to comply with UN Security Council resolutions -- period, full stop,” US Secretary of State Mike Pompeo said Thursday. 

“And the United States is intent on enforcing all the UN Security Council resolutions. And come Monday, there will be a new series of UN Security Council resolutions that we enforce, and we intend to ask every country to stand behind them,” he added.

Meanwhile, Britain, France and Germany told the UN Security Council on Friday that UN sanctions relief for Iran would continue beyond September 20, when the US asserts that the sanctions should be re-imposed.

In a letter to the 15-member body, the three European parties to the JCPOA said any decision or action taken to re-impose UN sanctions “would be incapable of legal effect.”

Iran has also dismissed the US bid, with President Hassan Rouhani congratulating the Iranian people on the imminent defeat of the US to trigger the so-called snapback sanctions against Tehran.

“In advance, I congratulate the Iranian nation on the upcoming Saturday and Sunday victory [of Iran] and the US humiliating defeat,” Rouhani said during a cabinet session on Wednesday morning.

Foreign Minister Mohammad Javad Zarif said Pompeo was wrong to think that the UN sanctions on Iran would be re-imposed on September 20.

“Wrong again, Pompeo. Nothing new happens on 9/20. Just read Resolution 2231. Bolton—who convinced the boss to order you to ‘CEASE US participation’—did. In his words: Process is not ‘simple’, automatic or snappy, but intentionally ‘complex and lengthy’. US is not a participant,” Zarif tweeted on Thursday.

On Tuesday, Zarif wrote in a tweet that Trump is being pushed toward a war with Iran by “the habitual liar”, referring to Pompeo.

“The habitual liar bamboozled @realdonaldtrump into assassinating ISIS' enemy #1 by raising a false alarm,” Zarif said, adding, “Now he's trying to sucker him into mother of all quagmires by leaking a new false alarm, time to wake up.”

It came hours after Trump threatened Iran with a “1,000 times greater” attack in response to a fake story, which claimed Iran is planning to assassinate the US ambassador to South Africa.

US Dollar Gaining Strength

The record breaking moves in the S&P 500 have drawn investors into US assets and in turn the USD. The greenback extended its gains against all of the major currencies on Wednesday with EUR and AUD experiencing the steepest declines. 

Non-farm payrolls will be released on Friday and ADP is an important barometer of labor market health. According to the private payroll provider, US companies added 428,000 workers last month, about half the forecasted amount. When the number was initially released investors reacted by selling USD, but the rally resumed quickly as buyers returned.

Even if non-manufacturing ISM report shows service sector activity slowing and employment gains weakening, the general sentiment in the market is that the rally in stocks signal a more durable recovery that should lead to lower unemployment.  While there are a lot of problems with this theory including the possibility of a second wave as schools re-open, sheer optimism is the main reason why investors are buying US stocks and the greenback. According to Beige Book released by the Fed, economic gains were modest. Business contacts had mixed expectations for staffing in the months ahead with manufacturers expecting staff increases and the service sector anticipating the need for reductions.

The reversal in EUR gained traction with the single currency headed for a test of 1.18 versus the USD. Eurozone retail sales are scheduled for release, it could miss expectations. Signs of the Eurozone recovery losing momentum are worrying investors and with the single currency rising to heady levels, there’s a strong sense of profit taking especially after ECB Chief Economist Lane said EUR/USD rate would matters. 

Last but certainly not least, GBP followed EUR lower. As it was said at the start of the week, there’s very little on the UK calendar but the data that one has seen so far has been better with house prices following mortgage approvals higher. Still GBP is taking its cue from the market’s appetite for USD. 

Dollar bomb can burst any time

The scale of money being printed in the United States has become unprecedented; the government is spending more money than ever before. It is being said that more than 60 cents out of every dollar the government spends is printed. The US Federal Reserve is printing more money than the government is collecting in taxes.

Critics are challenging the myth that the US economy was strong before Covid-19. They say it wasn’t strong at all; it was the weakest it has ever been. It was the biggest bubble that has ever existed, that’s the reason economy imploded after Covid-19 pandemic. The air has started leaking in the fourth quarter of 2018 and the dollar is being wiped out now.

It is being said openly that everything the US government did in the aftermath of the 2008 financial crisis was imprudent. Its monetary as well as fiscal policies were faulty. As a consequence, the US economy never recovered from the crisis, which was caused by the Fed and the government.

The US is about to experience inflation on an unprecedented scale. The cost of living is going to skyrocket and it’s going to happen very quickly, but people are not going to see this.

More people will be blindsided by the dollar crisis than by the financial crisis. The dollar crisis will be much worse than the financial crisis. When the dollar crisis happens, printing dollars will not help because nobody wants them.

Analysts warn that there will be a sovereign debt crisis. The dollar will fall through the floor and inflation is going to ravish the US. If this happens the world will go off the dollar standard and go back to the gold standard, it has already started happening.

The entire US economy is built on the perception that the dollar is the world’s reserve currency. Once the dollar become just like any another currency, it will be the end of the game for US. The fear is growing that the dollar may collapse any day. That is the reason individuals, corporate and governments are buying gold to hedge the financial risk.

The world response to UAE - Israel agreement

The United Arab Emirates (UAE) has become the first Persian Gulf Arab country to reach a deal on normalizing relations with Israel. It is also the third Arab nation to reach such a deal with Israel, after Jordan and Egypt. The "Abraham Agreement", was made public by United States President Donald Trump on Thursday, securing an Israeli commitment to halt further annexation of Palestinian lands in the occupied West Bank.

However, addressing reporters later in Tel Aviv, Israeli Prime Minister Benjamin Netanyahu said he agreed to "delay" the annexation as part of the deal with the UAE, but the plans remain "on the table". It is necessary to see how other nations and the various stakeholders in the Israeli-Palestinian conflict reacted to the Israel-UAE deal. The UAE's minister of state for foreign affairs, Anwar Gargash, defended the deal. Abu Dhabi Crown Prince's Mohammed bin Zayed decision to normalize ties with Israel reflected badly needed realism.

"While the peace decision remains basically a Palestinian-Israeli one, the bold initiative of Sheikh Mohammed bin Zayed has allowed, by banishing the specter of annexing Palestinian lands, more time for peace opportunities through the two-state solution," Gargash said in a series of tweets. "Developing normal ties in return for this is a realistic approach forwarded by the Emirates," he said. "The successful decision is to take and give. This has been achieved."

In a statement, Democratic United States presidential candidate Joe Biden said, "The UAE's offer to publicly recognize the State of Israel is a welcome, brave, and badly-needed act of statesmanship ...  A Biden-Harris Administration will seek to build on this progress, and will challenge all the nations of the region to keep pace." Biden also said, "Annexation would be a body blow to the cause of peace, which is why I oppose it now and would oppose it as president," he said.

United Kingdom Prime Minister Boris Johnson praised the agreement between Israel and the UAE. He said, "The UAE and Israel's decision to normalize relations is hugely good news."  "It was my profound hope that annexation did not go ahead in the West Bank and today's agreement to suspend those plans is a welcome step on the road to a more peaceful West of Asia."

The Persian Gulf state of Bahrain welcomed the accord between the UAE and Israel. The small island state of Bahrain is a close ally of Saudi Arabia, which has not yet commented on the agreement.

Egyptian President Abdel Fattah el-Sisi, a close ally of the UAE, welcomed the agreement. "I followed with interest and appreciation the joint statement between the United States, United Arab Emirates, and Israel to halt the Israeli annexation of Palestinian lands and taking steps to bring peace in the West of Asia," said Sisi.

Jordan said that the UAE-Israel deal could push forward stalled peace negotiations if it succeeds in prodding Israel to accept a Palestinian state on land that Israel had occupied in the 1967 Arab-Israeli War.

"If Israel dealt with it as an incentive to end occupation ... it will move the region towards a just peace," said Jordan's Foreign Minister Ayman Safadi. Israel's failure to do this would only deepen the decades-long Arab-Israeli conflict and threaten the security of the region as a whole. The agreement must be followed by Israel ending any unilateral moves to annex territory in the occupied West Bank that that obstruct peace prospects and violate Palestinian rights.

In a statement issued by his spokesman, Palestinian President Mahmoud Abbas denounced the accord, saying the Palestinian leadership rejects and denounces the UAE, Israeli and US trilateral, surprising announcement. He also termed the deal a "betrayal of Jerusalem, Al-Aqsa, and the Palestinian cause."

Hamas rejected the US-brokered deal establishing formal ties between Israel and the UAE saying it did not serve the cause of the Palestinians. This agreement encourages the occupation by Israel to continue its denial of the rights of Palestinian people, and even to continue its crimes against our people.

Oman said it backed the normalization of ties between the neighboring United Arab Emirates and Israel and hoped the move would help achieve a lasting West of Asia peace.  A foreign ministry spokesman expressed the sultanate's "support for the UAE's decision regarding relations with Israel", according to a statement on Oman's official news agency.