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General Petraus is concerned about "fragile" progress in Iraq, and President Bush may tell U.S. citizens that a quick drawdown in troops from Iraq is not desirable. The question is why after the surge of U.S. troops, the early successes seem to have evaporated.
Yesterday, in this space, we reported that tensions are rising in the Middle East. We noted, with lots of caveats and disclaimers, that Debka.com, a sometimes erratic, but also sometimes accurate Israeli web site had put forth some information worth pondering, given the overall tone of the report, which when taken as a whole, raised the possibility of an open international conflice in the Middle East, possibly involving, Syria, Iran, and the U.S.
Debka's report summarized the situaion as the four points below state:
"1. US is preparing to attack the Iranian military installations linked to subversion in Iraq. The operation will widen out into strikes on the Islamic Republic’s suspect nuclear sites.
2. Israel will use the chance for a concurrent attack on Syria.
3. Israel will attack Hizballah’s strongholds in Lebanon.
4. A broad, coordinated US-Israeli offensive will be mounted against Iran, Syria and Hizballah."
Now, another intellingence service, Stratfor.com, who some of our readers seem to think is a mouthpiece for the CIA, is putting forth another interesting set of arguments to support the notion that something abnormal is happening in that region of the world. Friedman, carefully writes that aside from the usual rumors, other "things — minor and readily explicable individually — have drawn our attention to the possibility that something is happening.
George Friedman, Stratfor's founder, noted several points worth noting, with regard to the conflict in Iraq, as well as the U.S. relationship with Iran.
Friedman notes that the U.S. began to buy oil for the Strategic Petroleum Reserves (SPR). Friedman noted that SPR was 96.2% full, but that the Energy Department started to buy reserves anyway, despite record high oil prices.
Next, he noted that a key Hezbollah figure was assassinated in February in Syria, and Hezbollah accused the Israelis of the hit. In March, the U.S. increased its naval ship presence near Lebanon, and "The Sixth Fleet has gone out of its way to park and maintain U.S. warships off the Lebanese coast"
In March, Israel announced that it would deploy a military exercise, and Syria responded by deploying three divisions, in what seemed to be a "defensive posture" to the Bekaa Valley, a "stronghold of Hezbollah."
According to Friedman, the exercise called "Turning Point 2" was a rather large and serious exercise that involved "turned out to be the largest exercise in Israeli history. It involved the entire country, and was designed to test civil defenses and the ability of the national command authority to continue to function in the event of an attack with unconventional weapons — chemical and nuclear, we would assume." Friedman also noted that "Israeli Defense Minister Ehud Barak canceled a scheduled visit to Germany this week," immediately "after the reports of the Syrian military redeployment were released."
Friedman, as Debka.com noted in their report also notes that both Vice President Dick Cheney and Defense Secretary Robert Gates have both visited Oman lately. Oman is friendly toward Iran.
Friedman also reminds us of last year's Israeli bombing of a facility in Syria widely believed to have been a nuclear reactor, while adding reports of rumors to the effect "that the Israelis will claim Iranian complicity in building the reactor," while noting that "one Israeli TV station reported April 8 that Israel really had discovered Saddam Hussein’s weapons of mass destruction, which it said had been smuggled to Syria."
In other words, lots of things seem to be happening at once, that are seemingly unrelated, and that taken on their own might seem to be part of what is constituted to be within "normal" for that region of the world. When taken together, these events make us wonder if there is more going on.
Conclusion
Two intelligence web sites that rarely agree in method or in content are homing in on a single set of events. The events involve, Iran, Iraq, Syria, and Hezbollah, as well as the U.S. and Israel.
The reports come as violence in Iraq is on the rise and the U.S. is starting to backpedal from aggressive troop withdrawals from the area.
For some reason, the U.S. has been topping off the SPR, even at record prices for oil.
And as Friedman notes "No one of these things, by itself, is of very great interest. And taken together they do not provide the means for a clear forecast." But, he also cautiously notes the following: "Tensions in the Middle East are moving well beyond the normal point, and given everything that is happening, events are moving to a point where someone is likely to take military action. Whether Hezbollah will carry out a retaliatory strike or Israel a pre-emptive strike in Lebanon, or whether the Israelis’ real target is Iran, tensions systematically have been ratcheted up to the point where we, in our simple way, are beginning to wonder whether something has to give."
Finally he adds: "In truth, all of this may dissolve into nothing much. In intelligence analysis, however, sometimes a set of not-fully-coherent facts must be reported, and that is what we are doing now. There is no clear pattern; there is no obvious direction this is taking. Nevertheless, when we string together events from February until now, we see a persistently escalating pattern of behavior. In fact, what we can say most clearly is that there is escalation, without being able to say what is the clear direction of the escalation or the purpose."
We agree on all points. All kinds of things are going on, and little seems clear. Yet, uncertainty is the worst thing for a market that is trying to for a tradeable bottom.
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The Dow Jones Industrial Diamond Shares (AMEX: DIA) are holding up quite well after bottoming in March.
Chart Courtesy of StockCharts.com
The Dow Industrials sometimes get no respect, but lately they've been acting quite well, and seem to have formed a double bottom, in January and March.
Since then the index has rallied above its 20 and 50-day moving averages, but has remained below 13,000. Now, another bullish development is developing, as the 20-day moving average is about to cross above the 50-day moving average.
This is a positive for technical analysts, and is often a part of technically driven market participation models, which means that if it happens and it sticks, we might see more money move into the market, as traders begin to sense what could be an intermediate term trend change, and a chance for the rally to finally get some legs.
It's premature to get too excited. But the longer the market holds up, the greater the opportunity for positive things to develop. The next big test is 13,000 on the Dow and the 200-day moving average. |
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