G-khan
04-03-2003, 10:55 PM
April 3, 2003
The world is certainly wired for sound. It is so organized now that the spin-city in everything no longer even tries to hide itself.
The last five days in gold have been so blatant and the confidence level of the price manipulators has risen so high that they no longer seem interested in hiding their evil deeds. In a sense that is easy to understand since the jettisoning of the GATA suit which based its gold market fiddling claims on the incredulous repetition of gold price anomalies.
The judge preferred a smoking gun in the form of a written plan by the Cartel or a witness to a cabal-type conversation. Well the judge apparently didn't know much about market. GATA proof to a trader was a smoking gun because prices may trend but they rarely if ever on their own do what you can see by looking at the lower opening, then trend up with a dress down close that has taken place over the last five days.
This simply does not happen in a normal marketplace. Each day the opening is sold after selling down the overnight market. Thereafter, the positive interest is not opposed significantly until just before the close. The close is market down. This is a trading pattern that points to the same people with the same intention working together.
I believe and history documents that:
1/ Markets are bigger than any pool players in history.
2/ No manipulation has ever succeeded that pushed against a primary bull or bear move.
Therefore, I conclude for both proprietary technical reasons and fundamental reasons that short of an immediate surrender by Saddam Hussein and Sons Inc., the gold shorts are pressing their luck motivated by egos larger that the nominal value of all derivatives.
Even if the war ended tomorrow, it would only serve to unleash an emotional market interlude before economics would reestablish the same negative trend in the dollar and positive trend in gold.
Is there A political Influence in the War?
The lesson of Vietnam and Korea is that generals tend to be successful and efficient purveyors of war but are usually not political entities. Although there is a first time for everything, the real fight starts now that our troops have arrived on the outskirts of Baghdad. The following Reuters article speaks to the possible political influence in this campaign which is certain to reach a critical stage in the coming weeks:
Rumsfeld Ignored Pentagon Advice on Iraq
Reuters
Saturday, March 29
WASHINGTON (Reuters) - Defense Secretary Donald Rumsfeld repeatedly rejected advice from Pentagon planners that substantially more troops and armor would be needed to fight a war in Iraq, New Yorker Magazine reported.
In an article for its April 7 edition, which goes on sale on Monday, the weekly said Rumsfeld insisted at least six times in the run-up to the conflict that the proposed number of ground troops be sharply reduced and got his way.
"He thought he knew better. He was the decision-maker at every turn," the article quoted an unidentified senior Pentagon planner as saying. "This is the mess Rummy put himself in because he didn't want a heavy footprint on the ground."
It also said Rumsfeld had overruled advice from war commander Gen. Tommy Franks to delay the invasion until troops denied access through Turkey could be brought in by another route and miscalculated the level of Iraqi resistance.
"They've got no resources. He was so focused on proving his point -- that the Iraqis were going to fall apart," the article, by veteran journalist Seymour Hersh, cited an unnamed former high-level intelligence official as saying.
A spokesman at the Pentagon declined to comment on the article.
Rumsfeld is known to have a difficult relationship with the Army's upper echelons while he commands strong loyalty from U.S. special operations forces, a key component in the war.
He has insisted the invasion has made good progress since it was launched 10 days ago, with some ground troops 50 miles from the capital, despite unexpected guerrilla-style attacks on long supply lines from Kuwait.
Hersh, however, quoted the former intelligence official as saying the war was now a stalemate.
Much of the supply of Tomahawk cruise missiles has been expended, aircraft carriers were going to run out of precision guided bombs and there were serious maintenance problems with tanks, armored vehicles and other equipment, the article said.
"The only hope is that they can hold out until reinforcements arrive," the former official said.
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Here is today's Intel Report which will hopefully give you some perspective on what is really going on in Iraq. As you read this, you will see why subscribing to an Intel service of merit has certain important advantages over taking all your information from CNN and financial TV. Please review this information carefully and compare it to what you're seeing in the mainstream electronic and print media:
Republican Guard Units Still May Pose Threat
www.us-iraqwar.com
Apr 03, 2003
Summary
U.S. forces have pressed on in their advance on Baghdad, passing the cities of Karbala and An Najaf. They reportedly have bypassed large numbers of scattered or isolated Republican Guard forces as well. Whether these Iraqi troops pose a continued threat to U.S. forces will depend on the accuracy of U.S. intelligence regarding their condition, resilience of Iraqi command and control, the training they have received in small unit action and the continued availability of coalition air cover.
Analysis
Over the past 24 hours, the U.S. military has resumed its advance on Baghdad, and some lead units reportedly have probed to within 15 miles of the southern outskirts of the capital. The advance followed substantial bombardment of up to five Republican Guard units south of Baghdad. Iraqi units have put up limited resistance to the U.S. advance, and most of the surviving Republican Guard troops have been dispersed or bypassed. The question now is whether those bypassed units can regroup and/or carry out attacks behind U.S. front lines.
U.S. aircraft and helicopters have demolished large numbers of Republican Guard armor and equipment south of Baghdad, reportedly even reducing the sortie rate by AH-64 Apache attack helicopters on April 2 for want of targets. Air strikes by strategic bombers, tactical fighters and helicopters have effectively destroyed two Republican Guard divisions, according to CENTCOM: the 2nd Al Medina Armored Division near Karbala and the 5th Baghdad Mechanized Infantry Division near Al Kut. Pentagon officials were quick to clarify that the two divisions have not been eliminated, but rather that their combat effectiveness has been reduced to near zero.
As U.S. troops move past these and other Republican Guard units, the first question is, how accurate is the U.S. bomb damage assessment? When U.S. units began to probe into territory believed to be held by Republican Guards, the lack of resistance they encountered could mean the units had been destroyed, or that they were intact but declining combat, or that they had withdrawn, or that they were never there in the first place.
Sources in the German intelligence community report that the four Republican Guard divisions that reportedly moved south a few days ago in fact remained in their positions on the outskirts of Baghdad and Tikrit. These would include the 7th Adnan Mechanized Infantry Division that coalition aircraft reportedly attacked as the unit redeployed from Tikrit to the northwestern outskirts of Baghdad. U.S. sources categorically reject this claim and confirm broadcast reports of the Adnan division's movement.
The other three units would be the 1st Hammurabi and 6th Nebuchadnezzar Mechanized Infantry Divisions, which reportedly reinforced the Al Medina Division near Karbala and the Al Nedaa Armored Division, which Iraqi opposition sources repeatedly claimed had advanced to reinforce Al Kut. U.S. troops reportedly have captured Iraqi fighters and engaged equipment around Karbala bearing the insignia of the Nebuchadnezzar Division, which contradicts German claims. However, it is possible that only small detachments of the division were involved, or that the Iraqi military has begun to manipulate uniforms and markings to confuse coalition intelligence regarding the nature of Iraqi deployments.
German intelligence sources also claim that only half of the Al Medina Division remained in Karbala -- the 14th Mechanized Brigade and an armor brigade, possibly the 2nd. The remainder of the division is reportedly in the outskirts of Baghdad. The sources claim that the Republican Guard units in Karbala have suffered few losses due to coalition bombardments, because they are entrenched within the city itself. Coalition bombing and shelling focused on empty positions or decoys outside the city.
Also, U.S. and German sources concur that there was no ground battle in Karbala. Rather, units in Karbala traded fire with U.S. 3rd Infantry Division for three hours as it swept around the city toward the Euphrates River bridge at Al Musayyib. To the best of our knowledge, Karbala remains encircled by a brigade of the 3rd Infantry Division, but it has not been swept of Iraqi forces. The relative accuracy of the U.S. and German intelligence will not be tested until the Iraqi units in Karbala surrender or U.S. forces move into the city.
Regarding action further to the east, Russian military intelligence sources report that there was no battle between the Republican Guard Baghdad Division and U.S. Marines at Al Kut, not because the division had been destroyed, but because it feared destruction by U.S. airpower and therefore remained entrenched in the city. U.S. officials have indicated that Marines did not take Al Kut or the bridges in the city, but rather took a bridge further to the west, probably at An Numaniyah.
The Russian sources report the Baghdad Division did suffer some losses due to heavy bombing, but was not destroyed and remains combat-capable. Moreover, it is possible that only a portion of the division is entrenched in Al Kut, while others have been deployed elsewhere, perhaps Baghdad. Though not inherently confirming anything, it is interesting to note that the Baghdad Division commander appeared on Iraqi television April 2 to deny his unit had been destroyed.
Russian and German sources are only as good as their collection methods and their interpretation of the data. However, U.S. sources are affected by similar constraints. The course of battle will determine which, if any, were correct. However, there is clearly room for some question regarding the deployment and status of the Iraqi Republican Guard.
U.S. sources report that the Republican Guard units south of Baghdad have declined to engage U.S. troops and are engaged in a strategic withdrawal into the outskirts of Baghdad, ahead of advancing U.S. troops. Iraqi army units reportedly are reinforcing them at the same time. Coalition airpower is concentrating its attacks on these retreating units and their reinforcements, with the primary goal of preventing their reaching cover in the city.
U.S. forces reportedly are racing toward Baghdad, despite having planned for a slow, methodical advance. Given public expressions of extreme caution from CENTCOM, it is unlikely that they are merely advancing with blind enthusiasm upon meeting little resistance. Rather, they may be trying to get between Baghdad and the retreating Republican Guard.
Assuming for the moment that the U.S. sources are 100 percent accurate, and two divisions of the Republican Guard have been shattered, and U.S. troops are bypassing scattered, isolated, and retreating units, the next question is whether they will pose a threat behind U.S. lines. There are three factors that will affect this -- command and control, training and U.S. air superiority.
Stratfor's earlier report suggesting that degradation in the Iraqi television signal could indicate a deeper problem for Iraqi command and control was apparently premature. Iraqi television continues to recover from air strikes, though not as quickly as earlier in the war. And U.S. sources report that, though likewise degraded, Iraqi command and control remains intact. Baghdad continues to retain contact with Iraqi units outside the capital and, as the ring draws tighter, telecommunications will become less important for sustaining defense.
Training will come into play for units caught behind coalition lines and out of communication with Baghdad. Fedayeen forces have demonstrated their tenacity at harassing small unit actions. Some of those identified as Fedayeen -- for example, those in Umm Qasr -- later were identified as company-level or smaller Republican Guard units. It seems, therefore, that the Republican Guard has been trained in isolated small unit operations, rather than the brigade- and division-level maneuver they were formerly known to prefer. Interestingly, it appears that resistance along the Euphrates has been waged by battalion-sized Iraqi army units, suggesting that at least some of the training has trickled down to them.
U.S. troops nearing Baghdad are in a precarious position. If the bypassed Republican Guard units are motivated and trained to carry out independent counterattacks behind U.S. lines, they could threaten already strained supply lines.
The United States does not have many troops to spare at this time for securing rear areas and rounding up Iraqi soldiers. Already, the 101st Airborne Division is tied down securing An Najaf and the surrounding areas, while the 82nd Airborne Division's 2nd Brigade Combat Team is fighting around As Samawah. And latest reports indicate the 15th Marine Expeditionary Unit is on cleanup duty in An Nasiriyah. This is a substantial portion of U.S. combat forces devoted to securing supply lines. The pressure will ease when elements of the 4th Infantry Division or other units entering the theater begin deploying into Iraq, but for the next few days there is a risk of supply interdiction.
That leaves two issues: Iraqi motivation to counterattack and the availability of U.S. airpower to destroy any Iraqi troops who dare leave defensive positions. U.S. forces have thwarted two Iraqi attempts to attack lead elements of the 3rd Infantry Division at the Al Musayyib bridgehead. In one instance, the Iraqis were able to plant charges that damaged the bridge. At least one Iraqi tank was involved in the counterattacks. These Iraqi attacks answer the question of Iraqi motivation. At least some units are willing to risk air strikes and attack.
It also raises some questions about U.S. tactical intelligence and airpower on the outskirts of Baghdad. Iraqis were able to approach the bridge twice, and U.S. forces resorted to tank and artillery to repel the attacks. There was no explanation of the absence of U.S. aircraft at the two engagements. U.S. forces are now coming into an area that is highly urbanized and still protected by substantial air defenses. Tracking the movements of small Iraqi units will be difficult. Interdicting them will be more difficult.
CENTCOM must now ensure that ongoing air strikes prevent Republican Guard units from joining Special Republican Guard units defending Baghdad, or lead U.S. units may need to pull back and await the major reinforcements still pouring into Kuwait.
Source: www.stratfor.com
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April 2, 2003
To understand markets you must understand the thinking processes that are occurring in Washington amongst those that make the rules of engagement - be it economic or military. (Is there any difference)? Many times, listening is better than speaking. So in that mode this article is important reading for the Gold community.
How Will the Iraq War Change Global Nonproliferation Strategies?
"Arms Control Today"
April 01, 2003
Trying to determine what the Iraq war will mean for global nonproliferation regimes is difficult. The war is less than a month old, and the many uncertainties that remain make it hard to render an assessment with sufficient confidence.
Even within the time that it takes to write these words and print them, dramatic events might occur that change this article's tentative conclusions. As Yogi Berra said, "It's tough to make predictions, especially about the future."
Nonetheless, even at this point, it is useful to examine how leading policy-makers in the administration would like the nonproliferation regimes to change and to outline the key questions we must answer to forge a new strategy.
From Eliminating Weapons to Regimes
If President George W. Bush's vision of a quick military victory, a benign and untroubled occupation, and the quick construction of a democratic Iraq is correct, the rules and structures of the international system might be further rewritten in favor of a U.S.-centric system.
But even if the war goes badly and the occupation is difficult, many in the Bush administration can be expected to push on boldly, lest they lose momentum. In Washington, the executive branch almost always sets the agenda, and the Bush administration is particularly good at this.
Still, it is a bit erroneous to talk about "the administration" as a single unit. Until the White House makes final decisions, there is fierce contention among various groups within the government on national security issues. Most observers see three main factions: the moderate internationalists, led by Secretary of State Colin Powell; the national conservatives, sometimes epitomized by Secretary of Defense Donald Rumsfeld; and the aggressive neoconservatives, led by Deputy Secretary of Defense Paul Wolfowitz.
Mark Danner of The New Yorker characterizes what I call the moderates as the pragmatists in line with the policies of the administration of President George H. W. Bush. "These are so-called realists. They believe that foreign policy is the patient management of alliances, competitions and, to some extent, conflict."
The neoconservatives, on the other hand, "take a somewhat ideological and almost evangelical view of the world," says Danner. They believe that American power "should be used to change the world, not simply to manage it." Finally, the traditional conservatives have little use for international organizations and would not favor overseas deployments unless vital U.S. interests were threatened.
Unless the war turns into a quagmire, the neoconservatives can be expected to continue their dominance of the policy apparatus and to press their carefully constructed agenda. That consists primarily of a "permanent regime change" policy focused on the Middle East.
"There is tremendous potential to transform the region," says Richard Perle, a prominent neoconservative who recently resigned as chairman of the Defense Policy Board. "If a tyrant like Saddam [Hussein] can be brought down, others are going to begin to think...and act to bring down the tyrants that are afflicting them."
There might be less unity among neoconservatives after the war, however, as some might want to turn their sights on Iran, others on Syria, and still others might argue for action against North Korea. Traditional conservatives who support the Iraq war might split from the neoconservatives' radical and expensive agenda, preferring to consolidate gains and start bringing troops home.
They might find that they have a lot more in common with moderate Republicans concerned about deficits and homeland defense than with neoconservative ambitions for global transformation.
Still, the neoconservatives are firmly established in the administration, and their ideas have captured the minds of the president and his key advisers. Most now see this as a pivotal moment in world history, comparing it to the years 1945-1947 when a small group in the White House led the construction of the institutions that shaped the Western world throughout the Cold War, including the United Nations, NATO, the World Bank, the International Monetary Fund, and the development of the doctrine of containment.
National security adviser Condoleezza Rice told Nicholas Lemann of The New Yorker that September 11 "has started shifting the tectonic plates in international politics. And it's important to try to seize on that and position American interests and institutions and all of that before they harden again."
These institutions are now outdated, according to some, as is the central principle that has guided U.S. nonproliferation policy since World War II. For more than 40 years, there has been a bipartisan consensus that focused on eliminating nuclear, biological, and chemical weapons. The weapons themselves were the problem: as long as they existed, they would be used.
"The weapons of war must be abolished before they abolish us, " President John F. Kennedy said in September 1961. "The mere existence of modern weapons...is a source of horror and discord and distrust." Thus, Kennedy started, Lyndon Johnson completed, and Richard Nixon signed the nuclear Nonproliferation Treaty (NPT) that promised the elimination of nuclear weapons.
Nixon unilaterally ended the U.S. biological weapons program in 1969 and negotiated the Biological Weapons Convention that bans these deadly arsenals. George H. W. Bush in 1993 signed the Chemical Weapons Convention (CWC) that similarly bans chemical weapons, and President Bill Clinton won its ratification in 1997.
Since the end of the Cold War, there has been general agreement that the most serious threat to the national security of the United States "is posed by the proliferation of nuclear, biological and chemical weapons and their means of delivery," as Clinton put it in November 1998.
But George W. Bush has changed that formula. Now, as he said in his 2003 State of the Union address, "The gravest danger facing America and the world is outlaw regimes that seek and possess nuclear, chemical and biological weapons." (Emphasis added.)
The new clause makes all the difference. The focus has shifted from eliminating weapons to eliminating certain regimes that have those weapons. It is a strategy of picking and choosing good guys and bad guys. Possession of these weapons by allied or friendly regimes is tolerated, even encouraged, while governments designated as threats must not only disarm, but be deposed. In this strategy, universal norms and treaties are a hindrance to U.S. freedom of action, not strategic levers in the battle against nonproliferation.
Burning the Bridges We're On
To neoconservatives, the construction of new institutions begins with the destruction of the old. They say the failure of George W. Bush to win UN Security Council support for the war shows that the United Nations itself must go. Columnist George Will writes, "The United Nations is not a good idea badly implemented, it is a bad idea." The March 17 cover of the Weekly Standard is devoted to "Present at the Destruction: The United Nations Implodes." Inside, contributing editor David Gelernter says the United Nations "today is an impediment to world safety. It should be replaced....
The core of the new organization-call it the Big Three-would be a Britain-Russia-America triumvirate." In another example of neoconservative thinking, Charles Krauthammer, America's most passionate unilateralist, tells the president in the Washington Post simply to "walk away."
Such extreme views are now commonplace in neoconservative circles. Yet, many noted foreign policy experts find it difficult to take this challenge seriously. "What is most striking is just how relevant the United Nations has become," argues Anne-Marie Slaughter, dean of Princeton's Woodrow Wilson School of Public and International Affairs. "And contrary to all the bluster on both sides of the Atlantic, that will continue to be true."
Unfortunately, Slaughter appears to be wrong. Her mistake, however, is understandable. In its public statements, the Bush administration has sought to minimize opposition and please both the neoconservatives and the mainstream foreign policy establishment. The best example of this schizophrenic approach is the Bush administration's September 2002 National Security Strategy. At one point, the document appeals to more traditional thinkers:
We are also guided by the conviction that no nation can build a safer, better world alone. Alliances and multilateral institutions can multiply the strength of freedom-loving nations. The United States is committed to lasting institutions like the United Nations, the World Trade Organization, the Organization of American States and NATO as well as other long-standing alliances.
The National Security Strategy, however, cut and pasted verbal concessions to outsiders and administration moderates alongside more hard-line views. Indeed, we can now see that the document drafters were willing to put in multilateral boilerplate as long as they could get official blessing for the radical new concepts of pre-emption and unilateral action. They had learned from bitter experience: These ideas were put forward by Deputy Secretary of Defense Paul Wolfowitz a decade ago in the first Bush administration but were harshly rejected. Given another chance, the neoconservatives have sought to advance their agenda with stealth tactics.
The drive to war in Iraq quickly sacrificed multilateral principles in favor of the more deeply felt new doctrine, also in the strategy: "We will not hesitate to act alone" and, "if necessary, act preemptively." In this view, there is no need for permanent alliances or permanent multilateral organizations. Indeed, these are seen as impediments to U.S. action, unnecessary fetters on American power. Why should the greatest nation on Earth be forced to seek the approval of Cameroon for its vital national security policies?
Similarly, NATO is now treated as a tool kit for the administration. When they see something they need, they take it; otherwise, it is ignored. As Wolfowitz noted in his draft 1992 defense policy guidance, the United States "should expect future coalitions to be ad hoc assemblies" that might not outlive a particular crisis. "The United States," he argued, "should be postured to act independently when collective action cannot be orchestrated."
The End of UN Inspections?
The idea that the United States would cast aside key international institutions that we ourselves created and that are so integral to the idea of collective security might seem incomprehensible. Surely, the United Nation's work on hunger, women, children, and other causes is too valuable to lose? But even if the more extreme views in the administration are moderated and the United States continues to cooperate with the United Nations, the attacks on the inspections process in Iraq might have fatally weakened all international inspection operations.
In order to press the case that war was the only way to save the world from Saddam Hussein, the administration had to diminish, defile, and dismiss inspection efforts. Most of the fire was focused on the UN Monitoring, Verification, and Inspection Commission (UNMOVIC) and its leader Hans Blix, but if anything, the International Atomic Energy Agency is hated more, particularly for its repeated rebuttal of administration charges that Iraq had an active nuclear weapons program.
If the administration did not trust UN inspectors in Iraq, why should it trust them in Iran, North Korea, or any other state? But what could take their place? After all, the United States depends on UN inspections to monitor compliance with key nuclear, chemical, and biological weapons treaties.
Post-war Iraq might provide an alternative model of inspections more amenable to the neoconservatives' new doctrines. Senior national security aides have been working on the concept of U.S.-based disarmament teams for months. Former UN Special Commission (UNSCOM) weapons inspectors have been drawn into this new disarmament apparatus by the Pentagon, alongside intelligence analysts and veterans from the Cooperative Threat Reduction program, which helps secure and dismantle weapons of mass destruction in the former Soviet Union. "Mobile Exploitation Teams" of inspectors are in Iraq equipped with the latest detection technologies, including:
Chemical Agent Monitors, hand-held devices for rapid detection of chemical molecules. Portable Isotopic Neutron Spectroscopy, which uses a neutron beam to identify the contents of sealed containers. Handheld Advanced Nucleic Acid Analyzers, which can identify specific sequences of DNA in biological samples (such as those for anthrax) within 15 minutes.
Laser-Induced Breakdown Spectroscopy, which can precisely identify materials from a distance. All the plans to find and eliminate Iraqi arms were drawn up independently of UN weapons inspections. They might prove an attractive alternative to chronically underfunded and geographically balanced international inspection teams. These would be under complete U.S. control and could be used in a bilateral process between the United States and the offending country, much as the U.S.-Soviet inspections were conducted during the Cold War, although these would be strictly one-way.
Rebuilding the Regime
Three excellent articles in this and the March 2003 issues of Arms Control Today address the key issues involved with the administration's policies toward the use of nuclear weapons, the salami tactics being used to bring us closer to resuming testing of new nuclear weapons, and the anemic support provided for nuclear nonproliferation efforts.
Representative John Spratt (D-SC) warns in one of these pieces of "a dangerous drift" in U.S. policy. "My greatest concern is that some in the administration and in Congress seem to think that the United States can move the world in one direction while Washington moves in another-that we can continue to prevail on other countries not to develop nuclear weapons while we develop new tactical applications for such weapons and possibly resume nuclear testing."
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April 2nd 2003:
The stock market rallies over 200 points on the assumption that US forces have reached the red line around Baghdad. On the airwaves this geographically insignificant event is being portrayed as the end to the Iraq conflict, a return to world economic strength and exuberance and the end of every single calamity known to mankind.
Here's an example from the International Herald Tribune of how markets ignore important news stories that have negative implications for the increasingly tenuous global economy. Following that is a story from FT.Com (Financial Times) commenting about the perilous condition of the global economy.
North Korean threat spirals toward disaster
A greater danger
By Alan D. Romberg and Michael D. Swaine (IHT)
Thursday, March 27, 2003
WASHINGTON: While the world's attention is riveted on Iraq, the United States cannot afford to ignore another brewing crisis with potentially even greater consequences. The Bush administration's approach to North Korea is quickly moving from the inexplicable to the irresponsible. If it continues on the current course, America could soon find itself confronted with the unpalatable choice between a nuclear-armed North Korea and war.
Washington is confusing the reality that this is an international problem with the practicality that the initial impetus toward resolution must come in the form of a U.S.-North Korean dialogue. This confusion can only be understood in terms of President George W. Bush's personal animus toward the North Korean leader, Kim Jong Il, and Bush's willingness to follow the lead of those who seek not a solution but North Korea's collapse.
Pyongyang's decision to develop nuclear weapons by alternative means was taken years before this administration assumed office and responsibility for this deceit lies squarely with the North. But the recent spiraling crisis also has a lot to do with Bush's deeply flawed North Korea policy since he took office and with the U.S. refusal to talk directly with the North since October.
While the State Department searches fruitlessly for a way to overcome the North's objections and open multilateral discussions with Pyongyang, others in the administration argue over how best to compel the North to abandon its nuclear program, believing that Pyongyang is vulnerable to pressure and that, in the end, this will contribute to the only reliable solution: regime change. Meanwhile, Pyongyang continues to raise the stakes.
We do not know whether Pyongyang is committed to building a nuclear weapons capability regardless of any security assurances from Washington or if - as it says - it would give up its nuclear ambitions in return for such assurances. But if Washington is unwilling to speak directly with Pyongyang to find out which is true - and is also unwilling to tolerate a nuclear-armed North Korea - then the current crisis is likely to worsen over the next several weeks as Pyongyang continues to ratchet up the pressure for bilateral talks through increasingly provocative nuclear-related activities or by breaking its moratorium on long-range missile launches.
Such further escalation could significantly increase pressure within the administration for threats of a preemptive strike, either to compel China, South Korea, Russia and Japan to support economic sanctions and interdiction of North Korean military exports as a less onerous alternative, or as a supposedly viable military means of preventing Pyongyang from creating significant amounts of nuclear weapons or exportable nuclear weapons-grade material.
Such approaches assume that North Korea will eventually retreat rather than risk annihilation. This is a very dangerous assumption. Either preemptively or as a first response to a U.S. strike, the North could well decide to launch its own strike against U.S. forces or facilities in South Korea, hoping to split the U.S.-South Korean alliance and mobilize world opinion against any further escalation on the part of the United States. Even if only part of this came to pass - splitting the U.S.-South Korean alliance, for example - the consequences for U.S. regional security interests would be immeasurable.
Maybe the North is determined to continue on the nuclear path, and maybe some of these consequences cannot be avoided. But rather than risk them needlessly, it makes more sense for Washington to find out by opening talks with North Korea - soon.
The administration seems to resist talking with the North precisely because the North demands to talk with it. This is self-defeating. Is the administration so insecure that it thinks sitting with the North will suddenly make it Pyongyang's puppet? Or does it somehow equate sitting at the table with surrendering to the North's substantive demands?
Surely North Korea would be pleased it had brought the mighty United States to the table, but it would have no illusions about who was the strong power and who the weak. Moreover, the exercise of American leadership by showing pragmatic flexibility - not weakness - would earn respect rather than disdain from others. And if harsher measures were later needed, a foundation would have been laid, with international support made more likely.
The administration is right that this is an international problem, and in the end it requires participation and commitment from many countries. But the situation could explode out of control if Washington doesn't demonstrate leadership.
Alan D. Romberg is a senior associate at the Henry L. Stimson Center. Michael D. Swaine is senior associate at the Carnegie Endowment for International Peace and co-director of its China program.
Top financiers urge defence of world economy
By Alan Beattie in Washington
FT.com site; Apr 01, 2003
The world's top economic policymakers should promise now to take swift and concerted action - such as cutting interest rates - if the global economy weakens further, the leading association of financial institutions said on Tuesday.
The warning from the Institute of International Finance, a private sector body representing banks, fund managers and finance houses, came as a run of poor figures showed weakening confidence across the world's large economies in the period before the war with Iraq.
The IIF, issuing its advice to ministers before next week's meetings of the International Monetary Fund, said the economic fragility went beyond the transitory effect of the war.
"It would be unfortunate if ministers came to Washington believing that an early end to the war would remove the need for action," said Charles Dallara, the IIF's managing director.
The Group of Seven rich countries has shied away from promising a collective plan to cope with economic weakness, saying each central bank and finance ministry should concentrate on its own economy. But the IIF said challenging times called for extraordinary measures.
"There is value sometimes in the demonstration effect of co-operative and co-ordinated action," Mr Dallara said.
The G7 should announce a bias towards monetary easing underpinned by a joint commitment to act if necessary and to flexible short-term management of fiscal policy, he said.
Global financial markets appeared slightly stronger on Tuesday, with most stock markets and long-term interest rates pulling back a little from recent falls. But surveys from the US, the eurozone and the UK confirmed that business and consumer confidence had been badly dented in the run-up to the war.
The widely watched Institute of Supply Management survey suggested that US manufacturing stalled in March, when its activity index fell to its lowest since the aftermath of the September 2001 terrorist attacks. The slide to 46.2 in March from 50.5 in February was sharper than most economists had expected.
The Reuters/NTC purchasing managers' survey for eurozone manufacturers showed the index sliding by a higher-than- expected 1.7 points to 48.4.
In France, the Insee survey of household confidence in March showed consumers at their gloomiest since 1996, when the country was disrupted by public sector strikes.
In the UK, the regular Reuters purchasing managers' survey suggested the sector was beginning to contract again.
The surveys released on Tuesday were largely compiled before the war, leaving open whether subsequent mood swings in financial markets had been echoed among businesses and consumers.
Additional reporting by Peronet Despeignes, Robert Graham, Haig Simonian, Lydia Adetunji
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April 02, 2003
Q&A
The significance of April 4
Q: Inasmuch as I am a slow learner, I would appreciate you explaining to me again, in the simplest terms possible, the significance of April 4, 2003, and specifically what will constitute favourable news for gold bulls on the one hand, and unfavourable on the other.
Thanks for a great seminar in Phoenix.
A: To simplify the implication inherent in the date of April 4th, I feel a picture will exceed words. (My apologies for the quality of the chart). However, some words are required as well.
April 4th represents the bottom of a period of time in which gold has had a habit of constructing highs and lows over the past eight years. That does not mean that gold must bottom on April 4th but it means that there is a high probability that it will.
We have other tools to know if gold in fact does make that turn. If you would like to learn how to do this go to the book, "Technical Analysis of Stock Trends" by Edwards & Magee. Read the chapters on "Trend lines" and "Support and Resistance."
After you have read these two chapters try to apply what you have learned to a chart on gold. Fax that chart to me and I will help you learn how to read the language of gold. It is quite simple.
April 2, 2003
Did Gold Fall Or Was it Helped Lower?
The answer to that question is a no-brainer of world-class proportions. We warned our Gold Community readers that the Cartel of Common Interest, the short sellers in gold and gold shares, would make one more attempt to hold gold back from the rise that is directly ahead of us this week.
So it is no surprise to us that gold gapped down this morning, coming in lower from yesterday's attempts at $338. Well, welcome to Wednesday's action in gold. Today's use of the media and abuse of common sense hinges on the assumption that as US forces approach Baghdad the Iraq war is nearly over.
The made for television fabrications from Command Central have reached almost biblical proportions. The generals are learning to lie as well as politicians. Sure, spreading disinformation is a requirement in war but it seems so natural to our news services now that I question if anyone in Washington or on CNN can tell the difference between truth and fiction.
The jet aircraft that was reported to have sick passengers from Asia and was offloaded by the CDC personnel is reported to be a false alarm. Was it?
Every downed aircraft in the Iraq war was lost due to friendly fire or mechanical problems. Early surrenders of Iraqi troops were numerous. They were not!
Shipping Geraldo Rivera out of Iraq might well have been a service to all mankind, but firing Peter Arnett was somewhat over the top. Certainly he might have expressed views that were different from the mainstream press, but our country was founded on the inherent right of all people to express their views without fear of retribution.
The campaign is nothing like we've been hearing on the major networks and so far the expectations created for a quick and decisive victory have not been realized.
That does not mean that our overall objectives won't be achieved in time. That will be seen when our forces finally secure Baghdad. However, I do not believe that the long arm of Washington's political imperative will allow our forces to fight this war as it must be fought. No, I doubt anyone in America today could handle seeing "Saving Private Ryan" on CNN or in real time. That would be acceptable only in defense of the homeland.
While the Talking Heads were projecting instant victory upon arrival in Baghdad look at what Mr. Friedman has served up to his subscribers at www.us-iraqwar.com:
"1221 GMT - U.S. and British troops likely will take up to two months to gain control of Baghdad, but it is much harder to forecast when the war with Iraq will end, according to a Reuters poll of 25 defense and Middle East experts published on April 2. The experts gave estimates ranging from two weeks to six months for coalition forces to capture the Iraqi capital, with most forecasts in the four- to eight-week range."
So were the networks forthcoming with us or playing with our heads? I bought June Comex gold today as $328.60 and had bids on the books down to $323 in case the Cartel got nuts. I am adding every day this week through the Friday close because I believe we have a gold price bottom to this recent decline.
The following two items, presented chronologically, point to growing Russian dissatisfaction with American and coalition involvement in Iraq, the long term implications of which are disturbing:
"1105 GMT - Russia's Foreign Ministry on April 2 protested against U.S. air strikes that allegedly targeted a Baghdad neighborhood where the Russian Embassy is located. U.S. Ambassador Alexander Vershbow was called to the ministry in Moscow to hear a protest, and Russia's ambassador to the United States, Yuri Ushakov, delivered a similar protest to the U.S. State Department in Washington."
What followed this announcement, however, proved to be the real news:
"1240 GMT - Russia may send one of two fleets planning exercises in the Indian Ocean to the Arabian Sea, a Russian daily, Nezavisimaya Gazeta, reported April 2. It's not clear how many ships might enter the Arabian Sea, but the Russian newspaper, which is known for close ties with military officials, reported that the commander of Russia's Black Sea fleet, Yevgeny Orlov, traveled to Moscow recently to receive orders regarding the mission."
Do you honestly think that Admiral Orlov is on his way to assist the US war effort? No, he is not! It's amazing that the media has not picked up this story within the context of what is happening in the Gulf at this very moment.
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April 1, 2003
The Economic Impact of SARS
We have blamed bad business on deep discounts and zero interest rate financing programs that have saturated the market with new cars. Add to this, the cold winter, relentless snow storms and now the war in Iraq. In truth, business was just bad and rarely for the reasons promoted by the talking heads on our major networks.
Well, now something even more sinister is sneaking up on us that in fact could deliver a knock-out punch to economic activity worldwide. Few of us have ever studied public reaction to epidemics historically. In fact, the last major flu epidemic with significant human consequences occurred in 1918 as the war in Europe was coming to its sad conclusion.
If you have a government that seeks to expand its powers over the population, history suggests that the populace will happily deliver individual rights to central governments in the greatest of all crises - the enemy that you cannot see - an epidemic.
Already, quarantines are in place at major hospitals in the Toronto area and elsewhere in Canada which boasts one of the most modern health care systems in the world. Today, an aircraft landing in California was prevented from unloading infected passengers. Historically, quarantine methods are at best a Band-Aid solution to make citizens feel something is being done to protect them when in fact there is nothing that can be done.
SARS (Severe Acute Respiratory Syndrome) presents a greater challenge to world economies than the imagined excuses being given for poor performance by most reporting public companies - you guessed it - the economic downturn due to the Iraq War. Malls will be empty. Restaurants will be empty. Movies & shows will be empty. Vacations will be canceled.
Air traffic will grind to a halt because one of the best ways to get infected is from re-circulated air within a pressurized high altitude aircraft. Conferences will be canceled. Non-computerized exchanges will be closed. Armies that show signs of SARS infection will start to fear their fellow comrades in arms.
The economic impact of SARS will, if it spreads, not just hurt economies. It will devastate economies for undetermined periods of time thereby exploding the US Federal Budget Deficit and the Current Account Deficit, driving the dollar into a free fall from which only gold can save it.
Maybe!
Read the history of epidemics and then consider the economic consequences of epidemics. Chairman Greenspan and Governor Bernanke have another challenge that no one on this planet expected to occur just at the absolute wrong time. Both of these men will have to man the electronic printing presses 24 hours a day eight days a week to produce the liquidity that a virus will inject into the world of business. The doctor who identified this disease has died of it.
There is a catalog that comes to me of ex-USSR Soviet military equipment. This catalog had offered old USSR space suits for $3,000. I wondered who in the world would pay that money for something they could not use. Well, if you are thinking of commuting into a major US city, assuming SARS gets there first and no cure is found, then the space suit might come in handy. Personally, I live on a farm in the hinterland of Connecticut that produces its own electricity and water.
The town population is approximately 2,900 and less than half of them really live here. My TV comes off satellite as all we have locally are two channels of snow. (It's much the same looking out my windows these days). My cherished Corvette is shaking in the garage and the engine isn't even running.
My kids thought all car radios had static and Mr. Yahodi really lived under bridges and turned your radio off when you went over them. Powers fails regularly and if it rains my phones are iffy. I can get a cell phone to work in the African bush but not in my town. If you want reliable communications from my town you need a satellite phone. With all that's going on these days, for some strange reason I think I will just stay here.
http://www.jsmineset.com/s/Home.asp
The world is certainly wired for sound. It is so organized now that the spin-city in everything no longer even tries to hide itself.
The last five days in gold have been so blatant and the confidence level of the price manipulators has risen so high that they no longer seem interested in hiding their evil deeds. In a sense that is easy to understand since the jettisoning of the GATA suit which based its gold market fiddling claims on the incredulous repetition of gold price anomalies.
The judge preferred a smoking gun in the form of a written plan by the Cartel or a witness to a cabal-type conversation. Well the judge apparently didn't know much about market. GATA proof to a trader was a smoking gun because prices may trend but they rarely if ever on their own do what you can see by looking at the lower opening, then trend up with a dress down close that has taken place over the last five days.
This simply does not happen in a normal marketplace. Each day the opening is sold after selling down the overnight market. Thereafter, the positive interest is not opposed significantly until just before the close. The close is market down. This is a trading pattern that points to the same people with the same intention working together.
I believe and history documents that:
1/ Markets are bigger than any pool players in history.
2/ No manipulation has ever succeeded that pushed against a primary bull or bear move.
Therefore, I conclude for both proprietary technical reasons and fundamental reasons that short of an immediate surrender by Saddam Hussein and Sons Inc., the gold shorts are pressing their luck motivated by egos larger that the nominal value of all derivatives.
Even if the war ended tomorrow, it would only serve to unleash an emotional market interlude before economics would reestablish the same negative trend in the dollar and positive trend in gold.
Is there A political Influence in the War?
The lesson of Vietnam and Korea is that generals tend to be successful and efficient purveyors of war but are usually not political entities. Although there is a first time for everything, the real fight starts now that our troops have arrived on the outskirts of Baghdad. The following Reuters article speaks to the possible political influence in this campaign which is certain to reach a critical stage in the coming weeks:
Rumsfeld Ignored Pentagon Advice on Iraq
Reuters
Saturday, March 29
WASHINGTON (Reuters) - Defense Secretary Donald Rumsfeld repeatedly rejected advice from Pentagon planners that substantially more troops and armor would be needed to fight a war in Iraq, New Yorker Magazine reported.
In an article for its April 7 edition, which goes on sale on Monday, the weekly said Rumsfeld insisted at least six times in the run-up to the conflict that the proposed number of ground troops be sharply reduced and got his way.
"He thought he knew better. He was the decision-maker at every turn," the article quoted an unidentified senior Pentagon planner as saying. "This is the mess Rummy put himself in because he didn't want a heavy footprint on the ground."
It also said Rumsfeld had overruled advice from war commander Gen. Tommy Franks to delay the invasion until troops denied access through Turkey could be brought in by another route and miscalculated the level of Iraqi resistance.
"They've got no resources. He was so focused on proving his point -- that the Iraqis were going to fall apart," the article, by veteran journalist Seymour Hersh, cited an unnamed former high-level intelligence official as saying.
A spokesman at the Pentagon declined to comment on the article.
Rumsfeld is known to have a difficult relationship with the Army's upper echelons while he commands strong loyalty from U.S. special operations forces, a key component in the war.
He has insisted the invasion has made good progress since it was launched 10 days ago, with some ground troops 50 miles from the capital, despite unexpected guerrilla-style attacks on long supply lines from Kuwait.
Hersh, however, quoted the former intelligence official as saying the war was now a stalemate.
Much of the supply of Tomahawk cruise missiles has been expended, aircraft carriers were going to run out of precision guided bombs and there were serious maintenance problems with tanks, armored vehicles and other equipment, the article said.
"The only hope is that they can hold out until reinforcements arrive," the former official said.
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Here is today's Intel Report which will hopefully give you some perspective on what is really going on in Iraq. As you read this, you will see why subscribing to an Intel service of merit has certain important advantages over taking all your information from CNN and financial TV. Please review this information carefully and compare it to what you're seeing in the mainstream electronic and print media:
Republican Guard Units Still May Pose Threat
www.us-iraqwar.com
Apr 03, 2003
Summary
U.S. forces have pressed on in their advance on Baghdad, passing the cities of Karbala and An Najaf. They reportedly have bypassed large numbers of scattered or isolated Republican Guard forces as well. Whether these Iraqi troops pose a continued threat to U.S. forces will depend on the accuracy of U.S. intelligence regarding their condition, resilience of Iraqi command and control, the training they have received in small unit action and the continued availability of coalition air cover.
Analysis
Over the past 24 hours, the U.S. military has resumed its advance on Baghdad, and some lead units reportedly have probed to within 15 miles of the southern outskirts of the capital. The advance followed substantial bombardment of up to five Republican Guard units south of Baghdad. Iraqi units have put up limited resistance to the U.S. advance, and most of the surviving Republican Guard troops have been dispersed or bypassed. The question now is whether those bypassed units can regroup and/or carry out attacks behind U.S. front lines.
U.S. aircraft and helicopters have demolished large numbers of Republican Guard armor and equipment south of Baghdad, reportedly even reducing the sortie rate by AH-64 Apache attack helicopters on April 2 for want of targets. Air strikes by strategic bombers, tactical fighters and helicopters have effectively destroyed two Republican Guard divisions, according to CENTCOM: the 2nd Al Medina Armored Division near Karbala and the 5th Baghdad Mechanized Infantry Division near Al Kut. Pentagon officials were quick to clarify that the two divisions have not been eliminated, but rather that their combat effectiveness has been reduced to near zero.
As U.S. troops move past these and other Republican Guard units, the first question is, how accurate is the U.S. bomb damage assessment? When U.S. units began to probe into territory believed to be held by Republican Guards, the lack of resistance they encountered could mean the units had been destroyed, or that they were intact but declining combat, or that they had withdrawn, or that they were never there in the first place.
Sources in the German intelligence community report that the four Republican Guard divisions that reportedly moved south a few days ago in fact remained in their positions on the outskirts of Baghdad and Tikrit. These would include the 7th Adnan Mechanized Infantry Division that coalition aircraft reportedly attacked as the unit redeployed from Tikrit to the northwestern outskirts of Baghdad. U.S. sources categorically reject this claim and confirm broadcast reports of the Adnan division's movement.
The other three units would be the 1st Hammurabi and 6th Nebuchadnezzar Mechanized Infantry Divisions, which reportedly reinforced the Al Medina Division near Karbala and the Al Nedaa Armored Division, which Iraqi opposition sources repeatedly claimed had advanced to reinforce Al Kut. U.S. troops reportedly have captured Iraqi fighters and engaged equipment around Karbala bearing the insignia of the Nebuchadnezzar Division, which contradicts German claims. However, it is possible that only small detachments of the division were involved, or that the Iraqi military has begun to manipulate uniforms and markings to confuse coalition intelligence regarding the nature of Iraqi deployments.
German intelligence sources also claim that only half of the Al Medina Division remained in Karbala -- the 14th Mechanized Brigade and an armor brigade, possibly the 2nd. The remainder of the division is reportedly in the outskirts of Baghdad. The sources claim that the Republican Guard units in Karbala have suffered few losses due to coalition bombardments, because they are entrenched within the city itself. Coalition bombing and shelling focused on empty positions or decoys outside the city.
Also, U.S. and German sources concur that there was no ground battle in Karbala. Rather, units in Karbala traded fire with U.S. 3rd Infantry Division for three hours as it swept around the city toward the Euphrates River bridge at Al Musayyib. To the best of our knowledge, Karbala remains encircled by a brigade of the 3rd Infantry Division, but it has not been swept of Iraqi forces. The relative accuracy of the U.S. and German intelligence will not be tested until the Iraqi units in Karbala surrender or U.S. forces move into the city.
Regarding action further to the east, Russian military intelligence sources report that there was no battle between the Republican Guard Baghdad Division and U.S. Marines at Al Kut, not because the division had been destroyed, but because it feared destruction by U.S. airpower and therefore remained entrenched in the city. U.S. officials have indicated that Marines did not take Al Kut or the bridges in the city, but rather took a bridge further to the west, probably at An Numaniyah.
The Russian sources report the Baghdad Division did suffer some losses due to heavy bombing, but was not destroyed and remains combat-capable. Moreover, it is possible that only a portion of the division is entrenched in Al Kut, while others have been deployed elsewhere, perhaps Baghdad. Though not inherently confirming anything, it is interesting to note that the Baghdad Division commander appeared on Iraqi television April 2 to deny his unit had been destroyed.
Russian and German sources are only as good as their collection methods and their interpretation of the data. However, U.S. sources are affected by similar constraints. The course of battle will determine which, if any, were correct. However, there is clearly room for some question regarding the deployment and status of the Iraqi Republican Guard.
U.S. sources report that the Republican Guard units south of Baghdad have declined to engage U.S. troops and are engaged in a strategic withdrawal into the outskirts of Baghdad, ahead of advancing U.S. troops. Iraqi army units reportedly are reinforcing them at the same time. Coalition airpower is concentrating its attacks on these retreating units and their reinforcements, with the primary goal of preventing their reaching cover in the city.
U.S. forces reportedly are racing toward Baghdad, despite having planned for a slow, methodical advance. Given public expressions of extreme caution from CENTCOM, it is unlikely that they are merely advancing with blind enthusiasm upon meeting little resistance. Rather, they may be trying to get between Baghdad and the retreating Republican Guard.
Assuming for the moment that the U.S. sources are 100 percent accurate, and two divisions of the Republican Guard have been shattered, and U.S. troops are bypassing scattered, isolated, and retreating units, the next question is whether they will pose a threat behind U.S. lines. There are three factors that will affect this -- command and control, training and U.S. air superiority.
Stratfor's earlier report suggesting that degradation in the Iraqi television signal could indicate a deeper problem for Iraqi command and control was apparently premature. Iraqi television continues to recover from air strikes, though not as quickly as earlier in the war. And U.S. sources report that, though likewise degraded, Iraqi command and control remains intact. Baghdad continues to retain contact with Iraqi units outside the capital and, as the ring draws tighter, telecommunications will become less important for sustaining defense.
Training will come into play for units caught behind coalition lines and out of communication with Baghdad. Fedayeen forces have demonstrated their tenacity at harassing small unit actions. Some of those identified as Fedayeen -- for example, those in Umm Qasr -- later were identified as company-level or smaller Republican Guard units. It seems, therefore, that the Republican Guard has been trained in isolated small unit operations, rather than the brigade- and division-level maneuver they were formerly known to prefer. Interestingly, it appears that resistance along the Euphrates has been waged by battalion-sized Iraqi army units, suggesting that at least some of the training has trickled down to them.
U.S. troops nearing Baghdad are in a precarious position. If the bypassed Republican Guard units are motivated and trained to carry out independent counterattacks behind U.S. lines, they could threaten already strained supply lines.
The United States does not have many troops to spare at this time for securing rear areas and rounding up Iraqi soldiers. Already, the 101st Airborne Division is tied down securing An Najaf and the surrounding areas, while the 82nd Airborne Division's 2nd Brigade Combat Team is fighting around As Samawah. And latest reports indicate the 15th Marine Expeditionary Unit is on cleanup duty in An Nasiriyah. This is a substantial portion of U.S. combat forces devoted to securing supply lines. The pressure will ease when elements of the 4th Infantry Division or other units entering the theater begin deploying into Iraq, but for the next few days there is a risk of supply interdiction.
That leaves two issues: Iraqi motivation to counterattack and the availability of U.S. airpower to destroy any Iraqi troops who dare leave defensive positions. U.S. forces have thwarted two Iraqi attempts to attack lead elements of the 3rd Infantry Division at the Al Musayyib bridgehead. In one instance, the Iraqis were able to plant charges that damaged the bridge. At least one Iraqi tank was involved in the counterattacks. These Iraqi attacks answer the question of Iraqi motivation. At least some units are willing to risk air strikes and attack.
It also raises some questions about U.S. tactical intelligence and airpower on the outskirts of Baghdad. Iraqis were able to approach the bridge twice, and U.S. forces resorted to tank and artillery to repel the attacks. There was no explanation of the absence of U.S. aircraft at the two engagements. U.S. forces are now coming into an area that is highly urbanized and still protected by substantial air defenses. Tracking the movements of small Iraqi units will be difficult. Interdicting them will be more difficult.
CENTCOM must now ensure that ongoing air strikes prevent Republican Guard units from joining Special Republican Guard units defending Baghdad, or lead U.S. units may need to pull back and await the major reinforcements still pouring into Kuwait.
Source: www.stratfor.com
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April 2, 2003
To understand markets you must understand the thinking processes that are occurring in Washington amongst those that make the rules of engagement - be it economic or military. (Is there any difference)? Many times, listening is better than speaking. So in that mode this article is important reading for the Gold community.
How Will the Iraq War Change Global Nonproliferation Strategies?
"Arms Control Today"
April 01, 2003
Trying to determine what the Iraq war will mean for global nonproliferation regimes is difficult. The war is less than a month old, and the many uncertainties that remain make it hard to render an assessment with sufficient confidence.
Even within the time that it takes to write these words and print them, dramatic events might occur that change this article's tentative conclusions. As Yogi Berra said, "It's tough to make predictions, especially about the future."
Nonetheless, even at this point, it is useful to examine how leading policy-makers in the administration would like the nonproliferation regimes to change and to outline the key questions we must answer to forge a new strategy.
From Eliminating Weapons to Regimes
If President George W. Bush's vision of a quick military victory, a benign and untroubled occupation, and the quick construction of a democratic Iraq is correct, the rules and structures of the international system might be further rewritten in favor of a U.S.-centric system.
But even if the war goes badly and the occupation is difficult, many in the Bush administration can be expected to push on boldly, lest they lose momentum. In Washington, the executive branch almost always sets the agenda, and the Bush administration is particularly good at this.
Still, it is a bit erroneous to talk about "the administration" as a single unit. Until the White House makes final decisions, there is fierce contention among various groups within the government on national security issues. Most observers see three main factions: the moderate internationalists, led by Secretary of State Colin Powell; the national conservatives, sometimes epitomized by Secretary of Defense Donald Rumsfeld; and the aggressive neoconservatives, led by Deputy Secretary of Defense Paul Wolfowitz.
Mark Danner of The New Yorker characterizes what I call the moderates as the pragmatists in line with the policies of the administration of President George H. W. Bush. "These are so-called realists. They believe that foreign policy is the patient management of alliances, competitions and, to some extent, conflict."
The neoconservatives, on the other hand, "take a somewhat ideological and almost evangelical view of the world," says Danner. They believe that American power "should be used to change the world, not simply to manage it." Finally, the traditional conservatives have little use for international organizations and would not favor overseas deployments unless vital U.S. interests were threatened.
Unless the war turns into a quagmire, the neoconservatives can be expected to continue their dominance of the policy apparatus and to press their carefully constructed agenda. That consists primarily of a "permanent regime change" policy focused on the Middle East.
"There is tremendous potential to transform the region," says Richard Perle, a prominent neoconservative who recently resigned as chairman of the Defense Policy Board. "If a tyrant like Saddam [Hussein] can be brought down, others are going to begin to think...and act to bring down the tyrants that are afflicting them."
There might be less unity among neoconservatives after the war, however, as some might want to turn their sights on Iran, others on Syria, and still others might argue for action against North Korea. Traditional conservatives who support the Iraq war might split from the neoconservatives' radical and expensive agenda, preferring to consolidate gains and start bringing troops home.
They might find that they have a lot more in common with moderate Republicans concerned about deficits and homeland defense than with neoconservative ambitions for global transformation.
Still, the neoconservatives are firmly established in the administration, and their ideas have captured the minds of the president and his key advisers. Most now see this as a pivotal moment in world history, comparing it to the years 1945-1947 when a small group in the White House led the construction of the institutions that shaped the Western world throughout the Cold War, including the United Nations, NATO, the World Bank, the International Monetary Fund, and the development of the doctrine of containment.
National security adviser Condoleezza Rice told Nicholas Lemann of The New Yorker that September 11 "has started shifting the tectonic plates in international politics. And it's important to try to seize on that and position American interests and institutions and all of that before they harden again."
These institutions are now outdated, according to some, as is the central principle that has guided U.S. nonproliferation policy since World War II. For more than 40 years, there has been a bipartisan consensus that focused on eliminating nuclear, biological, and chemical weapons. The weapons themselves were the problem: as long as they existed, they would be used.
"The weapons of war must be abolished before they abolish us, " President John F. Kennedy said in September 1961. "The mere existence of modern weapons...is a source of horror and discord and distrust." Thus, Kennedy started, Lyndon Johnson completed, and Richard Nixon signed the nuclear Nonproliferation Treaty (NPT) that promised the elimination of nuclear weapons.
Nixon unilaterally ended the U.S. biological weapons program in 1969 and negotiated the Biological Weapons Convention that bans these deadly arsenals. George H. W. Bush in 1993 signed the Chemical Weapons Convention (CWC) that similarly bans chemical weapons, and President Bill Clinton won its ratification in 1997.
Since the end of the Cold War, there has been general agreement that the most serious threat to the national security of the United States "is posed by the proliferation of nuclear, biological and chemical weapons and their means of delivery," as Clinton put it in November 1998.
But George W. Bush has changed that formula. Now, as he said in his 2003 State of the Union address, "The gravest danger facing America and the world is outlaw regimes that seek and possess nuclear, chemical and biological weapons." (Emphasis added.)
The new clause makes all the difference. The focus has shifted from eliminating weapons to eliminating certain regimes that have those weapons. It is a strategy of picking and choosing good guys and bad guys. Possession of these weapons by allied or friendly regimes is tolerated, even encouraged, while governments designated as threats must not only disarm, but be deposed. In this strategy, universal norms and treaties are a hindrance to U.S. freedom of action, not strategic levers in the battle against nonproliferation.
Burning the Bridges We're On
To neoconservatives, the construction of new institutions begins with the destruction of the old. They say the failure of George W. Bush to win UN Security Council support for the war shows that the United Nations itself must go. Columnist George Will writes, "The United Nations is not a good idea badly implemented, it is a bad idea." The March 17 cover of the Weekly Standard is devoted to "Present at the Destruction: The United Nations Implodes." Inside, contributing editor David Gelernter says the United Nations "today is an impediment to world safety. It should be replaced....
The core of the new organization-call it the Big Three-would be a Britain-Russia-America triumvirate." In another example of neoconservative thinking, Charles Krauthammer, America's most passionate unilateralist, tells the president in the Washington Post simply to "walk away."
Such extreme views are now commonplace in neoconservative circles. Yet, many noted foreign policy experts find it difficult to take this challenge seriously. "What is most striking is just how relevant the United Nations has become," argues Anne-Marie Slaughter, dean of Princeton's Woodrow Wilson School of Public and International Affairs. "And contrary to all the bluster on both sides of the Atlantic, that will continue to be true."
Unfortunately, Slaughter appears to be wrong. Her mistake, however, is understandable. In its public statements, the Bush administration has sought to minimize opposition and please both the neoconservatives and the mainstream foreign policy establishment. The best example of this schizophrenic approach is the Bush administration's September 2002 National Security Strategy. At one point, the document appeals to more traditional thinkers:
We are also guided by the conviction that no nation can build a safer, better world alone. Alliances and multilateral institutions can multiply the strength of freedom-loving nations. The United States is committed to lasting institutions like the United Nations, the World Trade Organization, the Organization of American States and NATO as well as other long-standing alliances.
The National Security Strategy, however, cut and pasted verbal concessions to outsiders and administration moderates alongside more hard-line views. Indeed, we can now see that the document drafters were willing to put in multilateral boilerplate as long as they could get official blessing for the radical new concepts of pre-emption and unilateral action. They had learned from bitter experience: These ideas were put forward by Deputy Secretary of Defense Paul Wolfowitz a decade ago in the first Bush administration but were harshly rejected. Given another chance, the neoconservatives have sought to advance their agenda with stealth tactics.
The drive to war in Iraq quickly sacrificed multilateral principles in favor of the more deeply felt new doctrine, also in the strategy: "We will not hesitate to act alone" and, "if necessary, act preemptively." In this view, there is no need for permanent alliances or permanent multilateral organizations. Indeed, these are seen as impediments to U.S. action, unnecessary fetters on American power. Why should the greatest nation on Earth be forced to seek the approval of Cameroon for its vital national security policies?
Similarly, NATO is now treated as a tool kit for the administration. When they see something they need, they take it; otherwise, it is ignored. As Wolfowitz noted in his draft 1992 defense policy guidance, the United States "should expect future coalitions to be ad hoc assemblies" that might not outlive a particular crisis. "The United States," he argued, "should be postured to act independently when collective action cannot be orchestrated."
The End of UN Inspections?
The idea that the United States would cast aside key international institutions that we ourselves created and that are so integral to the idea of collective security might seem incomprehensible. Surely, the United Nation's work on hunger, women, children, and other causes is too valuable to lose? But even if the more extreme views in the administration are moderated and the United States continues to cooperate with the United Nations, the attacks on the inspections process in Iraq might have fatally weakened all international inspection operations.
In order to press the case that war was the only way to save the world from Saddam Hussein, the administration had to diminish, defile, and dismiss inspection efforts. Most of the fire was focused on the UN Monitoring, Verification, and Inspection Commission (UNMOVIC) and its leader Hans Blix, but if anything, the International Atomic Energy Agency is hated more, particularly for its repeated rebuttal of administration charges that Iraq had an active nuclear weapons program.
If the administration did not trust UN inspectors in Iraq, why should it trust them in Iran, North Korea, or any other state? But what could take their place? After all, the United States depends on UN inspections to monitor compliance with key nuclear, chemical, and biological weapons treaties.
Post-war Iraq might provide an alternative model of inspections more amenable to the neoconservatives' new doctrines. Senior national security aides have been working on the concept of U.S.-based disarmament teams for months. Former UN Special Commission (UNSCOM) weapons inspectors have been drawn into this new disarmament apparatus by the Pentagon, alongside intelligence analysts and veterans from the Cooperative Threat Reduction program, which helps secure and dismantle weapons of mass destruction in the former Soviet Union. "Mobile Exploitation Teams" of inspectors are in Iraq equipped with the latest detection technologies, including:
Chemical Agent Monitors, hand-held devices for rapid detection of chemical molecules. Portable Isotopic Neutron Spectroscopy, which uses a neutron beam to identify the contents of sealed containers. Handheld Advanced Nucleic Acid Analyzers, which can identify specific sequences of DNA in biological samples (such as those for anthrax) within 15 minutes.
Laser-Induced Breakdown Spectroscopy, which can precisely identify materials from a distance. All the plans to find and eliminate Iraqi arms were drawn up independently of UN weapons inspections. They might prove an attractive alternative to chronically underfunded and geographically balanced international inspection teams. These would be under complete U.S. control and could be used in a bilateral process between the United States and the offending country, much as the U.S.-Soviet inspections were conducted during the Cold War, although these would be strictly one-way.
Rebuilding the Regime
Three excellent articles in this and the March 2003 issues of Arms Control Today address the key issues involved with the administration's policies toward the use of nuclear weapons, the salami tactics being used to bring us closer to resuming testing of new nuclear weapons, and the anemic support provided for nuclear nonproliferation efforts.
Representative John Spratt (D-SC) warns in one of these pieces of "a dangerous drift" in U.S. policy. "My greatest concern is that some in the administration and in Congress seem to think that the United States can move the world in one direction while Washington moves in another-that we can continue to prevail on other countries not to develop nuclear weapons while we develop new tactical applications for such weapons and possibly resume nuclear testing."
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April 2nd 2003:
The stock market rallies over 200 points on the assumption that US forces have reached the red line around Baghdad. On the airwaves this geographically insignificant event is being portrayed as the end to the Iraq conflict, a return to world economic strength and exuberance and the end of every single calamity known to mankind.
Here's an example from the International Herald Tribune of how markets ignore important news stories that have negative implications for the increasingly tenuous global economy. Following that is a story from FT.Com (Financial Times) commenting about the perilous condition of the global economy.
North Korean threat spirals toward disaster
A greater danger
By Alan D. Romberg and Michael D. Swaine (IHT)
Thursday, March 27, 2003
WASHINGTON: While the world's attention is riveted on Iraq, the United States cannot afford to ignore another brewing crisis with potentially even greater consequences. The Bush administration's approach to North Korea is quickly moving from the inexplicable to the irresponsible. If it continues on the current course, America could soon find itself confronted with the unpalatable choice between a nuclear-armed North Korea and war.
Washington is confusing the reality that this is an international problem with the practicality that the initial impetus toward resolution must come in the form of a U.S.-North Korean dialogue. This confusion can only be understood in terms of President George W. Bush's personal animus toward the North Korean leader, Kim Jong Il, and Bush's willingness to follow the lead of those who seek not a solution but North Korea's collapse.
Pyongyang's decision to develop nuclear weapons by alternative means was taken years before this administration assumed office and responsibility for this deceit lies squarely with the North. But the recent spiraling crisis also has a lot to do with Bush's deeply flawed North Korea policy since he took office and with the U.S. refusal to talk directly with the North since October.
While the State Department searches fruitlessly for a way to overcome the North's objections and open multilateral discussions with Pyongyang, others in the administration argue over how best to compel the North to abandon its nuclear program, believing that Pyongyang is vulnerable to pressure and that, in the end, this will contribute to the only reliable solution: regime change. Meanwhile, Pyongyang continues to raise the stakes.
We do not know whether Pyongyang is committed to building a nuclear weapons capability regardless of any security assurances from Washington or if - as it says - it would give up its nuclear ambitions in return for such assurances. But if Washington is unwilling to speak directly with Pyongyang to find out which is true - and is also unwilling to tolerate a nuclear-armed North Korea - then the current crisis is likely to worsen over the next several weeks as Pyongyang continues to ratchet up the pressure for bilateral talks through increasingly provocative nuclear-related activities or by breaking its moratorium on long-range missile launches.
Such further escalation could significantly increase pressure within the administration for threats of a preemptive strike, either to compel China, South Korea, Russia and Japan to support economic sanctions and interdiction of North Korean military exports as a less onerous alternative, or as a supposedly viable military means of preventing Pyongyang from creating significant amounts of nuclear weapons or exportable nuclear weapons-grade material.
Such approaches assume that North Korea will eventually retreat rather than risk annihilation. This is a very dangerous assumption. Either preemptively or as a first response to a U.S. strike, the North could well decide to launch its own strike against U.S. forces or facilities in South Korea, hoping to split the U.S.-South Korean alliance and mobilize world opinion against any further escalation on the part of the United States. Even if only part of this came to pass - splitting the U.S.-South Korean alliance, for example - the consequences for U.S. regional security interests would be immeasurable.
Maybe the North is determined to continue on the nuclear path, and maybe some of these consequences cannot be avoided. But rather than risk them needlessly, it makes more sense for Washington to find out by opening talks with North Korea - soon.
The administration seems to resist talking with the North precisely because the North demands to talk with it. This is self-defeating. Is the administration so insecure that it thinks sitting with the North will suddenly make it Pyongyang's puppet? Or does it somehow equate sitting at the table with surrendering to the North's substantive demands?
Surely North Korea would be pleased it had brought the mighty United States to the table, but it would have no illusions about who was the strong power and who the weak. Moreover, the exercise of American leadership by showing pragmatic flexibility - not weakness - would earn respect rather than disdain from others. And if harsher measures were later needed, a foundation would have been laid, with international support made more likely.
The administration is right that this is an international problem, and in the end it requires participation and commitment from many countries. But the situation could explode out of control if Washington doesn't demonstrate leadership.
Alan D. Romberg is a senior associate at the Henry L. Stimson Center. Michael D. Swaine is senior associate at the Carnegie Endowment for International Peace and co-director of its China program.
Top financiers urge defence of world economy
By Alan Beattie in Washington
FT.com site; Apr 01, 2003
The world's top economic policymakers should promise now to take swift and concerted action - such as cutting interest rates - if the global economy weakens further, the leading association of financial institutions said on Tuesday.
The warning from the Institute of International Finance, a private sector body representing banks, fund managers and finance houses, came as a run of poor figures showed weakening confidence across the world's large economies in the period before the war with Iraq.
The IIF, issuing its advice to ministers before next week's meetings of the International Monetary Fund, said the economic fragility went beyond the transitory effect of the war.
"It would be unfortunate if ministers came to Washington believing that an early end to the war would remove the need for action," said Charles Dallara, the IIF's managing director.
The Group of Seven rich countries has shied away from promising a collective plan to cope with economic weakness, saying each central bank and finance ministry should concentrate on its own economy. But the IIF said challenging times called for extraordinary measures.
"There is value sometimes in the demonstration effect of co-operative and co-ordinated action," Mr Dallara said.
The G7 should announce a bias towards monetary easing underpinned by a joint commitment to act if necessary and to flexible short-term management of fiscal policy, he said.
Global financial markets appeared slightly stronger on Tuesday, with most stock markets and long-term interest rates pulling back a little from recent falls. But surveys from the US, the eurozone and the UK confirmed that business and consumer confidence had been badly dented in the run-up to the war.
The widely watched Institute of Supply Management survey suggested that US manufacturing stalled in March, when its activity index fell to its lowest since the aftermath of the September 2001 terrorist attacks. The slide to 46.2 in March from 50.5 in February was sharper than most economists had expected.
The Reuters/NTC purchasing managers' survey for eurozone manufacturers showed the index sliding by a higher-than- expected 1.7 points to 48.4.
In France, the Insee survey of household confidence in March showed consumers at their gloomiest since 1996, when the country was disrupted by public sector strikes.
In the UK, the regular Reuters purchasing managers' survey suggested the sector was beginning to contract again.
The surveys released on Tuesday were largely compiled before the war, leaving open whether subsequent mood swings in financial markets had been echoed among businesses and consumers.
Additional reporting by Peronet Despeignes, Robert Graham, Haig Simonian, Lydia Adetunji
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April 02, 2003
Q&A
The significance of April 4
Q: Inasmuch as I am a slow learner, I would appreciate you explaining to me again, in the simplest terms possible, the significance of April 4, 2003, and specifically what will constitute favourable news for gold bulls on the one hand, and unfavourable on the other.
Thanks for a great seminar in Phoenix.
A: To simplify the implication inherent in the date of April 4th, I feel a picture will exceed words. (My apologies for the quality of the chart). However, some words are required as well.
April 4th represents the bottom of a period of time in which gold has had a habit of constructing highs and lows over the past eight years. That does not mean that gold must bottom on April 4th but it means that there is a high probability that it will.
We have other tools to know if gold in fact does make that turn. If you would like to learn how to do this go to the book, "Technical Analysis of Stock Trends" by Edwards & Magee. Read the chapters on "Trend lines" and "Support and Resistance."
After you have read these two chapters try to apply what you have learned to a chart on gold. Fax that chart to me and I will help you learn how to read the language of gold. It is quite simple.
April 2, 2003
Did Gold Fall Or Was it Helped Lower?
The answer to that question is a no-brainer of world-class proportions. We warned our Gold Community readers that the Cartel of Common Interest, the short sellers in gold and gold shares, would make one more attempt to hold gold back from the rise that is directly ahead of us this week.
So it is no surprise to us that gold gapped down this morning, coming in lower from yesterday's attempts at $338. Well, welcome to Wednesday's action in gold. Today's use of the media and abuse of common sense hinges on the assumption that as US forces approach Baghdad the Iraq war is nearly over.
The made for television fabrications from Command Central have reached almost biblical proportions. The generals are learning to lie as well as politicians. Sure, spreading disinformation is a requirement in war but it seems so natural to our news services now that I question if anyone in Washington or on CNN can tell the difference between truth and fiction.
The jet aircraft that was reported to have sick passengers from Asia and was offloaded by the CDC personnel is reported to be a false alarm. Was it?
Every downed aircraft in the Iraq war was lost due to friendly fire or mechanical problems. Early surrenders of Iraqi troops were numerous. They were not!
Shipping Geraldo Rivera out of Iraq might well have been a service to all mankind, but firing Peter Arnett was somewhat over the top. Certainly he might have expressed views that were different from the mainstream press, but our country was founded on the inherent right of all people to express their views without fear of retribution.
The campaign is nothing like we've been hearing on the major networks and so far the expectations created for a quick and decisive victory have not been realized.
That does not mean that our overall objectives won't be achieved in time. That will be seen when our forces finally secure Baghdad. However, I do not believe that the long arm of Washington's political imperative will allow our forces to fight this war as it must be fought. No, I doubt anyone in America today could handle seeing "Saving Private Ryan" on CNN or in real time. That would be acceptable only in defense of the homeland.
While the Talking Heads were projecting instant victory upon arrival in Baghdad look at what Mr. Friedman has served up to his subscribers at www.us-iraqwar.com:
"1221 GMT - U.S. and British troops likely will take up to two months to gain control of Baghdad, but it is much harder to forecast when the war with Iraq will end, according to a Reuters poll of 25 defense and Middle East experts published on April 2. The experts gave estimates ranging from two weeks to six months for coalition forces to capture the Iraqi capital, with most forecasts in the four- to eight-week range."
So were the networks forthcoming with us or playing with our heads? I bought June Comex gold today as $328.60 and had bids on the books down to $323 in case the Cartel got nuts. I am adding every day this week through the Friday close because I believe we have a gold price bottom to this recent decline.
The following two items, presented chronologically, point to growing Russian dissatisfaction with American and coalition involvement in Iraq, the long term implications of which are disturbing:
"1105 GMT - Russia's Foreign Ministry on April 2 protested against U.S. air strikes that allegedly targeted a Baghdad neighborhood where the Russian Embassy is located. U.S. Ambassador Alexander Vershbow was called to the ministry in Moscow to hear a protest, and Russia's ambassador to the United States, Yuri Ushakov, delivered a similar protest to the U.S. State Department in Washington."
What followed this announcement, however, proved to be the real news:
"1240 GMT - Russia may send one of two fleets planning exercises in the Indian Ocean to the Arabian Sea, a Russian daily, Nezavisimaya Gazeta, reported April 2. It's not clear how many ships might enter the Arabian Sea, but the Russian newspaper, which is known for close ties with military officials, reported that the commander of Russia's Black Sea fleet, Yevgeny Orlov, traveled to Moscow recently to receive orders regarding the mission."
Do you honestly think that Admiral Orlov is on his way to assist the US war effort? No, he is not! It's amazing that the media has not picked up this story within the context of what is happening in the Gulf at this very moment.
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April 1, 2003
The Economic Impact of SARS
We have blamed bad business on deep discounts and zero interest rate financing programs that have saturated the market with new cars. Add to this, the cold winter, relentless snow storms and now the war in Iraq. In truth, business was just bad and rarely for the reasons promoted by the talking heads on our major networks.
Well, now something even more sinister is sneaking up on us that in fact could deliver a knock-out punch to economic activity worldwide. Few of us have ever studied public reaction to epidemics historically. In fact, the last major flu epidemic with significant human consequences occurred in 1918 as the war in Europe was coming to its sad conclusion.
If you have a government that seeks to expand its powers over the population, history suggests that the populace will happily deliver individual rights to central governments in the greatest of all crises - the enemy that you cannot see - an epidemic.
Already, quarantines are in place at major hospitals in the Toronto area and elsewhere in Canada which boasts one of the most modern health care systems in the world. Today, an aircraft landing in California was prevented from unloading infected passengers. Historically, quarantine methods are at best a Band-Aid solution to make citizens feel something is being done to protect them when in fact there is nothing that can be done.
SARS (Severe Acute Respiratory Syndrome) presents a greater challenge to world economies than the imagined excuses being given for poor performance by most reporting public companies - you guessed it - the economic downturn due to the Iraq War. Malls will be empty. Restaurants will be empty. Movies & shows will be empty. Vacations will be canceled.
Air traffic will grind to a halt because one of the best ways to get infected is from re-circulated air within a pressurized high altitude aircraft. Conferences will be canceled. Non-computerized exchanges will be closed. Armies that show signs of SARS infection will start to fear their fellow comrades in arms.
The economic impact of SARS will, if it spreads, not just hurt economies. It will devastate economies for undetermined periods of time thereby exploding the US Federal Budget Deficit and the Current Account Deficit, driving the dollar into a free fall from which only gold can save it.
Maybe!
Read the history of epidemics and then consider the economic consequences of epidemics. Chairman Greenspan and Governor Bernanke have another challenge that no one on this planet expected to occur just at the absolute wrong time. Both of these men will have to man the electronic printing presses 24 hours a day eight days a week to produce the liquidity that a virus will inject into the world of business. The doctor who identified this disease has died of it.
There is a catalog that comes to me of ex-USSR Soviet military equipment. This catalog had offered old USSR space suits for $3,000. I wondered who in the world would pay that money for something they could not use. Well, if you are thinking of commuting into a major US city, assuming SARS gets there first and no cure is found, then the space suit might come in handy. Personally, I live on a farm in the hinterland of Connecticut that produces its own electricity and water.
The town population is approximately 2,900 and less than half of them really live here. My TV comes off satellite as all we have locally are two channels of snow. (It's much the same looking out my windows these days). My cherished Corvette is shaking in the garage and the engine isn't even running.
My kids thought all car radios had static and Mr. Yahodi really lived under bridges and turned your radio off when you went over them. Powers fails regularly and if it rains my phones are iffy. I can get a cell phone to work in the African bush but not in my town. If you want reliable communications from my town you need a satellite phone. With all that's going on these days, for some strange reason I think I will just stay here.
http://www.jsmineset.com/s/Home.asp