Understanding War

Bad guys

President Obama has just finished talking at the UN where he said the world must act to "reject the cancer of violent extremism." He also talked about the Ukraine, Ebola and the Israel / Palastinian problem but it is clear that minds are focused on clearing out ISIL.

I think many Western and Middle Eastern countries view the Arab Spring as a lucky escape. This new and very different fundamentalist threat though has them very concerned. Many players, or the way they present it, view ISIL as a pestilence that can be eradicated. I'm not so sure it will be that simple. What the papers here haven’t explained is that ISIL are well organised and well led to an extent that is little understood. They have a command structure and operate tactically on the ground to a strategic plan with strategic goals. They have many Chechen's in their leadership so any view of them being a bunch of bloodthirsty mad rag-heads is misplaced.  Its going to take a lot more than air strikes to clean this up.

Recent ISW update

Well informed reporting however is difficult for the passing observer to come by, I'm here to help. These guys, The Institute for the Study of War, send regular updates on the situation on the ground. You can also find updates on other security matters pertaining to the Middle East and Afghanistan and also some reports. The one below, A Strategy to Defeat the Islamic State, written by Kimberly Kagan, Frederick W. Kagan, and Jessica D. Lewis, is well worth a read. Knowledge dispels fear!


Syria; So What?

Camera's in Westminster; Press Are On The Start Line Then

"UK Politicians . People who don't hesitate to bomb other countries on the flimsiest of evidence but spend years worrying over whether to implement a badger cull . " Army Rumour Web Site

Our Nobel Peace Prize winning President used to think in 2007; Obama:  "The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation."  With Boehner tearing off a letter signed by 118 Congressmen, (18 Democrats), making it clear that keeping the legislature in the dark is not going to cut it - the UN Sec Gen throwing up obstacles - and now his chief ally Britain having difficulties in going straight to war..... then Barry is taking his time for good reason.  And we should be thankful for his reticence in foreign matters, even if it is indecision.  When Russia and China start sounding reasonable it is time to think again.

We are now in a phase where all involved, on all sides, will seek to confuse, confound and mislead. This is all part of the disinformation and deception campaign which of course, makes perfect tactical sense. This will inevitably create a lot of market noise and markets will ebb and flow with each wave of news, regardless of its veracity. That is, right up until we wake up to hear on the news that Tomahawks are jinking down downtown Damascus.

Surprisingly, Milliband has for once caught the national mood and suddenly become the hate figure in Westminster as a government source tells the Times, 

“No 10 and the Foreign Office think Miliband is a f****** c*** and a copper-bottomed s***. The French hate him now and he’s got no chance of building an alliance with the US Democratic Party”

Why? Here is where things stand this morning. Miliband’s threat to oppose the government means the PM doesn’t have the numbers for military action. Today’s vote will now not authorise intervention, there will have to be a second vote next week if Cameron wants war.” Guido

 

UKIP Says No To War In Syria

As one chum put it "I never like to see that snivelling millipede score a point but someone had to stop Cameron".  Labour were very close to forcing a major defeat on the Govt which resulted in the motion being moved to one of principle today; but we should expect the Mother of all Parliaments to put on a fine display of calm reason.  Open goal for UKIP as well as Nigel Farage echoes the fine words of Lord Tebbit. (Does Cameron really want to lose his summer of easy victories over Labour and the virtual disappearance of UKIP all in one fell swoop?).

" It was not the Assad government which declared war on the Syrian people. Over the years the Assads, father and son, had been authoritarians but by the standards of the Middle East they had respected minorities, not least the Christians. It would be a gross oversimplification of the very complex religious and tribal and ethnic divisions within Syria to blame the Islamists alone, but it was the more extreme Islamists who became increasingly restive at the deviant tolerance of the Assads and they who incited an undeclared war against it and Assad.

What the British and American governments have to ask themselves is who would be strengthened most by any proposed warlike action. If it were to be designed to weaken Assad, would it be a coalition of the moderates of all shades who might find a peaceful way forward, or the extremists who would more likely want to impose a far harsher regime than that of Assad before the uprising? And if despite the first wave of military action the Assad govt survived but became more & not less intransigent towards the rebels of all shades, what then?"

Of course, Sarin itself has a short shelf life once the precursor chemicals are mixed, and so Saddam theories are discountable. Production of Sarin has been a schedule 1 war crime offence since 1993....so by forensic thought, we need to find a supplier with a chemical industry that produces organophosphates...such as sheep dip. That opens out the suspects......"

 

Syrian and US Assets (Bloomberg)

For the moment the Middle East Peace Envoy Tony Bliar (oh the irony -stop it), his press spokesman of old Alistair Campbell and it seems Sam Cam are the main proponents of the school of bomb them back into the middle ages. They might want to just check the above out as this will not be a Libyan style push over.

So who does this crisis help?  Apart from the obvious Sunni/Shia  push and shove; 

1. Obama as he may get his budget/debt ceiling through as Republicans may have to back down in all decency, (ok unlikely but may help if we are being really cynical) 

2. He gets to rig the FOMC again and wave Summers through (again bit of a stretch).

3. Israel as they won't have to be quite so nice to Palestinians in upcoming talks (though I think Netanyahu is right on everyone's case regarding Iran and setting easy precedents)

4. New boy in Iran can't play the peace card to western media and look all normal and nice - which by the way they have in condemning use of chemical weapons.  Unfortunately, they went on to warn Iran will attack and "burn" Israel if Syria is attacked - expect Iran to retaliate via unconventional methods e.g kidnappings via Hezbollah etc

 5.  Erdogan, Hollande and several others with "local difficulties" can divert attention.  As Rahm Emanuel allegedly said never let a good crisis go to waste - always an opportunity.

Meanwhile the US government  are leaking news of impending action on high value targets. The message being delivered to the media and to a public fatigued by war, is that strikes will be limited to high value targets. The last thing Washington wants is regime change because that would create the need for massive resources for a nation building clean-up, involvement in another civil war, another $1tr, probably 5,000 casualties etc etc etc

Obama is due in Sweden on Sep 3rd and then Russia for the G20 on the 5th-6th, the suggestion being that he’d like it all tied up by then, ie limited strike, (Stratfor).

However, other countries are quickly putting the brakes on incl the UK, (above), who at the moment, will struggle to get a vote through parliament without the report from the UN inspectors producing verification, (its not even finished). An attack without clear legal authority would be politically damming both here and in the US and that is thus far, also subject to the UN report. As time passes, domestic opposition here is growing and coalescing across an unlikely collective across the political spectrum.

There is an outside chance that the Russians might cooperate and help remove Assad. Russia still has a large presence in Syria and removing the head but leaving the body in place, (Army, security, intelligence & government), would avoid creating a power vacuum that would allow extremists to flourish. On current form, Putin is unlikely to acquiesce but you never know. For the moment, Russia has announced it is “adjusting” its Naval group in the Med, with Interfax reporting that  they’re sending an additional anti-submarine ship and missile cruiser. Putin and Iranian president, Hassan Rouhani, announced they had a telephone conversation yesterday in which they stressed the need to settle the conflict by political and diplomatic means. Meanwhile, the French have dispatched the anti aircraft frigate Chevalier Paul “in the direction of Syria,” which probably means to Corsica for lunch given their parliamentary debate isn’t until next Wednesday. We meanwhile are sending six Tornadoes to Cyprus. Getting crowded down there though and accidents do, unfortunately happen.

Conspiracy theorists may wish to consider this disturbing article.

With regard to markets, an enormously complex geopolitical, religious and civil conflict is not going to be easier to understand over coming days. Markets will continue to trade in an erratic fashion with obvious sensitivity to headlines. Markets will however, want to believe in the “clean and limited,” strike and I tend to the feeling that shares will want to rally short term from here. Having recalibrated down in a somewhat disorderly way they now need to find their levels and re-establish their value based relationships with one another.

However, any rally would have to be quite powerful indeed to overcome the new intermediate downtrend which has taken hold. Much technical damage has been done. In S&P terms, be very cautious if we break down through 1627; above 1640-1643 would probably ignite a short bull run but the dizzy heights of the 1670-80 zone would make me very cautious again. I believe rallies will be sold and the debt ceiling talks, Asian contagion and Europe will all contribute to headwinds for equities. (Europe is the bad boy no one is pricing and crude will impact us all; crude especially is a tax on producers and consumers and spikes in the crude px have usually preceded shares being hammered, (1987, 1999-00, 2005, 2007,).

War lust antidote here.

In summary, the hopes of a clean and limited strike to deliver a bloody nose to the school ground bully but with no fall-out remains possible but is getting ever so more complicated with each day that passes. When I was a young officer cadet we were taught to ask the question “So what?” to every potential action, and then “So what?” to each outcome until we exhausted the process to come to a conclusion. So what? There are an awful lot of “So what?” strands to this wee planning and political challenge. 

Syria; Not Our Sandpit

Keep Calm..............

Syria has long been a rogue state with no love lost between us and them. It was a location for Provisional IRA training camps and a source of weapons for PIRA and indeed other terrorist organisations. Nonetheless, the logic for British involvement is flaky at best. David Cameron and William Hague cannot grandstand and assume moral ascendancy when we lack the resource to back it up. We don’t have the resource mostly because Cameron’s government followed a well established pattern over the past 22 years of squeezing Defence in favour of other departments. Currently, the UK has amongst its local assets Cyprus, but with no aircraft on it and the HMS Illustrious group.... with no aircraft. Interesting that the most vocal opponents of involvement in a barely understood conflict are current  and former people from the military and intelligence community. The most pro is apparently the Prime Minister’s wife.

That much of the current instability can be traced back to our previous interventions seems lost on our leaders. Those interventions, achieved very little indeed, especially Iraq. It’s also popular to make comparisons with Kosovo which is extremely misleading, given the huge difference in size of the countries and the ferocity of the current civil war in Syria as opposed to the low intensity conflict in the Balkans.

 

aving avoided involvement so far neither the US or the UK really want to become embroiled in an inter Arab 50 year religious civil war. Based on outrage from the most recent atrocities, (although gas has been in use in limited quantities since March), the “something must be done,” calls don’t take us anywhere beyond lobbing some cruise missiles through the ether to “teach them a lesson,” in some fantasy aspiration that only bad guys will die, (including no doubt a bunch of Russian advisors which could be awkward), and the rest will just give up. Given we haven’t even confirmed the “who,” bit never mind the “what then,” part none of this is credible. Certainly, one question that enquiring minds ought to be asking is “who had most to gain,” by murdering innocents by the foulest of means?” Assad? Really, when he was winning the civil war?

The US of course has plenty of war toys in theatre with another 2 carrier groups on route

Attacks on air defences, military installations, command and control centres and chemical storage and production plants from the air don’t in themselves remove bad regimes. That requires men on the ground. There is no appetite for that either here or in the US, (and with an Army falling to 80,000 we couldn’t do it anyway), both populations being tired of constant war for 20 years. Moreover, the scale of munitions required to destroy and suppress such assets is of a much higher magnitude than was used in Libya. Of passing note of course is that hits on chemical sites are likely to release said chemicals into the atmosphere which would create the collateral damage nightmare of all nightmares. Meanwhile, the largest supporters of the rebels, the Saudi’s, will, along with their allies, be nowhere to be seen. The British Army are not mercenaries to be used to further the geopolitical aims of a bunch of rich sheiks in a country that we don’t know, don’t much care about and have no immediate national interest which actually lies in supporting regional allies, not doing their job for them.

An assumption that we can be involved in an attack on a foreign country with no fear of retaliation is just plain stupid. Syria has always had a sophisticated security network and, potentially with the help of Iran, retaliatory action must be expected, both on the mainland UK and abroad against UK and US assets and individuals. Indeed, rumours to the effect that Hezbollah will begin taking hostages are already circulating in Beirut.

A Reuters/Ipsos poll on August 19-23rd found that only 9% of Americans support US military intervention in Syria, while 90% of British people polled opposed any intervention in Syria. While a re-elected second term US president can afford to ignore public opinion, this is not true of a British prime minister, particularly if a single western weapon goes astray.

Those most opposed to intervention then, could God forbid, end up being casualties of war....... in any of our towns or villages. Do not underestimate the violence which these people are easily capable of perpetrating. A senior figure in the Intelligence community told me three years ago that it was only a matter of time before a European city suffered a significant attack from a rogue state or terrorist group using WMD. He then, was counting the years on the fingers of one hand.

Markets, who are smarter than politicians, have figured all this out and its the uncertain path forward and unknown outcome in the Middle East which is increasing volatility across asset classes. European stress points appearing, Asian contagion and budget issues in the US don’t help an already difficult situation. That any action would likely be propped up by more QE is though, slightly irrelevant at this point. Historically, we do tend to sell off prior to conflict and then rally hard during and in its aftermath but that previously was based on quick and decisive victories. This will be anything but.

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Are You Kidding Me?

Over the pond and you may be aware that financial markets around the world are more or less in suspended animation as we wait for an agreement to be hammered out between the democrats and republicans in Washington. 

Like toddlers arguing over a favourite toy they are bickering and grandstanding while the President stands back as would a preening adolescent baby sitter.

One voter has had enough. Thing is, how much of what he describes can you easily apply to their counterparts in Westminster?

Libya; Straight Talking At Last

Back to the increasingly complex situation in Libya. Actually, it's all really rather simple; we have no business being there.

We seem to be making a habit of late on the blog,  of using Americans to make a point but in this case one Michael Scheuer makes an enormous amount of sense and underlines many points previously made here and elsewhere. A former CIA analyst, he makes mincemeat of the two airheads interviewing him on CNN but do take the time to watch, it's worth it.

(When watching, just replace every reference to President Obama with David Cameron and references to the US with the UK).