FROM GARY NORTH ON THE ARMADA SENT TO THE GULF

MEDIA BLACKOUT: THE ARMADA IN THE GULF The media have covered such recent events as the Olympics,the selection of Joe Biden as the Vice Presidential candidate forthe Democratic Party, and what John McCain is going to do aboutthe selection of the Vice President of the Republican Party. Nowthe media will focus on the national convention of the DemocraticParty. The most important news for the month of August was the factthat President Bush has quietly sent the largest armada into thePersian Gulf since the Iraq war began in 2003, when there weresix carrier groups. This is a huge number of ships to beconcentrated in one location in peacetime. This story has been completely ignored by the news media allover the West. The only coverage is from special-interestwebsites. It was only on Saturday morning, August 23, that Ilearned what was going on. I spent most of Saturday in an attempt to verify the basicstory. Some of this story is easily verifiable. Other parts ofit are circumstantial, but nevertheless compelling. I posted thestory on my site late in the afternoon. You can read the detailshere: http://www.garynorth.com/public/3927.cfm Here is the basic story. Two aircraft carrier task forces,the Abraham Lincoln and the Peleliu, are already in the PersianGulf. This is verifiable on the Websites of the carriers. Athird task force, the Iwo Jima, was dispatched to the Gulf onAugust 22. This has been verified by a naval source. Two more -- the Theodore Roosevelt and the Ronald Reagan --are said to be sailing to the Gulf, but I was unable to verifythis from official sources. The "Jerusalem Post" reported this,as did at least one Egyptian newspaper cited by the "Post." TheArab world is aware of all this. Western audiences are not. We do know from naval sources that in July, the TheodoreRoosevelt was involved in joint naval maneuvers with the FrenchNavy. Think about this for a moment. When was the last time youread of joint naval operations between the United States Navy andthe French Navy? I have never heard of it. Third-party sources report that French ships, along withBritish ships, are accompanying the Theodore Roosevelt to theGulf. This would indicate a joint military venture. THE BLACKOUT This is receiving no coverage by the media of the Westernnations. It is a non-event. Yet if I know about it, and if Ihave been able to verify three-fifths of the story by officialsources, then there is no question in my mind that any of themajor news media that wanted to assign one lone individual totracing down the details of this story would be able to do thiswithout a great deal of difficulty. Yet the media have remainedabsolutely silent about this. This sounds fishy to me. It sounds as though there is acoordinated effort among Western owners of the media to makecertain that the voters are kept in the dark. Why should this story not be front-page news? Two very goodreasons are the fragility of the economy with oil under $130 abarrel, and what could happen if it goes to $400. Nobody wantsto trigger bank runs. The existence of an armada of this size raises an obviousquestion: Against which nation in the Persian Gulf is such anarmada to be used? The answer is obvious: Iran. If this armada is to be used against Iran, the next questionarises: What will happen to the price of oil if Iranian exportsof oil are cut off by an armada whose purpose is to stop alltrade with Iran? Second question: What would happen to the price of oil ifIran sinks two oil tankers in the Strait of Hormuz? Third question: What would happen to maritime insurancerates for oil tankers in the Persian Gulf? This raises a fourth question: Is the fleet's purpose isto police the Strait of Hormuz, to make certain that the land-basedanti-ship missiles that may have been installed by Iran can bestopped? Fifth question: Why would Iran sink oil takers, apart fromwartime? These questions relate to the supply of oil. The price ofoil, as with the price of all other commodities, is set at themargin. The problem with the price of oil is that it is sovolatile. There are no short-term supplies of oil that can comeon-stream in response to rising prices. Because increasedsupplies do not respond to an increase in the price of oil,prices rise and very fast and very high whenever there is a majorinterruption of oil production or delivery. IRANIAN RETALIATION If Iran is attacked by either the United States or theIsraeli Air Force, there will be retaliation by the Iranians. Iranian leaders have made it clear repeatedly that an attack onIran by the Israeli Air Force will be regarded as an attack bythe United States. At that point, the Middle East will begin tounravel. If the Israeli Air Force attacks Iran, this will create aninstant unified resistance movement by Muslims throughout theMiddle East. This will include Sunni Muslims. The hatred ofthe Israelis by Muslims in the region is so intense that eventhough the Israeli Air Force attacks at Shi'ite nation, Sunnileaders will not be in a position to publicly justify such anattack. They would risk a revolution in their own countries ifthey did this. The best that the Israelis could expect would besilent neutrality. Retaliation on the part of Iran will be expected by allMuslim nations in the Middle East. What could Iran do to impose negative sanctions on theUnited States? The first thing it can do is to stop all oilexports. This would create an economic depression in Iran. Butif the armada is controlling the flow of goods into Iran anyway,then why not stop the export of Iranian oil? If Iran cannot buythe goods that revenues from the sale of the oil would provide,then Iran's leaders might as well get some credit with theirpeople for having stood up to the Americans. Iranian leaders will be able to say, accurately, that sinceUnited States has gone to war with Iran by creating an embargoaround Iran, the smart thing to do is to inflict great economicdamage on the United States. The leaders will be able to tellthe people to buckle down, cut expenses, and suffer because thisis the price of war with the Great Satan, which has indulged inan act of war against Iran. All the bad effects can be blamed onthe United States, and all the tough talk will strengthen theregime that is in power at the time that the embargo is firstannounced. This will wipe out any so-called moderates in Iran. The nation will come together against the United States. Next, Iran can begin to create havoc for American troops bysupplying small arms to Shia militias inside Iraq and bysupplying resistance fighters inside Afghanistan. There isnothing that the United States can do to stop the flow oflow-cost, low-intensity arms out of Iran. The American deathtoll in both Iraq and Afghanistan would increase. The surgewould find itself facing a much greater counter-surge. NATO forces in Afghanistan will begin to suffer a series ofdefeats. This will certainly please Vladimir Putin. This willadvance Russian hegemony in the region. All the Russians have todo is tell the world that they oppose this unauthorized embargoon Iran, and that it opposes any air strikes inside Iran by theUnited States or the Israeli Air Force. At this point, Russiawill become a verbal ally of the Islamic world. This will be anenormous diplomatic advantage for Russia. It will be anextraordinary diplomatic disadvantage for the United States. Because imposing an embargo was an act of war, and becauseIran would have no particular reason to settle with the UnitedStates on terms that are in any way favorable to the UnitedStates, the Iranians need only bide their time. At some point,if the armada is removed from the Strait, the Iranians will againbe in a position to sabotage oil tankers going through theStrait. So, once this embargo is imposed, it has to becomepermanent. The tactic that would impose the greatest financial loss onthe United States would be to sink oil tankers in the Strait. Ifthe Iranians can sink as few as two tankers, this will result inhuge increases in maritime insurance premiums for oil tankerssailing through the Strait. This would reduce the supply of oilreaching the West. Whether Iran can attack oil tankers in the Strait when theStrait is protected by American warships is a tactical questionthat I am not capable of answering accurately. It may be thatIran's land-based missiles can be taken out by naval air power. But this would mean that the armada must remain inside thestraight permanently. If Iran ceases to export oil, this alone would be sufficientto drive the price of oil into regions that will push the Westinto a recession. Thus, it is ominous that President Bush, asCommander-in-Chief of the Armed Forces, has ordered the fivecarrier task forces into the region. I realize that the price of oil has not responded yet tothis strategic move. The best thing we can say at this point isthat the oil markets do not appear to regard this strategic moveof the United States Navy as a serious threat to the supply ofoil from the Middle East. Given the high-risk situation that has been created by thefailure of subprime mortgages in the United States, an oil shockthat drives oil above $200 a barrel is likely to createbankruptcies in major banks all over the West. Depositors arealready jumpy. If it appears that the Western economies aregoing to go into a simultaneous recession, because of a sharpincrease in the price of oil that is likely to become permanent,the West's banking system, and surely its capital markets, willbe at risk. The Iranians understand this. There is no reasonwhy the rest of us should not understand this. Hence, there is ablackout on all information of the assembling of the armada allover the Western world.A UNITED FRONT Islamic societies do not tolerate military activities ofnon-Islamic nations against Islamic nations except in support ofone Islamic nation against an invasion by another Islamic nation. It was possible for President George H. W. Bush to mobilizesupport from Sunni Islamic nations in the first Gulf War becauseSaddam Hussein had invaded Kuwait. This was perceived as anattack by a secular national leader against an Islamic nation. President Bush understood that this did not authorize theconquest of Iraq by the West. This is why he stopped Americantroops from capturing Baghdad. The capture of Baghdad and theoverthrow of Saddam Hussein were not part of the agreement bywhich the United States received financial and logistical supportfrom oil-exporting Islamic nations in the Gulf. The United States since 2003 has been able to gain grudgingsupport by Sunni nations in the region only because the officialjustification for the invasion was to fight Al Qaeda. Al Qaedais perceived by the oligarchies of the region as a threat totheir own existence. Also, Saddam Hussein was perceived, not asa practicing Muslim, but as a secular autocrat. The United States was able to gain support from Pakistan,but this has created such resistance inside Pakistan thatMusharraf has finally been forced out of office. The thing that oil-exporting Muslim nations worry most aboutis the possibility that Iran will retaliate by sinking oiltankers that pass through the Strait of Hormuz. On this issue,oil-exporting Muslim nations may be willing to accept thepresence of a Western armada in the Middle East. If thejustification of the armada is to keep open the Hormuz Straight,oil-exporting nations may cooperate with the United States. Theywill not be able to say anything favorable toward Israel, butthey may keep quiet about the use of the armada as a way tomaintain revenues for themselves. IF NOT OIL, THEN WHAT? I have three other questions. What is it that oil investors believe is a legitimate role for five carrier task forces in the Persian Gulf that is not in some way related to the export of oil? What is it that these carrier groups will do for the stability of oil exports from the region? Why is it that five carrier task forces are required to do what one carrier task force was expected to do prior to August? There is no question that this is a major military show offorce in the region. President Bush has decided to make thisshow of force. He has done so without informing the Americanmedia regarding the reason for this show of force. If the reasonhas nothing to do with Iran, he should say so. If the reason hassomething to do with Iran, then he should publicly discuss thequestion of the supply of oil exported from the Middle East. Heshould discuss how he intends to enable Iran to continue toexport oil to the West, yet at the same time persuade theIranians to change their policy on nuclear development. What is it that five carrier task forces in the Persian Gulfcan do to persuade the Iranians to change their policies, otherthan by interdicting oil trade with Iran? If this armada doesthis, how will Iranian oil exports not be affected? If thesecarrier forces are to interdict goods coming into Iran, whatmotivation does Iran have for continuing to export its most vitalcommodity, when Iran will not be able to use the proceeds fromthe sale of this commodity in order to buy Western goods? If President Bush imposes an embargo on shipping in and outof Iran, and he does so after the November election but beforethe inauguration of a new President, he will deliver to the newadministration a third war. The surge in Iraq will prove to havebeen a short-lived operation that succeeded only because Shiamilitias and the Shia-run government of Iraq decided to let theAmericans alone. Meanwhile, Afghanistan will become a disasterzone, and will remain a disaster zone for as long as Westerntroops are in the country. Iran need only sit and wait. The new administration willfind that the world economy is disintegrating, that oil priceshave moved up to such an extent that American voters will demandaction, and the only action that will make any sense will be towithdraw all forces from the region. At that point, the Western economy will be completelydependent upon the good will of the Iranians. If Iran stops theflow of oil by sinking tankers in the Strait of Hormuz, the priceof oil will become astronomical. The greatest winner in such ascenario would be Russia. Russia would be in a position ofalmost complete monopoly over the oil markets. Under such a scenario, the new administration would have oneproblem to deal with, and that problem is war in the Middle East. All other issues, domestic and international, would fade intoinsignificance on the day oil goes over $200 a barrel. Yet thiscould happen after the election but before the inauguration. President Bush will depart, and his replacement will be saddledwith an economic disaster, a military disaster, and a domesticpolitical disaster. There will not be a thing that the newly elected Presidentcan do prior to January 20 to deal with this problem. PresidentBush will be an absolute control because he is lawfully theCommander-in-Chief of the Armed Forces. There could be a move to impeach him, but Congress hasproven so utterly impotent over the last two years, and soutterly fearful of challenging the President on the issue of thewar, that it is unlikely that Congress could mount a successfulimpeachment and trial by the Senate during the two-month periodbetween the election of a new President and his inauguration. If you think the price of oil would be astronomical underthe conditions I have already described, add to this animpeachment attempt by Congress. That would tie up the Bushadministration, which would mean that its policies in the MiddleEast will be set in concrete until January 20, 2009. All of this may seem hypothetical. But, as Forrest Gump'smother might say, hypothetical is as hypothetical does. What isnot hypothetical is the presence of three carrier task forces inthe Persian Gulf, and probably two more by the end of September. Then what? The media have been completely successful in blocking allinformation about this, not just in the United States, but in theWestern countries generally. Nobody's paying any attention tothis. This includes oil investors. My opinion is that thisblindness is going to result in a military disaster before theend of 2009. If President Bush goes on national television this week toexplain why he ordered four new carrier groups into the region,and this explanation is plausibly unrelated to it ran, oil, andthe Strait of Hormuz, then I am willing to consider thepossibility that the scenarios that I have outlined here aresimply hypothetical. There may be a cogent explanation for why five carrier taskforces should be in the Persian Gulf. The fact that I cannotimagine a cogent explanation that does not involve Iran, oil, andthe Strait of Hormuz does not mean that there is not such anexplanation. But the silence of the media points to the silenceof the lambs. The lambs are the voters in the West who could befacing another war in the Middle East by January 20, 2009. CONCLUSION You should think carefully about the implications of $400oil on your family's finances. You should also think carefullyabout $400 oil's effect on your employer's finances. You shouldthen think very carefully about what might be a plausibleexplanation for five carrier task forces in the Persian Gulf thatdo not point to $400 oil by January 20, 2009.