Jim’s Mailbox

Jim Sinclair’s Commentary

Under the fluff of day to day MSM MOPE the sum of all financial fears plods on.

Gold is our only protection against the intrigue that circulates at the foundation of finance in politics, not even touched on by talking heads, MSM and especially the herd of experts that babble every day.

The Foundations for Global Conflict

The increasingly contentious tenor of Anglo-American relations with Iran has remained a predominant feature in international relations over the past 5 years. Now, with the wind-down of American forces in Iraq, and the U.S. Administrations’ belated realization that Afghanistan will not evolve into a codified nation around a strong central government, but will instead require a devolution of power to localized Taliban forces, the focus has turned to Iran. Iran’s nuclear program, while remaining a prominent topic in the media, may, in fact, no longer be the focal point for western objectives. The singular objective of preventing Iran from obtaining an operational and deliverable nuclear weapon appears now to either have been contained, relegated to secondary status or perhaps even achieved through technological warfare, although the latter is hard for the lay-person to verify. However, what is clear is that the primary policy objective, that of regime change, conceived over a decade ago, is now ascendant. In dissecting the never-ending volley of verbiage that surrounds Iran’s diplomatic relations with the English-speaking world, the latest diplomatic ruptures and escalation of threatening rhetoric has unique features which indicate that the possibility of conflict is increasing significantly.

Primary amongst these is the termination of diplomatic relations with Britain. The attack on the UK mission in Tehran, and its obvious sanction by the Iranian government, may be seen as an attempt to drive a wedge between the Anglo-American sphere of influence that has been driving for an oil embargo against Iran, vs. the EU-centred desire to maintain such flows, and the Russian desire to delimit any potential military moves against Iran. One can surmise how the latest UK-EU rift over recent attempts by the Brussels to dominate the financial and political landscape at a time of ever increasing crisis may have, in fact, revealed its limits in the conduct of international trade and relations. The Anglo-American world is lining up against nascent French influence directed via Brussels (with the tacit support of Germany), over the conduct of the international oil trade. This is the exact diplomatic trajectory that preceded the invasion of Iraq, although crucially, German power was nowhere near as dominant as it is now.

While the mainstream press retains its’ focus on recent Iranian military exercises in the Persian Gulf and the question of whether Iran can or will attempt to close the Straits of Hormuz, the British diplomatic rupture with Iran, widely seen as a mere diplomatic idiosyncrasy takes on true significance. The concurrent British drive for EU-wide oil sanctions, already approved in Washington, has significantly increased the potential for military conflict. Iran has retaliated that if such sanctions are brought to bear on the lifeline of its economy, it will proceed with attempts to close the Straits, and terminate all shipments through the region. This would mean, most significantly, a large portion of Saudi crude, as well as the entirety of Kuwaiti and Iraqi crude being shut-in. The success of an Iranian backed closure of the Straits, even for a short period of time, could unleash regional chaos in an area already beset by public uprisings against the established order. Iraq, already divided by regional power-demarcation, could re-collapse into wholesale anarchy.

An EU-wide embargo of Iranian oil would destroy Iran’s economy in short order, and likely send crude oil prices significantly higher. The regime would be forced to act militarily to survive, despite its significant force inferiority. Here there are echoes of the Western policy pursued vis-à-vis Japan in the 1930s.

How the Franco-German axis lines up with Russia will be paramount to diplomatic considerations. If the resolution to an ever-increasing currency crisis in the Euro area is the restoration of a commodity-backed currency, Russia may play a role more significant than most expect. It has the tangible basis to offset its’ own lack of gold-reserves, and could offer currency stability via oil and natural gas, if the gold reserves of Europe, held in America, can not be physically recovered. As Russia is the primary energy supplier to Europe’s predominant economic power – Germany – it could be a natural fit. The survival of the Euro project could then effectively hinge on Russian support. However, if a German dominated EU backs the policy of Anglo-American oil sanctions, Russia will withdraw such support and, faced with increasing isolation, will not hesitate to use its energy-leverage with Germany. Germany is well aware of this. As such, it is hardly surprising that on the issue of an oil embargo against Iran, Germany is praying it can sit on the fence for an extended period of time. It is a luxury which may not last. Washington and London are pressing the matter. Germany, and not France, will decide the outcome of the EU’s position on an Iranian oil embargo. Support threatens relations with its primary energy supplier, lack of support threatens relations with its primary military ally. But, as German economic success relies less on exports to America, and more on trade with the world at large, its dependency on and vulnerability to Russia increases.

As the EU can hold the Iranian economy hostage through the threat of compliance with an Anglo-American based oil sanctions regime, Russia, firmly against such sanctions, could, at a minimum, make life hell for Europe at a time when energy costs could deliver the coup-de grace to a highly fragile world economy. That in turn would significantly jeopardize the continuation of the project for European Union and may even ultimately lead to its disintegration. The price of regime change in Iran could be increased Russian leverage in Europe and expanded hegemony in Asia. As serious as a Euro-disintegration may be, even this may be considered a secondary consideration when set against the potential for a wide spread series of regional proxy wars pitting Anglo-American influence against Russian influence, from Kazakhstan through Central Asia and ultimately into outright conflict in Iran. There are signs that these proxy wars have been regenerated. If Iran and the west begin hostilities, Russia will reassert its influence in areas of Central Asia where western interests have increased significantly in the past 20 years. This has been its historic reaction, and there is little reason to believe it has changed. Russian reassertion of regional hegemony as a response to an attack on Iran will demand the rollback of American petroleum interests in the region, where billions have been spent. Needless to say, this may be challenged. Although largely forgotten, Central Asia has long been a pivot point for global conflict. With the massive increase in the economic power of China, India and Turkey over the past generation, that role as a fulcrum for conflict has only increased. Along with the chaos sweeping the MENA region, as one power vacuum after another emerges, open conflict with Iran has ability to conflagrate into an all-out global conflict of potentially catastrophic proportions.

CIGA Pedro