NTI: Global Security Newswire – CIA Sees Iran Approaching Nuke Capability.

Tuesday, March 30, 2010

Barak: Israel alone will decide issues of ‘nat’l importance’.

Photo by: Ariel Jerozolimski

By YAAKOV KATZ AND HERB KEINON 29/03/2010 00:33

In apparent message to DC, says “We are the ones who have exclusive responsibility for Israel’s fate and future.”

The decline of the West.

By ZVI MAZEL
27/03/2010 19:41

UK’s move against Israel fits into the European trend of appeasing Islam.

Osama bin Laden must be laughing his head off while plotting his next action against Europe in his dusty cave somewhere between Afghanistan and Pakistan. Once again Great Britain has demonstrated what a staunch ally it can be. One can trust the West; democracy is good for terrorists. It views terror as an ordinary offense against society and deals with it accordingly. Never mind that Bin Laden, Khaled Mashaal, Hassan Nasrallah, Mahmoud Ahmadinejad and the like have basically declared war on Western society and its values, and are making a concerted effort to achieve their aim. First on their list is Israel.

DEBKAfile, Political Analysis, Espionage, Terrorism, Security.

Canadian FM chairs G8 parley

debkafile‘s Washington and Iran sources disclose that the G8 ministers meeting in Gatineau, Quebec, agreed to leave the door open to dialogue with Iran after they were discreetly informed that the Obama administration had launched a secret bid to engage Iran’s radical Revolutionary Guards in nuclear talks.
The initiative aimed at bypassing Iran’s hardline political leaders and ayatollahs.
It was first revealed by DEBKA-Net-Weekly 436 on March 12.

At their meeting in Canada on March 29, the G8 ministers drafted a statement “to remain open to dialogue and also reaffirm the need for the international community to take appropriate and strong steps to demonstrate… resolve to uphold the international nuclear non-proliferation regime.”
But they pointedly sidestepped mention of sanctions or any other practical action for curbing Iran’s dash for a nuclear bomb, after learning that the US president was no longer behind active steps that would antagonize Tehran. Instead, Washington had sent out messengers to meet high-ranking Guards representatives in Tehran and a number of European capitals in pursuit of a new diplomatic initiative for engaging the IRGC in dialogue, after failing to get anywhere with Tehran’s regime leaders.

Those messengers went out on their mission three weeks before US Vice President Joe Biden’s visit to Israel blew up into a major crisis over Israeli construction in East Jerusalem.

The US messengers offered IRGC emissaries the following arguments and inducements:

1. Washington was not seeking regime change in Tehran and had proved as much by not backing Iran’s opposition in eight months of their protests against a probably rigged presidential election.

2.  The US appreciated the IRGC was undergoing two fundamental transformations – one, shifting its radical-militant orientation over to greater emphasis on its vast business and financial interests, and, two, the disappearance of public affirmations of support for president Mahmoud Ahmadinejad from the vocabulary of its leaders.
3.  Washington believes that the IRGC had hoped the president would adopt a new pragmatic line on Iran’s nuclear program and relations with the United States and were disappointed by his growing intransigence.  It was therefore in both their interests to sideline the hardline Ahmadinejad in national decision-making.
4.  UN sanctions against Iran – or unilateral US penalties – would harm the Guards’ broad business interests and inhibit their growth pattern, whereas the absence of sanctions would let them expand uninterrupted.
5. As for the core issue, Iran’s nuclear weapons program, here, too, the Obama administration was ready to be flexible, said the messengers, and accept Iran’s acquisition of a nuclear bomb capability, so long as it does not cross the threshold and tip over into building bombs or stocking a nuclear arsenal.
This US concession would render academic the controversy over whether Iran was indeed pursuing a nuke – and the length of time it needed for its attainment.
The White House’s rationale for talking to the Revolutionary Guards rested on the fact that its high command controls every facet of Iran’s military nuclear and ballistic missile programs. Washington hopes the two sides can come to terms in advance on where to draw the line on their development. However, according to debkafile‘s Iranian sources, the Obama administration is still waiting for the Guards chiefs to reply to its proposal.
But already, there is diplomatic fallout in the Gulf region. When US defense secretary Robert Gates visited Riyadh on March 10, he was told Saudi rulers no longer trusted the Obama administration to deal with the Iranian nuclear threat in the light of its backdoor contacts with the IRGC. Gates departed the kingdom after an angry exchange.

IAEA chief: Iran failing to clarify nuclear intentions – Haaretz – Israel News.

The head of International Atomic Energy Agency, Yukiya Amano, on Tuesday expressed frustration with his failure to persuade Iran to speak openly about its nuclear intentions. There has been no progress in the past weeks in getting Iran to clarify possible activities related to developing nuclear weapons, said Amano, who recently replaced Mohammed El-Baradei as chief of the UN’s nuclear watchdog. “So far I haven’t got the response that I hoped,” Amano told the DPA news agency. World powers suspect Iran of using civilian nuclear development to mask a weapons program, a claim Tehran denies. The United States is currently leading a diplomatic push for a fourth round UN of sanctions against Iran over its refusal to cooperate with UN inspectors. Early in January U.S. Secretary of State Hillary Clinton vowed to push for harsh diplomatic measures against Iran. “Our aim is not incremental sanctions, but sanctions that will bite,” Clinton told the American Israel Public Affairs Committee, a lobby group. “Let me be very clear: The United States is determined to prevent Iran from acquiring nuclear weapons,” she said. But Amano warned that new sanctions would mean international nuclear inspectors have a more difficult job in the short term. “As Iran quite often declares, they don’t want to act under pressure,” the 62-year-old Japanes diplomat said. Nuclear inspectors are also seeking information about 10 new enrichment plants that Iran has announced it would build, starting with two sites. “We are now following this issue carefully. But we don’t have specific pieces of information on the construction of these 10 or two facilities,” he said.

The American Spectator : Barry and Bibi Back-Story.

By George H. Wittman on 3.30.10 @ 6:08AM

For some reason quite unclear, the Obama Administration’s foreign policy establishment decided to make a major issue out of the announcement during VP Biden’s visit to Israel of new settlement construction in East Jerusalem. As analysts searched for an explanation of the White House’s well-publicized contest with Prime Minister Netanyahu during the latter’s recent U.S. trip, more and more the focus was drawn to matters unrelated to the settlement issue.

The Israeli newspaper Yedioth Ahronoth was used by insiders in the Netanyahu entourage to be quoted as saying Obama’s views were a “strategic disaster.” While most people assumed the quote related to the settlement matter, it was actually aimed at a more serious and immediate concern. The settlements could have been passed off as unfortunate timing. More importantly, according to the former Israeli UN ambassador Dan Gillerman, development in East Jerusalem has never been considered by Netanyahu and Israel’s right wing as part of the settlement phase of “land for peace.”

Biden had been briefed on this; Obama had been briefed on this; Hillary Clinton had been briefed. The real story is that the Obama Administration is proceeding on the basis that evolving a Palestine/Israel accord will be an important element in negotiations with Iran to cease nuclear weapon development.

This fantastical idea has evolved out of the strong White House belief that Iran can be cajoled into an agreement on nuclear weapon development if only the Palestine “problem” was solved. Any action appearing to inhibit the current campaign to bring Israel and Palestine closer is perceived by President Barack Obama as contrary to his plan to prevent Iran from “going nuclear.” Contrary to the oft-stated theme of keeping the military option on the table, the Obama Administration is committed to avoiding a preemptive strike on Iranian nuclear development targets.

The key to the Obama strategy (as reportedly explained to PM Netanyahu) is the expectation that there is a real possibility that the current Iranian clerical regime will be overthrown and replaced with a secular republic that that will include perhaps only a clerically dominated judiciary. All that is needed for the Obama plan to work is time, he told Netanyahu.

And here is where Obama’s recent conflict with Bibi Netanyahu comes in. Netanyahu’s real purpose in meeting with the U.S. president was to explain Israeli thinking on the need for and possible timing of an Israeli strike on Iran. From the Israeli standpoint the new developments in East Jerusalem were an unimportant side show, and Israeli estimates of the ability of the Iranians to have nuclear weapons is at most by the end of this year.

Obama’s view was firmly anchored in the importance of the peace talks while Netanyahu was equally adamant and unmoving in disagreement. He said quite clearly that Israel has to plan on using its military power to prevent the Persian attack. Well-informed sources in the Israeli PM’s camp indicated that while repeating the pledge of United States commitment to Israel’s defense in perpetuity, the American leader tried to use verbal strong-arm tactics to challenge the position of Israel’s American-educated, former IDF special forces officer-turned professional politician prime minister. This was definitely the wrong thing to do.

It was at this point that Obama decided to disengage and left Netanyahu cooling his heels in the White House. It was the first time Obama had been so categorically thwarted in his generally accepted “brilliant” ability to out-debate an adversary.

Netanyahu admitted differences between the U.S. and Israel “are those between allies and friends….” His response to Yedioth Ahronoth’s claim that Obama’s views were “a strategic disaster” was simply to refer to the newspaper’s comments as “anonymous, unworthy remarks.” Not quite a strong denial in any terms.

The final result of the Obama-Netanyahu talks was that the latter left convinced that the American president would not openly admit it, but he was willing to extend all aspects of negotiation and threats of sanctions with and against Iran to a point beyond where Netanyahu believed Israel could afford to go before taking preemptive action. Furthermore, the Israeli prime minister believes there would be little or no influence on Iran’s nuclear plans resulting from Palestine-Israel peace talks — contrary to Obama’s firm belief to the opposite.

If Israeli news sources are to be believed, Obama’s view has been effectively altered that he could make the decision for an Israeli government headed by Bibi Netanyahu regarding if and when to use a preemptive strike against Iran. As President Obama himself said in a different context, it’s just a matter of time!

American Thinker: Obama’s Ire, Not U.S. Interests, Direct Israel Policy.

By Jonathan F. Keiler

Israeli leaders have repeatedly sounded alarms over Iran’s atomic ambitions, pointing at President Mahmoud Ahmadinejad’s calls for the Jewish state to be “wiped off the map”. Here is a timeline of statements between the two countries:

Oct. 2005 – President Ahmadinejad says that Israel should be “wiped off the map”, the official IRNA news agency reports. Ahmadinejad makes the comments at a conference called “The World without Zionism”, attended by some 3,000 conservative students who chanted “Death to Israel” and “Death to America”.

— Governments from Russia to Canada condemn the Iranian president for his comments on Israel that once again raises questions about Tehran’s nuclear policy.

Dec. 2006 – Iran accuses the U.N. Security Council of pursuing a double standard in imposing sanctions on what it said was Tehran’s peaceful nuclear programme while ignoring Israel’s nuclear arsenal.

— Iran made the accusations after remarks by then Israeli Prime Minister Ehud Olmert who implied for the first time in a recent German TV interview that his country had nuclear weapons.

June 2008 – Israel’s then Deputy Prime Minister Shaul Mofaz says in a newspaper interview that Israeli strikes on Iran looked “unavoidable” given progress in its nuclear plans.

Sept. 2008 – Mofaz denounces his native Iran as “the root of all evil” and says its nuclear programme constitutes a threat to world peace.

— Outgoing Prime Minister Olmert dismisses calls by some of his cabinet colleagues for a unilateral attack on Iran as “megalomania”, saying on Sept. 29 that Israel must “act within the envelope of the international system”.

April 2009 – Ahmadinejad prompts a rare walkout at a U.N. conference on race when he calls Israel a “cruel and repressive racist regime”. Secretary-General Ban Ki-moon deplored the address which prompted dozens of delegates to leave their seats, which some Western powers including the United States boycotted.

— The boycott left Ahmadinejad, who has in the past cast doubt on the Nazi Holocaust, in the spotlight as the only head of state at the conference.

Sept. 2009 – A nuclear-armed Iran would not be capable of destroying Israel, Defence Minister Ehud Barak says in remarks that departed from long-running Israeli arguments about the threat posed by its foe.

Dec. 2009 – Ahmadinejad says Israel could not do a “damn thing” to stop the Islamic state’s nuclear programme, which the West suspects is a front to build bombs.

Feb. 2010 – Israel’s perspective on Iran’s nuclear programme differs from that of the U.S., and the two may part ways on what action to take, Israeli Defense Minister Ehud Barak says at the Washington Institute for Near East Policy.

— “There is of course a certain difference in perspective and a difference in judgment and a difference in the internal clock, a difference in capabilities,” Barak says.”I don’t think that there is a need to coordinate in this regard. There should be understanding on the exchange of views, but we do not need to coordinate everything…”

March 2010 – Prime Minister Benjamin Netanyahu says in a speech in Washington that “a radical Iranian regime armed with nuclear weapons could bring an end to the era of nuclear peace the world has enjoyed for the last 65 years.”

— He added Israelis will “always reserve the right of self-defence.”

Reuters AlertNet – ANALYSIS-Israel-Iran standoff challenges Mideast, investors.

The beach at Palmachim

By Alastair Macdonald

PALMACHIM, Israel, March 29 (Reuters) – Children skip over the beach at Palmachim as parents ponder a lazy Mediterranean sunset; far away, in London, or New York, traders scan other horizons, of economic data, watching for growth, or debt crises.

They may all be looking the wrong way.

Looming over the dunes behind the Israelis at play, the dump-truck shapes of U.S.-made Patriot missile batteries betray the presence of Palmachim air base — a keystone of the Jewish state’s defence should the war ever come with Iran that lurks, for now, just under the radar of the world’s financial markets.

In Washington this week, Israeli Prime Minister Benjamin Netanyahu called Iran’s nuclear programme “an unprecedented threat to humanity”. He has likened Tehran to Germany in 1938, as it plotted the Holocaust. His words, aimed at Barack Obama’s bid to buy time for sanctions, reminded the U.S. president of Israel’s readiness to stop talking and act in its own interest.

“Israel expects the international community to act swiftly and to act decisively to thwart this danger,” Netanyahu said.

“But we always reserve the right of self-defence.”

Financial markets moved not a jot on those comments.

Yet Israeli forces are training for a possible long-range strike on Iran, their submarines have sailed routes that could take them to the Gulf and civil defence authorities have tested bunkers, air raid sirens and gas masks. Intelligence sources talk of covert action under way to hit Iran’s nuclear industry.

People living across the Middle East are anxiously aware of Israel’s record of air strikes on suspected nuclear sites, in Iraq in 1981 and in Syria less than three years ago. That such an attack might trigger a long missile war across the region or action by Iran’s guerrilla allies is a familiar fear to many.

Traders, notably in oil, always price in some supply threat after years of angry words between Tehran and Israel. But beyond that, investors face a deep conundrum.

The likelihood and timing of any conflict, as well as its geographical scope, duration and outcome, are all hard to judge.

At their bluntest, investors’ big questions are: Will Israel strike? Will it go it alone? When? And what will happen next?

The safest bet replies (probably) are: Very possibly; Quite possibly; Maybe within a year; and, well, Heaven knows. Though not even Netanyahu can know all the answers.

LOOKING FOR CLUES

Scenarios for war range from Israeli strikes (from the air, by special forces or both) that Iran might not even respond to — perhaps denying their impact, or even concealing them — to, in the grimmest forecasts, a prolonged missile duel that might, in time, even tempt Israel to use its assumed nuclear option.

That’s a pretty perplexing spread of long-term imponderables but there are more immediate questions that may help narrow it.

— Is Iran satisfying Western powers and Israel that it is halting progress toward nuclear weapons capabilities? Tehran, of course, says it is not seeking nuclear arms at all, but the coming months may see a change in Western, and Israeli, perceptions.

— How far are Netanyahu and his Defence Minister Ehud Barak, who lead rival parties, committing themselves in Israeli eyes to action against Iran if sanctions fail, in their view, to stem the perceived threat? The more cautious their statements, the more they may be seeking room to step back from the brink.

— How far are Israel and Washington in step on Iran, and if they are not, is Obama willing — or even able — to hold back an Israeli strike that might prove popular with U.S. voters?

Much of the information available to Reuters from parties involved is divulged in private, off-the-record conversations with senior officials. Some of that information can be trusted. Some is doubtless part of the bluffing game among the powers.

Telling the difference is the hard part.

American sources have told Reuters since Vice President Joe Biden’s uncomfortable visit to Israel in early March that they believe Israel gave an undertaking not to take overt action against Iran before a U.S. move to force Tehran to change tack by means of international sanctions had had a chance to work.

Israeli sources see it rather differently, suggesting no guarantees are on offer when Israel’s very survival is, in its own eyes, at stake. But restraint, at least in the coming months, to avoid outraging allies abroad, would make sense.

At the same time, Israeli analysts who claim some access to Netanyahu and Barak’s thinking, reckon Israel is ready — and that when action comes it will surprise in both its timing and nature, as befits Barak and Netanyahu, both former commandos.

Bluff? Maybe.

MIXED SIGNALS

Under the previous, centrist-led coalition of Prime Minister Ehud Olmert, Israeli officials prepared a defence policy paper that suggested the Jewish state might be ready to settle into a regime of mutual deterrence with a nuclear Iran.

As he prepared to resign, Olmert, once among Israel’s keener hawks, said the idea of attacking Iran alone was “megalomania”.

But faced by leaders of the Islamic Republic who wish openly for Israel’s demise, Netanyahu might risk his own future if he is seen backing down. Still, the year-old Netanyahu government rarely commits to more than “all options are on the table”.

Netanyahu and Barak do say that a clock is ticking toward an outcome — Iranian ability, in terms of technology and supply of fissile material, to build a viable number of warheads within, say, a few months. And Israel finds that to be a mortal threat.

U.S. generals and officials have warned about “unintended consequences” from a strike that could destabilise the Middle East. They also suggest Iran’s pace of nuclear work is slowing.

But Barak has told Washington that, if an Iranian nuclear arsenal seemed like something Americans could live with, his people felt differently and valued their independence.

“From a closer distance, in Israel, it looks like a tipping point for the whole regional order,” Barak said. “There is of course a certain difference in perspective … and a difference in the internal clock, a difference in capabilities.

“There should be understanding on the exchange of views, but we do not need to coordinate everything.”

SANCTIONS SCEPTICS

Israel is backing Obama over coordinating sanctions against Iran. But, in private, few Israelis share the confidence voiced by senior figures in Washington about their efficacy, especially if they are not as “crippling” to Iran as Netanyahu wants.

As Israel’s Foreign Ministry phrases it in the bold headline over a major section on its Web site devoted to Iran: “The international community is moving toward lower-level sanctions, which are not unimportant, but may not be enough.”

That is a quote from Netanyahu to parliament on March 3. It begs the question, what next if sanctions are “not enough”?

Yet heavier sanctions might be called for, but Israeli officials are fearful that Obama could pursue such a track until, in their view, it is “too late” and Iran has, if not a weapon, the ability to make one fast.

As Barak put it, Israeli and American clocks are running on different time partly because Israel’s limited firepower means that the longer it waits as Iran, allegedly, multiplies secret sites, the less chance Israel has of damaging them on its own.

In any case, Israeli officials believe the kind of strike they are capable of mounting could only delay, perhaps by a few years, any Iranian programme. That delay, however, as with the pressure from sanctions, could, they hope, bring a durable halt to Tehran’s nuclear ambitions by bringing change in its leaders.

Hence the notion, prevalent among Israeli analysts, that a “window” for an effective strike by Israel may only be open for a year or two more. So can Obama hold it shut?

This month’s ructions in U.S.-Israeli relations offered mixed signals. The Netanyahu coalition’s unrepentant approval of new Jewish homes on occupied land around Jerusalem marred a visit by Biden that was both intended to seal peace talks with the Palestinians and get Israeli buy-in for more diplomacy with Iran, including sanctions, rather than moving to a war footing.

Some commentators saw Washington’s angry response as driving Israel toward more unilateral action. Others gave more weight to the view that Netanyahu was now less likely to annoy the United States any further by risking going it alone against Iran.

GOING IT ALONE

The latest has been a concerted effort, especially from the Obama administration, to smooth over the rough patch, and speak of the “unbreakable bond” the United States has with Israel.

Israel certainly does not seek a rift with Washington, its main arms supplier, guardian in terms of anti-missile forces and broader military protection and prime diplomatic ally. But, as Barak made clear in Washington last month, each state has its own interests.

In the case of the air strike on Syria in 2007 that targeted a suspected nuclear facility, Israel did inform Washington in advance that something of the sort was afoot — but it did not seek permission, a source familiar with the operation said.

While such a strike, which triggered no clear retaliation, might be ideal for Israel against Iran, the risk of Tehran launching either its own missiles or asking its allies in Hamas or Hezbollah to mount attacks, means Israel will be wary of any action that Washington would repudiate, or seek even to punish.

Israelis note, however, that Iranian leaders have said they would hit U.S. interests if Israel attacked. In that case, Israel may have less risk of being left to face Iran alone.

It remains a huge and unpredictable risk, however. That alone leads many to question whether Israel would take it. But those who believe they understand the enigmatic Netanyahu stress how the long term features in the prime minister’s thinking.

While U.S. officials may focus on a short domestic election cycle, Netanyahu, son of a noted Zionist historian, misses few opportunities to put his policy toward Iran in the context of millennia of struggle by the Jewish people. For example, he addressed American evangelical Christians in Jerusalem recently:

“We must prevent Iran from developing nuclear weapons,” Netanyahu said of “tyrants in Tehran” who “hope to wipe Israel off the map”. And adding biblical context, he concluded: “After centuries in exile … the people of Israel have come home and no force on earth will ever make us leave our home again.”

SCENARIOS-Global impact if Israel strikes Iran | Reuters.

SCENARIOS-Global impact if Israel strikes Iran

By Peter Apps, Political Risk Correspondent

LONDON, March 29 (Reuters) – If Israel were to strike Iran over its nuclear activities, markets would be watching one thing only – Iran’s response.

The scale of that response could be the difference between a brief spike in oil prices and pushing the world back to economic crisis.

Below are possible scenarios together with projected potential market reactions suggested by analysts, economists and foreign policy strategists.

NO IMMEDIATE REACTION

Tehran announces that Israel’s military attacked civilian locations but inflicted little damage. It hurls furious rhetoric at Israel but stops short of any military response.

“It may make sense for the Iranians to play the victim,” said IHS Global Insight Middle East analyst Gala Riani. “They may also use it to build the regime’s legitimacy internally.”

— news of the strike would see oil prices spike $10-$20 and wider investor flight to safer assets such as U.S. treasuries, while equities and risky currencies would suffer. But without further action, sentiment would recover.

— relatively used to conflict, Israeli markets might prove more resilient to the initial news. Some analysts suggest that a successful strike that significantly put back an Iranian nuclear programme could be positive for Israeli markets.

Key unknowns:

— assessing the effectiveness of an attack on Iranian facilities could prove almost impossible. The longer-term impact of the strikes on Iran’s internal politics, regional politics and Western support for Israel would be hard to predict.

— can Israel achieve its aims with a single strike, or would it require a more sustained operation potentially lasting several days and hitting markets much harder?

PROXY RETALIATION

Iran steers clear of any overt response, but backs intensifying attacks by Hamas from the Palestinian territories and by Hezbollah from Lebanon. It might also back proxy attacks on Western forces in Iraq and Afghanistan.

“The most likely response would be to increase their subversive activity across the Middle East,” said IHS’s Riani. “It would most likely be focused in Palestine, Lebanon and to a lesser extent around the Gulf.”

— might have some short-term impact on oil prices — particularly if the attacks included Iraq — but generally global markets would be little affected.

— Israeli markets would likely take initial attacks in their stride, but a prolonged campaign would drag on the economy, driving up defence spending and undermining markets as they did during the Palestinian Intifada.

Key unknowns:

— the duration of increased violence. Proxy violence could escalate to include militant attacks on Western and oil targets.

— If Hezbollah strikes Israel, Israel will retaliate in a way that quickly expands the conflict. Israel has threatened to hold the governments of Lebanon and Syria responsible for any Hezbollah attacks.

MISSILES STRIKE ISRAEL

Iran retaliates by launching ballistic missiles with conventional warheads. While more accurate than the Scuds launched by Iraqi leader Saddam Hussein at Israel during the 1991 Gulf War, damage from each strike would be limited.

“It’s certainly not something you can rule out,” said Metsa Rahimi, intelligence analyst for risk consultancy Janusian. “The Iranians are going to want to retaliate. But they know if they do this, they are going to get hit back again.”

— oil prices would certainly spike higher, although attacks on Israeli cities would not directly have any impact on oil production. Wider global markets would sell off and watch nervously for any further escalation.

— Israeli markets might again prove more resilient. They actually rallied in January 1991 during the missile attacks as it became clear the strikes were not chemical and not causing significant damage. Much would depend on the level of damage and for how long any missile barrage continued.

Key unknowns:

— Israeli and Western reaction. Would there be further retaliation? Would weapons used remain conventional? [ID:nLDE6023HI].

— Would Israel strike military targets and civilian infrastructure in Iran, possibly including oil facilities? That would push-up prices and force primary customer China to look for supplies elsewhere.

CLOSING HORMUZ

Iran makes good its threat to close the Straits of Hormuz to traffic, blocking the flow of some 17 million barrels a day of oil, roughly 40 percent of all seaborne oil trade — but likely inviting swift retaliation from United States forces.

“Iran doesn’t even need to be successful in their threat,” said Michael Wittner, global head of energy research at Societe Generale. “Even a credible threat or near miss and insurance rates will spike. Then no one’s going to send any oil through there for a couple of weeks until somebody’s navy can re-establish control.”

— analysts estimate this could push oil prices up towards $150 a barrel. Alternative oil producers such as Russia, Nigeria and Angola might benefit, but rising fuel costs would likely undercut growth everywhere. China, Iran’s main export destination, would have to seek supplies elsewhere.

— Other financial markets would suffer and fall sharply if they believed disruption would be long term.

— Israeli markets are likely to be affected by the wider frenzy, although probably less than volatile emerging markets.

Key unknowns:

— how long could Iran maintain its blockade? Military analysts believe its handful of mine-laying ships, helicopters and submarines might quickly be neutralised by the US military.

see also:-Iran unlikely to risk blocking Hormuz [ID:nLDE60612O]

SPARKING WIDER CONFLICT

Ultimately, the consequences of an Israeli strike on Iran are hard to predict. At worst, it could fuel an upsurge in wider regional violence.

“I worry a great deal about the unintended consequences of a strike,” Chairman of the US Joint Chiefs of Staff Admiral Mike Mullen said on a recent visit to Israel.

— a more violent Middle East would put an inherently higher risk premium on oil, pushing up prices and possibly undermining global recovery from the financial crisis. It might also drive consuming nations towards non-Middle Eastern suppliers and alternative technologies.

— investors would also view Israel as much higher risk, while much higher defence spending would weigh on the economy.

Key unknowns:

— duration and severity of any conflict. Would the world’s wider powers – China, Russia, the United States and European Union in particular – move towards a consensus on the Middle East or would the conflict exacerbate their differences further?