Meanwhile In Greece…

Less than a week after the Greek government sent additional police forces to reinforce its land border with Turkey as fears mount over a sharp rise in the number of refugees and migrants crossing the frontier, The Guardian reports that  Greek Prime Minister Alexis Tsipras faced down protests from citizens Thursday upset over how he’s handled April’s 17% increase in the influx of migrants.

The Daily Caller’s Audrey Conklin reports that the protests in Lesbos, Greece, represent a stark shift in attitude among a people once significantly more welcoming to migrants fleeing as part of a years-long refugee crisis.

Locals argue with riot police during a protest against the visit of Greek Prime Minister Alexis Tsipras in Mytilene, on the Greek island of Lesbos.

Huge numbers of people seeking asylum are flooding into the country by bus and boat every week, and while an agreement between the EU and Turkey signed in 2016 states that illegal refugees are supposed to be sent to Turkey after crossing European borders, Greek camps are overcrowding and in bad shape. Experts estimate that as many as 500 refugees new people cross the island’s borders each week. 

As DW News reports:

“Earlier on Thursday, the aid agency Doctors without Borders warned that Lesbos was ‘reaching breaking point’…overstretching healthcare and other services laid on for the migrants while leading some to resort to violence.”

Approximately 9,000 migrants and refugees are currently stranded in Greece because they are stuck between borders with no real place to live, even temporarily, as a result of the EU deal with Turkey.

Since March 2016, Turkey has threatened to terminate the agreement because the EU is having trouble collecting and delivering funds for the millions of refugees Turkey agreed to take in from Europe.

Syrian refugee Bashar Wakaa (3rd L) and his family stand in front of their tents at a makeshift camp for refugees and migrants next to the Moria camp on the island of Lesbos, Greece.

Arrivals on Greece’s Aegean islands have increased by 17 percent since last month “due to refugees fleeing Iran, Iraq and Syria.”  Nearly a million refugees have crossed the borders of Lesbos over the past three years. Locals have had enough.

“The people of Lesbos are exhausted,” said mayor Spyros Galinos. “Kindness has turned to anger … and where there is anger there is room for all sorts of extremism.”

Locals and refugees alike witnessed that extremism Galinos is referring to when, just two weeks ago, radical protesters set fire to bins and flares surrounding a refugee base where Afghan migrants were protesting their confinement. Over a dozen people were injured, the Tampa Bay Times reports

“Women are afraid to leave their homes at night,” Galinos continued. “Children are kept locked up indoors because parents are afraid to let them go out and play. No community would put up with this.”

A garbage bin burns as riot police officers stand guard separating protesting groups of locals and refugees demonstrating against conditions in Moria camp and delays in asylum applications, in the city of Mytilene on the island of Lesbos, Greece.

Residents feel their government is neglecting the people who actually live and work legally in Greece as a result of the ever-increasing population of refugees, which now make up a third of Lesbos’ total population

“Commerce and investment [have] come to a standstill,” local chamber of commerce leader Evangelos Myrsinias told reporters. “On these islands, we feel very neglected, very abandoned with frustration compounded by the decision to raise VAT which after everything we’ve been through will drastically raise the cost of living.”

Migration Minister Dimitris Vitsa said the government plans to decrease the number of migrants and refugees by the end of September from the current number of 15,500 to 6,500, which is the total population capacity for refugee shelters.

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Don’t Be Fooled, There’s No “New Détente” Between India And China

Authored by Andrew Korybko via Oriental Review,

The outcome of last week’s informal summit between Indian Prime Minister Modi and Chinese President Xi is that both nominal BRICS partners are now unofficially in a “Cold Peace” with one another.

The two leaders met in the city of Wuhan and reportedly went over the gamut of their relations, especially the strategic-military aspects that have led to increasing tensions between the two Asian Great Powers over the past year. This, of course, refers to India’s pro-American pivot to the so-called “Quad” and China’s CPEC project through Pakistani-administered territory that New Delhi claims as its own. By all indications, the meeting was a success in at least superficially restoring regional trust, but looking below the surface, this appears more to be about a “Cold Peace” than a “New Détente”.

India and China’s globalization models are threatened by the US’ protectionist shift, and the two nominal BRICS allies have a shared interest in tightening their economic cooperation and presenting a seemingly unified front in the face of Trump’s pressure against them both. That, however, doesn’t necessarily transcend over into the military-strategic realm where the two still remain fierce rivals, suggesting that each side won’t make a big fuss for now about the other arming up and building border roads & bases in the meantime, accepting that this will proceed anyhow and that it’s better for the time being to remain quiet about it given their temporarily shared economic interests vis-à-vis the US.

The “Cold Peace” is welcome because it will calm both of their publics down and allow them to redirect their attention towards more constructive areas of bilateral engagement where they actually have the power to change something, like in the economic field as opposed to the realm of International Relations and military affairs. This could hopefully expand the complex economic interdependency between the two and thus serve as an asymmetrical deterrence measure preventing either of them – but in this context, mostly India – from falling for the American divide-and-rule plot to pit them against one another in the New Cold War.

This “second honeymoon” between the two countries and their leaders won’t last forever, and both sides know it given their expanding strategic contradictions all across the Afro-Eurasian space (both naturally occurring and American-encouraged), so the “Cold Peace” should be seen as a short-term tactical measure to help each of these Great Powers gain the perception (key word) of greater leverage over the US during the onset of Trump’s protectionist “trade warthan as a long-term strategic understanding paving the way for a “New Détente”.

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US Navy Resurrects Its Cold War-Era Atlantic Fleet To Counter Russia

In a stunning surprise, the United States Navy announced Friday that it would reactivate its Second Fleet to counter the increasing threat from Russia.

Admiral John Richardson, chief of naval operations, said the fleet, deactivated in 2011, could oversee roughly 6,700,000 square miles of the Atlantic Ocean from the North Pole to the Caribbean Sea and from the East Coast of the United States to the middle of the Atlantic Ocean.

“Our National Defense Strategy makes clear that we’re back in an era of great power competition as the security environment continues to grow more challenging and complex,” said Admiral Richardson.

The re-establishment of the US Second Fleet is part “of re-orientating the US armed forces towards a world of renewed big power competition and away from the counter-insurgency campaigns they have been fighting over recent decades,” said BBC.

The strategy makes countering Russia a top priority. Admiral Richardson added, “that’s why today, we’re standing up Second Fleet to address these changes, particularly in the north Atlantic.”

The Fleet was established following World War II for the sole purpose of supporting the North Atlantic Treaty Organization (NATO).

Before the 2011 deactivation, the Second Fleet had approximately 126 ships, 4500 aircraft, and 90,000 personnel situated at major naval installations along the East Coast.

Adm Richardson also said that the Second Fleet would “exercise operational and administrative authority over assigned ships, aircraft and landing forces.”

BBC said the revived fleet would be headquartered in Norfolk, Virginia, where the United States Department of Defense (DoD) will build a staff of about 15 personnel for the intermediate timeframe, then increase to more than 200.

At the moment, it is a mystery who will command the Second Fleet, nevertheless, what military assets it will include.

According to Military.com, the reactivation of the Second Fleet could bring some relief to other fleets stretched around the globe.

“Bringing the Second Fleet back to life will free up Fleet Forces to focus on such bigger-picture issues as manning, training and equipping the entire fleet, which took on increased scrutiny in the wake of two deadly collisions involving U.S. warships in Asia. Davidson led the Navy’s comprehensive review of those incidents, which called for restructuring how the Navy operates.”

NATO has recently suggested that Russia expanded its naval patrols in the Baltic Sea, the North Atlantic and the Arctic regions, along with its submarine activity at levels not seen since the Cold War.

Back in 2011, the prospect of U.S.-Russia relations seemed healthy, after the Obama administration declared a reset in 2009. Now, it appears as the Trump administration has performed an about-face with a dramatic reversal to reactivate the Second Fleet amid Moscow’s continued support for President Bashar al-Assad of Syria. War is coming…

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The Warmakers

Via The Saker,

Between the US strikes on Syria in April and the recent developments on the Korean Peninsula, we are in somewhat of a lull in the Empire’s search for a new war to start. The always helpful Israelis, in the person of the ineffable Bibi Netanyahu, are now beating the drums for, well, if not a war, then at least some kind of false flag or pretext to make the USA strike at Iran. And then there is the always bleeding Donbass (which I won’t address in today’s analysis).

So let’s see where we stand and try to guesstimate where we might be heading. To be honest, trying to guess what ignorant warmongering psychopaths might do next is by definition a futile exercise, but since there are some not negligible signs that there are at least a few rational people still left in the US White House and/or Pentagon (as shown by the mostly “pretend strikes” on Syria last month), we can assume (hope) that some residual degree of sanity is still present. At the very least Americans in uniform have to ask themselves a very basic and yet fundamental question:

Do I want to die for Israel? Do I want to lose my job for Israel? How about my pension? Maybe just my stock options? Is it worth risking a major regional war for such a “wonderful” state?

A lot depends on whether the US military leaders (and people!) will have the courage to ask themselves this question and, if they do, what their reply will be.

But, first, let’s begin with the good news:

The DPRK and ROK are in direct talks with each other.

This is indeed a truly great development for at least two reasons. First, of course, the main and objective one: anything which lowers the risks of war on the Korean Peninsula is good. But there is a second reason which we should not discount: Trump can now take all the credit for this and claim that his (empty) threats are what brought the North Koreans to the negotiating table. I say – let him. In fact, I hope that they organize a parade for Trump somewhere in the USA, with confetti and millions of flags. Like for an astronaut. Let him feel triumphant, vindicated and very, very manly. MAGA, you know?!

Yeah, that will be sickening to the thinking (not to mention counter-factual), but if a little bit of intellectual nausea is the price to pay for peace, I say let’s do it. If Trump, Bolton, Haley and the rest of them can feel that they “kicked ass” and that their “invincible military” is what brought “Rocket Man” to “give up his nukes” (he never said any such thing, but never mind that) then I sincerely wish them a joyful and highly ego-pleasing celebration. Anything to stop them from looking for another war to start, at least for a now.

Now the bad news.

The Israelis are at it again

Amazing, isn’t it? The Israelis have been whining about “imminent” Iranian nukes for years, and they are still at it. Not only that, but these guys have the nerve to say “Iran lied”. Seriously, even by the already unique Israeli standards, that is chutzpah elevated to a truly stratospheric level. If it were just Bibi Netanyahu, then this would be comical. But the problem is that Israel has now fully subjugated all the branches of the US government to its agents (the Neocons) and that they now run everything: from the two branches of the Uniparty to Congress, to the media and, now that Trump has abjectly caved in to all their demands, they also run the White House. They apparently also run the CIA, but there still might be some resistance to their lunacy in the Pentagon. The USA is now quite literally run by a Zionist Occupation Government, no doubt about it whatsoever.

So what are these guys really up to? Listen to the one man who knows them best, and whose every single word you can take to the bank, Hezbollah General Secretary Nasrallah (ever wondered why Hezbollah, which has not committed anything even remotely looking like a terrorist attack since the 1980s is called the “A-Team of terrorists”? Just saying…):

The first event is the Israeli blatant and manifest aggression against the T-4 base or airport on the outskirts of Homs, that targeted Iranian forces from the Guardians of the Islamic Revolution of Iran who were present there, hitting them with a large number of missiles, causing 7 martyrs among its officers and soldiers and wounding others. This was a new, significant and important event. Maybe some people do not pay attention to its importance and magnitude. In this operation, Israel has deliberately killed (Iranian soldiers). This is an unprecedented event. In the past, Israel has struck us [Hezbollah] for example in Quneitra, and it turned out that coincidentally Guardians [of the Islamic Revolution] officers were with us. Israel declared hastily that they did not know it, and thought that all (targeted soldiers) were Hezbollah’s. This is an event that has no precedent since 7 years, it is unprecedented since 7 years, that Israel openly targets the Guardians of the Islamic Revolution in Syria, killing deliberately, in an operation that caused a number of martyrs and wounded (…) I want to tell the Israelis that they must know – I wrote that statement accurately and I read it to them – they must know that they have committed a historic mistake. This is not a simple blunder. They committed an act of great stupidity, and by this aggression, they entered in a direct confrontation with Iran, the Islamic Republic of Iran. And Iran, O Zionists, is not a small country, it is not a weak country, and it is not a cowardly country. And you know it very well. As a comment on this incident, I stress that it constitutes a turning point in the situation of the region. What follows will be very different from what preceded it. This is an incident that cannot be considered lightly, contrary to what happens with many incidents here. It is a turning point, a historic turning point. And when the Israelis committed this stupid act, they had some assessment (of the situation), but I tell them that their evaluation is false. And even in the future, since you have opened a new path in the confrontation, (you should ensure) not to be wrong in your evaluations. In this new path you opened and initiated, don’t be wrong in your assessment, when you are face to face, and directly (in conflict) with the Islamic Republic of Iran.

I can only agree with this evaluation. As does The Jerusalem PostNBC News, and many others. Regardless of how crazy this notion might sound to rational people (see below), there are all the signs that the Israelis are now demanding that the USA start a war against Iran, either by choice or more likely, to “stand by our Israeli allies and friends” after they attack Iran first.

Israel is truly a unique and amazing country: not only does it openly and brazenly completely ignore international law, not only is it the last overtly racist country on the planet, not only has it been perpetuating a slow-motion genocide against the Palestinians for decades, it also constantly uses its considerable propaganda resources to advocate for war. And in order to achieve these goals, it does not mind allying itself with a regime almost as despicable and evil as the Zionist one – I am talking about the Wahabi nutcases in the KSA. And all that under the high patronage of the United States. Some “Axis of Kindness” indeed!

What is their plan? Actually, it is fairly straightforward.

The Israeli plan “A” (failed)

Initially, the plan was to overthrow all the secular (Baathist) regimes in power and replace them by religious nutcases. That would not only weaken the countries infected by that spiritual rot, it would set them backwards for many decades, some of them would break up into smaller entities, Arabs and Muslims would kill each other in large numbers while the Israelis would proudly claim that they are a “western country” and the “only democracy in the Middle-East”. Even better, when the Daesh/ISIS/al-Qaeda/etc types commit atrocities on an industrial scale (and always on camera, professionally filmed, by the way), the slow-motion genocide of Palestinians would really be completely forgotten. If anything, Israeli would declare itself threatened by “Islamic extremism” and, well, extend a couple of “security zones” beyond its borders (legal or otherwise), and do regular bombing runs “because Arabs only understand force” (which would get the Israelis a standing ovation from the “Christian” Zionist rednecks in the USA who love the killing of any Aye-rabs and other “sand niggers”). At the end of all this, the Zionist wet dream: unleashing the Daesh forces against Hezbollah (which they fear and hate since the humiliating defeat the IDF suffered in 2006).

Now I will readily agree that this is a stupid plan. But contrary to the propaganda-induced myth, the Israelis are really not very bright. Pushy, arrogant, nasty, driven – yes. But smart? Not really. How could they not realize that overthrowing Saddam Hussein would result in Iran becoming the main player in Iraq? This is a testimony of how the Israelis always go for “quick-fix” short-term “solutions”, probably blinded by their arrogance and sense of racial superiority. Or how about their invasion of Lebanon in 2006? What in the world did they think they would achieve there? And now these folks are taking on not Hezbollah, but Iran. Hassan Nasrallah is absolutely correct, that is a truly stupid decision. But, of course, the Israelis now have a “plan B”:

The Israeli plan “B”

Step one, use your propaganda machine and infiltrated agents to re-start the myth about an Iranian military nuclear program. And never mind that the so-called “The Joint Comprehensive Plan of Action” was agreed upon by all five of the UNSC Permanent Members, and Germany (P5+1) and even the European Union! And never mind that this plan places restrictions on Iran which no other country has ever had to ever face, especially considering that since 1970 Iran has been a member in good standing with the Nuclear Non-Proliferation Treaty (NPT) while Israel, of course, is not. But the Zionists and their Neocon groupies are, of course, quite exceptional people, so they are constrained by neither facts nor logic. If Trump says that the JCPOA is a terrible deal, then this is so. Hey, we are living in the “post-Skripal” and “post-Douma” era – if some Anglo (or Jewish) leaders say “highly likely” then it behooves everybody to show instant “solidarity” lest they are accused of “anti-Semitism” or “fringe conspiracy theories” (you know the drill). So step one is the re-ignition ex nihilo of the Iranian military nuclear program canard.

Step two is to declare that Israel is “existentially threatened” and therefore has the right to “defend itself”. But there is a problem here: the IDF simply does not have the military means to defeat the Iranians. They can strike them, hit a couple of targets, yes, but then when the Iranians (and Hezbollah) unleash a rain of missiles on Israel (and probably the KSA) the Israelis will not have the means to respond. They know that, but they also know that the Iranian counter-attack will give them the perfect pretext to scream “oy vey!! oy, gevalt!!” and let the dumb Americans fight the Iranians.

You might object that the USA does not have a mutual defense treaty with Israel. You are wrong. It does, it is called AIPAC. Besides, last year the USA established a permanent US military base in Israel, making it a “tripwire”: just claim that “the Ayatollahs” tried to attack the US base with “chemical weapons” and, bingo, you now have a pretext to use all your military forces in retaliation, including, by the way, your tactical nuclear forces to “disarm” the “genocidal Iranians who want to wipe Israel off the map” or some variation of this nonsense.

You might wonder what the point of all that would be if Iran does, as I say, not have any military nuclear program?

My answer would be simple: do you really think the Syrians have been using chemical weapons?!

Of course not!

All this nonsense about Saddam’s WMD, the Iranian nuclear program, the Syrian chemical weapons or, for that matter, Gaddafi’s “Viagra armed raping soldiers”, and before that the “Racak massacre” in Kosovo or the various “Markale market” atrocities in Sarajevo for that matter: these were just pretexts for aggression, nothing more.

In Iran’s case, what the Israelis fear is not that they will be “wiped off the map” (that is a mistranslation of words originally spoken by Ayatollah Khomenei) by Iranian nukes; what really freaks them out is to have a large, successful Muslim regional power like Iran openly daring to denounce Israel as an illegitimate, racist state. The Iranians are also openly denouncing the US imperialism and they are even denouncing the Wahabi dictatorship of the House of Saud. That is Iran’s real “sin”: to dare defy openly the AngloZionist Empire and be so successful at it!

So what the Israelis really want to do is:

  1. inflict a maximum amount of economic damage upon Iran

  2. punish the Iranian population for daring to support the “wrong” leaders

  3. overthrow the Islamic Republic (do to it what they did to Serbia)

  4. make an example to dissuade any other country who dares to follow in Iran’s footsteps

  5. prove the omnipotence of the AngloZionist Empire’s

To reach this objective, there is no need to invade Iran: a sustained cruise missile and bombing campaign will do the job (again, like in Serbia). Finally, we just have to assume that the Zionists are evil, arrogant and crazy enough to use nuclear weapons on some Iranian facilities (which they will, of course, designate as “secret military nuclear research” installations).

The Israelis hope that by making the USA hit Iran really hard, they will weaken the country enough to also weaken Hezbollah and the other allies of Iran in the region sufficiently and break the so-called “Shia crescent”.

In their own way, the Israelis are not wrong when they say that Iran is an existential threat to Israel. They are just lying about the nature of this threat and why it is dangerous for them.

Consider this:

IF the Islamic Republic is allowed to develop and prosper and IF the Islamic Republic refuses to be terrified by the IDF’s undisputed ability to massacre civilians and destroy public infrastructure, then the Islamic Republic will become an attractive alternative to the kind of repugnant Islam embodied by the House of Saud which, in turn, is the prime sponsor of all the collaborator regimes in the Middle-East from the Hariri types in Lebanon to the Palestinian Authority itself. The Israelis like their Arabs fat and corrupt to the bone, not principled and courageous. That is why Iran must, absolutely must, be hit: because Iran by its very existence threatens the linchpin upon which the survival of the Zionist entity depends: the total corruption of the Arab and Muslim leaders worldwide.

Risks with Israel’s plan “B”

Think of 2006. The Israelis had total air supremacy over Lebanon – the skies were simply uncontested. The Israelis also controlled the seas (at least until Hezbollah almost sank their Sa’ar 5-class corvette). The Israelis pounded Lebanon with everything they had, from bombs to artillery strikes, to missiles. They also engaged their very best forces, including their putatively ‘”invincible” “Golani Brigade”. And that for 33 days. And they achieved exactly *nothing*. They could not even control the town of Bint Jbeil right across the Israeli border. And now comes the best part: Hezbollah kept its most capable forces north of the Litany river so the small Hezbollah force (no more than 1000 man) was composed of local militias supported by a much smaller number of professional cadre. That a 30:1 advantage in manpower for the Israelis. But the “invincible Tsahal” got it’s collective butt kicked like few have ever been kicked in history. This is why, in the Arab world, this war is since known as the “Divine Victory”.

As for Hezbollah, it continued to rain down rockets on Israel and destroy indestructible Merkava tanks right up to the last day.

There are various reports discussing the reasons for the abject failure of the IDF (see here or here), but the simple reality is this: to win a war you need capable boots on the ground, especially against an adversary who has learned how to operate without air-cover or superior firepower. Should Israel manipulate the USA into attacking Iran, the exact same thing will happen: CENTCOM will establish air superiority and have an overwhelming firepower advantage over the Iranians, but other than destroying a lot of infrastructure and murdering scores of civilians, this will achieve absolutely nothing. Furthermore, Ayatollah Ali Khamenei is no Milosevic, he will not simply surrender in the hope that Uncle Sam will allow him to stay in power. The Iranians will fight, and fight, and continue to fight for weeks, and months and then possibly years. And, unlike the “Axis of Kindness” forces, the Iranians do have credible and capable “boots on the ground”, and not only in Iran, but also in Syria and Iraq and Afghanistan. And they have the missiles to reach a very large number of US military facilities across the region. And they can also not only shut down the Strait of Hormuz (which the USN would eventually be able to re-open, but only at a cost of a huge military operation on the Iranian coast), they can also strike at Saudi Arabia proper and, of course, at Israel. In fact, the Iranian have both the manpower and know-how to declare “open season” on any and all US forces in the Middle-East, and there are plenty of them, mostly very poorly defended (that imperial sense of impunity “they would not dare”).

The Iran-Iraq war lasted for eight years (1980-1988). It cost the Iranians hundreds of thousands of lives (if not more). The Iraqis had the full support of the USA, the Soviet Union, France and pretty much everybody else. As for the Iranian military, it had just suffered from a traumatic revolution. The official history (meaning Wikipedia) calls the outcome a “stalemate”. Considering the odds and the circumstances, I call it a magnificent Iranian victory and a total defeat for those who wanted to overthrow the Islamic Republic (something which decades of harsh sanctions also failed to achieve, by the way).

Is there any reason at all to believe that this time around, when Iran has had almost 40 years to prepare for a full-scale AngloZionist attack the Iranians will fight less fiercely or less competently? We could also look at the actual record of the US armed forces (see Paul Craig Roberts’ superb summary here) and ask: do you think that the USA, lead by the likes of Trump, Bolton or Nikki Haley will have the staying power to fight the Iranians to exhaustion (since a land invasion of Iran is out of the question)? Or this: what will happen to the world economy if the entire Middle-East blows up into a major regional war?

Now comes the scary part: both the Israelis and the Neocons always, always, double-down. The notion of cutting their losses and stopping what is a self-evidently mistaken policy is simply beyond them. Their arrogance simply cannot survive even the appearance of having made a mistake (remember how both Dubya and Olmert declared that they had won against Hezbollah in 2006?). As soon as Trump and Netanyahu realize that they did something really fantastically stupid and as soon as they run out of their usual options (missile and airstrikes first, then terrorizing the civilian population) they will have a stark and simple choice: admit defeat or use nukes.

Which one do you think they will choose?

Exactly.

Going nuclear?

Here is the paradox: in purely military terms, using nukes on Iran will serve no pragmatic purpose. Nuclear weapons can be used in one of two ways: against military assets (“counterforce”) or against civilians (“countervalue”). The point is that by the time the Neocons and their Israeli patrons come to the point of considering using tactical nuclear forces against the Iranians, there won’t be a good target to hit. Iranian forces will be dispersed and mostly in contact with allied (or even US forces) and nuking an Iranian battalion or even a division won’t fundamentally alter the military equation. As for nuking Iranian cities just out of savagery, this will only serve one purpose: to truly get Israel wiped off the map of the Middle-East. I would not put it past the Neocons and their Israeli bosses to try to use a tactical nuclear weapon to destroy some Iranian civilian nuclear facility or some underground bunker with the very mistaken hope that such a show of force and determination will force the Iranians to submit to the AngloZionist Empire. In reality, this will only infuriate the Iranians and strengthen their resolve.

As for the currently “macronesque” Europeans, they will, of course, first show “solidarity” on the basis of “highly likely”, especially Poland, the Ukies and the Baltic statelets, but if nuclear weapons start going off in the Middle-East, then the European public opinion will explode, especially in Mediterranean countries, and this might just trigger yet another major crisis. Israel wouldn’t give a damn (or, as always, blame it all on some totally mysterious resurgence of anti-Semitism), but the USA most definitely does not want the Anglo grip on the continent compromised by such events.

Maybe a Korean scenario?

Is there a chance that all the huffing and puffing will result in some kind of peaceful resolution as what seems to be in the works in Korea? Alas, probably not.

A few months ago it sure looked like the USA might do something irreparably stupid in Korea (see here and here) but then something most unexpected happened: the South Koreans, fully realizing the inanity of Trump’s reckless threats, took the situation in their own hands and began making overtures to the North. Plus all the rest of the regional neighbors emphatically and clearly told Trump & Co. that the consequences of a US attack on the DPRK would be apocalyptic for the entire region. Alas, there are two fundamental differences between the Korean Peninsula and the Middle-East:

  1. On the Korean Peninsula, the local US ally (the ROK) does not want war. In the Middle-East it is the local US ally (Israel) which pushes the hardest for a war.
  2. In Far-East Asia all the regional neighbors were and are categorically opposed to war. In the Middle-East most regional neighbors are sold out to the Saudis who also want the US to attack Iran.

So while the risks and consequences of a conflagration are similar between the two regions, the local geopolitical dynamics are completely different?

What about Russia in all this?

Russia will never *choose* to go to war with the USA. But Russia also understands that Iran’s security and safety is absolutely crucial to her own security, especially along her southern borders. Right now there is a fragile equilibrium of sorts between the (also very powerful) Zionist lobby in Russia and the national/patriotic elements. In truth, the recent Israeli attacks in Syria have given more power to the anti-Zionist elements in Russia, hence all the talk about (finally!) delivering the S-300s to Syria. Well, we will see if/when that happens. My best guesstimate is that it might already have happened and that this is simply kept quiet to restrain both the Americans and the Israelis who have no way of knowing what equipment the Russians have already delivered, where it is located or, for that matter, who (Russians or Syrians) actually operate it. This kind of ambiguity is useful to placate the pro-Zionist forces in Russia and to complicate AngloZionist planning. But maybe this is my wishful thinking, and maybe the Russians have not delivered the S-300s yet or, if they have, maybe these are the (not very useful) S-300P early models (as opposed to the S-300PMU-2 which would present a huge risk to the Israelis).

The relationship between Russia and Israel is a very complex one (see here and here), but if Iran is attacked I fully expect the Russians, especially the military, to back Iran and provide military assistance short of overtly engaging US/Israeli/NATO/CENTCOM forces. If the Russians are directly attacked in Syria (and in the context of a wider war, they very well might be), then Russia will counter-attack regardless of who the attacker is, the USA or Israel or anybody else: the Zionist lobby in Russia does not have the power to impose a “Liberty-like event” on the Russian public opinion).

Conclusion: Accursed are the warmakers, for they shall be called the children of Satan

The Israelis can eat falafels, create “Israeli kufiyeh” and fancy themselves as “orientals”, but the reality is that the creation of the state of Israel is a curse on the entire Middle-East to which has only brought untold suffering, brutality, corruption and wars, wars and more wars. And they are still at it – doing all they can to trigger a large regional war in which many tens or even hundreds of thousands of innocent people will die. The people of the USA have now allowed a dangerous cabal of psychopathic Neocons to fully take control of their country and now those, who Papa Bush used to call the “crazies in the basement” have their finger on the nuclear button. So now it all boils down to the questions I opened this article with:

Dear US Americans – do you want to die for Israel? Do you want to lose your job for Israel? How about your pension? Maybe just your stock options? Because make no mistake, the US Empire will not survive a full-scale war against Iran. Why? Because all Iran needs to do to “win” is not to lose, i.e. to survive. Even bombed out and scorched by conventional or nuclear strikes, if Iran comes out of this war still as an Islamic Republic (and that is not something bombs or missiles will change) then Iran will have won. In contrast, for the Empire, the failure to bring Iran to its knees will mean the end of its status as the world Hegemon defeated not by a nuclear superpower, but by a regional conventional power. After that, it will just be a matter of time before the inevitable domino effect breaks up the entire Empire (check out Richard Greer’s excellent book “Twilight’s Last Gleaming” for a very plausible account on how that could happen)

Okay, unlike Russia, Iran cannot nuke the USA or, for that matter, even reach it with conventional weapons (I don’t even think that the Iranians will successfully attack a US carrier as some pro-Iranian analysts say). But the political and economic consequences of a full-scale war in the Middle-East will be felt throughout the United States: right now the only thing “backing” the US dollar, so to speak, are USN aircraft carriers and their ability to blow to smithereens any country daring to disobey Uncle Sam. The fact that these carriers are (and, truly, have been for a long while) useless against the USSR and Russia is bad enough, but if it becomes known urbi et orbi that they are also useless against a conventional regional power like Iran, then that’s it, show over. The dollar will turn into monopoly money in a very short span of time.

Wars often have “Nietzschean consequences”: countries which wars don’t destroy often come out even stronger than before they were attacked, even if it is at a horrendous price. Both the Israelis and the Neocons are too dialectically illiterate to realize that by their actions they are just creating increasingly more powerful enemies. The old Anglo guard which ran the USA since its foundation was probably wiser, possibly because it was better educated and more aware of the painful lessons learned by the British (and other) Empire(s).

Frankly, I hope that the ruling 1%ers running the USA today (well, they are really much less than 1%, but never mind that) will care about their wealth and money more than they care about appeasing the Neocons and that the bad old Anglo imperialists who built this country will have enough greed in themselves to tell the Neocons and their Israeli patrons to get lost. But with the Neocons controlling both wings of the Uniparty and the media, I am not very hopeful.

Still, there is a chance that, like in Korea, somebody somewhere will say or do the right thing, and that awed by the potential magnitude of what they are about to trigger, enough people in the US military will follow the example of Admiral William Fallon and CENTCOM commander at the time who told the President “an attack on Iran will not happen on my watch”. I believe for his principled courage, the words of Christ “Blessed are the peacemakers: for they shall be called the children of God” (Matt 5:9) can be applied to Admiral Fallon and I hope that his example will inspire others.

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Saudi Arabia Will Build Christian Churches After Striking Deal With Vatican

First he let women drive. Then he loosened rules surrounding public interactions between men and women. Now, in his latest act of progressive benevolence (in a country that still chops people’s heads off for committing adultery), Saudi Crown Prince Mohammed bin Salman will allow the Vatican to build Christian churches in Saudi Arabia.

The historic deal was signed by the Secretary General of the Muslim World League Sheikh Mohammed bin Abdel Karim Al-Issa and the President of the Pontifical Council for Inter-religious Dialogue in the Vatican, Cardinal Jean-Louis Tauran following a meeting last month, according to Breitbart.

Saudi

The decision is part of KSA’s shift to an ever more open stance as it seeks to recruit technology firms and other industries to help diversify its economy away from oil.

During a visit to Riyadh in April, Cardinal Tauran was received at the royal palace by King Salman bin Abdulaziz Al Saud, who in addition to nominally running the country is also the custodian of the Two Holy Mosques, as well as his son MbS. Tauran and his delegation also visited the Center for the Fight against Extremist Thought, and met with the Grand Mufti of Saudi Arabia, Abdul-Aziz ibn Abdullah Al ash-Sheikh.

In his address to Saudi officials, Tauran spoke about the difficulties faced by the “hundreds of thousands of Christians in the Saudi Kingdom” despite the fact that the country is the only state in the Arab world without even a single church.

Tauran insisted that Pope Francis follows their plight “with close attention.” The cardinal also reaffirmed the Vatican’s view on the equal treatment of all citizens regardless of their religion, including those who are atheist or agnostic.

Another benefit of the Cardinal’s visit was an agreement to renounce violence, extremism, terrorism and achieve security and stability in the world.

The accord calls for the formation of a committee with two representatives each from Christianity and Islam. The committee will meet every two years, alternating between Rome and a city chosen by the Islamic World League.

Since its founding, Saudi Arabia has embraced a fundamentalist strain of Islam known as Wahhabism, which bans all forms of non-Muslim religious activities.

But as MbS moves to liberalize the country at a staggering rate to help improve the chances of achieving his Saudi Vision 2030 goals, one can’t help but wonder: What’s next? Letting Christians into Mecca?

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Stephen Hawking’s Last Words: We Live In ‘The Matrix’?

Before he passed away in March, renowned physicist Stephen Hawking had published more than 230 articles on the birth of the universe, black holes and quantum mechanics. But, ten days before his death, Hawking finished his final theory on the origin of the universe  – now published posthumously – and it offers an interesting departure from earlier ideas about the nature of the “multiverse.”

As PBS reports, the new report, co-authored by Belgian physicist Thomas Hertog, counters the longstanding idea that the universe will expand for eternity.

If you asked an astrophysicist today to describe what happened after the Big Bang, he would likely start with the concept of “cosmic inflation.” Cosmic inflation argues that right after the Big Bang — we’re talking after a teeny fraction of a second — the universe expanded at breakneck speed like dough in an oven.

But this exponential expansion should create, due to quantum mechanics, regions where the universe continues to grow forever and regions where that growth stalls. The result would be a multiverse, a collection of bubblelike pockets, each defined by its own laws of physics.

“The local laws of physics and chemistry can differ from one pocket universe to another, which together would form a multiverse,” Hertog said in a statement. “But I have never been a fan of the multiverse. If the scale of different universes in the multiverse is large or infinite the theory can’t be tested.”

Along with being difficult to support, the multiverse theory, which was co-developed by Hawking in 1983, doesn’t jibe with classical physics, namely the contributions of Einstein’s theory of general relativity as they relate to the structure and dynamics of the universe.

“As a consequence, Einstein’s theory breaks down in eternal inflation,” Hertog said.

Einstein spent his life searching for a unified theory, a way to reconcile the biggest and smallest of things, general relativity and quantum mechanics.

He died never having achieved that goal, but leagues of physicists like Hawking followed in Einstein’s footsteps. One path led to holograms.

Diagram of evolution of the (observable part) of the universe from the Big Bang (left) to the present. After the Big Bang and inflation, the expansion of the universe gradually slowed down for the next several billion years, as the matter in the universe pulled on itself via gravity. More recently, the expansion has begun to speed up again as the repulsive effects of dark energy have come to dominate the expansion of the universe. Image and caption by NASA

Instead of the ‘standard’ description of how the ‘universe’ unfolded (and is unfolding), the authors argue the Big Bang had a finite boundary, defined by string theory and holograms.

The new theory – which sounds simplistically like the world of the red-pill-blue-pill Matrix movies – embraces the strange concept that the universe is like a vast and complex hologram. In other words, 3D reality is an illusion, and that the  apparently “solid” world around us – and the dimension of time – is projected from information stored on a flat 2D surface.

The Telegraph reports that Prof Hertog, from the Katholieke Universiteit Leuven (KT Leuven), said:

It’s a very precise mathematical notion of holography that has come out of string theory in the last few years which is not fully understood but is mind-boggling and changes the scene completely.

Applied to inflation, the newly published theory suggests that time and “the beginning” of the universe arose holographically from an unknowable state outside the Big Bang.

Prof Hawking said before his death:

We are not down to a single, unique universe, but our findings imply a significant reduction of the multiverse, to a much smaller range of possible universes.

And believe it or not, there’s actually evidence that the world works this way.

Hawking’s final paper can be read in full below…

As PBS concludes, some physicists point out that the Hawking-Hertog theory is preliminary and should be considered speculation until other mathematicians can replicate its equations.

Sabine Hossenfelder, a theoretical physicist with the Frankfurt Institute for Advanced Studies, said on her blog that the ideas put forward in this paper join others that are currently pure speculation and don’t yet have any evidence to support them. She makes it clear that while the proposals aren’t uninteresting, Hawking and Hertog haven’t found a new way to detect the existence of universes other than our own.

“Stephen Hawking was beloved by everyone I know, both inside and outside the scientific community,” she wrote.

“He was a great man without doubt, but this paper is utterly unremarkable.”

Here is Ars Technica’s John Timmer with more details on the holographic universe.

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Mueller Investigation In Jeopardy As “Witch Hunt” Accusations Play Out In Court

A funny thing happened on the way to impeaching Donald Trump. After two-years of investigations by a highly politicized FBI and a Special Counsel stacked with Clinton supporters, Robert Mueller’s probe has resulted in the resignation of National Security Advisor Michael Flynn, the arrests of Paul Manafort and Rick Gates, and the indictment of 13 Russian nationals on allegations of hacking the 2016 election – along with the raid of Trump’s personal attorney, Michael Cohen.

The nation has been on the edge of insanity waiting for that much-promised and long awaited link tying President Trump to Vladimir Putin we were all promised, only to find out that there is no link, the deck appears to have been heavily stacked against Donald Trump by bad actors operating at the highest levels of the FBI, DOJ, Obama admin and Clinton camp, and the real Russian conspiracy in the 2016 election was the participation of high level Kremlin sources used in the anti-Trump dossier that Hillary Clinton paid for.

Now, as the out-of-control investigation moves from the headlines and into court, the all-encompassing “witch hunt,” as Trump calls it, may be in serious jeopardy

As of Friday, three separate Judges have rendered harsh setbacks to the Mueller investigation – demanding, if you can believe it, facts and evidence to back up the Special Counsel’s claims – in unredacted format as one Judge demands, or risk having the cases tossed out altogether. 

The first major setback happened in February, when the federal judge assigned to the criminal case against Trump’s former National Security Judge Emmet G. SullivanMueller’s team to turn over any “exculpatory evidence” to Flynn’s defense. 

Oddly, Flynn’s legal team never made this request. Instead, Judge Emmet G. Sullivan issued the order “sua sponte,” or at his discretion, invoking the “Brady Rule” – which requires prosecutors to turn over previously unfiled evidence that might have a material impact on a defendant’s case. Two days before Sullivan’s order, Mueller filed a motion for a protective order regarding the use of evidence in the case, including “sensitive materials,” which would be provided to Flynn’s lawyers by the office of the Special Counsel.

Judge Emmet G. Sullivan

This development generated a significant buzz in conservative circles, with the implication being that perhaps Flynn might not have pleaded guilty in light of certain evidence

We also know that the FBI agents who interviewed Flynn – one of whom was anti-Trump counterintelligence agent Peter Strzok, did not think Flynn was lying to them – something James Comey was recently caught lying about himself. 

Fox‘s Judge Andrew Napolitano thought Sullivan’s decision at the time was a complete bombshell. 

“Why would he we want that after General Flynn has already pleaded guilty? That is unheard of. He must suspect a defect in the guilty plea. Meaning, he must have reason to believe that General Flynn pleaded guilty for some reason other than guilt.” –Andrew Napolitano

And as we noted yesterday, some have suggested that Flynn pleaded guilty due to the fact that federal investigations tend to bankrupt people who aren’t filthy rich – as was the case with former Trump campaign aide Michael Caputo, who told the Senate Intelligence Committee “God damn you to hell” after having to sell his home due to mounting legal fees over the inquiry. 

“Your investigation and others into the allegations of Trump campaign collusion with Russia are costing my family a great deal of money — more than $125,000 — and making a visceral impact on my children.”

Let’s not forget about the time Mueller’s team at the FBI massively screwed up the 2001 anthrax case after 9/11 – ruining the life of SAIC employee Steven Hatfill when it mysteriously leaked that he was the FBI’s prime suspect. Mueller assured Congress in a closed-door January, 2003 session that Hatfill was their man based on shaky evidence which was later deemed unreliable. Effectively, he needed a scalp. Hatfill was professionally and financially ruined until he sued the US Government for $5.8 million.

It’s like death by a thousand cuts,” Hatfill, who is now 56, says today. “There’s a sheer feeling of hopelessness. You can’t fight back. You have to just sit there and take it, day after day, the constant drip-drip-drip of innuendo, a punching bag for the government and the press. And the thing was, I couldn’t understand why it was happening to me. I mean, I was one of the good guys.” –The Atlantic

Then there’s the judge in the Manafort Case, who excoriated a Special Counsel attorney on Friday during a “motion to dismiss” hearing. A leaked transcript of the heated exchange between attorney Michael Dreeben and Eastern District of Virginia Judge T.S. Ellis reveals that the entire Manafort case is in jeopardy if the Special Counsel doesn’t produce an unredacted copy of the original order from Deputy AG Rod Rosenstein authorizing the original investigation.

Judge Emmet G. Sullivan

Ellis also said that Mueller shouldn’t have “unfettered power” to prosecute Manafort for charges that have nothing to do with collusion between the Trump campaign and the Russians, and called out the DOJ’s efforts in the case as an attempt by Mueller to gain leverage over Manafort.

“You really care about what information Mr. Manafort can give you that would reflect on Mr. Trump or lead to his prosecution or impeachment or whatever. That’s what you’re really interested in.” –Judge Ellis

The Judge also notes that the Special Counsel’s indictment against Manafort doesn’t mention:

(1) Russian individuals
(2) Russian banks
(3) Russian money
(4) Russian payments to Manafort

To which Dreeben provided an unsatisfactory lawyerly response about how everything is connected to everything (including, apparently, whether Trump paid a woman to keep quiet about consensual sex). 

Lastbut we’re quite sure not least, was last week’s ruling by federal Judge Dabney Friedrich, a Trump appointee, denying Mueller a trial delay over the high-profile February indictment of 13 Russians for interfering in the 2016 US election.

Mueller accused 13 Russian nationals and three Russian entities – one of which was Concord Management and Consulting, of “knowingly and intentionally” conspiring to interfere with the election by using social media to disparage Hillary Clinton and support Donald Trump. 

And Concord Management decided to fight it… 

As PowerLine notes, Mueller probably didn’t see that coming – and the indictment itself was perhaps nothing more than a PR stunt to bolster the Russian interference narrative. 

I don’t think anyone (including Mueller) anticipated that any of the defendants would appear in court to defend against the charges. Rather, the Mueller prosecutors seem to have obtained the indictment to serve a public relations purpose, laying out the case for interference as understood by the government and lending a veneer of respectability to the Mueller Switch Project.

One of the Russian corporate defendants nevertheless hired counsel to contest the charges. In April two Washington-area attorneys — Eric Dubelier and Kate Seikaly of the Reed Smith firm — filed appearances in court on behalf of Concord Management and Consulting. Josh Gerstein covered that turn of events for Politico here. –Powerline Blog

Politico’s Gerstein notes that by defending against the charges, “Concord could force prosecutors to turn over discovery about how the case was assembled as well as evidence that might undermine the prosecution’s theories.”

In a mad scramble to put the brakes on the case, Mueller’s team tried to say that Concord never formally accepted the court summons related to the case, wrapping themselves in a “cloud of confusion” as Powerline puts it. “Until the Court has an opportunity to determine if Concord was properly served, it would be inadvisable to conduct an initial appearance and arraignment at which important rights will be communicated and a plea entertained.”

The Russians hit back against Mueller’s attempt to delay – filing a response on Friday to let the court know that “[Concord] voluntarily appeared through counsel as provided for in [the Federal Rules of Criminal Procedure], and further intends to enter a plea of not guilty. [Concord] has not sought a limited appearance nor has it moved to quash the summons. As such, the briefing sought by the Special Counsel’s motion is pettifoggery.

And the Judge agreed

A federal judge has rejected special counsel Robert Mueller’s request to delay the first court hearing in a criminal case charging three Russian companies and 13 Russian citizens with using social media and other means to foment strife among Americans in advance of the 2016 U.S. presidential election.

In a brief order Saturday evening, U.S. District Court Judge Dabney Friedrich offered no explanation for her decision to deny a request prosecutors made Friday to put off the scheduled Wednesday arraignment for Concord Management and Consulting, one of the three firms charged in the case. –Politico

In other words, Mueller was just denied the opportunity to kick the can down the road, and will likely be forced to produce the requested evidence or withdraw the indictment, potentially jeopardizing the PR aspect of the entire “Trump collusion” probe.  

As Mueller’s “witch hunt” moves from the headlines to courtrooms with no-nonsense Judges, dismissals and withdrawn cases risk further delegitimizing the already-beleaguered Special Counsel investigation of President Trump and the 2016 US election. 

One wonders how much this whole thing has cost taxpayers so far?

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WTI Tops $70 For First Time Since Nov 2014 As Iran Deal Deadline Looms

With the Iran Deal looking increasingly fragile, front-month WTI futures have just traded above $70 for the first time since Nov 2014.

$70 just happens to be the 50% retracement from the Aug 2013 highs to the Feb 2016 lows…

As OilPrice.com’s Tsvetana Paraskova notes, US President Donald Trump has another week to decide whether to waive the sanctions against Iran. Expectations that he would not waive the sanctions this time around have supported the price of oil over the past month, with Brent briefly breaching above $75 to its highest price level since November 2014.

Analysts are still struggling to quantify the impact of possible fresh sanctions on Iran and prices are expected to be volatile as the deadline for President Trump’s decision is getting closer.

The month of May could be a very important one for oil prices with geopolitical risks stacked and too close to call. Apart from the Iran sanctions waiver, the market will be looking to the Venezuela presidential election that socialist leader Nicolas Maduro has scheduled for May 20.

“The geopolitical landscape will therefore remain tense and price conditions volatile,” Stephen Brennock, an analyst at PVM Oil Associates, told Platts on Friday.

Commenting on the Iran sanctions waiver, Commerzbank analysts said in a note:

“This will be the main issue preoccupying the oil market, with fundamental factors such as stock levels and production data taking a backseat until this has been resolved”.

Even more worrisome, as OilPrice.com’s Kent Moors writes, is that Trump walking away from the deal, and possibly re-imposing sanctions on Iran could throw the oil market into chaos.

An agreement is an agreement, or so it’s said.

Tensions are skyrocketing after Israeli Prime Minister Netanyahu’s claim that Iran has violated the Joint Comprehensive Plan of Action (JCPOA) agreement.

This is the deal that was meant to shut down Iran’s nuclear weapons program.

Whether Netanyahu is correct or not, it puts the ball in President Trump’s court. Remember, he has questioned the JCPOA since before his election.

But while the talking heads on TV will tell you that cancelling the JCPOA and renewing sanctions on Iran will drive oil prices up…

The truth is much messier. Here’s what’ll really happen…

Iran’s Restrictions are Extensive – and Controversial

As we await a Trump decision on whether to continue the Iranian nuclear accord, the uncertainty is beginning to have an impact on oil’s pricing volatility.

The accord signed during the Obama administration is officially called the JCPOA. It was agreed upon in Vienna on July 14, 2015 after some 20 months of negotiations.

Signatories include the five permanent (and veto carrying) members of the UN Security Council (U.S., UK, France, China, Russia), Germany and the European Union (P5+1+EU) on the one hand, and Iran on the other.

Under JCPOA, Tehran agreed to eliminate its stockpile of medium-enriched uranium, reduce its store of low enriched uranium by 95 percent, and decrease the number of gas centrifuges for 13 years by some 67 percent.

Additionally, for a period of 15 years, JCPOPA states that Iran would do the following:

  • Not enrich uranium beyond 3.67 percent, enough for energy use but well below weapons grade;

  • agree to forego the building of any new heavy-water plants, essential to control nuclear reactions, over the same period, and

  • limit enrichment to a single location employing first generation centrifuges for a period of 10 years.

In return, the P5+1+EU agreed to begin phasing out – subject to a sequence of verifications – economic and trading sanctions imposed by the U.N., the U.S., and the E.U.

However, during the 2016 presidential campaign Trump heavily criticized JCPOA and pledged to scrap the accord…

America Wants More from the Agreement

In President Trump’s view, matters not part of the agreement – such as Iranian support for global terrorism, continued development of ballistic missile programs, and support for enemies of Israel and Saudi Arabia in the Persian Gulf region – need to be added to the arrangement.

As a result, the White House announced in October of last year that it would not provide the periodic JCPOA certification as required under U.S. law.

However, the administration did not end the agreement.

This week, Israel released documents claiming that Iran has continued its nuclear program in violation of JCPOA. The presentation was less than compelling, including little tangible information about the post-accord environment.

Both the International Atomic Energy Agency (IAEA) and independent watchdog organizations have said that there is no evidence to support the contention that Iran is evading JCPOA. The IAEA has the responsibility under JCPOA to monitor Tehran’s compliance.

Now, my Iranian contacts were quick to note the obvious: Each of the new demands made by Washington are not part of what is covered by JCPOA.

“One does not revise an international arrangement after the fact to pander to one’s own internal politics,” a source in the Iranian National Oil Company said over the weekend.

There is also strong support from other permanent UN Security Council members, Germany, and the EU to continue the agreement.

Yet all other parties are very aware that JCPOA will not survive if the U.S. pulls out.

And neither will the current oil environment…

The Future without the JCPOA Is Bleak

The global pricing of crude oil is now feeling the impact of the politics swirling about Washington.

I expect that the current intent inside The Beltway is to develop evidence to support the Israeli claims. But there seems to be little leverage to accomplish such an objective, even if the administration can figure out what it wants to add.

This is an exceptionally dangerous play with no clearly identifiable upside beyond delivering on a campaign pledge and a few tweets.

Trump may have made a threat to scrap JCPOA a central theme for his political support base and has said that a better replacement is needed, but that development has a very low probability.

Throwing out JCPOA will certainly put Iran back into full weapons development with a corresponding rise in geopolitical uncertainty.

And there will be a direct impact on oil prices.

Renewal of U.S. sanctions will increase the cost of Iran’s crude exports, cut Tehran off from easy access to global banking and capital, and in all likelihood reduce the country’s predictable export volume.

These are factors that would contribute to an upward pressure on international global oil prices.

But there are other things to consider – factors that could be even stronger and ultimately drive prices in the other direction.

For one thing, Iran would certainly stop any pretense of abiding by the OPEC-Russia production cuts. That, in turn, would prompt defections by others.

Moreover, the enticement for a spike in production will be almost irresistible for U.S. companies – which are both the quickest sources of additional oil coming into the market, and the main source not subject to production caps.

But the main destabilizing factor emerges from the acceleration in volatility itself.

Any perception of additional security challenges in the Persian Gulf – and make no mistake, the end of JCPOA will heighten tensions between Iran and Saudi Arabia – will contribute to a near-term rise in global prices.

The resulting uncertainty will quickly give way to a widening application of competing short and long plays, which, in a whipsaw effect, will result in higher highs and lower lows in the oil price band and make genuine pricing determinations more difficult.

Ask any trader.

Predictability is more important than anything else. Ending JCPOA thrusts the Iranian factor into the center of the equation.

And that will not be a preferable development.

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BofA: “The Best Leading Indicator Of Global EPS Just Turned Negative”

When it comes to the recently passed $1+ trillion US fiscal stimulus, there are two opposing views in the market: one is that it was an unnecessary, ill-timed diversion, which the US economy with its near record low unemployment rate does not need, which will prompt a surge in inflation and will unleash a debt-funding crisis as the US Treasury is forced to sell record amounts of debt at every greater yields. This is the view typically held by those who are politically aligned against President Trump.

On the other hand, there are those who say the impact of US fiscal stimulus has been extremely visible in US business & consumer surveys (which have predicted >5% growth in real GDP) and together with tax reform, has been instrumental in send the S&P 35% higher since the Trump election. Supporters of president Trump tend to see more positives than negatives in the fiscal plan.

And yet, the reality is that to date US tax cuts have had little if any tangible impact on actual economic activity according to Bank of America economists. In a note released earlier today by BofA’s Michael Hartnett, the chief investment strategist highlights the following:

  • US capital goods orders in the past 5 months are very surprisingly flat despite corporate tax cuts, record profits & stock prices (Chart 6); and there is no evidence of Make American Wages Great Again (wage growth stuck around 2.5%)

  • The $1600 gain from tax cuts in 2018 for average US households (Brookings Institute) has thus far been saved (personal savings rate is up from 2.4% to 3.1%), used to reduce debt (42% of respondents BofAML’s US consumer survey said they plan to use the tax cut to “save” or “pay down debt”), or used to fund an extra $320 in gasoline bills (gasoline prices are up on average 16% this year)

However, no matter what one thinks of Trump or the ultimate relevance of the fiscal stimulus, a bigger concern – according to BofA – is that a “visible stimulus” will be critical in the coming months for two reasons:

  • First, the blockbuster corporate earnings bonanza is coming to an end as BofA’s model suggests global EPS will slow from 20% to 6% in coming quarters as Asian export growth slows and global PMIs normalize, as predicted by the yield curve.

  • Second, and far more important, is that both profit and economic growth is suddenly in jeopardy: according to Hartnett South Korean export growth, a notoriously good global cyclical indicator, turned negative for 1st time since 2016.”

And, as a further reminder, the last time South Korean export growth turned negative in the downward direction was just around the time of China’s devaluation in the summer of 2015, when global markets were on the verge of a 20% bear market, and only the Shanghai Accord of February 2016 prevented a free fall in risk assets.

If the South Korean “advance indicator” is as accurate as it has always been, forget about soaring earnings for the coming quarters: an earnings recession is just around the corner!

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Saudi Arabia’s Needs Have Become Iran’s Problems

Authored by Tom Luongo,

While Israel has been the barking dog pushing hostilities against Iran, it is the Saudis that are truly most threatened by Iran’s return to the global economy.  They are as much, if not a bigger, agitator for tearing up the Iran Nuclear Deal as Israel has been.

A report earlier this week from the International Monetary Fund argued that Saudi Arabia still needs oil trading at $88 per barrel to balance its budget and pull off the structural reforms the country needs.

Crown Prince Mohammed bin Salman’s Vision 2030 plan, which has the usual suspects in Washington salivating at the prospect of leaching off of, will require a complete make-over of Saudi society.  It will likely cost trillions.  And the Saudis still have a big budget deficit.

It is set to shrink to a more manageable 7% of GDP this year while expanding government spending by more than 5%.

2018 Cuts the Deficit to 7.3% of GDP, thanks to $70/bbl Oil

And the only thing keeping this budget deficit moving lower is, of course, higher oil prices.  Last year’s breakeven point was just $70 per barrel. But that rises this year to $88 according to the IMF because Bin Salman has begun the spending associated with Vision 2030.

Now, since the implementation of the Iran Nuclear Deal (JCPOA) Iran’s oil output has risen back to its pre-sanctions level of around 3.8 million barrels per day.

Iran’s Oil Production Now Exceeds, on Average, it’s Pre-Sanctions Level in 2012

With new exploration and production deals signed by European, Chinese and Russian oil majors Iran’s output over the next few years could easily push over 4 million barrels if not closer to 5 million.

While at the same time Saudi Arabia wants to both cut back on production and its exports to raise the price per barrel to the level it needs.  So, it shouldn’t take a genius to see the incentive here to try and bribe President Trump with hundreds of billions in arms sales and promises of fighting Iran in Syria to get him to de-certify the JCPOA and have the deal fall apart.

U.S. Mob Rule

The Saudis, to some extent, are being shook down by Trump, Mafioso-style, for our nuclear shield.  In exchange for help bottling up Iran and raising oil prices the Saudis will have to spend a lot of their savings pump-priming the U.S. economy with new refineries in Texas and more planes to drop bombs on weddings.

You know, win/win.

If the Saudis need $88 per barrel oil then Iran has to have its output cut to offset the rising price per barrel.

With the reports that U.S. Green Berets are present on the battlefield in Yemen should tell you that the Trump Administration is uninterested in any outcome in the Middle East that doesn’t end with Iran’s capitulation to Israeli and Saudi (and therefore U.S.) needs and Russia and China’s humiliation for backing Iran.

The White House is fully staffed with people willing to commit or condone the worst human rights violations in Yemen and Syria in order to stop Iran.

The question is, “Stop Iran from what?”  The conventional answer from Trump and K-Street foreign policy ‘experts’ is, “Gaining a nuclear weapon.”  The real answer, however, is much simpler than that.

Iran will not be allowed to re-join the global economy as an independent actor.  That position will be maintained even if the theocracy is overthrown.  Because this supposed existential fight to the death between Saudi Arabia and Iran has little to do with religion and old enmities.

It has to do with oil.   Saudi Arabia wants Iran back to less than 3 million barrels a day to support higher prices.  Israel and the U.S. want to starve the Iranian government of money, so pulling out of the deal will allow the U.S. to re-impose sanctions on Iran, cutting it out of the global banking system again.

But Iran being back to pre-2012 production levels and removing the U.S. dollar from its oil trade officially means that China has a different partner to buy its oil from.  And that supports the fledgling petroyuan system developing in Shanghai financial markets.

The China Syndrome

Sinopec is set to curb imports of Saudi Oil another 40% this month citing inexplicable high prices from the Saudis during a time when a significant portion of Sinopec’s refineries are down for annual maintenance and other producers are happy to offer more for less to grab market share.

Last month, a Unipec official told Reuters, “Our refineries think these are unreasonable prices as they do not follow the pricing methodology.” Besides Sinopec, a source from another two refineries in northern Asia said they will be cutting their imports from Saudi Arabia by ten percent as oil buyers have a hard time grasping how the Kingdom is calculating the price for its most popular grade.

The price increase came as a surprise to the biggest market for crude in the world.

Aramco is pushing China at a time when it’s clear it has other options in the oil market and no longer wants to pay for oil in dollars.  Brazil’s imports to China have risen sharply.  Iran’s imports to India, tangentially related, are set to double this year to nearly 400,000 bbl/day.

Trump may want the Saudis, again mafioso-style, to raise its prices to get China to import U.S. oil as the Brent/WTI spread continues to widen, now over $6, to combat the U.S. trade deficit with China.  Not that that makes a lick of sense, but then again, Trump is a mercantilist, which also doesn’t make any sense.

So, at least its consistent.

U.S. production keeps surging and will continue for likely the rest of 2018 and beyond as new fracking techniques lengthen the production time of new wells, albeit at lower daily output.

So, even if rig counts fall, which they show no signs of doing, U.S. shale oil output will keep rising.  Brent output is falling, U.S. production is rising.  So, the Brent/WTI spread will continue to widen if new ‘markets’ aren’t opened up for U.S. shale producers.

This again, brings me back to the Iran Nuclear Deal being all about oil and not about bombs.  Ending the deal will allow Iran to restart its program which the conventional wisdom says they can spin up to a viable weapon within 18 months, quicker if its partner North Korea was successful in producing a viable warhead.

But, having removed Iran from the SWIFT financial payments network and seen Iran survive it, the threat of sanctions and SWIFT expulsion seem hollow. Both China and Russia have viable SWIFT alternatives and Iran has so few ties to both U.S. and European banking institutions after nearly a decade of hostilities.

Moreover, Turkey, who helped Iran survive without SWIFT in the past, is more than happy to stick it to the U.S. after its backing the Syrian Kurds.  In short, Iran has a lot more friends today than it did in 2012.

China and Russia are immensely stronger.  Israel and Saudi Arabia far weaker.  And that means that regardless of what Trump does on May 12th, the world is already prepared for the next steps.

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