Category Archives: Blog

The Guns of August

The trouble with August is that the historical record shows that whilst everyone is on holiday it’s a great month to start a war.

From the guns of August in 1914, via the start of the Wehrmacht’s ‘Grand Tour of Europe’ in 1939, the Gulf of Tonkin Vietnam war inciting incident of 1964, Saddam Hussein’s invasion of Kuwait in 1990, down to the Russo-Georgian War of 2008, August has meant ‘war’.

This August doesn’t look much better. There is global trouble brewing, big time. It may be the heat: perhaps the madness of ‘le Cafard,’ (the Foreign Legion’s description of the delirium caused by a Saharan summer), but the war drums are beating once again.

The problem is Iran. The US and Iran have been at odds increasingly over Tehran’s growing political and military influence in the Middle East. Things are not looking good for the ‘Mad Mullahs’ of Tehran this August. Trump has deliberately put the clerical regime in Tehran and the Iranian people between a rock and a hard place. The Ayatollah and President Trump are on a collision course.

Many thought that Trump would go back on his threat to quit Obama’s 2015 wishy-washy nuclear ‘deal.’ They were wrong. The economic war started on Tuesday, 7 August 2018, with new US sanctions on cars, aircraft, currency and gold. Any company with an office in the US caught ‘trading with the enemy’ will be prosecuted. Sanctions will cut off the money tap. Europeans are stunned by their loss of potential profits, but the Yanks mean business.

The current American President has simply followed through on his campaign promise. If anyone was in doubt about his willingness to use US power, Trump has shown that when he sets his mind to something it’s going to happen, despite the anguished wails of dismay from EU corporations who thought that their juicy new Iranian contracts would bring them an early Christmas.

Trump is deliberately placing the Iranian economy under intolerable pressure. Global companies are now fleeing the country and the Iranian rial has collapsed, losing half its value since April. Behnam Ben Taleblu, Research Fellow at the Foundation for Defense of Democracies in Washington DC, says: ‘Re-imposing these sanctions is the first step towards tightening the noose on Tehran, putting the regime to a choice between continuing its malign activities or improving its economy.’ Washington’s new penalties are just the first warning shot for even more savage sanctions planned for early November that will target Iran’s valuable oil exports.

The threat is mortal. Tehran needs to sell its oil to survive. The lack of oil revenue could bankrupt Iran. The reaction to American threats from the regime was therefore predictable: Iranian President Hassan Rouhani promptly threatened to disrupt international oil shipments through the Persian Gulf if renewed US sanctions strangle Iran’s oil sales. ‘No one who really understands politics would say they will block Iran’s oil exports, and we have many straits, the Strait of Hormuz is just one of those …. We are the honest men who have throughout history guaranteed the safety of this region’s waterways. Do not play with the lion’s tail, it will bring regret.’

Trump promptly Tweeted in kind, mostly in capital letters: ‘To Iranian President Rouhani: Never, ever threaten the United States again or you will suffer consequences the likes of which few throughout history have suffered before. We are no longer a country that will stand for your demented words of violence and death. Be cautious!’

Whether that will change the change the minds of Iran’s Shi’ite clerical leadership is another matter. Already Tehran is preparing for a fight. The US military’s Central Command reported on Wednesday, 8 August 2018, an increase in naval activity in the Strait of Hormuz, the critical waterway at the mouth of the Persian Gulf for the international shipment of oil from the Middle East. Iran is threatening to block it off with ships and mines if the USA’s renewed sanctions begin to bite.

The spokesman for Iran’s Revolutionary Guards confirmed the deployment of more than 100 vessels to the Gulf: ‘This exercise was conducted with the aim of controlling and safeguarding the safety of the international waterway in the Persian Gulf and within the framework of the programme of the Guards’ annual military exercises.’ He added: ‘They are to enhance defence readiness and to confront threats and potential adventurous acts of enemies.’

In turn, the Americans have warned Iran off. According to Washington, ‘Iran has threatened to close the Strait of Hormuz. They’ve done that in the past. They saw the international community put dozens of nations of the international community naval forces in for exercises to clear the straits. Clearly, this would be an attack on international shipping, and it would have, obviously, an international response to reopen the shipping lanes with whatever that took, because of the world’s economy depends on those energy supplies flowing out of there.’

This is fighting talk by both sides, but America has serious muscle on the water to back its rhetoric. The US 5th Fleet, based in Bahrain, is the ‘combined 5th Fleet’, which means it does not just comprise the US Navy. As well as a powerful US Carrier Strike Force, it has got Kuwaiti, Bahraini, Saudi, and Emirati vessels under command, as well as the occasional Royal Navy warship (when Britain’s MoD can afford to spare one as a token gesture).

From the Iranian side this war of words is not just sabre rattling. This is a battle Iran dare not lose, for domestic reasons. The Government of President Hassan Rouhani is already facing serious trouble at home, where the opposition has demanded action on corruption and for renewed efforts to rescue the economy. A combination of scarcity and inflation has caused prices to soar. Everything from real estate, groceries, and electronic goods have almost doubled in price. Iran is facing the worst economic crisis the country has ever seen.

Worse is to come. Iran has major internal socio-political problems, with serious water shortages and street protests breaking out in the country since the beginning of 2018 over high prices, disconnected water supplies, power cuts and widespread corruption. Since the start of August 2018, thousands of people have rioted in Iranian cities – including Isfahan, Karaj, Shiraz and Ahvaz – in protest against high inflation caused in part by the collapsing rial.

Already there are signs of a widespread clampdown by the clergy and the Revolutionary Guards. What started off as protests, spurred on by the deteriorating economic conditions in Iran and the inflation in prices of basic necessities, could now escalate into a rebellion against the Islamic Republic itself. As domestic economic conditions get worse there is growing anger at Iran’s foreign policy – which includes spending billions of dollars to supply weapons and fighters to take over Syria, funding the Houthi rebellion in Yemen, as well as lending financial support to Lebanese Shi’ite group, Hezbollah – whilst Iranian citizens back home go short. The Mullahs can no longer rely on a docile population.

The questions to pose are, ‘To what extent are these protests threatening the theocratic regime?’ and ‘Could such an upheaval foreshadow a second Iranian revolution?’ This is a real possibility and it explains Washington’s adamantine stance. Despite US denials, Trump and his team really want nothing less than to bring the Mullahs down.

This would explain the sudden receptiveness of the regime to the pleas of the protesters. In January 2018, Iran’s Parliament rejected a then-recent budget plan that increased the price of petrol by 50% and proposed increases in the price of water, electricity, and gas (‘Protests, 2018 budget and public discourse in Iran’, Al Jazeera News, 30 January 2018).

This apparent responsiveness from the current Islamic Consultative Assembly government is a desperate attempt to defuse the sense of grievance felt by many Iranians in the hope of reducing the risk of more violence on the streets or, in the worst-case scenario, protests escalating into a fully fledged revolution. On every front, trouble looms.

Will it end in tears and war? If so, when? Who can predict the outcome?

Once again, the guns of August are loaded and ready to fire – on both sides of the crisis.

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Democracy?

Sir Winston Churchill famously growled, ‘Democracy is the worst form of government – except for all the others.’

The great man had a point. He understood the dangers of ‘the tyranny of the majority’ very clearly, even adding on one occasion, ‘the best argument against democracy is a five-minute conversation with the average voter.’ Despite this, Churchill was a genuine democrat. He believed in the people and accepted their judgments.

‘Let’s do this the Democratic way …. Hands up all those who agree with me?’

This is highly relevant today, because democracy is under attack. The most obvious is Britain’s undeclared civil war over Brexit, where a narrow majority of voters – albeit on the biggest recorded electoral turn out – voted to quit the European Union. The subsequent uproar and the blatant attempts to pervert and obstruct the people’s decision to leave have shown that the democratic will is only recognised by some when it suits them. That is profoundly undemocratic. But, as in some many things, it all depends on what you mean by ‘democracy.’

Democracy as a political idea dates back to ancient Greece. Literally, it means, ‘rule by the people.’ The word comes from the Greek word dēmokratiā, which is a combination of ‘the people’ (demos) and ‘to rule’ (kratos). The first major exponent of the system was the city state of Athens, around 400 BCE. Not every Greek agreed with the concept. When a Spartan aristocrat argued for more democracy, he was put down firmly by the retort, ‘I’ll believe it when you run your own family as a democracy!’

Since then, both the theory and the practice of democracy have undergone profound changes.  What worked for certain types of male citizens of Athens centuries ago (women, slaves, foreign residents and children under 18 years of age had no vote) clearly does not work for hugely diverse countries like the USA or complex modern societies like the UK.

However, the idea of the people as ‘sovereign in their own affairs’ persists at the heart of democracy. Lincoln spelled it out simply in his Gettysburg Address: ‘… government of the people, by the people, for the people shall not perish from the earth’. From this, three principal systems of democracy have emerged; ‘direct’; ‘delegated’; and ‘representative’.

  • Direct democracy means every voter has a direct say via referendums. The Swiss and Californians like these.
  • Delegated democracy means that the people elect an individual to carry their views to a governing body such as a Senate, as in Ancient Rome. British Trades Unions are a modern example. Shop stewards are given instructions from their members and send delegates to the TUC with ‘a mandate from their members’.
  • Representative democracy means that elected officials represent a group of people. This is the theme of the rest of this article.

Colonial America favoured a system of representation because of the new country’s enormous size and widespread population. The Constitutional Convention (1787) realised that ‘the People of the United States’, could only govern themselves at the national, Federal level by electing Congressmen to go to distant Washington DC to represent their wishes.

The key word is ‘represent.’  Whereas a delegate is merely a mouthpiece, a representative is sent to use his (or her) best judgment on behalf of his constituents. The English political thinker Edmund Burke described his role as an MP to the voters of Bristol in 1774: ‘Your representative owes you … his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.’ This explains why, for example, hanging is not put to the popular vote. Polls show that any referendum of the people would reimpose capital punishment, but Britain’s elected representatives in Parliament disagree. MPs think they know best, so they use their judgments to represent their constituents; they do not take their instructions from the people between general elections, which gives rise to the saying: ‘If you don’t like me or my views, then you can vote me out.’

Democracy therefore can mean different things to different people. What is clear, however, is that representative democracy requires mutual trusttrust of the representative by the people; and trust in the people by their elected representatives. Somewhere in the past 20 years that trust has begun to break down. We live in a world where politicians spout democracy – but do everything in their power to overturn it when the people give the ‘wrong answer’ at elections.

Nowhere was this more in evidence than the 2008 farce of Irish voters rejecting the Lisbon Treaty, only to be sent back to vote again after EU officials’ behind-doors deal to force a second referendum. Similar European Commission’s contempt for democratic majorities – and for democracy itself – has been seen in Denmark and France. For Brussels, ‘the people’ cannot be trusted and must be forced to vote again until they come up with the ‘right answer.’ This is dangerous stuff and reflects Bertholt Brecht’s sardonic comment on Communist elections: ‘Would it not be simpler, if the government simply dissolved the people and elected another?’

Closer to home, the UK’s Brexit referendum and Trump’s election in the USA sent shock waves through liberal elites, by coming up with the ‘wrong answer’. The chattering classes were horrified. What these events revealed across the Western world is a widening chasm in far too many countries between voters and the cosy governing class represented by the likes of Davos, the Bilderburg Group, Brussels, Westminster, Washington, politicians, intellectuals and civil servants. This gap is made worse by the refusal of these elites to accept the will of the people; vested interests do everything in their power to block resolutions using non-elected institutions, such as supreme courts and the European Commission, to clamp down on dissent and liberty. For the EU it’s the (deliberate) ‘democratic deficit’; for the chatterati it means finding some way to ignore or neutralise voters’ wishes.

So, when added to the alternative-fact extremes of frightened metropolitan-elite politicians who wish to bash the masses using phrases like ‘post-truth politics’ to control the ‘unqualified simpletons of the great voting public,’ something sinister and profoundly undemocratic is emerging.

Democracy itself is under attack across Europe and the USA, a fact becoming plainer with every daily headline. The idea that the ‘common people are too ignorant and too driven by base emotions to really understand what they voted for’ has gained ground in political circles ever since Trump was elected and Britain voted for Brexit. This is sold as defence of human rights, and especially minority rights against the ‘tyranny of the ignorant majority’. These days it’s not the aristos who fear the mob – it’s the ivory-tower academics and intellectuals who think only they know what is best.

Their solution? ‘Ordinary people are too ill-informed to know what’s best for them – leave it to the experts.’ Well, the experts of the IMF, CBI, the EU, most of the media, the Chancellor and the Bank of England forecast instant ruin, famine, unemployment and plagues of frogs if Britons dared to leave the EU. They’re still waiting.

Another chestnut touted by the new anti-democrats is that ‘Democracy leaves semi-illiterate voters at the mercy of fake news and media lies.’ The high-minded BBC naturally does not agree; but heartily agrees that Fox News and the Daily Mail’s ‘propaganda’ only confuses ordinary, simple folk – quite unlike the BBC and The Guardian, of course ….

The truth is that democracy itself is under attack. Nowhere can this be seen more clearly than in today’s struggle over Brexit, but showing contempt for the masses can only end one way.

As Chairman of the Public Administration and Constitutional Affairs Select Committee, Sir Bernard Jenkin MP has said he ‘dreads to think’ what will happen to British politics if the Establishment fails to implement the people’s verdict in the Referendum. He warned: ‘That’s not what democracy looks like in my book. Of course, the EU has always tried to reverse every adverse referendum … but if they defeat the British people in this endeavour, that would be a disaster for our country.’

And for democracy? Watch out for forthcoming variations on the ‘I’m a democrat, but …’ theme before politicians and bureaucrats then ignore the will of the voters. Be very careful; the ‘post-Democratic’ age is being touted as the way ahead.

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The Wolf at our Door

The Assyrian came down like the wolf on the fold,’ wrote Lord Byron in his famous poem about the ancient Persians on the rampage. Well, the modern Persians are on the rampage now; and they are right on our doorstep.

Fortunately President Trump is well aware of the danger; he has slammed the diplomatic door in Tehran’s face, to the fury of France, Germany and EU companies, all suddenly forced to ditch their lucrative contracts with Tehran.

One of the mistakes Westerners make is thinking that the Middle East is run by Arabs: wrong. The Middle East is mainly split between Persians and Arabs; and they don’t get on – and never have. The ancient Persians were the bane of Greece and Rome; it wasn’t until the fanatical Arabian warriors of Islam conquered Persia in 651 that the Persians even became Muslim. To this day Persia – now calling itself Iran (after its Persian name) – is a separate culture, language and even a separate branch of Islam.

Persians are Shi’ite Muslims and believe that Islam should be ruled by direct descendants of the Prophet.  Most Arabs are Sunni Muslims, believing that Muhammad’s successor was an elected Imam called Abu Bakr. The ‘religion of peace and love’ fell out in 661 when Muhammad’s cousin and son-in-law, Ali, was murdered. Since then the religious split has widened and acquired political significance – Persians are mainly Shi’a; the rest of the Arab world (85%) are Sunni.

This matters because the modern Assyrians are once again muscling in across the Middle East – and even further. Thanks to Iran, and the meddling Mullahs of Tehran, the great geo-strategic tectonic plates are shifting, and not necessarily for the better. Iran is on the march – and Iran wants a nuclear bomb.

Iran’s efforts to expand its influence are there for all to see. Following the rout of ISIS by Kurdish infantry and American and Russian air power, Iran now controls large swathes of the Middle East, as well as dominating the governments in Baghdad and Damascus, whilst simultaneously intimidating the Gulf States. Through its use of proxy fighters like the Houthis in Yemen, Hezbollah in Lebanon and Hamas in Gaza, Tehran’s tentacles have now reached the Mediterranean. Iran is busy setting itself up as a regional superpower.

However, Tehran’s real interests are much wider; as Trump warned, we ignore them at our peril. Azerbaijan’s traditional alliance has been with Turkey: Azeris are ethnically Turkic, and the two countries’ languages have shared roots. However, with Turkey now mired down in Syria as a result of Ankara’s paranoia over the Kurds, Tehran is suddenly wooing Baku, because Azerbaijan was once part of the Persian Empire and over 20 million ethnic Azeris live in Iran. Tehran is concerned that the Azeris might try to break away – like the Kurds.

However, Iran’s interests are much wider than domestic unrest on its northern border. Assad’s rump Syria is, once again, effectively a Persian satrapy. This worries Jeddah, because far to the south west, Tehran is fighting a proxy war with Saudi Arabia, the other big player in the region. (‘War’ is no exaggeration. When guided missiles start falling near your capital, that’s war!) The luckless hosts for this struggle for regional dominance are the wretched Shi’a Houthis of Yemen, whose rebellion against their government is being brutally crushed by the Saudis and Gulf States, determined to stop the Shi’a gaining even more power on their doorstep.

Washington is not fooled by Tehran’s manoeuvrings, either. With respect to Iranian aims, US General Jack Keane warns: ‘Syria for Iran is a strategic anchor in the region … they really want to gain more influence and domination of the countries in the area … the Iranians have been conducting a military build-up in southern and south-western Syria .… What they really want to do is replicate what they’ve done in Lebanon, where Hezbollah have in their hands 130,000-plus rockets and missiles capable of reaching Tel-Aviv and Jerusalem. This is serious stuff, what Iran is up to. They certainly want to undermine the government of Israel, create instability and eventually, in time, destroy it.’

Iran’s leaders make no secret of their ambition to emerge as the dominant power in the Middle East and, eventually, the entire Islamic world. Tehran is quite open about its aims: to roll back the influence of the United States in the region and to work towards Israel’s destruction. For example, in 2015, Ali Younesi (a senior intelligence adviser to Iranian President Rouhani) outlined a clear blueprint for Iranian plans, describing Iran’s role as ‘protecting the interests of all the people in the region – because they are all Iran’s people .… We must try to once again spread the banner of Islamic-Iranian unity and peace in the region. Iran must bear this responsibility, as it did in the past.’ Interestingly he spoke of Iran’s past as an empire, and called for a ‘greater Iran’, stretching from the borders of China to the Persian Gulf.

There is however a built-in limit to imperial Iranian dreams: Sunni Arabs are deeply suspicious of Persians. As a Shi’a power, Tehran finds it difficult to win support outside Shi’ite Arab populations. The principal tool of Iranian expansion has been the Islamic Revolutionary Guard Corps (IRGC), led by the experienced Mohammad Ali Jafari, an advocate of asymmetric warfare using its elite al-Quds Force, whose prime mission is to create Shi’a political/military proxies in other countries and further the ‘Iranian Islamic Revolution’. The chaos in Syria and Lebanon opened the door to Iran’s take-over, using the IGRC as its vanguard.

Iran’s control of Iraq’s Shi’a Arabs rams the point home.   According to a recent report in the Asharq al-Awsat, the IRGC openly maintains a permanent staff of senior officers and political appointees in Baghdad to manage the Shi’a militias and control the Iraqi countryside.  Similar IRGC units are being set up in Syria and Lebanon.

Now Iran has been caught stirring up trouble in another area of expansion, this time on the Atlantic, a very long way from home: Morocco. When colonial Spain left Morocco in the 1970s, Polisario guerrillas fought for independence for the Sahrawi people until a UN-brokered ceasefire. However, Iran and its Lebanese Shi’ite ally, Hezbollah, have just been exposed running arms secretly to the Polisario and training its fighters. ‘Hezbollah sent military officials to Polisario and provided the front with … weapons and trained them in urban warfare’, according to Rabat. Intelligence reports confirm this meddling. Sunni Morocco has reacted by expelling the Iranian ambassador and severing all diplomatic ties.

However, the greatest danger of all is Iran’s nuclear ambitions, as Trump warned when he scrapped Obama’s 2015 naive Iranian deal. Under pressure from Obama and the EU, Iran had agreed to limit its attempt to develop a nuclear capability in return for the lifting of crippling economic sanctions. But, as Israeli intelligence has proved conclusively, the Persians lied and cheated. Now, despite EU corporations’ wails of lost profits, Trump has re-enforced savage sanctions to bring Tehran to its knees once again and scupper Iran’s nuclear programme once and for all. Iran’s aims may be ambitious but its armed forces lack any genuine capability to attack its neighbours; so, without a nuclear capability, Tehran’s options to become the bully on the block are limited.

Iran’s long-term strategy is clear: a naked grab for regional hegemony, mainly by controlling proxies. The irony is that Tehran has badly overplayed its hand; Iranian interference and subversion abroad has been too blatant and encouraged international resistance to Tehran’s over-ambitious dictators. Absolutely no-one wants to see the mad Mullahs with a nuclear bomb. Perhaps the Ayatollah should heed the old Persian proverb? ‘Experience teaches us that wishful thinking only leads to disappointment.’

But be in no doubt: the Iranian wolf is hungry.

Money Makes the World Go Round

For the second time in a month, to my surprise, I find myself agreeing with President Putin.  Speaking at the International Economic Forum recently he warned: ‘We don’t need trade wars today … we need a comprehensive trade peace.’

Cuddly old Vlad was really warning us that there’s a financial firestorm brewing. Looking at what is going on with the euro and the Turkish lira, it’s hard to disagree.

The euro is really our old friend the Deutsche mark, cunningly devalued and disguised to pay for German re-unification, and now Europe’s chokehold currency of no choice. For example, any independent Scotland joining the EU would nowadays be ‘forced’ to accept the euro. Difficult for the Scots: not for nothing did Thomas Carlyle call economics the dismal science.’

Dismal science or not, money makes the world go round – and always has done. Even St Paul admitted: ‘The love of money is the root of all evil.’ This titanic battle for economic power rages around us every day, as China and America tussle behind the scenes over who owes how many dollars to whom and what they are worth, whilst a worried Commission in Brussels watches nervously as its great dream of a superstate called ‘Europe’ begins to disintegrate.

Because the UK’s ‘Brexit’ is the least of the EU’s problems. With Poland refusing to toe the Merkel party line, the Balkan states disobeying Juncker’s ‘diktats’ on immigration, and now a major trade war looming with the USA, Brussels has its hands full. Money is at the heart of it all. The unfolding Italian political train crash that is the new populist, anti-establishment Eurosceptic government is Brussels’ worst nightmare. It threatens their euro. Austrian chancellor Kurz gives the game away, bleating: ‘We saw in Greece how dangerous it is if a country has a bigger and bigger debt and I hope that we will not have a second Greece in our neighbouring country, Italy.’

The reason? Money and debt. Frightened hard currency has been haemorrhaging out of cash-strapped Italy for months, driving it even further into the red, amid fears of a Greek-style euro debt crisis which would bring the country to its knees. The new Italian government is even threatening to quit the euro and set up a parallel currency.

This is serious, because Italy is the eurozone’s third largest economy, nearly ten times the size of Greece’s.

The former chief economist of the IMF – Olivier Blanchard – believes the eurozone is heading for an ‘horrific crisis,’ denouncing Italy’s popular new government’s plans as ‘likely to violate all EU and domestic fiscal rules and put debt on an unsustainable trajectory’. What he means is that Rome is inviting an economic and political war, because the big French and German banks risk losing billions if Italy says, ‘no more pay offs.’

Brussels now has the beginnings of a serious rebellion on its hands. However, once again Italian voters have been over–ruled by EU technocrats, pressuring President Mattarella to ignore the voters, just as the Berlusconi government was toppled in 2011 by Brussels and the European Central Bank, in what was effectively a ‘soft coup.’

This is dangerous territory.

The Italian president’s refusal to accept the Lega-Gillini finance minister because he ‘could provoke Italy’s exit from the euro’ is dynamite. The political message to Italian voters is clear: whoever you vote for, the eurozone rules. A Lega spokesman explained: ‘You have to swear allegiance to the god of the euro in order to be allowed to have a political life in Italy. It’s worse than a religion.’

In Brussels,  Juncker openly threatens: ‘There can be no democratic choice against the European treaties. One cannot exit the euro without leaving the EU,’ and Günther Oettinger, European Budget Commissioner for Budget, actually said: ‘This will teach the Italians to vote for the right thing.’

Because the ECB and Brussels will fight to the last drop of Italian money to stop anyone escaping from their eurozone straitjacket.  The French Finance Minister warns: ‘If the new government takes the risk of not respecting its commitments [in other words, “If Italy doesn’t pay its huge debts to our big French and German banks”], the financial stability of the eurozone will be threatened. Everyone must understand that Italy’s future is in Europe and nowhere else. … there are rules that must be respected.’

This push to smother Italy’s eurosceptic rebellion, as they muzzled Syriza in Greece, comes from a worried Berlin, Brussels, and the EU power structure. But this time they may have blundered into a trap, because the EU’s economic problems grow worse every day. Now debt-ridden Spain admits it is in serious trouble. And Spain owes euro banks ‘zillions’, too. The bottom line for the EU is that if the Italians and Spanish welch on their euro debts, then the euro is finished – with huge international bankruptcies on the cards.

‘So what?’ says the man in the Kyrenia café, ‘How do big economic problems affect me, my family and my bank account? Who cares?’

The answer to the puzzled denizens of Turkish North Cyprus is ‘look at your money.’ Something very odd has happened to their Turkish lira. One year ago, 1 GBP pound sterling bought you 4.30 TRY; ten years ago, on 31 May 2008, a quid bought just 2.12 lira. And today? Going to press, a pound buys you around 6 lira. That’s what international currency fluctuations do to the expat, watching his pension. That’s how small Turkish Cypriot businesses, being paid in lira whilst paying for their rents in sterling, go bust. The reason? Money: because the Turkish lira is now in deep international doo-doo.

For years, Ankara’s AKP government has funded its massive vote-buying economic programme with money borrowed from overseas investors, attracted by Turkey’s generous interest rates. No less than 70% of Turkey’s deficit is covered by short-term foreign loans.

The problem is paying off those loans. Interest payments were biting deeper and deeper into Ankara’s Central Bank’s precious reserves of hard currency US dollars or euros. Loans began to dry up, so the Central Bank increased interest rates to tempt the punters and keep the all-important foreign dosh flowing. The problem is that at 13.5% the interest payments were expensive – but, at 16.5%, they could become ruinous.

At which point Turkey’s would-be President stepped in, boasting that he personally intends to run the economy when he wins the election on 24 June to become all-powerful leader. On his orders, interest rates will be slashed to 10% to save Turkey’s money. Result? Instant panic and predictable flight by spooked, nervous lira investors. Consequence? A market panic with foreigners desperate to unload their lira while they can. ‘Cheap? Your real, genuine Turkish lira. A real bargain, guv … Gotta sell.’

Because that’s what markets do. That’s how economics works: supply and demand. No demand for lira, they go dirt cheap. The result is that Turkey will either have to devalue, introduce capital controls or accept that, whatever their ‘Dear Leader’ thinks, foreigners will decide just what the Turkish lira is truly worth: and foreign investors are not impressed.

As an anonymous fund manager at a major asset management firm, complained: ‘Erdogan is fighting the extremists, he is fighting after the failed coup – now he is fighting the financial markets, and that is dangerous …. You can fight your domestic foes all you want; but when you are trying to take on the global financial market, that is a battle you can’t really win.’

And the EU? Watch this space. Of one thing we can be sure: the Commission, Berlin, Paris and Frankfurt will gang up in a darkened alley, ready to bludgeon, beat, bribe, browbeat and bully Italy to keep their precious euro together at all costs. Once again, the financial gloves are off. It’s going to get ugly. Just ask the Greeks.

Money really does make the world go round.

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Watch Out! There’s a War About

For once I find myself in total agreement with Vladimir Putin, who observed recently in a Blinding Glimpse of the Obvious that ‘the world is becoming a more chaotic place.’ Whilst Pres-for-life Vlad’s BGO doesn’t exactly qualify him as a great thinker, this time he is absolutely right. There’s a definite feeling abroad of an unravelling in world affairs; an uneasy sense that something nasty is lurking round the corner of history ….

As Nigel Molesworth put it so succinctly in Down with Skool: ‘History started badly and hav been getting steadily worse.’ Looking at our increasingly troubled world, maybe ‘the gorilla of 3B’ got it right.

But first, the good news. A few months ago we were all nervously observing a ‘mad, bad and dangerous to know’ US President threatening fire and fury at North Korea’s ‘Little Rocket Man’ over nuclear missiles. It was definitely steel helmet (and don’t forget your respirator) time. Now, thanks to Trump’s interesting blend of diplomacy, brutal economic sanctions and the threat of violence, Kim Wrong ’Un seems to have a sudden change of heart and is smiling for the cameras and shaking hands across the border. Sigh of relief all round?

However, let’s not get too excited. North Koreans have a consistent track record in talks with the South and the US: consistently lying and trousering the ‘Danegeld’ paid to them to behave themselves, whilst they ignore any agreements. We need to watch this ‘deal’ very carefully.

And let us not forget that Dictator Kim was threatening nuclear war whilst still presiding over appalling human-rights abuses as he ruthlessly executed friends and family alike to eliminate his rivals. Nonetheless, if President Trump really succeeds in negotiating an end to Kim’s nuclear provocations and the Korean War (‘Neutral ground or dramatic backdrop?‘, Telegraph, 23 April 2018), he will have defused a potentially apocalyptic global crisis.

Good luck with that.

Now for the bad news; and there is far too much, as Putin warns.  Intelligence analysts are warning that trouble is looming from at least three other directions: Syria and Iran; Israel; and a global economy deep in debt.

First, Syria, where the endless civil war to keep Assad and his Shi’a allies in power has morphed into something new – and much more worrying. UN Secretary General Guterres warns: ‘The Cold War is back with a vengeance – and a difference.’ The difference is that it is no longer cold. Something very dangerous is unfolding in the war-torn Middle East. A little-known Iranian-backed Shi’a group calling itself the ‘Baqir Brigade’ has declared jihad on US forces in Syria,  where Russian and American troops are only a rifle range apart.  The US, UK and France have already attacked Syrian military targets as a reprisal for the latest gas attack. The dangers are obvious. Any Russia and US fighting in Syria could detonate a hot war and set the entire Middle East on fire.

Further north, Turkey has invaded Syria to crush the Kurds – the warriors who really defeated ISIS on the ground. Meanwhile the Iranians and their Lebanese Shi’a proxy, Hezbollah, have set up a new battle front on Israel’s border. Iran effectively runs Syria now and is turning its malevolent eye against Israel.

This time the Mullahs are really playing with fire. Israel is not a normal country. Tel Aviv will fight like a cornered cat against an enemy that has sworn to ‘sweep the Jews into the sea.’ And Israel possesses nuclear weapons precisely to deter anyone stupid enough to threaten Israel’s very existence. Israel has warned that ‘it will retaliate with every means possible,’ if attacked by Iran and its friends.

Ironically, Iran’s nuclear ambitions may be unravelling at the very moment it tries to intimidate Israel. Tehran thought that it had pulled a stroke with nice Mr Obama with his 2016 no-nukes deal to get sanctions lifted, whilst continuing to build its Shi’a empire in Iraq, Lebanon, Syria, and now Yemen. Trump is having none of that. Despite Macron’s pleading for a cosy continuation of flogging French and EU goodies to oil-rich Iran, Trump pulled the plug on 12 May 2018 and re-imposed economic sanctions, blocking Iranian oil sales and wrecking Tehran’s not-so-secret nuclear plans.

This is bad news for the world economy, which is now just as vulnerable to a financial crisis as it was in 2008. Oil is the motor of commerce. Oil prices, which dropped to $30 a barrel in 2009 and 2016, are now rising as production cuts by OPEC and Russia have finally sold the world glut of oil; so supply dries up. Iranian sanctions alone will remove 500,000 barrels a day from the market.

Even America’s new oil-shale output cannot fill this gap between supply and demand. Now Brent crude has risen to $72 a barrel and will probably go higher now that Trump has re-imposed sanctions. This could be a global economic bombshell as various geostrategic crises explode. Saudi Arabia is already talking about $100 crude, setting off a speculators’ scramble;  ‘We are pretty confident that oil will be in triple digits by next year,’ opines Jean-Louis Le Mee from Westbeck Capital.

IMF reports warn of a chain-reaction for world finance. One is well-understood: debt. Global debt has been alarmingly high since the 2008 financial crisis. Since then, nations have continued to borrow hand over fist, pushing worldwide debt to $200 trillion (a trillion is a million, million million.)  That is nearly three times the size of the entire global economy.

The second economic problem is that the Chinese and German economies are going into reverse. Germany’s economy in particular is stalling surprisingly quickly. The economic miracle by the EU’s motor of industry is over and now even Berlin faces economic problems, warns Düsseldorf’s Macroeconomic Policy Institute: ‘The danger of recession has increased markedly. It is a more critical picture than just a month ago.’

All this is happening as Korea teeters on a knife edge, Washington and Moscow go head to head, Syria faces multiple wars, Israel and Iran are shaping up for a catastrophic showdown, and the proxy war between Saudi Arabia and Iran over Yemen gets out of control with missile attacks on Saudi targets by Iranian-backed Houthis. A full blown religious war between Sunni and Shi’a has started. One intelligence analyst warns: ‘All it will take is one Houthi missile sinking a 200,000-ton oil tanker in the Gulf and the consequences would be global.’

Even here, on our island in the sun, alarming events are going on all around us. Suddenly bankrupt Greece is preparing to lease two French multi-purpose frigates to bolster its defences in the Aegean Sea, amid rising tensions with Turkey. Fighters are again on the alert over contested islands. Turkey sails warships to Cyprus to protect hydrocarbon finds. Hostages are being held on both sides. President Erdogan suddenly announces a snap election to choose the country’s next president and parliament on 24  June 2018, to give himself greater executive powers.

All this at a time when the Turkish economy is overheating, raising the possibility of another financial crisis like 2001, when the AKP first came to power promising a strong economy. With Turkish national borrowing skyrocketing and Ankara having to lure foreign money with promises of 13% interest on government bonds, this doesn’t look much like economic competence. The truth is that we are ‘living through interesting times,’ as the old Chinese curse puts it.

Whilst most normal people are just trying to get on with their lives, get to work, earn enough to raise a family and enjoy themselves, all around us alarming events look like coming to the boil. Politically we are living through world-changing history.

It’s an increasingly unstable and dangerous world.  We need to watch out for what is really going on out there.

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Gallipoli and the ANZACS

Last Wednesday, 25 April, was ANZAC day, which commemorates the invasion of Gallipoli in Western Turkey by the Allies in 1915. While Gallipoli was not exactly the British Empire’s finest hour, for Australia ‘ANZAC Day’ celebrates the colony’s rebirth as a new nation, forged in war.

The ‘Australian and New Zealand Army Corps’ was formed in Egypt in December 1914 from Antipodean volunteers. They were fit, adventurous young men, well paid and full of enthusiasm for the Empire and its war. Their first action was at Gallipoli on 25 April 1915.

However, the Gallipoli campaign turned out to be a major defeat for the Allies. It killed and maimed hundreds of thousands of men, wasted scarce resources and changed the face of British politics in the middle of a global war. It ensured that the Ottoman Empire would stay in the war, and helped condemn Tsarist Russia to defeat and the subsequent Red revolution.

The campaign was approved in January 1915, following a Russian request for an attack on Turkey. Russia was geographically isolated and fighting on three fronts. Both the Tsar and the Allies desperately needed support for Russia’s war effort because, if Russia stopped fighting, the whole might of the German war machine would be free to fall upon the Western Front.  Churchill, as First Lord of the Admiralty, ordered a naval assault on the Dardanelle Straits to bombard Constantinople. France added reinforcements to the force assembling in the Eastern Mediterranean.

The attack started in February when Admiral Carden led a mixed British and French fleet into the Straits. The British and French battleships blasted the Turkish fortresses and marines went ashore to confirm that the forts were out of action. It therefore came as a surprise when the fleet returned early in March to be met by accurate fire from mobile Turkish field artillery batteries. Worse, the minesweeping trawlers clearing the narrows ahead of the battleships with their crews of untrained civilian fishermen ‘turned tail directly they were fired upon.’

Admiral de Robeck took over and on 18 March led another full-blooded assault to ‘Force the Narrows’, when disaster struck. Four old battleships hit mines and sank. De Robeck withdrew, planning to return with reliable minesweepers and this time with army support to secure the ground covering the Straits. The upshot was that an expeditionary force under General Sir Ian Hamilton landed on Cannakale (Gallipoli) on 25 April. The ANZACs came ashore halfway up the west coast at Gaba Tepe and the British stormed ashore on the southern tip at Cape Helles.

But now the Turks were waiting. Both landings were a shambles. The ANZACs landed on an unknown beach under heavy fire. They struggled ashore to scramble up the steep slopes to the high ground overlooking the peninsula. Some Australians could even see the distant waters of the Dardanelles.  However, back on the beach all was confusion. Units waited for orders, officers failed to advance and artillery could not get up the steep hills. A near-suicidal counter attack by Mustafa Kemal’s 19th  Division stopped the Australians. Hamilton ordered the ANZACS to consolidate and dig in. They would stay in those locations for another eight wretched months.

Hamilton tried to break out on 28 April; but little was achieved and the bridgeheads were reduced to the troglodyte trench conditions of the Western Front by a determined Turkish defence. In the first five weeks of the campaign, the Imperial troops suffered nearly 40,000 casualties, the French a further 20,000; the Turks lost even more.

Gallipoli had become a bloody failure, politically and militarily. In May 1915 Admiral Fisher resigned over the direction of the campaign. Churchill was promptly sacked by Prime Minister Asquith as the price of forming a new coalition government.

As the summer heat built up, the campaign stagnated; flies, disease, lack of water and sanitation became the real enemy in the blistering heat of a Mediterranean summer. In August three new attacks were mounted. All failed. All that was left were three beleaguered beachheads – at Helles, Anzac Cove and Suvla Bay. In October, Hamilton was replaced by Sir Charles Monro, who promptly recommended withdrawal.

Lord Kitchener himself came out to see what conditions were like on the ground; appalled, he confirmed that the campaign must be ended. The only decision left was when to do so. In December the ‘Constantinople Expeditionary Force’ extricated itself under the very noses of the Turks without the loss of a single soldier. Ironically, the evacuation was easily the most successful element of the entire campaign.

However, Gallipoli established the ANZACs’ unique reputation. This was confirmed when they joined the BEF on the Western Front in France in 1916.  However, while no one doubted their ferocity in action or their fighting ability, they were – by British army standards – woefully undisciplined. Australian blood lust in the attack was legendary and they frequently took no prisoners, as at Polygon Wood near Ypres in the final assault towards Passchendaele in 1917. Here they encountered the Prussian Guard, whom they had fought when they arrived on the Somme the year before. Even the official communique admitted, ‘the ANZACs took no prisoners’. Robert Graves claimed in Goodbye to All That, that an Australian had boasted of robbing a dozen German prisoners then killing them all in cold blood.

These excesses were not just confined to the battlefield. Stories of Australian misconduct abounded and a host of contemporary references detail the lengthy list of their misdeeds, which were not limited to drunken sprees in estaminets behind the lines, either. They had the worst VD record in the BEF and a remarkable record of disciplinary infringements and imprisonment.  (By 1918, nine Australians per thousand were in prison for military crimes, some of them extremely serious. For the rest of the Dominion troops, the figure was only 1.6 per thousand.)

Australians were even bold enough to release British prisoners undergoing field punishment and dare the Military Police to try and re-imprison them. The Australians were not just tough and resourceful; they were also brazen in their defiance of authority.

The big difference was probably the absence of the death penalty. Alone in the BEF, Australians were effectively exempt from capital punishment for military offences. Although the British Commander-in-Chief, Haig, made several pleas for the death sentence to be enforced on his bolshie Australians, for domestic Australian political reasons the penalty was never enforced. Whatever the reasons, wherever ANZAC troops gathered in a gang out of the line there was often theft, drunkenness, disorder and trouble.

This cocky, over-confident Australian attitude was not universally admired. However, a Royal Artillery officer grudgingly conceded that he was ‘always glad when they were in the line nearby.’

As the war progressed the ANZACs’ reputation grew, even as their volunteer soldiers increasingly became casualties. Their final commander was an ‘amateur’ soldier: an Australian civil engineer, John Monash. General Monash led his Australians to remarkable victories as the German Army finally collapsed in the last years of the war. From 8 August to 11 November 1918 the ANZACs alone destroyed no less than 39 German divisions and advanced 100 miles.

According to the British Official Historian, ‘We all agreed; the Australians were finest assault troops on the Western Front.’ French Marshal Foch agreed after the war, stating that ‘the greatest individual fighter of the war was the Australian,’ and Field Marshal Montgomery later wrote: ‘Sir John Monash was the finest general on the Western Front.’

ANZAC Day therefore marks Monash and his ‘Diggers’ true achievement. Australians started the war in 1914 as one of Britain’s ‘Lion Cubs.’ Thanks to the exploits of the ANZACs at Gallipoli and the Australian victories of 1918, a new, independent and proud Australia emerged from World War I.

Professor Sir Michael Howard later hailed the ANZACs as ‘builders of a nation’: he was right.

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The New War

Well, that’s it. The war is over, ISIS is beaten and on the run. We can all relax and bring the boys home. Mission accomplished.

Wrong.

In May, President Trump stood before the assembled leaders of the Sunni Muslim world and called on them to ‘drive out the terrorists and extremists … from this earth.’ Well, they have succeeded. An extraordinary coalition of Syrian, Russian, American, British, Turkish, Kurdish and Iraqi military forces have crushed ISIS’s ‘caliphate’, killed most of its leadership and made the heroic ‘Fighters for God’ flee as fast as their strictly non-suicidal legs will carry them.

Unfortunately it’s not over. Islamic State survivors have dispersed into the global undergrowth to set up a network of IS franchises known as ‘wilaya’ (Arabic for ‘provinces’) stretching from the southern Philippines to Nigeria. ISIS is far from finished. Instead it has rebranded itself by merging with existing religious fanatics who hate the West and all it stands for, and who have pledged allegiance to IS’s aims. More ominously it has also absorbed – or taken over – the legacy of Osama bin Laden’s global network, al-Qaeda. Its new leader is thought to be none other than Osama’s son, Hamza bin Laden, who resurfaced in 2015 when al-Qaeda’s Zawahiri introduced him as the torchbearer of his father’s legacy. Hamza has sworn revenge on the United States in retaliation for Osama’s murder. He is considered by intelligence agencies to be the next charismatic leader of global jihadism.

That’s the bad news. The worse news is that after ISIS’s defeat there is now a vacuum in the Middle East. However, ‘as any fule kno’, nature abhors a vacuum and nowadays Iran is only too happy to fill that vacant space. The truth is that Iran played a larger role in the battles for Mosul and Raqqa than the Coalition admits, and Tehran is determined to cash in on its victory. The war between Sunni and Shi’a Muslims, between Arabs and Persians, continues with an undeclared new war stretching from Iraq to Lebanon on the Mediterranean coast.

The problem is that Washington, firmly focused on the Korean nuclear crisis, has been forced to take its eye off the ball and concentrate on the problems of the Far East rather than the Middle East and the consequences of Obama’s feeble nuclear deal with Iran. The US is well aware of Tehran’s regional power grab; but Washington can only deal with one major foreign policy crisis at a time. Iran is shaping up to become a major problem, not just for US diplomats but for the whole region.

Colonel Richard Kemp, former head of international terrorism on the UK’s Joint Intelligence Committee has warned that the Iranian Shi’a Ayatollahs’ destabilising actions are not just a threat to the Middle East but pose a grave threat to wider international security. In a recent interview, he said, ‘I see Iran as the greatest threat to world peace today. Not just to the Middle East, but elsewhere in the world.’

Kemp has a point. Iran is spoiling for a fight and has effectively declared war on Sunni Saudi Arabia. Intelligence reports are clear. Openly funding and arming the mainly Shi’a Houthi rebels in Yemen, Iran is now fighting a proxy war against the Saudi-backed Yemeni government. Earlier this month the rebels launched an Iranian-supplied Scud ballistic missile across the border at Riyadh International Airport. It was brought down by a Saudi surface-to-air missile. That looks like a war.

Saudi Arabia and Iran are now locked in a fierce struggle for regional dominance. The ancient feud between Arab and Persian is made worse by deep religious differences. Saudi Arabia, the birthplace of Islam and guardian of Islam’s holy places, sees itself as the leading Sunni state and leader of the Muslim world. However, the 1979 Iranian Islamic revolution, with its theocratic regime of rule by the Ayatollahs, is a permanent challenge to the Saudi monarchy. Shi’ite Iran openly declares itself to be a ‘Revolutionary Muslim’ state, anxious to export its revolution beyond its own borders.

Both nations seek to ally themselves with countries with Sunni or Shi’a majorities, and who instinctively look towards Saudi Arabia or Iran for support. The uprisings across the Arab world have also added to the political instability throughout the region. The 2003 toppling of Saddam Hussein, a Sunni Arab, removed an intransigent Iranian adversary. Since then Iran has moved into Iraq – politically, militarily, economically and religiously – intent on establishing itself or its proxies across the region and determined to build a land corridor west to the Mediterranean. Intelligence photographs show the Iranians constructing a network of roads, electricity and communication lines extending from Iran through Iraq, Syria and Lebanon.

In its turn, Saudi Arabia is working hard to thwart Tehran’s growing influence and regional ambitions. When Shi’a Houthi rebels seized control of Yemen’s capital Sana’a in 2014 and began pushing south to take over the country, Saudi Arabia and a coalition of Sunni Arab states intervened to support their neighbour’s government. The result is that Yemen has now become a major battleground between Riyadh and Tehran.

This intervention by the Saudis’ Crown Prince Mohammed bin Salman – now Saudi’s de facto ruler – has exposed wider regional tensions. However, in his efforts to stem Iranian influence, ‘MbS’ has found an unusual ally: Israel. Strange bedfellows indeed! For years Saudis have been taught that Israel is the ‘eternal enemy‘ and Jews are the descendants of apes and pigs.

The real reason for this curious alliance is that both are equally nervous about Tehran’s ambitions. Israel and Saudi Arabia were the two countries most adamantly opposed to Obama’s 2015 international agreement limiting Iran’s nuclear programme.

Both warned that the treaty did not go far enough to prevent Iran obtaining the bomb. The danger is that Israel’s alliance with Saudi inevitably brings any proxy conflict uncomfortably close to Lebanon and Cyprus.

Tel Aviv is well aware that Hezbollah, Iran’s Lebanese allies, lead a politically powerful bloc and, crucially, control a large, well-armed Shi’a militia. Hezbollah in Lebanon is spoiling to begin another civil war like Syria’s and poses a serious problem, because any conflict in Lebanon will almost certainly draw in Israel. This could lead to yet another devastating Israeli-Lebanese war. Israel is right to be worried by Iran’s growing threat. With Iranian Revolutionary Guards and Al-Quds brigades now parked on Israel’s borders, the risks to regional peace are obvious.

The other risk is a direct war between Saudi Arabia and Iran. That Iran is preparing for trouble across the Persian Gulf is not in doubt. Iran’s Revolutionary Guard has recently installed sophisticated radar, surveillance and communication equipment covering all the routes from Iran to Basra, Najaf and Karbala on Iraq’s southern coast. Intelligence sources warn, ‘The purpose of these devices, which can be used for eavesdropping and spying on mobile phones and wireless Internet services, is to cover the Iraqi-Saudi border and monitor all communications and aircraft movements.’

This build up risks a much broader conflict across the waters of the Gulf. For the US and other Western powers, freedom of navigation in the Gulf is essential. Any conflict that blocked that waterway – vital for international shipping and oil transportation – would swiftly draw in US naval and air forces.

There are other indications of serious trouble. The sudden resignation of Lebanese Prime Minister because ‘he feared an assassination attempt by Hezbollah’ simply doesn’t pass muster. The truth is that the Saudis were furious at him for holding secret talks with Iranian and Hezbollah officials. The Middle East is breaking up; and Lebanon is directly in the firing line.

With Saudi Arabia now united with Israel against Iran, plus troubled Lebanon on the brink, a new desert storm is brewing in the Middle East.

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