Israel

In an interview with Fox Business News, former US envoy to the UN, John Bolton, told the channel that if Israel wants to prevent Iran from acquiring a working nuclear plant, then a military strike must be launched against the Bushehr nuclear power facility within the next eight days. Specifically, Bolton was envisioning the projected August 21 launch date of the nuclear power plant, which Zero Hedge noted previously. According to Bolton, once the Bushehr facility is operational it will be too late for a military air strike against Iran because such an attack would affect too many Iranian civilians due to the spread radiation.

Just in case you missed the strategic implications of the prior post, here is some breaking news from BNO: "Israel Prime Minister Benjamin Netanyahu on Wednesday said that Hamas was responsible for the rocket attacks last Monday and that the Jewish nation will retaliate."

The Steering Group of the Veteran Intelligence Professionals for Sanity (VIPS) which consists of Phil Giraldi, former CIA (20 years), Larry Johnson, former CIA; DoS, (24 years), W. Patrick Lang, Col., USA, Special Forces (ret.); Director of HUMINT Collection, Defense Intelligence Agency (30 years), Ray McGovern, US Army Intelligence Officer, CIA (30 years), Coleen Rowley, FBI (24 years), and Ann Wright, Col., US Army Reserve (ret.), (29 years); Foreign Service Officer, Department of State (16 years), have penned a memo to the president in an attempt to alert him "to the likelihood that Israel will attack Iran as early as this month. This would likely lead to a wider war." Read on for the full memo by the activist group.

Earlier today, the Middle East again came once step closer to war after the latest Israel-Lebanon clash claimed the most lives since the Second Lebanon War. As part of the escalation, 3 Lebanese soldiers and 1 journalist were killed, as well as an Israeli officer, over what appears to have been a day of gardening gone horribly wrong: Haaretz reports: "The violence apparently erupted over a move by Israeli soldiers to trim some hedges along the border, a sign of the level of tensions at the frontier where Israel fought a war in 2006 with the Lebanese militant group Hezbollah." Surely this latest escalation explains the most recent surge in stocks, as Ben Bernanke will now have an excuse to take his money paradrop operation over to the Middle East, in hopes of keeping everyone occupied through endless amazon.com purchases of assorted useless gizmos.

Things in the middle east are back to normal (which means the usual deadly massacre), although with a twist. An earlier rocket attack on the Israel port city of Eliat missed its target completely, and instead slammed into Aqaba, in neighboring Jordan, located 6 miles away just over the border. Instead of firing the rockets from Israel and prompting immediate airborne retaliation, the launch point for today's attack was Egypt, which prevent Israel (or should that be Jordan) from retaliating. Sky News reports that the reason for the shelling is connected to a recent agreement that will see the Palestinian authorities talk face-to-face with the Israelis, and radical elements, who do not want that to happen, are escalating the violence as a means to stop it. It is unclear if Jordan will also escalate now that its own territory has been impacted in the ongoing conflict, and it is also to be seen how Egypt will react should it become perceived as a peripheral zone of cross-border attacks.

As we first reported last week, in an article that was met with much original skepticism, the Pentagon has now confirmed that a fleet of 12 warships has passed the Suez Canal, and is now likely awaiting orders to support the escalation in the Persian Gulf. The attached image from Stratfor shows the latest positioning of US aircraft carrier groups as of June 23: the USS Harry Truman (CVN-75) is now right next to USS Eisenhower (CVN 69), both of which are waiting patiently just off Iran. As for the catalyst the two carriers may be anticipating, we provide the following update from the Gulf Daily News where we read that Israel may be on the verge of an attack of Iran, with an incursion originating from military bases in Azerbaijan and Georgia.

It appears that tensions are escalating between Gaza and Isreal. The Jerusalem Post reports that 3 members of an Islamic militant group had been killed after launching two rockets into southern Israel, which "landed in open areas and caused no injuries." This was allegedly immediately followed by an airborne retaliation: "The IDF confirmed it had carried out an airstrike Tuesday, and Gaza's chief medical examiner said there were three deaths." Doesn't end there: the Israeli media reports that "two Palestinian terrorists were identified infiltrating into Israel from the southern Gaza Strip earlier this morning. The soldiers on the scene exchanged fire with the terrorists, killing them both." We are still awaiting for the other perspective on these escalations, although so far have been unable to attain an impartial view on events. In other news Al Jazeera quotes Mossad Chief Meir Dagan as saying on Tuesday that Israel is progressively becoming a burden on the United States. "Israel is gradually turning from an asset to the United States to a burden," said Dagan, speaking before the Knesset's Foreign Affairs and Defense Committee.

"This action, totally contrary to the principles of international law, is inhumane state terrorism. Nobody should think we will keep quiet in the face of this" - Tayyip Erdogan

Even as futures are feeling buoyant as a result of the JPY drop following the collapse of the Japanese ruling coalition (which in itself will likely spell serious JGB troubles in the days ahead), Middle-east geopolitical issues have once resurfaced... or technically submerged as the case may be. The Sunday Times reports that "three German-built Israeli submarines equipped with nuclear cruise missiles are to be deployed in the Gulf near the Iranian coastline." Presumably, this a defensive move: "The first has been sent in response to Israeli fears that ballistic missiles developed by Iran, Syria and Hezbollah, a political and military organisation in Lebanon, could hit sites in Israel, including air bases and missile launchers. The submarines of Flotilla 7 — Dolphin, Tekuma and Leviathan — have visited the Gulf before. But the decision has now been taken to ensure a permanent presence of at least one of the vessels." We are not sure Iran will take the news with the required dose of stoic acceptance. But at least we now have confirmation that Israeli subs are not being used by the Obama administration as a means of delivering nuclear armaments to the continental shelf (unless this too, is another Criss Angelesque Emmanuel Rahm masterpiece).

WSJ reports that Isreal is investigating a pre-dawn launch of "at least one Katyusha rocket which landed near the Jordanian port of Aqaba." Jordan notes the report with passing indifference, and goes back to buying ES and AMZN using Redi and Sigma X.

The middle east powder keg is on the verge of exploding. After repeated warnings of possible escalation between Iran and Israel, we get the first official confirmation that the conflict may not be tidy and contained. The Telegraph is reporting that King Abdullah of Jordan has just warned the US that a war between Israel and Hizbollah is imminent and that is could spread across the Middle East. Just like the Great Depression ended in a Great War, so this ongoing Great Depression v2.0 (because -10% GDP when one takes away the government stimulus is precisely that) is likely about to result in another one.

I can assure you of two things. Israel is definitely planning a strike on Iran, which I’m told may happen this Summer. The country has been having large simulated chemical attack drills, and even my small town has had its own drills (which I’m sure were ordered from above). Number 2 is that I am also hearing that Israel will not attack w/o the OK of the US. Israel needs to fly over Iraq to reach Iran, and it can’t do this w/o US attack codes. I’m not sure what the solution is, but, as someone once said – “a Jew who does not believe in miracles is not a realist.” - Chashmonaim, Israel (West Bank)

Are things between Israel and Egypt about to get really heated?

From BNO News:

JERUSALEM (BNO NEWS) -- Israel's anti-terror bureau warned on Tuesday that a terror attack in Egypt's Sinai Peninsula is imminent and all Israelis must leave the region. The warning message said, quoting intelligence sources, that a terror attack in which Israelis could be kidnapped is imminent, Israeli media reported.  "We call on all Israelis now in Sinai to leave at once and return to Israel," the warning said. "Families of Israelis now in Sinai are requested to make contact and update them of this travel warning."

Who would have thought that Obama's fate would be decided not by his passage of the "historic" healthcare reform, or his pathological inability to disengage from the kleptos on Wall Street, or even the exponential growth in the US debt, but by what is shaping up to be a November (potentially Nuclear) D-Day out in the middle east. Pakistani newspaper The Nation, quotes former Israeli defense minister Ephraim Sneh, who in an Op-Ed in Haaretz, says that "Israel will be compelled to attack Iran’s nuclear facilities by this November unless the US and its allies enact crippling sanctions that will undermine the regime in Tehran." It appears that Israel is not taking the recent deterioration in its relations with the US lightly. If China and the whole botched CNY issue is any indication of just how incompetent and impotent US foreign policy has become, Obama has about 6 months before the defense/war complex sounds the victory horn (and the president gets to experience first hand just how much better unemployment in this country really is getting) in the shadow of the mushroom cloud.

The Middle East peace talks are at a deadlock. Negotiations between Israel and the Palestinians to move ahead with the plan established by the so-called Quartet – the US., U.N., EU and Russia -- have faltered and come to a complete standstill. Continuing with this inertia will have a long-term negative effect on the future of the region both from a political point of view as well as from a business perspective. With the exception of a few risk-takers, what company or business executive would be willing to invest in the Middle East once the region plunges onto the abyss amid renewed violence?

And whenever trouble brews in the Middle East it tends to spill over into other parts of the world. The risk that Mideast violence could spread to nearby Europe might have been one of the reasons that pushed Italian Prime Minister Silvio Berlusconi to say that Israel should be admitted into the European Union earlier this week. Berlusconi made the statement during an official state visit to Israel. Berlusconi, of course, is one of Israel’s strongest supporters.