Iran

From Reuters: U.S. OFFICIAL EINHORN SAYS BELIEVES IRAN SEEKS TO REACH THRESHHOLD OF NUCLEAR WEAPONS CAPABILITY

If indeed this is the first step of a forced provocation (shocking "weapons of mass destruction" discoveries coming?) we can't wait to hear how much more excess capacity Saudi Arabia can suddenly find and come to market with. It may however be slightly troubled to replace lost Russian output too: Reuters now reports that crude products exports blocked in thick ice at Russian Baltic ports according to St Peterburg Port Authority.

Bad news for crude bears all around today.

No missing tank rumors were disseminated in the copy and pasting of this latest Reuters blurb on what is happening in Iran now. Incidentally, if the reports from Bahrain are even remotely true, it is all downhill from here as the religious aspect of the food revolutions comes out front and center. "Iran's security forces have been deployed to the streets on Tuesday ahead of a planed opposition rally calling for lifting house arrests imposed on opposition leaders, an opposition website reported. "A large number of security forces have been stationed at main streets and some squares of Tehran since noon to prevent gathering of opposition supporters," said the Sahamnews website. It is unclear if any Bloomberg reports were beaten with broomsticks as a result of this latest crackdown on demonstrations.

Despite indications that the US would attempt to forcefully box the Iranian warships in the Red Sea, first observed here, this strategy, if that was indeed the plan, has failed, and according to Egypt's state-run MENA agency, the Suez crossing for one (very old) Iranian frigate and one (very old) supply ship has commenced. Bloomberg reports: "The ships entered the canal early today after the approval of Egypt’s Defense Ministry, the state-run Middle East News Agency cited Ahmed El Manakhly, head of traffic at the Suez Canal Authority, as saying. The crossing usually takes 10 to 12 hours, El Manakhly said." Israel is, needless to say, unhappy: "Israeli Foreign Ministry spokesman Yigal Palmor today said that Israel would consider the presence of the warships sailing through the canal to the Mediterranean Sea “a provocation” that should be “dealt with by the international community.” Palmor said he was citing previous comments by Foreign Minister Avigdor Lieberman." Yet with tensions already on edge, the possibility that this latest war of words escalates into anything more is quite remote.

While last week the focus of US naval deployment in the Middle East emphasized securing the Suez Canal in the midst of the Egyptian revolution, this week the developing story is the passage of two Iranian warships through this very canal. Not surprisingly, two US naval groups - an aircraft carrier and a big-deck amphibious warfare ship - are now situated at either end of the Red Sea, where the Iranian flotilla is supposedly located. Will the US presence be enough to prevent escalation? Since we believe that Iran has few alternatives to pulling a "wag the dog" scenario with increasing domestic protests, and an increasingly more troubled ruling class, perhaps the increased US presence in the area is geared more toward dissuading a preemptive engagement by Israel. Regardless, expect posturing to increase as Iran is now stuck in a position from which it can only lose face if it does not at least pursue the symbolic passage of the Suez canal. What happens after is unclear.

Are these (1) spontaneous protests in the Arab world (2) creations of American intelligence services or (3) the start of a world-wide unfolding of unrest?

After nothing happened last night, following Egypt's statement that it had not received a request to allow Iranian warships through the canal, PressTV has just announced that an Iran Navy official says the 2 warships are in fact on their way to the Canal and will pass shortly. Per Reuters, "the Iran state TV says Egypt sees nothing wrong with passage of Iranian warships through Suez Canal." The vessels in question are the Alvand frigate and the Kharg, a supply vessel.

Tensions in the Middle East is once again heating up. Following earlier reports that Israel would not take too kindly to Iranian warships passing through the Suez Canal, the WSJ now reports that Iran has likely resumed nuclear-research work. "A new classified US intelligence assessment concludes that, even as Iran enriches more uranium, there is an increasingly heated debate within its regime over whether to move towards building nuclear weapons, suggesting international economic sanctions may be sowing serious divisions." Does this mean it is time for a new revision and more lethal version of Stuxnet to be released? How much of this report is based on fabricated data is unknown, although judging by how well it worked last time around there was a full scale US incursion, we will likely find out soon enough (or eventually). As to whether Israel is actually willing to take the risk and actually initiate a military offensive against Iran, and, indirectly, against Egypt's military coup government, we will likely find out tonight when the ships are actually expected to cross the canal.

Blink and you will miss the latest revolution. Algeria riots yesterday, Bahrain earlier today, and Iran now. Per AP: "Clashes between Iranian police and tens of thousands of protesters wrecked central Tehran on Monday as security forces beat and fired tear gas at opposition supporters hoping to evoke Egypt's recent popular uprising. The opposition called for a demonstration Monday in solidarity with Egypt's popular revolt that a few days earlier forced the president there to resign after nearly 30 years in office. The rally is the first major show of strength for Iran's cowed opposition in more than a year. Police used tear gas against the protesters in central Tehran's Enghelab, or Revolution, square and in Imam Hossein square, as well as in other nearby main streets. Demonstrators responded by setting garbage cans on fire to protect themselves from the stinging white clouds." And a quick refresher in Geopolitics 101: Iran has lots of oil...and, supposedly, nukes (assuming Norton anti-virus has a Stuxnet patch).

To all freedom loving Arab brothers and sisters...

It appears that gold isn't really a currency... until it is. The Economic Times reports that India is attempting to ensure steady crude oil supplies from Iran. In doing so it is doing everything it can to pay Iran in a way that avoid loopholes associated with recent US sanctions. And the stunner: "India could settle crude oil import transaction using gold in the short term, while efforts to resolve the deadlock continue." But does Iran realize they can't possibly eat all that gold? Or that The Fed has no way of diluting to oblivion? Or that, unlike the dollar, it is currently not involved in a global race to bottom in which every central bank will have no choice but to print ever more of its linen-infused currencies? Something tells us that the answer to all three is yes.

With republicans back in control, it was only a matter of time before the military-industrial complex reminded the world of its existence. It took about 72 hours: republican senator Lindsay Graham, who apparently has not received the memo that all modern wars are now waged in binary, and are won by those who can push the FX bid/ask the furthest and the fastest away from equilibrium, spoke at the Halifax International Security Forum, giving a very distinct taste of what US foreign policy is about to look like: "Iran is a major threat to any conceivable world order" and that he sees an almost inevitable confrontation with Iran. As AP reports, the South Carolina Republican saw the United States going to war with
the Islamic republic "not to just neutralize their nuclear program, but
to sink their navy, destroy their air force and deliver a decisive blow
to the Revolutionary Guard, in other words neuter that regime." And the Democrats, still in shock over their recent pummelling, will likely not have the resolve to respond palliatively to such warmongering, which they likely deem as supported by the broad population: "US Democratic Senator Mark Udall, who joined Graham during a panel
discussion at the forum in Halifax, Nova Scotia, urged continued
sanctions against Iran. But he also noted that "every option is on the
table," a thinly veiled reference to possible military action." And just when the world was getting along so well, and all the international bickering appeared to be taking place over various Forex terminals...

Great idea ... Not!

As of today, one of the world's top oil exporters disclosed that it has exchanged about $15 billion of its FX reserves into gold. Earlier, Iran announced that the country has converted about 15% of its foreign exchange reserves into gold, and "will not need to import the metal for the next ten years." There is your mystery buyer to all that gold the IMF was selling in Q3... And since Ahmadinejad said that Iran's total FX reserves exceed $100 billion, the amount of gold in stock held by Iran is more than $15 billion. Which is equivalent more than 345 tonnes at a closing price of about $1350. Which also means that the WGC's official gold holdings are in dire need of an update, as Iran does not appear anywhere on the IMF's listing of official gold holders, and with over 345 tonnes, it would make Iran a top 15 holder of the yellow metal.

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Sources in the Gulf region report that Iran is preparing for a possible attack by Israel and/or the United States on one or more of its nuclear production units by stockpiling arms and munitions with its proxy militias in Kuwait and Bahrain. This comes as Bahrain arrests 23 opposition leaders accused of terrorism offenses and hints that Iran is behind an alleged plot to overthrow the government. Bahrain's attempted coup reports should be taken seriously, as Iran knows that its best chance of fighting the US and/or Israel is by proxy. Hitting Bahrain hard would greatly upset the overall security situation in the Middle East and Gulf region.