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Old 10-02-06, 10:08 AM   #15
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Money and Markets
Friday, February 10, 2006

Dear Subscriber,

News reports pouring in from Europe and the Middle East indicate that the seeds of the revolt now erupting throughout the Muslim world did not come from the streets.

They were originally planted by clerics and government officials at the highest levels.

These officials may not have anticipated the widespread upheavals that are now careening beyond their control. But their actions underscore the depth of the conflict ... and the validity of the scenario we have been so persistently warning you about:

New revolts against the established order in the Arab world. A diplomatic, economic or even military conflict with Iran. Disruptions to oil supplies, driving the price to $100 per barrel and beyond. Plus ...

Parallel surges in precious metals and other natural resources. But anyone who thinks this crisis just popped out of nowhere should take a good, hard look at recent history:

Last May, anti-American demonstrations spread throughout the Muslim world like wildfire. In Afghanistan alone, 15 people died. Everywhere, from the Western Sahara to Eastern Indonesia, the anger was evident.

Six months later, a new wave of violence erupted — this time in France, and this time raising far broader questions about the East-West conflict.

And now, just four months have gone by, and, already, a new, even more frightening tsunami of uprisings has swept across the Muslim world.

Thousands of European and American flags have been burned. Several embassies and consulates have been torched. Hundreds of people have been killed or injured.

With each of these episodes, observers identified a single event that triggered the unrest — an offensive article in Newsweek about the Koran ... the accidental deaths of two young teenagers fleeing the police in Paris ... twelve unfortunate cartoons published in a small Danish newspaper.

But by now, it is widely recognized that the true cause of the revolts lies far deeper: A cultural, political, and, most important, economic schism between:

Most of the world’s largest consumers of oil (the U.S. and Europe)

and ...

Most of the world’s largest producers of oil (the Middle East and Persian Gulf).

This is serious. It’s so serious, in fact, that earlier this year, we began writing to you about a topic that we’ve never written about before: War.

Our reasoning: Oil markets are already a pressure cooker, ready to burst. With the added heat from these worldwide tensions, the surge in oil prices — and oil conflicts — could be explosive. Indeed ...

The Bitter Battle with the Muslim World Is Not
Mostly about Religion. It’s Primarily about Oil.


Many people think that religion plays the dominant role in this conflict. Not true.

The current chain of events in the East-West conflict can be traced back to 1990, when Iraq invaded Kuwait.

That invasion had nothing to do with religion. It was almost entirely motivated by economics — for hegemony over oil reserves, control over Kuwait’s ports to the Persian Gulf, and better access to vital transportation routes to major world markets.

America’s long-term response to Iraq’s invasion of Kuwait — to establish a permanent military presence on the Arabian Peninsula — was also mostly for economic reasons: To help guarantee access to the peninsula’s vast oil reserves.

What about the terrorist attacks in New York, Washington, Madrid and London? Weren’t they driven primarily by religious zeal? Not necessarily.

The original raison d’être of al Qaeda was to eject the U.S. military from the Arabian Peninsula ... gain control over the region’s oil reserves ... and place them under the auspices of a broad Islamic empire.

Yes, al Qaeda is a rogue, terrorist organization with a pseudo-religious mission. But its primary goal is to bring about revolutionary economic change. Whether they succeed or not, the mere threat of this revolution spreading throughout the Muslim world is creating a new, hotter cold war.

A New, Old Battleground
In the War for Oil: Iran


The control over oil and energy is also what’s behind the looming confrontation with Iran over its nuclear facilities. This is a new battleground. But it’s also an old one, with many lessons from recent history that we must not forget:

The Iranian revolution which drove oil prices up to the equivalent of $96 per barrel in today’s dollars...The Iran-Iraq war...the longest major war of the 20th century...lasting eight full years...taking an estimated one million lives... costing as much as two trillion dollars...and demonstrating the stubbornly bellicose tendencies of both countries’ leaders ..The latest Iraqi elections, in which the outstanding winner was precisely the party most directly allied to Iran, and now...Iran’s nuclear program.

Why is Iran so steadfastly committed to nuclear energy, despite all the carrots and sticks waved at Iran by the U.S. and Europe?

Simple: Iran wants to develop nuclear energy to reduce its own dependence on its decaying oil infrastructure. Iran wants a nuclear bomb to defend its oil reserves against perceived threats by oil-hungry world powers — China, the United States, Russia and others. And Iran is especially intimidated by the presence of large American and European armies in neighboring Iraq.

In recent days, Iran has ended all international inspections of its nuclear facilities. It has begun full-scale production of enriched uranium that can be used for nuclear bombs. And it has set off a chain reaction of events that could easily escalate into a new war over oil. The reasons for this impasse are both clear and fundamental:

The United States and Europe will not allow the world’s premier supporter of terrorist organizations — including Hamas, Hezbollah and Islamic Jihad — to develop the world’s supreme weapon of mass destruction.

Yes, there may have been a relatively lax attitude toward nuclear proliferation in the past. But no more!

No one needs to tell the United States and Europe how to connect the dots — from Iran to terror ... from terror to al Qaeda ... and from al Qaeda to nuclear attacks on major cities of the Western world.

Nor do our leaders need any help asking the obvious questions: If terrorists had primitive nuclear devices, what would have happened in the World Trade Center bombing of February 26, 1993? What would have happened on 9/11? What about Madrid on March 11, 2004? Or London on July 7, 2005?

This is the last straw. Clearly, with Iran, the West must draw — and already has drawn — an immutable line in the sand. There will be no compromise that results in a nuclear Iran.

The probable result: The United Nations will stop Iran from building a bomb. Iran will retaliate by stopping its oil exports to the West. And we will see a repeat of the oil-price explosion we saw during the Iranian revolution a quarter-century ago.


The rest of the article is about Gold - Which is still a great buy.
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