May 22, 2007

STRATFOR : Intelligence Guidance: May 22, 2007

Source: Startfor
Intelligence Guidance: May 22, 2007
May 22, 2007 19 22 GMT

1. The Iranians apparently made an offer to the United States at the Sharm el-Sheikh, Egypt, conference earlier in May, and using the medical travels of senior Iraqi Shiite leader Abdel Aziz al-Hakim as a pretext, the United States has handed back its comments. Both sides are now processing the discussions to date, and when they meet -- formally, publicly and directly -- in Baghdad, Iraq, on May 28 we could see the start of a deal over everything: the war in Iraq, the occupation and the future balance of power in the Persian Gulf. Anyone who would try to mess this up would need to start acting now. We can assume that since some of the messages have been passed via Saudi media Riyadh is at least tentatively signing off on the proto-deal, but what of other powers that have a vested interest in not seeing an American-Iranian detente (the jihadists, the Russians, other Arab states, the Kurds, the Pakistanis, etc.)?

2. A number of Iranian officials -- most notably, Supreme National Security Council Secretary Ali Larijani -- are leaking not so subtly that they are seeking to discredit or even dismiss President Mahmoud Ahmadinejad. With the Iranian-U.S. negotiations on Iraq finally seeming to show some progress, it makes sense that a power struggle within Iran over the future of … well, everything … would surface. Watch it like a hawk. Should Tehran break down into internal bickering or worse, no deal on Iraq will stick.

3. The United Kingdom announced May 22 that it was filing charges against former KGB agent Andrei Lugovoi for the polonium assassination of former KBG agent turned dissident Alexander Litvinenko. Leaving aside the as-yet-unresolved issues of Litvinenko's political connections, Lugovoi's guilt or innocence and the Kremlin's complicity or lack thereof in the murder, how far is London willing to push this? Ruining bilateral relations for the sake of a murder investigation seems a bit over the top, no matter how politically motivated that murder might have been. Is London laying the groundwork for a colder relationship it sees just around the corner, perhaps when the Kremlin begins fiddling with BP's Russian assets? If so, it is time to map out the tools London has to strike back.

4. Nigerian President-elect Umaru Yaradua is in the midst of creating a new framework of informal financial and political links to manage the country. With upward of $50 billion in oil money to distribute to contain myriad ethnic, regional, religious and political ambitions, it will all come down to how well he can negotiate between the powers-that-be and the powers-that-wish-to-be. The Niger Delta militants seem placated now that one of their own is in the vice presidency, so where/who will be the first place/person that tosses Yaradua a knife he cannot juggle?

5. New French President Nicolas Sarkozy is eager to put his stamp on France and change much of its economic structure, but that cannot happen until after June's parliamentary elections. In the meantime, he holds full power over the country's foreign policy apparatus and already has met with his German counterpart, Angela Merkel. France and Germany have always jointly determined exactly what "Europe" would strive to be. What are the two of them cooking up -- and who is going to try to sabotage it?

6. With its announcement of a planned purchase of a 9.9 percent stake in U.S. private equity player Blackstone, China's new State Investment Co. statement surprised global markets and proved its ability to outsmart the markets -- at least as far as management plans for its $1.2 trillion of foreign exchange reserves is concerned. Blackstone is the first foreign equity purchase made with Chinese state foreign reserves, but will not likely be the last; watch out for new Chinese foreign exchange reserve-funded purchases in other foreign international intermediaries as a prelude to China funneling money through these private intermediaries into parts that Bejing intends to keep unknown.

7. The various pieces that constitute the Musharrafian republic in Pakistan are beginning to buckle under the stress of the legal crisis in the country as key ministers and power brokers start thinking of abandoning ship even as Islamist militants challenge the writ of the state. Pakistani President Gen. Pervez Musharraf is on a decline but the question is: How fast will he go down? Watch the moves of his civilian allies, generals, opposition parties, the legal community, militants and of course the United States as each of them adjusts to the deteriorating crisis of governance, using their own calculus as to when to abandon the country's embattled leader.

8. Venezuela's Radio Caracas Television, the most significant independent media in the country, will be closed down May 27 at the directive of President Hugo Chavez. Barring an unlikely opposition uprising, it will mark the end of organized resistance to Chavez's government. Should this truly spell the end of meaningful anti-Chavez activity, the government's end will then be determined by its own actions. In the long run, that could be linked to an eventual fall in oil prices, but there could be a shorter-term complication. Chavez has been expanding land redistribution programs that he says will increase the land's production under the labor of the people. Likely it will do the opposite -- most of the newly formed communes are not even producing at subsistence levels, on land that used to be very productive. Economic mismanagement has already led to food shortages in the country -- this year, no less. Could Chavez be laying the groundwork for the destruction of the country's food-production capacity, a la Zimbabwe?

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