Tuesday, July 31, 2007

Persian Miracle

Politics may be the art of the possible, but it is also the “last of the arts”, as one Lebanese political old hand once quipped. In Lebanon, sadly, politics is about sweeping things under the rags… but backroom deals are not limited to us; they are played on the grandest scale, but under the loftiest of goals.

OK, maybe not the Russians; they do not mince their words, nor their actions… But I digress

Arab Purchase

One such interesting example was the sale by the United States of USD 20 Billion worth of weapons to the Arab Gulf States. Pundits quickly linked it to the ongoing cold war with Iran, and noted two things;

1- The systems will be integrated. In those days of the modern Military-Technical Revolution (in American jargon; “Revolution in Military Affairs”, RMA), integrated systems are a must. Weapons and troops need to be able to talk to one another, the better to coordinate their actions and maximize their punch.

2- The purchase will create a stronger Arab force in the Gulf, better able to face-off Iranian challenges to sovereignty. Iran has therefore a choice; play nice, or waste more cash on weapons in an arms race it can ill-afford to play.

It looks like the Mullahs want to play… They have little choice in the matter; Persian nationalism and Islamic fundamentalism are the only goods they have on sale, and they have no other way to hide their economic incompetence. So far, they have banked on the United States tiring after the Iraqi quagmire and the sputtering of Lebanon’s Cedar revolution, but no dice; the stakes are much too high. Now, they seem hell-bent on waiting for the democrats, as if this is going to change much, pace Chomsky

And it looks like Russians, who know a thing or two about cold wars and the economy, jumped at the chance to offload more weapons for cold, hard cash, and maybe even some leverage with the Americans… You can hear, in the background, the sound of factories retooling to make tractors and cars rather than tanks, thanks to all this Iranian cash.

Gifts to Israel

No pundit, however, made the true link with the donation of USD 30 Billion worth of weapons over 10 years from the United States to Israel.

Question: Why the link?

Answer: How much would USD 20 Billion yield, when invested at say… 10% return over 10 years?

The answer to this question will reveal the true Persian miracle; being so obnoxious and threatening as to get Arabs to fund Israelis

I just hope there was a Lebanese in on the deal, with a juicy commission; it will be good for our economy.

Thanks Br. for the artwork

7 comments:

ghassan karam said...

Jeha,
I understand the point that you are trying to make, the Mullahs' intransigence is winding up in helping the military-industrial complex of the "American Satan", strengthening the Arab adversaries, advancing the military superiority of the "Zionist Entity" and weakening an already weak Iranian economy. But I am afraid that your conclusion about the latest proposed US military sales and aid packages to various countries in the area does not hold.
The Us proposes selling Saudi Arabia and the other Gulf states military hardware valued at $20 billion. and proposes giving Israel military aid over 10 years that is valued at $30 billion in addition to military gifts to Egypt valued at #13 billion. Once you net the above it is clear that the total US weapons that are paid for by the Arab states is only $7 billion . But that is not all, your highly improbable opportunity cost of 10% or $700 million per annum does not flow to Israel . It is in effect the implicit cost that needs to be added to the explicit cost in order to arrive at the cost of all and any transactions bare none.

May I suggest a slightly different twist on what is going on between the US and Iran. I think that the current administration is finding it difficult to wage an outright military war against Iran and so they have decided to borrow a page from the book that was used by Ronald Reagan against the "evil empire". Force them to spend themselves into bankrutcy.

amir in tel aviv said...

One Israeli commentator said that it's
better to have under-equipped army,
than over-equipped.
.

Jeha said...

Good point,

But it still makes up for significant savings on the part of the US, and establishes an interesting trend. The Arabs pay their USD 20 Billion upfront, and could pay more over the long run to cover the need for training, maintenance, and operations. I understand the Total Ownership Cost of those systems is at least as much as the actual "ticket price".

And an interesting problem will soon appear in training and recruitment; before Gulf War 1, an entire Gulf Arab army threatened to desert when salaries were increased on the other side of the border. Most of the troops were Pakistani...

But you're right on the 13 Billion to Egypt; they are needed to re-establish "parity" of military aid between it and Israel, as guaranteed by the Americans. I fear that it will create "interesting incentives" to the Egyptians, with the increased Chinese involvement in East Africa, especially in dam construction in Ethiopia and Sudan.

BOB said...

Ghassan and Jeha

very interesting points i was going to raise the same point, about the cold war and how the US pushed the USSR into bankruptcy by initiating the star wars program and similar high tech military projects.

Unfortunately these plans take time, and time is not on our side. Once Iran gets the bomb all bets are off. However, before that happens the US or in the worst case Israel will take action against the Mullah's

meanwhile on a totoaly different subject, you should read Young's article about teh Metn election and the possibility of Aoun steping into a syrian trap ( i have posted it on my blog (http://ibosblog.blogspot.com

and i would very much like to hear your views aboutt he metn election...

peace

ghassan karam said...

Bob,

I have stopped reading the DS a few months ago and as a result I had missed that nice analysis by Young. Thank you for bringing it to my attention.
Interestingly, I had posted yesterday on B2B a very short comment that seems to be in total agreement with the Young hypothesis. My conclusion is that a victory by the Aoun candidate in the Metn by election could wind up in hurting Aoun. What is important is not only to win but it is the margin by which the FPM wins. If the win is by only a few thousand votes instead of the 28,000 votes margin of victory in 2005 then the General will lose for winning. I do think that Aoun was set up but that is not difficult to do when one is dealing with a megalomaniac. General Aoun, in my opinion, will eventually implode and I believe that the Metn by elections will only bring that date closer.

programmer craig said...

Interesting take on things, Jeha. I tend to take a more simplistic view: that after weakening the position of Arabs in the ME and strengthening Iran at the same time, that the arms sales are just what they seem. A fall-back position on the part of the US with the intent of allowing Arab states to still pose a deterrent to Iran, without Iraq and without US troops in Iraq. The reason that would be a fall-back is that it only matters if the US fails to topple Islamic Republic, which is (I believe) what the US wants to accomplish next.

You may very well be right, though. I just don't give the US government that much credit for finesse and subtlety :)

Amos said...

Jeha,

On the arms sale to the Arab states - as far as I know, it hasn't gone through yet. So far, 114 Congressional representatives have opposed it, including 18 Republicans. Don't forget that a number of candidates, including Guiliani, are trying to make a breakthrough by pushing an anti-Saudi line. This is part of efforts to differentiate themselves from Bush (in the case of Republicans) and of appealing to American public opinion (both Reps and Dems). Bush and Cheney's perceived closeness to the Saudis is a liability for Republicans.

Those who oppose such deals can make arguments that speak much more clearly to the American public than geopolitical calculations: 1) disgruntled Saudis = 9/11 terrorists, 2) Saudi = anti-democratic, illiberal, Islamist, and 3) Saudi = too anti-Israel.