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War Plans For Iraq

FORECASTS & TRENDS E-LETTER
By Gary D. Halbert
December 30, 2002

Introduction

If you watched the news over the holiday, it is clear that the US and Britain are accelerating the movements of troops and equipment to the Middle East, obviously in preparation for a possible war with Iraq.  Many of you reading this E-Letter are in favor of such a war and many are not.  Regardless of your view, a war with Iraq is probably going to happen.

In the last week, Stratfor.com published the analysis which follows.  Rather than try to summarize it for you, I have chosen to reprint it intact.  Stratfor is an excellent source for geopolitical intelligence and information.   Here is their latest thinking on the war with Iraq.

QUOTE “Summary

The United States is under pressure to provide intelligence that shows Iraq possesses weapons of mass destruction. This leaves Washington with a problem. The main threat comes from Iraqi chemical weapons, which must be attacked early in a war. If Washington makes public information on where chemical weapons are located, Baghdad can move those weapons around. If the United States provides intelligence, it must follow up rapidly with attacks. For this and other reasons, the pressure to launch the war is growing as diplomatic pressure to avoid the war is beginning somewhat to abate.

Analysis

When chief U.N. weapons inspector Hans Blix delivered his report to the U.N. Security Council last Thursday, he took the U.S. position, saying that Iraq's 12,000-page weapons declaration contained serious omissions. He did not, as U.S. Secretary of State Colin Powell had, use the term ‘material breach,’ which is the magic word for war. Blix was in no position to use that term: He is a technician reporting to the Security Council. He reports the facts. It is up to the Security Council to draw conclusions from those facts -- conclusions that are political in essence.

What was most striking was the quiet that followed Blix's report and Powell's evaluation. Russia pointed out that it was not up to the United States, but the Security Council to determine whether a material breach had occurred. Moscow focused on procedure, not on substance. As for the rest of the permanent Security Council members, there was mostly silence. That silence is ominous for Iraqi leader Saddam Hussein.

The focus has shifted away from the question of Iraq's compliance with the inspection regime; it is now obvious that Baghdad is not compliant. The question now is whether Iraq actually has weapons of mass destruction, and the spotlight is on U.S. intelligence. First Blix, then Iraq, challenged the CIA to reveal information on Iraq's weapons program, but the CIA has a couple of reasons for hesitating:

1. The agency has an institutional aversion to revealing its sources and methods. Information comes from sources within Iraq, monitoring of telecommunications, penetration of Iraqi computer systems and so forth. Every bit of information provided can compromise a source.

2. Iraq's weapons of mass destruction capabilities are heavily focused in the area of chemical weapons. These chemicals, contained in drums and shells, can be moved easily and quickly. They will be one of the first targets of U.S. air attacks. Any report filed by the CIA would give Baghdad the opportunity to move them quickly. In fact, even if the inspectors find these chemicals and report them, the Iraqis still would have time to move them before the United States could act. Therefore, providing intelligence on the location of chemical weapons would undermine the United States' ability to destroy them.

Officials in Baghdad understand this. Having lost the first line of defense, they've moved to the second. Having been shown to be uncooperative, they are trying to shift the focus of the question to their actual possession of weapons. This creates a minor problem for the United States. If Washington provides accurate intelligence, it could lose a target. If it fails to provide accurate intelligence, a case could be made that Iraq has no WMD. The United States, therefore, will focus on the non-cooperation issue while trying to work through back channels with France and Russia, which know about Iraq's capabilities through their own intelligence and, of course, because they provided some of the production facilities themselves.

The point here is that the situation is shifting perceptibly from a diplomatic to a military issue. The United States has, with some real skill, gone a long way in defusing opposition to an attack. There is no enthusiasm for it and most nations will not participate, but there is now a sense that war no longer can be resisted. The standard position that is emerging, from France to Syria, is that (1) war is coming, (2) other countries don't want to be deeply involved, yet (3) they don't want to be left out of the spoils. That's about as good as it's going to get for the United States this time around.

Which brings us to timing. Blix is supposed to file a definitive report by Jan. 27. The United States will push to make that a negative report. Washington also will use the interim period to perpetuate the atmosphere of resignation that has gripped most third parties in the last few weeks. We expect the U.N. Security Council will declare Iraq in breach of the resolution and will develop some vague language under which the United States can launch an attack without an actual U.N. endorsement. That will do for the United States.

All forces for a ground assault have not yet moved into place. Britain still is moving equipment in, as is the United States. U.S. reservists and National Guardsmen are being told that they will be mobilized around mid-January. Many of these will replace regular troops that are going overseas and others will be providing increased security in the United States. But others, particularly Marines, will be sent overseas, including to Iraq. If they are mobilized in mid-January, they will not arrive for several weeks -- and they will need several more weeks of training in-theater for acclimation and integration into the war plan.

The United States on several occasions has made it clear that an air war can begin before all forces are in place. That appears to be the strategy. As long as the U.S. Air Force is ready in Turkey, Qatar, Diego Garcia and other air bases from which strategic bombers can operate, and as long as both carriers and platforms capable of firing cruise missiles are ready, the air war can be launched. The current speculation is for the air war to begin within days of the Jan. 27 deadline. We expect that to be the case: The days from Jan. 29 through Feb. 3 will provide excellent conditions for air strikes.

An air war would take four to six weeks. The issue is not early suppression of enemy air defenses or disruption of communications; both undoubtedly can be achieved on a strategic and operational level within the first week of operation. However, in anticipation of a ground war, the United States first will attack Iraqi ground formations, including armored, mechanized and infantry units. Attacking large formations is inevitably a time-consuming process involving the delivery of munitions to targets. Also, a large number of missions will need to be carried out, battle damage assessments made and targets revisited. The goal will be to render Iraqi formations incapable of resisting.

We would estimate a minimum of four weeks for the anti-ground force mission. That would move us into March for the ground war, with March 3-5 providing a reasonable window of opportunity. The weather in early March remains acceptable, with increasing possibilities of spring rains and flooding. Washington would like to have the operation completed by mid-March.

It should be noted that the actual commencement of ground operations need not be as clean as in 1991. There are persistent reports of Israeli and other special forces operating in western Iraq, which is lightly held. There are similar reports of U.S. forces operating in northern Iraq, where Turkish forces are ever-present. Thus, the war could include effective operations in western and northern Iraq while the air war goes on in January.

The real issue will be in the south, where the British are leaking promises of an amphibious attack. Stratfor's war plan, ‘Desert Slice,’ which appears to be the model being pursued here, views an amphibious attack at the Shatt al Arab as likely, if the United States cannot squeeze enough force into Kuwait. However, during Desert Storm, an amphibious assault was not carried out but was merely threatened in order to hold Iraqi troops in place along the coast. In either case, the attack in the south must take place before any flooding is possible.

Allied forces must develop a multi-axis line of attack, including a swing to the west to supplement any movement north along river lines. Air power will be critical in breaking up Iraqi formations on already unpleasant terrain. That means that the southern attack is likely to be the last axis implemented.

This returns us -- as it has over and over again -- to Baghdad and the fundamental imponderable in the war: morale. There is little that is less quantifiable, less predictable and more critical in war than morale and its twin, training. It cuts both ways: An enemy's morale and training sometimes are wildly overestimated, sometimes wildly underestimated, but rarely are they correctly evaluated.

The battle of Baghdad depends on morale and training more than on any other single factor. If even a relatively small force decides to stand and fight and has basic fighting skills, then taking Baghdad will become a brutal, bloody process. If the Iraqi army shatters under the bombing and ground assault and simply fails to resist, then taking Baghdad still will be complex but will not be a problem.

In 1991, the United States overestimated the morale and training of the Iraqi army, assuming that the blooded force that fought Iran would put up a better fight. Of course, the forces deployed in Iraq were cannon fodder, deployed for destruction. The United States did not engage Republican Guard units in Baghdad. The current assumption is that the victory of 1991 in Kuwait will be replicated throughout Iraq, using the same basic combination of forces. That might well be true, but it will not be known until after the battle is won.

That is why the United States needs to fight earlier rather than later. After mid-March, rains turn some of the country into a quagmire. Later still, the temperature rises, frequently making operations in MOP-4 chemical protection suits unbearable. The temperature in July can reach as high as 120 degrees Fahrenheit. Whoever said that summer is not a problem either has never worn a MOP-4 suit at Fort Benning or Fort Bragg on an ordinary summer day or knows that the Iraqi chemical weapons stash doesn't exist or won't be used. You do not fight in the Iraqi summer if you don't have to.

So, given that no one knows how long the battle for Baghdad might last or if the United States and Britain will have to pull into siege positions for an extended period, launching the battle of Baghdad as early as possible is a military necessity. Its very unpredictability requires that the battle be waged as early as possible. That means that the commencement of the war cannot be put off much past Feb. 1. If it is, the entire war could start to slide into April and May -- and that means that if the Iraqi army doesn't simply crumble in Baghdad, the war could extend beyond what the United States wants. Given other requirements, follow-up operations in the region and the intensification of activity in Afghanistan, the last thing the United States wants is to tie forces down around Baghdad.

All of this argues for an air war beginning in late January or early February, operations in the west and north beginning a week or so later and an attack launched from Kuwait by early March. A lot of slippage will not be a good idea here.” END QUOTE

Conclusions

While not absolutely certain, the odds of war with Iraq are huge.  This is one reason why stocks have been moving lower and oil prices higher in recent days.  These trends could continue (probably erratically) for several more weeks as war preparations continue.  For stocks, it remains to be seen if the move down will provide an excellent buying opportunity, or if the bear market has resumed.  I tend to believe the former. 

Whatever turns out to be the case, the equity markets will continue to be very volatile which argues, once again, for market timing strategies that can get you out of the market from time to time.  My new Special Report on Market Timing is available to you free on our website at www.profutures.comOr call us toll free at 800-348-3601.

As for oil prices, in addition to the strike in Venezuela, much depends on whether or not Saddam Hussein destroys his oil fields and production facilities.  If at all possible, the US will not allow him to do this, and such a move could actually be the catalyst which starts the war.

As we close out 2002, we learn that the economy was considerably stronger than most analysts predicted a year ago, but very consistent with what The Bank Credit Analyst forecasted.  As I will discuss in more detail next week, BCA is mildly optimistic about the US economy in 2003.

Let me thank those of you who have read and appreciated these weekly E-Letters this year, and even those who have e-mailed us with opposing views and thoughts.  With the audience now over 1½ million people, there will undoubtedly be those who agree and those who disagree.

To all, let me wish you a very happy and prosperous New Year!!

Warm holiday wishes,

Gary D. Halbert

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Forecasts & Trends E-Letter is published by ProFutures, Inc. Gary D. Halbert is the president and CEO of ProFutures, Inc. and is the editor of this publication. Information contained herein is taken from sources believed to be reliable but cannot be guaranteed as to its accuracy. Opinions and recommendations herein generally reflect the judgement of Gary D. Halbert (or another named author) and may change at any time without written notice. Market opinions contained herein are intended as general observations and are not intended as specific investment advice. Readers are urged to check with their investment counselors before making any investment decisions. This electronic newsletter does not constitute an offer of sale of any securities. Gary D. Halbert, ProFutures, Inc., and its affiliated companies, its officers, directors and/or employees may or may not have investments in markets or programs mentioned herein. Past results are not necessarily indicative of future results. Reprinting for family or friends is allowed with proper credit. However, republishing (written or electronically) in its entirety or through the use of extensive quotes is prohibited without prior written consent.

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