Ten years ago, the Sovereign Society published what became the most controversial article I've ever written. Entitled "The Enemy of My Enemy is My Friend," it predicted that the then-upcoming invasion of Iraq would have the unforeseen consequence of accelerating the rise of Islamic fundamentalism in the Mideast.
Rather than attacking Iraq, then led by dictator Saddam Hussein, I suggested, tongue-in-cheek, that the United States should target Islamic fundamentalism more directly by sending Saddam billions of dollars to topple the Saudi Arabian government. After all, Saudi Arabia, was—and still is—controlled by Islamic fundamentalists. Indeed, 15 of the 19 participants in the 9/11/01 terror attacks carried Saudi passports. Moreover, Islamic fundamentalists loathed Saddam. In more than two decades of his rule, Saddam murdered tens of thousands of them.
Sadly, while I received hundreds of e-mails attacking my logic, the outcome was just as I predicted. By deposing Saddam, former President George W. Bush gave Islamic fundamentalism in Iran, Iraq, Saudi Arabia, Syria, and many other countries an enormous boost.
Now, 10 years later, the tide has turned 180 degrees. President Obama is preparing for war with both Syria and Iran. Obama has ordered the Navy and Air Force to prepare for air strikes on Syria. With Iran, Obama's actions are more nuanced: his administration has ratcheted up the economic sanctions against its Islamic fundamentalist rulers, while also claiming it won't permit a nuclear-armed Iran to exist.
Meanwhile, Obama's neocon opponents are baying for war. Presumptive Republican presidential nominee Mitt Romney has stated publicly he has the authority to attack Iran without congressional approval. Not to be outdone, Republican vice-Presidential hopeful Marco Rubio recently announced that the American people should be prepared for war with both Iran and Syria.
Is war inevitable? While Obama seems less inclined to start a war than Romney does, public opinion polls show nearly 60% of Americans believe military action is justified to prevent Iran from developing nuclear weapons. As a last-minute maneuver to garner swing votes in his re-election bid, Obama might be persuaded to invade Iran. And if Obama fails to do so, and loses his re-election bid to Romney, war appears a virtual certainty.
Once war begins, what is the most likely geopolitical outcome? I believe the following near-term consequences will develop:
- The United States will be drawn into war with Russia. Russian special forces are already stationed in Syria to guard a Russian navy port in the coastal city of Tartus. Russia is also massing troops along its southern border for deployment to Iran. This means that any U.S. attack on either Syria or Iraq will likely lead to direct engagements with Russian military forces.
- The U.S. military will suffer much heavier casualties than anticipated. Syria's anti-aircraft capability is robust, and Russia is boosting it further. Iran has both Chinese “Silkworm” and Russian made “Sunburn” anti-ship missiles in its arsenal. A single missile can sink a large warship. One war game simulation predicts that Iran will retaliate against any naval attack with massive missile launches against U.S. navy forces and kill up to 20,000 U.S. military personnel in just the first 24 hours of the conflict.
- Iran and Syria will escalate proxy wars against the United States and U.S. allies, such as Israel. Count on attacks on Israel from both Lebanon and the Gaza Strip and on possible suicide bombings in the United Kingdom and perhaps even the United States.
- Iran will deploy tens of thousands of mines to block the Strait of Hormuz, through which about 20% of the world's oil supply flows. While there's little question the United States has the military capability to clear the mines, military experts predict it could take months to do so. In the intervening months, oil prices will skyrocket.
- Russia will block natural gas exports to Europe in an effort to drive a wedge between the United States and its European allies. About 25% of Europe's natural gas supplies come from Russia. Coming on top of the euro crisis, a cutoff in Russian gas supplies could tip Europe into a depression.
Rreturning to the old principle that "the enemy of my enemy is my friend," who are the winners and losers of a U.S. attack on Syria and/or Iran?
The Sunni-dominated government of Saudi Arabia and Sunni Islamic fundamentalist movements such as al Qaida are most obvious beneficiaries. Sunni fundamentalists detest the Shiite dictators of Iran and the Alawite rulers of Syria. Toppling these governments would place Sunni fundamentalists in a much stronger position. Count on a big upsurge in terror attacks by al Qaida and al Qaida allied groups in the event of war.
Conversely, the United States will be in a much weaker position, both militarily and economically, in the wake of much-tougher-than-expected wars with Syria and Iran. U.S. military operations in the Middle East since the 9/11/01 attacks have cost U.S. taxpayers well over $1 trillion. Protracted wars with Syria and Iran will cost hundreds of billions of dollars more. With U.S. deficits already approaching $2 trillion annually, where will the money come from?
As is always the case in a fiat money system with a compliant central bank, it will be borrowed into existence by the Federal Reserve and U.S. Treasury. The U.S. dollar, one of the strongest global currencies over the last year, will decline precipitously. Prices for oil, gas, precious metals, and strategic metals used in weapons will skyrocket.
For U.S. investors, the anticipated fall in the value of the dollar makes diversification out of the United States more important than ever. In addition, during war, you can expect not only larger budget deficits, but also more restrictions, more emergencies, and more invasions of civil liberties. That makes a "Plan B"—offshore investments, a second residence and ideally, a second passport—more important than ever.
The Nestmann Group, Ltd. can help you set up your Plan B. Contact us for more information.
Copyright © 2012 by Mark Nestmann
