NO MEANS TO DEAL WITH GLOBAL RECESSION? HOW ABOUT A TURMOIL IN MIDDLE-EAST?

From a price of $147.27 per barrel on July 11, 2008, the price of crude oil tumbled to alarmingly low levels - levels which couldn't be explained based on any rational economic principle. Yes, there is a situation of recession in US, Euro zone, Japan but that situation can not justify a demand contraction happening overnight which should trigger a drop in crude price more than 70% below the July 11 level.

Anyway, in the aftermath of this precipitous fall from the cliff the oil companies worldwide started behaving like pansies - new E&P projects started getting put on hold, especially, projects related to non-conventional crude sources, like oilsands in Canada.

[One wonders what kind of economic model these companies follow that low crude prices prevailing even for a month sends their economic viability haywire. It is well known that economic analyses of such projects are done over the life cycle of the source of oil - the life cycle ranging from 25-40 years. So, it is hard to imagine that the oil companies chicken out just on the basis of one, two or six month period of relative low crude prices.]

More than the oil companies, most of whom have reasonably good balance sheet position, the oil producing countries are hurting more. So much so that even a country like Saudi Arabia was forced to delay the issuance of Request for Bids for their two refinery projects which were slated to go out in Q4 2008.

Iran, Venezuela and Russia are already in bad shape. Venezuela is considering to nationalise some profitable foreign owned mining leases to supplement their national revenue. Russian Rouble has plunged to unprecedented lows. Iran has had to ration their fuel supplies. Well, if these three countries find themselves in trouble it is music to West's ears.

With recession casting a pall of gloom globally, and US, Japan and Europe not knowing what to do to get out of this morass, is a crisis in the Middle-east a welcome event at the moment? Who would gain if there is a turmoil in that region? Will a military conflict, which can potentially become a full blown crisis in the region threatening to cut off oil supplies, be helpful to global economy at this time?

The world's top three GDP regions are struggling to find ways to bring about higher liquidity in the markets so as to increase aggregate demand for goods, housing and so on. So, in such a scenario will these economies not suffer a whammy by having to cope with higher crude oil prices which invariably happens whenever there is a conflict in Middle-east?

But this is exactly what is happening at the moment. Israel is going full blast at Hamas in Gaza, and there are fears that this operation might escalate. Crude prices are nudging their way upwards.

Granted that Israel will have their parliamentary elections in two months and Prime Minister Olmert is allegedly gambling on this military operation to come back in power. But the billion dollar question is: Will Israel ever carry out this kind of an operation and, more importantly, at this point in time without the knowledge and/or acquiescence of their godfather - USA? Hard to digest that they have gone ahead without keeping Washington informed.

Further, US and its lackey (UK) would have immediately figured out the consequential economic ramifications of a potential Middle-east crisis. Yet they would have apparently agreed. Why? Is there some smart Alec who theorised that should there be a disruption of sea lanes (and the trade dependent on it) leading to 'perception' of disruption of goods globally, there can be a rebound in consumer demand triggered by panic buying?

Bear in mind, consumer spending is key to the big economies getting back on track. So, if the consumer spending can be triggered for some reason it is most welcome. And, apart from increased consumer spending there is a potential of arms supply by major powers, like, US, UK and to some extent, Russia. Dollars and Pounds flowing in exchange of arms supply can grease the economic wheels of these countries. Never mind, if Russia also gets some crumbs.

Moreover, rise in crude prices will again restore the projected inflow of money for OPEC countries who will then have funds for their new oil & gas projects which will in turn be good news for vendors, contractors and EPC companies - most of which come from G-7 countries.

So, it may seem that after all a crisis in Middle-east is what the doctor ordered for at this very moment. Is it likely that this is an event which has been engendered in a scripted manner? Will it escalate? Will it suck in Hamas supporters, like, Iran and Syria? And, will this provide an opportune time to Israel (and US) to hit at Iranian nuclear facilities, since Iran is down in dumps economically?

The concern is: Will it be possible for Israel (and its allies) to play this crisis as a scripted event? If the crisis goes out of hand and/or plays outside the script what will happen? Or, are the phantom scriptwriters damn sure that they can control it right till the denouement? By the way, on the flip side, who knows, this event can end up in a whimper too without bringing in the spin-offs for the G-7 visualised so glibly in the foregoing. Let's wait and watch!

MUMBAI KIILINGS, AND POTENTIAL DANGERS POSED FOR USA - PAKISTAN PLAYING NEW GAMES

As per a news item posted on a US cable news website, a new intelligence assessment obtained by The Associated Press states that "The terrorism threat to the United States over the next five years will be driven by instability in the Middle East and Africa, persistent challenges to border security and increasing Internet savvy." The assessment further states "The al-Qaida terrorist network continues to focus on U.S. attack targets vulnerable to massive economic losses, casualties and political turmoil''.

US Homeland Security Secretary Michael Chertoff said in his year-end address on Dec. 18 "The threat of terrorism and the threat of extremist ideologies has not abated. This threat has not evaporated, and we can't turn the page on it."

As per the news item referred to above, intelligence officials predict the pool of radical Islamists within the U.S. will increase over the next five years due partly to the ease of online recruiting means. Officials foresee "a wave of young, self-identified Muslim 'terrorist wannabes' who aspire to carry out violent acts."

Wait a sec, where does the aforementioned fit in the killings carried out in Indian city of Mumbai on Nov 26? Good question! Here is the answer: After hours of interrogation of the lone Pakistani terrorist captured alive by Indian authorities, the FBI (and probably CIA/NSA), British and Israeli Intelligence have found out for themselves that the Mumbai killings was planned and launched from Pakistan.

Now the curve ball! The people who were killed in Taj Hotel included 2-3 US intelligence operatives (as per media reports but obviously US won't deny or confirm it). What is disturbing for US intelligence is how did the Pakistani terrorists, who carried out the operation on Nov 26, know about the presence of the said US operatives. It was no mere coincidence that the attack took place on Nov 26 and that the terrorists came to Taj Hotel looking for people who held US and British passports.

Consider the following relevant aspects: If the news about presence of the said US operatives in Mumbai was not supposed to be known to any other country, then how come the Pakistani militants came to know about them. Does it mean there is a Pakistani mole in US system? Now, the flip side - if per chance the Pakistani agency (ISI) had some inkling about the said US operatives' presence (for some purported coordination amongst US-ISI), then obviously the information flowed to the Pakistani terrorists from ISI.

Both the above scenarios are frightening and worrisome from US point of view. All these years US was in a state of self-inflicted denial that there was no worry for US from Pakistani terrorism mainly targeted against India. But now it is clear to even the dumbest of the dumb that Pakistan was and is the staging base for deadliest of the terrorist operations, and these operations have potential ramifications that threaten US interests - inside and outside US.

To make matters worse, the terrorist outfits, including Lashkar-e-Taiba, Al-Qaida and Taliban get logistical and intel support from certain factions of Pakistani intelligence (ISI). The logistical and technical support provided by these factions of ISI includes recruiting, networking, and making suitably trained resources available to the terrorist units for their covert and/or overt operations on ground or in cyberspace.

Make no mistake, the anti-US elements in Middle-East may be simmering with anger and may be willing to wreak vengeance against US, but they lack the sophisticated capability and savvy to carry out any deadly attack inside US or against US targets outside US. Get this in your heads - if there is any deadly attack inside US or against US targets outside US in the coming years, or if any such operation is thwarted in the planning stages, the epicentre of the same will get traced to Pakistan (and its border areas with Afghanistan which, again, receives support from ISI).

It needs to be mentioned here that Taliban has announced that should India chose to launch any military action against Pakistan, it (Taliban) will be fighting alongside Pakistani troops. Whatever veil of separation was there, if any, about the umbilical link between Pakistan and Taliban, gets completely shredded by this announcement.

Counter-terrorism experts fear that Pakistan (through one of its surrogates) may have already passed on the dirty bomb technology to some terrorist outfit. News items, like, 'Disgraced Pak scientist Dr. Khan tried to sell nuclear technology to foreign elements' are meant to deflect international attention from Pakistan to something obscure and non-existent. Unfortunately, the western world deliberately allowed itself to be fooled by such red herrings.

But time is now up for US and its western allies to play idiot and live in state of denial about Pakistan's deadly machinations - these machinations encompass not only India but more importantly the western countries whose boots the Pakistani leadership chose to lick but only to fool them and further its (Pakistan's) own interests.

The only way to thwart the deadly machinations (againat US and its allies), which invariably are supported directly/indirectly by Pakistan's ISI, is to have comprehensive intel coordination amongst western allies (including Israel), and to carry out devastating surgical pre-emptive operations against the nefarious elements within Pakistan.

If US and its western allies trust and depend on Pakistan to root out elements inimical to western powers, then it will be their monumental foolishness. One hopes the new US administration will not be fooled by chicanery, dubiousness and manipulated lies of Pakistan.

If US has to protect its citizens from potential deadly terrorist attacks in future, it will have to bring itself around to stare the 'real' epicentre of terrorism planning (i.e. Pakistan) in its face and stamp it out. The notion that US is thousand of miles away from Pakistan/Afghanistan and hence it is safe is as nonsensical as it can be. Hope numbskulls and delusional fools will not be occupying the key policy making positions in US come 2009!