5th Fleet Focus: The Fog of Peace

Are you ready for $100 a barrel for oil? You should be, the rhetoric is about to hit all sides of the media like a storm, introducing the fog of war to the current peace, which usually plays out in economic speculation for higher prices of crude oil.

Lets start by pointing out that the Truman Carrier Strike Group will cross the Suez Canal this week and enter the 5th fleet Area of Operations. This will raise the typical rhetoric as the number of aircraft carriers rises to two for a few weeks. It is very likely the Navy will maintain both carriers in the region for at least a few weeks, as the Enterprise is busy maintaining a presence during the current Pakistan situation.

Adding to that, the AP has this story.

The head of Iran's Atomic Energy Organization said Saturday that the country had produced its first nuclear fuel pellets for use in a heavy water reactor, which is still under construction.

The uranium oxide pellets are made using a process separate from the uranium enrichment at the heart of a standoff between Iran and the U.S., which accuses the clerical government of secretly pursuing a nuclear weapons program.

But the Arak reactor, which began construction in central Iran in 2004, is a concern to the West because the spent fuel from a heavy-water facility can be used to produce plutonium, which in turn can be used for a nuclear weapon. U.N. inspectors last visited the reactor in July, and Iran has said it hopes to have Arak up and running by 2009.

Then you have this tidbit from the Russian press.

The recent report by Director General of the International Atomic Energy Agency (IAEA) Mohamed ElBaradei is similar to the previous one but for a sensational detail.

It says that the IAEA is getting ready to verify and seal the nuclear fuel which will be supplied to the Bushehr nuclear power plant on November 26, 2007. This procedure will precede the delivery of fuel from Russia to Iran.

This suggests that the nuclear plant will be commissioned earlier than planned - at the end of next year. This is why the delivery of fuel is being rushed. Otherwise, why conduct the verification procedure and store sealed nuclear fuel? Its quality will deteriorate because of radioactivity. Moreover, the Tvel Corporation, a Russian manufacturer of fuel, is already sustaining losses because it had to suspend the first full load of fuel for the plant.

Just in case you were wondering if the US Navy is doing anything interesting behind the scenes, the British media is busy watching the logistics.

The U.S. military has stepped up chartering of tankers and requests for extra fuel in the U.S. Central Command area, which includes the Gulf, shipping and oil industry sources say.

A Gulf oil industry source said the charters suggested there would be high naval activity, possibly including a demonstration to Iran that the U.S. Navy will protect the Strait of Hormuz oil shipping route during tensions over Tehran's nuclear programme.

The U.S. Navy's Military Sealift Command (MSC) has tendered for four tankers in November to move at least one million barrels of jet and ship fuel between Gulf ports, from Asia to the Gulf and to the Diego Garcia base, tenders seen by Reuters show.

It usually tenders for one or two tankers a month to supply Gulf operations, which include missions in Iraq.

And not to be outdone, the Herald has a the scoop of "secret" work being done in Diego Garcia.

The US is secretly upgrading special stealth bomber hangars on the British island protectorate of Diego Garcia in the Indian Ocean in preparation for strikes on Iran's nuclear facilities, according to military sources.

The improvement of the B1 Spirit jet infrastructure coincides with an "urgent operational need" request for £44m to fit racks to the long-range aircraft.

That would allow them to carry experimental 15-ton Massive Ordnance Penetrator (MOP) bombs designed to smash underground bunkers buried as much as 200ft beneath the surface through reinforced concrete.

If you are wondering what all of this means, it basically means higher energy prices this winter. Is the US about to strike Iran? I doubt it, the only people who want war is Iran and Saudi Arabia, in fact, I'm not even convinced the neocons wants war... yet. It looks to me like the Bush administration has given Sec of State Rice at least until March of 2008 to figure out a plan for Iran.

Why March? Several reasons. First, in March Petraeus is due back in Congress to update the Iraq situation. Given the success we have seen in Iraq, I'm starting to think Petraeus is going to recommend a dramatic cut of military forces in Iraq in March. Second, there are some noteworthy deliveries of military equipment to Israel (including BMD) that will be mostly completed by March. Finally, there is no reason to hurry up and do anything until then, March 08 represents a month of peak performance capability for the US Navy, so why not wait?

BTW, for those who believe there will be a war with Iran before the Bush administration leaves office, we now believe if it happens, the war will be started by Israel in 2008, not by the US. There are a number of reasons for this, but mostly we believe it will happen that way to spare backlash from Iran against Iraq and Saudi Arabia. The US only gets involved if Iran attacks either Iraq or Saudi Arabia, neither of which is a winning play as a response of attack by Israel (Iran loses the propaganda high ground if they attack Arabs after being attacked by Jews).

The backlash would likely come from Hezbollah and Hamas, just as we saw in the summer of 2006. We also believe there is political motive for this development however, observers in the 2006 war would recall the incredible reactions of the far left against Israel, creating a rift between the American Jewish community and the Democratic Party. In other words, in the middle of a huge election year, we see it as very difficult for the left in the US to pile on Israel like they did in the summer of 2006, because it would be considered politically stupid to alienate one of the largest political donation blocks of the Democrat Party during a major US election season.

Israel taking unilateral action gives the US military and the Bush administration more flexibility in response, gives the regional actors cover, but also limits the military actions against Iran due to logistics reasons. If you are one of those who don't think it is possible, you need to do your homework, Israel has the capability to put about 50 sorties a day over Iran, and again do your research, because those 50 sorties would come from forces barely used in 2006 against Lebanon, because those air forces were held back in case of direct attack by Iran.