Cutting Up What Remains, Part 3

Don't piss down my back and tell me its raining...

This note was distributed to my institutional clients on January 14, 2020. I am distributing it on Substack to provide background for upcoming notes.

·        The situation has changed such that the clock is ticking much faster for the Iranians than it is for the Gulf Arabs or Turkey. Putin has undoubtedly achieved his intermediate goal of being a big player in the Middle East – now he must live with being a big player in the Middle East.

·        Across the Middle East and the Horn of Africa, the artificial borders defining “nations” in the Western sense are being ignored and the true borders based on diverging interests are becoming clear. While it might be easy to shrug off the problem as “more of the same” in the Middle East, the steady decline of the sanctity of national sovereignty should be of concern to all.

·        The financial crisis in Lebanon and its effects on Hezbollah combined with the funding squeeze generated by the Trump administration’s “maximum pressure” sanctions campaign has put Iran in a vulnerable position and might be forcing the regime’s hand.

·        If the funding network in Lebanon gets back up and running and/or Iran gets some sanctions relief then their clock will start ticking a lot slower. However, if the financial squeeze continues or gets worse Iran will need to make a move before time runs out. Consider that such a difficult decision is taking place in the context of an enraged and humiliated Supreme Leader and Revolutionary Guards. They will be looking for a fight and they know the next blow must be a knock-out.

·        In contrast, the Gulf Arabs are sitting on piles of cash that – for the time being – that render them indispensable friends during times of financial stress. In the long run the Gulf Arabs have a problem because they have designed their societies around unrealistically high oil prices. But, in the short run cash is king and the Gulf Arabs have plenty of it.

Major General Qassim Soleimani, the recently departed commander of the Iranian Revolutionary Guards’ Quds Force, was a self-made man, a patriot, a zealot and a mass murderer. He was soft-spoken but assertive, an understated charisma the Arabs call khilib. Above all, Soleimani was a warrior, a great one, and great warriors do not go to their graves unsung. Soleimani was the architect and manager of Iran’s ambitious project to establish a secure land bridge to the Mediterranean – which he declared as his mission upon promotion to Commander of the Quds Force twenty-one years ago. Soleimani’s power stemmed from his close relationship with Supreme Leader Khamenei, who called him a “living martyr of the revolution”. His death was a severe emotional blow to Khamenei who wept openly at Soleimani’s funeral.