Good morning,
Here’s part two of the transcript from a conference call we recently enjoyed with Dr. George Freedman, founder of Stratfor, a global intelligence firm. In this part of the call Freedman dealt with the war itself and its aftermath:
The war will begin sometime we expect around February 27th through March 2nd. The dates are picked because of the phases of the moon. We do not want moonrise before 4:00 a.m. on the night we initiate combat. The reason is that darkness favors the United States. Our Stealth Bombers are primarily vulnerable to optical sites. On a moonless night they’re almost impossible to see, they can’t be picked up by radar and so on. They’re safest when there’s no moon. . .
There is a hard stop to this war sometime in mid to late April when temperatures rise above 85 degrees and it becomes extremely difficult for U.S. forces to operate in what is called Mach 4 conditions in chemical suits. If you have ever worn one of those, it’s not a joke. You are not going to be able to function effectively as a solider if under the threat of chemical attack you have to put one of those on and hide in hot weather. You’re not going to be very effective even in relatively cool weather, but it becomes impossible. We have to calculate that by mid-April we will have reached the point where the weather becomes unsupportable.
Therefore, we can’t push the war much further and we can’t wait until the fall because we have now deployed, between us and the British, the equivalent of six divisions in Iraq and one division that we can count up in Turkey. That’s the family jewels. That represents the overwhelming majority of the mobile striking power of the U.S. Ground Forces. When we add into the Five Carrier Battle Groups that are now about to be on position in the Persian Gulf, there’s no way we’re going to hold those forces there for six or seven months, certainly not with the situation developing elsewhere. This war has got to be brought to conclusion now. . .
Now how will the war be fought? The war will begin, as all American wars begin, with a suppression of enemy air defenses campaign that will be carried out by cruise missiles, wild weasel aircraft and other capabilities, heavy strikes against all Iraqi command and control centers including Saddam’s house, his houses, his wives’ houses, and everything else in, frankly, the hope of killing him there. We believe that simultaneously with this, not waiting until after this campaign ends, we will begin to see ground operations early on. Those ground operations will consist of two parts.
In the south, there will be a movement into the oilfields very rapidly, not only to prevent the Iraqis from blowing the oil wells although we certainly like to do that, but also because the road structure through the oilfields allows us to cross the Euphrates River effectively and turning northwest toward Baghdad. So strategic and military considerations come together.
The critical part of this war is that there are about six bridges across the Euphrates River, which is the river that runs from Baghdad down to the …. At least three of those bridges have to be taken by Americans or we will have to do bridging operations ourselves, which we’d rather not do. There’s no question that the Iraqis plan to blow those bridges early in the war and there is no question that one of the first things we’re going to try to do is seize those bridges. If any of you have seen the movie A Bridge Too Far, you get some vague idea of what will happen. We will send Special Forces in air and mobile units to seize the bridges, and then we will send armor along roads through the deserts south of the Euphrates to try to take the bridges. It will be quite an operation and it’s the kind of operation that the U.S. Army is the very best at. We expect that to be successful even if they blow the bridges.
The real question, of course, if going to come down to this. Baghdad is a city of over five million people. Physically and in terms of population it is the size of the Detroit Metropolitan area out to Flint, Michigan and Ann Arbor. It is big. Most of the streets are unnamed and unmarked with crooked lanes and one and two story houses. Even outside the city, urbanization is intense, particularly on the path that we’re going to be taking up from Kuwait.
Therefore, if the Iraqis are able to fight effectively in Baghdad they will cause a serious problem for the United States. The United States Army has never seized a city the size of Baghdad in its entire history. Very few armies have. The Soviets seized Berlin …, the Germans attempted to take cities like Leningrad and never did, cities like Kiev they did against light defenses, cities like Stalingrad, which they failed to take.
There is no more difficult battle fight in warfare than an urban battle. Therefore, sometime at around a week into the war we’re going to find out the sentimental question. Are the Iraqis capable of mounting a defense inside of Iraq, inside of Baghdad? Inside of Baghdad there are four brigades of what are called Special Republican Guards, the Elite of the Elite. These are highly motivated troops, their families have profited greatly from membership in the SRG, the Special Republican Guards. We have never encountered them in battle. They’re normally used for security purposes. They’re heavily armed and well trained. Will they fight?
In warfare, the most difficult thing to predict is moral, but these troops are motivated. If they believe that Saddam’s explanation to them is that they can win, if they believe that they can fight the U.S. through …, we believe contrary to some others that there’s a possibility that they will put up stiff resistance. If they do put up stiff resistance, there are three additional lesser Republican Guard divisions north of Baghdad that are capable of moving into the city. This will create a problem for the United States in this sense.
There’s no question that the United States could take Baghdad, but the classical response to urban warfare is to surround the city and pound it with artillery moving in very carefully as you pulverize the town. It’s an extended period of fighting and it’s one that causes very high causalities to civilians. In World War II when the Germans took Berlin, they didn’t care about civilian casualties. The United States doesn’t have that luxury in this particular case. In taking Baghdad, we have to take it as bloodless as possible.
Therefore, the great hope of the United States is twofold. First, that the Special Republican Guards, after being hit by air attacks, after being destabilized by U.S. Special Forces and other covert operations, will simply not fight. The second hope is that as we approach Baghdad, there will be a coup in Baghdad by somebody in the Iraqi military who is prepared to surrender the city. There has undoubtedly been attempts to covert contact with these forces. They may work, but it must be remembered that Saddam has a superb security force and that he has a nasty habit of suddenly shuffling his generals around and shooting a few of them, not necessary because he is convinced that they’re guilty of anything, but why take chances.
The battle is going to come down to a moral issue and I don’t believe that the U.S. Command, the President, or even Saddam Hussein knows the answer to this question, will the Special Republican Guards fight. Ultimately, if they fight heavily the United States will face this choice sometime a week or two into the war. To accept the U.N. cease-fire that is undoubtedly going to be on the table 24 hours after the war begins. Both operations are on Baghdad and constrain Saddam to the city of Baghdad in hope that he topples there, or to continue with the operation. In continuing with the operation, escalating the war to a more difficult level. That is going to be the question and we’re going to be looking at that very carefully.
Now the question that was put to us was what does all this do for the geopolitical alliances that we have? All of you, of course, have been watching French and German behavior over the past few weeks. What is extraordinary to me, having recently been in Europe, is what I see as a major French miscalculation. The French assumed that if Berlin and Paris aligned on an issue inevitably, the result was going to be that the United States would be confronted with a united Europe.
The outcome has been very different. Being confronted with a Paris/Berlin coalition, much of the rest of Europe said, “My god, if we give into the French and the Germans on this we’re going to be dominated by them for a generation.” Partly because they really resented the manner in which the French and the Germans were operating, partly because of the very real skill of American diplomacy, and partly just because they fear the French and the Germans more than they fear the United States, the Europeans shattered. So we wound up with the Iberian Peninsula, the Italians, most of Eastern Europe, even the Dutch coming in on the side of the United States.
Now there is a very real question that I don’t have time to get into here of whether NATO is going to survive because with the French and the Germans taking the position that they’re taking, one leg of the NATO stool has collapsed. There’s the Germans and France, there’s the United States with everyone else, and the Germans and the French are now facing the abyss of a split with the United States that leaves a very bitter taste in all of Europe. The German government is extremely weak. It’s unlikely that Schröder will personally survive.
The French are feeling themselves increasingly isolated. We have heard very convincing reports that back channel conversations between the French and the United States has already established that the French will somehow find a way to move into cooperation with the United States. We see the movement of French troops and French naval assets toward the region, unless they’re planning to take on our own fleets as being an indication that they want to be in for the kill.
So we don’t regard the European crisis in the end as being definitive. For us, what is much more interesting right now from a geopolitical sense is what is going to happen to other allies like the Saudis who are going to find themselves, if this war is successful, in a very different position than they’ve ever been in before, the Syrians that are going to find themselves in an untenable position, and the Iranians who are going to get a much stronger position that the others, but still are going to be very uncomfortable.
One of the important evolutions to keep your eye on, of course, is U.S. Indian relations, which have become intensely close and corporative over the past year. We expect it to continue to intensify, and we continue to expect to see all sorts of business and economic opportunities evolving out of those growing American/Indian relationships. The Indians are on board with us essentially because they believe, as many in the Administration do, that ultimately after Iraq we’re going to have to deal with the Pakistan question.
The Indians are delighted at the thought of dealing with Pakistan and are prepared to cooperate to any extent we would like. But from a geopolitical point of view what you are seeing is a close alignment between a country, which are called the equivalent in many ways of China and the United States, we’ve already seen cooperation in the high tech area in …, but in our view, there is going to be an intensification of corporation across the board between the United States and India. That makes India a very interesting place to look at in the same sense that Saudi Arabia becomes an increasingly dubious place to look at. It is very difficult to imagine the current ruling structure that has led Saudi Arabia to the current position of isolation, surviving unscathed. The Saudis are desperately looking around for ways to solve the problem.
To close, the question of oil prices have come up. We generally regard the war in Iraq as having minimal effect on oil prices. Venezuela has had a more substantial effect of $1.5 million a day that the Iraqis are currently shipping out, first to be made up by others, especially now that Venezuela is slowly coming back online. Secondly, we see a contingency plans by the United States rapidly, to now only restoring the flow of Iraqi oil but also increasing it substantially. Finally, even if that oil does not come back online at all for an extended period of time, we think the premium is already built into the price.
Whatever happens in the war, the world has lived with wars before. We can argue whether wars are bullish or bearish. We can argue multiple ways, but the point is that can both or either. We do not see the red connection. We in fact see war as being a permanent feature for the next five or ten years of the national landscape. We don’t think Iraq is the last operation of this sort the United States will be carrying out. We believe we are going to see an extension of U.S. Forces around the world in effect and in the form of an American empire. I think the markets will have to live with that, and they will live with it because the structural impact of these operations on the U.S. economy will be, from our point of view, neutral positive.
Quote for today from Stanislaw Jerzy Lec: “No snowflake in an avalanche ever feels responsible.”
Have a great day,
John
Today’s Tidbits is a service to clients and friends of Heritage Fund Advisors, LLC, a registered investment adviser and subsidiary of Heritage Capital Advisors, LLC. If you have received this e-mail in error or at any time you no longer wish to receive these e-mails please reply with a “delete” request and you will be immediately removed from our distribution list. The information contained herein is based upon sources considered to be reliable but is not represented to be complete and its accuracy is not guaranteed. Any opinions expressed reflect the judgment of the author at this date, are subject to change without notice, and are not a complete analysis of every material fact respecting any company, industry or security. Heritage Fund Advisors, LLC and its directors, officers, shareholders and affiliates and member of their families may make either long or short investments in a company or securities mentioned herein before, after or currently with the publication of this report or transmission. Affiliates of Heritage Fund Advisors, LLC may perform investment banking or other services for, or solicit investment banking or other services from any company, person or entities mentioned herein. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any security.
John F. Ray
Co-Chairman
Heritage Capital Advisors, LLC
3384 Peachtree Road, NE
Suite 300
Atlanta, GA 30326
Here’s part two of the transcript from a conference call we recently enjoyed with Dr. George Freedman, founder of Stratfor, a global intelligence firm. In this part of the call Freedman dealt with the war itself and its aftermath:
The war will begin sometime we expect around February 27th through March 2nd. The dates are picked because of the phases of the moon. We do not want moonrise before 4:00 a.m. on the night we initiate combat. The reason is that darkness favors the United States. Our Stealth Bombers are primarily vulnerable to optical sites. On a moonless night they’re almost impossible to see, they can’t be picked up by radar and so on. They’re safest when there’s no moon. . .
There is a hard stop to this war sometime in mid to late April when temperatures rise above 85 degrees and it becomes extremely difficult for U.S. forces to operate in what is called Mach 4 conditions in chemical suits. If you have ever worn one of those, it’s not a joke. You are not going to be able to function effectively as a solider if under the threat of chemical attack you have to put one of those on and hide in hot weather. You’re not going to be very effective even in relatively cool weather, but it becomes impossible. We have to calculate that by mid-April we will have reached the point where the weather becomes unsupportable.
Therefore, we can’t push the war much further and we can’t wait until the fall because we have now deployed, between us and the British, the equivalent of six divisions in Iraq and one division that we can count up in Turkey. That’s the family jewels. That represents the overwhelming majority of the mobile striking power of the U.S. Ground Forces. When we add into the Five Carrier Battle Groups that are now about to be on position in the Persian Gulf, there’s no way we’re going to hold those forces there for six or seven months, certainly not with the situation developing elsewhere. This war has got to be brought to conclusion now. . .
Now how will the war be fought? The war will begin, as all American wars begin, with a suppression of enemy air defenses campaign that will be carried out by cruise missiles, wild weasel aircraft and other capabilities, heavy strikes against all Iraqi command and control centers including Saddam’s house, his houses, his wives’ houses, and everything else in, frankly, the hope of killing him there. We believe that simultaneously with this, not waiting until after this campaign ends, we will begin to see ground operations early on. Those ground operations will consist of two parts.
In the south, there will be a movement into the oilfields very rapidly, not only to prevent the Iraqis from blowing the oil wells although we certainly like to do that, but also because the road structure through the oilfields allows us to cross the Euphrates River effectively and turning northwest toward Baghdad. So strategic and military considerations come together.
The critical part of this war is that there are about six bridges across the Euphrates River, which is the river that runs from Baghdad down to the …. At least three of those bridges have to be taken by Americans or we will have to do bridging operations ourselves, which we’d rather not do. There’s no question that the Iraqis plan to blow those bridges early in the war and there is no question that one of the first things we’re going to try to do is seize those bridges. If any of you have seen the movie A Bridge Too Far, you get some vague idea of what will happen. We will send Special Forces in air and mobile units to seize the bridges, and then we will send armor along roads through the deserts south of the Euphrates to try to take the bridges. It will be quite an operation and it’s the kind of operation that the U.S. Army is the very best at. We expect that to be successful even if they blow the bridges.
The real question, of course, if going to come down to this. Baghdad is a city of over five million people. Physically and in terms of population it is the size of the Detroit Metropolitan area out to Flint, Michigan and Ann Arbor. It is big. Most of the streets are unnamed and unmarked with crooked lanes and one and two story houses. Even outside the city, urbanization is intense, particularly on the path that we’re going to be taking up from Kuwait.
Therefore, if the Iraqis are able to fight effectively in Baghdad they will cause a serious problem for the United States. The United States Army has never seized a city the size of Baghdad in its entire history. Very few armies have. The Soviets seized Berlin …, the Germans attempted to take cities like Leningrad and never did, cities like Kiev they did against light defenses, cities like Stalingrad, which they failed to take.
There is no more difficult battle fight in warfare than an urban battle. Therefore, sometime at around a week into the war we’re going to find out the sentimental question. Are the Iraqis capable of mounting a defense inside of Iraq, inside of Baghdad? Inside of Baghdad there are four brigades of what are called Special Republican Guards, the Elite of the Elite. These are highly motivated troops, their families have profited greatly from membership in the SRG, the Special Republican Guards. We have never encountered them in battle. They’re normally used for security purposes. They’re heavily armed and well trained. Will they fight?
In warfare, the most difficult thing to predict is moral, but these troops are motivated. If they believe that Saddam’s explanation to them is that they can win, if they believe that they can fight the U.S. through …, we believe contrary to some others that there’s a possibility that they will put up stiff resistance. If they do put up stiff resistance, there are three additional lesser Republican Guard divisions north of Baghdad that are capable of moving into the city. This will create a problem for the United States in this sense.
There’s no question that the United States could take Baghdad, but the classical response to urban warfare is to surround the city and pound it with artillery moving in very carefully as you pulverize the town. It’s an extended period of fighting and it’s one that causes very high causalities to civilians. In World War II when the Germans took Berlin, they didn’t care about civilian casualties. The United States doesn’t have that luxury in this particular case. In taking Baghdad, we have to take it as bloodless as possible.
Therefore, the great hope of the United States is twofold. First, that the Special Republican Guards, after being hit by air attacks, after being destabilized by U.S. Special Forces and other covert operations, will simply not fight. The second hope is that as we approach Baghdad, there will be a coup in Baghdad by somebody in the Iraqi military who is prepared to surrender the city. There has undoubtedly been attempts to covert contact with these forces. They may work, but it must be remembered that Saddam has a superb security force and that he has a nasty habit of suddenly shuffling his generals around and shooting a few of them, not necessary because he is convinced that they’re guilty of anything, but why take chances.
The battle is going to come down to a moral issue and I don’t believe that the U.S. Command, the President, or even Saddam Hussein knows the answer to this question, will the Special Republican Guards fight. Ultimately, if they fight heavily the United States will face this choice sometime a week or two into the war. To accept the U.N. cease-fire that is undoubtedly going to be on the table 24 hours after the war begins. Both operations are on Baghdad and constrain Saddam to the city of Baghdad in hope that he topples there, or to continue with the operation. In continuing with the operation, escalating the war to a more difficult level. That is going to be the question and we’re going to be looking at that very carefully.
Now the question that was put to us was what does all this do for the geopolitical alliances that we have? All of you, of course, have been watching French and German behavior over the past few weeks. What is extraordinary to me, having recently been in Europe, is what I see as a major French miscalculation. The French assumed that if Berlin and Paris aligned on an issue inevitably, the result was going to be that the United States would be confronted with a united Europe.
The outcome has been very different. Being confronted with a Paris/Berlin coalition, much of the rest of Europe said, “My god, if we give into the French and the Germans on this we’re going to be dominated by them for a generation.” Partly because they really resented the manner in which the French and the Germans were operating, partly because of the very real skill of American diplomacy, and partly just because they fear the French and the Germans more than they fear the United States, the Europeans shattered. So we wound up with the Iberian Peninsula, the Italians, most of Eastern Europe, even the Dutch coming in on the side of the United States.
Now there is a very real question that I don’t have time to get into here of whether NATO is going to survive because with the French and the Germans taking the position that they’re taking, one leg of the NATO stool has collapsed. There’s the Germans and France, there’s the United States with everyone else, and the Germans and the French are now facing the abyss of a split with the United States that leaves a very bitter taste in all of Europe. The German government is extremely weak. It’s unlikely that Schröder will personally survive.
The French are feeling themselves increasingly isolated. We have heard very convincing reports that back channel conversations between the French and the United States has already established that the French will somehow find a way to move into cooperation with the United States. We see the movement of French troops and French naval assets toward the region, unless they’re planning to take on our own fleets as being an indication that they want to be in for the kill.
So we don’t regard the European crisis in the end as being definitive. For us, what is much more interesting right now from a geopolitical sense is what is going to happen to other allies like the Saudis who are going to find themselves, if this war is successful, in a very different position than they’ve ever been in before, the Syrians that are going to find themselves in an untenable position, and the Iranians who are going to get a much stronger position that the others, but still are going to be very uncomfortable.
One of the important evolutions to keep your eye on, of course, is U.S. Indian relations, which have become intensely close and corporative over the past year. We expect it to continue to intensify, and we continue to expect to see all sorts of business and economic opportunities evolving out of those growing American/Indian relationships. The Indians are on board with us essentially because they believe, as many in the Administration do, that ultimately after Iraq we’re going to have to deal with the Pakistan question.
The Indians are delighted at the thought of dealing with Pakistan and are prepared to cooperate to any extent we would like. But from a geopolitical point of view what you are seeing is a close alignment between a country, which are called the equivalent in many ways of China and the United States, we’ve already seen cooperation in the high tech area in …, but in our view, there is going to be an intensification of corporation across the board between the United States and India. That makes India a very interesting place to look at in the same sense that Saudi Arabia becomes an increasingly dubious place to look at. It is very difficult to imagine the current ruling structure that has led Saudi Arabia to the current position of isolation, surviving unscathed. The Saudis are desperately looking around for ways to solve the problem.
To close, the question of oil prices have come up. We generally regard the war in Iraq as having minimal effect on oil prices. Venezuela has had a more substantial effect of $1.5 million a day that the Iraqis are currently shipping out, first to be made up by others, especially now that Venezuela is slowly coming back online. Secondly, we see a contingency plans by the United States rapidly, to now only restoring the flow of Iraqi oil but also increasing it substantially. Finally, even if that oil does not come back online at all for an extended period of time, we think the premium is already built into the price.
Whatever happens in the war, the world has lived with wars before. We can argue whether wars are bullish or bearish. We can argue multiple ways, but the point is that can both or either. We do not see the red connection. We in fact see war as being a permanent feature for the next five or ten years of the national landscape. We don’t think Iraq is the last operation of this sort the United States will be carrying out. We believe we are going to see an extension of U.S. Forces around the world in effect and in the form of an American empire. I think the markets will have to live with that, and they will live with it because the structural impact of these operations on the U.S. economy will be, from our point of view, neutral positive.
Quote for today from Stanislaw Jerzy Lec: “No snowflake in an avalanche ever feels responsible.”
Have a great day,
John
Today’s Tidbits is a service to clients and friends of Heritage Fund Advisors, LLC, a registered investment adviser and subsidiary of Heritage Capital Advisors, LLC. If you have received this e-mail in error or at any time you no longer wish to receive these e-mails please reply with a “delete” request and you will be immediately removed from our distribution list. The information contained herein is based upon sources considered to be reliable but is not represented to be complete and its accuracy is not guaranteed. Any opinions expressed reflect the judgment of the author at this date, are subject to change without notice, and are not a complete analysis of every material fact respecting any company, industry or security. Heritage Fund Advisors, LLC and its directors, officers, shareholders and affiliates and member of their families may make either long or short investments in a company or securities mentioned herein before, after or currently with the publication of this report or transmission. Affiliates of Heritage Fund Advisors, LLC may perform investment banking or other services for, or solicit investment banking or other services from any company, person or entities mentioned herein. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any security.
John F. Ray
Co-Chairman
Heritage Capital Advisors, LLC
3384 Peachtree Road, NE
Suite 300
Atlanta, GA 30326
