Morning Intelligence Brief

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1144 GMT - IRAQ -- The former U.S.-led Coalition Provisional Authority (CPA) in Iraq did not maintain good records concerning close to $1 billion from
the Iraqi exchequer spent on reconstruction projects, according to a new audit released by the CPA's inspector-general. In the first formal audit of contracting procedures under the CPA, the auditors found that 29 of the 43 contracts they examined had incomplete or missing documentation. In each of the cases, it was not possible to ascertain whether the goods and/or
services paid for by the CPA were ever received. The CPA paid for 1,928 contracts worth about $847 million with funds confiscated from the ousted Saddam regime, and oil revenues.

1138 GMT - BELGIUM -- An explosion apparently caused when workers attempted to repair a leak in an underground gas pipeline killed at least 14 people and i! njured another 200 in an industrial area in southern Belgium on July 30. A spokesman for the regional civil protection agency said the blast occurred at 9 a.m. (local time) near the town of Ath, 25 miles southwest of Brussels as the workers tried to plug a leak in the pipeline transporting gas from the Belgian port of Zeebrugge to northern France. Two nearby
factories were destroyed in the blast.

1126 GMT - PAKISTAN -- Security forces were on high alert in the southern Pakistani city of Karachi on July 30 due to concerns that militant Islamist
suicide bombers would stage attacks against mosques. Karachi police chief Tariq Jamil said intelligence agencies suspected that the banned Sunni sectarian group Lashkar-e-Jhangvi was planning to bomb Shiite mosques using women as suicide bombers. The use of explosives-filled briefcases, water coolers or lunch boxes also was considered a possibility.

1120 GMT - SUDAN -- The U.N. Security Council ! is expected to approve July 30 a U.S.-drafted resolution threatening Sudan with sanctions if it fails to crack down on Arab Janjaweed militias responsible for widespread killings, looting and rapes in the country's western Darfur region. Officials in Washington said that they are aiming for a unanimous vote but that the positions of China and Pakistan are not clear. The resolution, co-sponsored by Britain, France, Germany, Spain and Romania, proposes giving Khartoum 30
days to neutralize the militia, or face possible sanctions.

1110 GMT - CHINA -- China threatened Taiwan with war if the island nation moves ahead with its plans to adopt a constitution by 2008, the China Daily reported July 30. Wang Zaixi, vice minister of the State Council's Taiwan Affairs Office, said that Beijing does not want war but that a military
conflict could not be ruled out if Taiwanese President Chen Shui-bian acts on his intentions to introduce a new constitution.

1102 GMT - IRAQ -- U.S. Secretary of State Colin Powell made an unannounced visit to Baghdad July 30, and met with U.S. Ambassador John Negroponte and senior Iraqi leaders. Powell said his talks with Iraqi officials would focus on understanding "what needs to be done with Iran, to persuade them that this is the time for them to play a positive role, not a role of interference or intervention." He went on to say that Tehran should be doing its utmost to assist in stabilizing Iraq.

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Geopolitical Diary: Friday, July 30, 2004

European -- French, German and British -- diplomats met with Iranian leaders in Paris on Thursday in attempts to salvage the agreement between the International Atomic Energy Agency and Tehran over its nuclear weapons program. Iran had promised to abandon the program; it now seems intent on pursuing it, wrecking the agreement. Th! e meeting did not go well, and the consensus after the meeting was that the deal was slipping away. A spokesman for the British Foreign Office said, "The Iranians are set on research into and development of the nuclear fuel cycle" (for which, read "nuclear weapon") "and we are trying to stop them."

The United States has been warning about the threat from the Iranian program for months. The Europeans, particularly the Germans and French, have been trying to be more cautious and conciliatory. It is therefore significant that the Germans and French were sharing British concerns about Iran's intentions. U.S. credibility on nuclear issues in the Middle East is not, at the moment, inspiring, but when even the French start being concerned, the situation becomes more intense.

What is most interesting in this brewing crisis has been Iran's clear desire to have it. The Iranians certainly could have hidden the program more
effectively if they chose to. They virtually forced the IAEA to notice the program. Having attracted notice, Tehran then appears to have gone out of
its way to be inflexible, with a public lack of cooperation. If the Iranians really wanted to surprise the world by detonating a deliverable nuclear weapon, however, this would be the stage at which they would proceed with
utmost stealth -- agreeing to virtually everything and making certain that U.S. allegations were effectively denied in public, thus splitting
Washington and Paris. That is the exact opposite of what they are doing.

This seems to mean that Tehran wants a confrontation more than it wants nuclear weapons. The consensus is that Iran is still years away from developing a deliverable weapon. But the problem with such a consensus is that it might be wrong, and the Iranians might be much closer to having one. The built-in uncertainty about the status of their program means that
countries that don't want to se! e an Iranian nuclear capability -- and that includes a lot of countries, not the least of which is Israel -- might be prompted to make a preemptive strike.

That means that the Iranians are consciously courting a preemptive strike. They know that the Israelis cannot afford for Iran to acquire a nuclear
weapon. The Israeli population, concentrated as it is on the coastal plain and the Tel Aviv-Jerusalem corridor, could be decimated by a relatively
small strike. The Israelis cannot remain dependent on Iran's intentions on the subject; their national security doctrine calls for a preemptive strike
well before Iran could possibly acquire nuclear weapons. It is possible that the Israelis might determine that such a strike could be effective only if using their own nuclear capability.

Iranian leaders know they are risking Israel's nuclear capability. They also know that the last thing the United States would want is an Israeli nuclear s! trike, which would damage the U.S. position in the region massively. Iran also knows that the United States has no appetite for preemptive war in Iran -- and certainly not before the presidential election. Finally, Iranian leaders know the Europeans aren't going to do anything. Iran, therefore, has a safe window of time for posturing. The window might close after
November -- George W. Bush, whether re-elected or not, will become very unpredictable after the vote. But during that window, Tehran has room to
maneuver.

The question is what it is maneuvering toward. Risking its nuclear program is not that much of a risk: Iran knows that someone is going to take out
their facilities before weapons are produced, which means that they know that the program's only value is as a bargaining chip. That signals two
things: First, Iran is setting up a bargaining opportunity, and second, it needs to close a deal in the next 90 days.

That much is ! clear. What is not clear is what the Iranians are really after. Certainly they must realize that they are not going to get back to their
pre-April position in Iraq. However, they might be thinking that they can still strike a bargain that gives them certain guarantees concerning Iraq
and its own interests there. Tehran has learned from North Korea that a small, weak country with a nuclear program gets a lot more respect than a
small, weak country without one. North Korea, a country that should be as interesting to the world as Chad, actually has U.S., Chinese, Russian and
Japanese diplomats treating it with respect.

The Iranians may be thinking that this is their path to recouping their position. Forcing a confrontation over their nuclear potential might well get them a place at the table that they had lost. Or, by creating enough uncertainty as to whether the country has a nuclear program, the Iranians might feel that they have raised th! e bar on preemptive war sufficiently to guarantee regime survival. That might be the case, but it is a game better played in Northeast than Southwest Asia.

Copyrights 2004 - Strategic Forecasting, Inc. All rights reserved.
 
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