Friday, July 8, 2016

NATO Can Reduce The Threat Of Escalation With Russia

By Leonid Bershidsky
The Bloomberg View
July 8, 2016

The North Atlantic Treaty Organization summit starting in Warsaw on Friday will probably lead to increased -- and unnecessary -- tension between NATO and Russia. Yet it may also yield good results: Acknowledging the increased hostility might make it possible for the two sides to ensure there are fewer dangerous incidents.

The most imminent threat to NATO countries today has little to do with Russia. Rather, it’s instability in the Middle East -- the chaos that has created the refugee crisis and spawned well-funded human-trafficking networks. This threat is killing people right now, in Syria and Iraq but also in the West, in terrorist attacks and in leaky boats on the Aegean Sea. Yet NATO is doing little to counter these threats. As an organization, it is not involved in operations against Islamic State, and though it’s dispatched a maritime force to the Aegean, it’s not playing a particularly active role there.

Instead, NATO is finding it easy to leave behind the times when it had to “go out of area or out of business” and concentrate again on its Cold War-era goal of confronting Russia. That will be the central team of the Warsaw summit.

Though Ukraine -- where people are also dying right now in a Russian-instigated conflict -- will get some attention at the summit, NATO won’t get too involved there, either. In 2015, it only allocated 5.3 million euros ($5.9 million) to helping Ukraine, and the order of magnitude is unlikely to change this year, given the absence of political will in Washington.

So the Russia-related discussion will focus on the Baltic region, where Latvia, Lithuania and Estonia are feeling threatened, and neutral Sweden and Finland worry about a growing number of close encounters with increasingly aggressive Russian forces.

Whether or not that makes sense is debatable. It’s not clear why Russia would attack the Baltics the way it attacked Ukraine. From the Kremlin’s perspective, a coup in Kiev had threatened Russia’s cherished navy base in Crimea, so Russia moved in to occupy it. It’s hard to imagine a Baltic analogy.

On the other hand, Russian President Vladimir Putin hasn’t been too predictable or open about his plans, and it would be wrong to ignore the concerns of militarily exposed member countries -- especially since they’re now making an effort to raise their military spending to 2 percent of gross domestic product, as NATO requires. Latvia has committed to getting there by 2018, and Lithuania by 2020. Tiny Estonia is already at the prescribed level.

It is known in advance that NATO will deploy “four robust and multinational battalions to Estonia, Latvia, Lithuania and Poland, on a rotational basis.” To the Baltics, this is chickenfeed. As Jorge Benitez of the Atlantic Council wrote recently:

"Four battalions deployed in NATO’s eastern members is not a proportional response. Four battalions (perhaps 4,000 men) do not come close to deterring the approximately 250,000 troops Russia has in its Western Military District (WMD) bordering NATO. In fact, four NATO battalions are not even a proportional response to the 3 new divisions (roughly 30,000 troops) Russia announced in January that it is creating in the WMD. At best, the deployment of four NATO battalions is an incremental step to strengthen deterrence that falls short of changing the calculus in Moscow. At worst, they are evidence to Putin that NATO is so weak and divided, the allies can only muster consensus on tepid action, such as the deployment of battalion-sized speed bumps for his Spetsnaz as they trample over Article 5."

Even this move, however, has the Kremlin worried. Putin is also concerned that NATO is trying to pull in Finland and Sweden, which are attending the summit to discuss cooperation in the face of growing Russian assertiveness and perhaps even in case of an attack. The probability of a disproportional Russian reaction is high, judging by Putin’s remarks on a visit to Finland earlier this month:

"It’s been announced that the NATO contingent in the Baltic nations will be boosted. Troop movements in our own territory are described as elements of aggressive behavior but NATO military exercises at out borders are not regarded as such for some reason. We consider this absolutely unfair and inconsistent with reality. What are we supposed to do in response to an increase in NATO presence at our borders?

The sides, then, appear to be locked into an escalation game. Each says it’s reacting to moves by the other, and tension increases regardless of who’s right.

Russia and NATO have already been there. Recently declassified documents tell the story of NATO’s Able Archer exercise in 1983, which the Soviet Union nearly mistook for the beginning of a nuclear war. Such a major scare is all but impossible now, yet any number of incidents could trigger a dangerous response.

Putin is not making things easier. During the Finnish visit, he asserted Russia had moved its troops “1,500 kilometers away” from the Finnish border to be friendly -- a nonsense claim, as Moscow is only 900 kilometers from Helsinki. So when he agreed with Finnish President Sauli Niinisto that military flights above the Baltic Sea with transponders off should be banned, he could have been dissembling, too.

Yet it should be clear to NATO members that they had been wrong to suspend the so-called Cooperative Airspace Initiative (CAI) with Russia at the previous summit two years ago. The CAI was about the joint monitoring of airspace, mainly to prevent terrorist threats. It can also be used to make Russia and NATO’s shared area safer, though: The technical capability has existed since 2011. It won’t be easy to agree on how to use it, since the Baltic states would be wary of any information-sharing between Russia and NATO, but the inevitable escalation makes it necessary to set up reliable security protocols.

NATO and Russia will hold a high-level meeting in Brussels after the Warsaw summit to discuss these arrangements, and, despite Putin’s unpredictability, this could be the most positive result of this weekend’s discussions. If NATO is going to concentrate on a theoretical threat in the Baltic region rather than the existing deadly threats elsewhere, it certainly makes sense to take every precaution to stop theory from turning inadvertently into practice and symbolic deterrence from growing into a real war.

Article Link to The Bloomberg View:

Friday, July 8, Morning Global Market Roundup: Investors Dump Stocks As Risk Aversion Grows; Yen Up

By Saikat Chatterjee
July 8, 2016

Asian stocks deepened losses and the Japanese yen strengthened against the greenback on Friday as investors dumped riskier assets and fled to safe havens after four police officers were killed and others wounded in the United States.

Snipers opened fire on police during rallies in Dallas to protest against the fatal shooting of two black men this week.

U.S. stock futures ESc1 dipped 0.2 percent, and European markets were set to open flat to lower.

Markets had already been on edge after a steady stream of negative news this week in the form of rising Brexit uncertainty and a growing crisis in Italian banks. Investment managers sought shelter in the U.S. dollar, Treasuries and gold, signaling a rocky start to the second half of the year.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.6 percent. For the week, it is set to fall 1 percent, its biggest weekly drop since June. 19. Hong Kong stocks .HSI led losers with a fall of 1 percent.

Japan's Nikkei .N225 fell 0.9 percent.

"The market is not in a mood to chase bids higher. It is still unclear how the situation for (Italian bank) Monte Paschi plays out, and moreover, there is the U.S. jobs data to digest," said Soichiro Monji, chief strategist at Daiwa SB Investments.

U.S.-based funds invested in precious metals attracted the most money since February, adding $2 billion to these funds in the latest week, according to Thomson Reuters' Lipper data.

With the European economy threatened by Britain's decision to leave the European Union, investors are counting on the resilience of the U.S. economy to support global growth.

Ahead of the closely-followed U.S. payrolls report later on Friday, U.S. data published on Thursday was mostly positive.

U.S. private payrolls increased more than expected in June as small businesses ramped up hiring, and fewer Americans applied for unemployment benefits last week.

The consensus forecast for Friday's non-farm payrolls data is for 175,000 jobs gain for June, according to a Reuters poll, but investors remained wary given the unexpected negative surprise in payrolls the previous month.

"I would say numbers around the consensus figure will be the most comfortable for markets," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

"Anything below 100,000 will scare investors while reading above 200,000 could rekindle talk of a Fed rate hike even though I suspect people would not seriously expect the Fed to raise rates soon."

Though strong payrolls data would spark fresh speculation of a U.S. rate increase later this year, it would also trigger a fresh round of currency weakness and likely policy tightening in emerging markets.

The British pound was steady for now at GBP=D4 $1.2945, but it still stood just about a cent above its 31-year low of $1.2798 touched on Wednesday.

Having slipped 2.8 percent so far this week, it looks set to post its third straight week of losses.

The euro EUR= eased to $1.10775, having shed 0.3 percent on Thursday, not far from this week's low of $1.1029 set on Wednesday.

The yen JPY= was broadly flat on Thursday to 100.51 yen per dollar, coming within sight of retesting Wednesday's high of 100.20, as the Japanese currency is seen as a safe-haven at times of distress.

U.S. bond prices retreated a bit on profit-taking after the 10-year yield hit a record low of 1.321 percent US10YT=RR earlier this week. It last stood at 1.385 percent. Meanwhile, Japanese bond yields plunged to fresh record lows.

Still, analysts expect U.S. bonds to continue luring investors' funds escaping Europe.

Oil prices fell 5 percent to two-month lows on Thursday after the U.S. government reported a weekly crude draw within analysts' forecasts that disappointed market bulls expecting larger declines.

Brent crude futures LCOc1 hit a two-month low of $46.15 per barrel on Thursday and last traded at $46.88.

Spot gold XAU= edged down on Friday but is set for its sixth consecutive weekly gain.

Article Link to Reuters:

Oil Rebounds From Two-Month Lows, Outlook Seen Volatile

By Henning Gloystein
July 8, 2016

Oil prices rebounded on Friday, bouncing off two-month lows hit in the previous session when prices fell 5 percent on news that the U.S. weekly crude draw missed some forecasts.

Traders said that the outlook looked volatile as a refined product glut and slowing economic growth weighed on markets while the risk of supply disruptions could tighten supplies.

Brent crude futures LCOc1 were trading at $46.75 per barrel at 0649 GMT on Friday, up 35 cents, or 0.8 percent, from their last settlement. U.S. crude CLc1 was up 29 cents, or 0.6 percent, at $45.43 a barrel.

The bounce came after a 5 percent fall in prices the previous sessions, to two-month lows, after the U.S. government reported a weekly draw in crude oil inventories that was lower than many analysts had expected.

U.S. commercial crude stocks fell by 2.22 million barrels to 524.35 million barrels, according to the Energy Information Administration (EIA). This was a lower withdrawal rate than many traders had expected, resulting in a late Thursday sell-off as traders feared the oil glut would remain bigger than anticipated.

Yet on Friday traders said that the price fall in response to the inventory reduction had been an overreaction as crude stocks had now fallen for almost two months straight, and U.S. production is also down again.

U.S. crude oil production has fallen by 12.3 percent since their 2015 peaks and by 8.74 percent since January this year to 8.43 million barrels per day, the lowest since June 2014, when the 2014-2016 oil price rout began.

"U.S. shale oil continues to hurt, as many banks are exiting the segment in general," fuel hedging firm Global Risk Management said in its second-half 2016 oil market outlook.

Traders said, however, that the outlook would likely be choppy as the threat of supply reductions could tighten markets.

"The increased unrest and attacks on pipelines among others in Nigeria and Iraq affect the countries' oil output," Global Risk Management said.

However, an ongoing glut in refined products, especially in Asia and North America, as well as slowing economic growth weighed on oil.

"Refining margins were down sharply in all regions over the last week and gasoline cracks went into free fall," U.S. investment bank Jefferies said on Friday.

Asian benchmark Singapore gasoline margins GL92-SIN-CRK have slumped more than 86 percent this year to just $2.28 barrels, the lowest since the fourth quarter of 2013.

"When product margins fall so will crude," said Matt Stanley of brokerage Freight Investor Services (FIS) in Dubai.

Article Link to Reuters:

British Property Panic A Red Flag For Banks, Insurers

By John O'Donnell and Lawrence White
July 8, 2016

The run on British property funds has drawn attention to the vulnerability of the commercial real estate sector, largely funded by domestic banks and building societies but increasingly by foreign banks and insurers.

UK banks and building societies had around 90 billion pounds ($117 billion) in credit extended to domestic commercial real estate at the end of 2015, according to a study by De Montfort University.

German, other international and U.S. banks had 55 billion pounds of exposure, having increased their investments in the sector since the 2008 financial crisis. Insurers, which prior to the crisis had barely any exposure accounted for 25.9 billion.

This means they could all take a hit if Britain's vote to leave the European Union leads to a slowdown in business investment and depresses demand for offices and shopping centers, as expected.

"There is a lot of uncertainty at the moment," said Sonja Knorr, a funds analyst in Germany at rating agency Scope.

"Transactions in the UK have come to a halt."

The total value of UK outstanding commercial real estate debt, stood at 183.3 billion pounds as at Dec. 31 2015, the De Montfort study said.

The uncertainty has already caused panic among some commercial property investors. In the past week, more than 18 billion pounds of investor cash in commercial property has been frozen as funds run by M&G Investments, Standard Life Investments and Threadneedle Investments, among others, suspended trading.

While ordinary retail investors stand to lose most initially, some funds have been paring back the value they put on their property - a signal that a price drop is likely. That would hit the banks that lent or insurers invested in property.

Legal & General's fund arm and F&C Investments both cut the value of their UK property funds on Thursday to discourage withdrawals.

"Property is so much about confidence," said Danny Cox of broker Hargreaves Lansdown. "Once you have this kind of dent, it will take a time to come back."

While UK banks' exposure to the sector is high, accounting for 45 percent of lending last year, according to the De Montfort Commercial Property Lending Report, it is down from over two thirds a decade ago.

UK banks' loans to the sector have declined every year since 2009, according to Bernstein Research, only returning to slight growth in March this year.

Meanwhile, German banks had more than 18 billion pounds of outstanding loans in British real estate compared to 10.5 billion of U.S. peers at the end of last year, De Montfort said.

For some foreign lenders, commercial property may still be attractive proposition because of the fall in the value of the pound.

"A 17 percent fall in the value of sterling makes investments in Britain interesting, despite the Brexit. That goes for UK property as well, an area we are now looking at," said Andreas Gruber, chief investment officer of German insurer Allianz, responsible for investments of 640 billion euros.

"The lower value of the currency offers an attractive discount."

Article Link to Reuters:

Snipers Kill Five Dallas Police, Wound Six During Protests Over Police Shootings

By Lisa Maria Garza
July 8, 2016

Dallas police were in a standoff with a suspect on Friday after snipers killed five officers and wounded six, one of the worst mass police shootings in recent U.S. history, during protests against the killing of two black men by police this week.

Police had taken three people into custody after the shootings on Thursday night and a standoff with another in a downtown garage, where gunfire had been exchanged, extended into Friday morning, officials said.

No motive has been given for the ambush at a downtown protest, one of many held in major cities across the United States on Thursday. New York police made more than a dozen arrests on Thursday night, while protesters briefly shut down one of Chicago's main arteries.

Dallas Police Chief David Brown said the shooters, some in elevated positions, used sniper rifles to fire at the officers in what appeared to be a coordinated attack.

"(They were) working together with rifles, triangulating at elevated positions in different points in the downtown area where the march ended up going," Brown told a news conference.

Police initially said four officers had been killed but the main union for Dallas police later reported that one of seven wounded officers had later died, taking the death toll to five.

"It has been a devastating night. We are sad to report a fifth officer has died," Dallas police said on Twitter.

The shooting happened as otherwise largely peaceful protests unfolded around the United States after the shooting of Philando Castile, 32, by police near St. Paul, Minnesota, late on Wednesday. His girlfriend posted live video on the internet of the bloody scene minutes afterward, which was widely viewed.

The suspect in the standoff told police "the end is coming" and that more police were going to be hurt and killed. Brown said the suspect also told police "there are bombs all over the place in this garage and downtown."

"This suspect we are negotiating with for the last 45 minutes has been exchanging with us and has not been very cooperative with the negotiations," Brown said.

Police said they were questioning two occupants of a Mercedes they had pulled over after the vehicle sped off on a downtown street with a man who threw a camouflaged bag inside the back of the car. A woman was also taken into custody near the garage where the standoff was taking place.

"We are being very careful in our tactics so that we do not injure any of our officers or put them in harm’s way. We still don’t have a complete comfort level that we have all the suspects,” Brown said.

"We are leaving every motive on the table on why this happened and how this happened," Brown said.

A large area of downtown Dallas was an active crime scene, Dallas Mayor Mike Rawlings said.

"Our worst nightmare has happened, he said. "It is a heartbreaking moment for the city of Dallas." The Texan city is home to more than 7 million people.

Rawlings later visited the wounded at Parkland hospital, the same hospital where President John F. Kennedy was taken after he was shot in Dallas in November 1963.

Television footage showed a heavy police presence, with officers taking cover behind vehicles on the street.

The use of force by police against African-Americans in cities from Ferguson, Missouri, to Baltimore and New York has sparked periodic and sometimes violent protests in the past two years and has spawned the Black Lives Matter movement.

Anger has intensified when the officers involved in such incidents have been acquitted in trials or not charged at all.

Article Link to Reuters:

Snipers Kill Five Dallas Police, Wound Six During Protests Over Police Shootings

Will Shiite Power Struggle Turn Into Armed Conflict In Iraq?

Signs are indicating that political disagreements over power among Shiite parties may turn into armed conflict, given the multiple armed factions and their influence on the street and within government institutions.

By Mustafa Saadoun
July 8, 2016

BAGHDAD — Most Shiite political parties in Iraq have their own armed groups, enjoying influence on the Iraqi street and engaging in the war against the Islamic State. Yet these groups all have different religious authorities and funding sources, and their stances towards domestic and foreign issues also differ.

Concern is widespread in Iraq over potential fighting among armed Shiite groups, and the potential for the political crisis within the Shiite alliance to exacerbate. Such conflicts could lead to a major crisis with great human and material losses that could further aggravate the deteriorating situation.

Recently, a dispute over the management of religious shrines flared up. On June 25, Al-Khaleej quoted Muhammad al-Rubeii, a leader of the Muqtada al-Sadr Peace Brigades, as saying that the Badr Organization, led by Hadi al-Ameri, is implementing foreign agendas (a reference to Iran) to exert military and administrative control over the city of Samarra, home to the shrine of Al-Askari.

The dispute over the management of the shrine between the Shiite and Sunni endowments continues. Because Samarra is a Sunni-majority city, the dispute is worsening the recent row among Shiite groups and the city at large over the shrine’s management.

Management of the holy shrine has a lot of advantages and benefits, including symbolic prestige and financial interests, as it is visited frequently by Shiites from Iraq and elsewhere. The Sunni endowment used to manage the place in the time of Saddam Hussein. But after terrorists bombed Al-Askari Mosque in 2006, Shiites took over. Since then, different Shiite groups have competed for control.

As Moqtada al-Sadr and his supporters in the Sadrist movement took part in protests against the government of Prime Minister Haider al-Abadi and stormed the Green Zone twice, some Shiites condemned this move as unjustified. On June 7, protesters believed to be supporters of Sadr shut down the headquarters of the Shiite parties in southern Iraq, tearing up photos of Iraqi and Iranian Shiite clerics.

On June 12, State of Law Coalition parliamentarian Rasoul Rady expressed trepidation that an armed conflict could break out among Shiite parties if the attacks against political parties' headquarters in southern Iraq continue.

In response to the shutdown, a group of Shiite parties that have their own armed factions issued a warning June 10. The statement read, "We are calling on those claiming that they are leading the peaceful protests to [have the courage] to identify themselves and be dealt with in accordance with the protest law, to avert dire consequences and the combatant's anger."

Most Shiite factions in Iraq are backed by Iran, which is not on good terms with Sadr. His supporters are known for chanting slogans against Iran and Gen. Qasem Soleimani, who leads the Iranian Revolutionary Guard Corps' operations in Iraq. Their actions have angered Iranians and Iran's supporters in Iraq and could spark an armed conflict between the Sadrists and armed pro-Iranian groups.

When Sadrists stormed the Green Zone, where government and diplomatic headquarters are located, for the second time on May 20, gunmen affiliated with Khorasani Brigades were deployed in the streets of the Iraqi capital. This force, a faction of the Popular Mobilization Units, was led by Ali Yassiri, who was seen giving instructions to his men to shut down the entry points and protect the Green Zone.

Since then, other signs have emerged that the conflict could turn violent between the Sadrist Movement and its armed wing, the Peace Brigades, and other armed Shiite factions close to Iran.

Shiite National Alliance parliamentarian Hamed Khodor told Al-Monitor, "I do not expect fighting to take place between armed Shiite factions. It is a mere political dispute that may not reach the point of armed conflict."

Yet National Alliance member Saad al-Matlabi disagreed with this optimism. He told Al-Monitor, "There is a political bloc [of Sadr and his followers] trying to impose its will upon other political blocs by force, which will not happen." Matlabi went on, "The threat of chaos and protests and imposition of wills are no longer useful. Iraqi political blocs agree that there is a flaw in the Sadrist policy, which no longer has any allies, and all blocs are allied against it."

Political analyst Wathek al-Hashemi, president of the Iraqi Group for Strategic Studies, told Al-Monitor, "There is more than one scenario for the post-IS stage. … If the [political] conflict evolves into an armed conflict, the Iraqi state would be unable to control the situation, due to its weakness."

He added, "There is a struggle within the Shiite alliance and tension between its parties. If the Sadrist movement returns to the streets, things may evolve and the political and security situation may further worsen."

The multiplicity of armed factions and leaders portends great danger, especially in the post-IS era. Everyone is fighting terrorism now, but later on, political disputes may turn into armed conflicts over either political gains or a specific geographic area.

This potential violence is seen as likely considering that 12 years ago, two armed Shiite groups fought in this manner. Jaish al-Mahdi, which was affiliated with Sadr, and the Badr Organization, which was under the umbrella of the Islamic Supreme Council of Iraq and headed by Ameri (a commander of the Popular Mobilization Units in addition to leading the Badr Organization), had fought each other. The fighting resulted in the burning of the two groups' offices and the deaths of dozens of people.

Article Link to Al-Monitor:

Will Shiite Power Struggle Turn Into Armed Conflict In Iraq?

Are Iran, West On Collision Course Over Missiles?

As Iran makes strides in the development of navigation, guidance and missile systems, the West should consider why Tehran is making such a push.

July 8, 2016

TEHRAN, Iran — Iran’s defense minister, Brig. Gen. Hossein Dehghan, unveiled new military equipment during a June 1 event at the Defense Ministry-affiliated Malek Ashtar University of Technology. The most significant of these products was Hoda, the transmitter for a local positioning system (LPS). Dehghan said that Malek Ashtar had succeeded in building the 1 megawatt, half-cycle transmitter in the first phase of designing the system. Five ground stations equipped with the systems are expected to be built in different regions of the country. These will serve as stations for positioning guided missiles as well as unmanned aerial vehicles (UAVs), warplanes and other military aircraft.

Iran is trying to develop an alternative to satellite positioning systems, in particular the Global Positioning System (GPS), to guide military hardware during battle. Within Iran, GPS systems have a margin of error of about 30 meters (98 feet), so the Islamic Republic is trying to decrease the distance to about a meter (some 3 feet) by improving its homegrown LPS system.

The current Iranian LPS has an accuracy of a few centimeters within a radius of 30 kilometers (19 miles) and an accuracy of about a meter within a radius of 150 kilometers (93 miles). A few years ago, Iran developed a similar program, the Persian Gulf Network Beacon (DGPS) that focuses on the Persian Gulf and the Sea of Oman to assist the navy with navigation of its aerial fleet and positioning.

The Iranian LPS is also designed to guide long-range drones, including combat and reconnaissance UAVs. Although this navigation system is outdated — many Western countries began developing LPS in the 1950s — it addresses the country's immediate needs in terms of positioning and thus can be considered to have been an important step forward.

At present, however, Iran's missile program suffers from three main weaknesses. It has issues of accuracy and guidance stemming from not utilizing satellites. As a result, key military targets cannot be targeted from afar. Moreover, there is the matter of destructive power. Iran’s most powerful missiles have warheads that are only slightly more destructive than laser-guided bombs. Thus, absent nuclear or chemical warheads, these missiles lack a high destructive capability.

At this stage, utilization of navigation and positioning systems is vital in Iran’s efforts to develop its missiles and UAVs. Short-range ballistic missiles, such as the Persian Gulf, Fateh A-110 and Hormuz, can be guided with a high degree of accuracy optically and via radio. Moreover, considering their payloads, these weapons have a relatively high destructive capability. Indeed, these pieces of military hardware are Iran’s most important weapons against the fleets and military bases of the United States and its Arab allies in the Persian Gulf region and the Strait of Hormuz. Iran’s medium-range ballistic missiles, with ranges of 1,300 to 2,300 kilometers (808-1,430 miles), are less accurate, however, due to exceeding radio range.

Iranian officials are well aware of this problem, and President Hassan Rouhani and his Defense Ministry have been doing their utmost to solve it. During the past three years, the Defense Ministry has designed guided warheads and unveiled optical warheads. Furthermore, there were reports in June of the initial testing of the Simorgh space-launch vehicle in the deserts of Semnan, in central Iran, in Rouhani's presence. Analysts disagree on whether Iran had tried to utilize this North Korean missile platform for military purposes during the presidency of Mahmoud Ahmadinejad (2005-13). It is clear, however, that the Rouhani administration is not looking to expand the range of Iran’s ballistic missiles, but is planning to use the Simorgh program for space and reconnaissance purposes.

The big picture is that the Iranian missile program is becoming more complex. On the one hand, now that Iran’s nuclear program is no longer a source of international concern, Western countries and Iran’s regional rivals are increasing pressure on the Islamic Republic over its missile program. On the other hand, there is now a domestic dialogue and a deep dialectic over the missile program, including how and to what degree it should be expanded. Although Iranian political and military elites arrived at a clear consensus that the country’s missile capabilities must be maintained, disagreement remains over whether missile ranges need to be expanded or accuracy and guidance need to be improved. It appears that the Rouhani administration prefers the latter.

In addition, during the past year, there has been news of Iran using long-range combat UAVs in Syria. Images that have surfaced reveal these UAVs to be of the Shahed-129 type, guided in operations in northern Aleppo from the Konarak military base, near the Makran coast. The images, coupled with the announcement that a radio LPS station has been set up in Chabahar, strengthen speculation that the southern part of Iran’s Sistan and Baluchestan Province has become the center for guiding combat UAVs.

Iran has invested heavily in its missile and space programs and is making every effort to make them more effective and operational, including through the use of older technology, such as LPS. With international concern over Iran’s missile program growing as it expands, however, one must consider what Iran can depend on to protect itself in the world’s most heavily armed region. Its outdated aerial and naval fleets, in addition to its huge but worn out ground forces, cannot be considered the solution. Rather, it is Iran's missile program that provides it relative deterrence.

At the end of the day, one should also ask, would the Islamic Republic have sought to expand its ballistic missile program had the international community not refused to sell it conventional military equipment, including conventional warplanes? It appears that the missile program, which has become one of the main points of contention between Iran and the West, will soon — like the confrontation over Iran’s nuclear program — become the most important political challenge for the two sides.

Article Link to Al-Monitor:

Are Iran, West On Collision Course Over Missiles?

The Ahab Caucus Returns To Port Empty-Handed, Again

By Eugene Robinson
The Washington Post
July 8, 2016

WASHINGTON -- Next to the word "overreach" in the dictionary should be a group picture of the House Republican caucus. Once again, in their Ahab-like pursuit of Hillary Clinton, they have managed to make themselves look desperately partisan and woefully incompetent.

What were they thinking when they hauled FBI Director James Comey to Capitol Hill to challenge his decision about Clinton and her emails? Did they expect Comey, a very tough nut, to crack under their withering interrogation? Did they believe they could somehow make him change his mind? Did they not anticipate that he would stand by his decision and back it up with facts, precedent and logic?

Thursday's hearing -- called on an "emergency" basis, no less -- was effectively over just minutes after it began. House Oversight Committee Chairman Jason Chaffetz, R-Utah, asked Comey the bottom-line question: "Did Hillary Clinton break the law?"

Comey's reply: "In connection with her use of the email server? My judgment is that she did not."

At that point, Chaffetz should just have thanked the witness, pounded his gavel and sent everyone home. Instead, Republicans went on at length in a vain attempt to challenge Comey's knowledge of the law and his personal integrity. In the end, he suffered not a dent, not a nick, not even a scratch.

The GOP's theory of the case is basically that Clinton committed acts that would have led to prosecution if she had been anyone else. But because she is the presumptive Democratic presidential nominee or because she is a Clinton or because she is an "elite" or for some other reason, this theory goes, she was given a pass.

Comey patiently explained that this view was wrong. Quite the opposite, he said: Deciding to recommend charges would have constituted special treatment.

The key question was intent: Comey said the FBI could not find evidence that Clinton intended to do anything illegal. A low-ranking government employee who handled classified information in the same "careless" manner might well be subject to administrative sanction, including firing. But that "John Doe" employee would not be prosecuted; and if he or she had already left government service, the case would simply be dropped.

Much was made of a federal statute that would seem to allow charges in the case of "gross negligence" on Clinton's behalf. But Comey said that the law in question, passed in 1917, has been used by federal prosecutors only once in 99 years. There are questions, he said, about the statute's constitutionality.

Comey did not budge from his view that no "reasonable prosecutor" would seek to bring charges against Clinton given the facts of the case. He said the decision to recommend against prosecution was unanimous among the FBI investigators involved, adding that no one outside of the bureau knew of this decision until he announced it Tuesday.

The hearing was a pretty sorry spectacle. Comey's would-be inquisitors could not come out and call him a compliant Democratic toady because clearly he is nothing of the sort. Comey served as deputy attorney general in the George W. Bush administration. As is proper for someone who occupies the office of FBI director, overseeing an agency he described as "resolutely apolitical," he is not now registered as a member of any party. But for most of his adult life, he testified, he was a loyal Republican.

How embarrassing did the hearing get? Some Republicans on the committee, fancying themselves junior G-men, demanded to know the specific questions FBI agents asked Clinton when they interviewed her. Others sought to parse the language of various federal statutes, perhaps hoping to make Comey break down and cry, "OK, you got me there." Spoiler alert: He didn't.

Toward the end, Rep. Mark Walker, R-N.C., felt obliged to ask Comey, "Do you feel like this has been a Republican witch hunt?" Comey politely said no.

I disagree. It was obviously just that, a partisan attempt to wring another news cycle's worth of headlines out of a "scandal" whose dying embers were being definitively snuffed out. I doubt those headlines will be the ones they were hoping for.

I'm certain that some Republicans sincerely believe that Bill and Hillary Clinton are the greatest master criminals of our times. But an unimpeachable authority figure and a team of FBI investigators have decided that Hillary Clinton's handling of her emails -- which, as I have written, was wrong -- was not a crime. Deciding otherwise, Comey said, would be "celebrity hunting."

Which is what Republicans tried to do at Thursday's hearing. But they came home red-faced and empty-handed.

Article Link to The Washington Post:

Krauthammer: Comey: A Theory

His decision might be indefensible, but it is also understandable.

By Charles Krauthammer 
The National Review
July 8, 2016

Why did he do it? FBI director James Comey spent 14 minutes laying out an unassailable case for prosecuting Hillary Clinton for the mishandling of classified material. Then at literally the last minute, he recommended against prosecution.

This is baffling. Under the statute (18 U.S.C. section 793(f)), it’s a felony to mishandle classified information either intentionally or “through gross negligence.” The evidence, as outlined by Comey, is overwhelming.

Clinton either sent or received 110 e-mails in 52 chains containing material that was classified at the time. Eight of these chains contained information that was Top Secret. A few of the classified e-mails were so marked, contrary to Clinton’s assertion that there were none.

These were stored on a home server that was even less secure than a normal Gmail account. Her communications were quite possibly compromised by hostile powers, thus jeopardizing American national security.

“An unclassified system was no place for that conversation,” said Comey of the classified e-mails. A rather kind euphemism, using the passive voice. In plainer, more direct language: It is imprudent, improper, and indeed illegal to be conducting such business on an unsecured private server.

Comey summed up Clinton’s behavior as “extremely careless.” How is that not gross negligence?

Yet Comey let her off the hook, citing lack of intent. But negligence doesn’t require intent. Compromising national secrets is such a grave offense that it requires either intent or negligence.

Lack of intent is, therefore, no defense. But one can question that claim as well. Yes, it is safe to assume that there was no malicious intent to injure the nation. But Clinton clearly intended to set up an unsecured private server. She clearly intended to send those classified e-mails. She clearly received warnings from her own department about the dangers of using a private e-mail account.

She meant to do what she did. And she did it. Intentionally.

That’s two grounds for prosecution, one requiring no intent whatsoever. Yet Comey claims that no reasonable prosecutor would bring such a case. Nor has one ever been brought.

Not so. Just last year, the Justice Department successfully prosecuted naval reservist Bryan Nishimura, who improperly downloaded classified material to his personal, unclassified electronic devices.

The government admitted that there was no evidence that Nishimura intended to distribute the material to others. Nonetheless, he was sentenced to two years of probation, fined, and forever prohibited from seeking a security clearance, which effectively kills any chance of working in national security.

So why not Hillary Clinton? The usual answer is that the Clintons are treated by a different standard. Only little people pay. They are too well connected, too well protected to be treated like everybody else.

Alternatively, the explanation lies with Comey: He gave in to implicit political pressure, the desire to please those in power.

Certainly plausible, but given Comey’s reputation for probity and given that he holds a ten-year appointment, I’d suggest a third line of reasoning.

When Chief Justice John Roberts used a tortured, logic-defying argument to uphold Obamacare, he was subjected to similar accusations of bad faith. My view was that, as guardian of the Supreme Court’s public standing, he thought the issue too momentous — and the implications for the country too large — to hinge on a decision of the court. Especially after Bush v. Gore, Roberts wanted to keep the court from overturning the political branches on so monumental a piece of social legislation.

I would suggest that Comey’s thinking, whether conscious or not, was similar: He did not want the FBI director to end up as the arbiter of the 2016 presidential election. If Clinton were not a presumptive presidential nominee but simply a retired secretary of state, he might well have made a different recommendation.

Prosecuting under current circumstances would have upended and redirected an already year-long presidential-selection process. In my view, Comey didn’t want to be remembered as the man who irreversibly altered the course of American political history.

And with no guarantee that the prosecution would succeed, moreover. Imagine that scenario: You knock out of the race the most likely next president — and she ultimately gets acquitted! Imagine how Comey goes down in history under those circumstances.

I admit I’m giving Comey the benefit of the doubt. But the best way I can reconcile his reputation for integrity with the grating illogic of his Clinton decision is by presuming that he didn’t want to make history.

I don’t endorse his decision. (Nor did I Roberts’s.) But I think I understand it.

Article Link to the National Review:

Noonan: Comedy Wears Better Than Cynicism

The contrast in theatrics is starting to make Trump look sympathetic.

By Peggy Noonan
The Wall Street Journal
July 8, 2016

Let’s start shallow and try to end deeper.

The shallow thought is about campaign theatrics, or, better, the mood with which candidates present themselves to the public.

Part of how Donald Trump connects with his audience, those in the hall and those watching at home, is that he tells them how he experiences things. It comes across as undefended, forthcoming—fresh. Hillary Clinton at this point would never say how she’s experiencing things. She doesn’t wing it because when she has in the past—from “I’m not sitting here like some little woman standing by my man, like Tammy Wynette” and “I suppose I could have stayed home and baked cookies” right up to “We came out of the White House not only dead broke but in debt”—she always came to regret impromptu remarks. A certain unconscious snobbery always seeped out, and repelled when she meant to attract.

No one has ever taken Mr. Trump for a snob, but that isn’t my point. Mrs. Clinton is heavily defended, mentally edits and re-edits every spontaneous comment, and has a tropism toward the unimaginative. Boring is a safe place to be in politics so I can’t imagine she sees it as anything but a trade-off. Better not to give them a memorable quote than to give them “What difference, at this point, does it make?”

Wednesday night in his speech in Cincinnati Mr. Trump was typically free-associative and talked too long, more than an hour. He doesn’t know when to stop because he doesn’t know when he’s made his point, or sometimes what his point was. But he unselfconsciously shares a lot of his internal dialogue, and how he’s experiencing things. “Baron draws stars all over the place.” “I hate mosquitoes.” “Have I been a good messenger?” “I said three times, bad, bad, bad,” of Saddam Hussein. The golf swing they showed on TV “actually looked good.” “This speech last night was good.” He mimicked newscasters, saying “They are liars, these are bad people,” and Mrs. Clinton, aping her speech patterns.

There is something scatty in this but also something interesting, possibly potent. There is no invisible scrim between him and the audience. He also has fun and is a comic. I realized he thinks he has to entertain; it’s part of his job to be informal, surprising, personal—to make jokes, even to step apart from himself and almost admit: Look, I don’t always get it right in interviews but I’m trying over here! Wednesday night as he spoke I thought of Jerry Lewis—“Hey, lady!”—and what was said of him, that a television camera was his full moon.

Anyway, this dynamic—that he personally connects and entertains, and she doesn’t—will continue, because he can’t stop it and she can’t do it.

A note on mainstream media antipathy to Trump. I suspect at the moment it’s starting to help him. More than half the country is willing to believe the media are essentially dishonest and mobby, that they function either consciously or not as Democratic operatives, that they don’t have to like Mrs. Clinton (and they don’t) to function in this way, and that they feel nothing but disrespect for Mr. Trump, his followers and everything they represent. But a lot of TV journalists are particularly upfront and out there now about their antipathy, in part because they’re honestly alarmed—this guy could really become president—and in part because it is not respectable not to hate him. But they are starting to make him look sympathetic.

His media foes should watch out for a boomerang effect.

On Mrs. Clinton and FBI Director James Comey’s decision to recommend against prosecution:

Mr. Comey looked to me both embarrassed and double-minded. He appeared to want to make clear that Mrs. Clinton was repeatedly untruthful in her public statements on her server and emails. He is a sophisticated man who surely knew people would take video clips of his announced findings and juxtapose them with video clips of her previous assertions. He was clear in his words and made that job easy, which he didn’t have to do. He could have spoken the horrible bureaucratic non-language people in government revert to when they don’t want to be understood.

When you look at the tapes of Mrs. Clinton’s assertions, you see exactly what her face looks like and her voice sounds like when she is lying. That will do her no good!

But the story is now over. In politics when you don’t die, you are alive. Prosecution would likely have killed her presidential hopes. With no prosecution she moves forward as a member of the Undead.

The scandal will make Mrs. Clinton look worse to people who had doubts about her essential character, and to those who didn’t know they should have reservations. It made her look better to no one. At a certain point a central idea—that she decided to subvert government record-keeping requirements and freedom-of-information requests, and damn the repercussions—broke through. That point was the famous private-plane-on-the-Phoenix-tarmac meeting of Bill Clinton and the attorney general who would ultimately decide her case. People thought: Wow, that smells. It stinks. It was like a plot point in “House of Cards.” A saving grace of the Clintons is that they’re often too clever by half.

I add only that Mr. Comey’s decision, after the famous 3½-hour holiday-weekend interview with Mrs. Clinton, makes you wonder if they would have recommended prosecution only if she had confessed to wrongdoing. Maybe they were expecting a Perry Masonmoment where she breaks down under questioning. “Of course I knew having a private server was wrong! Of course I knew it meant Putin was reading my emails! I’ll tell you something else, I was the man in the hat on the Grassy Knoll. I killed Mary Meyer on the C&O Canal and I’m proud of it!”

But that wouldn’t happen in real life, would it?

It is legitimately asked whether this is a government of laws or a government of men—of failed, flawed human beings. Are the rich and powerful always assumed now to have the decisive finger on the scales of justice?

Anything that increases public cynicism in America is, at this point, a very particular and damaging sin. It spreads an air of social defeatism. It saps the civic will. It makes earnest and trusting people feel like dopes and dupes. It makes trusting parents look clueless to their children.

Cynicism is also a virus. Once everyone knows nothing is on the square, as they used to say, they too become more corrupt just to maintain their position.

Cynicism doesn’t just make everything worse; it creates a new kind of bad. It kills, for instance, the idea of merit. You don’t rise through talent and effort; you rise through lies, connections, silence, the rules of the gang. That gives the young an unearned bitterness. That is a terrible thing for adults to do, to deprive the young of the idealism that helps them rise cleanly and with point.

Article Link to The Wall Street Journal: