Trade surplus triples for China

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China's trade surplus tripled to a record $102 billion in 2005 as exports jumped, increasing tensions with the U.S. and European Union over the nation's currency policy.

The gap increased from $31.9 billion in 2004 and $16.7 billion in 1995, as overseas sales helped China become the world's fastest-growing major economy. Exports rose 28 percent last year and imports grew 18 percent, the Beijing-based customs bureau said on its Web site Wednesday.

The surplus, which climbed $11 billion in December, has prompted the U.S., Europe and Japan to accuse China of keeping the yuan artificially weak to spur exports. U.S. lawmakers are threatening to impose tariffs on Chinese imports, and the EU has said it may complain to the World Trade Organization.

"I don't think the world can tolerate such a massive surplus," said Dong Tao, chief Asia economist at Credit Suisse First Boston (CSFB) in Hong Kong, who forecasts China's economy will grow 10.1 percent this year.

"What this does is just reinforce the case that China is manipulating its currency," said Ernest Preeg, a senior fellow at the Manufacturers Alliance, an Arlington, Va.-based group representing companies such as Caterpillar and Motorola. "China is a whole cloud over trade policy."

The yuan strengthened to 8.0677 Wednesday. The currency would rise to 7.7175 against the U.S. dollar in a year if freely traded, according to the forward contracts Wednesday in Hong Kong, up 0.5 percent from Dec. 30.

The contracts allow investors to bet on the value of a currency that isn't fully convertible or hedge investments denominated in it.

Foreign investors such as Nokia and Sony poured $213 billion over the past four years into building factories in China to take advantage of low labor costs and falling trade tariffs.

The resulting surge in overseas shipments helped the Chinese economy expand by an average 9.2 percent annually between 1995 and 2004. It also prompted the U.S. and Europe to step up calls for a more freely traded currency.

The People's Bank of China's decision to revalue the yuan by 2.1 percent in July and let it fluctuate against a basket of currencies failed to satisfy U.S. lawmakers. Sen. Charles Schumer, D-N.Y., and Rep. Phil English, R-Pa., have introduced legislation to impose tariffs on Chinese imports unless the yuan rises further.

"China has a major role in preventing" the U.S. from imposing tariffs by taking "significant action" on the currency, Sen. Max Baucus, D-Mont., a ranking member of the Senate Committee on Finance, told reporters Tuesday in Beijing. A yuan revaluation "would have a considerable economic benefit."

Japanese Finance Minister Sadakazu Tanigaki said Wednesday that China has room to make its currency more flexible.

""A more flexible Chinese currency policy will help not only China, but also the global economy," he told reporters after meeting with U.S. Treasury Secretary John Snow.

Snow said Tuesday at a news briefing that he's not concerned China might reduce its holdings of U.S. government debt.

With the U.S. snapping up Chinese-made goods, Chinese investors are shoving the proceeds into U.S. Treasuries. China owned $247.6 billion at the end of October, making it the second-largest holder of U.S. debt after Japan.

Even as exports continue to rise, China's trade surplus will probably shrink 20 percent next year as the government adopts policies to stimulate domestic demand, boosting imports, said Tao of CSFB.

China's exports have soared from $267 billion in 2001. That's three times as fast as growth in global trade, according to Morgan Stanley economist Andy Xie. The increase equals the value of Japan's 2005 overseas sales, Xie said.

In the first 11 months of 2005, China's exports amounted to about three-quarters of Germany's, measured in dollars. In 2001, China's exports were less than half of Germany's, based on the average exchange rate between the dollar and the euro for that year.

Shipping companies and port operators are continuing to invest in China, betting the trade boom will continue.

A.P. Moeller-Maersk, Hutchison Whampoa and three other companies said last month they are investing in the second phase of Shanghai's $16 billion Yangshan port, which is on track to be the world's busiest harbor by 2010. The expansion will double the city's cargo-handling capacity by the end of the decade.

"We expect trade to grow at a high rate and probably close to what we've experienced in recent years," Tommy Thomsen, a partner in A.P. Moeller and head of its container business, said in a December interview. "Shanghai is positioned to become the world's largest port within three to four years."

China's exports have surged an average of more than 30 percent over the past three years amid an investment boom triggered by the nation's entry into the World Trade Organization in December 2001.

Companies supported by foreign investment accounted for almost 90 percent of technology exports in the first 10 months of the year and for more than half of total overseas shipments, according to commerce-ministry data.

Economists including Paul Cavey forecast that export growth will cool to about 20 percent this year as the expansion in new production capacity tails off.

"Export growth has been driven by information-technology products, which has been a function of Taiwanese companies moving to the mainland," said Cavey, China economist at Macquarie Securities in Hong Kong. "That structural outbuilding of Chinese capacity is now coming to an end."

Bloomberg News reporters Alison Fitzgerald, Mark Drajem, Minako Kawai and Kevin Carmichael in Washington, D.C., Bernard Lo and Katherine Kwun in Hong Kong, and Duncan Hooper in Brussels contributed to this report.

BEIJING/SEOUL (Reuters) - The top U.S. negotiator with North Korea said in Beijing he would try to breathe life into stalled nuclear talks on Thursday as North Korean leader Kim Jong-il appeared to continue a secret trip to China.

"We're going to discuss a way forward on the six-party talks," Christopher Hill told reporters at the airport in Beijing, after holding similar talks in Seoul and Tokyo.

"Obviously what we need is for all six parties to agree to a date." added Hill, who was due to meet his Chinese counterpart, Wu Dawei.

Hill said he had no plans to meet any North Korean officials in Beijing but hinted that Kim was also in China. "I understand we have some North Korean visitors here today," he said.

Earlier on Thursday, the U.S. ambassador to South Korea, Alexander Vershbow, said the United States had little information on Kim's whereabouts but said he hoped Kim was holding meetings that may help make progress on the six-party talks.

The nuclear talks, which group the two Koreas, host China, the United States, Russia and Japan, made progress last year when North Korea agreed in principle to dismantle its atomic weapons in exchange for aid and security guarantees.

The six were meant to meet again early this year, but North Korea has threatened to boycott the proceedings because of a U.S. crackdown on its finances. The last round of talks was held in November.

The United States has clamped down on several companies it suspects of aiding North Korea in counterfeiting, money laundering and the drugs trade, saying the illicit business has helped fund Pyongyang's nuclear weapons programmes.

Hill said the sanctions issue was not the focus of his trip, adding he was anxious to move forward on implementing the pledges made at the six-party talks.

Vershbow said U.S. Treasury officials would head to South Korea and China in the next 10 days to discuss U.S. concerns about North Korea's suspected illicit activities.

Officials speculated that if Kim was indeed in China, his visit could give new impetus to the negotiating process.

"If he is visiting China, this could have positive results," South Korean Vice Unification Minister Rhee Bong-jo told reporters.

Various media reports -- citing witnesses, diplomatic sources and those familiar with his movements -- have put Kim in Beijing and Shanghai, and one source said he was in Russia.

Hong Kong journalists began flocking to the southern city of Guangzhou on rumours Kim was staying at the White Swan Hotel.

"We wouldn't take any reservations from the 12th to the 16th," said Janet Xie, assistant general manager at the White Swan, adding she did not know the reason.

Staff at the hotel's Hirata Restaurant said the hotel would not be open to the public from January 13-15. Nearby restaurants and bars said they had not seen any unusual security presence.

Guangdong was a pioneer in China's economic reforms and its party secretary, Zhang Dejiang, studied in North Korea and speaks Korean. There is also a North Korean trade office not far from the hotel.

[While energy issues are less apparent in the continuing tensions between India and Pakistan, they are absolutely dominant in what is now being dubbed by Pakistan’s Interpress News Agency as “the new cold war” between China and Japan. While Pakistan and India have shown remarkable cooperation on a trans-Pakistani gas pipeline to supply India, no such energy cooperation has revealed itself anywhere in Sino-Japanese relations where the head butts are occurring more frequently. It is the nuclear tensions on the western and eastern edges of the Asian continent that warrant close watching. – MCR]

NEW DELHI , Dec 26 (IPS) - The Asia-Pacific region has not only emerged as one of the main engines of the world economy but it has also taken the global centre-stage in developments pertaining to nuclear weapons and efforts to acquire a capability to make them.

From Iran and Israel in West Asia, through India and Pakistan in South Asia, to North Korea and Japan in the East, the region exhibited, in 2005, unprecedented activity in the nuclear field that can only intensify in the coming years.

In each of these countries, the United States plays a major role. Its policies of selectively favouring or opposing their nuclear activities will alter the strategic balance in some of the world’s most volatile regions.

"This is a marked shift from the cold war period, where the global nuclear centre of gravity lay in the all-out confrontation between the eastern and western blocs, which was most intense in Europe," says Achin Vanaik, professor of international relations and global politics at Delhi University. He is also a member of the Coalition for Nuclear Disarmament and Peace and an independent nuclear expert. "Regrettably, Asia’s nuclear developments are dominated by a superpower that has set its face firmly against nuclear disarmament."

2005 witnessed two landmark nuclear developments-- an attempt by the U.S. and its allies to censure Iran and prevent it from enriching uranium, either for military or civilian purposes, and an Indo-U.S. agreement to "normalise" India’s nuclear weapons status and resume civilian nuclear commerce with it.

Talks continued in 2005 between North Korea and other nations led by the U.S., which included China, Russia, Japan, South Korea and the European Union, to dissuade Pyongyang from pursuing its nuclear weapons programme. These did not resolve the issue.

Meanwhile, Japan moved closer towards revising its post-World War II commitment not to make or acquire nuclear weapons and not to build a large scale standing army. This acquires great significance in the context of what has been called a "new cold war" between Japan and China.

In September, the U.S. brought a motion in the board of governors of the International Atomic Energy Agency (IAEA) holding Iran "non-compliant" with its obligations under the nuclear Non-Proliferation Treaty (NPT) and paving the way for referring it to the United Nations Security Council for possible sanctions. The resolution could be passed because India broke ranks with the non-aligned movement at the IAEA and voted with Washington.

Iran rejected the resolution and reiterated its right under the NPT to enrich uranium for peaceful purposes. Russia has since proposed a compromise, under which Iran can convert yellowcake (oxides of uranium) into hexafluoride gas to be sent to Russia for enrichment.

Under the compromise, Iran can burn the enriched uranium in a power reactor, being built with Russian help, but would send back the spent fuel to Russia. Iran will thus, forswear reprocessing to extract plutonium, which too, like highly enriched uranium, is used to make nuclear bombs.

Iran has not formally rejected the proposal, but its talks with the European Union-3 (Germany, France and Britain) have not yielded results.

Tehran’s nuclear posture and activities have drawn a hostile response from Israel and the U.S. President George W. Bush again returned to his "Axis of Evil" characterisation. The U.S. reportedly has drawn up plans for an armed attack on Iran.

A war of words meanwhile broke out between Iran and Israel. In October, Iran’s newly elected president Mahmoud Ahmadinejad called for Israel to be "wiped off the world’s map."

Israeli leaders have vowed to prevent Iran from acquiring nuclear weapons. Prime Minister Ariel Sharon said on Dec. 1 that Israel would not allow Iran to do so. "Israel, and not only Israel, cannot accept a situation in which Iran would be in possession of nuclear weapons," Sharon said.

Former prime minister Benyamin Netanyahu has held out a scarcely veiled threat to destroy Iran’s nuclear installations, approvingly citing Israel’s 1981 bombing of Iraq’s "Osirak" research reactor, then under construction.

On Dec. 16, Iran warned Israel that its response to an Israeli attack would be "swift, firm and destructive."

"What all this highlights is the potential for a dangerous conflict in the Middle East," says Vanaik. "The region has already become explosively volatile because of the occupation of Iraq, coming on top of the Palestinian crisis. If the U.S. and Israel persist with a hardline approach to Iran, they could create havoc. U.S. double standards -- hostility to Iran, coupled with its support to Israel’s nuclear weapons programme -- are a source of great popular discontent in the region."

Washington’s double standards are evident in South Asia too. It agreed to make a one-time exception in the international nuclear non-proliferation regime for India by accepting that India is a "responsible" nuclear weapons state, although it has not signed the NPT. The Bush administration offered to persuade the U.S. congress to amend non-proliferation laws and to plead for a similar exception for India in the Nuclear Suppliers’ Group.

India and the U.S. are developing a "strategic partnership", including extensive military cooperation. In March, Washington offered to help India become a great world power in the 21st century.

This has rankled Pakistan, which sees the Indo-U.S. "partnership" as introducing regional strategic asymmetry. Pakistan is likely to demand similar treatment for itself in respect of nuclear technology and equipment, and is drawing up plans for new nuclear power stations.

The U.S. is doing little to defuse the Indo-Pakistan nuclear rivalry. It is embarrassed by disclosures about the clandestine activities of the Abdul Qadeer Khan network which sold uranium enrichment technology to Iran, North Korea and Libya. But Washington needs Pakistan as an ally in the "war against terrorism", in particular, the Taliban and al-Qaeda. It has resisted applying pressure on Pakistan to subject Khan to thorough interrogation to detail his nuclear transactions.

The hardline approach of the U.S. to Iran’s nuclear activities contrasts with its soft approach to North Korea, despite Pyongyang’s claim that it already has a nuclear weapon. It is offering inducements to North Korea, including a civilian nuclear reactor, and economic aid, although it rejects the demand that the reactor’s construction should precede the dismantling of Pyongyang’s nuclear weapons programme.

"Washington’s non-proliferation criteria are selective, discriminatory and inconsistent," says Vanaik. "It uses non proliferation as a weapon when that suits its short-term interests. When it doesn’t, it allows nuclear weapons technologies to proliferate."

A worrisome example of this may be Japan. The country’s constitution, dictated by the U.S. during its post-war occupation, forbids the acquisition, manufacture or "bringing in" of nuclear weapons. Many conservative politicians in Japan want the statute amended.

Japan has stockpiled huge amounts of plutonium, reprocessed in western Europe, ostensibly to feed its fast breeder reactors but with the potential for quick diversion to military uses.

Should Japan acquire nuclear weapons and continue its military build up, China will react. Already, China feels threatened by Washington’s ballistic missile defence programme and by growing Indo-U.S. military collaboration. If present trends continue, Asia could witness two new arms races -- one between Japan and China, and the other between China and India.

These rivalries will not be driven entirely by regional factors but will have a strong extra-regional influence, that of the U.S. As the Asia-Pacific region transits into 2006, it seems headed for turmoil and instability.

BEIJING -- Bolivia's president elect invited energy-hungry China on Sunday to help develop his country's vast gas reserves after his government carries out plans to nationalize them.

Evo Morales' visit to China comes amid a campaign by Beijing to develop ties with nations throughout Latin America as new sources of fuel, raw materials and new markets for its export dynamo.

Carlos Villegas, an economic adviser to Morales, said the industrialization of natural gas "is a fundamental topic" for Bolivia's incoming government.

"He invited the Chinese government, through its state companies, to participate," Villegas said.

Morales met Monday with President Hu Jintao, telling the Chinese leader he made visiting China a priority because he considers the country to be an ideological ally.

"I have a new responsibility. It's a new experience for me, so I hope to count on the help of your government and your party," Morales told Hu after the two leaders shook hands and posed for photos at the Great Hall of the People, China's legislative seat.

The left-leaning Morales has alarmed Western governments with his plans to nationalize Bolivia's gas resources. Villegas said Bolivia wants private companies to remain as partners to develop them and will renegotiate existing contracts following Morales' Jan. 22 inauguration.

Villegas said Morales wants to develop industries to turn Bolivia's gas into more profitable products such as cleaner-burning diesel instead of exporting it as a low-priced raw material.

"We have made the proposal in Spain and France, and now in China," Villegas said.

Morales, a former Indian activist, said he hoped to build ties between Bolivia's socialist movement and China's ruling Communist Party.

China, as part of its push for links to Latin America, has signed deals to develop Venezuelan oil fields, and its investments in the region include a Brazilian steel mill and copper mines in Chile and Peru.

For their part, Brazil, Argentina and other nations look to China as a source of investment and markets for their own exports. Beijing has become a regular stop for Latin American leaders traveling with large business delegations.

Beijing's interest is almost purely commercial, said Zhu Hongbo, a professor at the Latin American Research Institute of Shanghai's Fudan University.

"People should not worry that China is seeking political and military interests there," Zhu said, adding that where Beijing develops political ties, it is to "guarantee the economic development."

China imports an estimated 40 percent of its oil, and analysts expect consumption to surge in coming years despite official efforts to increase use of alternative energy sources.

SHANGHAI, Jan. 9 - Cnooc, the giant state-owned Chinese energy company, said Monday that it would pay nearly $2.3 billion in cash to acquire a large stake in a Nigerian oil and gas field, one of the biggest overseas acquisitions by a Chinese company.

With the deal, Cnooc would acquire almost half of an oil field in the Niger Delta, one of the world's largest oil and gas basins. The field is believed to hold more than one billion barrels of oil and is operated by the French oil company Total, which also has a large interest in the project. Cnooc has also committed itself to spending $2.25 billion over the next few years to help develop the field. In late summer,

Cnooc - its official name is the China National Offshore Oil Corporation - made a $18.5 billion bid to acquire Unocal, which was eventually bought by Chevron. That attempt rocked energy markets, symbolizing to many not only China's growing influence on global energy markets but its relentless rise on the world stage.

The contest for Unocal quickly turned into a political fight over whether a Chinese state-owned oil company, which some argued was a proxy for the Chinese government, should be allowed to acquire important American energy assets. Cnooc lost the battle after American politicians voiced their opposition and Chevron raised its bid.

But Monday's move was a signal from Cnooc that it was back in the hunt for global energy assets. The company said it would pay $2.28 billion cash to acquire a 45 percent interest in an offshore oil license it acquired from South Atlantic Petroleum of Nigeria, a privately owned company that is reportedly controlled by a former defense minister, Theophilus Danjuma, and other, undisclosed investors.

If the deal, which requires the approval of the Nigerian government, is completed, it would be the biggest ever for Cnooc and one of the largest overseas acquisitions ever by a Chinese company. The largest so far was the $4.2 billion purchase in October of PetroKazakhstan by China National Petroleum, China's largest state-owned oil company.

Cnooc's chairman and chief executive, Fu Chengyu, said in a statement that the company's expansion plans were back on track.

"This transaction is perfectly aligned with Cnooc's long-term strategy of achieving growth through the exploration and development of offshore fields and achieving geographic diversification of the company's portfolio," he said.

Cnooc, one of China's most aggressive energy companies, has spent nearly $2 billion over the last few years acquiring overseas oil and gas exploration assets in countries like Australia, Indonesia, Vietnam, Thailand, Bangladesh and Azerbaijan.

In seeking to meet booming domestic demand, Chinese oil companies have moved quickly to sign deals even in countries like Iran and Sudan, sometimes bringing Beijing into conflict with Washington's foreign policy goals.

The Nigerian assets Cnooc won on Monday had earlier been promised to the Oil and Natural Gas Corporation of India last month for about $2 billion, but that bid was blocked by India's cabinet. The cabinet was concerned about the transparency of the Nigerian ownership, according to Bloomberg News.

India's oil minister, Mani Shankar Aiyar, on Monday called for China and India to cooperate on energy deals rather than compete as rivals, and talks are planned for this week, news service reports said.

A Preemptive Attack on Iran's Nuclear Facilities:
Possible Consequences Center for Nonproliferation Studies

At a time when Iraq and the war on terrorism tend to dominate the debate on international affairs, the possibility of an attack on Iran's nuclear facilities has not been a major topic of discussion in the United States. There are reports, however, that the Bush administration has seriously considered this option but opted to put it on the back burner for the time being.[1] Further, on May 6, 2004, the U.S. House of Representatives passed Resolution 398 in a 376-3 vote, calling on the U.S. government "to use all appropriate means to deter, dissuade, and prevent Iran from acquiring nuclear weapons."[2] If a similar resolution passes the Senate, it will give President Bush or any future administration the ability to launch a preemptive strike on Iran's nuclear facilities whenever this is deemed necessary.

In Israel, planning and rhetoric appear to have progressed quite a bit further[3]; it appears that some in Israel are seriously considering a preemptive attack similar to the June 1981 attack on Osirak that destroyed Iraq's nuclear reactor.[4] Meir Dagan, the Chief of Mossad, told parliament members in his inaugural appearance before the Israeli Knesset Foreign Affairs and Defense Committee that Iran was close to the "point of no return" and that the specter of Iranian possession of nuclear weapons was the greatest threat to Israel since its inception.[5] On November 11, 2003, Israeli Foreign Minister Silvan Shalom said that Israel had "no plans to attack nuclear facilities in Iran."[6] Less than two weeks later however, during a visit to the United States, Israel's Defense Minister Shaul Mofaz stated that "under no circumstances would Israel be able to tolerate nuclear weapons in Iranian possession"[7] and just six weeks earlier, Mossad had revealed plans for preemptive attacks by F-16 bombers on Iranian nuclear sites.[8] This report will examine the following: The Iranian nuclear facilities most likely to be targeted and their proliferation risk potential; the likely preemptive scenarios involving Israel or the United States; and the possible consequences of any preemptive action.

On December 18, 2003, Iran signed the NPT (nuclear Non-Proliferation Treaty) Additional Protocol on Nuclear Safeguards, according greater access and the possibility of intrusive inspections to Iran's nuclear facilities by the International Atomic Energy Agency (IAEA).[9] Since then, IAEA inspectors have carried out various inspections all throughout Iran that revealed a lot of new information about the scale and history of the Iranian nuclear program. While Iran has in general been forthcoming and helpful to the IAEA, some issues remain outstanding. Some IAEA board members, primarily the United States, have accused Iran of pursuing an underground nuclear weapons program that has yet to be substantiated by IAEA inspectors. The United States argues that this constitutes a violation of the NPT and necessitates the referral of Iran's nuclear file to the United Nations Security Council (UNSC). In its last resolution on Iran on June 18, 2004, the board reprimanded Iran for not providing the agency with fuller, more timely, and more proactive cooperation; specifically Iran postponed mid-March visits to a number of locations involved in Iran's P-2 centrifuge enrichment program.[10] In addition, while Iran claims that it has furnished the IAEA with relevant information in a timely and responsible manner, the IAEA deplored Iran's omission of any reference in its October 21, 2003 declaration of it possession of P-2 design drawings, research, manufacturing, and mechanical testing activities.[11] The IAEA also called on Iran to "be proactive in taking all necessary steps on an urgent basis to resolve all outstanding issues" including issues related to LEU and highly enriched uranium (HEU) contamination and the limited production of polonium-210 and plutonium.[12]

IAEA director Mohamed El-Baradei is all too aware of the current dilemma with regard to Iran, and is wary of referring Iran's file to the Security Council. He fears that exerting too much pressure might well push Iran into choosing to opt out of the NPT, in which case, as he mentioned recently to a gathering of academics in Israel, "you have another North Korea."[13] To the barrage of critics who insist that, despite the lack of proof, Iran's intentions are obvious, El-Baradei has decried the lack of a "smoking gun" providing evidence of Iran's engagement in a nuclear weapons program. As he stated, "We are not God. We cannot read intentions."[14] Iran continues to assert that its nuclear program envisages peaceful applications only, and El-Baradei continues to support a diplomatic solution to the situation.[15] In addition, Russia, which is currently building the Iranian Bushehr reactor, has been unequivocal in its opposition to UN sanctions on Iran, especially in the absence of concrete evidence of a weapons application. Russia has asserted complete Iranian disclosure, despite Putin's recent charge of bad faith on the part of Iran in its failure to comply with IAEA inspections.[16]

Bushehr is a complex of light water reactors located on the Persian Gulf southwest of Isfahan. Construction started in mid 1975 under Shah Mohammad Reza Pahlavi. Following the Islamic Revolution in 1979, Ayatollah Khomeini deemed nuclear weapons research un-Islamic and ordered the project shut down. In 1995, however, Tehran signed an $800 million deal with Russia to complete the construction of the Bushehr reactor. Bushehr is a 1,000 MW reactor, expected to be operational by 2005.[17] The contingent of Russian experts and workers at the facility is currently estimated at around 300 persons from among a 900-person strong workforce.

During talks with Russian President Vladimir Putin in early July 2004, El-Baradei basically concurred with the Russian assessment and Iranian claims, stating that "Bushehr is not apparently at the center of international concern because Bushehr is a project to produce nuclear energy."[18] El-Baradei also praised Russia's resolve to get its spent fuel back from Bushehr. Russia intends to provide fuel to Bushehr after it reaches an agreement with Iran to secure the return of all spent fuel. From a nonproliferation standpoint, Bushehr is not currently a major concern as long as it is open to intrusive IAEA inspections and the spent fuel is returned to Russia, but this arrangement may change in the future. Iran has stated that in the long term, it intends to produce its own fuel for Bushehr. Without consistent intrusive inspections and verifications, there is a potential proliferation problem if spent fuel rods from Bushehr can be diverted to secret undisclosed facilities for plutonium production. Once enough plutonium has been produced, Iran could build nuclear weapons in a short time.

Natanz is a nuclear facility, the previously secret existence of which was disclosed by the National Council of Resistance of Iran (NCRI) an Iranian opposition group in August 15, 2002.[19] Satellite imagery made available in December 2002 indicated that Natanz may be used as a gas centrifuge facility for uranium enrichment.[20] Iran subsequently invited IAEA inspectors to visit the facility under construction at Natanz in early 2003. During a February 2003 visit, Iran advised IAEA chief Mohamed El-Baradei of the near-completion of a uranium pilot fuel enrichment plant (PFEP) and continuing construction of a large fuel enrichment plant (FEP). Upon completion, the pilot plant will house approximately 1,000 P-1 gas centrifuges.[21] During the 2003 visit, the IAEA inspectors noted, fully operational new centrifuges in the nuclear complex and the IAEA reported the possible presence of HEU at the PFEP facility later that year, apparently contradicting Iran's claim that it had not carried out enrichment procedures. Iran has suggested that the HEU particles that were found must have been on imported centrifuge equipment. The FEP complex is very large and being built partially underground, leading some to question its purported peaceful character.[22] From a nonproliferation standpoint, in the absence of IAEA intrusive verifications and inspections, the facilities at Natanz can become a major concern. When completed, it is estimated that Natanz will be capable of producing weapons-grade uranium sufficient for several weapons per year, employing more than 50,000 centrifuges.[23] Uranium extracted from mines in Yazd Province will allow Iran to be self-sufficient in its quest to produce the fuel needed to run its nuclear power stations, obviating the current need for regulated Russian nuclear fuel.

Arak is the site of two planned heavy water facilities. The first is a heavy water production facility, the existence of which was disclosed by an Iranian opposition group in August 2002. When IAEA inspectors visited the site in February 2003, Iran claimed that it planned to produce heavy water for export to other countries. Three months later, Iran clarified that it intends to use the heavy water to moderate a prospective heavy water research reactor in Arak.[24] The second facility is a 40 MW heavy water reactor, which Iran announced its plans to start building in 2004. This plant may present a serious nonproliferation challenge when completed. The Arak heavy water reactor will use uranium dioxide and enable Iran to produce plutonium suitable for nuclear weapons assembly. Some estimate that this plant will be able to produce 8 to10 kilograms of weapons-grade plutonium every year, a sufficient amount to build one to two nuclear weapons annually.[25] The Iranians claim the plant is for peaceful purposes only and is intended for medical research and development.

On June 7, 1981, in a surprise air attack the Israeli Air Force using F-15 and F-16 fighter jets destroyed the Iraqi Osirak nuclear reactor located 30 kilometers South of Baghdad.

If Israel were to decide to act alone and attack Iran's nuclear facilities, it would face a greater challenge than it did with Osirak. Natanz, Bushehr, and Arak are much farther away from Israel than Osirak. Moreover, these facilities are located hundreds of miles from each other, which makes them more difficult to attack simultaneously. Yiftah Shapir, an Israeli analyst, explains: "Israel's options to counter the threat are limited. A preemptive strike against Iran's missile or nuclear assets is problematic because the targets are too far away, too numerous and dispersed, and too well protected - some of them in deep underground installations."[26] Furthermore, it is unlikely that Israel would receive permission from Turkey, Saudi Arabia, or Jordan to pass through their airspace en route to Iran. Due to widespread domestic opposition, Turkey denied the United States use of its territory in the attack on Iraq despite large financial inducements. It would be difficult for the Turkish government to justify cooperating with an Israeli attack on another Muslim country. The Saudi government is currently in a severe struggle with domestic militant Jihadi elements who deem the al-Saud ruling family Western lackeys and infidels. Under these circumstances, it would be very difficult and dangerous for the Saudis to grant Israel permission to overfly their airspace to attack Iran, given its potential to further destabilize their domestic security position. The Jordanian regime is in a position similar to Saudi Arabia, although it has usually been more accommodating of Israeli needs. Should Israel use the Jordan route to Iran, it would have to overfly Iraqi airspace, which is controlled by the United States. For the United States to agree to allow Israeli overflight of Iraqi airspace en route to Iran would necessarily be seen as equal American complicity in the attack.

Another possible scenario is a U.S. attack on Iran's nuclear facilities. U.S. forces have at their disposal a very impressive array of smart bombs and guided munitions, as evidenced during the "Shock and Awe" campaign in the first few days of Operation Iraqi Freedom. A U.S. attack on Iran's nuclear facilities, using an array of Tomahawk cruise missiles and/or guided munitions from stealth bombers would surely be much more effective than anything Israel could muster at this point. It is difficult, however, to estimate the likely extent of damage to Iranian installations, given that the more sensitive portions of these facilities were built underground - specifically to guard against a destructive attack. In addition, Iran has purchased and deployed advanced Russian air defense systems to guard these nuclear facilities. Since 1993, Iran has purchased an unknown number of S-300PMU-1 missiles from Russia, and in 2003-2004, Iran and other Middle Eastern nations have purchased additional quantities of the Russian made S-300.[27] These last shipments may have included the more advanced S-300V.

Contrary to popular belief, it appears that Israel's attack on Osirak in June of 1981 did nothing to hinder Iraq's nuclear aspirations. Although it temporarily set back its capabilities, it served rather to reinforce and increase Saddam's desire for a nuclear arsenal. In fact, Iraqi nuclear scientist Imad Khadduri claims that Israel's preemptive strike against the French-built Tamuz Iraqi nuclear reactor, which was not really suitable for plutonium production anyway, had the exact opposite effect of the one intended: it sent Saddam Hussein's A-bomb program into overdrive and convinced the Iraqi leadership to initiate a full fledged nuclear weapons program immediately afterwards.[28]

Khidir Hamza, another Iraqi nuclear scientist and one of the leading proponents of Operation Iraqi Freedom and the overthrow of Saddam Hussein, gave a near identical assessment. He told Mike Begala on CNN's Crossfire on February 7, 2003:
Israel -- actually, what Israel [did] is that it got out the immediate danger out of the way. But it created a much larger danger in the longer range. What happened is that Saddam ordered us - we were 400... scientists and technologists running the program. And when they bombed that reactor out, we had also invested $400 million. And the French reactor and the associated plans were from Italy. When they bombed it out we became 7,000 with a $10 billion investment for a secret, much larger underground program to make bomb material by enriching uranium. We dropped the reactor out totally, which was the plutonium for making nuclear weapons, and went directly into enriching uranium.... They [Israel] estimated we'd make 7kg of plutonium a year, which is enough for one bomb. And they get scared and bombed it out. Actually it was much less than this, and it would have taken a much longer time. But the program we built later in secret would make six bombs a year.[29]

Furthermore, in his book Saddam's Bombmaker, Dr. Hamza states that following the destruction of Osirak in June 1981, Saddam Hussein decided not to repeat the mistake of concentrating all of Iraq's nuclear assets in a single declared location. With the help of the Soviets, the Iraqis embarked on a covert nuclear program that simultaneously extended and hid Iraq's uranium enrichment facilities. Many of these facilities were disguised as warehouses or schools; others were hidden behind farmhouses - all of which was aimed at confusing the IAEA inspectors and preventing them from discovering Iraq's true nuclear potential.

It was Saddam's 1990 invasion of Kuwait, compounded by the difficulty of acquiring sufficient fissile material that doomed Iraq's nuclear prospects. Prior to the invasion, Iraq's nuclear program was moving full speed ahead to produce enough fissile material for nuclear bomb assembly, assuming it could obtain enough uranium. But Iraq's invasion of Kuwait changed everything, resulting in UN Security Council Resolution 687, which banned Iraqi possession of any WMD programs.[30] Iraq's defeat in the 1991 Gulf War, in addition to more than a decade of UN sanctions and inspections, virtually stripped Iraq off its nuclear technology gains and bomb-making ability.

With regard to Iran, there is no reason to believe that an attack on the facilities in Bushehr, Arak, or Natanz would have any different consequence than the Osirak example. Such an attack would likely embolden and enhance Iran's nuclear prospects in the long term. In the absence of an Iranian nuclear weapon program, which IAEA inspectors have yet to find, a preemptive attack by the United States or Israel would provide Iran with the impetus and justification to pursue a full blown covert nuclear deterrent program, without the inconvenience of IAEA inspections. Such an attack would likely be seen as an act of aggression not only by Iran but most of the international community, and only serve to weaken any diplomatic coalition currently available against Iran.

The most troubling aspect of such a scenario is that, unlike Iraq in 1981, Iran is not dependent on foreign imports for nuclear technology and already has available the raw materials, and most of the designs and techniques, required to pursue a nuclear weapons program. Iran has the necessary know-how and has already produced every stage of the nuclear fuel cycle.[31] Furthermore, Iran has uranium mines in Yazd and is in the process of constructing milling plants to manufacture yellow cake uranium and conversion plants that convert it to UF6 gas.[32] Iran has also begun manufacturing its own gas centrifuges used to enrich uranium. Even if Natanz, Arak, and Bushehr were destroyed in a preemptive strike, Iran probably has duplicate equipment that can be activated and has the know-how to produce more, to pursue a more vigorous and unabated nuclear weapons program in the long term.

In the event of an unprovoked preemptive attack on its nuclear facilities, Iran could justifiably argue that it requires nuclear weapons to guard against aggression and protect its sovereignty, effectively announcing its intention to withdraw from the NPT and altering the current international dynamic. Especially given the recent lack of substantiation in the Iraqi WMD case, such a strike would undoubtedly result in U.S. or Israeli diplomatic isolation.

The practical diplomatic consequences of a preemptive attack in Iran are worth considering. In the aftermath of such a strike, it is highly unlikely that the United States would be able to convince members of the UN Security Council to impose sanctions on Iran. Without international sanctions, Iran will be able to allocate greater financial and human resources to its nuclear program. If the Iraqi Osirak example is any indication, the size of Iran's nuclear program would probably increase dramatically, as the Iranian government touts an expanded nuclear program as the key to deterring Iran's enemies.

As the target of an unprovoked attack, Iran gains by pointing to justifications for escaping the constraints of the NPT, therefore becoming a much greater proliferation threat. Unrestrained, the Iranians will have the means and technology to eventually manufacture gas centrifuges and mine, mill, convert, and enrich uranium. Even under IAEA intrusive inspections, Iran has assembled more than 920 gas centrifuges, 120 of which were assembled in just two and a half months, between November 2003 and mid-January 2004.[33] To enrich enough HEU to make one nuclear bomb requires running 750 gas centrifuges for one year.[34] If Iran seceded from the NPT, and increased the size of its nuclear program, it would be able to manufacture and assemble many more gas centrifuges, and therefore rapidly enrich uranium. Once sufficient fissile material is obtained, designing a basic nuclear warhead can be easily accomplished. In the absence of intrusive inspections or threat of UN Security Council (UNSC) sanctions, the only way to prevent Iran from obtaining a nuclear weapons capability would be to occupy Iran, a very unlikely occurrence given the serious challenges already faced by the United States in a smaller, weaker Iraq.

Attacking Iranian nuclear facilities also has the potential of igniting a diplomatic crisis between the United States and Russia. The Russian Federation is not only Iran's foremost supplier of nuclear technology and training, it is reported that hundreds of Russian scientists and technicians currently work in Bushehr. A preemptive attack on Bushehr may kill a large number of Iranian and Russian personnel; the ensuing diplomatic crisis could seriously affect not only Russian-U.S. trade but also cooperation on international matters, including the war on terrorism.

An attack on Iran's nuclear facilities that are viewed by most Iranians as a symbol of national pride and technological progress would provide the Iranian mullahs the necessary justification to intensify their crackdown on dissidents and moderates, whom the hawks are likely to brand as agents of foreign powers. It is equally plausible that, fearing such a backlash, domestic opposition forces in Iran would band together with Iran's new hawkish majority in parliament and abandon their calls and protests for reform.

Unlike Iraq, which in June 1981 was in the midst of a major war with Iran and lacked the military means to retaliate for Israel's attack on its nuclear reactor in Osirak, Iran is not only capable but very likely to respond to a preemptive attack on its nuclear facilities. Various Iranian leaders have already promised very strong reactions to such an event. On July 5, 2004, during a visit to Hamedan in western Iran, Ayatollah Ali Khamenei told a crowd of thousands: "the United States says that we have endangered their interests... if anyone invades our nation, we will jeopardize their interests around the world."[35] In December 2003, Iran's Air Force Commander General Seyed Reza Pardis, said in response to statements by Israeli Defense Minister Shaul Mofaz that if Israel attacks Iran it will be "digging its own grave."[36] Considering the extensive financial and national policy investment Iran has committed to its nuclear projects, it is almost certain that an attack by Israel or the United States would result in immediate retaliation. A likely scenario includes an immediate Iranian missile counterattack on Israel and U.S. bases in the Gulf, followed by a very serious effort to destabilize Iraq and foment all-out confrontation between the United States and Iraq's Shi'i majority. Iran could also opt to destabilize Saudi Arabia and other Gulf states with a significant Shi'i population, and induce Lebanese Hizbullah to launch a series of rocket attacks on Northern Israel.

Open source information suggests that currently Iran possesses more than 500 Shehab ballistic missiles. Most of these missiles are Shehab-1 and -2, with a 300- to 500-kilometer (km) range and a 700- to 985-kilogram (kg) payload.[37] With these missiles, Iran is capable of reaching U.S. bases in Oman, Qatar, Kuwait, and Iraq. Iran is also believed to possess 25 to100 Shehab-3 ballistic missiles, displayed in a military parade marking the anniversary of the Iran-Iraq war on September 22, 2003.[38] The Shehab-3 has a 1,300km range, a 700kg payload, and is capable of reaching Israeli cities and bases (See: Chart 1). Iran could launch dozens of these ballistic missiles in the direction of Israel; and U.S. targets in the region, over a long period, depending on the size of the Iranian arsenal, the desired severity of the counterattack, and the ability of U.S. forces to find and destroy their missile launchers.

On the one hand, the destructive potential of these ballistic missile systems should not be underestimated. Although these Scud variants are relatively inaccurate - they are certainly incapable of the pinpoint accuracy associated with U.S. cruise missiles and guided munitions - they do have much greater accuracy and higher payloads than the Iraqi al-Husseins that turned out a mediocre CEP (circular error probability) of 1 to 3km in 1991.[39] Multiple missiles attacks on U.S. or Israeli targets carrying large warheads can potentially be very deadly, as demonstrated by an Iraqi Scud attack on barracks in Saudi Arabia in early 1991. It turned out to be the deadliest such incident of the entire war for U.S. troops, killing 28 and injuring 98.[40]

On the other hand, even given their relative improvements in accuracy, this may be a risk that the United States or Israel would be willing to take. Administration officials may argue that it is preferable to take on Iran now, rather than allow more time to improve its existing missiles and develop the Shehab-4. In fact, some Israeli officials claim that Israel currently has the wherewithal to neutralize Iran's ballistic missile arsenal using the Arrow anti-ballistic missile system, which some Israelis claim is fully capable of defending Israel from the Shehab-3. Arye Herzog, head of the Israeli Homa Missile Defense Program at the Israeli Defense Ministry, stated on July 8, 2003: "We are fully capable of dealing with whatever the Iranians have today, which is the Shahab-3."[41]

Chart 1: Iran's Ballistic Missile Capabilities[42]
Ballistic Missile System
Inventory
Range
Payload
CEP - circular error of probability
Possible Targets in the Region
Shehab-1
"Meteor"
(Scud-B variant)
200-300
300km
985kg
450m[43]
U.S. bases in the Gulf:
1 Ali Salem Airbase in Kuwait
2 Camp Dawhah Army base in Kuwait
3 al-Udeid Airbase and Army base in Qatar
4 al-Seeb Airbase in Oman
5 Various U.S. bases in Iraq
Shehab-2
(Scud-C variant)
100-150
500km
700kg
50m[44]
Shehab-3
(Nodong variant)
25-100
1,300km
700kg
190m[45]
Israeli cities & targets:
1 Tel-Aviv
2 Haifa
3 Beir-Shiva
4 Dimona

It is difficult to assess whether the Israeli Arrow system is truly capable of neutralizing Iran's arsenal of Shehab-3 as it has yet to be battle tested. In 1991, the American Patriot system deployed in Saudi Arabia and Israel was hailed as a "Scud-Buster" and during the 1991 Gulf War, U.S. officials repeatedly claimed that it had been able to intercept and neutralize the majority of Iraqi Scud missiles launched at Israel and Saudi Arabia. However, a Congressional investigation of the Patriot's performance led by Joseph Cirincione revealed that administration claims of success were highly exaggerated for political effect and in actuality, the Patriots were less that 10% successful in intercepting Iraqi Scuds. Cirincione told 60 Minutes, "the best evidence that we found supports between two and four intercepts out of 44."[46] More than a decade later, during Operation Iraqi Freedom, news reports reveal that the Patriot has yet to live up to its promise. Its continued inability to intercept Iraqi missiles has been compounded by its tendency to shoot down friendly allied fighter planes.[47] Israel's Arrow system looks good on paper, and in its latest test on July 29, 2004, off the coast of California it successfully intercepted a confiscated Iraqi SCUD, but its true combat potential remains to be seen.[48]

Destabilizing Iraq by Inducing the Shi'a to Rise Up Against the U.S. Occupation

Iran's most dangerous potential response to an American or Israeli attack on its nuclear facilities might be a serious and sustained Iranian effort to destabilize post-war Iraq. Coalition forces there have faced a deadly insurgency, primarily from Iraqi Sunnis and a small number of foreign Jihadis who have infiltrated Iraq to target Coalition forces and their allies in Iraq. Deadly suicide bombings and mortar attacks have become almost a daily occurrence, claiming the lives of hundreds of Coalition personnel and thousands of Iraqis, most of whom have been Iraqi Shi'a. The insurgents have also struck at various Iraqi officials who have cooperated with the Coalition authorities. However thus far, with the exception of the relatively marginal Muqtada al-Sadr and his followers in the Mahdi Army, the Shi'a of Iraq have taken a rather pragmatic approach to the situation on the ground. Most Iraqi Shi'a leaders and their followers opposed neither the U.S. presence in Iraq nor the overthrow of the Saddam Hussein regime. In fact, most Shi'a have shown remarkable restraint and avoided being dragged into a civil war, reasoning that the Shi'a majority will be the primary beneficiary of the popular elections scheduled for January 2005.

So far, Iran and its allies in the region have encouraged the Iraqi Shi'a to continue to show restraint and work for social stability in post-war Iraq, even in the face of what would otherwise be deemed egregious provocations, such as the bombing of Shi'a holy sites in Karbala, Najaf, and Baghdad that killed hundreds of Shi'a, including dozens of Iranian pilgrims.[49] Many in Iran have reasoned that they will benefit greatly from a stable Iraq ruled by a Shi'a government, which will necessarily be closer to Iran by virtue of shared religious and historical affiliations. However, in the event of an attack on Iran, this calculus would likely yield to a desire for revenge. In such a scenario, Iranian Revolutionary Guards could cross the border in great numbers to promote a full-blown guerrilla war against the large U.S. presence in Iraq. Iranian intelligence agents, who are currently in Iraq in significant numbers, could provoke clashes between the U.S. forces and Shi'a majority, precipitating a general uprising against Coalition forces in Iraq. It is important to note that, unlike the foreign Salafi Jihadi fighters (a la Abu Musab al Zarqawi and his Tawhid network) who infiltrated Iraq to fight the Americans and are despised by the Iraqi Shi'a, Iranian infiltrators in Iraq are likely to be seen by Iraqi Shi'a in a very different light.

Most major Iraqi Shi'a groups have considerable connections with Iran due primarily to common religious, cultural, and historical bonds. Throughout centuries of struggle against the more numerous, sometimes hostile, Sunni Arab majority in the Middle East, the Shi'a of Iran and Iraq have more often than not come out on the short end of the stick. The Iraqi Shi'a were Saddam's primary enemies and victims; tens of thousands of them were killed, imprisoned, and abused by the secular ruling Ba'ath party. Similarly, following the Iranian Revolution, Iran took the brunt of Saddam Hussein's aggression and military adventurism. In the eight-year-long Iran-Iraq war, which began with Iraq's invasion of Iranian territory in 1980, Iran suffered 500,000 to 600,000 casualties, including up to 60,000 Iranians killed by Iraqi chemical weapons.[50] Under Ba'ath Party rule, many Iraqi Shi'a escaped Saddam's tyranny and sought refuge in Shi'i Iran. As a result, many of Iraq's leading Shi'i figures and organizations have deep roots and affiliations inside Iran.

The list of Iranian allies in Iraq is impressive. Iraq's most influential leader and the highest-ranking religious cleric, Grand Ayatollah Ali al-Sistani, is an Iranian national who has lived in Najaf, Iraq for most of his professional life.[51] Since the fall of the Ba'ath regime, al-Sistani has wielded remarkable influence over the Iraqi Shi'a population who see him as "marjaa` al taqlid," their highest religious authority and the leader worthy of emulation. In January, when Sistani called on Iraqi Shi'a to undertake peaceful demonstrations demanding immediate free elections, in the absence of UN verification, tens of thousands of Iraqi Shi'a poured into the streets of Baghdad, Basra, Karbala, and Najaf. This forced the Coalition Provisional Authority (CPA) to request that the United Nations send a delegation to convince Sistani that Iraq was not ready to hold elections before 2005. The CPA also had to invite the United Nations to participate in the selection of an Interim Iraqi Government and promise the Iraqi Shi'a free and direct elections by January 2005 as demanded by Grand Ayatollah Sistani.

One of Iraq's two most popular Shi'i organizations, the Supreme Council for Islamic Revolution in Iraq (SCIRI) headed by Abdel Aziz al-Hakim, was founded by his brother Ayatollah Mohammed Baqr al-Hakim in Iran in the 1982; its military wing, the Badr Brigade, was trained by Revolutionary Guards in Iran. The Dawa party, founded in the 1950s, is the oldest of all Iraqi Shi'a parties in Iraq. This group achieved prominence in the 1970s by targeting and attacking Saddam's regime. Due to the ensuing suppression of the Dawa party, many of its members left Iraq and established two main factions, one located in Iran and the other in London. The Iran-based faction, "Islamic Dawa," participated in the founding of the SCIRI in Tehran in 1982.[52]

Members of the Iraqi National Congress (INC) once favored by the Americans, including Ahmad Chalabi, have turned out to have very strong connections to the Iran. In the last few months, various reports have alleged that the U.S. Central Intelligence Agency (CIA) has hard evidence that INC officials, including Ahmad Chalabi and his intelligence chief, Aras Karim Habib, passed sensitive information about U.S. military operations in Iraq to Iranian intelligence, including the breaking of Iran's intelligence communication codes. Indeed, some U.S. intelligence officials claim that Aras Habib has been an Iranian agent for years and was part of an elaborate Iranian plan to provide inaccurate intelligence on Iraqi WMD to encourage the United States to overthrow Saddam Hussein, Iran's greatest enemy.

According to an intelligence source in Washington, "it's clear that the Iranians had us for breakfast, lunch and dinner... Iranian intelligence has been manipulating the US for several years through Chalabi."[53] This view was seconded by Larry Johnson, former senior counter terror official at the CIA and the State Department, who added: "When the story ultimately comes out we'll see that Iran has run one of the most masterful intelligence operations in history. They persuaded the U.S. and Britain to dispose of its greatest enemy."[54] In recent weeks, the U.S. Justice Department has launched an investigation into the dealings of the Ahmed Chalabi and his associates, specifically to discover whether American secrets in Iraq were compromised for Iran's benefit. U.S. and Iraqi forces raided his house in Baghdad and are still looking to arrest Aras Habib. Dr. Chalabi and his associates deny any wrongdoing and claim that the Central Intelligence Agency is setting him up.

Regardless of the veracity of these accusations, it is evident that many in the INC have had very close relations with the Iranian government and whereas Iran's list of allies in post-war Iraq is growing apace, the list of American allies is growing thin. While most of these Shi'i organizations actively or passively supported the overthrow of Saddam's secular regime, it is not likely that any of these groups would side with the United States in the event of an attack on Iran. After all, Iran has shielded, supported, and nurtured these organizations for decades, since long before anyone in the West showed any sincere interest in the welfare of the Iraqi Shi'a or their liberation from the Ba'athist yoke.

Ironically, Muqtada al-Sadr and his Mahdi Army are not traditional allies of Iran; Sadr has been vociferous in his opposition to Iranian influence in Iraq. Muqtada al-Sadr is the son of the late Muhammed Sadiq al-Sadr who was killed by Saddam in 1999, and is a relative of the former Grand Ayattolah Mohammad Baqr al-Sadr.[55] The young and inexperienced Muqtada favors a more "nativist" approach to Shi'i rule in Iraq, and previously called on the Iran-born al-Sistani and Iran-supported al-Hakim to leave Iraq.[56] However, ever since the CPA shut down his Hawza newpaper and issued a warrant for his arrest for the killing of Abd al-Majid al-Khoei a rival Shi'i cleric, Sadr and his Mahdi Army militia have been involved in various clashes with Coalition troops around Iraq.

In the event of an American or Israeli attack on Iran's nuclear facilities, it is likely that Iran would attempt to take advantage of its extensive list of allies in Iraq to further sour the U.S. occupation and provoke clashes between U.S. troops and Iraqi Shi'a, which may well result in a popular Iraqi Shi'a uprising against the American presence in Iraq. In such an event, American casualties and costs would multiply exponentially as Iraq further disintegrates into Lebanon-style violence. Such developments would prove disastrous for U.S. interests in the Middle East and negate any perceived or actual benefits that may be gained from destroying Iran's nuclear facilities. The fact is that the strategic usefulness of a successful preemptive attack on Iran's nuclear facilities is likely to be short-lived if the United States gets further bogged down in Iraq.

Fool's Gold - The Limits of Military Success in Recent Middle Eastern History

Middle Eastern history is rife with examples of the short-lived usefulness of overwhelming military successes. None may be more relevant than Israel's stunning victory over Syrian troops during the onset of "Mivzaa' Shlom Hagalil," Israel's invasion of Lebanon. In the period June 6-11, 1982, the Israeli Air Force scored one of the most impressive military achievements in the history of modern warfare. Within a matter of hours, the Israeli Air Force annihilated Syria's surface-to-air missile batteries in the Beka'a Valley and downed 25 Syrian fighter planes.[57] Over the next few days, the Israelis virtually decimated the Syrian Air Force by shooting down a total of approximately 80 Syrian fighter planes, without a single Israeli casualty.[58] The first few months of the Israeli invasion were very favorable to the IDF (Israeli Defense Forces), who where able to force their way north to Beirut while overpowering Syria's troops in Lebanon and compel Palestinian Liberation Organization guerrillas to accept an American-brokered cease-fire plan that included the relocation of all Palestinian fighters to Tunisia.

Soon after these stunning Israeli achievements in Lebanon, Israel's fortunes began to decline rapidly in the face of Syrian payback. Unable to confront Israel in a conventional military conflict due to inferior training, logistics and Soviet weaponry, the Syrian Allawi leadership embarked, with the help of Iran, on a full blown campaign to target the pro-Israeli Lebanese factions and Christian Maronite-dominated Lebanese government, while nurturing the Lebanese Shi'i militias. Shortly thereafter, on September 14, 1982, Lebanon's President and Israel's foremost ally, Bashir Gemayel was assassinated by a Syrian agent.[59] In the following years, the Lebanese Shi'i militias headed by AMAL, Lebanese Islamic Jihad and later Hizbullah carried out a relentless guerrilla war against Israeli forces in Lebanon and their allies, including the U.S. Marines stationed in Beirut. By 1985, this guerrilla warfare waged by the Shi'i militias forced the IDF to withdraw from most of Lebanon, limiting Israeli presence to a narrow security zone in South Lebanon. By the end of the 1980s, Syria emerged as the clear benefactor in Lebanon. In 1989, Syria was recognized at an Arab League summit in Taif, Saudi Arabia, as the primary powerhouse in Lebanon by most Lebanese factions and Arab countries - and tasked therefore with disarming the Lebanese militias and restoring order at the end of the civil war in Lebanon.

In 2000, Israel withdrew from Southern Lebanon, after which Hizbullah decimated the Israeli-trained and financed South Lebanon Army. In less than three years, Israel's once promising invasion and brilliant military victory had turned into a guerrilla war nightmare, resulting in the deaths of hundreds of Israeli soldiers, more than 241 American Marines and considerable turmoil within Israeli society. It was the first humiliating defeat of Israel's once invincible military since its inception in the1940s.

By invading and occupying Iraq, the United States has inherited its own "South Lebanon" and is now responsible for managing 14 million Iraqi Shi'a. An attack on Iran's nuclear facilities has the potential for a scenario similar to the Israeli experience in Lebanon. An initial successful military operation by the United States or Israel, followed by a long and very bloody campaign by Iran to destabilize a fragile post-war Iraq, could in turn develop into a full blown confrontation between U.S. forces and the Iraqi Shi'a who account for more that 60% of Iraq's population. Such a scenario would spell disaster for U.S. interests in Iraq and the Middle East in the long-term, especially given the considerable difficulty and casualties the United States has already endured since the fall of Baghdad fighting Iraqi Sunni insurgents, foreign Salafi fighters, and members of the marginal Mahdi army.

An attack on Iranian nuclear facilities in Bushehr, Arak, and Natanz, could have various adverse effects on U.S. interests in the Middle East and the world. Most important, in the absence of evidence of an Iranian illegal nuclear program, an attack on Iran's nuclear facilities by the U.S. or Israel would be likely to strengthen Iran's international stature and reduce the threat of international sanctions against Iran. Such an event is more likely to embolden and expand Iran's nuclear aspirations and capabilities in the long term.

On Monday July 19, 2004, President Bush stated that the United States is investigating any connection between Iran and al-Qa'ida, and whether Iran played any role in the 9/11 attacks on the United States.[60] A day before, acting CIA chief John McLaughlin told Fox News that eight of the 9/11 hijackers traveled through Iran but added, "however, I would stop there and say we have no evidence that there is some sort of official sanction by the Government of Iran for this activity."[61] These reports come on the heels of news articles stating that the administration has examined the possibility of a preemptive strike against Iran's nuclear facilities. It remains to be seen whether the timing of these revelations is just coincidence, election year politicking, or the inception of a campaign aimed at cultivating domestic support for an attack on Iran. Whether talk of a preemptive attack on Iran's nuclear facilities is a likely scenario or just bravado and journalistic hype remains to be seen, but one thing is for certain, it would not be just another Osirak.

[1] Arnaud de Borchgrave, "Iran in bombsights?" Washington Times, July 5, 2004, <http://www.washingtontimes.com/>.
[2] "108th Congress, 2nd Session, H.CON.RES.398, Concurrent Resolution," May 6, 2004, <http://thomas.loc.gov/>.
[3] "Israel's plans for Iran strikes," Jane's, July 16, 2004, <http://www.janes.com/>.
[4] de Borchgrave, "Iran in bombsights?"
[5] "Mossad head: Nuclear Iran is worst-ever threat to Israel," Haaretz, November 17, 2003, <http://www.haaretzdaily.com/>.
[6] "Shalom: there is no intention to attack nuclear facilities in Iran," Maariv, November 11, 2003, <http://www.maariv.co.il/>.
[7] Ross Dunn, "Israel threatens strikes on Iranian nuclear targets," The Scotsman, November 23, 2003, <http://www.news.scotsman.com/>.
[8] "Israel ready to launch preemptive strike on nuclear sites in Iran," AFP, 11 October 2003, <http://www.iranexpert.com/>.
[9] "Iran Signs Additional Protocol on Nuclear Safeguards," IAEA, December 18, 2003, <http://www.iaea.org/>.
[10] "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran - Resolution adopted by the Board on 18 June 2004," IAEA, June 18, 2004, <http://www.iaea.org/Publications/Documents/Board/2004/gov2004-49.pdf/>.
[11] "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran-Report by the Director General," IAEA, June 1, 2004, <http://www.iaea.org/Publications/Documents/Board/2004/gov2004-34.pdf/>.
[12] Ibid.
[13] Louis Charbonneau, "ElBaradei wary of taking Iran to Security Council," Reuters, July 8, 2004, <http://www.iranexpert.com/>.
[14] Ibid.
[15] Ibid.
[16] "Sanctions against Iran "unacceptable" Russian minister," AFP, November 17, 2003, <http://www.iranexpert.com/>; de Borchgrave, "Iran in bombsights?".
[17] Marshal Breit, "Iran's Programs to Produce Plutonium and Enriched Uranium - Carnegie Fact Sheet," Carnegie Endowment for International Peace, April 1, 2004, <http://www.ceip.org/>.
[18] Rasha Saad, "Heating Up," Al-Ahram Weekly, July 1, 2004, <http://www.iranexpert.com/>.
[19] "Group: Iran's Nuke Program Growing," The Associated Press, 15 August 2002; in New York Times, <http://www.nytimes.com/>.
[20] "Natanz," Global Security, <http://globalsecurity.org/wmd/world/iran/natanz.htm>.
[21] Breit, "Iran's Programs to Produce Plutonium and Enriched Uranium - Carnegie Fact Sheet."
[22] "Natanz," Global Security.
[23] "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran-Report by the Director General," IAEA, November 10, 2003, <http://www.iaea.org/Publications/Documents/Board/2003/gov2003-75.pdf/>.
[24] Breit, "Iran's Programs to Produce Plutonium and Enriched Uranium - Carnegie Fact Sheet."
[25] Ibid.
[26] Yiftah Shapir, "Iranian Missiles: The Nature of the Threat," Jaffe Center for Strategic Studies, July 9, 2003, <http://www.tau.ac.il./jcss/>.
[27] "S-300P," Missile Threat, <http://missilethreat.com/systems/s-300p.html/>.
[28] Imad Khadduri, Iraq's Nuclear Mirage, Memoirs and Delusions (Toronto: Springhead Publishers, 2003), p. 82.
[29] "Crossfire transcript," CNN, February 7, 2003, <http://www.cnn.com/>.
[30] "Security Council Resolutions Concerning Iraq," U.S. Department of State, November 8, 2002, <http://www.state.gov/p/nea/rls/01fs/14906.htm>.
[31] "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran-Report by the Director General," IAEA, November 10, 2003.
[32] Ibid.
[33] "Implementation of the NPT Safeguards Agreement in the Islamic Republic of Iran-Report by the Director General," IAEA, February 24, 2004, <http://www.iaea.org/Publications/Documents/Board/2004/gov2004-11_derestrict.pdf/>.
[34] William Broad, "Uranium Traveled to Iran Via Russia, Inspectors Find," New York Times, February 28, 2004, <http://www.nytimes.com/>.
[35] "Iran warns against an invasion by any country," Associated Press, July 5, 2004, <http://www.iranexpert.com/>.
[36] Miranda Eeles, "Iran warns against Israeli strike," BBC, December 22, 2003, <http://www.bbc.co.uk/>.
[37] "Iran Missile Overview and Capabilities," Nuclear Threat Initiative, <http://www.nti.org/e_research/profiles/Iran/Missile/3367.html/>.
[38] "Iran demonstrates military capabilities, Shahab-3 missile," Tehran Vision of the Islamic Republic Network 1, September 22, 2003, in FBIS Document IAP20030922000056.
[39] "SS-1C 'Scud B'." Missile Systems of the World (AMI international, 1999), p. 528.
[40] "Iraq's missiles remain a threat, despite advances in U.S. technology," Associated Press, October 21, 2002, <http://www.usatoday.com/news/world/2002-10-21-iraq-missiles_x.htm>.
[41] "Defense Official: Arrow System Provides 'Full Protection' Against Iran's Shahab-3," IDF Radio (Tel Aviv), July 8, 2003; in FBIS document GMP20030708000028.

[42] "Iran: Weapons of Mass Destruction Capabilities and Programs," CNS, 2004, <http://cns.miis.edu/research/wmdme/iran.htm/>; "Iran Missile Capabilities Overview," Nuclear Threat Initiative.
[43] "SCUD B Shahab-1," Federation of American Scientists, <http://fas.org/nuke/guide/iran/missile/shahab-1.htm/>.
[44] "Shihab-2," Federation of American Scientists, <http://fas.org/nuke/guide/iran/missile/shahab-2.htm/>.
[45] "Shahab-3/Zelzal-3," Federation of American Scientists, <http://fas.org/nuke/guide/iran/missile/shahab-3.htm/>.
[46] "The Patriot Flawed?" CBS, June 27, 2004, <http://www.cbsnews.com/stories/2004/02/19/60minutes/main601241.shtml/>.
[47] Ibid.
[48] Amos Harel, "Arrow anti-missile defense system successfully tested in U.S." Haaretz, July 30, 2004, <http://haaretzdaily.com/>.
[49] "Syria Condemns the Heinous Attacks and Calls on the Iraqi People to Hold on to Their National Unity," Teshreen, March 3, 2004, <http://www.teshreen.com/>; "Bloody Explosion in Karbala and Baghdad Aimed at Shi'a Ashura Ceremonies," Alquds, March 3, 2004, <http://www.alquds.co.uk/>; "Press Horror at Iraqi Massacres," BBC, March 3, 2004, <http://www.bbc.co.uk/>.
[50] Javed Ali, "Chemical Weapons and the Iran-Iraq War: A Case Study in Noncompliance," Nonproliferation Review (Spring 2001), <http://cns.miis.edu/pubs/npr/vol08/81/81ali.pdf/>.
[51] Graham E. Fuller, "Islamist Politics in Iraq after Saddam Hussein," United States Institute of Peace, Special Report108 (August 2003), <http://www.usip.org/>.
[52] Ibid.
[53] Julian Borger, "US intelligence fears Iran duped hawks into Iraq war," Guardian, May 25, 2004, <http://www.guardian.co.uk/>.
[54] Ibid.
[55] "Who is Muqtada al-Sadr?" CNN, April 6, 2004, <http://www.cnn.com/>.
[56] Graham E. Fuller, "Islamist Politics in Iraq after Saddam Hussein."
[57] "Lebanon War ('Peace for the Galilee')," Israeli Air Force Official Website, <http://www.iaf.org.il/>.
[58] "Israeli Air Force," Aeroflight, <http://www.aeroflight.co.uk/>.
[59] Thomas L. Friedman, From Beirut to Jerusalem (New York: Anchor Books, 1990), p. 157-158.
[60] "Bush: U.S. probes possible Iran links to 9/11," CNN, July 20, 2004, <http://www.cnn.com/>.