Thursday, August 17, 2006

Cash Flow Jihad Meets Aftermath

It is interesting that despite the proclamations of "victory" and early post war intrasigence, Hizbollah is giving in to the demands of the Lebanese Government (sort of) to allow the Lebanese Government to take control of South Lebanon. They still refuse to be disarmed (they promise to not carry their arms openly), they still claim the right to "resist" the Israelis, but they have done nothing that would renew the hostilities.

This is a mystery. They are not acting victorious. They are not dictating terms (much). They are submitting to the Lebanese Army and French peacekeepers under a UN mandate. Why would that be?

It seems not even the Lebanese Shia are happy with Hezbollah.

The tone in Lebanon has already changed. According to friends in Beirut, not even the Shia were happy with Hezbollah leader Hassan Nasrallah's post-ceasefire speech.

The Shia community is the most vulnerable right now. Hezbollah is using fierce rhetoric, most likely, to intimidate other Lebanese politicians and sects from criticizing them and to delay any talk of their disarmament. This rhetorical move is sending shivers down the spines of most Shia because now is precisely the time to talk about Hezbollah's weapons. We were talking about them before in an effort to prevent something happening like what just occurred. Now, the urgency to talk is even greater.

Hezbollah's rhetoric is frightening many Shia because they are without homes, food, electricity, medication, money, roads, utilities, and other necessities. They could take the fight against Israel. They can't take much more. And they definitely can't take arms against the people who most recently supported them when they were in need; the very people who currently in a much better state than those who lost their homes.

Many Shia claim that if Hezbollah doesn't provide them with support very soon, they will no longer be able to support the organization. Many Shia were willing to support Hezbollah through thick and thin because Hezbollah took care of them. In Dahieh Jounoubieh (the southern suburbs of Beirut which is primiarly Shia and where Hezbollah's headquarters are located), Hezbollah was referred to as chebab (guys) who took care of all sorts of mundane problems.
The problem for the Shia is that those neighborhoods are gone. Israel's tactic of avoiding death and sticking to destruction has created a logistical nightmare for Hizbollah. They now have a vast Army of walking wounded to deal with. The dead are low maintenance, the wounded are high maintenance. This is a very expensive problem. Food, shelter, and housing must be provided to all those supporters and their families. The tall apartment complexes that housed so many are rubble. So people used to living in Beirut must now be housed in the country side in tents. To these tents must be delivered food, water, blankets, and sanitary facilities. They have to deliver all this over a road net that has numerous blocks. This is not Hezbollah's area of expertise.

Then there is the military degradation of Hizbollah.
Hezbollah does not have the strength to bully around the Lebanese government like it did before. They very well could face isolation if they do not play their cards correctly. What could aid in this occurring would be tearing Shia Parliamentary Speaker Nabih Berri away from Hezbollah. Doing so probably won't be difficult. The threat alone of freezing his bank account filled with bloody money will get him singing a different tune. We'll see if other Shia leadership, like Hussein Husseini, are willing to speak a more moderate line.
You know the reason the Hizbollah may have demanded to keep their weapons is that they fear for their lives.

So what does all this have to do with the Cash Flow Jihad? There are estimates out there that Iran spent $4 to $6 billion on rockets and general military strength. Probably another equivalent amount on all the destroyed high rises. Then there are all the houses missing in the south. This is putting a huge strain on Iran's cash flow if it intends to keep the Lebanese Shia bought. If it doesn't keep them bought Hezbollah is going to have a huge problem on its hands.

Iran currently has oil income in the $30 to $45 billion range. And yet this is not enough to keep its population pacified. So it has choices to make. Immediate choices. Curtail its military program. Abandon Hizbollah. Accept increasing unrest in Iran.

Iran was reported to have withdrawn on the order of $35 billion in cash and gold from European banks, probably to avoid getting it embargoed by the US's efforts to squeeze the terror network's cash flow.

There is a huge demand for gold in Iran due to the people expecting a war momentarily.

This is the modern way of doing a blockade. Don't cut off the supply of goods by land and naval blockade (although the Israeli Naval blockade is helping short term by strangling Lebanon of fuel, food, and military resources), cut off the cash to buy the stuff. That makes Iran an instant credit risk. It pretty much has to pay cash for everything. This is not very efficient.

The Jihadis are getting strangled by the lack of bits on computer networks. Since bits are practically free it is the control of the networks that count. And who controls the networks? The Great Satan.

Blockade is a slow form of warfare, however, it slowly weakens and then kills the ability to resist. By creating such huge economic losses for Iran ( Syria is broke and full of refugees ) Israel has speeded up the action of the cash flow Jihad.

Update: 17 August '06 2345z

There are some excellent comments. I'm going to bring some of them forward a little later.

Update: 18 August '06 0511z

Commenter Adam said this about a Shimon Peres appearance on CSPAN:
Following some comments that Peres made tonight, I think I can articulate the core of that policy as "creating the conditions in which the enemy is destroyed by his own internal contradictions".
I amplify on that in You Say You Want a Revolution?

Ros made a long comment about unrest in Iran. Read it. Thanks Ros for your knowledge and insight.

Carol Herman reminds me of the $4.5 bn Lebanon lost when they they found out that except for a few intrepid souls, war zones are not attractive to most tourists.

Update: 18 August '06 1244z

Reuters reports that Hizbollah is handing out wads of cash to people who have lost their homes in the recent war in Lebanon. The cash is going to 15,000 families who have lost their homes and the amounts are reported to be $12,000 each.

I guess the decision has been made: hold the home front with more repression, hold Lebanon with cash. DNA India reports on a crackdown on satellite dishes in Tehran to prevent western cultural imperialism. Of course such crackdowns only make western culture more attractive. At least that is how it worked in the USSR. Say, what happened to them anyway? You never hear much about them these days.

Update: 18 August '06 1653z

Carl in Jerusalem thinks the money may be counterfeit.

Which reminds me that it's crackers to slip a rozzer the dropsy in snide.

Update: 20 August '06 0834z

Little Green Footballs discusses the counterfeiting story.

Update: 21 August '06 0353z

Reader Paul and I were exchanging e-mails and he got me looking at Iran's behavior re-military exercises and the destruction of satellite dishes. Well it got me thinking. And I came up with this:

I think they are comitted to some action they feel almost sure will start a war.

They have been promising fireworks on the 22nd. It is part of their war plan. Think of the time Oral Roberts went begging for money so that the Maker wouldn't call him. Evidently he got enough. Well the question here is: will I'm-a-nut-job get enough of what he wants? Or is it possible he will get too much. Olmert is weak so now he has to act super tough. I think the President of Iran looks best in earth tones. It is his alpha male color. Brown. Makes some kinds of stains almost invisible.

Israel is in no mood to cower or be trifled with. They think they just lost a war and they want revenge. A rematch. Any foe. The sooner the better. Their blood is up.

Think Genereal Grant in the Battle of the Wilderness. By most accounts he lost that battle. But Grant advanced and Lee retreated.

Update: 27 Aug '06 2328z

Captain's Quarters is of the opinion Hizballah lost.


Karridine said...

This is VERY USEFUL INSIGHT, indeed!

Thank you, Sir!

Go Israel! Go Freedom-Loving humans!

Anonymous said...

I watched Shimon Peres on cspan tonight. Naturally he's going to put the best possible face on what happened, but I'm willing to be sold on the idea that Israel did exactly what it wanted to do in this war, no more and no less.

In some way, I wonder if Olmert isn't continuing in essense the unilateral withdrawl policy only with regard to Hezballah rather than Hamas. The two foes are really very similar in their political and strategic dimension if not militarily.

Following some comments that Peres made tonight, I think I can articulate the core of that policy as "creating the conditions in which the enemy is destroyed by his own internal contradictions".

Sounds hegelian/marxist, no? But Peres ended tonight with the comment that the greatest wisdom is to choose the moral path, something he claims Ben-Gurion taught him. Shouldn't Israel's greatest strengths be her moral and political values? Shouldn't the fact that Israel is a democracy that abhors war be the key to her survival?

But Hamas and Hezbollah have to exist in two distinct realities, on one hand social institutions and on the other institutions of nilhilism. Putting pressure on this contradiction can only do them harm, so any policy that accomplishes that is good.

I think the unilateral withdrawls and perhaps the conduct of this Hezballah war have been examples of such a policy.

The tie in to the cash flow jihad is there, btw, but this is already getting long winded so I won't spell it out.

Ros said...

Your info on the parlous state of Iran is very interesting. I had read that they simply cannot afford to turn off the oil, and some suggest sanctions are coming. They haven’t been able to reduce their petrol imports. You inform that they have 15% inflation. They have high unemployment, and very high younger population who are both educated and unemployed.
From the Asia Times last year discussing their problems
“Arabs, Azeris, Bakhtiaris, Balochis, Kurds, Turkmens and Lurs co-existing alongside the majority Persian population…
Iran is particularly vulnerable to foreign penetration in that non-Persian, non-Shi'ite ethnic minorities inhabit its extremities. Aside from Khuzestan's Shi'ite Arabs, there are Sunni Balochis in the southeast, Sunni Kurds and Shi'ite Azeris in the northwest and Sunni Turkmens in the northeast.”

Many of these have got violent at times, The Balochis and the Kurds on an ongoing basis. They are about to execute about 20 Ahwazi-Arabs, which should cause them more trouble. Syria is breaking international law and returning Ahwazi refugees no doubt for execution.

So many that I read suggest that it has been a victory for Hezbollah, Iran and Syria. You are one of the few that looks at the circumstances of Hezbollha’s masters. Iran has very real problems, Syria is a basket case economy, the only “nation-state” Israel is the one that is both economically sound, and moving on, eg offshore oil gas electricity and water pipelines, and be the conduit for Caspian and Russian oil to the Red Sea and hence Asia. And they have now improved their security whatever the doomsayers say.

I think Nasrallah said that Lebanon carried a 35 billion foreign debt so another 5 billion for rebuilding won’t hurt. But as in the past even, if they get the money, most will do the Lebanese version of “trickle down economics”, into the pockets of the corrupt, and Hezbollah, that has to rebuild itself. And if Nasrallah is saying we can go further into debt it sounds like Iran and Syria aren’t offering to pay. As you say Iranians are already angry with Hezbollah getting money they desperately need. And Saudi complained bitterly at the cost of Lebanon’s stoushes to them when this started, maybe they won’t hand over the money for Hezbollah again.

Not asking you to predict, not possible in a system on the edge of chaos, but your information certainly points to the possibility that this war may have some surprising outcomes, and not to the advantage of Iran, Syria and Hezbollah.


Anonymous said...


Really good post. Just a quibble, here and there, or two.

Gold's price is DOWN on the market. And, oil prices are also dropping.

One thing the Ahma-nut may do is attack the shipping lanes with missiles, because without something combustable, the whole "extremist" approach in iran is almost dead in the water. Those crazy turbaned midgets have inflicted this damage onto themselves. But they're loose in the street of iran. And, they're terrorists. So they scare the pants off people who don't exhibit "belief adherence." Not exactly an uprising. And, the one thing needed is something lots of iranians support. Anything that hurts Israel will do.

Your take on nasrallah's problems?

Keen insights.

Redeveloping what's lost will be impossible. Because to rebuild, and then convince the Shi'a to live with missiles in their living rooms, and under their parking lots, will make them so phobic, they won't move in.

While in Israel there's real anger at Olmert. It's not drying up. And, given the extortionist spirit that inflicts most MK's; who are smelling blood in the water, this time. Involvng Amir Peretz sitting in the Defense portfolio, has major implications, ahead.

So far, Bush and Condi are hoping the UN's #1701 "mandate" doesn't become an albatross. Even given the lack of strength you indicate nasrallah has. Because this war showed up some real shortcomings.

Just like it did for Golda. It does for Olmert, now.

What can happen? Depends on Bibi's willingness to join an injured Olmert government; or wait for more power. How so? I could see Livni replacing Olmert. And, pulling Amir Peretz' portfolio. She could give it to Foad Ben Eliezer. And, she could mandate changes in the IDF's power bases. She'd also free up the Education portfolio. Another "bust" of Olmert's decision to go with a very weak team. SO he could look so pretty. By comparison. Of course.

How long before Olmert leaves? It would be funny if the PM needs to resign over his beneficial home owner's deal; than before Arik Sharon expires. (I think this is the working plan, right now, actually.) But Olmert may just be a glutton for punishment. So the records against him will have to expose even more stuff where he took for himself. Halutz, too. At at career ending juncture. Who knows if just pinning a ribbon on him and letting him retire would even stop the flood of criticm?

The tank corp absolutely needs to be updated. Revised tactics instituted. And, the Merkeva's replaced. Not in toto. But with something smaller. And, the old Rommel/Patton handbook of battles, tossed. Too many sitting ducks for the newer missiles cooked up by Russia. And, sold to the beasts.

Does Israel's relationship with russia finally change? I sure hope so. Russia sucks Israeli technology dry. So does China. So, here, too. A better business model.

And, because of the needs for better business models, Bibi's stock is running very high. Could he live with a Livni/Kadima/Likud? Why not? What's Labor gonna do? You know, because Dahlia Itzik ran to have a "secret" meeting with Bibi; that's she not letting any grass grow under her belonging to government. She's not foolish enough to sign this away if Amir Peretz feels piqued. True, too, for Foad. And, Haim Ramon. Plus what about the more skilled Labor ministers Amir Peretz ran over on his way into Defense? Hmm?

Labor's the biggest loser. The whole notion of "land for peace" no longer exists. And, Ehud Barak still looks like a foolf for racing out of Southern Lebanon in 2000. Well, that's the nature of hindsight.

Who will hang on their own petard? Just asking. Keep posting Simon! You're blog's one of my favorite spots. Hope people come from Captain's Quarters to read this. Hope Captain Ed reads, here, too.

Anonymous said...


Not to forget that $4.5 BILLION in the Lebanese tourism trade when BOOM. This won't get fixed all that fast. Because how many foreigners enter war zones? Even if so much of Beirut has been left intact?

How do they come in through the sea blockade? When does the airport get rebuilt? And, the stockpile of fuel get replenished?

The Shi'a were never part of the tourism trade. They were the garbage collectors. So nasrallah wasn't focussed.

And, what about the french? Whose hands were in the cookie jar? They've been cut off from some of the money that changes hands.

And, assad? Runs all sorts of risks, as he tries to move contraband through his country (syria's just a middle-man's business), and he runs into problems created by the difficulties of getting things into syria, through iraq? I would think this is more true, than not true.

The biggest plus? Now Bush is angry to see the fallout from the UN's attempts to hinder implimentation of a successfully signed #1701 agreement.

And, looming? Will nasrallah nail Siniora, to syonnara? If assad got flack for killing Hariri. What would killing Siniora do? For how long would his slipping all of lebanon into his underpants, last?

There ought'a be a dead pool on some of these people. Even in terms of viable political lives. I think nasrallah's messing with the wrong person, if the only person mad, is Bush. (Not the only person, now, anyway. Can't wait to see what happens among Israeli civilians, as they come to their own terms with what they wanted, and what they got.)

M. Simon said...

Excellent points Carol!!!!!

Always a pleasure to have your input.

M. Simon said...


Glad you caught Peres on cspan.

Your point about "creating the conditions in which the enemy is destroyed by his own internal contradictions" is excellent.

M. Simon said...

The Rommel Patton deal was always about combined arms.

Infantry supported by tanks.

Infantry is required to suppress anti-tank weapons. Tanks to punch holes in the infantry.

A very good example of this is in the movie Patton. Rommel's forces (Rommel was home sick) did a combined arms attack on Patton's forces. Patton defeated them with artillery and dug in tanks used as artillery.

Israel was supposed to have learned about the problems of anti-tank weapons in '73. Talk about lessons forgotten.

Fares said...

lebanon Survives once again, But will Syria of Assad

Ecclesiastes said...

"... they still claim the right to "resist" the Israelis, but they have done nothing that would renew the hostilities."

I suggest that you re-examine that idea. HA is flatly refusing to return the two Israeli soldiers as specified in the UN resolution.

If you are thinking that Israel wouldn't start a war over just two soldiers, well, that's what Nasrallah thought.

Now is not a good time for Lebanon to bet half the country on Israel being "reasonable".

Anonymous said...

Forget these lesser important issues of oil, gold, lebanon and deodorant. There is something which casts a huge shadow over these issues my raghead friends.

You are a set of googlewhackers!

Its true! I'm sure you will delight in this and perhaps fire your kalashnikov into the air or decapitate a women tonight for not wearing her pillowbox, but so long as you're happy eh!

P.s. nice beards but I bet they stink.

Go Bush - boofy