US Official: "On Syria, the Russians are `tone deaf’, & the Iranian are scared s---less.”"

All the talk about the unrestrained Israelis boils down to this maneuver! MEPGS, Excerpts;

"With Congress on the verge of passing legislation that will, in effect, produce a secondary boycott against Iran’s Central Bank (“CBI”), it now seems clear that the US is finally prepared to implement the one major non-military action,  “The big sanction’ has always been the CBI,” says one Administration insider.  “The questions that remain are how it is implemented and, of course, whether it will work.”

            As passed by the Senate 100-0, it would prohibit commercial banks after 60 days and central or state run banks after 180 days from doing business with the CBI, unless they are willing to forego all transactions with US banks.  “It’s a simple `us’ or `them’” explains one Congressional source.  This is the case particularly for countries like Japan and South Korea which represent about 25% of Iran’s oil market [Iran exports about 2 million barrels per day) and use the CBI for most transactions.  Also hard hit will be European countries, notably Greece, Spain and Italy account of an equivalent amount of Iranian exports; while China comes in next at about 20%.

            For all these countries, the Congressional action represents potential significant economic hardship.  It will have no direct impact on the US, since direct Iranian oil imports have been banned here for years.  But these other countries, some, like Greece, have only recently begun buying Iranian oil – at a discount -- as Teheran has scrambled to find new buyers.  Moreover, all trade with Iran will be effectively halted as nations decide whether it is more important to maintain corresponding accounts with US banks or continuing to do business with Iran.

            Central to the success of this US effort is the ability of the international oil market to make up for the loss of Iranian crude.  Thoughts immediately turn to Saudi Arabia, which has excess capacity.  But all crude is not the same and the kind of crude provided by Iran may not be easily replaced by Saudi Arabia, nor for that matter, as some argue, by the return of Libyan oil to the market and the ramping up of Iraqi crude.  Perhaps even more important is the political calculus for Saudi Arabia.  As one Administration insider put it somewhat rhetorically this week, “Are the Saudis prepared for this kind of confrontation with Iran?”   An answer was provided by one European diplomat,  “The Saudis are in the right place.  The real question is whether the Administration is, as well.  The Saudis will act only if they believe they have the full backing of the US.” Other diplomatic critics insist that only the US can, as one said this week,  “… `put the fear of God’ into the Iranians.”  As this diplomat explains, “As the US invasion of Iraq caused Iran to put its nuclear weaponization program on hold in 2003, now the US must force the leadership in Teheran to fear for its own future.” The reasoning here is that with the sanctioning of the CBI, the US, if it pursues the issue vigorously (a big “if” for many observers), it will represent a big shift in economic and psychological warfare against Iran.  If additional proof of this “game changing” approach is necessary, one need only look at the reaction of the Treasury Department to the legislation.  Long in the forefront of the battle to enforce various economic sanctions against Iran, Treasury Secretary Geithner and his team fought against this legislation.  They warned that US friends and allies, not to mention the fragile international economy could hurt more than Iran by sanctioning the CBI.  For example, some major purchasers such as China, will simply employ banks that do not work with the US to deal with the CBI (Plus it is not in China’s interest to become increasingly dependent on Saudi Arabia, a US ally, for a grater share of its oil supply). Proponents of the legislation retort that whatever the imagined negative consequences of oil disruption resulting from Iranian crude being effectively reduced in the international market, pale in comparison to the effects of military action taken by Israel or perhaps, less likely the US.... ... “What is the Administration waiting for?” asks one well-placed diplomat.

            Besides the above mentioned political caution, it could well be that the Administration has its hands full dealing with crises across the Middle East.  Syria continues to slip into civil war, note US officials.  Although the consensus continues that Bashar al- Assad’ s regime is doomed, few argue with one official’s assessment that “The old guard will not crack.”  Meanwhile, Assad continues to get backing from Russia and Iran.  Russian diplomatic support is key to blocking any United Nations action and according to informed sources, Iran has stepped up financial aid to the increasingly financially strapped regime. [“The Russians are `tone deaf’, comments one State Department official.  The Iranian are scared s__less.”]  Meanwhile, most observers see Turkey as by far the most important regional actor... Next moves could include Turkish establishment of a “humanitarian corridor” and a “safety zone” within Syria. (Yawn)

            Bahrain is where the US holds the most sway.  But here, too, there are cross currents of opinion within the Administration.  The Pentagon  is reluctant to see the State Department or White House put any pressure on the ruling Khalifa family. ... ...  Meanwhile, neighbor Qatar has been, in the words of on US official “filling empty space.”  In other words, this tiny sheikhdom of 250,000 citizens has been proactive from Libya to Syria to Sudan and Yemen.  “They are fearless,” says one US official. They are also extremely wealthy but, for many here and in Europe they  also now seem to be backing Islamists across the region."