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Editor's
Note: The White House has been
changing its tune on Iraq publicly, and may also be doing so
privately. Recent reports suggest that the Bush administration is
increasingly impatient with the lack of progress in Iraq, and that
Iraq’s Prime Minister Nouri al-Maliki might be ousted out of
office, perhaps forcibly. The
White House did not deny the rumors, and there has been no comment
from the Iraqi government. Yet, if there is truth to this
situation, it could be a significant and debilitating blow to the
financial markets, as well as providing significant amounts of
problems for the U.S. and coalition forces on the ground in Iraq. In
this analysis, originally posted on October 26, 2006, at
www.joe-duarte.com Dr. Duarte looks at the situation.
Iraq: Coup Rumors Surface (10-26-06)
The U.S. is losing its patience with the Iraqi government and some
sources are reporting that there are plans for a removal of the
Iraqi government if things don't change.
UPI, in a news analysis published on October 23rd reported:
"Iraqi army officers are reportedly planning to stage a
military coup with U.S. help to oust the government of Prime
Minister Nouri al-Maliki."
The UPI piece noted two key developments:
1. "The proposed plan, according to the source,
stipulates that the new Iraqi army, with the assistance of U.S.
forces, will take control of power, suspend the constitution,
dissolve parliament and form a new government. The military will
also take direct control of the various provinces and the
administration after imposing a state of emergency."
2. "An Arab source also told UPI that certain Arab
countries were informed of the plan and requested to offer their
help in convincing the former leaders of the deposed Baath Party
regime residing in their countries to refrain from obstructing the
move and stop violence perpetrated by the party in Iraq. In
return, they will be invited to participate in the government at a
later stage."
On October 25th, Iraq's Prime Minister Nouri al-Maliki angrily
denounced a combined U.S. and Iraqi military operation in Sadr
City, a Baghdad section occupied by Muqtada Al-Sadr and his Mehdi
Army militia, saying that his office had not been notified of the
action.
U.S. armed forces said that Maliki had been notified, while
President Bush was ambivalent about what might or might not have
happened with regard to the situation, while suggesting that U.S.
patient in Iraq had limits.
Al-Maliki suggested that President Bush's very public change in
strategy in Iraq was related to the U.S. midterm election, while
President Bush responded, also in a press conference by noting;
'"We are making it clear that America's patience is not
unlimited," he said. "We will not put more pressure on
the Iraqi government than it can bear."'
This set of circumstances indicates the new dynamic in Iraq, a
lack of patience by the U.S. and signs of splintering within the
Iraqi government.
Situation
Critical
This
is a highly complex situation developing, with multiple players
vying to establish a long term foothold in Iraq.
The U.S. position is the clearest. The death toll for the U.S.
armed forces, the rising violence in Iraq, and the lack of overall
progress in establishing an Iraqi government that can stand on its
own two feet are weighing on the electorate.
The Republicans are in trouble for the upcoming election, and the
White House has to start cleaning house, for the Bush term will be
over in 2008, no matter who wins the midterm election.
The situation in Iraq, is nowhere near that clean, as multiple
groups have some hold on power, at least on a regional or local
basis, and the central government is basically powerless to
enforce any kind of national law.
Multiple trial balloons have been launched, including the notion
that Iraq might be split into three regions based on the majority
ethnic component of each area with the Kurds getting control of
the North, the Sunnis the middle, and the Shia the South of the
country.
The key to success in such a split is how the oil revenues will be
divided. The North has plenty of oil. The South has a fairly good
supply, as well as a port. And the middle has little to bargain
with.
The major stumbling blocks at this point are the presence of the
militias, and the death squads within the militia, as well as the
presence of the Al-Qaeda jihadists, with the latter mostly holding
ground in the Sunni dominated areas of the middle of the country.
Several reports suggest that some kind of end game is approaching,
although the course is likely to be violent.
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Stratfor.com
reported that the Sunnis have approached the U.S., requesting
that they would be willing to assist the U.S. in removing the
jihadists from their portion of the country, in exchange for
some kind of protection from the Shia.
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As
stated above, there have been rumors of a potential coup in
Iraq.
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The
U.S. is attempting to remove certain death squad leaders from
the playing field, thus the raid on Sadr city.
Conclusion
The situation is Iraq is inherently clear to the U.S. now, as they
have been there long enough to have finally figured out who the
key players are and what their objectives are likely to be in the
post Saddam Hussein era.
Due to the politics of the country, though, it is increasingly
difficult to deliver any kind of decisive blow to one or another
key objective without causing a major upset in the balance of the
central government.
In other words, it has become clear that the problem is the
central government, since the only reason it is in power is
because each of the other power groups in the country are using
the central government for cover as each individual group seeks
its own objectives.
That leaves the U.S. as the odd country out.
In this context, the U.S. is the puppet, not the puppeteer. And
that is not something that is likely to be playing well in
Washington.
The U.S. has finally figured out the situation and is starting to
squeeze each individual player, as political and economic
realities are in turn squeezing the White House.
That's why there are rumors of a coup. And that's why the U.S. is
testing the waters about its ability to run operations with the
Iraqi army without necessarily notifying Al-Maliki.
There's much more here to be left uncovered. Yet, the situation is
increasingly clear, and increasingly dangerous.
The bottom line is that Al-Maliki and his ineffective government
are in the way of achieving some kind of order in Iraq. And that
suggests that his days might be numbered.

© 2006 Joe Duarte, M.D.
Dr. Duarte's Bio and Archive
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Joe
Duarte, M.D.
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Joe
Duarte M.D. is founder and Editor in Chief of Joe-Duarte.com. Dr.
Joe Duarte's Daily Market I.Q. is a premium service that provides
daily intelligence, trading strategies, and technical analysis at www.joe-duarte.com.
Duarte offers free analysis and news coverage at www.intelligentforecasts.com
. Dr. Duarte is a board certified anesthesiologist, a registered
investment advisor, and President of River Willow Capital
Management. He is author of "Successful Energy Sector
Investing" and "Successful Biotech Investing"
(Prima/Random House). Duarte's analysis appears regularly in major
outlets including CBS MarketWatch
and Investor's Business Daily.

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