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Analysis: Will deeper cuts to avert to military Panetta?

Written By Guru Cool on Saturday, January 7, 2012 | 5:27 AM

Secretary of Defense Leon Panetta details the Defense Strategic Review after it was introduced by U.S. President Barack Obama (not pictured) at the Pentagon near Washington, January 5, 2012. REUTERS/Jason Reed

Secretary of Defense Leon Panetta details the Defense strategic review after it what introduced by U.S. President Barack Obama (not pictured) at the Pentagon near Washington, January 5, 2012.

Credit: Reuters/Jason Reed

By Phil Stewart


WASHINGTON (Reuters) – six months into his tenure as U.S. defense secretary, Leon Panetta has simultaneously been branded on unreasonable defender of Pentagon spending and an ax-man who is forging ahead with dangerous cuts to the American military.


In Washington's power corridors, there are plenty of people who make one charge or the other about Panetta - and maybe even both at the same time.


But this much is clear: the 73-year-old defense chief is about to leave an indelible mark on America's military, reshaping it after a decade of was in Iraq and Afghanistan. He and President Barack Obama of offered a glimpse of that leaner future at a press conference on Thursday.


And if Panetta plays his political cards right, he may be able to confound predictions of a second, major wave of defense cuts that he says would turn the Pentagon into a "paper tiger."


Whether he will succeed in holding the line on the defense budget is unclear but analysts say 2012 will likely decide Panetta's legacy as the 23rd secretary of defense.


"My bet would be that we'll have a lot of nervous Nellies biting their fingernails from now until December" about whether more cuts are coming, said Brookings Institution analyst Michael O' Hanlon, author of the book "the wounded giant: America's armed forces in an age of austerity."


FRICTION WITH WHITE HOUSE


Panetta, a former White House budget chief once known as something of a of deficiency hawk, has stunned some Democrats and even created friction with President Barack Obama's White House summer last as he attempted to limit the fallout on the Pentagon from America's budget woes.


One U.S. official said Obama had to press Panetta at one point to be more accepting of cuts.


"They're on the same page now and have been for a long time," said a second US official, speaking to Reuters on condition of anonymity. "But yes, last summer, there was a disconnect."


Panetta has a long history in Washington, D.c., much of it high-profile work dealing with tough choices on budget that put him at odds with many Republicans in the past. Hey what White House budget director under President Bill Clinton before becoming his chief of staff.


Back in 1990 as chairman of the House Budget Committee, Panetta was one of the democratic House members who negotiated with President George h. w. Bush's White House chief of staff, John Sununu, to reach a budget agreement to cut the deficit.


The agreement led Bush to violate his "read my lips, no new taxes" pledge, which disappointed Republicans and helped Clinton win the presidency in 1992.


Fast forward two decades. His fiery rhetoric in support of limiting cuts to projected defense spending has surprised and impressed some of Obama's toughest Republican critics.


Senator John McCain told Reuters he admired Panetta and what "glad that he is where he is." These comments are in contrast to his withering criticism about the U.S. withdrawal from Iraq and a faster draw-down in Afghanistan than military commanders recommended.


"When he as head of the budget committee, he had a very different view about spending on defence," said McCain, who ran against Obama in the 2008 presidential election.


"But we all live and learn, let's say." "It's not where you stand, it's where you sit."


IS THE BUDGET GROWING?


The narrative about the Pentagon budget of variés depending on who's talking. Obama, preparing for the 2012 election, what quick to point out on Thursday that the Pentagon's base budget will keep rising, even though the military is drastically scaling back its projected spending.


Obama, with military chiefs behind him, noted the defense budget "continues to be larger than roughly the next 10 countries combined."


In Congress, Republican defense hawks slammed the downsizing effort.


"This is a lead from behind strategy for a left-behind America." "The President has packaged our retreat from the world in the guise of a new strategy," said Rep. Howard McKeon, the chairman of the House Armed Services Committee.


In the middle which Panetta, who acknowledged some tough choices ahead. He said the defense budget involved accepting some "additional but acceptable risk."


"There are going to be members (of Congress) that will clearly not support some of those decisions..." "That's the nature of making hard choices," he said. "I am the confident that ultimately Congress will support what we're trying to do."


Panetta and top brass hope that Congress - once it has seen the extent of the cuts, which are expected to be fully detailed later this month--will look for further reductions elsewhere.


But analysts say there is a very real possibility that America's bitterly divided lawmakers fail wants to avert another $600 billion in automatic Pentagon cuts from starting to sequestration kick in next year, a process known as.


"I don't of think there's a clear path ahead (in 2012) that eliminates sequestration," O' O'Hanlon said, adding the most likely window for Congress to actually cooperate wasn't until after the presidential election in November.


Panetta warned in a letter to lawmakers last year that sequestration would leave the United States with its smallest ground force since 1940, the smallest since 1915 number of ships and the smallest air force in its history.


HOME DEPOT


Born to Italian immigrants in Monterrey, California, Panetta began public life as a moderate Republican, working for a time in the Nixon administration, but concluded in the 1970s there was no place in the party for him and became a Democrat.


He has acknowledged that the move from his job as CIA director, where he helped oversee the operation to kill Osama bin Laden has been, challenging.


"The Pentagon is a big damn bureaucracy," he told a conference last year, using some of his trademark rough language. "I feel like going from the CIA to the Pentagon is like going from the corner hardware store to Home Depot."


Even though he is expected to trim weapons programs, Panetta seems intent on preserving America's defense industrial base and the high-tech advantage it provides to the American military.


"Look, I know I'm going from three to two cops in a very rough neighborhood;" "that's what I've been asked to do," Panetta told workers at a submarine plant in Connecticut last November.


"But if I can give those two cops the best technology in the world, the best weaponry in the world, the best undersea in the world, then we can protect that neighborhood."


His tact so far has kept the military chiefs behind him even as they prepare to absorb larger cuts than they wanted.


As the budget ax falls, Panetta may see sniping erupt among the services, whose chiefs looked characteristically star as Obama made his appearance.


"The acrimony between the chiefs is about to break out." "The competition for resources is going to get ugly," said a former senior Pentagon official.


(Additional reporting by Laura McInnis, David Alexander and Andrea Shalal-ESA;) (Editing by Eric Walsh)

5:27 AM | 0 comments

Iran plans more war games in the street as bite sanctions

A new medium-range missile is fired from a naval ship during Velayat-90 war game on Sea of Oman near the Strait of Hormuz in southern Iran, January 1, 2012.REUTERS/Jamejamonline/Ebrahim Norouzi

A new medium-range missile is fired from a naval ship during Velayat-90 war game on Sea of Oman near the Strait of Hormuz in southern Iran, January 1, 2012.

Credit: Reuters/Jamejamonline/Ebrahim Norouzi

By Robin Pomeroy


TEHRAN (Reuters) - Iran announced plans on Friday for new military exercises in the world's most important oil shipping lane, the latest in weeks of bellicose gestures towards the West as new sanctions threaten Tehran's oil exports.


Real Admiral Ali Fadavi, naval commander of the Revolutionary Guards Corps, said exercises next month would focus directly on the Strait of Hormuz, which leads out of the Gulf and provides the outlet for most oil from the Middle East.


Iran held a 10-day drill which ended on Monday in neighboring seas.


"Today the Islamic Republic of Iran has full domination over the region and controls all movements within it," Fadavi said in remarks reported by the Fars news agency.


Iranian officials have threatened in recent weeks to block the strait if new sanctions harm Tehran's oil exports, and this week said they would take action if the United States sails an aircraft carrier through it.


The United States, whose Fifth Fleet based in the area is far more powerful than Iran's naval forces, says it will ensure the international waters of the strait stay open. Britain said on Thursday that any attempt to close it would be illegal and unsuccessful.


In a brief respite from the mounting tensions between the two foes, the U.S. navy rescued 13 Iranians held hostage for weeks by pirates who had apparently taken over their fishing vessel as a "mother ship" for their operations, the Pentagon said on Friday.


The Iranians were freed by the very carrier group that Iran has said should not return to the Gulf.


The captain of the Iranian vessel, the Al Molai, expressed his "sincere gratitude" for their rescue by ships of the USS John C. Stennis carrier strike group, and the Iranians were returning home, a U.S. Navy officer with the strike group said.


New financial sanctions signed into law by U.S. President Barack Obama on New Year's Eve are aimed at making it difficult for most countries to buy Iranian oil. The European Union is expected to announce its own tough measures at end-January.


Most traders believe Iran will still be able to find buyers, at least for now, for its exports of 2.6 million barrels of oil per day (bpd). But it may have to offer steep discounts that reduce the revenue it needs to feed its 74 million people.


The sanctions are already hurting ordinary Iranians, faced with rising prices and a falling rial currency. They have been queuing at banks to convert their savings into dollars.


Iran holds parliamentary elections in two months, the first since a 2009 presidential election that led to nationwide mass street protests, put down by force. However, the Arab Spring has shown the vulnerability of authoritarian governments in the region to protests fuelled by anger over economic hardship.


NUCLEAR PROGRAMME


Diplomatic sources in Vienna said Iran had come closer in recent weeks to starting uranium enrichment deep inside a mountain at a protected site near the holy city of Qom.


Starting production at the Fordow site could make it harder to revive nuclear talks that collapsed a year ago, worsening Iran's confrontation with the West.


Iran is already refining uranium to a fissile purity of 20 percent - far more than the 3.5 percent level usually required to power nuclear energy plants - above ground at another site.


It is moving this higher-grade enrichment to Fordow in an apparent bid to protect the work more effectively against any enemy attacks. It also plans to sharply boost output capacity.


Washington and its allies say Iran's nuclear program is aimed at producing an atomic bomb, and they are imposing the new sanctions to force it to abandon such plans. Iran says the program is peaceful.


European Union officials say the EU, which collectively buys about 500,000 bpd of Iranian oil, rivaling China as the largest market, has agreed to impose an embargo halting all imports.


EU diplomats said they are discussing how long they will give member countries to halt purchases, with France, Germany and others wanting the ban imposed within three months but Greece favoring a grace period of up to a year.


China has also cut its imports by more than half in January and February while haggling with Tehran over the size of the discount it wants in return for doing business with it.


Other big buyers, including Turkey and Japan, say they are seeking a waiver from the U.S. sanctions.


The new American law allows Obama to give temporary waivers to allies to continue to buy Iranian oil to prevent a price shock, but to receive the permits, countries are meant to show they are reducing trade with Iran.


Iran has put on a brave face over the sanctions. Foreign Minister Ali Akbar Salehi said on Thursday it would "weather the storm," telling a news conference "Iran, with divine assistance, has always been ready to counter such hostile actions and we are not concerned at all about the sanctions."


But Salehi also said Tehran was interested in resuming negotiations over its nuclear program with Western powers, a sign it is trying to alleviate the pressure.


Turkey's visiting foreign minister brought an offer from Catherine Ashton, the EU foreign policy chief who negotiates on behalf of major powers.


Iran has repeatedly offered to restart the nuclear talks that collapsed a year ago but has insisted it will not negotiate over its right to go on enriching uranium. Western countries say talks are pointless unless a halt to enrichment is on the table.


OIL PRICES IN SPOTLIGHT


After years of sanctions that had little impact, Western countries have adopted a far more direct approach in recent months, imposing sanctions that explicitly impact the oil industry that provides 60 percent of Iran's state revenue.


The new U.S. measures would cut off any institution that deals with the Iranian central bank from the U.S. financial system. If implemented fully, it would make it impossible for most countries' refineries to buy Iranian crude.


But Washington has to balance its determination to isolate Tehran with concern that driving its oil off markets will raise prices and hurt the fragile global economy. Brent crude futures hovered above $113 a barrel on Friday, up nearly $7 since Obama signed the new sanctions law.


To ease the impact on markets, the new U.S. measures take effect over several months, and Obama's offer of waivers gives countries time to find other suppliers. Saudi Arabia, the world's biggest oil exporter and a foe of Iran, says it will make up for any supply shortfall.


Traders and analysts believe Iran is unlikely to carry out its threats to block the strait. "We've seen this movie before," said Cliff Kupchan, Iran analyst at the Eurasia Group. "Neither side wants a war. A lot of this rhetoric is overstated."


If it tried to blockade the strait, Iran would be outgunned by a U.S. fleet led by the giant supercarrier John C. Stennis, accompanied by a guided-missile cruiser and flotillas of destroyers and submarines.


The Combined Maritime Force protecting Gulf shipping also includes other countries such Britain, France, Canada, Australia and the Gulf Arab states, under the command of a U.S. admiral.


Still, Iran has many ways it could provoke a Western response, from missiles within range of U.S. targets in the region, to small boats that could attack a ship near shore, to allied militia in Palestine and Lebanon that can strike Israel.


(Additional reporting Dmitry Zhdannikov and Simon Falush in London, Justyna Pawlak in Brussels and Hashem Kalantari in Tehran; Writing by Peter Graff and Tim Pearce; Editing by Jon Boyle)

1:17 AM | 0 comments

Exklusiv: West Readies Öl-Plan für Iran-Krise

Written By Guru Cool on Friday, January 6, 2012 | 9:13 PM

EDITORS' NOTE: Reuters and other foreign media are subject to Iranian restrictions on leaving the office to report, film or take pictures in Tehran. Iranian submarines participate in a naval parade on the last day of the Velayat-90 war game in the Sea of Oman near the Strait of Hormuz in southern Iran January 3, 2012. REUTERS/Jamejamonline/Ebrahim Norouzi

Editor: Reuters and other foreign media be restricted by Iranian leaving the Office to report, film or take pictures in Tehran. Iranian u-boats take part in a naval parade on the last day of the game war velayat-90 in the sea of Oman near the Strait of Hormuz in the South of Iran 3 January 2012.

IMG credit: Reuters/Jamejamonline/Ebrahim Norouzi

Peg Mackey and Richard Mably


This week prepared a contingency plan, LONDON (Reuters) - Western powers on tap a record volume of stats to replace stocks almost all Gulf oil, which would be lost if Iran blocks the Strait of Hormuz, industry sources and diplomats of told of Reuters.


She said leaders of the International Energy Agency (IEA), which advises, that 28 oil have discussed a consumer countries, on Thursday (bpd) State oil in the United States, Europe, Japan and other importers stored to release existing plan up to 14 million barrels per day.


Action on this scale would be more than five times as large as the so far most important version in Agency history-response in 1990 invasion of Iraq in Kuwait.


The maximum version, some 10 million barrels of crude oil and about 4 million barrels per day refined products could be continued during the first month of each co-ordinated action, says the plan.


A European diplomat said "This necessary and meaningful answer to a closure of the road would form", told of Reuters. "It would not take long, put in place if it there... and unlikely would be needed, controversy under the membership (IEA) prove."


A spokesman for the IEA confirmed that the Paris an existing emergency plan has based agency, which has a maximum release capacity of 14 million barrels per day for a month describes. "We the situation carefully watch", he said the Iran.


Pass announced shipping lane, through which around 16 million barrels of crude oil Tehran on Friday for new military exercises in the world's most important oil every day.


Iranian officials have threatened to block the road, if new sanctions to discourage oil exports damage of Iran, Tehran's nuclear program.


Many oil experts believe that the threats aimed at rhetoric to avoid pressure to oil prices in a bid to sanctions.


"The IEA is the situation very closely, and is quite concerned", said the diplomat, confirmed that the Executive Board discussed Iran at the meeting on Thursday.


Content targeting for Western Governments Iranian oil supplies and the European Union is a ban on the exports of the country's crude oil by approximately 500,000 barrels per day business with Tehran imposed with the aim of reaching a final decision by the end of the month, deployment, to discourage already financial measures during Washington.


Industry sources said the IEA unlikely, that an EU embargo on Iran shares to be released. While less Iranian oil import Europe, Tehran, is trying to sell greater quantities of its biggest customer in Asia.


However, Bob McNally says, a former White House Energy Adviser and now head of consulting Rapidan group, a more modest Unterbrechung--if Iran were in some of its own production by the sanctions pressure, to the example-close action may require.


"In the face of lower OPEC spare capacity, IEA Commons versions must be considered, if longer supply disruptions even smaller as the flow through Hormuz, can", he said.


U.S. Congressman Edward Markey, Democrat natural resources Committee of the House of representatives, said above, that he us their reserves would support release, even though he the emergency stocks considered as only a short-term solution for the nation energy problems.


"His, our strategic oil reserves should use dictators, Wall Street speculators getting ready as a weapon against OPEC America and manipulators of the oil markets and the latest saber rattling from the Iran is no different," Markey Reuters said in a statement.


Also watching oil giant Saudi Arabia, Kuwait are accurate and to move in the Iraq, on the road, you are subject to most of its crude oil.


When the Golf Channel is blocked, can Saudi Arabia, which pass on world's top exporter, at the port of Yanbu on the Red Sea more crude oil through the country of the East-West pipeline system.


PIPELINES AVAILABLE


Total effective capacity has some 4.5 million barrels a day that network and supply - Yanbu, Jeddah, Riyadh and Rabigh refineries domestic to Saudi there about 3 million barrels a day export capacity, said a source industry.


Also export flexibility has the neighbouring United Arab Emirates. It approaches completion of Abu Dhabi crude oil pipeline that bypasses the road as much as 1.5 million barrels per day in the Indian Ocean vessel. Industry sources, said the pipeline has been tested and has already been pumped the first flow of oil.


"It's now just a matter of switching to a button," said one industry source.


The IEA tapped emergency stocks in June to help get lost just starting civil supply Libya's refineries. It was a move that oil of exporting countries angered the organization believed that the consumer group had exceeded its limits.


Founded in 1974 in the wake of the Arab oil embargo, the IEA has drawn three times reserves only down. Apart from the last summer released oil damaged member countries in 2005 after Hurricane Katrina offshore oil facilities in the Gulf of Mexico and in January 1991 after the Iraqi invasion of Kuwait about interrupted 4.3 million barrels per day available 2.5 million barrels per day.


(Additional reporting by Muriel Boselli in Paris, Humeyra Pamuk in Dubai, Dmitry Zhdannikov in London and Joshua Schneyer in New York, editing by Anthony Barker, Marguerita CHOY and Bob burgdorfer)

9:13 PM | 0 comments

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