A Digest of debkafile Round-the-Clock Exclusives in Week Ending May 17, 2005:

Uzbekistan: A Smoldering Fire of Conflicting Interests

14 May: The regime in Tashkent routinely blames the fundamentalist Hizb-ut-Tahrir for any violence in the country, although the troublemaker is more likely to be the Islamic Movement of Uzbekistan, the IMU, whose founder Yuldashev, has nailed to his mast the goal of an Islamic state in the broad Ferghana Valley which straddles Uzbekistan, Kyrgyzstan and Tajikistan.

The Islamic Movement of Uzbekistan was founded in 1989, the same year Karimov took power, to become his most implacable enemy. Its exact membership is believed to be smaller than Hizb a-Tahrir’s 4,000 to 7,000 adherents. The multinational Islamic Hizb a-Tahrir (The Liberation Party), forced underground in much of Central Asia as well as Russia, maintains cells in most Muslim countries. Founded in the Middle East in 1953, Hizb a-Tarir is older, larger and less virulent than Yuldashev’s IMU although just as radical. Its leader Vahid Omran has stressed his movement’s goals as being to disseminate the word of Islam – not spread death. Nonetheless Hizb a-Tahrir cannot be counted out of any surge of violence in Uzbekistan considering the brutal persecution its followers suffer at the hands of the Karimov regime. While not openly committed to violence, the Liberation Party will strike hard if an opportunity presents itself to overthrow the Uzbek or any other secular regime. At some crucial point, therefore, Omran could switch tactics and make a grab for power. Karimov’s troubles are far from over.

Saudi Oil and Backing for US Is Contingent on Israeli Concessions

15 May: Israeli prime minister Ariel Sharon is due in Washington Monday May 23 to address the pro-Israeli lobby AIPAC’s annual conference. So far, debkafile‘s political sources know of no appointments set up for him with any Bush administration officials.

Palestinian leader Mahmoud Abbas is tentatively scheduled to arrive three days later on May 26. After telling his confidants “Nothing will come of the visit,” Abbas is making sure that something does. The first move he pulled off was to persuade the White House to make sure Sharon was out of the capital before he arrived.

How was Abbas able to manipulate the Bush administration’s timetable and marginalize Sharon’s presence in the US capital? debkafile reveals that it was the Saudi Crown Prince Abdullah who set the maneuver up for him when he visited US president George Bush at the presidential ranch in Texas on April 25.

Abdullah laid down his price for “opening a new chapter in US-Saudi strategic relations.”

One, Sharon must be pushed towards keeping step with Abbas and meeting his demands, to continue propping the Palestinian leader up and to do nothing that might hasten his downfall.

Two, Sharon must be urged into serious negotiations with Syria.

Three, the Bush administration must avoid any action that might topple Bashar Assad or bring about the demise of the Assad regime in Damascus.

debkafile‘s sources have not discovered the US president’s response to these demands. More tellingly, neither has the Israeli prime minister’s office. The blackout Bush has ordered on the conversation is dense.

For Israel, the Saudi ruler’s gains are major setbacks:

1. If the Bush administration is not briefing, let alone consulting with, Jerusalem on key elements of its Middle East policy, then the special Israel-US strategic relations are far from being all the Sharon government has cracked them up to be.

2. If Bush accedes to Abdullah’s request on Abbas, then Israel might as well abandon its efforts to arrange the evacuations of the Gaza Strip and northern West Bank in accord with the Palestinian Auithority. Rather than coordination, the Palestinians will simply make their demands known for Israeli to meet. Israel will also have to turn a blind eye Abu Mazen’s refusal to disarm the Islamist radical Hamas and Palestinian terrorist units at large. Instead, Abbas will be allowed to integrate them with their weapons into the Palestinian security forces.

3. Ahead of the Sharon government is a uniquely polarizing, painful and costly withdrawal from Palestinian territory. It is hard to see any Israeli leader being in any state soon to plunge into a peace process with Syria that would entail a pullback – be it even in stages – from the Golan. On the other hand, the Syrians, cheered on by the Saudis, will no doubt maintain that if Israel is capable of one unilateral withdrawal, why not another? The Hizballah will be a handy instrument for turning the heat on Israel when it is too slow with concessions. The Sharon government therefore faces a new reality generated by the Saudi ruler’s enhanced standing in the Bush White House.

The Dollar Is Showing Muscle

 

17 May: The US dollar finished last week’s trading at its highest level in six months against the euro (1.2620 euro per dollar). It also made a strong showing against all other major world currencies.

Another round of good economic figures – especially the surprise narrowing of the American trade deficit in March, as published on Monday, May 11 – was a contributing factor. Other boosters were the slide in oil prices, the continuing surge in dollar interest rates, the huge speculative closing positions of the punt (=gamble), wagering on a revaluation of the Chinese currency, and the weak economic figures coming out of Europe.

debkafile‘s financial analyst sees the dollar emerging from the trough into which it began sinking in 2001 and expects a steady climb from now on and in the long term.

The main peril for the dollar in the medium term is from non-economic world developments, especially UN Security Council sanctions to punish Iran for its nuclear program. This is why Europe and the United States are leery about referring the issue to the world body. They take into account that sanctions against one of the world’s biggest oil producers could send oil prices shooting up and hurt the dollar. US military action against Iran may well set the dollar back to its lowest level as well as damaging the world economy. Any major terrorist attack in the United States or attempt on the life of an American leader would have the same ill effect.

To sum up, a spate of positive US economic figures, higher dollar interest rates – some even breaking through key technical support levels – have given the dollar bounce.

On May 13, the euro traded at new yearly lows against the dollar: $1.2620 $ per euro. The US currency is pulling itself out of its low ebb of 2001 and is poised for fresh vigor in the long term.