"On The Way.....Wait"

Grizzled army vets will recognize the expression above as the
communication by an artillery or rocket battery that a round has
been fired. Hezbollah / Syria / Iran are calling the shots in the
beleagured country of Lebanon at present. They likely have plans that
may scuttle the current round of negotiations regarding a ceasefire
between Israel and Hezbollah and open the way to further expose Israel's
vulnerability to attack from the north. I suspect Hezbollah may have
missiles that can be fired from well north of the Litani river and
which can strike hard well into the Israeli heartland. Such a development
would greatly increase tension and danger not only in Israel and
Lebanon, but beyond.

Iran bankrolls Hezbollah and is simply calling in markers -- "Time to
earn your keep." Syria is on Iran's pad, too and is in it for the revenge.
I believe Iran wants to show the West and others on the UN Security
Council just how much clout it can wield in the Mid-East. By putting
Israel in greater danger, its message is that it can cause profound
upset in this troubled region, and that the US and others must think
long and hard about the imposition of sanctions on Iran should it elect
to proceed with its uranium enrichment programs. In short, is it worth
a broad Mid-East war to sanction Iran?

Iran promised to respond to the UN sponsored package of incentives vs.
sanctions re its nuclear programs by August 22. That gives it a little
over three weeks to have Hezbollah further increase tension and peril
within the region. As Iran sees it, this will greatly increase their
bargaining power when it comes time to talk turkey on its nuclear
development.

I lay this all out to highlight the potential for sharply increased
volatility in the capital and energy markets in the weeks ahead. All
players need to be extra diligent about positions and interests as
events unfold.

Iran accuses the US and Israel of seeking to remake the Middle East
in a way that suits them. What we are seeing is blowback from Iran
and Syria as well as Iran's declaration that it is now to be seen as a
very big player in the region. If I am right that Iran has a nasty card
or two to play prior to August 22, market players must be prepared
for another round of escalation should Israel and the US decide on a
strong reaction.

I hope I am wrong about all of this, but it just seems like straightforward geopolitical hardball to me. It need not end badly. Iran, with its additional
leverage could secure a deal acceptable to all in exchange for curbing
Hezbollah and working to cool strife in Iraq. But, since no one player
controls all the pieces on the board, matters can slip out of hand once
Iran puts its next strategic piece into play.