General Editorial
James Sinclair
March 27, 2003

What Will Victory Look Like and How Long Will it Take?



Assuming that Saddam and his sons are still alive (I do), this conflict will take more time than anyone in the media or investment world was willing to accept only a week ago.

I had mused with you about the question of what we'd do when we arrived in Baghdad and what form victory would take after the final shot is fired.

Arrival in Baghdad

This is a quote from www.stratfor.com to whom I subscribe. I thoroughly recommend that you try their news service. There is entry level "Intel" for under $50, so it is hard logically not to use them. On the question of US arrival in Baghdad, stratfor reports the following on what is increasingly becoming a psychological war between the opposing parties:

March 27, 2003 - 2038 GMT

Summary

The Iraqi defense minister has said that he expects Baghdad to be surrounded within the next five to 10 days. In doing so, he is trying to set expectations in Iraq and in the United States and Britain that the coalition might not be able to meet. If the Iraqi claim takes hold and the coalition does not surround Baghdad in time, Iraq can claim a victory.

Analysis

Iraqi Defense Minister Sultan Hashim Ahmed said March 27 that he expects Baghdad to be encircled within five to 10 days. He went on to say that he expects strong resistance to the coalition in street-to-street fighting. That much of the statement was routine.

What was not routine, and what represented subtle and very effective psychological warfare on the part of Iraqi leaders, was that they have now tried to create expectations as to the coalition's war-fighting schedule. While it is possible that the coalition will encircle Baghdad within the next 10 days, we don't see that as inevitable. It will depend on a range of issues - from Iraqi resistance, to logistics, to the level of risk the coalition is prepared to absorb.

From the U.S. perspective, the timeline must be kept open to take contingency plans into account. What Iraq is trying to do is to create an expectation that the United States might not be able to fulfill: If coalition forces fail to surround Baghdad within 10 days, the Iraqis will be able to claim that this represents a failure on the part of the United States and that coalition war plans are in disarray.

There are two audiences for this statement. The first is the Iraqi populace, which is being prepped for the possibility of a siege beginning in the next week or so. Officials are being careful to set expectations in order to maintain credibility. Then, if encirclement occurs, trust will rise and with it, belief in the Iraqi defense strategy.

The second audience is the American and British publics, which are extremely anxious about the length of the war. If the Iraqis can prevent the encirclement of Baghdad within the timeline and declare a victory, they are hoping that American and British audiences will lose confidence in the management of the war, and anti-war sentiment will increase.

The United States has been committed to waging psychological warfare against the Iraqis, firing salvo after salvo at the Iraqi populace and troops. It seems to us that Iraq just fired back with a potentially dangerous shot. Coalition leaders must now either deny that they have plans to encircle Baghdad within 10 days - increasing the focus on just how long U.S. Central Command thinks it will take or try to ignore the claim, hoping it doesn't take hold at home. The coalition does not want to be discussing timelines just now. Baghdad is trying to make that the topic of conversation at all U.S. and British briefings for the next 24 hours.

When the arrival of the US troops occurs they have the following options under the present rules of engagement that have been made public:

a. They can siege the city? YES
b. They can ground attack the city? NO
c. They can bomb the city to ashes? NO
d. They can hope for surrender assuming Saddam and his sons are dead? YES
e. They can hope for an uprising of the citizens within the city? YES
f. They can camp out for six months? YES
g. They can turn around and go back to Kuwait? YES

That looks to me like a time-consuming stalemate. There is one thing that has not been asked and that question is:"Could Saddam or his body double hold out long enough to extract from the surrounding armed forces something that would not look like a victory for the US?"

Not knowing the answer, I did the only logical thing and that was to ask George Friedman, the Chairman of Stratfor, who so far has called every turn of this war perfectly from before day One.

The following was Mr. Friedman's answer:

Sir:

Thanks for your excellent question. Two things militate against stalemate. The first is the American command of the air. The Iraqi anti-air system is extremely limited. That means that over time, the U.S. can bring enormous amounts of fire to bear on any enemy that is concentrated in a defensive position. Since the Iraqis can't resist this, over time, their ability to resist will decline dramatically in an accelerating curve. The second variable is logistics. The Iraqis have a finite supply system, including limited production facilities. They import most weapons systems. Over time, this means that they will use up their stocks, plus have difficulty re-supplying forces in the field. High intensity conflict uses consumables at a dramatic rate. Therefore, the U.S. ability to sustain conflict is orders of magnitude greater than the Iraqis. With all other things being equal,these are two decisive military reasons for confidence in U.S. victory over time.

Note the emphasis on time. These are not short-term processes. Note also that the air power option must accept substantial civilian casualties. They are unavoidable, particularly close in to Baghdad. Therefore, over time, the Iraqi position is hopeless, unless they can generate sufficient pain to cause the U.S. to abandon the war. I don't see at this point any evidence that the U.S. doesn't have the 60-90 days needed at the extreme to allow these forces to come into play. I say at the extreme to denote my view that this could be bought to bear much earlier as well.

Thanks for recommending us. I'll try to cover this issue in my talk tomorrow as well.

Best wishes,

George Friedman

I apologize to the Community for spending so much time on this war as the subject is extremely difficult for everyone. It has, however, become the focal point of all markets rightly or wrongly.

Conclusion: The longer it takes to resolve this matter the less important it will become when resolved. Each week that passes of course becomes a week closer to its final resolution. Each week that passes makes the resolution of this less bullish on equities and less bearish on metals.

After 60 or 90 days, the resolution will be a non-event as the cost of this war in terms of the realignment of world powers and the long term expenses associated with occupying and rebuilding Iraq will make the end more like the final passing of a terminal patient - neither eventful nor anything one can celebrate.