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Generational Dynamics Web Log for 21-Apr-2015
21-Apr-15 World View -- US sends warships to Yemen as Saudis face a quagmire

Web Log - April, 2015

21-Apr-15 World View -- US sends warships to Yemen as Saudis face a quagmire

ECB examines a possible 'second currency' for Greece - government IOUs

This morning's key headlines from GenerationalDynamics.com

Saudi Arabia appears headed for a quagmire in Yemen
US escalates conflict by sending warships to Yemen to confront Iran
ECB examines a possible 'second currency' for Greece - government IOUs

Saudi Arabia appears headed for a quagmire in Yemen

Huge explosion following airstrike on army weapons depot near Sanaa on Monday (Reuters)

Huge explosion following airstrike on army weapons depot near Sanaa on Monday (Reuters)

A Saudi Arabia airstrike on Monday on a military weapons depot near Sanaa, the capital city of Yemen, caused the most powerful explosion of the current Saudi air campaign against the Iran-backed Houthi militias that have overrun much of the country. The explosion was so powerful that shop fronts were shattered and windows were blown out four miles away from the explosion.

The Saudis have been conducting a massive air campaign against the Houthis in Yemen since March 26. Although there's supposed to be a large coalition of nations participating, in actual practice only United Arab Emirates (UAE) has joined the Saudis in the airstrikes. The only other nation participating militarily is Egypt, which is bombarding Houthi targets from the sea with its Navy. The US military is helping out with intelligence and air-to-air refueling, and is sending the USS Theodore Roosevelt carrier group to waters off Yemen.

However, the air campaign is receiving a great deal of international criticisms because hundreds of civilians have been killed, and the airstrikes have hit hospitals, schools and a refugee camp. The Houthis have been storing weapons in hospitals, schools and civilian neighborhoods in order to provoke such attacks, and they're adapting to the airstrikes by avoiding being caught in large convoys.

Analysts believe that airstrikes alone are unlikely to settle the war and that sooner or later, a Saudi ground invasion will be required. And if that happens, analysts say that the Saudis would be involved in a bloody quagmire.

As we've been reporting, the Pakistan government has rejected Saudi Arabia's request for military help in Yemen. It turns out that this is a bitter shock to the Saudis, since Saudi Arabia has provided plenty of military aid to Pakistan over the decades.

Many analysts are predicting that Saudi Arabia will back down and negotiate a settlement with the Houthis -- which would be an enormous victory for the Houthis and for their Iranian sponsors. However, from the point of view of Generational Dynamics, Saudi Arabia is not in the mood for a compromise. Saudi Arabia's last generational crisis war was even earlier than World War II -- it occurred in the 1920s between the Al Sauds tribes and the Wahhabi tribes, when the Al Sauds subdued the Wahhabi tribesmen, leading to the creation of the country Saudi Arabia in 1932. So Saudi Arabia is now deep into a generational crisis era, and the public mood will be sharply opposed to a compromise with the country's arch-enemy, Iran. Daily Star (Beirut) and Lowy Interpreter (Australia) and AFP

US escalates conflict by sending warships to Yemen to confront Iran

The USS Langley, the US Navy's first aircraft carrier, off the coast of Baltimore in 1924. (CNN)

The USS Langley, the US Navy's first aircraft carrier, off the coast of Baltimore in 1924. (CNN)

In an escalation of America's participation in the Yemen war, the USS Theodore Roosevelt carrier group is being sent to waters off Yemen to join other American ships prepared to intercept a convoy of Iranian ships suspected of carrying weapons to Houthi militias in Yemen. The Iranian convoy consists of freighters, escorted by warships from the Iranian military and Revolutionary Guard forces.

Iran says that Iranian navy ships in the area were there to protect its ships from piracy.

The US Navy said in a statement: "The purpose of these operations is to ensure the vital shipping lanes in the region remain open and safe. The United States remains committed to its regional partners and to maintaining security in the maritime environment." NBC News and Washington Times and CNN

ECB examines a possible 'second currency' for Greece - government IOUs

We may know more after the Eurogroup of eurozone finance managers meet in Riga on Thursday (24-Apr), but it now appears likely that Greece is going to run completely out of money in the next two or three weeks, and will be unable to make its debt repayments, and also will be unable to pay its pensions and the salaries due to public sector employees.

The Europeans are unwilling to release to Greece the next bailout payment of 7.2 billion euros until the government of Alexis Tsipras produces its repeatedly delay list of reforms, addressing various economic issues, including the bloated public sector, curbing tax evasion and corruption, privatizing public businesses, and adjusting generous pension and minimum wage policies.

So the European Central Bank (ECB) has been studying an alternative scenario, where the Greek government issues IOUs in lieu of cash to pay the pensions and public sector salaries at the end of the month.

However, using the IOUs would have an important drawback: many Greeks would then have to withdraw their bank savings, causing a bank run that would put Greece's banking system into further crisis. Furthermore, the IOUs could not be used to make debt repayments to the institutions that loaned money to Greece.

Yields on Greek bonds have now skyrocketed to the levels of 2012, indicating that the markets are increasingly convinced that Greece is going to go bankrupt, and will be forced to exit the eurozone, and return to its former drachma currency. Reuters and Guardian (London)

(Comments: For reader comments, questions and discussion, see the 21-Apr-15 World View -- US sends warships to Yemen as Saudis face a quagmire thread of the Generational Dynamics forum. Comments may be posted anonymously.) (21-Apr-2015) Permanent Link
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Generational Dynamics Web Log for 21-Apr-2015 21-Apr-15 World View -- US sends warships to Yemen as Saudis face a quagmire

Saudi Arabia appears headed for a quagmire in Yemen

US escalates conflict by sending warships to Yemen to confront Iran

ECB examines a possible 'second currency' for Greece - government IOUs

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Generational Dynamics Web Log for 21-Apr-2015
21-Apr-15 World View -- US sends warships to Yemen as Saudis face a quagmire