What Arabian Sea country could be a far greater threat to world peace than Iran ... has more than
double Iran's population ... and could
be a much bigger disruption to global financial markets?
Some hints: It's the home of the world's most deadly
terrorist organization. The majority of its population is more virulently
anti-American than the majority of Iranians. It's a candidate for upheaval
and revolution that could make Iran's Islamic Revolution of 1979 seem tame by comparison.
Unlike Iran, it already has the bomb.
These are the undisputable — but underreported — facts of
one of the world's most potentially explosive nations: Pakistan.
Find the hints above a bit hard to believe? Despite massive
resources mobilized in recent years to destroy them, the Taliban still control
or influence most of the territories — shown in red, orange and yellow — that
they controlled before the government's offensives of recent years.
If so, here are the facts ...Pakistan is the headquarters of
the Taliban, which, since 2011, has
killed nearly 10 times more people than the
Islamic State — an average of 1,999 people per month vs. Islamic State's
208 per month.
At least two-thirds of the Pakistani population considers
the United States an enemy, making it one of the largest hotbeds of
anti-American sentiment in the world.
The country's extreme poverty, Muslim extremism, religious
hatreds and periodic political upheavals are, in many ways, reminiscent of the
conditions prior to the overthrow of the Shah of Iran, once America's
staunchest ally in the region.
Most worrisome of all, Pakistan is a nuclear power with 12
times as many nuclear warheads as North Korea.
Like North Korea, it has never signed the global Treaty of
the Non-Proliferation of Nuclear Weapons. But unlike North Korea, it has the
ability to drop its bombs on its enemies.
The Two Most Serious Risks for Global Stability
Right now, for example, countless numbers of Taliban
operatives are defecting to a newer group that's on the rise in Pakistan — none other than the Islamic State.
After 12 years of war, these Taliban operatives have grown
impatient with their own splintered leadership. They are enraged by just-announced
efforts to begin peace talks with the hated, U.S.-backed government in
neighboring Afghanistan. And they're drawn by the Islamic State's rapid conquests,
media blitz and "glamour."
Meanwhile, the Islamic State in Pakistan is said to be
preparing a new push to seize territory in the province of Baluchistan, which,
unfortunately, also happens to be the
center of Pakistan's nuclear weapons program.
Some Mideast experts are asking: If the Islamic State has
been able to gain control over large weapons like the one shown here, why
couldn't they do the same with an atom bomb?
Some Middle East terror experts are now even warning that
the Islamic State could be close to obtaining a "dirty bomb."
Example: Afzal
Ashraf, a former senior officer in Britain's Royal Air Force, says Pakistan is
"the most likely place" for ISIS to obtain a nuclear explosive.
Another important footnote from history: Pakistan's famous
leader and icon of the country's original nuclear program was Abdul Qadeer
Khan. But Khan was, himself, the most notorious trafficker of nuclear bomb technology
to rogue states in the history of mankind.
How do we know? He openly confessed to all his crimes and
was placed under arrest.
Pakistani atom bomb trafficker Abdul Qadeer Khan waves after
his release from house arrest in Islamabad.
At the time, some Pakistani groups alleged that his
activities were sanctioned by the Pakistani authorities. I never believed that
... until, that is, a memorable day in February 2009, when I learned he was
released as a free citizen of Pakistan, allowing him free movement inside the country.
The United States warned that Khan still remains a
"serious proliferation risk."
But even if that's no longer the case, what about the proliferation risk
of his successors? And what about the risks associated with the growing power
of their enemies?
Risk #2 is an Islamic revolution or coup. If the U.S.-backed
government is overthrown by extremists, everything the world fears about Iran's
distant future could instantly become a real and present danger in Pakistan.
Again, just consider the facts:
Pakistan's population is almost three times larger than that
of the UK — more people than California, Texas, Florida, New York, Illinois,
Pennsylvania, Ohio and Georgia combined.
It is the second-largest Muslim state on the planet (after Indonesia).
It's more than four times larger than Syria.
It shares its 1,963-mile Western border with the two other largest
conflict countries in the region — Iran and Afghanistan.
It interconnects Central Asia, China, the Middle East and
South Asia. And it's been either in a hot or cold war with nuclear India since
its independence 68 years ago.
Result: Any conflict in the country could potentially spill
over into all three regions.
Never forget ...Poverty and lack of opportunity help create
the breeding grounds for revolution, terrorism and chaos.
They always have and always will.
Throw in chronic unemployment, pitiful government services,
plus repression, and you have a nearly complete recipe for disaster. Alas, all
of these are severe, widespread and deeply ingrained in Pakistan:
Unemployment: According to the World Bank, youth
unemployment in Pakistan has been rising by approximately 0.5% annually for the
past four years. In a recent survey, 75% of families said their members joined
militant groups because of unemployment.
Pitiful government services: One of the most intractable
services in Pakistan is both simple and extraordinary: Power outages. In fact,
the energy crisis may be one of the biggest security threats facing the
country.
Hard to believe? Then imagine living in 100-plus-degree heat
day after day with power outages that can last 12 to 16 hours each day.
You're confined to a tiny room with no air
conditioning. Everything is hot – the
air, the floor, the water you drink. During those rare hours when the power is
on, the most you can do is turn on a couple of light bulbs, a charger, maybe a
fan. No more.
Accessing the Internet? A pipe dream. (I know. Because
friends in Pakistan that I wanted to interview for this article about power
shortages could not join me online precisely because of those shortages.)
The Center for Strategy and International Studies (CSIS)
reports that the crisis cuts a whopping 4% of the country's GDP annually and
adds greatly to unemployment and poverty.
The crux of the crisis: While Pakistan imports mostly
expensive fuels, it holds energy prices down at a level that's lower than
production costs. Meanwhile, population growth drives demand to new highs,
while supplies remain tight.
Compounding the problem is the likelihood of water scarcity
in the near future. Given that one-third of electricity is produced from
hydropower, any attempt to draw water from reservoirs would only make the energy
crisis that much worse. And sadly, electric
utilities often get first dibs on the water supplies. Those dying of thirst
often do not.
Race riots, political attacks and violence: Princeton University's
"Empirical Studies of Conflict" concludes that, from January 1988
through May 2011, there were 28,731 incidents of demonstrations, riots,
terrorism, state violence and insurgent
violence in Pakistan.
And there have been thousands more since.
In fact, just this past Friday, the nation marked its 68th
year since independence, but many Pakistanis weren't celebrating. They were protesting or rioting.
The only recent good news: This year hasn't been nearly as
bad as last year's Independence Day,
when two major opposition groups, led by
cricket star-turned-politician Imran Khan and Muslim cleric Tahir
ul-Qadri, led hundreds of thousands of
marchers on the capital and other large cities.
Between the rioters and the security forces, the entire nation was
gripped by a de-facto siege.
What's behind the unrest?
The Pew Research Center gives us some clues with its survey
that highlights the most pressing problems facing Pakistanis:
* At least 90% complain about rising prices, electricity
crisis and unemployment.
* More than three-quarters say that crime and income
inequality are very big problems.
* Over half complain bitterly about health care, corrupt political
leaders, poor quality schools, and other entrenched problems.
Is doom for Pakistan written in stone? Of course not. The
country's economy is still growing. It has prospects for more infrastructure
investment and international trade, especially with China — current trends that
Wall Street and Washington consider "positive." And it's still a
democratic country with core values, which, under normal circumstances, could
probably keep the country stable for years to come. The problem is that the circumstances of our world today are
anything but normal.
As our colleague Larry Edelson predicted two years ago,
global wars, revolutions and conflicts
have been ramping up steadily — and show every
sign of continuing to do so.
And just as Larry warned (at a time when nearly everyone
else was heralding "a great
boom"), we're now witnessing a global decline in all three of the things that matter most for countries
like Pakistan. We have:
Falling
emerging-market currencies
Falling
emerging-market stock markets, and ...
Falling prices for
commodities that emerging-market countries rely upon for their livelihood.
These are the global economic forces that can fuel the worst
wars and revolutions, while, at the same time ...It's these kinds of wars and revolutions that can most
easily shred even the most well-researched forecasts by Wall Street or
Washington.
This is a key reason why their forecasts differ so markedly
from ours:
Forecast #1. Unless reason and wisdom can somehow prevail, political
violence and economic ruin will continue to feed off each other — not just in
one country or region, but, in varying
degrees, virtually everywhere in the world.
Forecast #2. Pakistan could be one of the U.S. governments’
biggest and most shocking foreign-policy failures of our time.
Forecast #3. Whether Pakistan deteriorates suddenly or more
slowly over time, whether its crisis reaches a worst-case scenario or something
less frightening, it's bound to be
another important catalyst in the Global Money Tsunami — wave after wave
of flight capital moving from high-risk regions of the world to the few remaining safe havens like the U.S. dollar and select
U.S. assets.
This is where the dots connect to your money. Already,
thanks in large measure to the turmoil overseas, your U.S. dollars are worth a lot more than they
were when this phase of the global
crisis began just a couple of years ago. Simply by sitting in dollars, even
with meager or no interest income, savers and investors are wealthier today in
terms of how much they can buy in a wide
range of asset classes. Your U.S. dollars can buy more euros, Japanese yen,
Australian dollars, Brazilian reais and a host of other major currencies.
Your dollars can buy more gold and silver, more oil and gas,
more copper and steel — almost any commodity on the face of the earth.
And most recently, as I illustrated here one week ago, your
dollars can buy many more shares in some of the best blue-chip companies of
major foreign countries.
See why it makes so much sense to stash cash in U.S. dollars
and keep them in a safe place ... why it's such a good idea to hold big cash positions
in your investment portfolio ... and why some of the most successful
investments are extreme high-quality
companies in safest-haven countries?
This is what my team and I have been advocating all along.
And this is what we continue to advocate now — with increasing caution.
Stay faithful to this investment philosophy, and not only
will it protect you from risks like
those emanating from the Middle East and South
Asia ... it could help you build your wealth like never before. Good
luck and God bless! Martin Weiss
Source: Money and Markets
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