Stratfor's Morning Intelligence Brief

These are serious events. An opposition clearly has been organized and now is capable of carrying out attacks on U.S. forces. These are not militarily significant at this point, since they do not affect the ability of the United States to occupy Iraq. But they do have substantial political implications. At this moment, the trend line on the U.S. occupation is downward. The perception -- and to some extent the reality -- of the situation is that Washington has not gained control of the situation in Iraq, that improvements have been slow in coming. The attacks, which must be assumed to be coordinated, indicates that there are forces still operational in Iraq that can reverse what progress there has been.

It is difficult to be certain of the opposition group's identity. However the attack in Haditha is in Sunni country, which seems to indicate that the Baath Party and possibly Saddam Hussein have gone underground to wage guerrilla warfare. Escalating beyond occasional attacks will not be easy. Hit-and-run attacks are different than waging concerted guerrilla warfare. But this is a serious problem for the United States.

The essential problem is that the United States wants Iraqi territory to deploy forces in relation to Syria, Iran and even Saudi Arabia, but does not want to undertake the burden of imposing order and destroying low-grade resistance. First, there is the question of manpower. The United States does not have sufficient forces trained in this type of operation for a country the size of Iraq. Then there is the political issue. U.S. officials do not want to be responsible for the casualties that inevitably will happen if it clamps down. In the case of Iraq, law and order and repression go hand in hand. Washington wants to transfer the onus to an Iraqi government, but it is afraid that it will lose control of the situation if it does. In short, the United States has to make some fundamental decisions about Iraq, and these are not going to be easy decisions to make. Paul Bremer, the U.S. administrator in Iraq, is going to have to sort out the matter, and he really doesn't have much time.

Israeli Prime Minister Ariel Sharon and the Israeli Cabinet have endorsed the U.S. road map for peace. That is a serious concession by Sharon, since it commits him not only to supporting the creation of a Palestinian state but also to dismantling some settlements on the West Bank. On the other hand, it is not clear that Sharon will ever have to make good on this. The Palestinians, on their part, have to agree to end the violence and, in particular, put a stop to suicide bombings. That decision is not in the hands of anyone except Hamas. Palestinian Prime Minister Mahmoud Abbas met with Hamas leaders last week and didn't get anywhere.

The Israelis have announced that U.S. President George W. Bush would hold a summit with Sharon and Abbas in Jordan next week. If traditional patterns prevail, Hamas will unleash a series of suicide bombings in Israel designed to overshadow and disrupt the meeting. But in this case, there is a chance that Hamas won't do that. Publicly, Hamas has rejected the road map and refused a cease-fire on its terms. But Hamas is under some pressure inside the Palestinian community to allow the process to take place. A rigid, rejectionist line could undermine support among the Palestinians, whom polls show are hopeful that something might come of this. Agreeing to the process would create a massive crisis inside Hamas, with the possibility of a breakaway faction taking things into their own hands.

Therefore, Hamas has to walk a thin line. One way to walk this line is to stage some minor and relatively ineffective attacks prior to the Jordan summit. This would retain Hamas' credibility without causing Hamas to be seen as the cause of the collapse of the road map. Moreover, this would increase U.S. pressure on Sharon to continue the process without a complete cease-fire, indicating that a relative improvement, a de facto diminution of violence, should be enough. If that happens, Sharon will be caught in a tough spot. Hamas has the ability to put him there. But, Hamas is Hamas, and the likelihood remains that it will not be able to resist the opportunity to blow the summit out of the water. Still, the next couple of weeks holds open one of the best opportunities for progress in several years -- bearing in mind that best is a very relative term in Israeli-Palestinian relations.

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SITUATION REPORTS - May 27 2003

1159 GMT - Indonesia plans to increase its military offensive in Aceh province against rebels of the Free Aceh Movement (GAM), the BBC reports. New measures include intensive document checks, vehicle searches and door-to-door searches of homes, Indonesian officials said. Foreign aid workers also have been banned from entering the province.

1157 GMT - Toronto has been placed back on the World Health Organization's list of cities and areas affected by the severe acute respiratory syndrome (SARS) virus after eight new SARS cases and 26 suspected cases were reported in the Toronto area, the BBC reported May 27. Three suspected SARS victims also died in Toronto over the weekend.

1142 GMT - Iranian President Mohammad Khatami says his country has the right to develop a nuclear energy program and rejected Australian Foreign Minister Alexander Downer's request that inspectors from the International Atomic Energy Agency be allowed into Iran to confirm it is not developing nuclear weapons, the Sydney Morning Herald reports.

1134 GMT - Australian police found 165 pounds of pure heroin on May 7 buried about 10 miles west of the town of Lorne in the southern state of Victoria, the Sydney Morning Herald reported May 27, citing sources with the Australian Federal Police (AFP). About 50 pounds of heroin is believed to have fallen into the sea during transport from the freighter to the beach. This latest find followed the seizure in April of 110 pounds of heroin in a vehicle stopped at Lorne, and raises the total estimated street value of the seized drugs allegedly smuggled into Australia aboard the North Korean freighter Pong Su to $145 million. Opposition leaders have demanded that North Korea's ambassador to Australia be expelled if ongoing investigations confirm links between the heroin and North Korean government.

1129 GMT - Chile's Congress has passed a law that seeks to make political campaign funding more transparent. The measure comes after months of disclosures about secret payments and questionable campaign funding sources that tainted some 500 government officials and politicians associated mainly with the country's socialist government. The new law is based on British legislation that holds elected officials accountable for their campaign funding sources, and creates the foundations of a professional civil service instead of the standard Chilean -- and Latin American -- practice of awarding government jobs to one's political allies and financial donors.

1125 GMT - France concluded in January 2003 that the Bush administration already had decided to topple Iraqi President Saddam Hussein, the Financial Times reported late May 26, citing an interview with French Foreign Minister Dominique de Villepin. The French government reached this conclusion after Maurice Gourdault-Montagne, President Jacques Chirac's diplomatic adviser, met Jan. 13 in Washington with senior Bush administration officials. It was reinforced when de Villepin met privately with U.S. Secretary of State Colin Powell in New York on Jan. 19.

1120 GMT - Michael Eitan, a former Israeli Cabinet minister and leader of Prime Minister Ariel Sharon's Likud party, has accused the senior commanders of Israel's armed forces of being indifferent to "gross violations of human rights" by Israeli soldiers in the occupied areas, London daily The Guardian reports. Eitan leveled the charges during a hearing of the Knesset law committee that he chairs.

1118 GMT - Iceland plans to restart whale fishing with what it describes as a "scientific program" to kill 250 whales annually for two years to study how many cod the whales eat, London daily The Telegraph reported May 27, citing Iceland's whaling commissioner, Stefan Asmundsson. The whaling research program will seek to catch minke, fin and sei whales. Iceland's government hopes to demonstrate that controlled commercial whale fishing would help boost other commercial fish catches, such as cod, by up to 20 percent.

1115 GMT - Argentina's new government is moving quickly to develop a plan to restructure the country's banking system, Buenos Aires business daily Ambito reports. A six-person commission, including three from the Central Bank and three from the Economy Ministry, will be created to oversee a plan that would require banks that became insolvent in 2002 to recapitalize within six months. Previously, banks had been given up to two years to demonstrate their solvency. Reportedly, under the restructuring plan taking shape, state-owned banks would be allowed to purchase insolvent private banks.

1105 GMT - International air travel to and from France will be disrupted on May 27 -- with up to 80 percent of flights cancelled during a 17-hour period beginning at 6:00 a.m. local time -- as air traffic controllers strike against the government's proposed pension reforms, the BBC reports. British Airways and Dutch carrier KLM have cancelled all flights in and out of France for the day, while Air France announced it expected to operate at one-third of its normal flight operations. Teachers and postal, health and telecommunications workers also will strike on May 27, while railway and metro workers will start an open-ended strike June 3.