The Saudi State Visit (which began on 29 October) has already caused controversy with claim and counter-position on the supply of counter-terrorist intelligence by Saudi Arabia to the United Kingdom. Matters were not made any easier by an implied ‘snub’ from the Foreign Secretary who took paternity leave rather than attend a joint Conference for which (allegedly) five plane loads of Saudis were delivered by their Monarch. 

Perhaps shaking hands with the Saudi King might come to affect Mr. Miliband's internal Party vote when New Labour requires a new Leader - but such a suggestion would be uncharitable. It does seem odd, though, even in liberal Britain, for the head of the Foreign Office not to be available for a conference with his counterpart, especially (as we shall see) when the relationship with Saudi Arabia is touted as central to British policy in the Middle East.

Saudi Arabia holds more diplomatic and economic cards than its host. The Saudis' state capitalist system directly or indirectly keeps important skilled workers in jobs in key New Labour marginals and heartlands alike. The UK also wants to ensure that the US-sponsored November Summit on the Israel-Palestine issue is a success. A reluctance to displease was made clear as the British attempted to reject King Abdullah's criticisms of weak counter-terrorism performance without actually calling their honoured guest a liar.

In this context, it was no surprise to hear anonymous British officials (though not elected ones) allowing themselves to be quoted as saying that the UK relationship with Saudi Arabia was “the most central with any state in the Middle East” (eat your heart out, Israel!). This is not the sort of endorsement you would hear in Washington where some constituents of Congress might see the Saudis as only one step up from the agents of Hell itself.

Even in the UK, Press coverage of the Saudis was almost uniformly negative so that the Government was doing its usual Janus-like act of trying to be both courteous to its ally and avoid being seen too much in public with it. But it is the Press, the activists and the public who are misguided, not the Government.

The talks, which are likely to remain discreet and unreported in the detail, were expected to cover a whole series of issues in the region and are of great importance, especially as the King goes on to meet other European leaders immediately afterwards. The issues are all the obvious ones but, in addition to the Peace Process, the UK wants the Kingdom to attend this week’s conference of neighbours of Iraq (which includes Syria and Iran) in Istanbul. Much to many radicals’ irritation, the King is also getting the full red carpet treatment from the House of Windsor with whom the House of Saud has retained the most cordial personal relations.

The King's direct criticisms were almost calculated to assert that Saudi Arabia was now no longer a romantic desert kingdom, playground for FCO Arabists, but was an equal to the island that had once almost ruled the world. The King's comments (to the effect that Saudi intelligence had provided data that should have halted suicide bombings in the UK) were potentially very damaging because they implied British security incompetence in protecting its own citizens.

The Government could not provide the detail that might have told the public that he was wrong, for both diplomatic but also for tradecraft reasons, but the public seemed to accept this. A potential crisis for Mr. Brown was avoided, assisted by a general refusal to take the word of a perceived 'tyrant' over our own security services.

This misses the point. The King's attack indicated a persistent problem in Anglo-Saudi relations. We all know what this is really about. It is about Saudi dynastic frustration with a liberal society permitting free commentary about itself in the London Arabic media and with the permission given to Saudi dissidents to organise themselves freely without harassment or extradition. The Tsars had similar frustrations with the British police's tolerance of Mr. Lenin and his friends in Clerkenwell. 

Gordon Brown’s recent strong assertion of the libertarian base of British political culture now seems like a partial pre-emptive strike against an argument that neither side can win. The British cannot get it into Saudi heads (and never have done) that the Government does not dictate cultural norms yet here is a King coming over personally to demand that it does so.

On the other hand, the Anglo-Saudi alliance is the lynch-pin of a joint alliance to restrain both the US and Iran in the region from extreme acts and to create a regional conservative front from Islamabad to Amman that will (they hope) manage, contain and defeat insurgency (or terrorism as it is called). The British are into regime transition and not regime change as a general principle and both countries share similar conservative views on regional security and economic development.

Balancing Saudi Arabia both as key regional ally, as provider of jobs and as fellow Monarchy in a West of Republics are three aggressive drives against the maintenance of that alliance. One of these is the minority republican mentality that presents a radical right wing approach to the war on terror in which the British and the Saudis are seen as weak and potentially treacherous allies. Hard-line security interests emanating out of or integrated with thinking in New York, Washington, Paris, Tel Aviv and bits of News International are quite prepared to stir things up periodically against the Saudis, certainly against its more traditional elements.

Of the other two, the first is the human rights lobby which has captured not only the Liberal Democrats (which is perfectly understandable) but is increasingly making head-way in the Labour Left after years of diversion of energy on to US imperial perfidy. The second is the increasingly absurd corruption tale spun around BAE Systems’ alleged bribery of Saudi officials which manages to combine a-historicism, retrospectivity and gross misunderstanding of Saudi culture and sovereignty in equal proportions.

The issue on the alleged bribery case is, as the Saudis state, one of British law surrounding the conduct of a British corporation. Investigators, in good faith, have fallen into a political trap set by activists who, in turn, have combined their own liberal idealism (on which we have written) with being the ‘useful idiots’ of various US Executive Departments and quasi-official NGOs concerned with a much broader range of policy imperatives.

This is a bigger story for another time but it cannot be seen except in terms of a much wider attack on the Saudi interest. This sovereign interest has been seen by some as having employed its massive free capital in the past in sustaining certain policies 'off balance sheet' that have consequently made a lot of enemies, now brought together by the 9/11 event.

The most obvious current conspiracy theory in the US is that the Saudis conspired with the US security apparat and the Bush family to chase out the Soviets and build up the power of the Taliban to extend wahhabi ideology and access Central Asian oil reserves. There are some truths in the analysis but taken out of context, it has become a morality tale which somehow links the Saudi Dynasty wilfully to the assault on America in 2001 and determinedly replaces cock-up with conspiracy for political purposes.

There are certainly issues of Western policy on corruption to deal with. It is possible that BAE Systems has been very naughty (that is for the courts to decide), but the elision of an application of the law into a diplomatic incident merely serves the interests of a particular bloc in international affairs. The Saudis are, in any case, pretty secure in their sovereignty with the only theoretical threats being the loss of the US nuclear umbrella and revolution from below. The British are allies but don’t really matter except as influencers on Washington and suppliers of technology.

What does matter to the Dynasty is the very real political struggle within the elite between the modernizing liberals, currently dominant as advisers to an aging but extremely competent King, and conservatives who would be much harsher on Iran and on dissidents – and possibly be a bit more bullying to smaller neighbours in the Gulf. The conservatives might also throw their money around the region a little less responsibly. But time is not on the side of the liberals because they have no base in the country. Western radicals are acting very irresponsibly in this broader context.

The Western public must understand that a great deal of Western diplomatic effort has been put into supporting Crown Prince and then King Abdullah as a wise man respected by his people with modernising instincts. His reign is a window of opportunity to embed some reforms, including integration into the global economic system, and increase the chances that his successor sustains a reform model rather than seeks to reverse it.

Reforms have included limited municipal democracy, a public curtailing of the religious police, increased criticism of abuses in the media and a recent major overhaul of the legal system, as well as a commitment to a diplomatic solution to the Palestine-Israel issue that may upset the hardliners in Tel Aviv but which recognizes the existence of Israel from Mecca itself.

The real issue – which ignorant Western radicals have not understood – is that the elite dynastic liberals may be Thatcher's children with not an ounce of socialism in their bodies, but they are still better (from a Western point of view) than the alternative - unless you are a committed Islamist.

Discontent in the country is both economic and cultural and the two tend to combine in the Middle East, where resentment of the elite and its ways amongst the poor is expressed as a return to traditional values. Both liberal radicals in the West and traditionalist Islamists obsess equally in their different ways about corruption. Liberal modernisation is an elite project throughout the region so that democracy tends to result not in a liberal revolt but in a conservative-populist one.

Radical Saudi conservatism is not to be confused with Al-Qaeda - a common category mistake of American fundamentalists. However, conservatives would reassert the Arab tribesman over the urban liberal and over the migrant and expatriate - on whose presence national economic development still partly depends. They would return to traditional gender relations and forms of law. They would seek to support brother Sunni insurgents against Westerners and Shi’a alike and they might well seek to extend that to financing insurgency in Palestine against both Israel and Hezbollah. Domestic reform would stall. The point is that, as the municipal elections showed, moderate conservatism is probably stronger in the street than is liberalism.

Saudi frustration with the UK is that many of the intellectuals and activists operating a traditionalist or conservative stance critical of the Dynasty, certainly those critical of the Dynasty’s liberal but anti-democratic direction, are operating out of London with impunity. They are watched but not pulled in by the UK security services.

Riyadh claims these are, by definition, terrorists - confusing the categories of dissident, revolutionary, insurgent and terrorist. The UK Government has received no specific evidence that the dissidents and the revolutionaries are insurgents, let alone terrorists. Opinions on local regime change are not proof-positive of the promotion of terrorist methods.

The lack of action on Saudi complaints has caused diplomatic discomfort long before this visit - and, of course, clashes on human rights issues extend back nearly a decade. Periodically, there are PR assaults on the dissidents in which the Western 'hawks' in the security services and the Saudis find that they can make common cause. The Saudis may now be concerned that the tough stance of Blair (who still did not deliver the goods) has been replaced by a more touchy-feely and more liberal Brown. 

The King has come to London (amongst other purposes) to get the British to ‘put up or shut up’ on their commitment to counter-terrorism where the definition of terrorism is that of the Saudi Dynasty. On this issue both sides are likely to leave privately irritated and disappointed - whatever the communiqués may say.

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The Economist of 27 October has an interesting article summarising latest military thinking on the changes in practice required to defeat insurgency. The implication is that insurgencies in general cannot be defeated except through extreme restraint with uncertain results (mastered by the British in Malaysia and, more controversially, Northern Ireland) or through extreme brutality. 

The Economist names the Syrian suppression of 1982 as a model of brutality, but the real type-models are Nazi operations that were never finally assessed because the regime was defeated in a conventional war. Most commentators have assumed that the methods of the Wehrmacht and the SS, operating without restraint, would have suppressed all meaningful resistance - depressing though that thought may be. 

Israel, whose tenderness is not legendary, learnt some techniques from the Warsaw Ghetto experience, at least according to an old but interesting article by Stephen Graham in the January/February 2003 Edition of New Left Review [Subscription Only]. This refers to the Jenin episode as deliberate 'urbicide'. What precisely went on in Fallujah not long afterwards is unknown but subsequent military memoirs suggest that Graham may have been right that "military planners are matter-of-fact throughout the world". 

What seems to have happened is that Israeli adaptations of German urban warfare techniques were conveyed to the Pentagon for use in Iraq but resulted in a problem that had been unpredicted because the political situations of Israel and the US are so very different. 

Israel, backed democratically by its own people, can undertake 'collective punishments' (like denying fuel to 1.4m Palestinians in Gaza this week) for reasons of defensive security and can freely engage in 'bulldozer' techniques. The extension of similar techniques to an operation in Iraq, widely regarded as 'offensive', on a bigger canvas, thousands of miles from the 'heimat' and under the scrutiny of the global media and with many allies to keep on board, was simply untenable.  

It is not just that these techniques may not work technically (in fact, they probably would if the leash was entirely taken off the military), but that, as with the uncovering of Abu Ghraib, the methodologies involved cannot be kept secret to populations that have not yet been trained into accepting brutality as normal and necessary. Liberal strategies cannot easily make use of national-socialist techniques. Kidnapping, torture, collective punishment, random executions, death squads and indiscriminate bombing may only do the trick if they remain secret or become acceptable. 

NATO is now in trouble in Afghanistan partly because its strategists have been far too ready to let civilians die en route to defeating the enemy. One unnamed British Officer, sick of the war, has already and anonymously told the Press this weekend that he knows that innocent civilians are still getting killed. In 1944, this was treated callously by all sides on the lines of the later phrase that "s**t happens". Today, we find this sort of thing abhorrent and Israel and the US have both been sharply diminished in the eyes of the world as a result.

So, if US military thinkers are shifting direction faster than their political bosses, it is not because they have become nicer. Political warfare has had to become embedded in military thought because of experience. The 'hawk' model for the military ("anything is permissible in the cause of freedom") has gone the way of indiscriminate use of air power. It may seize territory but it represents a damn fool way of trying to hold on to it.

The assessment now is that we are into ‘fourth generation’ warfare in which loose networks infiltrate to destroy the political will of the other side – in essence, this is political warfare as we have been analyzing it for our clients for some time. This was the lesson of the Algerian revolt which was won by its insurgency precisely at the moment of greatest military success for the French because of a collapse of political will in the home country.  

The Economist article provides a lengthy and well worth reading account of this rising ideology of war as politics by other means. Military schools are now trying to come to terms with new techniques and to bring along an American political class that lags behind their thinking. The military are now far more ‘liberal’ in terms of the theory of capacity-building and political warfare than those older generation 'hawk' American politicians who were raised on cold war absolutes and the debate around Vietnam.

There is a diplomatic aspect to all this. Americans should try to understand that, while the British Government is committed to a transtlantic war on terror, the British public are at best cynical and indifferent and, at worst, are already keen to get out of the obligations made by the previous Prime Minister in 2001. 

Few European politicians, outside Sarkozy's office, are keen to extend existing obligations. Most are fighting a permanent rearguard action against complete withdrawal so that US conduct in the field becomes a critical issue in sustaining a legislative consensus for support. The Governments of Italy, Germany, Poland and the Netherlands sustain engagement only through the constant draining of valuable domestic political capital. Supporting America risks votes.

This situation almost certainly underpins the reason why both UK and US military leaders are insisting that commitment to the war on ‘terror’ must be seen in terms of ‘decades’ rather than of any quick fix. The military are deeply concerned that the Western political class seems not to understand what is required under new conditions. Opponents of the West now believe that all they have to do is to keep the US pouring resources into the war and this will undermine their economy and society from within. If Americans themselves are not convinced by the rightness of the cause (and certain methods of warfare raise such doubts), then eventually the system, so they think, will implode. 

However, we have to be cautious about British media praising British methods derived from the process of decolonization. These are often compared to the much more violent and troubled experience of France. France adopted more conventional and brutal methods and was chased out of its two key imperial zones (Indo-China and North Africa) under humiliating circumstances.

British methods had the virtue of not leaving a wasteland and a lasting resentment. They also left behind trading partners and the surprising survival of some liberal values through the Commonwealth but, by any conventional assessment, they were still withdrawals. Britain gave up power to drag out the period of its influence. Close reading of the Northern Irish situation also indicates no victory, only an uneasy truce between nationalist ideologies and the preservation of a weaker Union.

The logic of the current insurgency and the new ideology of counter-terrorism still remains the eventual withdrawal from direct hard power involvement in those remaining zones, such as the Middle East, that the West  took for granted were to remain within its post-imperial sphere of influence.

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The ‘big story’ story today is the unilateral imposition by the United States of sanctions on Iran, which (much as we predicted) were ‘supported’ in public by Europeans but with some serious concerns about their wisdom. Europeans are getting frustrated with US sabre-rattling and the tendency to 'go it alone'. While it is recognized that the US is very frustrated with UN ‘failures’ (or common sense if you are so inclined), Europeans are upset that the White House is risking prospects for a more effective multilateral sanctions regime based on a diplomatic dialogue with Russia and on a more measured assessment of what can move talks forward between Solana, the IAEA and the Iranian nuclear delegation.

The mixing of non-proliferation and anti-terrorism measures is also causing concern. European elites can still carry their publics on the former (largely because their publics are indifferent and more prepared to trust their governments) but less so on the latter. The US now appears to have constructed its nuclear proliferation sanctions regime around its war on terror agenda. This raises issues surrounding rights of national resistance, the Iraq War and extraordinary rendition that can all too easily open up the single issue aspects of the conflict with Iran to far more divisive public scrutiny.

So, although in public we get statements of support, quality journalists are being privately briefed on European ‘misgivings’. Phillip Stephens is often a good guide to British establishment thinking, In the Financial Times today, he writes that this is a ‘dreadful miscalculation’ and that ‘aside from Tehran’s certain retaliation, the likely consequence of any American attack is war AND a nuclear armed Iran.” The widespread assumption now is that the pressure on Iran is being racheted up to the point where the US is laying down a path that must lead inevitably to war. 

Even the French, who had been talking up sanctions (and seem not to have been consulted in advance by Washington), expressed a preference for doing these things through the UN. The Germans (under a very pro-US Foreign Minister in Steinmeier) said they certainly preferred multilateral sanctions.

British officials were said to have been ‘aghast’ [Financial Times] at the US' original intentions (and so were clearly being consulted). They now feel that they must support the US where they can because they appear to have persuaded the US not to accuse the entire Revolutionary Guard of being a terrorist organization (rather than just its overseas units and the international credit arrangements of the country). Brown's support was a typically British compromise: the British will roll in trying to do what is acceptable to their ally ‘de minimis but almost certainly having to ignore protests from the UK's business community and pleasing no-one.

Wiser analysts who know Iran believe that the sanctions will have minimal effect on the regime and perhaps only a relatively minor and manageable effect on the Iranian economy.

In the run-up to the imposition of unilateral sanctions, the US had been getting very jolly over the 'independent' FATF’s censuring of Iran for its deficiencies in controls over money-laundering and terrorist financing.  This has definitely assisted its friends inside Western Treasuries to press the wider banking system to cease or limit their business with Tehran.

The FATF is a leading element in the US-driven regulatory approach to capitalism.The US is now cleverly (perhaps too cleverly) cashing in the chips it has accumulated by sponsoring and promoting international regulatory networks concerned with transparency, anti-corruption and money-laundering, shifting this machinery first against insurgents such as Hezbollah and Hamas and now against state enemies such as Iran.

Stuart Levey, US Under-Secretary of the Treasury and chief ‘hawk’ on financial sanctions, predicted to the Financial Times that the FATF’s decision would accelerate the withdrawal of Western (he meant European) banks from Iran. What the FATF has really done is to create another point of tension between the regulators of capitalism and the capitalists so that the outcome is not quite so certain. Once again (a theme of our blog), we are probably seeing the very very early stages in the very slow process of the splitting of the global economic system into competing Western liberal and state capitalist structures ,though the shift could still be reversible.

The pitch from US lobbyists to the Europeans was that compliance was the only alternative to war (without ever actually and directly threatening war). Even the current unilateral sanctions do not threaten war directly, although we may have gone over a line where American and Iranian pride make the ministrations of Europeans, international agencies and the Russians fairly redundant. Squeezing Iran financially has now become indissolubly linked to the same type of propaganda and political warfare operations that were used against the House of Saud after 2001 (and earlier) and which might be regarded by its operatives as having providing them with a strategic success in that particular case. The 'hawks' believe that US power is not being misused but under-used and that a combination of non-diplomatic tools can effect changes where diplomacy fails.

Pressure on Germany is central to US strategy. This may be why a hardline Atlanticist like Steinmeier is so irritated with the US, especially as internally the Social Democrats (who sustain the coalition) seem to be shifting to the Left. The German Finance Ministry is now calling a rare meeting of banks and, no doubt, the aim will be to have the smaller banks [Deutsche Bank, Commerzbank and Dresdner Bank have already been ‘nobbled’] withdraw from Iran and get the US Treasury off its back. Sarkozy’s leadership is also placing immense pressure on the French banks and energy sector. BNP Paribas has compromised by refusing to take on new projects but has committed itself to carry on old ones. French business can be very stubborn. Canada has also prodded its banks but is not in a position to do more and Canadians, too, can also be stubborn about following American orders.

However, all banks in the G7 and those countries subject to Western pressure will be shifting the emphasis of Iranian policy from commercial to political risk, preparing for a serious UN Resolution (though it looks very unlikely today) and effecting what the US wants: the limitation of Iranian access to credit. Few politicians have asked whether all this disruption is really in the national economic interest and whether there is any real security threat to the countries concerned - this is, as we have noted, now about the workings of the Atlantic Alliance.  This is a sacred cow that no-one is ready to slaughter just yet. The crisis in NATO acts as a separate back drop to the entire performance.

It also seems (looking at the small print) that the FATF has made its decision not on evidence so much as the Iranian refusal to engage with it – somewhat understandably from an Iranian perspective, given the FATF's past history and the general use of ‘single issues’ for propaganda purposes. In fact, the technocrats at the Iranian Central Bank are as concerned as anyone else in the regulatory banking fraternity about money-laundering (the tax evasion involved in links with Dubai and other Gulf states is not helpful in managing the Iranian economy).  However, the US has politicised global regulation and the technocratic aspirations of Iranian bankers are overwhelmed by the need to fight a war on two fronts against both their President's populism and US militancy.

This is, of course, all leading up to the G7 Summit where the US and France want the entire West to come into line as a bloc with a confrontational stance against Iran. They are almost making it a sign of loyalty to the greater mission - a unified liberal West. Much rides on this group reinventing the West around a ‘hawk’ definition of itself.

To this end, Sarkozy has been busy being seen shaking hands with Olmert who will have come away from his Moscow talks with Putin somewhat concerned at the turn of events, a turn no doubt the more worthy of concern because Larijani was ‘removed’ after that Summit. The assumption must be of the emergence of an informal Russian support for a growing regional and equally informal alliance between Damascus and Tehran that looks set to include Ankara and possibly Baghdad if matters continue along current trends. A Middle Eastern version of the SCO or the Caspian Group would cap Russia's apparent strategy of inveigling small groups of countries in unstable areas into mutual interest alliances built around limited but shared security and energy interests. 

The British are standing back from the ‘hawk’ position, mollifying it, maintaining links with moderate Arab states and sustaining talks with Germany. This 'moderate' wing of the West is no less anti-Iranian but sees matters in terms of negotiation and diplomacy - and, tactically, of turning reformers within Iran into agents of compromise. It is implicit that the UK and the State Department are joint moderators of the more aggressive instincts in the White House (associated with Cheney). Few British are convinced that the US has the moral or organizational ability to take on Iran militarily, especially given the volatile state of its electorate, while some former British political elite figures involved in foreign affairs are quietly not a little bitter about US conduct under the Blair Administration.

The ‘rest of the West’ (British, Arabs and non-‘hawk’ Europeans) will try to maintain Western unity around the containment and persuasion of Iran, but this unity will not extend to war and the Iranians know it. The result of the ‘snap’ election in Poland takes out one troublesome ‘hawk’ player in the largest minor European nation in favour of a more mainstream conservative (confusingly called liberal). Disdain for American policy is growing rather than diminishing in that half of Europe that opposed the Iraq War and resented extraordinary rendition, although European ‘hawks’, inspired by Sarkozy, are equally hardening their positions.

Finally, within the West, the non-US corporate community is getting very irritable. Some energy corporations are being directly targeted by the ‘hawks’, notably Total of France. Shell, definitely an internationalist and Atlanticist corporation, has sent ‘signals’ by indicating that record oil prices were being driven by speculation and political tension (code for American approaches to regional issues) and not because of lack of supply.

As for the non-West, countries like Russia, it seems determined not to be sucked into the Western dilemma. India was marked out as a key ally for democracy by the US and as a bulwark against Iran and an Islamised Pakistan or Central Asia, and as counterweight to Russia and China. Almost certainly as a negotiating pitch over the nuclear issue, Indian politicians are taking a renewed interest in the proposed Iran-Pakistan-India gas pipeline.

The point is that, whatever the complex internal politics of India involving the nuclear deal and Communist participation in the governing UPA, the Indian Government is quite prepared to accept relations with Iran in the national interest even if they irritate the US. India is only one of many major emerging countries that no longer feel that they have to be led by the US in assessing who is a friend and who is an enemy. Similarly, Pakistan has placed its economic development above the demands of its alliance with the US by stating its intention to sign a MoU on the pipeline with Iran in November.  China, of course, is unimpressed with the US move and Russia unenthusiastic to say the least, so a UN Security Council majority for anything that even matches the US initiative now looks even less rather than more likely.

If we were to summarise all this, it might be that a particular radical liberal ideology, centred on the White House but extending through key activist agencies such as US Treasury and US Justice, has developed an extended position on America’s and the global interest that is now systematically alienating moderate allies - and suspicious third world giants. It is straining the assumption of a shared Atlanticism in Europe and it is creating the very early stage conditions for alternative economic and security arrangements around the world that will be centred on energy assets, a return to state capitalism and a possible withdrawal from the dollar bloc. In this situation, Iran has minimal interest or political will in conceding ground. Things are beginning to look very bad for those who want peace.

[This is the second of a two part posting on the geo-political background to the current Iranian crisis. It is now our view that the matter between the US and Iran is unlikely to be resolved through dialogue and co-operation and that the likelihood of war has advanced in the last twenty-four hours, unless the Atlantic Alliance splits on the issue or the Russians can come up with a decisive initiative acceptable to both sides. The former is unlikely.]