Weekly Geopolitical Report – Syria and the Red Line (May 6, 2013)

by Bill O’Grady

On Thursday, April 25, Secretary of Defense Hagel acknowledged that evidence that chemical weapons exposure occurred in Syria was probably accurate.  This news dominated the Sunday talk shows, mostly because President Obama had indicated that Syrian military use of chemical weapons would be a “game changer” and a “red line” that would trigger a U.S. and international response.  Now that it appears that somehow chemical weapons exposure did occur, the world awaits to see what exactly the president meant by a “response.”

In this report, we will discuss the problem President Obama has created, why he likely declared the “red line,” and his reluctance to intervene.  This reluctance is varied and complicated—essentially, it is difficult to see how there are any good options for the U.S. in intervening in the Syrian Civil War.  At the same time, not taking some sort of action will undermine his and America’s credibility which will be closely watched by North Korea, Iran, Russia and China, as well as by America’s allies.  As always, we will examine the ramifications of this event on the financial and commodity markets.

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