The transitional government was on its back foot. But, just days later, the situation is pretty much reversed. Things have been moving so fast that people have had little time to consider the really big question - what next?

Here is the current situation: reports from Somalia suggest that government forces, backed by Ethiopian troops, have captured the Islamists' last stronghold of Kismayo. Islamist leaders say they have retreated for tactical reasons, and because they wanted to avoid further bloodshed.

The worst case scenario for the future is that the situation could end up mirroring Afghanistan or Iraq: a quick defeat followed by protracted fighting from insurgents. Diplomats in Addis Ababa believe this is a real possibility.

The Union of Islamic Courts stoked these concerns yesterday by warning they will start an insurgency. The head of the Islamic movement in the Kismayo region said, "Even if we are defeated we will start an insurgency.
"We will kill every Somali that supports the government and Ethiopians."

The transitional government is formally supported by the African Union, the United Nations and the regional grouping, the Inter-governmental Authority on Development (Igad). But its strongest support comes from Ethiopia, where Prime Minister Meles Zenawi is determined not to see an Islamic state established on his borders. Somalia's interim President Abdullahi Yusuf has always had close ties with Ethiopia.

His first foreign visit after taking office in 2004 was to Addis Ababa, and it was reported that he wanted a 20,000-strong mainly Ethiopian force to strengthen his government, which has been based in Baidoa, not the capital, Mogadishu. The Somali parliament in Baidoa approved the deployment of foreign forces inside Somalia, a move strenuously resisted by the Islamists in Mogadishu.

For months, Ethiopia denied claims that it had troops in Somalia, only admitting to having military trainers there working with government forces. But in late December Ethiopia launched a large-scale offensive taking territory captured by the Islamists over the last six months. Ethiopia says it has no plans to stay in Somalia in the long term.

Apart from the support President Yusuf's government has received from Ethiopia, there are a number of reports of Yemeni planes arriving in Baidoa, bringing arms and ammunition. A group of Europeans and Australians has been arrested in Yemen, accused of breaking a United Nations arms embargo on Somalia.

The Union of Islamic Courts (UIC) also accuses Kenya, where the transitional government was formed after years of discussions, of being biased in favour of the government.

THE UNION OF ISLAMIC COURTS

During the six months that the Union of Islamic Courts ruled Mogadishu, it brought order to the capital. Finances for the courts were reportedly being provided by rich individuals in Saudi Arabia and the Gulf States. The government also says that Islamist radicals from around the world have gone to help the UIC. This is strongly denied by the Islamic courts.

There have also been reports that Eritrea - which has a long-running border dispute with Ethiopia - has been supplying arms to the Islamists. A leaked UN report says that 2,000 "fully equipped" Eritrean troops are working with the UIC. This is denied by the authorities in Asmara.

The chairman of the Union of Islamic Courts, Sharif Sheikh Ahmed, wrote to the UN, the European Union and the United States, calling for the establishment of friendly relations with the international community, based on mutual respect. In a four-page letter he denied giving sanctuary to Islamic extremists, or groups loyal to al-Qaeda. But another key UIC leader, Sheikh Hassan Dahir Aweys, is on a US list of individuals linked to terror groups. There are now fears that the UIC will now operate as an insurgency group.

THE INTERNATIONAL COMMUNITY

The African Union has called for Ethiopian forces to leave Somalia following their offensive, however the UN Security Council has failed to agree on a statement calling for the withdrawal of all foreign forces. Earlier in December, the Security Council passed a unanimous resolution to provide an 8,000-strong African peacekeeping force to protect the weak government.

This follows the establishment of the International Contact Group on Somalia by diplomats in June, which had the support of the US, Britain, Norway, Sweden, Italy, Tanzania and the EU. The African Union, Arab League and Kenya participated as observers. The Contact Group was formed after the collapse of the previous US strategy, which was to back the warlords who had controlled Mogadishu for many years.

The US was represented by Jendayi Frazer, Assistant Secretary of State for African Affairs. She has claimed that radical forces have sidelined more moderate forces in the Union of Islamic Courts. "The top layer of the courts are extremists to the core, they are terrorists and they are creating this logic of war," she said in December. Earlier she had said the union needed to be aware that the status of terrorists was a "core interest" of the US.

Meanwhile, the contact group had called for talks between the interim government and the UIC But three rounds of peace talks in the Sudanese capital, Khartoum, organised by the Arab League were inconclusive.
At one stage, the rivals had agreed a ceasefire but the Islamists continued to gain ground and both sides swapped fiery rhetoric.

The government no longer trusts the Arab League to mediate and the final round broke up without agreement in November.

The European Commission said the cuts posed no immediate risk to European supplies but it was seeking an urgent explanation from Belarus and Russia. Belarus has been in dispute with Russia over the price of Russian oil and gas.

Minsk says Russia has not been paying a transit tax for moving oil through Belarus, imposed after Russia doubled the price it charges Belarus for gas supplies. Exports were halted after Belarus began legal action against Russia for failure to pay the new oil shipment tax.

Transneft later said it had been forced to cut off supplies through the Druzhba pipeline after Belarus began siphoning off oil as payment in kind for the duties. The Russian firm has so far refused to pay the oil export taxes as it claims the charges are illegal. Separately, Azerbaijan has suspended oil exports to Russia following a pricing dispute with Russian state-backed oil giant Gazprom.

Neither Germany nor Poland is in any immediate danger of experiencing oil shortages, as both maintain substantial reserves. But BBC economics correspondent Andrew Walker says the suspension is an uncomfortable reminder to Europe of the large and growing role that Russia has in meeting its energy needs.
The decision to shut down the Druzhba pipeline is the latest twist in an energy row between Belarus and Moscow that began when Russian energy giant Gazprom forced Belarus to accept a huge increase in the price of Russian gas.

Last week Belarus said it would charge Russia $45 (£23) per tonne of oil that passed through its country. News of the disruption to supplies was a key factor helping to drive oil prices through the $57-a-barrel barrier after falling to around the $55 level last week.

US light sweet crude rose 89 cents to $57.20 in New York trade, while in the UK Brent crude stood at $56.71 - up $1.08. News that Saudi Arabia, the world's largest oil producer, planned to cut output by 158,000 barrels a day also helped to drive crude prices higher.

A judge said the plan, designed to lift the Spokane diocese out of bankruptcy, includes non-economic provisions to give victims some "closure". The Spokane diocese serves some 90,000 Catholics in Washington state. It is the latest in a series of multi-million dollar settlements offered by US churches in abuse claims.

Federal Bankruptcy Judge Gregg W Zive told the Associated Press news agency the settlement also includes a mechanism for paying off future claims. He said money for the settlement would come from insurance companies, the sale of church property, contributions from Catholic groups and from the diocese's parishes.

Victims and another bankruptcy judge must approve the move before it comes into effect. In December last year, the largest Roman Catholic diocese in the US agreed to pay $60m (£30m) to settle dozens of lawsuits alleging sexual abuse by priestsThe settlement by the Archdiocese of Los Angeles related to 45 cases among more than 500 that are pending.

It was one of the largest settlements since the Roman Catholic Church sexual abuse scandal erupted in the US in 2002. In February 2004, a report commissioned by the Church said more than 4,000 Roman Catholic priests in the US had faced sexual abuse allegations in the last 50 years.

The program openly advocates for the integration of economic issues across the continent, and in many places goes further such as the call for a common North American currency.

One teaching module made available online for professors to integrate into their teachings was written by George Haynal, senior fellow at the Norman Patterson School of International Affairs at Carleton University, and implied a joint military is required. Since the security of the continent "is a joint need; it should be supplied as a common enterprise."

"Given the nature of the threats against our security in the current environment, the first task is to reinvent 'borders.' We must exercise the responsibility for protecting our society against external threats where we can do so most effectively, not where infrastructures happens to be in place," he added. "Multilateral cooperation is going to be essential among governments."

"It is clear, to me at least, that we must move beyond NAFTA and do so with a purposeful determination," he wrote.

Another teaching paper advocates the adoption of a unified North American currency, the "amero," modeled after the euro currency of the European Union.

The programming the university is providing for help in teaching the new North American focus is just the latest evidence of the mounting campaign for a de facto North American Union. Although most in the establishment press are not covering the controversy, it has earned the opposition of a number of high-level voices including congressmen like Tom Tancredo, Virgil Goode and Ron Paul, and newsmen like CNN's Lou Dobbs who has described the U.S. government's actions in this effort as "Orwellian."

Ellison's swearing in came as Democrats formally took control on Thursday of the US Senate and House of Representatives following their defeat of the Republican party in the last year's midterm elections. Elllison, a Democrat congressman for Minnesota, shrugged off controversy over his use of the Quran instead of the Bible.

"It was good, we did it, it's over, and now it's time to get down to business," he said. Asked if he was relieved to have the ceremony behind him, Ellison said, "Yeah, because maybe we don't have to talk about it so much anymore.

"Not that I'm complaining, but the pressing issues the country is facing are just a little bit more on my mind right now." Ellison was born a Christian but converted to Islam in college.

Republicans have questioned Ellison will succeed in juggling his loyalty to the Ummah, or the global Muslim community, with his loyalty to the US and its constitution.

They accuse the body that grants licences for embryo research, the HFEA, of bowing to government pressure if it fails to consider their applications. Ministers proposed outlawing such work after unfavourable public opinion. The Human Fertilisation and Embryology Authority is to discuss if two research requests come under its remit.

The creation of hybrid human-animal embryos was first suggested as a way of addressing the shortage of human eggs available for research. But the HFEA says it is unresolved whether this type of controversial work is permissible under existing laws - or even whether it falls under the HFEA's jurisdiction to grant a licence. The resulting embryos made are more than 99% human, with a small animal component.

Opponents say this is tampering with nature and is unethical.

The researchers have called for greater understanding of what they are trying to achieve.
If the HFEA decides it is outside its remit, the scientists will not legally need a licence to continue with their work.
A spokesman for the Department of Health stressed that the new law, which still needs to be debated in Parliament, would contain a clause allowing for the possibility that this type of work should be permitted in the future.

Josephine Quintavalle, of CORE ethics, said: "This is creating an animal-human hybrid and that has to be acknowledged as something that does not meet with approval.

"We hope that the HFEA has found this is one hurdle too many and they are not prepared to jump over it."

The bloc, now of 27 countries, is still in a state of disarray 18 months after French and Dutch voters issued their clear "No" to the Union's draft constitution.

And the constitutional impasse has contributed to a growing "enlargement fatigue" not only over Turkey - whose membership talks are now partially suspended - but also over the various western Balkan states queuing up to join. Some senior EU officials in Brussels admit, off the record, that the atmosphere remains miserable.

And a senior French diplomat agrees: "It is really miserable. The mood could change? but there's not much concrete going on at the moment."

Krzysztof Bobinski of the Unia & Polska think tank in Warsaw is a pessimist too. I can't see the EU picking up momentum in 2007," he says. "Too many political leaders see Europe through a national perspective? of how to play 'Europe' to their own political advantage at home. Complacency is the name of the game."

But others disagree, pinning their hopes on Germany, which has said it will re-open the constitutional debate during its EU presidency (from now until the end of June) and on this year's elections in France.
Jose Ignacio Torreblanca, co-editor of BlogEuropa.eu in Madrid, says that: "The key event is the French presidential elections. No matter who wins, Royal or Sarkozy will have a mandate to fix the constitution."

Some even foresee rapid developments in the second half of the year, under the Portuguese presidency. A senior French diplomat envisages the EU's June summit launching an inter-governmental conference (IGC) to produce a cut-down version of the constitution. But few expect the way ahead to an IGC to be smooth.

Mr Torreblanca says: "My guess is that reaching a deal, say, among Germany, France, UK, Italy and Spain is not going to be that difficult? but the difficulties will arise in: first, 'selling' it to the Poles, Dutch, Danes etc and second, to the citizens, thus risking a second ratification failure."
A senior British diplomat argues: "It would be a real stretch to do the IGC under the Portuguese? and it would have to be a much more modest proposal and if France opens up the question of Commission size, and Poland and Spain the question of double-majority voting, it will take at least 18 months."

He also points out that Segolene Royal, France's Socialist presidential candidate, has committed herself if she wins to holding a new referendum on the constitution, "something she will want to put off to 2009 or later".
David Kral, director of the Europaeum think tank in Prague agrees that an extended timetable is more realistic, doubting even that the end of 2008 is feasible.

"If there's a new treaty to come? to have it in place by the French EU presidency (in the second half of 2008) is just not workable," he says. And while rescuing a more modest version of the constitution remains up in the air, the EU at 27 is not going to find it easy to agree on any more enlargement.

Some suggest that Germany - and France - would like to draw the borders of Europe more clearly, perhaps slowly bringing in the western Balkans but leaving the rest (apart from any fudge over Turkey) as neighbours, not candidates. Sparks could fly over this.

Martin Koopmann, European expert at the Germany Society for Foreign Policy in Berlin, sees "a growing reluctance in the EU concerning new enlargements". He says the German EU presidency will focus on reforming the EU's eastern neighbourhood policy away from a set of bilateral agreements - "which is very close to the logic of enlargement policy" - to a more multilateral approach.

Mr Koopmann goes on: "As a kind of important side-effect, any reform in this direction would take away pressure from the constitutional crisis". But defining Europe's borders divides the current EU members.

As Krzysztof Bobinski says: "Fairly obviously those who want the EU as small as possible will want borders defined, once and for all, and the enlargers will want to leave the process vague and see who manages to slip in - Ukraine, Georgia, others from the Caucasus, even something Central Asian maybe." David Kral is strongly opposed to stopping enlargement.

"Drawing a priori borders of Europe would be the most damaging thing one could currently do - this would be a symbolical building of fortress Europe," he says. And Jose Ignacio Torreblanca says the EU is not about hard borders, it is about soft boundaries. "Creating dividing lines will not help the EU," he adds.

A French diplomat agrees that this divides the EU. France, Belgium and Mediterranean member states want to keep a clear distinction between the enlargement policy and the neighbourhood policy, he says.
But other member states - those in the east, but also Sweden and the UK - want to open a "European perspective" in particular for Ukraine, in the new enhanced agreement with that country.
"Germany is in between, in the longer term it is ready for new eastern enlargements, but in the short term it has other priorities such as the constitution," he says.

Meanwhile, the senior British diplomat warns that any move on borders would be "doomed". "Lots of the Central Europeans support staying open to enlargement, as well as the UK, Spain, Italy, Sweden and Finland," he says.

And though some in the UK - not least Britain's putative next prime minister Gordon Brown, and even Conservative leader David Cameron - argue that the EU should turn outwards and focus on key issues such as climate change and global poverty, for now the EU looks set to carry on arguing over its internal divisions.

At the earliest, a new constitution might be agreed and ratified by 2009 and such a new deal might release enough energy to reduce enlargement fatigue and lessen the dividing lines over whether or not to build a Fortress Europe.

But the odds are not high for seeing a re-energised, newly confident and dynamic EU in 2007.

In the Palestinian Authority-controlled Gaza Strip and the parts of Judea and Samaria under its rule, a full-scale civil war is likely to erupt among the local Arabs, with unpredictable consequences.

This time around, the talk of "brotherhood" will likely be finally exposed for the myth it is. Fatah, Hamas, Islamic Jihad and other assorted terrorist gangs will participate, while outside sponsors such as Iran, Syria, and Jordan will supply the bullets, rockets, money and ill-will.

International and American sanctions against Iran and Syria will likely increase, as will defiance by the two nations. Will George Bush unleash an attack on Iran to foil its ambitions to obtain nuclear weapons? Judging by America's dismal performances in Afghanistan and Iraq, Israel will be left holding the bag forced alone to face an existential threat in which the options are all bad.

Damascus and Tehran will team up to destabilize Lebanon by activating their proxy, Hizbullah and their allies - the 400,000 Arabs who left Israel in the 1948 and 1967 wars. The bigger powers will push Israel's northern neighbour into a second civil war, one likely to be far more vicious than the 15-year conflict that ended in 1990.

Like the PA Arab battle, Lebanon's civil war will attract support and weapons, drawing in Western and Middle Eastern sponsors to supply the country's Christians, Shi'ites, Sunnis, Druze and Armenians. Jihadists, always on the lookout for training spots, also will flock into Lebanon to establish new bases of operations.

In Iraq and Iran, but also in Afghanistan, Lebanon, Somalia, Pakistan, and at least one major country in the Persian Gulf jihadist Muslim fundamentalists will become the main agenda-setters, emerging from the shadows to dictate the tempo of events, war, and peace.

The flow of refugees from Iraq, which now stands at two million, will double. Meanwhile the trickle of educated Arabs leaving the Gaza Strip and Judea and Samaria will continue to grow, resulting in a brain drain of the region's best and brightest.

In America, a Democratic-controlled Congress will turn the Iraqi mess into a full-blown tragedy by opposing any proposals advanced by the Bush administration short of a total and immediate withdrawal of American troops. The American population will progress toward a total rejection of further overseas involvements.

Somalia, which has disintegrated into a vast morass sheltering international jihadist Muslim fundamentalists, will continue its descent into bloody chaos, drawing the Horn of Africa down with it.

The presence of American military personnel already involved in Somalia, as well as the CIA and other semi-military American outfits, will increase with more western advisors to the local army. The flow of weapons to Christian Ethiopia will explode, as will Western satellite and surveillance outposts there. With the Indian Ocean thus wide open, the U.S. Navy and NATO will have to double their presence to block incoming mayhem from the sea.

In Israel - which in the summer of 2006 painfully discovered the limits of its military prowess against Hizullah's guerrilla-style warfare in Lebanon - politicians and the military will find that their enemies have been further emboldened.

Hamas and Hizbullah rockets aimed inland from Gaza and from Lebanon will test Israel again. Prime Minister Olmert's unwieldy coalition government once more will be pushed to the edge. The government is widely expected to remain in place, but its ability to develop effective responses will be as incomplete and as incompetent in 2007 as it has showed itself to be this year.

More important, PM Olmert and his feckless Defence Minister Amir Peretz as well as Israel's entire opposition will continue to exhibit a shocking lack of vision, failing to put forward a strategy to deal with the tide of Islamic fundamentalists and the consequences of Egypt's failed government. The total collapse of the Palestinian Authority will increase the internal challenge for Israel.

On the macro-economic front, the price of oil will continue to slip, as more alternative sources, from coal to oil sands to ethanol, grab a larger share of the world's markets.

The role of Russia as the world's major new supplier of "conventional energy"- now bigger than that of Saudi Arabia - will grow remarkably. Russia is already Europe's main supplier of natural gas, and it is moving to become a major supplier of oil and gas to Asia, as well. Canada, with its endless reserves of oil sands in remote northern Alberta, will join Russia as a major new energy power. The strategic consequences of these two countries' advances for American influence have yet to be calculated by think tanks, NATO, and the OECD.

Where does all this leave the Israeli man in the street? The slight cut on December 31 of the government-set price for gasoline, together with the Bank of Israel's decision earlier last month to slash interest rates by half a percent to 4.5 % - three quarters of a point below the Federal Reserve Bank's rate suggest continued strong growth in the Israeli economy and an ongoing reduction in the unemployment levels.

Want some unsolicited investment advice? Park your dollars in Israeli shekels, and watch as the greenback continues to shrink.

Rep.-elect Keith Ellison, D-Minn., decided to use the centuries-old Quran during his ceremonial swearing-in on Thursday after he learned that it is kept at the Library of Congress. Jefferson, the nation's third president and a collector of books in all topics and languages, sold the book to Congress in 1815 as part of a collection.

"It demonstrates that from the very beginning of our country, we had people who were visionary, who were religiously tolerant, who believed that knowledge and wisdom could be gleaned from any number of sources, including the Quran," Ellison said in a telephone interview Wednesday.

"A visionary like Thomas Jefferson was not afraid of a different belief system," Ellison said. "This just shows that religious tolerance is the bedrock of our country, and religious differences are nothing to be afraid of."
Some critics have argued that only a Bible should be used for the swearing-in. Last month, Rep. Virgil Goode, R-Va., warned that unless immigration is tightened, "many more Muslims" will be elected and follow Ellison's lead. Ellison was born in Detroit and converted to Islam in college.

Ellison said an anonymous person wrote to tell him about the Quran, and he arranged with the Library of Congress to use it. The chief of the Library of Congress' rare book and special collections division, Mark Dimunation, will walk the Quran across the street to the Capitol and bring it back after the ceremony.

Ellison's decision to use Jefferson's Quran was first reported by The Washington Post on Wednesday.
Jefferson was born in Albemarle County, in what is now Goode's congressional district in central Virginia. Goode's office did not return phone and e-mail messages left Wednesday.

An English translation of the Arabic, Jefferson's Quran was published in 1764 in London, a later printing of one originally published in 1734."This is considered the text that shaped Europe's understanding of the Quran," Dimunation said.It was acquired in 1815 as part of a more than 6,400-volume collection that Jefferson sold for $24,000 to replace the congressional library that had been burned by British troops the year before, in the War of 1812."It was a real bargain," Dimunation said.

The Quran survived an 1851 fire in the Capitol. Dimunation described it as a two-volume work, bound in leather with marble boards."As a rare book librarian," he said, "there is something special about the idea that Thomas Jefferson's books are being walked across the street to the Capitol building, to bring in yet another session of governmental structure that he helped create."

Although most in the media regard the notion of a merger agenda as sheer conspiracy theory, an increasing number of high-level voices including congressmen like Tom Tancredo and Ron Paul, and newsmen like CNN's Lou Dobbs who calls the government's actions on this issue "unconscionable" and "Orwellian" are sounding the alarm over recent moves in the direction of a de facto North American Union.

For example, confirmation has surfaced that the U.S. government will indeed provide full Social Security benefits to Mexicans which critics predict will bankrupt the already-shaky system. And a report by the powerful Council on Foreign Relations, regarded by many as something of a "shadow government," has called for a massive transfer of wealth from the U.S. to Mexico and the establishment of a "security perimeter" around North America rather than securing America's borders with Mexico and Canada.

Last month, for instance, WND reported that more Americans were murdered this year by illegal aliens than the combined death toll of U.S. troops in Iraq and Afghanistan since those military campaigns began.

In another disturbing expose, WND reported that a wave of illegal-immigrant gang rapes is sweeping the U.S. while public officials and law-enforcement authorities fear drawing the link.

As Deborah Schurman-Kauflin, a Ph.D. researcher of violent crimes, told WorldNetDaily: "It appears as if there is a fear that if this is honestly discussed, people will hate all illegal immigrants. So there is silence. But in being silent about the rapes and murders, it is as if the victims never even existed."

Even on the nation's highways, record high numbers of unlicensed, unregistered, uninsured drivers many of whom are illegal aliens are driving up the numbers of highway deaths in the U.S.

The last two paragraphs of his remarks revealed once again his steadfast and driving conviction, as reported in WND, that a messianic figure known as the "Mahdi" to Muslims is poised to reveal himself after an apocalyptic holocaust on Earth that leaves most of the world's population dead.

"I emphatically declare that today's world, more than ever before, longs for just and righteous people with love for all humanity; and above all longs for the perfect righteous human being and the real savior who has been promised to all peoples and who will establish justice, peace and brotherhood on the planet," Ahmadinejad said at the U.N. "Oh, Almighty God, all men and women are your creatures and you have ordained their guidance and salvation. Bestow upon humanity that thirsts for justice, the perfect human being promised to all by you, and make us among his followers and among those who strive for his return and his cause."

With Iran on the verge of producing nuclear weapons and already in possession of sophisticated medium-range missiles, mystical pre-occupation with the coming of a Shiite Islamic messiah is of particular concern because of Iran's potential for triggering the kind of global conflagration Ahmadinejad envisions will set the stage for the end of the world.

Ahmadinejad is on record as stating he believes he is to have a personal role in ushering in the age of the Mahdi. In a Nov. 16, 2005, speech in Tehran, he said he sees his main mission in life as to "pave the path for the glorious reappearance of Imam Mahdi, may Allah hasten his reappearance."

According to Shiites, the 12th imam disappeared as a child in the year 941. When he returns, they believe, he will reign on earth for seven years, before bringing about a final judgment and the end of the world.

Ahmadinejad is urging Iranians to prepare for the coming of the Mahdi by turning the country into a mighty and advanced Islamic society and by avoiding the corruption and excesses of the West.

All Iran is buzzing about the Mahdi, the 12th imam and the role Iran and Ahmadinejad are playing in his anticipated return. There's a new messiah hotline. There are news agencies especially devoted to the latest developments.

Ahmadinejad and others in Iran are deadly serious about the imminent return of the 12th imam, who will prompt a global battle between good and evil (with striking parallels to biblical accounts of "Armageddon"). Some interpretations of the events that precede his coming include a war that wipes out most of the world's population.

Only the British will find themselves between a rock and a hard place. They have had a strategic partnership with the U.S. forever, but have also had their natural pull from Europe. So far, they have had many reasons to stick with the winner. However, when they see their century-old partner falling, will they firmly stand behind him or will they deliver the coup de grace?

Still, we should not forget that currently the two leading oil exchanges are the New York's NYMEX and the London's International Petroleum Exchange (IPE), even though both of them are effectively owned by Americans. It seems more likely that the British will have to go down with the sinking ship, for otherwise they will be shooting themselves in the foot by hurting their own London IPE interests.

It is here noteworthy that for all the rhetoric about the reasons for the surviving British Pound, the British most likely did not adopt the Euro namely because the Americans must have pressured them not to: otherwise the London IPE would have had to switch to Euros, thus mortally wounding the dollar and their strategic partner.

At any rate, no matter what the British decide, should the Iranian Oil Bourse gain momentum and accelerate, the interests that matter those of Europeans, Chinese, Japanese, Russians, and Arabs will eagerly adopt the Euro, thus sealing the fate of the dollar. Americans cannot allow this to happen, and if necessary, will use a vast array of strategies to halt or hobble the exchange's operations:

Sabotaging the Exchange this could be a computer virus, network, communications, or server attack, various server security breaches, or a 9-11-type attack on main and backup facilities.
Coup d'état?this is by far the best long-term strategy available to the Americans.

Negotiating Acceptable Terms & Limitations this is another excellent solution to the Americans. Of course, a government coup is clearly the preferred strategy, for it will ensure that the exchange does not operate at all and does not threaten American interests. However, if an attempted sabotage or coup d'etat fail, then negotiation is clearly the second-best available option.

Joint U.N. War Resolution this will be, no doubt, hard to secure given the interests of all other members of the Security Council. Recent rhetoric about Iranians developing nuclear weapons undoubtedly serves to prepare this course of action.

Unilateral Nuclear Strike this is a terrible strategic choice for all the reasons associated with the next strategy, the Unilateral Total War. The American will likely use Israel to do their dirty nuclear job.

Unilateral Total War this is obviously the worst strategic choice. First, the U.S. military resources have been already depleted with two wars. Secondly, the Americans will alienate other powerful nations. Third, major reserve countries may decide to quietly retaliate by dumping their own mountains of dollars, thus preventing the U.S. from further financing its militant ambitions.

Finally, Iran has strategic alliances with other powerful nations that may trigger their involvement in war; Iran reputedly has such alliance with China, India, and Russia, known as the Shanghai Cooperative Group, a.k.a. Shanghai Coop.

Whatever the strategic choice, from a purely economic point of view, should the Iranian Oil Bourse gain momentum, it will be eagerly embraced by major economic powers and will precipitate the demise of the dollar.

"The dollar could lose as much as 30 percent of its value in 2007," econometrician John Williams, who publishes the website Shadow Government Statistics, told WND. "In 2007, we are likely to see the economic downturn of 2006 develop into a structural recession and yet we have international trade and federal budged deficits careening out of control."

Williams explained, "U.S. interest rates are still relatively low, compared to Europe. This will make it increasingly attractive for central bankers to consider moving foreign exchange reserves out of the dollar."

The dollar, which began January 2006 at 88.86 on the FOREX international currency index ended the year at 83.67, a drop of approximately 6 percent. For the year, the dollar fell approximately 11.5 percent versus the euro, 13.6 percent versus the British pound, and by 7.3 percent versus the Swiss franc.

China, the second largest holder of U.S. debt, reduced purchases of U.S. bonds 1.7 percent in the first 10 months of the year. Central bankers in Venezuela, Indonesia and the UAE have said they will invest less of their reserves in dollar assets. Iran's switch to euros is the greatest threat yet to dollar supremacy. The usage of the euro is now universal in Iran and it will spread to other Islamic oil-producing countries as well. The share of dollars as a percentage of OPEC foreign reserves has fallen from 67 percent to 65 percent in the first half of 2007.

Iran's decision to hold only Euros may prompt a U.S. decision to launch a pre-emptive attack, Chapman speculated, with the public argument being Iran's pursuit of nuclear weapons in defiance of the U.N. Security Council.

"Saddam Hussein signed his death warrant," Chapman argued, "when he got the U.N. to agree that he could hold his oil-for-food reserves in euros. Ahmadinejad appears determined to go down the same path."
Chapman expects the Chinese to take advantage of a strong commodities market in 2007, investing an increasing percentage of their foreign exchange reserves in gold.

"Remember," Chapman said, "all you hear about is the Dow being up 16 percent this year, but you do not hear that gold is up 23 percent. As the dollar continues to decline in 2007, we expect gold to continue increasing in value. Gold in 2007 could easily exceed $780 an ounce."