Dutch Army Withdraws. Fund Managers Unhappy.

Geopolitics: The 2010 Battle of Marja in Afghanistan probably represents the turning point in the Afghan war, just like the 2007 Third Battle of Fallujah in the Iraq war. Wars almost always pivot on key battles. Consider Stalingrad in WW II and Gettysburg in the Civil War. Of course Fallujah is the closest parallel to Marja.
The Iraqi Army played a minor role in Fallujah. It wasn’t ready to do any heavy lifting; the USMC did nearly all the fighting. However in 2008 the Iraqi Army was much stronger and it won the Battle of Basra pretty much by itself. Halfway through the Battle of Basra it was nip and tuck for the Iraqi Army. At one point it almost got clobbered by the Mahdi Army and needed a little help from the superpower. Just enough help, but no more, was given to the struggling Iraqi Army. Fallujah battle hardened the Iraqi Army and it is now a bad guy wrecking machine. In time this will happen to the Afghani Army. That is, if it is given time by ignorant leftwing Western voters.
The Sunday New York Times ran two stories saying that the Afghan Army is not doing the heavy lifting in Marja and is nowhere near ready to take over the war. This realization occurred to liberal politicians in Holland’s Parliament this weekend and the Dutch government collapsed Sunday over the issue of keeping troops in Afghanistan. The new Dutch government will certainly start withdrawing the Dutch Army from Afghanistan. It has 2000 troops in country and (unlike Germany and France) Dutch soldiers have been in the thick of savage combat from the beginning. So losing 2000 Dutch soldiers is like losing 2000 American or British soldiers.
The loss of good soldiers is not the primary danger represented by the Dutch withdrawal. The withdrawal shows how voters/politicians in Western democracies expect that the Afghan War will soon be over and are shocked to learn otherwise. It will not soon be over and when it is a new Islamic war will quickly spring up to replace it. When Western voters finally realize all this they might demand that the good guys stop fighting. The Dutch withdrawal might spark French and German withdrawals, which might spark a British withdrawal, and then even America will feel pressure from its left wing to withdraw. I don’t think all this will happen, but it is a possibility.
Most Western voters are woefully ignorant of the global conflict. In fact most would ask, “What global conflict?” Your local newspaper never uses the term Long War. The taking heads on the TV news tonight will report that the government of Sudan has agreed to a promising but tenuous peace deal with its southern rebels. The brain-dead talking heads will not explain that the Sudanese Civil War has been going on for decades, has killed nearly 2 million people and is a dangerous component of the Long War. They also won’t explain that the spiritual philosophy that guides the government of Sudan is a deadly bridge linking the Wahhabism of Osama bin Laden to the Sufi mysticism of good bad guy militias painstakingly nurtured by the CIA in central Somalia. Nor will they explain that as the locus of the Long War moves down into Africa the importance of Sudan is magnified. They sure as heck won’t speculate that the CIA might be pulling strings to get this fragile peace deal off the ground. No, none of these insights will be shared on the evening news. So voters remain ignorant.
But here’s a group of folks not woefully ignorant of geopolitics: Hedge Fund Managers. And since today’s bull market has little participation by retail investors it is important that Hedge Fund Managers remain happy. They are not happy when NATO armies withdraw from Afghanistan and Mullah Omar crows in delight.