On Tuesday, newly-arrived IAEA inspectors visited Iran’s Arak heavy water nuclear facility, invited by Iran in a limited but concerted attempt to allay international fears of its developing nuclear weapons program. Heavy water reactors are used to process spent uranium fuel into plutonium which can then be used to make much smaller and lighter nuclear warheads more easily delivered by missiles. The IAEA visit comes as families of detained student editors and activists describe their abuse in Iranian prison, accusing the regime of domestic torture in order to extract coerced false confessions.

Nearly coinciding with the IAEA visit is a round of new military arms sales to Saudi Arabia and other Arab Persian Gulf states that is openly intended, as Secretary fo State Rice described, “to counter the negative influences of al-Qaeda, Hizballah, Syria and Iran,” chief among them being Iran. In order to calm Israeli fears of any growing Arab military capability which might in turn be turned eventually on them, the United States also boosted its annual military aid to Israel by 25% over the next ten years. Israel’s Arab weapons fears are not based on threats posed by current Gulf States leadership, but rather the additional threat the new high-tech weaponry could pose if any of the current regimes were toppled by al-Qaeda or al-Qaeda-aligned Islamist forces.

Ahead of Condoleezza Rice’s visit to the region to meet with Israeli and Arab leaders, Hizballah leader Hassan Nasrallah declared that the Iranian-backed Lebanese terrorist group is ‘ready to strike Israel at any time.’ Delivering a speech via video feed at a rally in Bint Jbail, Lebanon, Nasrallah said that the terrorist group will never be at peace with Israel. He said, “It is impossible to live with a back-stabbing enemy on our border, who has been assaulting us ever since it was born,” and stated that Hizballah still possesses rockets and missiles that “can hit any area in occupied Palestine if Israel attacks Lebanon.” The video showed Nasrallah speaking before a professionally printed backdrop which read in English for a targeted Western audience, “The Divine Victory.”

In Egypt, new Palestinian Prime Minister Salaam Fayad said that Palestinian ‘resistance’ is legitimate, seeking to reassure those angry that the Fatah-run Palestinian government in the West Bank had stricken the term ‘resistance’ from its platform. He attempted to explain that it was excluded because it is too often associated with ‘armed struggle.’ Fayad said, “What is the essence of resistance, especially in light of the current occupation? Does it not begin with all possible efforts to strengthen the permanence of the Palestinian citizens on their land? That is precisely the government’s agenda.”

At the same time, a deployment of Jordanian forces into the West Bank is again being seriously considered by the Palestinian Authority, Israel and Jordan. Israel appears to prefer a Jordanian Arab force rather than a UN or NATO force. Jordan’s potential absorption of the West Bank as a new autonomous Jordanian territory has been also considered recently.

Perhaps as soon as Saturday, the US and Iran are set to hold more talks on Iraq’s future, it has been announced. But the talks should not be confused with negotiation.

While Iran publicly has welcomed more talks, State Department spokesman Scott McCormack said, “We think that … it would be appropriate to have another face-to-face meeting to directly convey to the Iranian authorities that if they wish to see a more stable, secure, peaceful Iraq — which is what they have said they would like to see — that they need to change their behavior.”

The meeting comes amid rising tensions and an IAEA announcement that the UN body and Iran have agreed on inspections and a “modality” to move forward on unresolved matters regarding Iran’s nuclear program. Skeptics view the Iranian move as another stall for time, noting that the “modality” is nothing more than an agreement on how to proceed with more talks, not any concrete resolution of outstanding matters.

While al-Qaeda suicide attacks since the Lal Masjid mosque compound was raided had been limited to areas in or bordering the FATA and NWFP, Tuesday saw a suicide bomber attack in Islamabad, though the source of the attack is unknown. At first glance, the Islamabad attack would appear counterintuitive for al-Qaeda, as it struck an anti-Musharraf protest that was to have former Pakistani Chief Justice Chaudhry addressing the crowd. The suicide bomber detonated the bomb before Chaudhry arrived and killed 15 activists and police officers.

Back in the FATA on Wednesday, a coordinated roadside bomb-small arms attack on a Pakistani military convoy killed 14 on the road linking Bannu to North Waziristan’s Miranshah capital. Miranshah also saw rocket attacks, but none of them netted any known casualties.

In a message released by al-Qaeda #2 Ayman al-Zawahiri, the terrorist leader sought to incite Pakistanis to jihad against government, citing the raid on Lal Masjid (Red Mosque) as the latest cause. Zawahiri said that “jihad is the only salvation” for Pakistani Muslims. And, ultimately displaying the true ideological split between the Islamists and the true pro-democracy protesters in Pakistan who have been united in their desire to see the end of Musharraf’s rule, Zawahiri delineated, “Rigged elections will not save you, politics will not save you, and bargaining, bootlicking, negotiations with the criminals, and political maneuvers will not save you.”

Just before Zawahiri’s message was released, Pakistani President Pervez Musharraf warned publicly that his government “would not tolerate militancy at any of Pakistan’s thousands of religious schools [madrassas].”

In Pakistan, the question is being publicly asked how such an armed fortress within the Red Mosque could have been created ‘under the noses’ of Pakistani intelligence within its capital city. Munir Malik, the president of Pakistan’s Supreme Court Bar Association, openly asked “How come the intelligence agencies were not aware of the happenings in the mosque?” The answer is openly known, but not openly discussed: A significant portion of Pakistan’s military intelligence (ISI) are sympathetic, supportve or actively engaged with the Islamists of the Taliban-al-Qaeda alliance. Lal Masjid was a recruiting center for the Taliban and al-Qaeda, and among the dead inside the final redoubt in the mosque are what Pakistani officials identify as “foreign rebels” linked to the Taliban and al-Qaeda.

As the siege on Lal Masjid (Red Mosque) in Islamabad continues, the death of Abdul Rashid Ghazi at the hands of Pakistani government forces has caused the government to put Pakistan on “Red Alert,” vigilant for an expected backlash from Pakistani Islamists.

Pakistani forces are proceeding cautiously, refusing to simply storm the basement where the remaining Lal Masjid combatants are holed up. The compound has been extensively booby-trapped, especially the pathways leading to where the terrorists have barricaded themselves in a last stand. And so the final Red Mosque confrontation continues for at least another day, perhaps several more.

Reaction to the siege of Lal Masjid in the Pakistani press is mixed, with Islamist outlets condemning the action and others cautiously praising the government’s confrontation of pro-Taliban Islamists.

US State Department deputy spokesman Tom Casey said Pakistani authorities had “proceeded in a responsible way on this issue,” adding that “ultimately all governments have a responsibility to preserve order and to try and take steps against terrorists and those that commit criminal actions, too.”

UPDATE: In unexpectedly rapid succession, Pakistani authorities have declared the Red Mosque cleared of all combatants inside, and the next phase of the operation has commenced: Clearing the compound of booby-traps, mines and other explosives. Maj. Gen. Waheed Arshad said in a phone interview, “The first phase of the operation is over. There are no more militants left inside.”

The US Navy will be drawing down its aircraft carrier commitment in the Persian Gulf, as the USS Enterprise arrives to relieve the carrier USS Nimitz. The USS John Stennis, also currently in the Persian Gulf, is slated to leave by the end of the summer, leaving just one carrier, the USS Enterprise, to remain in the Gulf. While there will temporarily be a concentration of three aircraft carrier battle groups during the transition, a US Navy spokesman “said the arrival of the USS Enterprise should not be understood as an escalation in the Gulf,” referring to suggestions that it signals a potential hardening stance against Iran. Escalation with three carriers in the Persian Gulf leaves the Navy exposed to the risk of having them confined without exit if Iran were to sink tankers and block the Strait of Hormuz as it has threatened in the past. Such confinement would cripple US ability to immediately project force throughout the region and the world, a risk military planners are likely unwilling to take.

Israeli Military Intelligence said Tuesday that Iran will cross nuclear threshold by 2009 and have the capability to produce nuclear weapons within the next two years. There had been speculation that the American carrier concentration may have represented US posturing for strikes on Iranian nuclear facilities. But there is little indication of any hardening of the US Administration’s stance against Tehran, relying still upon UN Security Council procedure and further sanctions.

Israeli Military Intelligence also said that with a nuclear deterrent, Iran’s support for terrorism will become more open.

Meanwhile, reacting to a recent al-Qaida threat against it, Iran says that it is prepared to meet any al-Qaeda threat. Iranian Interior Minister Mostafa Pourmohammadi said such threats are “new thing” and that Iran’s “security and law enforcement apparatus have been ready to defend the country.” Many counterterrorism analysts - including ThreatsWatch - view the threat from al-Qaeda in Iraq with skepticism.

Syria has made a threat of war with Israel, demanding that the Golan Heights be handed over by August or September.

An unnamed Syrian official told the New York Sun, “Syria passed repeated messages to the U.S. that we demand the return of the Golan either through negotiations or through war. If the Golan is not in our hands by August or September, we will be poised to launch resistance, including raids and attacks against Jewish positions (in the Golan Heights).”

On Monday, the Syrian government also urged Syrians to leave Lebanon “ahead of an expected military ‘eruption’ expected to take place next week.” Syria’s expected “eruption” comes just before the United Nations Security Council is expected to meet on the deployment of UN-flagged forces on the Syria-Lebanon border.

Pakistani President, General Pervez Musharraf, survived another assassination attempt as his plane was fired on with an anti-aircraft gun and a machine gun placed rooftop near Islamabad Friday. The attack indicated a minute-by-minute knowledge of Musharraf’s travel plans by his enemies - at least for that day. Musharraf has survived several assassination attempts since 2002.

While many believe a ‘militant Pakistan remains unlikely,’ often citing internal political polls, there remain two powers within Pakistan - it’s military and the Taliban-al-Qaeda alliance. A Taliban-al-Qaeda Islamist assassination of Musharraf would not be executed without formidable further plans to seize power.

Meanwhile, the Lal Masjid standoff in Islamabad continues, with armed Islamists still holed up inside the Red Mosque.

Japan’s Kyodo News is reporting that a diplomatic source revealed that North Korea has “agreed to supply four mini-submarines to Iran by mid-July.” The source said the agreement was reached in May when North Korean Vice Foreign Minister Kim Yong Il made a Tehran visit.

Previously, North Korea had agreed to provide mini-submarines to the Moro Islamic Liberation Front (MILF), a Philippine Islamist terrorist group. The terrorist group reportedly had paid North Korea $1 million and still owed $1.2 million according to documents seized from the group in 2004. The submarines were never delivered, but the willingness of North Korea to do so is telling. North Korea did, however, deliver 10,000 North Korean copies of the M-16, ammunition and grenades.

At Scuba Diver Info, experienced divers discuss diving as a means for terrorism, including the use of mini-submarines such as those Iran is seeking from North Korea. Dr. Walid Phares brought up the issue of an al-Qaeda submarine threat to Ras Tanura, Saudi Arabia’s most important Gulf oil terminal. In a conflict, Ras Tanura would be an obvious target for Iran, as well.

Based on a review of past Internet discussions, 45 Muslim doctors planned US terror raids as long as three years ago. The threats included the use of car bombs and rocket propelled grenades against US night clubs and military bases, including Mayport Naval Base in Jacksonville, Florida.

“We are 45 doctors and we are determined to undertake jihad and take the battle inside America. The first target which will be penetrated by nine brothers is the naval base which gives shelter to the ship [USS John F.] Kennedy.” The same message discussed hitting civilian targets around the Jacksonville naval base saying, “These are clubs for naked women which are opposite the First and Third units.”

The messages among the group of Muslim doctors dated as far back as three years ago, found in the home of Younis Tsouli, also known as Irhabi 007.

Confident in their investigation into the recent UK bombing attempts, Britain lowered their terror threat level from critical to severe. In that investigation, UK authorities are investigating a house in Scotland believed to be used as a bomb factory to produce the bombs in last week’s terrorist attacks.

About 700 followers inside Islamabad’s radical pro-Taliban Lal Masjid (Red Mosque) have surrendered to Pakistani forces as President Musharraf ordered a siege overnight. About 300 are believed to be still inside refusing to give up. Maulana Abdul Aziz, who ran the mosque with his brother, was arrested as he tried to escape wearing a burqa among a crowd of surrendering women of the female madrassa.

As parents gathered to receive their surrendering children, “the tide of popular feeling seemed to be turning against the clerics.” The government offered amnesty and $83 travel money for those who surrendered to return to their homes.

Radical religious leaders and their political allies sparked street protests in Lahore and Quetta in protest to the siege on the Red Mosque in Islamabad. There is fear that radical Islam may be rising in Pakistan’s cities, spreading from Taliban-controlled rural areas in the frontier provinces.

Judging by the reaction to recent meetings, Russia may be souring on Iran’s nuclear program. After ‘recent diplomatic contacts’ between the two states, the head of the International Affairs Committee of the Federation Council, Russia’s upper chamber of parliament, Mikhail Margelov said to the Russian InterFax news service that “[t]he Iranians obstinately dodged straightforward questions about their nuclear program.”

Ilen Berman of the American Foreign Policy Council reports that the Russian lawmaker added, “From this and other signs I had a feeling that Iran is working on a nuclear weapon.” Margelov believes that Iran will test its own nuclear device within five years.

Describing what prepared posters and banners called the “axis of unity,” Venezuelan dictator Hugo Chavez said in Iran that “The two countries will unite to defeat the imperialism of North America.” During his visit, he and Iranian president Mahmoud Ahmadinejad announced that the two anti-American governments will work together on joint petroleum facilities in Iran and dairy facilities in Venezuela.

Amid Iran’s deepening domestic crisis centered around the Iranian government’s inability to meet domestic demands for gasoline, Venezuelan energy minister Rafael Ramirez also announced that Venezuela will directly supply Iran with gasoline to help it meet growing demands that its diminished and decaying refining capability cannot meet. Ramirez said, “Yes, Iranians have asked to buy gasoline from us and we have accepted this demand.”

British intelligence sources have told CBS News that they increasingly believe that al-Qaeda in Iraq was behind the recent attempted bombings in the UK.

The CBS Report detailed that “[al-Qaeda in Iraq commander] Al-Muhajir [aka Abu Ayyub al-Masri] was told to recruit young men who could easily move into Western countries, assimilate and lay low until the time came to attack. Britain has a fast-track visa program for medical students which makes it easier for them to enter the country.”

British police have confirmed that several foreign-born Muslim doctors are at the center of the investigation, including a Palestinian and an Iraqi. In addition, Australian officials confirmed that “a foreign doctor working there had been detained” in connection with the UK plot.

One Pakistani paramilitary Ranger was killed by gunfire from inside the mosque in fighting at Lal Masjid, or the Red Mosque. While Islamabad’s deputy commissioner Chaudhry Muhammad Ali said there was no plan to raid the mosque, Interior Minister Aftab Sherpao said that police were “provoked into retaliation” by the students who started the gunfire. The Pakistani government forces fired teargas into the mosque and adjoining madrassa.

Considered a potential flash point for an Islamist uprising, the Musharraf government has been extremely hesitant to crack down on the pro-Taliban Islamist mosque that has been enforcing their own law on shops in the adjacent areas, particularly movie and music shop owners. But it is also reported that “Maulana Fazlur Rahman, the leader of the opposition in Parliament, gave his tacit support for the [Musharraf] government to confront the Taliban.” The Muttahida Majlis-e-Amal (MMA) opposition is “also said to have agreed with Musharraf during a National Security Council meeting on Monday that extremism should be confronted with ‘iron hands’.”

The recent 2,000-strong reinforcement around Lal Masjid (Red Mosque) may be part of the “iron hand” Musharraf has in mind, though his track record of confronting the Islamists leaves some observers wondering if his actions at Lal Masjid will match the language.

Update: Thus far on Tuesday (03July07), at least 9 have been killed in the Red Mosque confrontation, including two members of the Pakistani police and/or paramilitary rangers.

Note: Reuters has a good background resource sheet: FactBox - Pakistan’s Red Mosque in standoff with government.

Following the US-led Sadr City raids that killed 26 suspected of links to Iranian terror groups operating in Iraq, Brigadier General Kevin J. Bergner said that a member of the Lebanese terrorist group Hizballah, Ali Mussa Dakdouk, has been in custody since March 20 and was “working in Iraq as a surrogate for the Iranian Quds force.”

The US General said that Hizballah’s Dakdouk had been working for the Iranians as a liaison between Iran and the Kazaali network responsible for the January raid on the Karbala Provincial Joint Coordination Center (PJCC) in which 4 American soldiers were kidnapped and executed and a fifth killed during the abduction operation.

ThreatsWatch concluded and has maintained in analysis that Iran was behind the Karbala executions operation. It appears now that American military commanders are prepared to publicly state such unequivocally about an operation that can be seen as little else but an Act of War by a state entity.

British police were on the bombers’ trail as another group of terrorists drove their bomb-laden Jeep into an entrance gate at Scotland’s Glasgow Airport. Authorities had left a request for information on the suspects with their landlord, from whom they had rented living space just weeks prior to the attack.

Conducting raids throughout the UK, Britain continues its hunt for terrorists in the involved cell, believed to be part of al-Qaeda. Understandably, the hunt is difficult as “These are not the type of people who always carry identity documents, or who use their real identities.” Several British newspapers are reporting that “two of the men arrested were hospital doctors.” British authorities, however, have refused to comment on the claim. Three of the five already arrested are reported to be foreign nationals, and all five are said to be Muslim extremists.

All of the bombs used have been of the same gasoline and propane/butane gas design, each with double cell phone triggers that failed. As details of the devices and intent become known, a picture of a flawed bombing campaign by martyrdom-seeking terrorists is beginning to emerge.