Geopolitics Weekly

According to the US government, the group is responsible for targeting Iranian government officials and killing Iranian women and children, Foreign Policy said. In July it claimed responsibility for attacking the Grand Mosque in Sistan-Baluchistan capital of Zahedan, reportedly targeting members of Iran's elite Revolutionary Guards Corps, killing 28 people.

Tensions in the US-Iran relationship have also spiked, most recently following the car-bombing of an Iranian nuclear scientist. Foreign Policy, however, said there was no evidence of a link between the scientist's killing and Jundallah.

Last month Mr Gilani said conspirators were plotting to bring down his government, without specifically blaming the military. That prompted army chief Gen Ashfaq Kayani to dismiss coup rumours.

The Supreme Court is investigating an anonymous memo which sought US help to avert a possible military coup in Pakistan following the killing by US forces of al-Qaeda leader Osama Bin Laden in May. It is not clear who wrote the memo or conveyed it to the Americans.

The scandal has already cost Pakistan's former ambassador to Washington, Husain Haqqani, his job. He denies any role in the memo, as does President Asif Ali Zardari. He could be forced to quit if the trail is found to lead to his door. The Supreme Court investigation aims to get to the bottom of the scandal. Mr Zardari's government is also on a collision course with the judiciary, which wants to reopen old corruption cases in which the president argues he is innocent.

Last month's bombings targeted security buildings in the capital and were also the work of suicide bombers, the Syrian authorities have said.

Syria has been racked for 10 months by an uprising against President al-Assad in which the UN says more than 5,000 people have been killed. The government says armed "terrorists" have killed 2,000 members of the security forces.

The Pentagon has long debated its doctrine on being able to wage two wars simultaneously. In 2001, former Defence Secretary Donald Rumsfeld told Congress that strategy was not working. And when the US was in fact fighting two wars in Iraq and Afghanistan the military suffered a shortage of manpower.

Its Freedom and Justice Party (FJP) leads after two of the three rounds of voting and the rise of Islamist parties in the poll has prompted Western concern for the future of Egypt's close ties to Washington and peace with Israel.

Raids last week on non-governmental organisations by police in a judicial probe into foreign funding for political parties have incensed rights activists and drawn a rebuke from Egypt's long-time ally the United States.

The more hardline Islamist al-Nour Party has come second in the voting so far but some analysts believe the Brotherhood may seek to build a coalition with liberal groups. That could ease concerns at home and in the West about the rise of the Islamists in a country whose economy is propped up by tourism.

"The party's winning of the majority in the new parliament does not mean going it alone in writing the constitution without consideration for the rights of other Egyptians, or ignoring the political forces which did not get a majority or failed in the parliamentary elections," said FJP head Mohamed Mursi.

With so much to gain from its return to mainstream politics, the Brotherhood has insisted that the elections proceed as planned and has shunned recent street protests against the army.

poll officials said many citizens had turned up just to avoid paying a fine for not voting

Even Iran's top trading partner China - which has refused to back new global sanctions against Iran - is demanding discounts to buy Iranian oil as Tehran's options narrow. Beijing has cut its imports of Iranian crude by more than half for January.

Experts still say they do not expect Tehran to charge headlong into an act of war - the U.S. Navy is overwhelmingly more powerful than Iran's sea forces - but Iran is running out of diplomatic room to avert a confrontation.

"I think we should be very worried because the diplomacy that should accompany this rise in tension seems to be lacking on both sides," said Richard Dalton, former British ambassador to Iran and now an associate fellow at Chatham House think tank.

"I don't believe either side wants a war to start. I think the Iranians will be aware that if they block the Strait or attack a U.S. ship, they will be the losers. Nor do I think that the U.S. wants to use its military might other than as a means of pressure. However, in a state of heightened emotion on both sides, we are in a dangerous situation."

The new U.S. sanctions law, if implemented fully, would make it impossible for many refineries to pay Iran for crude. It takes effect gradually and lets Obama grant waivers to prevent an oil price shock, so its precise impact is hard to gauge.

The European Union is expected to consider new measures by the end of this month. The sanctions would halt purchase of Iranian oil by EU members such as crisis-hit Greece, which has relied on easy financing terms offered by Tehran to buy crude.

Although China, India and other countries are unlikely to sign up to any oil embargo, tighter Western sanctions mean such customers will be able to insist on deeper discounts for Iranian oil, reducing Tehran's income.

Beijing has already been driving a hard bargain. China, which bought 11 percent of its oil from Iran during the first 11 months of last year, has cut its January purchase by about 285,000 barrels per day, more than half of the close to 550,000 bpd that it bought through a 2011 contract.The impact of falling government income from oil sales can be felt on the streets in Iran in soaring prices for state subsidised goods and a collapse of the rial currency.

"The rate is changing every second ... We are not taking in any rials to change to dollars or any other foreign currency," said Hamid Bakshi at an exchange office in central Tehran.

The economic impact is being felt ahead of a nationwide parliamentary election on March 2, the first vote since a disputed 2009 presidential election that brought tens of thousands of Iranian demonstrators into the streets.

In a sign of political tension among Iran's elite, a court jailed the daughter of powerful former President Akbar Hashemi Rafsanjani on Tuesday for "anti-state propaganda."Rafsanjani sided with reformists during the 2009 protests. Daughter Faezeh Hashemi Rafsanjani went on trial last month on charges of "campaigning against the Islamic establishment."

She was briefly detained in February 2011 after taking part in a banned protest march.

The former president's political influence has decreased in recent years, and his website was recently shut down.

In 2009, during the protests that followed President Mahmoud Ahmadinejad's controversial re-election, Mr Rafsanjani angered hard-liners by calling for the release of detained opposition members. In March 2011 he lost his position as head of Iran's highest clerical body, the Assembly of Experts. He now retains only one political position, as head of the Expediency Council, but his term there ends in April and it is unclear whether he will keep that role.

Wary of Iran, the U.S.has been building up missile defenses of its allies, including a $1.7 billion deal to upgrade Saudi Arabia's Patriot missiles and the sale of 209 Patriot missiles to Kuwait, valued at about $900 million. On Thursday, the Obama administration announced the sale of $30 billion worth of F-15SA fighter jets to Saudi Arabia.

Under the fighter jet agreement, the U.S.will send Saudi Arabia 84 new fighter jets and upgrades for 70 more.

All the sales are part of a larger U.S.effort to realign its defense policies in the Persian Gulf to keep Iran in check.

Analysts say choking off the strait will hurt Iran's oil-dependent economy, particularly when OPEC member Saudi Arabia has pledged to compensate for any shortages in Iran's crude exports to Europe.Russia and China, Iran's main allies that have protected it from stronger U.N. sanctions, also have no interest in seeing the oil traffic disrupted in the Gulf and favour resolving the nuclear dispute through talks.

Iranian media reported that Jalili would write to the European Union's Ashton to express Tehran's readiness for fresh nuclear talks with major powers."Jalili will soon send a letter to Catherine Ashton over the format of negotiations ... then fresh talks will take place with major powers," said Iran's ambassador to Germany Alireza Sheikh Attar, the semi-official Mehr news agency reported.Talks between Iran and the five permanent members of the U.N. Security Council, the United States, Russia, China, Britain and France, plus Germany (P5+1) stalled in January.