THE IMPLICATIONS OF THE IRAN-IRAQ AGREEMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01142A000500050002-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 16
• Document Creation Date: December 20, 2016
• Document Release Date: March 31, 2006
• Sequence Number: 2
• Publication Date: May 1, 1975
• Content Type: REPORT

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Secret
The Implications of the Iran Iraq Agreement
MORI
review(s)
completed.
Secret
DCI/ NIO 1039-75
1 May 1975
Copy N2 222
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THE IMPLICATIONS OF THE
IRAN-IRAQ AGREEMENT
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CONTENTS
Page
OVERVIEW .......
.....................
DISCUSSION ........ .
2
The Algiers Accord ......... ... 2
..............
Motivations 3
Durability of the Accord 4
Implications for Iran .....
.......... 4
Domestic 4
....................................
Foreign ............... .. ...... ........ .......... 4
Implications for Baghdad .. .. .... . ..... . . 6
The Kurds ............. ... 6
...........................
Iraqi-US Relations 6
The Soviet View ............ ............... .. .......... 7
Arab-Israeli Ramifications .........
8
Iraq's Regional Impact ........ 9
Subversion and Diplomacy ......... ............. ......... 9
Implications for Syria ........ 10
Saudi Arabia .......................
10
Egypt's Stake 10
. ...................
Algerian Hopes ....................... 11.
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THE IMPLICATIONS OF THE
IRAN-IRAQ AGREEMENT'
OVERVIEW
Iran has long sought to persuade Iraq to accede to Tehran's
definition of the border between the two countries, especially along
the Shatt al-Arab waterway. Anxious to establish his own hegemony
i
h
n t
e area, the Shah has also sought to restrict Iraqi influence
,
n the region, as well as to eliminate foreign leftist
influences at work in Baghdad. The Algiers agreement of early March
between Iran and Iraq appears to have achieved the Shah's first
goal; whether the Shah's other objectives can be attained seems more
doubtful. Iraq has been freed of its entanglement in the Kurdish
rebellion and, for the time being, of the prospect of a confrontation
with Iran. Baghdad's foreign policy options have been substantially
increased.
We speculate below on the implications of the Algiers agree-
ment for the participants, other countries in the region, and the
great powers.
1 This paper was produced under the auspices of the National Intelligence Officer for
the Middle East. It was drafted by CIA (OCI) and coordinated with State/INR and DIA.
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DISCUSSION
The Algiers Accord
1. The Shah of Iran and Iraqi strongman Saddam
IIusayn Tikriti signed an agreement on March 6
intended to resolve long-standing border differences
which had led to a number of serious clashes during
the past year, Both governments gained important
advantages from the accord; Iraq's rebellious
Kurds 2 were the big losers.
2. The agreement consists of a public accord
which involves reciprocal responsibilities on two
points:
- demarcation of land and river boundaries;
- the exercise of strict border control and pre-
vention of infiltration of subversives.
The two sides describe the accord as indivisible;
violation of a single provision nullifies the whole
package.
3. Statements and actions by both sides since
March 6 point to the existence of a secret under-
standing, the exact terms of which are still unknown.
The Shah clearly promised to withdraw Iran's
military assistance from the Kurds.. This could not
be spelled out in the public accord because Tehran
always denied giving such help. The disposition
of Kurdish refugees in Iran probably was also
discussed. Both sides obviously agreed to end
hostile propaganda. The activities of foreign powers
in the Gulf may also have been treated in Algiers;
this has been the theme of statements by officials
of both governments and by their countries' media
since the signing.
4. Baghdad's main concession was its acceptance
of Tehran's formula for demarcating the disputed
Iraqi Kurds number about 2 million; they make up about
18 percent of the population. There are about 3 million
Kurds in Turkey, 1.5 million in Iran, and several hundred
thousand in Syria.
southern river boundary according to the thalweg
principle (i.e., center of the navigational channel).
Iraq had previously insisted that the 1937 treaty
setting the border along the Iranian shore of the
Shatt al-Arab gave Iraq total control of navigation
on the river-and hence over access to Iran's Aba-
dan refinery and the port of Khorramshahr. Bagh-
dad was unable to enforce this claim, however.
5. Strict observance of the border control provi-
sion would benefit both sides. It would end the
sending of Iraqi-trained subversives into Iran to stir
up anti-government sentiment among minority
groups, particularly the Arab population of Khuze-
stan. Iranian dissidents presumably would no longer
be allowed to promote their activities from Iraqi
territory. The major consequence of the provision,
of course, is that it has brought an end to Iranian
military assistance to the Kurds. This was Iraq's
objective and Iran's principal concession.
6. The withdrawal of Iran's aid reduced the
Kurds' options essentially to maintaining low-level
guerrilla activity, surrendering to Baghdad, or going
into exile. The accord thus holds out the prospect to
Baghdad that-freed from a debilitating internal
conflict-it can devote more resources to develop-
ment.
7. Some evidence suggests that the Shah thought
the accord also included a pledge from Saddam
Ilusayn at least temporarily to freeze the military
situation in Iraq and possibly to open negotiations
with the Kurds. Immediately after the accord was
signed, however, Baghdad ordered an all-out offen-
sive. It continued for about a week until the Shah
was able to arrange a cease-fire two days before a
previously scheduled meeting of foreign ministers
in Tehran on March 15 to work out the implementa-
tion of the agreement. The cease-fire, along with
Baghdad's offer of amnesty to rebellious Kurds, ex-
pired on April 1 and Iraq completed its military oc-
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cupation of all Iraqi Kurdistan. It met little opposi-
tion. Baghdad, under prodding from Tehran, did
extend until the end of April-and then for an addi-
tional 20 days-the period during which Kurdish
refugees in Iran could return to Iraq.
8. Border demarcation and control has proceeded
smoothly under the guidance of commissions cre-
ated by the foreign ministers. The Shatt al-Arab has
been surveyed, and jointly-manned control posts
have been established in both countries to monitor
the implementation of the Algiers agreement. A sec-
ond meeting of foreign ministers was held in mid-
April and a third is scheduled for mid-May. The
refugee problem has been discussed, along with the
possibility of wider cooperation. Saddam Husayn
went to Tehran in late April; the Shah is to return
the visit later this spring.
Motivations
9. Iraq has long been the focus of Iran's most
intense hostility and suspicion because of ethnic,
religious, and political differences. The Shah has
regarded Baghdad as a stalking-horse for Soviet
ambitions in the Gulf and as a source of subversion
throughout the region. For some time the Shah has
been using Iraqi Kurds to divert Baghdad's attention
and resources away from interference in Gulf poli-
tics, to encourage political instability, and indirectly
to promote Iran's interest in border rectification.
Never did the Shah consider aid to the Kurds an
open-ended commitment, however. He did not sup-
port their goal of autonomy out of fear it would
encourage similar sentiments among Iranian Kurds.
10. The Kurdish equation took on new dimen-
sions last summer when Baghdad decided to use its
Soviet-equipped army to seek a "final solution" to
its Kurdish problem. Baghdad launched an offensive
against rebel-held territory that eventually engaged
80 percent of Iraq's army.
11. To halt the Iraqi offensive and to preserve his
Kurdish card, in August the Shah introduced Iranian
artillery and air defense units directly into the fight-
ing inside Iraq. The intervention, plus the onset of
bad weather, eventually stopped the Iraqi advance.
The Kurds, however, were unable to regain any lost
territory during the winter, as they had usually man-
aged to do in past years.
12. The Kurdish failure left the Iraqi army in a
good position to renew its offensive this spring. The
Shah was faced with the prospect of having to in-
crease the already sizable Iranian military commit-
ment if the Kurds were to keep up the fight. The
Shah, concerned about the growing possibility of an
all-out military confrontation with Iraq and the
wider implications of such a policy, decided against
deeper involvement.
13. This decision made, the Shah could only con-
clude that his bargaining position would steadily
erode once the anticipated Iraqi spring offensive
began. He therefore made the best deal he could at
Algiers. The Iraqi concession on the Shatt al-Arab-
no small matter in itself-was a necessary minimum
in the Shah's eyes as a plausible explanation for his
sudden turnaround in reaching an accord with a
bitter adversary.
14. The Shah realized that deeper involvement in
the Kurdish fight would jeopardize a larger regional
goal-closer cooperation with moderate Arab states.
Expanded Iranian military intervention would have
caused him problems throughout the Arab world at
a time when he was trying to improve relations with
Egyptian President Sadat and other moderate lead-
ers. Arab governments were feeling Iraqi pressure to
intervene to secure an end to Iranian intervention.
Cairo, in particular, was arguing that ending the
confrontation would help draw Iraq into the Arab
political mainstream and lessen its dependence on
the Soviet Union. The Shah was concerned over
Moscow's growing influence in Baghdad, and
Cairo's argument may have influenced him.
15. Pursuit of the military campaign against the
Kurds also entailed risks for Saddam Husayn and
might have brought his downfall. As in previous
years, policy toward the Kurds was causing splits
within the ruling group in Baghdad. The Iraqi
strongman had made a personal commitment to a
military solution and his prestige was on the line.
Yet there were serious problems developing within
the military over heavy casualties and over Bagh-
dad's inability to respond effectively to Iranian in-
tervention. Also, the military campaign monopolized
national attention and resources, and the need for
military supplies circumscribed Baghdad's freedom
in dealing with Moscow.
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SECRET
16. Yet Saddam Husayn felt he could not afford
to end the campaign and admit failure. Since the
immediate need was to neutralize Iran, he decided
to pay the required price and accept Iran's view on
the Shatt al-Arab.
Durability of the Accord
17. The provisions of the agreement are being
implemented. Both sides appear to have complied
with their part of the bargain and have a mutual
interest, for the moment, in keeping the accord
intact.
18. Problems may yet develop, however. The
Shah, in effect, traded performance for promises
in Algiers, and there are few assurances that Iraq
will want to honor all those promises once it has
mastered its Kurdish problem.
19. Iran's leverage over Iraq was largely lost
when it pulled its troops out of Iraq, shut off aid
to the Kurds, and closed its border. If Baghdad
chose to renege on its part of the agreement it
would be difficult for Tehran to revive an effective
Kurdish resistance movement inside Iraq.
20. We have considerable doubt that there will
be a lasting reconciliation. Iran and Iraq are natural
competitors in the Gulf.
- They are the most populous states.
- Each is rich in natural resources and has a
large well-equipped army.
-Both the Shah and Saddam Iiusayn have
widely differing views of how the region
should evolve politically and both aspire to
regional leadership and dominance.
21. Friction seems certain to revive if Iraq per-
sists in meddling in Culf states, and particularly
if it continues to press neighboring Kuwait to cede
territory flanking the Iraqi port of Uinm Qasr. In
any event, each will continue to compete for allies
in the Gulf to strengthen its political and military
position.
Implications for Iran
Domestic
22. The Algiers accord was one of two abrupt
major policy decisions in early March that illus-
trated the Shah's increasingly arbitrary style of
vile-the other being his decree of a one-party
state for Iran. Ile apparently consulted no major
figures before ditching the Kurds. Most advisers
have become "yes-men" and there is virtually no
public debate over policy issues. Thus there are
few safeguards to miscalculation by him, nor any
apparent mechanism for correcting error, beyond
the Shah's own perceptions.
23. The Shah's Kurdish decision has domestic
security implications. Many of the estimated 150,000
Kurdish refugees in Iran are embittered by what
they regard as a betrayal, and some of Iran's own
1.5 million Kurds have expressed dismay at the
abruptness of Iran's withdrawal of support from
their Iraqi kinsmen.
24. We think Iranian security forces will be able
to handle potential problems from both sources.
Iran took the precaution of disarming Kurdish
fighting men crossing the border prior to its closing
and of isolating them from the civilian refugees.
Tehran does not want the refugees to remain in
camps and will attempt to integrate them into
Iranian society, possibly in non-Kurdish areas.
There is the possibility that some might resist
efforts to settle them in areas markedly different
from their mountainous homeland.
25. Baghdad, at Tehran's request, sent officials
to the refugee camps to reassure the Kurds that
they -will be pardoned if they return to Iraq. We
have received widely conflicting estimates on the
number who have chosen to do so. Baghdad
realizes, as does Tehran, that the Kurds pose a
potential security problem for Iran, and probably
has little interest in relieving the Shah of this
burden.
Foreign
26. The agreement strengthens the principal
rival capable of seriously challenging Iran in the
Gulf, as well as a regime whose sponsorship of
subversion and Arab radicalism and receptivity to
Soviet influence has long been considered by the
Shah as a threat to Iranian security. Iran may bene-
fit from the gratitude of sonic Arab leaders who
had argued the accord would lead to a moderation
of Baghdad's present political stance, but others-
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Kuwaitis, Syrians, and Omanis-worry that Bagh-
dad may now devote more attention to its other
feuds and border disputes. Turkish leaders welcome
the accord because it puts an end to Iran's aid
to Kurdish separatists; Ankara feared that there
might be a spillover of the fighting or that the 3
million Turkish Kurds might become involved in
an autonomy movement.
27. The Shah will try to use the accord to se-
cure-with the help of other Arab leaders-a mod-
eration of Baghdad's policies. In ending his aid to
the Kurds and normalizing relations with Iraq, he
strengthens the hand of Arab leaders who have
been encouraging Saddam Husayn to reduce his
ties to Moscow. The accord also helps undercut the
charge of Arab radicals that Iran is an implacable
foe of the Arabs.
28. To the extent that the Shah pushes for a re-
duction of Soviet influence in Iraq, he will come
under pressure to demonstrate to Baghdad and
other Arabs that Iran is not a tool of US policy in
the region. He has previously joined other area
states in insisting that Persian Gulf security is the
responsibility of littoral states. He now may be
willing to enlarge on this line, especially since
Prince Fahd-whom the Shah feels is more likely
to cooperate on regional security than was King
Faysal-has attained a more influential role in
Saudi Arabia.
29. Saddam Husayn has referred to the possi-
bility of a collective security arrangement in the
Gulf in several press interviews given since the
accord was signed. He said in one that the Algiers
accord foresaw some Iran-Iraq security cooperation.
This goes well beyond any Iranian statements to
date. A communique. issued following a visit to
Baghdad by the Iranian Prime Minister in late
March affirmed only that the Gulf should be
"spared all foreign interference." Iran's govern-
ment-controlled press has repeated this theme sev-
eral times since the accord was signed. Withdrawal
of Soviet and US naval forces would leave Iran
with the only significant naval force in the Gulf.
30. The Shah might be willing to state public
opposition to the US naval role in the Gulf more
forcefully in exchange for greater regional coopera-
tion on security matters or for concrete examples
of a lessened Soviet influence in Iraq. It is doubt-
ful, however, that he would at this time work to
secure the complete removal of the US presence
in Bahrain.
31. The Shah naturally retains a deep suspicion
that Iraq's foreign policy will continue to aim at
creation of an anti-Iranian front in the Persian
Gulf. If Baghdad continues to support subversion
and radical Arab policies, the Shah probably will
consider himself in a good position to insist that
Egypt and Algeria-governments which encour-
aged his reconciliation with Baghdad-join Iran
in addressing Iraqi "adventurism." He fears that
moderate Arabs will seek their own accommoda-
tion with Iraq and even cooperate with Baghdad to
limit Iranian influence on the Arabian peninsula.
32. The Shah's decision to end his support of the
Kurds raised doubts about Tehran in the minds of
some conservative Arab leaders with whom he is
on good terms. Oman, for example, was caused to
wonder about the steadfastness of Iranian support
in the Dhofar fighting. Muscat probably was re-
sponding to rumors that an Iranian withdrawal from
Dhofar was included in a secret protocol to the
Algiers agreement. Oman has privately reempha-
sized to Tehran its need for Iranian aid. The Shah
has shown no disposition to withdraw from Oman.
33. Jordan's King Husayn is deeply concerned
over the agreement. He had hoped that Iraq could
be persuaded to moderate its position toward the
Kurds and that a settlement might be reached
under which Barzani might retain his position as
leader of the Kurdish community. Husayn now
fears Iraqi subversive efforts, and he now wonders
whether the rapprochement may have given the
Iraqis license to do whatever they want. in the Gulf.
34. The Algiers accord-reached during a sum-
mit meeting of OPEC-could complement other
efforts to maintain unity within OPEC ranks be-
cause it eliminates a potentially divisive issue. The
Shah probably believes the agreement enhanced his
role in the organization especially with Arab oil
producing states, who, in the event of worsened
Iranian-Iraqi relations, might have found it politi-
cally expedient to oppose Tehran's policies in the
OPEC venue.
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Implications for Baghdad
35. The end of the Kurdish rebellion strengthens
Saddam Ilusayn by removing a vulnerability that
his critics could exploit. The present Baathist gov-
ernment, which took power in 1968, is an uneasy
coalition of military and civilian factions. Saddam
Ilusayn, who made the decision to use military
means to deal with the Kurdish problem, leads the
Baath party's civilian eying. The military's repre-
sentative in the leadership, President Bakr, who
is seriously ill and inactive, acquiesced. As the
fighting dragged on, the decision drew heavier
criticism, and the conflict became known as "Sad-
(lain Husavn's war."
36. Giving in to the Shah's demands on the
Shatt al-Arab cost Baghdad something in national
pride; but, by getting a free hand to deal with the
Kurds and lessening the danger of war with Tehran
the Iraqis gained more than they gave up. There
has been no known public reaction in Iraq against
Saddam Ilusayn's concession to Iran, nor have
critics within the leadership tried to exploit the
matter. The possibility remains, however, that if
he stumbles on some other issue, his concession on
the waterway could come back to bedevil him.
37. Although troublesome Kurdish-related ques-
tions have to be faced, Saddarn can now redirect the
regime's energies. Domestically, Saddam will con-
centrate on repairing damage to the economy stem-
ming from the hostilities, which, he admits, cost
the lives of 10,000 Iraqi troops. Demobilization of
reserves will free manpower to return to civilian
tasks and help case shortages of food and consumer
goods. Baghdad, moreover, can now allocate more
of its resources to accelerating industrial dcvclop-
ment, and to efforts to subvert Gulf states and
Syria.
The Kurds
38. As for the dealing with the Kurds, Iraq is
relatively free to impose its will. Baghdad will grant
no concessions to Kurdish aspirations for self-rule
beyond the token legislative and executive bodies
established last summer. Baghdad has made some
efforts to Arabize Kurdistan by resettlement and
may see this as part of the long-term solution
to the problem.
39. Armed resistance by Kurds on the scale of
1974 is now out of the question. Preliminary indi-
cations suggest that about one-third of the 30,000-
man Kurdish regular force intend to continue
the insurgency using guerrilla tactics. The Kurds
are believed to have cached large quantities of
ammunition in the mountains before the Iraqi of-
fensive in 'March. They may have also laid in
additional stores of arms and supplies from Iran
before the border was closed on April 1. The Kurds
may try to establish lines of supply to the Syrian
border. Despite Damascus' well-founded resent-
ment of the subversive activities of the rival Baath-
ist regime in Baghdad, Syria has more direct means
of putting pressure on Baghdad than arming Iraqi
Kurds.
40. Some die-hard Kurds hope that Iran may
resume military assistance if implementation of the
Algiers accord does not proceed smoothly. Such
an eventuality appears unlikely, despite reports
that Iran may be training some Kurds against the
possibility of a breakdown. Although mutual sus-
picions run deep in Iranian-Iraqi relations, both
sides have a major stake in keeping the new rela-
tionship intact, at least for the near term.
41. The decline in the Kurds' fortunes is matched
by the disarray in their leadership. Mulla Mustafa
Barzani, now in his early 70s, the personification
of the autonomy movement, has effectively stepped
down. The Shah's accord irreparably damaged
f3arzani's prestige and authority. No remaining rebel
commander has the stature to replace him. The
Kurdish central command may simply disappear and
a number of independent rebel groups may try to
carry on resistance against Baghdad.
42. It seems clear that without substantial sup-
port the rebels' resistance to Baghdad will be re-
stricted to the harassment of government units and
acts directed against economic targets. In their cur-
rent frame of mind, the Kurds may even strike at
Iraqi oil installations-heretofore proscribed from
the rebels' target list at the insistence of the Iranians,
who apparently feared that Iraqi terrorists might
retaliate against the petroleum complex at Abadan.
Iraqi-US Relations
43. The end of the Kurdish rebellion removes
one of the impediments to improved relations be-
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twecn Iraq and the US. The Iraqis probably be-
lieve that the US was collaborating with Iran-
and Israel-in providing military assistance to
the Kurds.
44. It is, however, the US role as Israel's principal
backer that Baghdad sees as the main deterrent
to better relations with Washington, and the Algiers
agreement has not affected this. For the moment,
Iraq probably sees no advantages in ending its
status as the only Arab state, among those that
broke with the US in 1967 over the Arab-Israeli
war, that has not reestablished ties with Wash-
ington.
45. The absence of formal diplomatic ties has
not obstructed rapid growth in commercial rela-
tions between Iraq and the US. In February, for
example, Baghdad concluded a $225 million con-
tract for Boeing aircraft, making Iraq one of the
fastest growing markets for US products in the
Middle East. Iraq still severely limits official con-
tact with US diplomats attached to the interests
section in the Belgian embassy. In sum, we doubt
that Iraq would be receptive to any overtures to
improve political relations unless there is a dis-
cernible change in overall US Middle Eastern
policy.
The Soviet View
46. To our knowledge, the Soviet Union had no
part in getting Iran and Iraq together. Moscow,
in fact, probably has mixed feelings about the re-
sults of the Algiers meeting, although the USSR
repeatedly has advocated a settlement of differences
between Iran and Iraq and a granting of Kurdish
autonomy. Now Moscow presumably is concerned
about what the agreement may portend for Bagh-
dad's relations with the Soviet Union.
47. Moscow is aware that Iraq may decide to
take advantage of decreased regional tensions to
accelerate its purchase of Western goods, tech-
nology, and developmental assistance, while reduc-
ing its dependence upon and cooperation with the
Soviet Union and Eastern Europe. Even before
the Algiers agreement, the Soviets had given indi-
cation of concern over what they saw as an Iraqi
tendency to lean toward the West. Moscow knows
that the Shah wants to wean the Iraqis away from
the Soviets and to restrict the growth of Soviet in-
fluence in the Gulf.
48. On the other hand, the Algiers agreement
has some positive features from Moscow's point
of view. The end of the Kurdish war eliminates a
threat to a regime in which Moscow has a substan-
tial stake and with which the Soviets enjoy basically
good, if sometimes troubled, relations. Moscow,
moreover, no longer faces the unwelcome prospect
of being importuned to back Iraq in full-scale
fighting against Iran-with whom the Soviets have
developed profitable commercial tics.
49. The Soviets are aware that over the short
term Iraq cannot replace Soviet military hardware,
with which Baghdad's forces are almost exclusively
equipped. Iraq will remain dependent on the USSR
for consumable supplies, spare parts, technical as-
sistance, and training, although the need for re-
supply will now be less urgent. About 500 Soviet
advisers are serving in training roles with the army
and an additional 400-500 are with the Iraqi air
force. The enhanced capabilities displayed by the
Iraqi army were probably largely the result of
Soviet training and advice. Recent purchases of
additional MIG-23 aircraft and Scud missiles, com-
plementing earlier deliveries of advanced weaponry
(FROGs, TU-22s and SA-6s), are further indica-
tions that Baghdad intends to continue looking to
Moscow for sophisticated weaponry.
50. The Soviets, however, have not been willing
to give the Iraqis everything they want, A two-
month delay last year before agreeing to Baghdad's
requests for additional ammunition undoubtedly
increased Iraqi concern about its dependence on
one nation for its military needs. This has con-
tributed to a Baghdad decision to diversify its
sources of equipment. Baghdad has since ap-
proached the West for military equipment. France.
which already had sold Iraq helicopters, armored
personnel carriers, and light tanks, reportedly now
has offered to sell Mirage aircraft.
51. Moscow also knows that there are powerful
influences in Iraq at work to impede any signifi-
cant turn away from Moscow. The Soviets recognize
that historical animosities, distrust, and conflicting
interests will be barriers to a significant or lasting
accommodation between Baghdad and Tehran.
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52. At the same time, the Soviet Union will con-
tinue to maintain cordial relations with Iran as a
key element of its policy in the Persian Gulf.
Although the accord could even lead to an im-
provement in relations; the Soviets have reasons
to believe that the agreement presages a different
power balance in the Persian Gulf that could further
limit Soviet influence in the area.
Arab-Israeli Ramifications
53. Iran perceives the accord with Iraq as con-
tributing to its effort to draw closer to the Arab
states. The Sliah, who aspires to regional leader-
ship, does not wish to be classified as hostile to
Arabs and a supporter of Israel. Moreover, it may
he his perception that the power balance has
shifted in favor of the Arabs. Ile might also anti-
cipate an eventual modification of US policy toward
Israel. The Shah does not want to be caught short,
54. Iran's diplomatic, economic, and intelligence
ties to Israel are based on pragmatic, not emotional
or ideological considerations. One such considera-
tion is that Israel has served the same purpose
toward the Arab world that the Kurds served
toward Iraq: it has kept the Arabs off balance and
occupied. As long as Israel remains militarily strong
and able to absorb Arab energies, the Shah will
regard his ties to Tel Aviv as in his interest, and
he will maintain a quiet relationship.
55. To Tel Aviv, the touchstone of relations with
Iran is the continued flow of Iranian oil-which
meets about half of Israel's domestic requirements.
Tehran's reconciliation with Baghdad will thus
not by itself significantly alter Iranian-Israeli rela-
tions, although it has increased Israeli doubts about
the Shah's willingness to supply petroleum should
another Arab-Israeli war break out.
57. The collapse of the Kurdish rebellion and
lessening of Iranian-Iraqi tensions will free much
of Baghdad's military forces for use against Israel
in the event of another var. In October 1973
Tehran's willingness--during a period of tension
with Baghdad-to resume diplomatic relations with
Iraq enabled the Iraqis to send two armored di-
visions to the Syrian front. We estimate that by
this summer the Iraqis could again contribute as
many as two armored divisions plus some aircraft
to any renewal of Arab-Israeli fighting.
58. Iraq's help might be more effective than in
1973. At that time the Iraqi effort on the Syrian
front was hampered by a shortage of tank trans-
porters, an inadequate logistics system, and diffi-
culties in coordinating operations with the Syrians.
Soon after the October War, Baghdad took steps
to increase its supply of armor transportation and
improve its coinmand-and-control procedures. The
logistic system appears much more effective, largely
as a result of experience gained in fighting the
Kurds.
59. Despite the current cooperation between the
two sides, however, Baghdad must still consider
Iran the primary military threat and will deploy
its troops accordingly. The Iraqi units will return
to their normal areas of cantonment near the Iranian
border. The Iraqi army suffered heavy casualties
and moderate equipment losses during the year of
fighting the Kurds but will experience little diffi-
culty in refitting and bringing units up to strength
for service against Israel.
60. The size of the force that Iraq contributes for
service on the Israeli front will be determined by
Baghdad's relations with the Arab belligerents
when, and if, hostilities break out. Baghdad's stri-
dent calls for "liberation" of Israeli-occupied terri-
tory should not be read as an open-ended commit-
ment of troops to another round of fighting. If the
Iraqis do not believe the front-line Arab states in-
tend an all-out prosecution of the war, Baghdad
will not be disposed to make a maximum military
contribution; and as in 1973, the reliability of its
commitment would be subject to the vagaries of
Iraq's political relations with other Arab belliger-
ents.
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Iraq's Regional Impact
61. The Algiers accord fits into the pattern emerg-
ing over the past year of Iraqi efforts to project an
image of moderation in its regional policy and non-
interference in the affairs of its neighbors. We are
unable yet to tell whether there is any substance
behind the image. Our initial impression, however,
is that Baghdad's courtship of some Arabs and now
Iran reflects an adaptation to internal and external
pressures-the need, for example to end the Kurdish
rebellion-and does not signal a basic shift in its
foreign policy outlook in the near term.
62. Past performance does.not encourage unques-
tioning acceptance of Saddam Husayn's new pose.
Although his personal charm and dynamism have
favorably impressed even many conservative Arab
leaders, and apparently the Shah, his record is that
of a dedicated Baathist revolutionary and meddler
in the affairs of other countries.
63. We believe that the Iraqi Baathist leadership
remains revolutionary in outlook and committed to
trying to overturn conservative and moderate re-
gimes in the Peninsula and the Gulf. Iraq may be-
come more subtle in its tactics, however. Our best
estimate is that Baghdad has adopted a two-tiered
policy. It actively courts its neighbors on the diplo-
matic level, while it continues to interfere in their
affairs. For a time, however, in keeping with the
conciliatory spirit of Algiers, Baghdad may refrain
from blatant involvement, such as its support last
year of an effort to overthrow the North Yemen
government and to replace it with a Baathist regime.
Subversion and Diplomacy
64. Freed of its battle against the Kurds, the
Iraqis may well decide to focus their energies on co-
vert operations aimed at extending their influence
within the states of the Peninsula and the Gulf.
Baghdad has never been better prepared financially
for such undertakings. Iraq's oil income-an esti-
mated $6.5 billion in 1974-is growing rapidly; by
the end of the decade Iraq could surpass Iran in oil
production.
65. In line with its new moderate posture, Bagh-
dad will probably concentrate at first on building
its clandestine assets through the quietly expanding
Baathist cells in the small Gulf countries and in-
creasing support of local dissidents. Iraq, moreover,
can spend liberally to influence local officials and
politicians. Iraqi embassies will probably acquire
additional intelligence and security-related person-
nel.
66. At the same time, we anticipate that Saddam
Husayn, concluding that the Algiers accord has
neutralized earlier Iranian opposition, will embark
on a new effort to create some kind of regional
security pact or joint military unit among the Arab
states of the Persian Gulf. We believe, however,
that such a proposal will continue to encounter
Iranian and Saudi Arabian resistance, as well as
foot-dragging by the smaller states.
67. Baghdad's intentions with respect to its neigh-
bors should be measurable by observable criteria.
Critical tests will be how Iraq deals with its prob-
lems with Kuwait and Syria and its role in support
of Omani rebels and other dissidents.
- Iraqi forces continue to occupy a strip of Ku-
waiti territory seized in March 1973. The Ku-
waitis fear that Baghdad-now free of the
Kurdish situation-will increase pressure on
them to cede two islands flanking the ap-
proaches to the port of Umm Qasr. The
Kuwaitis expect both Iraqi diplomatic initia-
tives and military muscle-flexing along the bor-
der. Various Arab leaders including Sadat and
Boumcdiene have been mentioned as being in-
terested in mediating the dispute, and Bagh-
dad's response will shed light on its general
posture.
- Iraq has shown no inclination to refrain from
subversive acts against the rival Baathist re-
gime in Syria. It was just such acts which
provoked Syria's latest squeeze of the Eu-
phrates water supply and its earlier restrictions
on Iraqi shipments through Latakia.
- To demonstrate its adherence to the principle
of noninterference, Baghdad could curtail its
support of the rebels in Oman's Dhofar prov-
ince. We believe, however, the Iraqis will do
their part to keep the Omani insurgency alive,
coordinating their support to the rebels with
that of South Yemen while maintaining a low
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profile themselves, The Iraqis believe they can
plausibly deny that they are providing the
arms, money, and training. Baghdad may urge
a shift in tactics to political subversion and ter-
rorism in northern Oman, arguing that the
rebels can revert to guerrilla warfare whenever
the Iranians go home,
- If Algiers is really a bench-mark in Iraq-Ira-
nian relations, Baghdad will end its support of
Iranian separatists. For sonic time, Baghdad
has sponsored a Khuzestan Liberation Front
to promote separatists sentiments among Ira-
nian Arabs and the Baluchi Liberation Front
for the Baluchi tribes of southeastern Iran.
Iraq has also meddled in Baluchi affairs in
Pakistan.
Implications for Syria
68. How Baghdad deals with Syria will also be
watched closely. Relations between the two are
at one of their periodic lows. In addition to historic
animosities between the two countries, Damascus
and Baghdad have rival claims to leadership of the
Baathist Movement. The news of the Iran-Iraq
accord was not well received in Damascus: the
Syrians would prefer to have Baghdad preoccupied
with the Kurds. The Syrians expect the Iraqis to
step up their propaganda attacks against Syrian
participation in the Middle East peace negotiations
and to feel freer to overthrow the Syrian regime.
69. The Syrians appear to have grounds for con-
cern. In mid-March, a senior official of the Baath
Party of Iraq privately commented that the Algiers
agreement would free Baghdad to pursue a number
of policy objectives among which is the creation
of a government in Damascus more ideologically
in tune with Baghdad. The official predicted an
upswing in Iraqi sabotage and espionage opera-
tions against the Syrian Government.
70. In early April, an early issue flared up when
the Iraqis charged that Damascus was violating an
agreement by diverting waters from the Euphrates
River. The Syrians publicly denied the charge but
privately acknowledged they took the step to warn
Baghdad to stop meddling in Syrian domestic af-
fairs. Only a few weeks earlier Syrian authorities
had rounded up 250-300 local Baath Party members
on charges of conspiring with Iraq to oust President
Asad.
Saudi Arabia
71. The agreement gives the new leadership in
Riyadh more latitude to seek better and more
complex relations with Iran. During the tension over
the past year between Tehran and Baghdad, Iraq
would have found it easy to criticize any such
moves by the Saudis as inimical to Arab solidarity.
Despite signs of a warming of Saudi-Iraqi rela-
tions-Saddam Ilusayn and Prince Fahd reportedly
soon will exchange visits and the settlement of
border problems appears to be near-the Saudis
fear that Iraq, free from its Kurdish entanglement,
will now be able to turn its attention to Persian
Culf affairs,
Egypt's Stake
72. Egypt's role in securing the Iran-Iraq agree-
ment was undertaken to further its own efforts
to maintain improving relations with Tehran and
Baghdad. Sadat counts heavily on economic assist-
ance from both countries, particularly Iran. He
further regards Iran as an important partner and
Iraq as a principal target for his efforts to exert
a moderating influence throughout the Middle East.
73. The Iran-Iraq dispute was a major hindrance
to both efforts. Sadat undoubtedly felt that his
close tics to Tehran endangered Iraq's economic
assistance and hampered his efforts to moderate
Iraq's opposition to Arab-Israeli peace negotiations.
In any case, as long as Tehran was skirmishing with
an Arab country, Egypt was vulnerable to criticism
from radicals for its good relations with Iran. Also,
Sadat is fully aware that settlement of Iraq's prob-
lems with Iran and an end to the Kurdish war might
free Iraqi troops to participate in another Middle
East war; presumably he also hopes that improved
ties with Baghdad will persuade the Iraqis to
participate in an oil embargo if war breaks out.
( Despite its rhetoric, Baghdad did not go along
with the OAPEC embargo in 1973.)
74. Whatever Sadat hopes, Baghdad is not likely
to repay Cairo for its mediation effort by softening
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Iraq's stand against Arab negotiations with Israel.
Baghdad sees merit in its rigid posture and no real
disadvantages, at least while negotiations remain
stalled. The Iraqis probably calculate that they can
climb on the negotiations bandwagon if they sense
that progress is being made toward a settlement.
75. For the moment, the Iraqis, allied with the
fedayeen groups that reject the Palestine Liberation
Organization's willingness to join in negotiations,
prefer the adversary role. This posture, they reason,
places them in the vanguard of the Arab world-
purists who brook no compromise with the enemy.
Should Egypt or Syria renounce the peaceful ap-
proach to a settlement, the Iraqis would be quick
to point out to other Arabs that they were right
all along. Baghdad would then exploit and harness
the anticipated radicalization of Arab opinion to-
ward Israel and the West.
Algerian Hopes
76. Though far from the front lines, President
Boumediene undoubtedly expects to receive some
financial aid and political support for his proposals
for a new economic order as a fallout from his part
in arranging the Algiers agreement. In need of funds
to finance its ambitious four-year development plan,
Algeria reportedly has requested $50 million from
Iraq and may have also approached Tehran. On
international issues, Boumediene probably hopes
Iran and Iraq will support his views that oil dis-
cussions with consumers be held only in the context
of all raw materials-not only oil, that the price of
oil should be indexed to world inflation rates, and
that all developing states should push for the radical
transformation of the world economic system at
the seventh special session of the UN General
Assembly next September.
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