PROSPECTS FOR IRAQ
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Publication Date:
July 19, 1983
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Director of Secret
Central
Intelligence
Prospects for Iraq
Special National Intelligence
Secret
SNIE 36.2-83
19 Juiy 1983
Copy 343
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S N I E 36.2-83
PROSPECTS FOR IRAQ
Information available as of 13 July 1983 was
used in the preparation of this Estimate.
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THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS.
The following intelligence organizations participated in the preparation of the
Estimate:
The Central Intelligence Agency, the Defense Intelligence Agency, the National Security
Agency, and the intelligence organizations of the Departments of State and the
Treasury.
Also Participating:
The Assistant Chief of Staff for Intelligence, Department of the Army
The Director of Naval Intelligence, Department of the Navy
The Assistant Chief of Staff, Intelligence, Department of the Air Force
The Director of Intelligence, Headquarters, Marine Corps
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CONTENTS
Page
KEY JUDGMENTS .................................................................................................... 1
DISCUSSION .............................................................................................................. 7
Military Situation .................................................................................................... 7
Iran's Strategy ......................................................................................................... 7
Iraq's Likely Response ............................................................................................ 9
Economic Impact of the War ................................................................................ ] 0
Economy Deteriorated in 1982 ......................................................................... 1.0
More Revenue Shortfalls in 1983 ....................................................................... ].0
Diminished Financial Assistance ....................................................................... 1.1
Retrenchment Ahead .......................................................................................... 1.3
Seeking Financial Reprieve ................................................................................ 1.4
Political Impact of the War ................................................................................... 1.4
Weakness of the Regime .................................................................................... ] 4
Strengths of the Regime ..................................................................................... ].5
Possible Succession Scenarios ............................................................................. 1.5
Opposition Groups .............................................................................................. 1.9
Regional Implications ............................................................................................. 20
Iraq's Foreign Policy .......................................................................................... 20
The View From the Gulf ................................................................................... 20
The Radical States .............................................................................................. 21
Relations With the Superpowers ........................................................................... 22
The Soviets .......................................................................................................... 22
The United States ............................................................................................... 23
Prospects for US Influence ................................................................................. 23
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KEY JUDGMENTS
The war with Iran is the almost single preoccupation of the
Saddam Husayn regime and is the principal determinant of Iraqi
foreign and domestic policy. Saddam is locked in a war of attrition, the
duration of which depends on a regime in Tehran that espouses
Saddam's overthrow as a religious duty. We do not expect the war to
end soon. The Iranians-more importantly, Khomeini-have given
little indication that they are willing to negotiate a settlement to the
conflict.
We believe Saddam will remain in power for the two-year period
of this Estimate, but in our judgment his regime has become more
brittle. It is more narrowly based on family and tribal ties and more de-
pendent on fear as an instrument of control than it was when the war
began.
Iraq retains few concrete war aims beyond extricating itself with
the least possible cost. Baghdad abandoned its goal of destabilizing the
Khomeini regime early in the war. It adopted a defensive military
strategy, thereby forfeiting the ability to control the scope, direction,
and duration of the conflict.
Chances of a decisive Iranian military victory during the period of
this Estimate are remote. Iran's last two offensives failed, at a cost of
some 25,000 casualties. Iranian efforts have suffered from poor plan-
ning and coordination, inaccurate intelligence, and inadequate air
support. Iraqi performance has improved because of more effective use
of intelligence, air power, and defensive doctrine.
There remains a potential that the war will escalate in a major way
to involve other Gulf states or even non-Gulf powers. We doubt,
however, that such an escalation will occur during the Estimate period..
Iraq's major military option to force dramatic change is sustained air at-
tacks on Iranian oil facilities and tankers in the Persian Gulf. Such an es-
calation, however, would not persuade Iran to negotiate-Iraq's current
objective. Such air attacks are more likely if Iraq believes its policy of
restraint is clearly leading to defeat and direct involvement of the major
powers is needed to force an end to the war.
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Escalation by Iran would probably take the form of resumption of
a strategy of all-out invasion of Iraq, or attacks on Iraq's Gulf
supporters. Both options become more, not less, difficult with time.
Iran's military capability will continue to decline in the absence of
resupply of major weapon systems.
Iraq's economic condition will worsen as long as the war continues
because it cannot export large amounts of oil. Oil exports are at one-
fifth the prewar level of 3.2 million barrels per day. Iraq will be unable
to increase oil exports substantially as long as its Gulf outlets and its
pipeline through Syria remain closed. Foreign exchange assets are down
to less than $8 billion, from a prewar level of about $35 billion. Direct
assistance from the Gulf states will be sufficient to allow Iraq to
continue the war, but will fall short of Iraq's overall requirements.
Iraq will have to reduce imports sharply this year. The cuts will
continue to impact most heavily on Iraq's plans for economic develop-
ment, but this year the consumer will also increasingly feel the effects.
Iraq also will have to defer payments worth several billion dollars
to its trading partners. Baghdad is negotiating with foreign contractors
from several Western countries for delayed payments on a wide variety
of civilian projects. Iraq also will press harder for financial concessions
from its major arms suppliers. Most exporters probably will go along
with Iraq's requests, because they can do little to force payment and
they can expect their current help to enhance their postwar economic
opportunities in Iraq.
As long as the war continues, Iraq's policies will be characterized
by a nonconfrontational stance on larger Middle East issues, a concern
not to alienate either superpower, and even heavier reliance on the
forces of repression to cope with the uncertain domestic security
situation. Saddam Husayn already has been forced by the war to
moderate further Iraq's longstanding radical policies toward its conserv-
ative Arab neighbors, and its strident opposition to Israel and the West.
Iraq also has stopped virtually all economic aid to leftist regimes
and opposition movements. Iraq instead has sought to strengthen ties
with its Persian Gulf neighbors, whose financial and political support is
critical against an Iran-Syria alliance. Syria is likely to remain deeply
hostile to Iraq. It will continue to see cooperation with Iran as the best
way to try to overthrow Saddam, and is likely to keep the Iraqi pipeline
through Syria closed.
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An Iraq that is again exporting oil will try to reassert its influence
in the region. This probably would result in a toughening of its stance on
many foreign policy issues important to the West, including the
Palestinian Question. Baghdad would probably demand a greater role in
Arab Gulf security arrangements and, in time, within the Gulf Coopera-
tion Council, from which it is now excluded. Iraqi leaders might revert
to their prewar policy of opposing superpower involvement in the
region, especially if they see a sharp increase in Iran's contacts with im-
portant outside powers. However the war ends, Iraq's behavior will
continue to be influenced during the next two years by a continuing,
sometimes violent, rivalry with Iran and Syria, and by a need to
maintain access to logistic and financial support from its conservative
Arab neighbors.
Although Iraqi-Soviet relations have run an uneven course in
recent years, they have improved since the spring of 1982. Relations
will remain proper, if not warm, as long as the war continues. Iraq can-
not jeopardize the arms supply relationship with the USSR-its primary
source of modern armor and aircraft-without risking a serious decline
in its military capability during the 1980s. The Soviets have used this
leverage, but with little success, in an attempt to reverse a prewar move
by Iraq to more evenly balance its East-West diplomacy.
The protracted war and economic crisis in Iraq have prolonged
Baghdad's dependence on Soviet arms, but the drift away is likely to re-
sume when the war ends. Moscow views Iran as the major geopolitical
prize in the region, and may be willing-if the opportunity arises-to
sacrifice close ties with Iraq in order to expand its influence in Tehran.
The Soviets might welcome Saddam's removal as an opportunity to
,expand their influence in Baghdad. They would, however, not welcome
a fundamentalist regime, which would lead to even less Soviet influence
in the Persian Gulf.
There is no evidence that Moscow has sufficient support within
Iraq to engineer a coup. Nevertheless, there is a faction within the Iraqi
leadership-although probably a minority-that reportedly favors
maintaining close ties with Moscow. Some elements of the military
probably would support close ties, at least until reliable alternate
military supply relationships have been established. The Soviets have a
large mission in Iraq, including at least 1,000 military and 5,000
economic and technical advisers.
The postwar opportunity to expand US-Iraqi ties is likely to
broaden if the current regime remains in power in Baghdad. Iraq's
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relations with the United States have improved over the last few years,
and commercial ties have grown considerably. Baghdad has expressed
growing interest in renewing high-level official contacts with the United
States, and after the war probably will expand relations with Washing-
ton. They will be reluctant to expand ties while the war continues to
avoid appearing as a supplicant in need of US support.
Serious impediments to closer US ties with Iraq remain. Iraq is
suspicious of US intentions in the Persian Gulf. It remains convinced
that the United States is prolonging the war by allowing Israel to supply
arms to Iran. US policy toward the Arab-Israeli issue and the Palestinian
question is a major obstacle. Iraq, moreover, appears intent on main-
taining some links to the Palestinian terrorist groups Black June and 15
May.
The current regime is likely to pursue policies more favorable to
the United States than any successor regime. A successor regime would
be anxious to establish its legitimacy with other Arabs and would be
heavily influenced by the current popular Arab attitudes toward the
United States. The United States, in fact, might serve as a scapegoat for
new leaders of the Ba'thist or Islamic fundamentalist variety. A major
upheaval, particularly one in which Iran had a large influence, would
result in a regime that would oppose any US presence in the area and
would pressure countries in the region to reduce ties to the United
States.
Among the scenarios for removal of Saddam Husayn, other than an
isolated assassination, a "palace coup" is most likely if the military or se-
curity situation deteriorates sharply. Saddam probably would be re-
placed initially by a collegial party leadership, which would make few
policy shifts. This leadership would soon come under great strain as
different players jockeyed for power, increasing the risk of further
political upheavals.
A broader coup involving the military is less likely during the
period of this Estimate. Pervasive security inhibits extended plotting
and the security services would have to be co-opted. Saddam has
reduced the political role of military officers, and the army, in any case,
is preoccupied at the front. Given the secretiveness of the Iraqi system,
however, we are unlikely to have advance knowledge of serious
plotting.
A general popular uprising is the least likely prospect. Despite an
upsurge in terrorist activity in Baghdad, opposition elements appear too
weak and disorganized to pose a coordinated threat to Saddam. They
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remain unable to cooperate even on the most elemental levels or to
agree on the shape of a successor regime. The groups are manipulated
by foreign backers who have conflicting goals in Iraq.
Saddam Husayn's removal could usher in an extended period of
instability in Baghdad. His successors probably could not maintain
Saddam's system of tight control and any post-Saddam regime is almost
certain to fall into factional fighting. Only after a succession of weak
governments in Baghdad would the chances increase for an Iranian-
supported fundamentalist regime coming to power. Even in that case,
Tehran could not be confident that such a government would remain
responsive to Iran's policy directives over the long run.
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DISCUSSION
1. Iraq is trapped in a stalemated war that saps its
financial reserves, restricts economic growth, wastes
manpower resources, and limits its political options.
Baghdad's search for an end to the war remains
frustrated by Tehran's declared determination to con-
tinue until President Saddam Husayn falls from power
or agrees to humiliating terms for peace.
2. Baghdad has few military options. Iraq forfeited
early in the war the ability to control the scope and
duration of the conflict. It cannot regain the initiative
without escalating the fighting and, in the process,
decreasing the already slim chances of a political
settlement. Consequently, it most likely will continue
to wage a defensive war punctuated by occasional air
raids or missile attacks against Iranian oil facilities and
population centers but also with the possibility of
escalating attacks on Iranian shipping.
Military Situation
3. Despite its strategic predicament, the tactical
military situation has improved substantially for Iraq
over the past year. Since Iranian troops recaptured
Khorramshahr in May 1982, Baghdad's forces have
repulsed or contained five Iranian offensives. Purges
of incompetent senior Iraqi commanders following the
Khorramshahr defeat, improved tactical planning, and
a greater willingness of Iraqi troops to fight in defense
of their own territory have accounted for the im-
proved performance.
4. With new commanders and a more tangible goal,
the Iraqi Army's advantages over the Iranians in
armor and artillery have begun to play a more
important role. (See table 1.) Iraq has more mobile
forces, a better organized logistic system, and elabo-
rate defensive fortifications along the border. The
Iraqis also have benefited from improved intelligence,
especially signal intercept capability. Iraqi command-
ers almost always have foreknowledge of Iranian
moves.
5. The Air Force has sufficient aircraft and weap-
ons to ensure air superiority over the decimated
Table 1
Iraq: Status of Forces
(Estimates as of 1 April 1983)
Ground Forces
Personnel a
350,000
Divisions b
14
Armored
5
Infantry
7
Mechanized infantry
2
Main battle tanks
3,075
Armored personnel carriers
1,852
Artillery (over 100 mm)
1,380
Air and Air Defense Forces
Personnel
30,000
Fighter aircraft
400
Attack helicopters
100
SAM batteries
75-90
Naval Combatants
Missile patrol boats
a Excludes several hundred thousand paramilitary forces.
b The Iraqis are creating an additional 10 divisions. Most of these
already have a skeletal structure and several are probably already
operational.
c Some 75 percent are operationally ready.
Iranian Air Force. In recent battles, the Air Force-
including attack helicopters-has played a more im-
portant role.
Iran's Strategy
6. Saddam's overthrow remains Iran's primary de-
clared aim. Iran also will work for his replacement by
an Islamic regime. Secondary objectives include forc-
ing a complete Iraqi withdrawal from occupied Irani-
an territory, obtaining sizable reparations, having Iraq
condemned as the aggressor, and repatriating Iraqi
exiles.
7. To achieve its goals and maintain military pres-
sure on Iraq, Iran has launched major ground offen-
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Figure 1
Iraq-Iran: Distribution of Forces and Major Occupied Areas
1ragi-1 el
Irani ti-held area
~Eyn
?-~ azan
f Dovq,yrico River front
DezfOl
Al 'Amarah
Iraqi-held'
area
Regular Army Units
Iranian
If Infantry division
Mechanized division
Armored division
f Infantry brigade
-ft Armored brigade
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sives every few months. Continued failures and
mounting casualties, however, have caused Tehran to
revise this strategy in favor of a less costly war of
attrition. A war of attrition allows Iran to maintain
military and economic pressure on Iraq while reduc-
ing the risk of a popular backlash at home over
casualties. The Iranians probably are convinced that,
in a war of attrition, their advantage in manpower and
their ability to maintain a high volume of oil exports
relative to Iraq would guarantee eventual victory. (See
table 2.) On the negative side, Iran, unlike Iraq, still
has less dependable suppliers of modern weapon sys-
tems in quantity, and the Iraqi advantage in this area
should increase over time.
8. A strategy of attrition probably will be accompa-
nied by increased assistance to Shia and Kurdish
opponents of the Baghdad regime in an attempt to
undermine Iraq's internal stability. A small band of
Shia dissidents with links to Tehran was responsible for
a series of terrorist bombings in Baghdad this spring,
including an attack on the headquarters of Air Force
Intelligence. Additional bombings and possibly assassi-
nation attempts against senior Iraqi officials are likely.
As Iran attempts to weaken foreign support for the
Iraqi regime, French, and even Soviet and US, installa-
tions and personnel could become targets of terrorist
attacks.
9. Iran can maintain economic pressure on Iraq by
keeping the Gulf closed to Iraqi shipping. This forces
Iraq to rely on long and costly transportation routes
through third countries and reduces its oil exports to a
trickle. Tehran will provide Syria nearly $1.4 billion
worth of oil on concessionary terms during 1983 to
ensure that the Iraqi oil pipeline across Syria remains
closed. Iran has not closed by sabotage Iraq's sole
Killed in action
110,000-115,000
50,000-60,000
Prisoners of war
7,500
50,000
Tanks
800
1,100
Armored personnel carriers
400-600
1,100
Artillery
400
500
Aircraft
180-190
160-180
remaining oil export route-a pipeline across Tur-
key-probably to avoid exacerbating tensions with
Turkey.
10. Iran will complement its military strategy with
a diplomatic campaign to drive a wedge between
Baghdad and its Gulf supporters. Iran will play on the
fears of weak Gulf governments uncomfortable with a
posture of confrontation with Iran. Tehran already is
trying to improve relations with Saudi Arabia, the
United Arab Emirates, and Kuwait, and these efforts
are likely to continue. Tehran also is trying to use the
pollution caused by the damaged wells in the northern
Gulf to turn both popular and governmental opinion
in the Gulf countries against Iraq, so far with only
modest success.
Iraq's Likely Response
11. Baghdad's goal is to convince Tehran that it
cannot win the war militarily and that continuation of
the war, even at reduced levels, is not in Iran's interest.
Iraq also wants to convince the major powers that the
war must be stopped and that outside parties must
work for a cease-fire. (See figure 1.)
12. To achieve these ends, Baghdad must prevent
Iran from achieving tangible military success while
inflicting the heaviest possible losses on Iranian forces.'
As was the case during Iran's last offensive in April,
Iraq will fight hard to recover even insignificant
territory captured by the Iranians to prevent Tehran
from claiming a victory. Iraqi ground forces, however,
are not likely to launch large-scale offensives of their
own because this would increase Iraqi casualties, give
Iran the opportunity to conduct a successful defense,
and once again give Iranians a tangible goal-defense
of Iranian territory-around which to rally its troops.
13. Iraq is responding to Iranian offensives and
terrorist attacks inside Iraq by striking Iranian oil
installations, cities, and civilian targets with surface-to-
surface missiles and with air attacks to underscore for
' Baghdad for many months has boasted that it possesses a secret
weapon that can inflict massive casualties and ensure victory. Iraq is
trying to develop a chemical warfare capability, but the program is
still in the experimental stage. Iraq reportedly has at least 1,000
artillery shells filled with mustard agent but has not used them so far
in the fighting. The Iraqis have used tear gas in the fighting, but no
lethal or incapacitating agents, against the Iranians. While the use of
mustard would inflict heavy casualties on Iran's largely infantry
forces, it would not force Iran to end the war.
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Iran that continuing the war is counterproductive.
Although such attacks strengthen the resolve of hard-
liners in Tehran, Baghdad is likely to continue them
until Tehran shows concrete interest in negotiations.
14. Iraq will endeavor to keep the dangers of the
war, particularly to oil, fresh in the minds of the Gulf
states and outside powers by attacking lightly de-
fended, less important oil targets in the northern Gulf.
Such attacks are one of the few military ways Iraq can
hurt Iran and counter the impression that only Iran
can initiate military action. In addition to hitting
Iranian offshore oil installations in the northern Gulf,
Iraq has warned that the large petrochemical complex
at Bandar-e Khomeyni will be attacked if Japanese
firms resume work on the project.
15. Iraq is attempting to increase its capability to
attack Iranian shipping throughout the Gulf. France
has agreed to loan Iraq five Super Etendard aircraft
armed with Exocet antiship missiles, to be delivered
by early fall. In addition, Iraq reportedly is having
some of the French Mirage F-1 fighter aircraft it has
on order modified to carry the Exocet. Iraq has used
Super Frelon helicopters armed with the Exocet
against shipping in the northern Gulf. Delivery of the
Super Etendard aircraft, in particular, would make
feasible Iraqi attacks against shipping nearly as far
south as Bandar-e Abbas.
16. The Iraqi Air Force already has the capability
to seriously disrupt Iranian oil exports. To be success-
ful, however, Baghdad would have to carry out sus-
tained attacks and-if Khark Island were the target-
risk significant losses. Should they decide to expand
their operations against Iranian facilities in the Gulf,
the Iraqis could choose from several possible targets.
They could attempt to disrupt activity at Bandar-e
Khomeyni, the only Iranian port with a railhead, or
destroy pumping stations serving Khark. In addition,
Iraqi fighters could be launched against Khark itself-
the best defended target-or vulnerable oil tankers en
route to or from Khark.
17. Sustained air attacks are more likely if Iraq
believes its policy of restraint is clearly leading to
defeat and direct involvement of the major powers is
needed to force an end to the war. Attacks against
Khark and oil tankers probably would prompt Iran to
resume a strategy of all-out invasion of Iraq, or attacks
on Iraq's Gulf supporters. Iraq's Arab allies almost
certainly will do as much as possible to bolster Iraq
and discourage such desperate moves.
18. Iraq will be able to sustain the current low level
of fighting for the two-year period of this Estimate.
Baghdad will retain a substantial advantage in military
equipment for the remainder of the war unless Tehran
can open a supply line for large amounts of modern
weapons comparable to those already in Iraq. Pros-
pects for such a development are dim; it would
require Tehran to improve relations dramatically with
Washington, Moscow, or Paris. Iraq will have to guard
against a deterioration in troop morale resulting from
war weariness as well as avoid tactical errors leading to
an Iranian battlefield breakthrough.
19. Finally, the Army's preoccupation with the
Iranian threat might be altered by a deterioration of
security in Iraq's major cities or in the unlikely event
of a major resurgence of Kurdish dissident strength in
the north. These events would be likely to force
Baghdad to withdraw some troops from the front-a
move which undoubtedly would weaken military
resolve.
Economic Impact of the War
Economy Deteriorated in 1982
20. The critical weapon in Iran's arsenal has been
its ability to severely damage Iraq's economy by
closing its oil export terminals in the Gulf. With oil
exports at one-fifth the prewar level of 3.2 million b/d
and the flow of Gulf state aid at a near trickle by the
end of 1982, Baghdad was forced virtually to abandon
its economic development program. It also had to
draw down its foreign exchange reserves by about $13
billion. (See figure 2.)
21. Still, the total import bill for 1982 was about
$20 billion, nearly the same as the year before.
Sustained import demand reflected Baghdad's com-
mitment to support the war effort, complete high-
priority projects, and ensure a steady supply of con-
sumer goods. Iraq was spending an estimated $1
billion per month in direct costs for the war during
1982. This sum included expenditures for military
equipment, fuel, and all war-related construction.
22. Iraq will earn even less foreign exchange this
year than it earned in 1982. Iraq cut its oil price in
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Figure 2
Iraq: Oil Exports and Revenues
Net Exports Revenue
Thousand b/d Billion US $
5,000 10
II ^I
1980
II Ill
1981
11 Ill
1982
I ^ est.
1983
March 1983 by $5 per barrel-to about $29-to
realign it with the new OPEC benchmark. As a result,
oil export revenue, which accounts for virtually all of
Iraq's earnings, will reach only about $7.0 billion,
compared with $9.4 billion in 1982. Every $1-per-
barrel cut Iraq is forced to make forces the regime to
cut expenditures by an additional $260 million, or to
find that much additional financial assistance from
abroad.
23. Iraq cannot substantially increase its own oil
exports, although other Arab producers can supply oil
to Iraq's customers. As long as Iran provides Syria with
oil, Damascus has little incentive to reopen the Iraqi
oil pipeline (capacity 1.2 million b/d) this year. Syria is
likely to continue resisting pressure from both the
Soviets and the moderate Arabs to reopen it. The
planned expansion of the Turkish pipeline (capacity
700,000 b/d)-now Iraq's only export route-will not
be completed until 1984. Although Baghdad and
Riyadh have agreed in principle to a pipeline across
Saudi Arabia to the Red Sea, the line is unlikely to be
completed before 1985, if at all. (See figure 3.)
24. Iraq will not be able to fall back on its foreign
exchange reserves in 1983 as it did in 1982. (See figure
4.) Reserves have plunged to less than $8 billion from
about $35 billion before the war. Reflecting the
squeeze for ready cash, Iraq has been liquidating
interest-earning assets prior to their maturity.
25. We believe the Gulf states-Saudi Arabia, Ku-
wait, Qatar, and the UAE-will provide sufficient,
direct aid to Iraq in 1983 to prevent the collapse of
Iraq's resistance to Iran due to financial strains. The
Gulf countries face financial difficulties of their own
because of the soft oil market. Saudi Arabia, the largest
benefactor, for example, will itself have to dip into
reserves this year no matter what aid it eventually
gives Iraq.
26. Direct Gulf aid, however, will probably be less
than in 1982. So far this year Saudi Arabia, Kuwait,
and the UAE have provided Iraq with about $1 billion
and additional Iraqi belt tightening will be necessary.
27. Saudi Arabia and other Gulf allies will continue
to underwrite Iraqi arms purchases. The $250 million
the Saudis have given in 1983 apparently is earmarked
for French and Egyptian arms purchases. Riyadh
earlier had paid for Iraqi purchases of Egyptian
military hardware worth about $220 million, accord-
ing to reliable sources. Kuwait, the UAE, and Oman,
to a lesser extent, also have funded Egyptian and West
European arms sales.
28. To augment their monetary aid to Baghdad, the
Gulf states-principally Saudi Arabia--also will con-
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Figure 3
Iraq: Major Oilfields and Pipelines
Iraq-Turkey Pipeline
million barrels1day capacity)
f *NICflSIA ~~ Baniyas S a
Kilometers
soe~da~y ,eP.e~ema~~o,~ ~s
poi ~esessa.~iy aeho.~iai~~e
- > Oilfield
Oil pipeline
^ Pump station
Oil terminal
Note: Pipeline alignments
are approximate
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*RIYADH
Bandar-e
Khomeyni
(Bandar-e Khomeini)
Cl
d b
ose
y
Iraq-Iran tar
Mirk'
(Khark Island)
Persian
Gulf
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Figure 4
Iraq: Foreign Exchange Assets
Iraq: Current Account Balance and Financing
Arrangements
tinue exporting oil on Iraq's behalf. Saudi Arabia so far
has delivered about 270,000 barrels per day to Iraqi
customers during April-June. Nearly all this oil has
been delivered to Japan and India. India makes
payments to the USSR which, in turn, credits Iraq's
arms purchase account.
29. The weak world oil market probably will make
it difficult for these countries to sell more than about
300,000 b/d-worth a maximum of $3.2 billion-for
Iraq during the rest of the year without price discount-
ing. As a result, total aid from the Gulf, both in direct
payments and oil sales, probably will not exceed the
previous level of $5.5 billion in 1982.
30. Wary of Iraq's creditworthiness and its inability
to win the war, Western banks are unlikely to lend
Iraq substantial amounts during 1983. The $500 mil-
lion Baghdad received in April was a weak response to
its request for aid; only three of the 10 participating
banks were non-Arab.
Retrenchment Ahead
31. With few other economic options, Iraq will be
forced to cut imports sharply in 1983. (See table 3.) We
Exports (f.o.b.)
9.7
7.0
7.0
Oil
9.5
6.7
6.7
Nonoil
0.2
0.3
0.3
Imports
-19.4
-1.6.1
-12.0
Trade balance
-9.7
-9.1
-5.0
Net Services and Private
Transfers
-7.1
-5.9
-5.4
Freight and insurance
-3.5
-2.5
-2.2
Investment income
1.6
0.6
0.7
Other
-5.2
-4.0
-4.0
Grants
-1.0
0
0
Current account balance
-17.8
-1.5.0
-10.5
Financing the Current Account
Gulf state aid
5.5
2.0
1.0
Commercial loans
0
0.5
0.5
Arrearages
0
5.0
3.0
Saudi oil sales
0
2.5
2.5
Reserves
13.0
5.0
3.5
a Possible scenarios. Alternative import spending and current
account balances depend on assumed levels of foreign assistance and
reserve drawdowns.
estimate they will fall to between $12 billion and $16
billion compared with $20 billion in 1982. Baghdad
told foreign companies that overall expenditures this
year will be 60 percent of 1982 spending levels. To
cover even these reduced import levels without fur-
ther drawing down reserves, Baghdad still will need
between $10 billion and $15 billion in additional
funds. Because we believe financial help from abroad
will fall short of these requirements, Iraq will be
forced to draw down reserves again this year by as
much as $5 billion.
32. The war effort will continue to receive top
priority during the term of this Estimate. Iraq proba-
bly will continue to sign new contracts this year to
meet its military requirements.
33. Industry and the consumer will bear the brunt
of the import reductions. Imports of manufactured
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goods will decline as Iraq completes existing projects
and postpones most new construction projects. Early
1983 trade data for some of Iraq's key suppliers
indicate that imports of heavy industrial machinery,
heating and cooling equipment, and steel are well off
last year's pace. Consumer goods imports from Japan,
Iraq's second-largest trading partner, were down a
whopping 80 percent during January-April from the
same period last year. Purchases of passenger cars have
dropped sharply.
34. Iraq cannot significantly trim imports of food-
stuffs; its agricultural sector does not provide nearly
enough food for self-sufficiency. Iraq must import
roughly 55 percent of its total grain needs.
Seeking Financial Reprieve
35. Iraq probably will be able to defer payments
worth several billion dollars to its trading partners this
year to help cover its foreign exchange shortfall.
Baghdad already has arranged credit terms for food
imports from several countries including Canada, Aus-
tralia, and the United States. It is also negotiating with
foreign contractors from several Western countries,
the most important being Japan, West Germany,
France, and the United Kingdom, for delayed pay-
ments on a wide variety of civilian projects now under
way. Negotiations currently are stalled because Iraq is
holding out for more favorable credit terms on its
debts, including an estimated $1.2 billion that Iraq will
owe for work on West German industrial projects. Iraq
also requires many firms bidding on contracts to offer
their own financial packages as a prerequisite for new
orders.
Political Impact of the War
Weakness of the Regime
38. Saddam has been politically weakened by the
conflict with Iran. He is locked in a war of attrition,
the duration of which depends on a regime that
regards his defeat as a religious duty. Economic
development has come to a virtual halt, and the
demands for sacrifices on the part of the population
will grow more onerous. Iraq's ability to exploit its
primary source of wealth-oil-is hostage to the Kho-
meini regime.
39. The key political cost for Saddam is that he has
had to assume ultimate responsibility for the war
among the civilian and military leadership. He has
concentrated power more narrowly in his own hands
and confined decisionmaking to a small handful of
supporters, probably alienating many others in the
Iraqi elite. Purges of both the military and civilian
leadership ranks may have tightened his immediate
control, but they probably have also resulted in blood
debts and further narrowed the base of those commit-
ted to his rule.'
40. Saddam will be blamed also for the collapse of
Iraq's key foreign policy goals because of the war. The
war has set back Baghdad's near-term hopes of assum-
ing a more dominant position in the Arab world as a
result of the opening provided by Egypt's ostracism
after the signing of the Camp David accords, and in
the Persian Gulf as a result of Iran's revolution. Iraq is
more dependent on its neighbors in the Gulf, and
36. Iraq also will press harder for financial conces-
sions from its major arms suppliers. Baghdad already
has arranged to provide $530 million worth of crude
oil annually to help finance most of its $5 billion arms
debt to France. Iraq also has reached an agreement to
meet its 1983 financial obligations to the USSR for
military hardware with Saudi Arabian oil worth about
$1.2 billion.
37. Most exporters probably will go along with
Iraq's requests for deferred payments and more con-
cessionary terms in anticipation of eventual improve-
ment in Iraq's economic situation, and because they
can do little to force payment anyway. They, no
doubt, expect their help now to enhance their business
opportunities in Iraq after the war.
2 Decisionmaking in Iraq is a closely held and highly personal
process, and the state apparatus is authoritarian. Party and govern-
ment structures overlap in Iraq, with the same individuals holding
the top posts in each structure. At the top is the President, who is
also chairman of the nine-member ruling Revolutionary Command
Council (RCC), which exercises power by decree. The President also
heads the Bath Party, Iraq's only significant political party, which
he rules through the Regional Command, a Soviet-style presidium.
Divergent ethnic and religious groups, as well as strong family and
clan rivalries, have hampered regime efforts to build a stable,
cohesive political and social structure in Iraq. The Iraqi leadership is
largely Sunni Arab, and dominated by Saddam's powerful Tikriti
clan. For a more detailed description of the political and social
system in Iraq, see NESA 82-10620, Iraq: A Handbook, December
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attempts to reduce Moscow's leverage have slowed
because of the increased importance of the Soviets as
an arms supplier.
41. It is not possible to predict whether the costs of
the war will prove fatal to Saddam Husayn. But, in our
judgment, his is a more brittle regime than three years
ago, more narrowly based on family and Tikriti tribal
ties and more reliant on fear as an instrument of
control. Although he maintains tight control over the
government and party and his opposition is weak and
scattered, he remains vulnerable to serious deteriora-
tion in the economy or the military situation. He will
be further weakened if he becomes the personal focus
of blame by the war-weary populace.
Strengths of the Regime
42. No opposition group or alignment, in our esti-
mation, has enough unity or strength to unseat Saddam
Husayn. The numerous exile opponents are weak,
disorganized, and manipulated by governments op-
posed to Iraq. Domestically, the government demon-
strated considerable resiliency during the repeated
Iranian military assaults in 1982. Moreover, Iraq's
ubiquitous security service, one of the largest and most
ruthless in the Middle East, dominates with repression.
Given the secretiveness of the Iraqi system, however,
we are unlikely to be forewarned of serious plotting.
43. Saddam has a well-deserved reputation as a
ruthless survivor. Last year, when Iraq was losing on
the battlefield, he quickly moved to curb opposition
within the government and the Ba'th Party. In June
1982 he packed the Ba'th Party Regional Command
with loyalists and scaled down the ruling Revolution-
ary Command Council, removing supporters of ex-
President Bakr and others who had voiced criticism of
Iraq's conduct of the war.
44. Saddam continued the purges in late 1982;
several officials removed from office in June lost their
party credentials in December, and at least one-the
ex-Minister of Health-was executed, reportedly for
incompetence. The death of Bakr in October removed
the major rallying point for those in the leadership
opposed to Saddam, and no other figure has emerged
from the party or military as a significant rival.
45. Military revolt against Saddam Husayn is un-
likely under the present circumstances. Although re-
porting is limited, there do not appear to be significant
morale problems in the military. The Army remains
preoccupied with the war, and no major military units
outside of the Republican Guard are stationed in
Baghdad. Saddam uses forced retirements and fre-
quent transfers to prevent officers from gaining broad-
based support inside the military. After the fall of
Khorramshahr, Saddam was able to defuse the mili-
tary's growing anger at political interference by re-
moving Ba'th Party appointees within the military
who were held responsible for the defeats. The regime
also provides the military with special benefits and
privileges.
46. Saddam does not yet appear to be the main
target of public dissatisfaction despite indications that
already fragile public morale continues to erode. Most
of the populace reportedly still blame Iranian intransi-
gence for the stalemated conflict and believe they
must band together in the face of the external threat.
Saddam also is the center of an elaborate personality
cult, and makes frequent public appearances to stress
his image as an accessible leader. The Iraqi leadership,
moreover, probably recognizes that Saddam's succes-
sor would face the same economic difficulties, and
does not see Saddam's removal as a likely way to end
the war. If Saddam became the focus of domestic
blame for the war, or if powerful elements in the Iraqi
leadership believed his removal would pacify Iran, his
position would be seriously weakened.
47. Should Saddam be removed, the process of
succession might develop in several ways. Any succes-
sor regime from the Ba'th Party or military would
come under immediate pressure from the war. Even
an Islamic fundamentalist regime, which could end
the conflict, probably would be plagued by factional
infighting.
48. Assassination. The greatest threat to Saddam is
assassination. He has survived several such attacks in
the past. His frequent public appearances increase the
risk of a successful attack. Saddam has a long list of
enemies-those purged from power, opposition ele-
ments long sworn to his removal, and disgruntled
victims of the disruptions caused by the war.
49. Palace Coup. The danger of a coup by some of
the current leadership would grow if the military or
security situation were to deteriorate to the point that
they judged their own survival was in danger, or if
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Figure 5
Iraqi Leaders
Iraq's de facto strongman since the early
1970s; President of Iraq, Chairman of the
Revolutionary Command Council, and
Secretary General of the Ba'th Party; the
primary architect of Iraq's authoritarian
political system, and the dominant power
in Iraqi foreign and domestic policy; 46.
A younger half-brother of Saddam and
probably Saddam's most trusted adviser;
chief of General Intelligence Directorate
(Mukhabarat) since 1979; also has supervi-
sory authority over all other security
mechanisms in Iraq; about 32.
Minister of Defense since 1977; Deputy
Prime Minister and Deputy Commander
in Chief of the armed forces since 1979; a
cousin and brother-in-law of Saddam, who
relies on him to ensure the loyalty of the
armed forces, but not popular among the
officer corps; viewed as a symbol of politi-
cal interference in military affairs; about
42.
First Deputy Prime Minister since 1979;
Commander of the People's Army since
1975; an ambitious and crafty politician-
with many supporters in the party, the
government, and the People's Army; often
said to be Saddam's most formidable rival,
is nevertheless entrusted with considerable
authority; about 44.
Vice Chairman of the Revolutionary Com-
mand Council since 1979; influential in
Iraq's economic and Persian Gulf policy;
chairman of the politically sensitive Ba'th
Party Military Bureau, which controls ap-
pointments, transfers, retirements, and
promotions of military officers; about 40
years old; devout Sunni Muslim.
One of Saddam's most trusted advisers
and a flexible, skilled politician; RCC
foreign affairs director since 1979, and
Foreign Minister since January 1983; un-
likely to accede to the presidency because
he is a Christian; the regime's most impor-
tant official in shaping foreign policy;
about 46.
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they sensed that Saddam was about to carry out a
preemptive purge in the wake of an unfavorable
settlement with Iran. The political threat to the leader-
ship does not seem severe enough to make such a move
likely in the near future, and key leaders probably
judge that they remain more secure with Saddam in
power.
50. A Coalition Government. Either of the scenar-
ios above would probably result in coalition of senior
figures in the regime. Among Saddam's most powerful
lieutenants are Vice Chairman of the RCC Izzat
Ibrahim and Deputy Prime Minister Taha Yasin Ram-
adan. (See figure 5.)
51. Izzat Ibrahim would be a candidate to succeed
to the presidency, although health problems and his
apparent preference for a subordinate role make him
an unlikely candidate to assume full power. He is
widely respected, making him an attractive figure-
head for behind-the-scenes power brokers. A longtime
regime loyalist who has held several sensitive posts,
Ibrahim is a devout Muslim who has had little contact
with Westerners.
52. Ramadan, 44, a ruthless and ambitious politi-
cian, is the second most powerful man in the govern-
ment and the most likely figure to replace Saddam. He
has been heavily involved in both foreign and domes-
tic policy and reportedly is less hostile to the Soviets
than Saddam. He is strengthened by his nominal
command of the People's Army, the 350,000-man
Ba'th Party paramilitary force. Ramadan, however, is
unpopular with the Tikriti clan and distrusted by the
regular military. He would face considerable opposi-
tion to his openly assuming power, and might, there-
fore, prefer initially to try to exercise power from
behind the scenes.
53. Saddam's own Tikriti clan would continue to
play an important role in any collegial government,
because they dominate the Ba'th Party and are scat-
tered throughout the military and security services.
Barzan Ibrahim al-Tikriti, the head of the Mukha-
barat, and Adnan Khayrallah, the Minister of Defense,
along with senior Tikriti officers and officials and their
supporters from other key Sunni clans, initially would
be most influential. Foreign Minister Tariq Aziz,
increasingly influential under Saddam, might play a
useful role. But Tariq is a Christian, and he would
have difficulty establishing himself as the leader of a
Sunni-dominated government. Shia officials like Naim
Haddad, head of the National Assembly, would be
given a high profile to reassure the Shia population.
54. A collegial leadership probably would not make
major changes in foreign policy. The leaders' first
priority would be consolidating power and extricating
Iraq from the war. We would expect them to continue
close relations with moderate and Gulf Arabs. They
could make overtures to Syria and Libya to try to
reduce their support for Iran, but are unlikely to move
far in this direction. They would keep relations with
Moscow correct, to ensure sufficient arms supplies, but
like Saddam Husayn, these new leaders would have
doubts about Moscow's reliability as an ally.
55. Although the initial transfer of power to a
collective leadership might be relatively smooth, the
coalition would be under great strain, and jockeying
for power would be intense because of the absence of a
dominant figure to arbitrate disputes. We cannot
predict who would ultimately seize power, but given
the conspiratorial backgrounds of the current leader-
ship and Iraq's political history, the struggle probably
would be violent. The breakdown of collegial rule
would undermine Iraq's ability to pursue a coherent
foreign policy, disrupting Baghdad's trend toward
alignment with moderate Arabs and closer political
and economic ties with the West.
56. An unrestrained internal power struggle would
weaken the central government and accentuate the
serious sectarian and ethnic divisions in Iraqi society.
A battle at the top likely would usher in a period of in-
stability similar to the turbulent era between the fall of
the monarchy in 1958 and the consolidation of Ba'th
rule in 1968. In such a climate, the possibility of a
broader coup-probably involving the military-or a
general uprising against the Ba'th leadership engi-
neered by traditional opposition elements increases
substantially.
57. A Broader Government Coup. Should public
confidence in the regime deteriorate substantially as a
result of military or economic setbacks and the securi-
ty forces prove unable to maintain order, a broader
group of anti-Tikriti elements in the party, supported
by the military, might be tempted to move against
Saddam and the ruling elite. Pervasive security makes
such coup plotting difficult, however, and key mili-
tary, party, and security figures would have to be co-
opted.
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Figure 6
Iraq: Distribution of Major Religious and Ethnic Groups
Sunni Arab
Sunni Kurd
Shia Arab
Sunni Arab and
Sunni Kurd
Z,/ Sunni Arab and
Shia Arab
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58. Such a wholesale change in leadership would
probably mean a continuation of Ba'th Party rule at
least temporarily. The resulting leadership might be
plagued, however, by rivalry between party and mili-
tary similar to that of the early 1970s. Saddam might
be made a scapegoat for Iraq's problems, but the new
regime would still have to make peace with Tehran.
Such a regime, moreover, might mark a return to
policies less accommodating to US interests, particular-
ly if those seizing control blame Iraq's current difficul-
ties on its abandonment of revolutionary Ba'thist goals.
59. General Uprising. A serious challenge to the
regime from outside the current power structure is the
least likely prospect in the term of this Estimate,
barring a collapse of the military and security forces or
a decisive victory by Iran. The inability of the four
main opposition groups-the Iranian-sponsored Shia
Dawa Party, Syrian-supported Iraqi exiles, the Kurds,
and the Iraqi Communist Party (CPI)-to cooperate
even on the most elemental levels or to agree on the
shape of a successor government allows the regime to
deal with each threat singly. Moreover, each of the
groups is manipulated by foreign backers-Iran, Syria,
and Libya-who have competing goals in Iraq.
60. The prospects for an opposition takeover that
radically changed the composition and policies of the
Iraqi Government would increase substantially if the
Iraqi Government began to unravel in a series of
coups. In such a scenario, the Shia Dawa Party,
supported militarily by Iran and espousing the estab-
lishment of an Islamic Republic on the Iranian model,
would appear to be the strongest candidate ultimately
to seize power.
Opposition Groups
61. Dawa. Iraq's Shias make up some 55 percent of
the population and reportedly about 75 percent of the
enlisted ranks of the armed forces. (See figure 6.) The
largest and most influential Shia dissident group,
Dawa, however, probably has no more than a few
thousand members. It receives financial aid, arms,
safehaven, and training from Iran. In late 1982 Dawa
formed an Iraqi government-in-exile, which is under
Iranian control.
62. Appeals by Shia dissidents to revolt appear to
have had little impact on the Iraqi populace. This
suggests that the Iraqi Government and internal secu-
rity services would have to become disorganized be-
fore a Shia revolt could develop. In such a situation,
however, the proximity of Iranian military support
and the high proportion of Shias in the enlisted ranks
of the Iraqi military would significantly boost Dawa's
chances of success.
63. A Dawa-based government would pursue a
radically anti-US foreign policy. It would probably
assist Iran in subverting the Sunni Arab regimes in the
Gulf and in Jordan. It would align with Syria and
Libya in the Arab-Israeli dispute, probably pressing
both to be even more militantly anti-Israeli. Serious
rivalry between an Iraqi Shia fundamentalist govern-
ment and the regime in Tehran is likely, however. The
Iraqi Shia government-in-exile in Tehran and Iranian
leaders have already disagreed over who should con-
trol the movement.
64. Syrian-Supported Opposition. The Syrians
support several small groups of former Iraqi politicians
and military officers opposed to the present regime in
Baghdad. The Syrians would like to see Saddam
Husayn replaced by another Ba'th Party politician or a
military officer whom they could influence or even
control. Damascus does not favor the establishment of
a Shia fundamentalist regime in Iraq and probably
would work against such a regime.
65. The Syrian-supported opposition groups-head-
ed by former Iraqi General Naqib-have little influ-
ence inside the country and no hope of overthrowing
the Ba'th Party and the present ruling elite by them-
selves. Their only hope-and a slim one-would be to
take over in a military coup as the present power
structure unraveled and before the Dawa could move.
66. A government run by the Syrian-supported
exiles would be vulnerable and unstable as none of the
exiles has a large personal following in Iraq or a
persuasive claim to legitimacy. Such a government
would assume a hard line on the Arab-Israeli dispute,
would be somewhat more anti-US than the present
regime, and might take a more hostile position toward
Saudi Arabia and the Gulf states.
67. The Kurds and Communists. Kurdish dissi-
dence will probably remain more of a nuisance than a
threat to the Iraqi regime for the next two years.
There has been a modest upswing in opposition activi-
ty by Kurdish rebels stimulated by Iranian prodding,
but they have only a few thousand armed supporters.
The two major groups-the Kurdish Democratic Party
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and the Patriotic Union of Kurdistan-remain at odds
with each other, mostly over rivalry for leadership and
local support.
68. The small Iraqi Communist Party is split into
competing factions, with most of its leadership in exile.
Party activity inside Iraq is limited primarily to
Kurdistan, where several hundred guerrillas operate in
small groups. They have established links with some
Kurds, but have failed to develop ties to Dawa. The
improvement in relations between Moscow and Bagh-
dad will not ease government pressure on the
Communists.
Regional Implications
Iraq's Foreign Policy
69. Before the war, Iraq used its oil wealth and
greater political self-confidence to play a larger role in
Arab and nonaligned politics. It was a leading advo-
cate of radical politics, and it expanded its support for
the Palestinians and other leftist, revolutionary move-
ments and regimes. It had begun to develop closer ties
to moderate Arab states, despite sharp ideological
differences, to strengthen the appearance of Pan-Arab
unity. Relations with Syria-its Arab archenemy-
remained hostile, however, and Iraq lobbied to replace
Iran as the key protector of the Gulf.
70. The war has forced Baghdad to moderate many
of its more antagonistic policies toward its conservative
Arab neighbors and its strident opposition to Israel and
the West. To gain needed financial and political
support from the Gulf, Baghdad has had to abandon
temporarily its long-term goal of radicalizing the
political climate in the region and to depend heavily
on regimes that Iraq traditionally has viewed as
reactionary.
71. Iraq appears to have stopped virtually all eco-
nomic aid to leftist regimes and opposition movements
it had sought to cultivate before the war. With the
military tied down by the war, Iraq has been unable to
threaten either Israel or Syria. Iraq lost the opportuni-
ty to assume leadership of the Nonaligned Movement
when Iranian threats forced the cancellation of the
seventh Nonaligned Summit in Baghdad in 1982.
72. After the war Iraq will quickly try to reassert its
claim to leadership in the region, which will increase
tensions with Egypt and Saudi Arabia. If the war ends
on terms even moderately satisfactory to Iraq, Bagh-
dad will claim to have stopped the spread of Iranian-
style fundamentalism. Relations with moderate Arabs
probably will become more problematic as the need
for financial support diminishes. Should the war end
during the period of this Estimate in a way that allows
Iraq to increase oil exports, pressure on the regime will
lessen considerably.
73. One troublesome issue still unresolved is Iraq's
disputed border with Kuwait. Iraq has delayed settling
the issue throughout the war, and Baghdad is likely to
seek territorial concessions from Kuwait-possibly
through a long-term lease-after the conflict, particu-
larly as it increases the size of its navy. Kuwait has
already refused Iraqi claims to disputed territory,
proposing instead to lease territory to Iraq. The dis-
pute is likely to worsen if Baghdad's economic
dependence on the conservative Gulf Arabs diminishes
after the war.
74. Iraq will toughen its rhetorical stance on most
foreign policy issues important to the West. It will
have more opportunity to give financial support to
leftist regimes and opposition movements and will
take a harder line on the Arab-Israeli issue. It will also
lobby for inclusion in regional security arrangements
for the Persian Gulf that exclude Iran, and generally
oppose overt superpower involvement in the area.
75. Iraq will still be faced with a hostile Syria and
Iran, so it will not risk alienating those countries on
whom it must depend economically and logistically,
particularly Saudi Arabia, Kuwait, and Jordan. Be-
cause of Jordanian support in the war, Iraq also would
probably give Jordan assistance in any future conflict
with Israel. It will also seek to reduce its military
dependence on the Soviets and will seek Western
economic aid in Iraq's postwar reconstruction and
development.
76. As long as the war continues, we expect the
Saudis to continue to back Saddam with logistic
support and financial aid (albeit less than he wants).
They regard Saddam as the lesser evil and have
already invested heavily (more than $21 billion in
loans and grants) in his regime as a counterweight to
revolutionary Iran. They need to preserve Iraq as a
security buffer to Iran.
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77. The Saudis and others would fear any change in
regime in Baghdad because of its potential for destabi-
lizing the region. They believe Saddam's downfall
would weaken Iraq's ability to resist Iranian military
pressure, encourage Iran to pursue its aims more
aggressively elsewhere in the Gulf, or even result in a
new regime in Baghdad inimical to their interests.
78. A Shia revolt or takeover in Iraq would particu-
larly frighten them. The Bahrainis and Kuwaitis, and
to a lesser extent the Saudis, would fear unrest among
their own sizable Shia populations. Faced with the
possibility of Iran and Iraq working in concert to
spread revolution, the Saudis and other Gulf Arabs
would seek private, and perhaps even public assur-
ances of US support. They also probably would try to
appease Iran.
79. If Saddam's successors worked to check Iranian
ambitions in the Gulf, the Saudis would be supportive.
Riyadh might even welcome Saddam's ouster if it
offered a chance to end the war on terms that
preserved a rough balance of power between Iran and
Iraq.
80. The war has had some fortuitous consequences
for Gulf states. It has drained the strength and re-
sources of two larger neighbors who have often bullied
them. The war opened the way for creation of the
Gulf Cooperation Council. The decline of Iraqi oil
production at the onset of the slump in the oil market
was welcome. Ending the war would lead to the
reemergence of Iraq as a major oil exporter and almost
certainly would cut into the Gulf states' share of the oil
market and put additional downward pressure on oil
prices. In addition, Iran would press them to help pay
war reparations.
81. Syria is deeply hostile to the current regime in
Baghdad, convinced that Saddam is bent on over-
throwing the regime of President Hafiz al-Assad.
Assad believes that Iraq actively supports the Muslim
Brotherhood in Syria, and accuses the Iraqis of assist-
ing the antiregime uprising in Hamah in February
1982. In return, Syria has supported various Iraqi
opposition groups and has strengthened its ties with
Iran.
82. As long as the regimes of Saddam and Assad
survive, Syrian-Iraqi hostility is likely to continue. The
mutual fear and suspicion of the two regimes is
reportedly reinforced by an intense personal hatred
between the two leaders. The Iraqi pipeline through
Syria probably will remain closed, and Syria will
continue cooperating with the Iranians, in order to
overthrow Saddam. The continuing hostility also
means that Iraq almost certainly will provide little or
no military help to Damascus in the event of a major
clash with Israel during the term of this Estimate.
83. Syria would welcome a nonfundamentalist re-
gime to replace Saddam in Baghdad, particularly if it
presaged reduced hostility. Syria probably would fol-
low up with early gestures of support, such as the
reopening of the oil pipeline, and high-level discus-
sions of closer ties. Syria, which currently bills itself as
the only frontline Arab state opposing Israel, would be
likely to seek Iraq's diplomatic and military coopera-
tion. Iraq and Syria, however, are regional competitors
for influence, and conflicting goals and interests would
make any Syrian-Iraqi rapprochement short lived.
84. If a fundamentalist regime were to replace
Saddam Husayn, Assad would fear that Shia funda-
mentalists would add their weight to the effort by the
Muslim Brotherhood in Syria to topple him. President
Assad would also move away from Iran, and possibly
improve his ties with both Saudi Arabia and Jordan to
counter the fundamentalist threat.
85. Libya has little ability to influence events in
Iraq, despite Libyan leader Qadhafi's antipathy to-
ward Saddam Husayn and his sense of revolutionary
alliance with the Khomeini regime. Libya provides
Kurdish oppositionists with small amounts of arms,
funds, and training, and has also disbursed funds to
Iraqi religious opposition groups. Libya would oppose
the creation of an Islamic republic in Iraq under the
influence of Iran, preferring a coalition of leftists,
Kurds, Shia, and dissident exiled military officers, with
whom Libya would hope to curry favor.
86. Relations between Iraq and Algeria have been
correct but not close. The current Algerian leadership
would most likely take a neutral position in response to
a change of leadership in Baghdad and would remain
willing to mediate a settlement to the Iran-Iraq war.
Algerian leaders, concerned over the spread of Islamic
fundamentalism at home, would be greatly troubled if
Islamic fundamentalists came to power in Iraq, but
could do little to influence events in Baghdad.
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Relations With the Superpowers
87. The war has not significantly altered Iraq's
relations with the Soviet Union or the United States. It
has prolonged Iraq's dependence on the Soviet Union
for arms, and may deepen that dependence if the war
drags on. Relations with the United States have im-
proved and are likely to continue to do so as Baghdad
seeks ways to loosen the Iraqi-Soviet link. Many
obstacles remain, however, in the way of close ties
between Baghdad and Washington.
88. Iraqi-Soviet relations have run an uneven course
in recent years. The two countries signed a friendship
and cooperation treaty in 1972, leading to increased
Iraqi purchases of Soviet weapons and expanded
Soviet economic projects in Iraq. Relations began to
sour in the mid-1970s when Moscow withheld arms
during Baghdad's crackdown on the Kurds. They
worsened when Baghdad suppressed the CPI in the
late 1970s, and began to use its expanding oil revenues
to reduce Iraqi dependence on Soviet arms and to
modernize and develop its economy with Western
assistance. Relations plummeted when Moscow again
briefly embargoed arms shipments at the outbreak of
the war with Iran, and they remained poor through
1981.
89. Soviet-Iraqi relations have improved since the
spring of 1982. The two countries negotiated major
new arms deals in April and in December 1982. Both
sides now publicly describe their relationship in posi-
tive terms. The Soviet
have been more supportive politically of the Iraqi
position on a settlement of the war since Iranian forces
crossed into Iraq in July 1982. The USSR has backed
Iraqi-inspired UN Security Council resolutions calling
for an immediate cease-fire and withdrawal of forces
to prewar boundaries. -
90. Moscow's more cooperative attitude stems from
its wish to reverse Iraq's turn toward the West, its
despair of any short-term gains in Iran, and its fear
that Iran's counterinvasion of Iraq might succeed in
establishing a new Islamic fundamentalist regime near
the USSR's southern border. From Moscow's perspec-
tive, the risk that a Soviet tilt toward Iraq would open
the way for reestablishment of US influence in Iran
seemed much lower in the spring of 1982 than it had
in the early days of the revolution. Khomeini had
crushed all major opposition, and the regime's anti-
American rhetoric was as shrill as ever. The Soviets
also concluded, according to an authoritative article in
the CPSU party journal in July 1982, that the pros-
pects for the Iranian revolution swinging to the left
were declining. They apparently judged that as long as
Khomeini lived, Soviet influence in Iran would be
minimal.
91. The Soviet-Iraqi rapprochement probably will
continue in the next two years if the war drags on.
Baghdad, despite its wish to diversify weapons sup-
plies, cannot afford to jeopardize its access to Soviet
arms. Moscow, in turn, wants to preserve its share of
the lucrative Iraqi arms market and reverse, or at least
slow, Baghdad's shift toward alternative sources. A
faction within the Iraqi leadership-although proba-
bly a minority-reportedly favors maintaining close
ties with Moscow, and some elements of the military
probably would support such ties, at least until reliable
alternate military supply relationships have been solid-
ified. The Soviets presumably have some influence
through their large mission in Iraq, which includes at
least 1,000 military and 5,000 economic and technical
advisers.
92. Certain factors, however, preclude a return to
the close relationship that existed at the time of the
signing of the Friendship Treaty in the early 1970s.
First, mutual distrust between Moscow and Saddam
remains high. Moreover, the Soviets will have to weigh
the effects of a full rapprochement with Baghdad on
their ties with Syria. They will want to avoid antago-
nizing Syrian President Assad's regime, their most
important ally in the Middle East and a strong sup-
porter of Iran, by developing too close a relationship
with Syria's archenemy, Saddam Husayn. Most impor-
tantly, despite the present poor state of Soviet-Iranian
relations, we believe Moscow still considers Iran more
important geopolitically than Iraq, if for no other
reason than that the USSR and Iran share a border of
more than 1,500 miles. Moscow will want to be careful
not to tilt so far toward Baghdad that it convinces
some Iranian leaders to rethink their hostile posture
toward the United States.
93. The Soviets probably would prefer to see Sad-
dam removed, as long as they were confident that he
would not be replaced by an Iranian-dominated Shia
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regime. If Saddam were simply replaced by his chief
deputies, chances are they would share his distrust of
the Soviets, although they probably would not allow
this to dominate Iraqi policy toward the USSR. Mos-
cow might seek to ingratiate itself by offering the new
leaders better credit terms on arms purchases and
more advanced weaponry, and possibly intelligence
and security support to help maintain them in power.
94. Relations between the United States and Iraq
have improved over the last few years as the United
States has sought to capitalize on Iraq's desire to
reduce its economic and military dependence on the
Soviet Union and to exploit Western technology to
develop its economy. The United States has not had
formal diplomatic relations with Baghdad, however,
since the 1967 Arab-Israeli war. Iraq not only severed
diplomatic relations with Washington but suspended
oil shipments to the United States as part of the 1967
Arab oil embargo and established a general boycott of
US goods, which remained in effect until 1973.
95. Commercial ties have grown steadily since
1973, and US firms have received a wide variety of
contracts for projects, primarily in the oil sector. In
1981 the Iraqis further expanded opportunities for US
businesses in Iraq by allowing participation in the
annual Baghdad International Trade Fair. Iraq pur-
chases large quantities of American agricultural prod-
ucts and has a growing appetite for sophisticated
industrial goods and technology. US firms will proba-
bly play a major role in the reconstruction of the oil
industry after the war.
96. Iraqi officials, including Saddam Husayn, have
made positive public statements about relations with
the United States in recent years. They assert that Iraq
had intended to reestablish full relations with the
United States but had to delay such a move when the
war with Iran began. Iraq views reestablishment of
diplomatic relations as a way of balancing its relations
with the two superpowers, as well as enhancing its
nonaligned credentials.
97. Serious impediments remain to the develop-
ment of close ties. The major long-term obstacles are
US policy toward Israel and Iraqi links to Palestinian
groups involved in international terrorism. Iraq
continues to view US support for Israel as inimical to
Arab interests. Iraq's more recent statements on the
Palestinian question suggest a willingness to accept a
negotiated settlement that is acceptable to the Pales-
tinians. This would mean abandonment of Iraq's
traditional rejectionist position, but it is too soon to
determine if this reflects a temporary Iraqi need to
play to its moderate Arab supporters in the war or a
fundamental change in outlook. Iraq also is suspicious
of US intentions in the Persian Gulf, and senior Iraqi
officials continue to charge that the United States is
prolonging the war by allowing Iran access to Western
arms. It is also sensitive to Iranian charges that it has
become a US "tool."
98. Iraqi officials have repeatedly denied that they
support such terrorist groups as 15 May and Abu
Nidhal's Black June, while insisting that Iraq must
provide aid and support for any "displaced" Palestin-
ians. Although Abu Nidhal probably is now operating
out of Syria, the Iraqis are suspected of having had a
hand in attacks on Kuwaiti diplomats last year by
Black June. Iraq's stated position probably can be
confirmed only by absence of involvement in terrorist
operations over an extended period of time.
Prospects for US Influence
99. US links to Iraq will probably increase despite
the constraints, if the current regime in Baghdad
remains in power. Saddam Husayn probably will see it
in his interests to pursue a more balanced relationship
with the two superpowers. Western and US advantages
over Communist states in the fields of technology and
economic relations will assume more importance when
the war ends and the Iraqi regime resumes its drive to
develop its economic power.
100. France, however, will continue to be Iraq's
major economic and political link to the West. France
is Iraq's major supplier of Western arms and has a
major economic stake in Iraq. France has also been the
only Western power publicly to support Iraq in its war
with Iran. French officials have stated flatly that Paris
will not allow Iraq to be defeated.
101. The current regime is likely to pursue policies
more favorable to the United States than any successor
regime. The United States is likely to come in for
harsher treatment from new leaders either of the
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Ba'thist or Islamic fundamentalist variety, particularly
if there is a return to the more traditional Iraqi
xenophobia and ideological hostility to the West.
102. A major upheaval in Iraq, particularly one in
which the Iranians were a significant influence, would
have severe consequences for US interests in the
Middle East. We would be faced with a second hostile
regime, which would pressure countries in the region
to reduce ties to the United States and which would
oppose any US presence in the area. Regional tension
would increase sharply, and the United States would
have difficulty containing damage to its own interests.
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ANNEX
EQUIPPING IRAQ'S MILITARY
1. Iraq has a sufficient inventory of weapons and
other military equipment to continue to wage pro-
tracted war against Iran during the period of this
Estimate. Only a major suppliers' suspension of spare
parts deliveries or failure to honor a major contract
would degrade this situation. Although Iraq has thor-
oughly diversified its sources of arms, its air and
ground forces will rely primarily on Soviet-made
weapons during at least the next several years.
2. The effectiveness of Iraq's armed forces against
Iran depends largely on their ability to maintain
numerical and qualitative supremacy in weapons and
equipment. Consequently, Baghdad will continue to
seek contracts that will ensure a wide margin of
superiority and will be suspicious that any improve-
ment in relations between Iran and the West could
threaten that superiority.
3. Until the mid-1970s, Iraq had relied almost
exclusively on the USSR for its modern military
equipment. Concerned about dependence on a single
supplier, Baghdad began to conclude arms deals with
Western Europe, primarily France. (See figure 7.) The
Soviet decision to embargo arms deliveries to Iraq
during the first months of the war accelerated Iraqi
contracts with the West.
4. Since the beginning of the war, Baghdad has
concluded deals worth almost $5 billion with France
for Mirage F1 fighters, Roland surface-to-air missiles,
self-propelled artillery, antiship missiles, and electron-
ic equipment. Italian sales have reached $2.2 billion
and include armored personnel carriers, other ground
equipment, and naval ships. China also has become a
major new source of arms. Beijing and Baghdad have
signed contracts for fighter aircraft, tanks, and artil-
lery totaling more than $3.5 billion. Chinese equip-
ment is particularly attractive because of its similarity
to Soviet equipment already familiar to the military.
5. For all of its new deals with China and the West,
Baghdad still looks to the USSR as its primary source
Figure 7
Iraq: Arms Deliveries
USSR 28%
Eastern Europe 28%
France 23%
China 9%
Egypt 4%
Other 8%
1
of modern aircraft and weapons. Since the war began
Iraq has concluded some $4 billion in new military
contracts with the Soviets. Iraq and the USSR early
this year concluded an arms deal for 66 advanced
MIG-21 fighters and some 500 T-72 tanks. For the
period of this Estimate the Iraqi ground forces will
remain almost completely equipped with Soviet-style
weaponry. The Air Force will have acquired nearly
100 French combat aircraft by 1985, but more than
three-fourths of Iraq's combat aircraft will still be of
Soviet origin. Iraq's continued dependence on Soviet
resupply of additional military equipment, spare parts,
and munitions will remain Moscow's major area of
leverage over Baghdad.
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6. The major impediment to future military con-
tracts will be Baghdad's shortage of foreign reserves.
Iraq relies on Saudi Arabia and other moderate Gulf
states for financing. Declining oil revenues and the
continued softness of the oil market will impose some
restraint on its arms purchases and will encourage
Baghdad to barter oil for equipment. Iraq this year has
successfully arranged favorable credit terms with
France and the USSR that will delay any further
serious payment problems until 1984.
7. Over the longer term, Iraq plans to build a
domestic arms industry through licensed assembly and
coproduction arrangements with West European com-
panies. Little serious progress in this area is expected
during the period of this Estimate.
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