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Backgrounder #594 on Middle East

July 20, 1987

High Stakes for the U.S. in the Persian Gulf

By

(Archived document, may contain errors)

594 July 20, 1987 HIGH STAKES FOR THE US IN THE PERSIAN GULF The May 17 attack on the YSS Stark is a tragic reminder of the potential dangers of the seven-year-old Iran-Iraq war. It also is a re minder of the Persian Gulfs enormous strategic importance to the United States and the West.

The attack on the Stark prompted second thoughts about the Reagan Administration's March commitment to reflag and escort eleven Kuwaiti oil tankers in the Persian Gulf. Some have called for Ronald Reagan to break this pledge to avert a possible naval confrontation with Iran. Such advice, however, ignores 'the long-term risks of a U.S. decision to cut and run. This would reverse the decades old U.S. policy to promo te stability in the Gulf, to keep it open to ships of all nations, and to prevent Soviet dominance in the region.

The West has sustained two major strategic setbacks in the Persian Gulf region in the past decade--the Iranian revolution and the Soviet invasion of Afghanistan. It cannot afford another. Reneging on the commitment to Kuwait would shatter U.S. credibility , already weakened by the revelation of arms sales to Iran, and undermine U.S. ability to deter both Iranian and Soviet aggression in the future. Withdrawing the reflagging offer not only would cast doubt on the consistency and reliability of the U.S., but would lead the Arab Gulf states to appease Iran or seek protection from Moscow.

Such an abdication of U.S. responsibility eventually would allow one of these hostile powers to establish hegemony over the Persian Gulf oil reserves. Given the economc import ance of Persian Gulf oil to the Western Alliance, the U.S. can not afford to err on the side of complacency.

Also at stake is the containment of the destabilizing spillover effects of the Iranian revolution. If Washington stands by idly, Iran probably cou ld intimidate Kuwait, drive a wedge between Iraq and the other Arab Gulf states, and then defeat Iraq. Iranian radicals bent on exporting Ayatollah Ruhollah Khomeini's -2 brand of radical Islamic fundamentalism would be strengthened at the expense of more reasonable Iranian leaders who could reach some accommodation with the West. Iran would be encouraged to foment revolution in Kuwait, Saudi Arabia, and other Gulf states An ascendant Iran would ignite smolderin8 fundamentalist movements in such pro-Wester n states as Egypt, Jordan, Tumsia, and Morocco.

Anti-Western terrorism would surge as. would the chances .of another. Arab-Israeli War Prudent Risks. The risks entailed in the Administrations reflagging plan appear prudent when weighed against the long-ter m risks of dishonoring the reflagging commitment. Reflagging, of course, is no anacea. It does not assure sends a signal to Iran, the Soviet Union, and the Arab Gulf states: the U.S. is willing and able to take action to protect its vital interests in the Persian Gulf the free flow of all Persian Gulf oil, only the bulk o P Kuwaiti oil exports Yet it Upholding the U.S. commitment to Kuwait is a necessary but not sufficient policy to protect U.S. interests in the Persian, Gulf. The best way to protect these mterests is to end the Iran-Iraq war. Pursuing this, the Reagan Administration has launched a diplomatic offensive to prompt the United Nations to give teeth to its so far ineffective Security Council resolutions calling for an end to the Gulf war.

Washington wants the U.N. Security Council to mandate an arms embargo on whichever belligerent refuses to accept a cease-fire and negotiations.

Washington experts know from long experience, however, that there is little chance of the U.N. taking effective actio n on the Iran-Iraq war: .The Administration thus must be prepared for the U.N. approach to fail. At that time, the Administration must be ready to work with other states to prevent Iran from attaining an outright victory. That would destabilize the region and ultimately impose enormous security and economic costs on the U.S. and its allies and friends THE lU3FLAGGING AND ESCORT PLAN Bogged down in its stalemated war with Iraq, Iran has launched a mounting campaign of intimidation against Kuwait. Kuwait is n ot an outright ally of Iraq. In fact, until the 1979 Iranian revolution, Iraq was the prime threat to Kuwaits independence and territorial integrity. Today, Iraq and Kuwait have a ,strategic marriage of convenience prompted by the common threat from revol utionary Iran.

Kuwait permits Iraqs warplanes to transit its airspace and Iraqs trade to be routed through Kuwaits port. Together with Saudi Arabia, Kuwait contributes oil revenues of about $4 million a day to Iraq To punish Kuwait for this, Iran has unlea shed a war of terrorism against Kuwait, sabotaging Kuwaiti oil facilities and attacking Kuwaiti shipping. Since last September, when Iran escalated its bully tactics against Kuwait, 26 of the 35 ships attacked by Iran in the Gulf have been bound to or fro m Kuwait.

Kuwait approached both Moscow and Washington in late 1986 seeking protection from Irans illegal naval attacks. To preserve its nonaligned foreign policy stance and maximize its leverage on both superpowers, Kuwait originally -3 wanted to put six ships of its twenty-two-tanker fleet under U.S. protection and five ships under Soviet protection In early March, the Reagan Addstration, hoping to minimize Moscow's role in the Gulf offered to reflag and escort all eleven ships.

Nevertheless, Moscow has leased three of its tankers to Kuwait as a gesture of solidarity against Iranian intimidation A Iimited Opedon Reflaggin8 and escorting eleven Kuwaiti oil tankers is a limited operation that provides protection for 70 percent of Kuwait's oil exports at mo s t. It does not constitute a comprehensive effort to ensure the security of all Gulf oil exports Only a few dozen of the 600 tanker sorties, from the Gulf will be escorted. Escorts for each oil tanker are unnecessary because only 1 percent of Gulf tankers h ave been attacked during the "tanker war"; this has not been enough a steadily increasing proportion of Gulf oil exports-9 to 11 million barrels per day of ipeline capacity will be available in 1990, compared to 2.5 million in 1980.l determination to step in before the tanker war rages out of control and disrupts oil markets. Ultimately, however, only an end to the Iran-Iraq.war will.remove the threat to seaborne oil exports task force. Normally comprised of five or six ships, it will be built up to nine s h ips including a Ticonderoga-class cruiser equipped with the so histicated Aegis air oil tankers about every ten days, starting in late July. Each of the escort. ships will be linked electronically to U.S. and Saudi AWACS radar surveillance aircraft based i n Saudi Arabia A U.S. carrier task force in the Indian Ocean will provide air support if necessary a to trigger an oil supply crisis. A key reason is that pipelines skirtingthe; Gufi,:'ce 1 Re a agging, nevertheless, is important because it demonstrates-- A merican To protect ships flying the U.S. flag, the Navy is expanding its Persian Gulf defense system. This force is slated to escort a convoy o P three to five reflagged Battle Stations Manned. The U.S. escort ships will operate with battle stations fully manned when passing throught the Strait of Hormuz, the 35-mile wide channel at the mouth of the Gulf. The U.S. escort warships will be allowed to defend themselves and the reflaeed tankers against any ship or plane that manifests hostile intent either by m aneuvermg into a position where it could attack or by activating its target acquisition radar. To avoid being misidentified by belligerents, which resulted in the Stark tragedy, U.S. ships and aircraft will be equipped with The political aims of the refla g ging and escort operation are to revent Iran navigation for nonbelligerent shipping. U.S. neutrality in the Iran-Iraq war would remain unchanged since American ships will be escorting Kuwaiti oil out of the Gulf, not war materiel into Iraq. Two Kuwaiti ta n kers already have been reflagged with British flags with little fuss the ongoing Iranian war against Iraq. Although Iranians are sure to complain that it amounts to an American intervention on behalf of Iraq, they long have electronics gear called "squawk e rs" that broadcast identifying signals. I I from bullymg Kuwait into submission and to demonstrate support for reedom of This U.S. policy is a specific response to Iranian pressure on Kuwait, not to 1. a Wall June 29,1987. -4 denounced anyway what they in sist, incorrectly, is American support for Iraq.

Teheran knows, moreover, that the U.S. could intervene much more decisively on Iraq's behalf if it desired. The argument that reflagging should be ruled out ;because it would be interpreted by Iran as a tilt towards Iraq, therefore, carries little weight U.S. INTERESIS IN THE PERSIAN GULF The Persian Gulf arguably is the region most vital to Western security outside of Europe. Since 1949, U.S. Navy ships have steamed through the Gulf to demonstrate U.S. will i ngness to protect Western interests there. During the 1970s the U.S. followed a "twin pillar" strategy in the Gulf, relying on strong ties to the Shah's Iran and Saudi Arabia to safeguard Gulf stability. A more direct. Arhericcanl commitment was needed af ter the Iranian revolution destroyed one 'pillar" and the Soviet Union encircled the Gulf in a pincer movement by developing bases in South Yemen and Ethiopia and invading Afghanistan in December 19

79. The Carter Doctrine of January 1980 proclaimed that the U.S. would resist any Soviet move to dominate the Gulf.

The reflagging of the Kuwaiti oil tankers furthers three U.S. objectives in the Persian Gulf: maintaining access to Gulf oil, minimizing Soviet influence in the Gulf region, and enhancing the stab ility of Gulf states AccesstOGUlfOil The Persian Gulf is the globe's largest single storehouse of low-cost energy supplies, containing 55 percent of the world's proved oil reserves. In 1986 Gulf states provided 6 percent (900,000 barrels per day) of U.S. total oil consumption.

Although U.S. dependence on Persian Gulf oil currently is relatively low, U.S. allies are not so fortunate. In 1986 Japan imported from the Gulf 2.6 million barrels per day or 61 percent of Japanese oil consumption, Italy 800,000 bar rels per day or 47 percent of consumption, France 600,000 barrels per day or 32 percent of consumption, and West Germany 200,000 barrels per day or 8 percent of consumption. The long-term cohesiveness of the Western alliance depends on the ability of the U .S. to assure its allies continued access to Gulf oil Despite its relatively low dependence on Gulf oil, the U.S. remains vulnerable to the economic damage that would accompany a major disruption in Gulf oil exports. Since oil is a fungible commodity free l y traded in the world market, a sudden interruption of Persian Gulf oil exports would cause importers of that oil to bid up the world price of oil. The 1973-1974 quadrupling of oil prices and the 1978-1979 doubling of oil prices were both triggered by glo b al oil supply disruptions of less than 5 percent. When supply shortages are translated into price hikes, the U.S. stands to lose more than any other country because it is the'world's largest oil importer (5.3 million barrels daily in 1986) and the America n economy is more oil intensive than many of its economic competitors I Persian Gulf oil will become increasingly important in the future. The recent fall in oil prices has depressed global investment in oil exploration and alternative energy sources while spurring the growth rate of oil consumption. Because it -5 contains 71 percent of the world's surplus oil production, the Gulf is projected to meet a growing share of Western energy demands2 From the roughly 20 percent of the fiee world's oil consumption t hat the Gulf supplies today, it will climb to 45 percent by 1995 Soviet Influence I Given the vital importance to Western economies of continued access to Gulf oil, the U.S. cannot allow the Soviet Union to establish control over Gulf oil or to gain the c apacity to deny it to the West. This would give Moscow tremendous leverage to peel oil-thirsty Japan and Western Europe away from their alliance with the U.S.

The Reagan Administration stepped forward to protect Kuwaiti tankers in part to minimize the Soviet role in the Gulf. To allow Soviet warships to become guarantors of the flow of Gulf oil would afford them a foothold. in the area. They then could pose as the protector of Gulf Arabs against Iran's Islamic revolution.

Conceding Moscow such a role would undermine American influence in the Gulf and prompt nervous Arab Gulf states to establish closer ties to Moscow Enhamhg Gulf Stability The chief source of ins tability in recent years has been the radical Islamic fundamentalism unleashed by the Iranian revolution. Since grabbing power 1979 Iran's revolutionary ayatollahs have sought to incite Shiite revolutionaries in ;Iraq Lebanon, Saudi Arabia, Kuwait, and Ba hrain. Iranian subversive activities were a major factor triggering Iraq's September 1980 invasion of Iran.

American interests in the Gulf have become increasingly threatened since 1984 when Iraq, unable to export its oil through ports blocked by Iran, esc alated attacks on Iranian oil exports. Iran responded by attach6 shipping from other Gulf states to intimidate them and press them to restrain Iraqi air attacks. Meanwhile, Iran continued its relentless brutal war of attrition against Iraq An Iranian vict ory over Iraq would bring fariatical Ir&an Revolutionary Guards to the borders of Kuwait, Saudi Arabia, and Jordan while increasing Iran's challenge of neutralizing a direct Iranian ground threat to Saudi Arabia and Kiiw'ait comparative advantage.

Iran in the Drivefs Seat. An Iranian victory also would threaten the economic stability of the West because Iranian control of Iraqi oil fields would put Iran in the OPEC driver's seat. Unlike the. Saudis,.'inrho' have a long time-horizon for oil production and t h erefore want prices to stay below the level that wouldt make alternative energy sources economically competitive, the Iranians have a relatively short time-horizon because of their smaller oil reserves. The result: ability to foment trouble in Turkey. The U.S. then would be confronted. ith, the rather than blunting Iranian threats at sea, where the U.S. enjoys a pronounced 2 Lt. Col. Ralph Cossa America's Interests in the Persian Gulf Are Growing, Not Decreasing,"

M, June 1987. -6 Teheran wants to maximize immediate profits. Iranian control of Iraqi oil would increase OPEC production discipline, because Iraq currently ignores OPEC-assigned quotas. demanded Enforcing the quotas would push up oil prices. Moreover, by reducin Iraqi oil roduction, Iran could j ust

a prolonged Rhineland-style occupation o B Iraq's oi 8 ields to extract the up to $150 billion in war reparations that it has THE RISKS OF REFLAGGING By reflagging and escorting Kuwaiti tankers, the U.S. will be assuming manageable risks: a low to mod erate risk of attack on the ships themselves and a somewhat higher risk of terrorism against U.S. targets in the Middle Easti 3rhn's naval threat to U.S.-escorted ships in the Gulf can be blunted relatively easgy by the U.S. Navy. Iranian-sponsored terror i st attacks are more difficult to counter, but this threat existed long before the reflagging in any case I MilitaryRisks Iran's small navy of three destroyers, four frigates, and several small patrol craft poses a minimal threat to escorted tankers. 4ran' s ships are believed to be in poor condition because of inadequate maintenance and lack of spare parts. lNaval ersonnel are poorly trained, and their weapons are extremely unreliable. Last fall For example, only 10 percent of Iran's Italian-made Seakiller s urface-to-surface missiles functioned properly in combat? Other Iranian weaponsb.systems. also have poor performance records because of deterioration in storage or the purchase of defective weapons from unscrupulous black market arms dealers. The strength of the Iranian an force has fallen steadily to about 70 serviceable combat aircraft including perhaps ten modem U.S.-made F- 14 fighter-bombers supplied before the revolution. Unlike Iraq, Iran has few, if any, air-to-sea missiles.

Iran's tanker war has b een waged primarily by the Revolutionary Guards militant followers of Ayatollah Khomeim who have developed their own naval, air and missile forces. Using 50 speed boats armed with machine guns and rocket launchers, the guards harass shipping with hit-and- r un raids. The guards also have deployed Chinese-supplied Silkworm anti-ship missiles at two sites near the Strait of Hormuz and one on occupied Iraqi territory near Kuwait. The silkworm. is1 a truck portable 1960s era missile with an 1,100 pound warhead a n d a range of roughly-50 miles. Iran is reported to have 20 silkworms and eventually may get twice as mapy? Although the Iranians have test-fired one missile, the others are not yet beheved to be operational. Work at one missile site was halted after U.S w arplanes staged a training exercise nearby More Nuisance than Threat The' Revolutionary 'Guaids increasin

y are using naval mines. At least four ships in the last two months have struck mnes in the channel leading to Kuwait's main oil terminal. An 18-man U .S. Navy 3 4 June 14 1987, p. A31 June 7, 1987, p. Al. -7 ordnance team dispatched to Kuwait located up to 20 primitive North Korean-made mines in Kuwaiti waters. Given their limited numbers and unsophisticated manufacture, Iranian mines are more of a nui sance than a threat. Kuwait has lease a Dutch minesweeper itself. U.S Navy helicopters also could locate and detonate mines if necessary.

U.S. naval escorts should have little trouble neutralizing Irans conventional naval threats. The U.S. ships carry sophisticated electronic devices to confuse the Silkworms guidance system, and the ships have anti-missiledefense systems.

American AWACS surveillance planes provide early warning not only of missiles and aircraft but also of Iranian speedboats. On balance, I rans unconventional threats in the form of sabotage or terrorism are relatively greater than the militarynthreat to the reflagged tankers.

Irans Risks requested assistance from Saudi Arabias four U.S.-made minesweepers and may 1 Despite its rhetorical blu ster, Iran always has treated American naval forces with utmost caution. The U.S. Navy has escorted approximately 150 U.S. ships through the Persian Gulf in recent years without sustaining a single Iranian attack.

British and Soviet warships also have esc orted hundreds of their own merchant ships without being attacked, although unescorted ships have not been so fortunate. Iran assiduously follows U.S.-established procedures for warning and identification when its forces operate in close proximity to U.S. naval vessels. Unlike Iraq, which mistakenly attacked the YSS SW, the Iranians always make. a!.reconnaisance overflight to identi

a target before launching an air attack.5 The Iranians have good reason to be cautious. A naval confrontation with the U.S. is far riskier for Teheran than for Washington. The Iranians already have their hands full with the war against Iraq. They launched their tanker war !to reduce Kuwaits support for Iraq, not to drag the U.S. in on Iraqs side. The Iranians-know that they ar e totally dependent on shipping their oil through the Gulf.

By contrast, all Iraqi oil is trans orted in pipelines that skirt the war zone: Iran not win risks losing its own oil exports if it picks a naval fight with the U.S. that it could 1 S.8 THE RISK S OF RENEGING ON THE REFLAGGING CO The abrogation of the U.S. commitment to Kuwait would send dangerous signals to Kuwait, other Arab Gulf states the Soviet Union, and Iran. Kuwait and other pro-Western Gulf states would lose confidence in the reliability , or even the relevance, of U.S. security commitments. This could prompt them to appease, Iran or to offset the Iranian threat by establishing closer ties to the Soviet Union.

Either way, U.S. influence in the Gulf would be eroded severely. Plummeting Amer ican credibility in the Gulf also would diminish U.S. ability to deter Libyan terrorism and act as a trusted go-between in resolving the Arab-Israeli dispute 5 survu ay 29, 1987, p. 1.

I a Rqagada Victory for Moscaw. An American about-face on reflagging w ould redound to Moscow's benefit. The Soviets secretly signed an agreement with Kuwait on April 1 to lease and reflag additional Kuwaiti tankers if the U.S. were to break devastating ropaganda victory in the Arab world, allowing it to pose as the.

The res ulting corrosion of deterrence could precipitate a Soviet miscalculation that would produce a superpower confrontation in the Persian Gulf. its commitment to protect Kuwait's tankers? This would hand Moscow a champion o P Arab interests while belittling.A m erican resolution and staying power American reneging on reflagging would encourage Iran to adopt a more aggressive posture toward the U.S. and step up its intimidation of Kuwait and other Gulf states. Perceiving U.S. power and interest in the Gulf to be ebbing, the Gulf states would hedge their bets on the Iran-Iraq war and appease Iran by.reducing their financial support for Iraq.

This would bolster Iran's prospects for a decisive victory over Iraq. Such a would threaten the political stability of many pro-Westem Middle East states by vict%!i i aming radical Islamic fundamentalist movements. Terrorism would suige.

Iran would gain leverage to block Arab-Israeli peace efforts and escalate attacks on Israel. An American effort to 'avoid the risks of reflagg ing heightens the long-term risks of Iran-generated instability U.S. FOLxY commitment. Like it or not, reflagging is now seen as a litmus test of U.S credibility in the Gulf. Reflagging is a means to an end, and the Administration should clarify that end. Although it marginally improves the security of Persian Gulf oil flows and minimizes the Soviet role in the Gulf, reflagging makes the most sense in the context of U.S. policy toward Iran. Reflagging blocks Iran's attempts to intimidate and dominate the A r ab Gulf states. The Administration therefore should stress that reflagging is a component of its long-term efforts to contain the destabilizing spillover effects of the Iranian revolution. As such, reflagging should be linked to a set of other policies ai m ed at limiting Iran's attempts to export its revolution government with solid disincentives for radical behavior and plausible incentives for moderating its aggressive foreign poli~y.~ The ultimate U.S. goal should be 'to encourage the emergence of a resp o nsible Iranian leadership with which the U.S and pro-Western Middle East states can establish a modus vivendi. These would be Iranian leaders who would accept a "revolution in one country" rather than relentlessly strive to foment revolution elsewhere. It also means leaders who would disavow terrorism as an adjunct of foreign policy The U.S. has made a commitment to reflagging, and it should live up #to that I 48 I Encouraging Responsiile hiders Washington must present the Iranian 6 7. See: James Phillips T he Continuing Need for a U.S. Opening to Iran: Heritage Foundation June 5, 1987, p. Al No. 566, March 5, 1987. -9 The American people and U.S. Congress would understand better the need to buttress Kuwait if they realized that the same pro-Iranian terroris t groups that hold American hostages in Lebanon are intent on bringing Kuwait to its knees In fact most of the nine Americans kidnapped by fundamentalist Shiites in Lebanon were taken hostage to force the release. of seventeen pro-Iranian terrorists captur e d after the December 1983 bombings of Kuwaiti. government installations and the American and French embassies in Kuwait Kuwait has stood firm against Iran-sponsored bombings, an assassination attempt on Kuwaits head of state, and sabotage of Kuwaiti oil f a cilities. The reflagging and escort of Kuwaiti tankers shores up Kuwaits determination to resist Iranian terrorism. It underscores the failure of Iranian terrorism to alter Kuwaiti or U.S. foreign policy, thereby demonstrating to Irans leaders that terror i sm, ddks .not always pay dividends Seeking the Wars End. Fulfilling the U.S. reflagging commitment is an essential signal that the U.S. is determined to protect its interests in the Gulf. But blunting the threats posed by Irans tanker war treats the sympt o ms, not the cause of instability in the Gulf. The U.S. must go beyond reflagging and seek an end to the Iran-Iraq war which spawned the tanker war. The most potent option for forcing an end to the war would be a joint U.S.-Soviet effort, but such a policy is unrealistic and undesirable. Long-term Soviet goals in the Persian Gulf are incompatible with American goals. Moscow wants a servile Iran, which would not block the extension of Soviet power to the Gulf or spur Islamic revolution in Soviet Central Asia . Washington needs a stable, independent Iran, which-does not I disintegrate into separatist states that the Soviets can use as stepping stones to the Gulf. The 1941-1946 failed experiment in Soviet-British condominium over Iran demonstrated the conflict b e tween long-term Western and Soviet goals. Moscow refused to honor its pledge to withdraw from northern Iran after World .Wai 11, and when it finally did so under heavy American pressure, it left behind communist puppet governments in Irans provinces of Ku r distan and Azerbaijan If the Soviet Union truly wants to end the Iran-Iraq war, then it can prove it at the United Nations Security Council where the U.S. delegation .is pushing a resolution that calls for a negotiated end to hostilities and an embargo on whichever side rejects a preliminary cease-fire. This would penalize Iran since Iraq long ago signalled its wdlingess to accept a cease-fire. Without the imposition. of an arms embargo that would choke off Irans import-dependent war effort, however, be Se c urity Council resolution is irrelevant. Moscow is Iraqs foremost arms supplier and the Soviets provide Iran with arms indirectly through North Korea, Libya, Syria Nicaragua, Vietnam, and Eastern Europe. Together with the Peoples Republic of China, Irans c h ief arms supplier, Moscow probably will derail any effort to mandate an arms embargo. Washington should press its effort anyway to demonstrate to the Gulf Arabs the shallowness of the Soviet commitinent to endthe war. fail, as almost surely will happen, t h en the U.S. must consider measures to deny Iran a decisive victory over Iraq. Although Saddam Husseins brutal Iraqi regime is no friend of the West, it furthers Western interests by shielding other Middle Eastern states from the brunt of Irans revolutiona r y fervor. Thwarting an Iranian Thwarting Iranian Victory. If efforts to resolve the conflict through the U.N 10 victory over Iraq is the best way to frustrate Irans radical hard-liners and encourage moderation in Irans foreign policy.8 Direct military ass i stance to Iraq should not be necessary unless Iran escalates terrorist attacks against the U.S. or provokes a confrontation in the Gulf. The U.S could improve Iraqs financial plight by easing-repayment terms on the $500 million worth of U.S. commodity cre dits that Iraq receives annually. Washington also could use its tilt to Iraq to help restore the confidence of international lenders in Iraqs ability to withstand Iran and repay loans.

Washington must make it clear that the U.S. arms sales to Iran were a temporary aberration. The American effort to block arms sales to Iran, Operation efforts and prolongs the war.

Staunch, must be a top priority. The availability of foreign arms stokes Irdns war Washington could support Iraq diplomatically by pressing Gulf. states not to appease Iran. Saudi Arabia, for instance, revised its oil pricing policy in 1986 and bowed to Irans demands to cut oil production. The Saudis also supplied Iran with refined oil products to offset shortfalls in Iranian refinery production.

The U.S. should support Jordanian efforts to encourage Syria to break with Iran and to reconcile with Iraq. Such a realignment could limit Irans ability to support terrorism in Lebanon and reduce Irans ability to manipulate American host ages As long as A y atollah Khomeini remains in power, Iran will continue to prosecute its war against Iraq. When Khomeini passes from the scene, however Irans implacable determination to continue its bloody war could soften. The U.S thus should maintain contact with all of t he ad hoc factions maneuvering to fill the power vacuum that Khomeini will leave behind. To focus Iranian attention on the benefits of a negotiated solution, the U.S. should endorse in principle Irans demand for war reparations from Iraq. Saudi Arabia and Kuwait may be willing to foot some of the bill by earmarking some of the oil production that already is committed to Iraq. The U.S. also could offer technical assistance in rebuilding the Iranian oil industry if Iran ends its war against Iraq and disavows terrorism I ti I Respect for Firmness In addition to these carrots, Washington, must brandish I sticks. If Iran attacks the reflagged tankers, the U.S. must be willing to respond firmly. Any Iranian attacks should be answered with the destruction not only of the attacking forces but also of their bases Iran respects firmness, as it demonstrated in 1984 when it chose not to escalate a confrontation with Saudi Arabia after Saudi fighter planes shot down an Iranian warplane on the Saudi side of the Gulf.

The Iranians should be kept guessing about the precise form and timing of U.S. retaliation. They should be warned beforehand, however, that a naval confrontation in the Gulf will precipitate American military assistance to Iraq and ultimately could result in U .S. airstrikes against Irans vulnerable oil export facilities 8. See: Daniel Pipes and Laurie Mylroie, Back Iraq: Its Time for a U.S. Tilt, Tbe New &put April 27, 1987 11 Iran must be convinced that attacks on U.S. escorted shipping will jeopardize its hi g hest priority goal: winning the war with Iraq CONCLLJSION to escort reflagged Kuwaiti tankers. The U.S. must take prudent risks to defend its interests in the Persian Gulf if it expects to be taken seriously by Iran, the Soviet Union, and the Gulf states. The risks of fulfilling its commitment are outweighed by the risks of dishonoring it and allow the Soviets to expand their influence in the Gulf at U.S. expense. It would increase the likelihood of an Iranian victory over Iraq, which would generate instab ility in the Middle East for years to come.

Reflagging should be part of a broader diplomatic effort to safeguard Western interests in the Gulf. Washington must work with other states to end the Iran-Iraq war If a negotiated solution proves unacceptable to Iran, then Washington 'should join an international effort to choke off Iran's arms supplies and tilt toward Iraq.

Iran must be convinced that extremist policies ultimately will hurt its interests, not help them. Until Iran disavows terrorism and ends vi olent efforts to export its revolution, the U.S. must safeguard Western interests vigilantly in the Persian Gulf Washington cannot respond to the Stark tragedy by abandoning its commitment Abrogating the reflagging commitment would encourage Iranian. a&es iveness I against Iranian threats and Soviet threats alike E 48 James A. Phillips Senior Policy Analyst

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