IRAN AND THE SUPERPOWERS IN THE GULF

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• Publication Date: June 1, 1987

Director of
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APPROVED FOR RELEASED
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DATE: 08-10-2010
0046021.
SN tE*34/ 11./39- *87
NI *0034*87
NIC DI SS . IINATICN
 THIS ESTIMATE IS ISSUED BY THE DIRECTOR OF CENTRAL
INTELLIGENCE.
THE NATIONAL FOREIGN INTELLIGENCE BOARD CONCURS,
EXCEPT AS NOTED IN THE TEXT.
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 SN I E 34/ 11 /39-87
IRAN AND THE SUPERPOWERS
IN THE GULFn
Information available as of 18 June 1987 was used
in the preparation of this Estimate, which was
approved by the National Foreign Intelligence
Board on 19 June 1987.
 SCOPE NOTE
This Estimate focuses on Iranian intentions toward the United
States and the Soviet Union in the Gulf over the next six months to a
year. The Estimate assesses not only the probable immediate actions
Iran will take in an effort to head off the proposed US protection for
Kuwaiti shipping, but also the probable Iranian strategy once the
reflagging project is implemented. Included is a discussion of the role of
Iraqi actions in Iran's decisionmaking. It does not attempt to assess US
ability to defend against Iranian actions or the ultimate effectiveness of
Iranian actions.
The Estimate addresses the probable reactions of Saudi Arabia,
Kuwait, and the other Gulf Cooperation Council states to increased US
involvement in the Gulf at various stages of rising tensions. Also assessed
is the impact of the shipping war and the probable impact of potential
Iranian actions on the free flow of oil. The effect of potential
superpower actions on the course of the Gulf war is also noted.)
 KEY JUDGMENTS
The risks of a US-Iranian military incident in the Gulf have risen
and will increase further when the US protection of Kuwaiti ships
begins. The level of superpower activity and pressure thus far in the
Gulf is unlikely to deter Iran from attacks directed against US-flag ships
or other US interests in the Gulf. We believe Iran prefers to persuade
the superpowers and Kuwait to back down short of a military clash. Iran
is acutely aware of concerns in the United States and the Gulf about ex-
panding superpower involvement. Tehran is prepared for confrontation
if, in its perception, other measures prove inadequate to force the
United States to back down.)
Iran will not indiscriminately attack US and USSR targets but will
try to use terrorism, sabotage, and military action selectively to serve its
broader objectives. The longer the superpowers' protective measures
remain in force, the more likely Iran will attempt to increase the cost.
Tehran will most likely use the blend of terrorism, diplomatic maneu-
vers, and conventional attacks to have maximum effect on government
and popular opinion in the United States, Europe, the USSR, and the
Gulf states. Iran is unlikely to directly attack a foreign warship.
Another major factor in any Iranian decision to attack superpower
interests will be Iraqi action: Iraqi attacks against Iranian targets in the
Gulf are likely to trigger retaliatory Iranian strikes against Iraq and the
interests of its perceived allies, particularly Kuwait and including the
United States and the Soviet Union. Iranian policy has been consistent
in trying to separate the shipping war in the Gulf from its land war
against Iraq. So long as Iraq refrains from attacks on Iranian tankers and
associated oil export facilities, we believe Tehran will be less likely to
provoke clashes with other parties in the Gulf. Tehran clearly would see
a cessation of military action in the Gulf as a major victory, allowing
Iran to continue to export oil-the revenues from which are vital to its
prosecution of the war-and giving Iran a freer hand in the land war
where it has the advantage.0
We believe that Iraq is likely to continue attacks on Iranian oil tar-
gets-ships and other facilities-in the Gulf because the Iraqi advan-
tage in this aspect of the war is considerable. In the absence of
extremely heavy pressure by allied and friendly states, Iraq is unlikely
to willingly cede the advantage to Tehran in the Gulf.l
 Even in the absence of Iraqi attacks, however, Iran believes US and
USSR protection for Kuwaiti shipping threatens to foreclose an Iranian
victory and eventually would challenge Iranian hegemony in the Gulf.
For now, Iran will be more hostile toward the United States than the
USSR and more willing to attack US interests. Iran is seeking a modus
vivendi in the Gulf with Moscow to counterbalance the United States
and to defuse the Soviet threat. Even if these efforts fail, the United
States will remain the focus of Iranian efforts to reduce superpower
presence and influence in the Gulf.=
Tehran does not believe the United States will maintain its
commitment to Kuwait in the face of sustained terrorist, diplomatic,
and military pressure to force Washington to back down. Public
statements by Iranian leaders clearly indicate that Tehran sees parallels
between developments in the Gulf and the 1983 events in Lebanon. In
Iran's view, it-with its Shia allies-forced the United States out of
Lebanon. Tehran believes it can intensify American concerns about the
Gulf, possibly leading to a loss of US resolve. Iranian perceptions that
they have scored a string of victories against the United States is likely
to make them bold in meeting the superpower threat. Failure of the su-
perpowers to meet commitments to protect shipping in the Gulf would
be a significant political victory for Iran and would almost certainly
encourage the GCC states to further accommodate Iran
Once US protective measures are implemented, Iran is likely to
increase its attacks on nonescorted Kuwaiti shipping, including US-flag
vessels, and also to lay more mines near Kuwait. Iran will also probe for
opportunities to attack escorted US-flag ships. The Iranians probably
believe that a strike-even if they suffer US retaliation-will intensify
the debate in the United States on the wisdom of US involvement
The heightened tensions in the Gulf and the chance of military
action near the warships increase the immediate threat to them and to
commercial ships. Most in the Community believe Iran is less likely to
deliberately use Silkworm missiles against US or Soviet naval vessels, at
least until Tehran has exhausted other measures to obtain its objectives.
Others, while they agree that Silkworm attacks on US or Soviet warships
are less likely than on commercial shipping, do not believe the Iranians
perceive the Silkworm as a weapon of last resort. E:1
We believe terrorism and sabotage will be important instruments
of Iran's policy in the Gulf. The possibility that Iran will conduct
terrorism against US targets-military, diplomatic, and commercial--is
growing. The most likely US targets are in the Gulf and the Middle
East, particularly in Kuwait and Bahrain. There is also an increased
4
 S+-
greater than the US or Soviet willingness to inflict it
threat to US interests elsewhere. Tehran's perceptions of serious
divisions in the United States over policy in the Gulf may well lead the
Iranians to risk some dramatic act that could crystallize US opinion
against an expanded role in the Gulf, The Iranian decisionmaking
process may also take into account the risk that the United States could
inflict greater damage perhaps by assisting Iraqi war efforts.
Tehran will expect retaliation for military or terrorist attacks
against superpower interests and will be able to absorb heavy punish-
ment. Iran probably believes its ability to bear the pain of retaliation is
Iran is almost certain to sponsor increased terrorism by pro-Iranian
Shia dissidents against the Sunni-dominated Kuwaiti Government.
Bahrain is likely to become a target for renewed Iranian subversion
because of its largely Shia population and the presence of the US Middle
East force.
While Moscow is warning against attacks, it is portraying itself as
the more cautious and evenhanded superpower. It does this by refrain-
ing from provoking Iran, warning against a US attack on Iran, keeping
its naval presence low, calling for an international agreement on
shipping, and cultivating relations with the Gulf states. This approach
might allow the USSR to better its political position in the Gulf,
especially if Iran forgoes attacks on Soviet targets.
The Soviets would almost certainly increase their naval capability
in the Gulf if Iran attacks another Soviet vessel or if Moscow interprets
attacks on US ships as indication that Soviet ships are likely targets. If
Iranian attacks on Soviet ships continued, Moscow would likely consider
sanctions against Iran for refusing to enter peace negotiations with Iraq
and impose an embargo on arms sales from Eastern Europe.
While Soviet ships would immediately respond to Iranian attacks,
the Soviets are highly unlikely to retaliate against Iranian territory if
Iran attacked Soviet ships. Moscow also is unlikely to take any military
action, other than increased alertness, in response to a US strike against
Iran, but would move quickly to try to gain political advantage,
The GCC states are concerned that superpower protection for
Kuwaiti ships will provoke Iran but will not provide adequate protec-
tion for them. They are reluctant to raise the profile of their relations
with the United States and are signaling Iran that they desire to ease
tensions.)
The GCC states' support for the protection measures would
increase if they were convinced of US resolve, including Congressional
and popular support, but they would still hesitate to grant basing rights
or to conclude military agreements with the United States. Additional
5
 access or basing rights would be granted only if there were sustained
Iranian attacks on GCC facilities or if Iranian forces appear poised for
attack on Kuwait or other Gulf states.0
In the event of stepped up Iranian threats or an actual Iranian
attack on US-flag shipping or a US warship, the GCC states probably
would privately support a strong US response. They would expect US
naval escorts to defend convoys against Iranian attacks and might
privately approve of US strikes on Iranian shore targets. They probably
would not endorse a preemptive US strike against the Silkworm sites,
even in response to Iranian threats to employ the missiles. If the Iranians
were to attack shipping with Silkworms, however, most GCC states
privately would approve of a surgical US strike on the site but would
oppose repeated attacks on the missile sites or other targets. If the
United States were to abandon the escort/reflagging project outright,
there would be a critical loss of faith in Washington's ability to meet its
commitments)
Despite the shipping war in the Gulf, the vital flow of oil has not
been disrupted and the oil market remains calm. Surplus capacity and
government stocks provide the market with adequate protection from
most potential disruptions. Limited Iranian terrorist and military
attacks against Gulf oil flows, for example, probably would not have a
lasting effect on the market. Many shipowners would continue to
operate despite greater risk, and world surplus production capacity
could offset substantial war damage to facilities; industry sources report
that 30 or more empty tankers are usually at the entrance of the Gulf
waiting to be chartered. The Saudis, with nearly 4 million b/d of
surplus capacity, remain key to a major disruption because they alone
could replace most lost supplies elsewhere in the Gulf. In the worst case,
Iran could destroy unique oil processing and export equipment in Saudi
Arabia and Kuwait that would take months to repair. Under these
circumstances, there could be a serious disruption in world oil supplies
and an increase in prices
Iran has contingency plans to close the Strait of Hormuz to oil
exports, but does not have the capability to do this for more than one to
two weeks.
The increased superpower role in the Gulf is unlikely to alter
significantly the overall course of the Iran-Iraq war unless one or both
of the superpowers make a concerted effort to deny Iran the economic
or military resources to continue the war. If faced with economic or
military strangulation, Iran would almost certainly increase subversion
in the Gulf and sponsor terrorism against countries supporting the
sanctions. F__1
6
 DISCUSSION
Iran's Perception of the Superpower Threat
1. The risks of a US-Iranian military incident in the
Gulf have risen and will increase when the Kuwaiti
ship protection by the United States begins. The level
of superpower activity and pressure thus far in the
Gulf is unlikely to deter Iran from attacking US-flag
ships or other US interests in the Gulf. Since the 1979
revolution, Iran believes that it has been successful in
dealing with the superpowers, primarily by using a
confrontational approach. Iran is not likely to alter its
approach in the current situation in the Gulf. =
2. Another major factor in any Iranian decision to
attack superpower interests in the Gulf will be Iraqi
action: Iraqi attacks against Iranian targets in the Gulf
will trigger retaliatory Iranian strikes against Iraq and
the interests of its perceived allies, particularly Kuwait
and including the United States and the USSR. Far
more dependent than Iraq on the continued flow of
shipping in the Gulf, Iran has been consistent in trying
to separate the shipping war from its land war against
Iraq. So long as Iraq refrains from sustained attacks on
Iranian tankers and oil facilities, we believe Tehran
will be less likely to provoke clashes with other parties
in the Gulf, Tehran clearly would see a cease-fire in
the Gulf as a victory, allowing Iran to continue vital oil
exports and giving Iran a freer hand in the land war,
where Tehran believes it has the advantage.=
S. Even in the unlikely event Iraq decides to refrain
from attacking Iranian ships and oil facilities, Iran will
decide that US and USSR protection for Kuwaiti
shipping challenges important Iranian interests. An
active superpower police role in the Persian Gulf
would diminish the credibility of Iranian threats to use
conventional military attacks to intimidate the states
of the Gulf Cooperation Council (GCC). Such intimida-
tion has been an important element in Iran's strategy to
restrain concerted Arab action in support of Iraq
4, The fear that the superpowers, and not Iran, will
be perceived as the effective power in the Gulf drives
Iranian determination to block superpower interven-
tion, In the near term, Iran fears that superpower
protection of Kuwaiti ships sets a precedent that will
lead to steadily expanding superpower intervention on
the side of Iraq and its Arab allies, The superpower
role thus threatens to foreclose an Iranian victory over
Iraq and eventually to neutralize Iran's traditional aim
of hegemony in the Gulf-an objective pursued by the
clerics no less than by the Shah. Ideological hostility
toward the United States and the USSR reinforces
Tehran's geostrategic concerns; the prospect of the
superpowers thwarting Iranian policies arouses an
emotional reaction=
5. Tehran's history of combative posture in the face
of threats, its recent hostile rhetoric, and the attack on
a Soviet vessel in May suggest that Iran will attempt to
bring an early end to the superpowers' protection.
Iran's objectives are to:
- Force Kuwait to reduce-if not cease-its mili-
tary and financial support for Iraq, and to
pressure other GCC states to reduce their
support.
- Intimidate other Gulf states by demonstrating
that increased superpower involvement in the
region risks dragging the Arabs into an expanded
conflict, making them potential targets for Irani-
an terrorism or military action.
- Protect Iran's goal of hegemony in the region by
showing that it cannot be intimidated by the
superpowers.F_~
6. Since Kuwait announced its intention to seek US
and USSR protection, statements by Iranian leaders
have focused on the threat to regional security posed
by increased superpower activity and on Kuwait's
responsibility for increasing regional tension. Even
comments by Assembly Speaker Rafsanjani, who usu-
ally keeps the door ajar for some improvement in
relations with Moscow and Washington, sound like the
militant speeches after the 1979 revolution, when Iran
seemed to welcome isolation as proof of the purity and
justice of its cause. The verbal attacks are intended to
influence US public opinion and to provide the ratio=
nale for hostile actions against the superpowers, as well
as for increased pressure on Kuwait0
7. We believe Iran prefers to persuade the super-
powers and Kuwait to back down before a military
clash. Iran is acutely aware of concerns in the United
States and in the Gulf about expanding conflict and
 m
 superpower involvement. Tehran will attempt to
heighten these concerns with harsh propaganda, sabo-
tage in Kuwait, and attacks on unescorted ships in the
hope of weakening US resolve and provoking Congres-
sional restrictions on US involvement. It also hopes to
force Kuwait to reconsider its request for superpower
protection by sponsoring terrorism against Kuwait and
by isolating it diplomatically from the other GCC
states on this issue. On 17 June, an Iranian ship turned
its guns away from a US ship when warned to do so.
The incident may indicate that, for now, Tehran is
willing to test the United States but not to provoke a
confrontation=
8. We believe Iranian leaders are confident they
will be able to deal with the increased involvement of
the superpowers in the Persian Gulf with the same
instruments they have used before to deal with the
GCC states and with the United States and France on
hostage issues: diplomacy, military muscle flexing, and
terrorism and intimidation. Iran will not indiscrimi-
nately attack US or USSR targets but will selectively
use terrorism, sabotage, and conventional military
action over the ne Months to serve its broader
political objectives.
9. For now Iran is likely to be more hostile toward
the United States than the USSR. Tehran believes it
has a chance to exploit the increased tensions in the
Gulf to bargain with Moscow for a modus vivendi in
the Gulf. If these expectations are dashed, Iran will
become more antagonistic toward the Soviets. Even
then, the United States probably will remain the
principal focus of Iranian efforts to end superpower
protection of Kuwaiti ships, unless Moscow significant-
ly increases its military presence in the region=
10. In our judgment, Iranian leaders do not believe
the United States will maintain its commitment to
Kuwait in the face of sustained Iranian terrorism, and
diplomatic and military efforts to force it to back
down. Iranian leaders and media commentary have
drawn parallels between events in Lebanon in 1983
and current developments in the Gulf. In the Iranians'
view, they and their Shia allies forced the withdrawal
of US military forces from Lebanon, dealing a humili-
ating defeat to the idea that the United States, through
the projection of its military forces, could influence
developments in the Middle East. The Iranians believe
they have a chance to humiliate the United States
again=
11. We believe the Iranians are aware of the differ-
ences between Lebanon and the Persian Gulf: the lack
of plausible denial if they attack US ships, the impor-
tance of oil to both Iran and the West, and the risk of
direct attacks on Iran. These differences will probably
make the Iranians more cautious in their tactics but
they will not alter Iran's strategic perception that the
United States is working against vital Iranian interests
and must not be allowed to prevail.
12. Tehran also is calling for negotiations to end the
shipping war. Iran would welcome an agreement that
separates the shipping war from the ground war. Iran
hopes such an agreement would derail UN Security
Council resolutions calling for a cease-fire and arms
embargo, obviate superpower intervention in the Gulf,
and end Iraqi attacks on Iranian ships, leaving Iran
free to continue a war of attrition against Iraq on the
ground. In any negotiations on navigation, we believe
Iran would demand, as the first order of business, a
halt to Iraqi attacks on its shipping and a Kuwaiti
retraction of their request for superpower protection.
Iranian leaders will portray Iran as the aggrieved party
willing to negotiate; their strategy will be to maneuver
their interlocutors into accepting conditions Iran has
sought all along without surrendering anything beyond
open-ended promises of reduced tensions and im-
proved bilateral relationsF__1
The View of Baghdad
13. The Iraqis appear relieved and pleased that
US-and world-attention has shifted from Iraq's
attack on the USS Stark to the Iranian threat in the
Gulf. They welcome recent US statements on the need
to end the war and are encouraged by the movement
of the permanent members of the UN Security Coun-
cil toward resolutions on the war that include sanctions
against the side failing to end the fighting. They
probably are less sanguine over the prospects of an
effective arms embargo against Iran or a quick end to
the wa~
14. If Baghdad perceives that progress on UN Secu-
rity Council resolutions and other pressure on Iran are
faltering, the Iraqis are likely to resume attacks against
Iranian shipping and oil facilities, including those on
Khark Island. Baghdad appears to view such airstrikes
as one of its few options to press Iran to end the war.
The Iraqis will be fearful of accidentally attacking
superpower ships and will exercise care not to do so,
althon h the risk of another accidental attack remains.
15. Baghdad, however, almost certainly is con-
cerned that Iran will benefit if the superpowers'
attention shifts away from the Iranian threat before
achieving a comprehensive agreement on the ground
war or at least a UN Security Council resolution with
9
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 teeth. The Iraqis know that a de facto truce in the
Gulf favors Iran. Even though Iraqi attacks in the Gulf
have only slightly reduced Iranian oil revenue, Iraq
uses them as retaliation for Iranian ground action, for
increased economic pressure on Iran, and for keeping
international attention focused on the Gulf.l 1
The Threat to Shipping
16. If Iran's political strategy fails and the United
States implements its protective measures, Iran is
likely to increase its attacks on nonescorted shipping in
the Kuwaiti trade. Iran may also seek out any US-flag
vessels that do not take advantage of an escort. Iran
probably will be content to pursue this approach for
some time if the attacks fuel the debate in the United
States and the Gulf about superpower intervention.
The presence of a US or USSR flag on an urie~scorted~
vessel will not, in itself, deter an Iranian attack
Figure 3. F-1 firing Exocet missile. (U)
17. There is also a threat to escorted US-flag ships,
and Iran will probe cautiously for opportunities to
attack them. The Iranians probably believe that a
strike, even if they lose a patrol boat or aircraft or
suffer US retaliation against their naval forces or other
Figure 4. Iranian Navy patrol boat
used to attack ships this year
military facilities, will increase significantly the Gulf
states' concern and intensify the debate in the United
States on the wisdom of US involvement, Tehran
expects that such a US debate would lead, over time,
to a weakening of US resolve.
18. If other measures fail to achieve Tehran's objec-
tives, Iran will be faced with a choice between
accepting superpower protection as a fact or attacking
escorted ships or even combatants. When Iran would
make such a decision is uncertain. We believe, how-
ever, that Iran is likely to choose escalation over
retreat. If Iran were backed into a corner, we believe
it would be likely to strike out at escorted shipping
with any assets at its disposal
19. The risk that Iran will use its Silkworm mis-
siles-the most formidable threat to shipping-also
will increase. Most of the Community believes Iran is
less likely to deliberately use Silkworms against US or
Soviet warships than against commercial ships, at least
until other measures have failed to achieve Tehran's
objectives and Iran has suffered significant retaliation
or economic reverses. Others, while they agree that
Silkworm attacks against US or Soviet warships are less
likely than on commercial shipping, do not believe the
Iranians perceive the Silkworm as a weapon of last
resort. They believe Iran may well use this missile
before it suffers significant retaliation or economic
reverses.F_~
20. In addition to using the Silkworm, Iran has
several other options if it decided to attack a US
warship. It could:
- Attack using several F-4 jets or other aircraft.
- Use naval ships to fire Seakiller surface-to-sur-
face missiles.
- Conduct suicide attacks using aircraft or small
boats loaded with explosives.
- Conduct sabotage attacks against US ships in
Gulf ports.
Any of these options, if successful, could severely
damage or sink a US ship, with heavy loss of life. Such
an attack would have especially high propaganda
value, with the clerical regime almost certainly touting
such an incident as clear evidence of Iranian predomi-
nance and US impotence in the Gulf
The Iranian Navy and the Revolutionary Guard
21. We believe the Navy is less zealous in its
support of the clerical regime, and thus is probably less
willing to initiate an attack on a US ship. The religious
fervor of the Revolutionary Guard and its virulent
11
 Iranian Military Capabilities and Constraints in the Persian Gulf
Iran has the largest naval force in the Persian Gulf,
but equipment and personnel problems limit its effec-
tiveness. Nonetheless, a combination of cannibalization
and innovative repairs has kept the Navy's ships and
missiles sufficiently operable to pose a threat to ship-
ping in the Gulf
Iran's major combatants include three destroyers and
four guided-missile frigates. The World War II vintage
destroyers have recurring engine and equipment prob-
lems. Nonetheless, they do occasionally participate in
short patrols in the Gulf and recently conducted firing
exercises. The frigates are more mechanically reliable,
but are plagued by frequent breakdowns of their
electronic support systems, including the fire-control
system for the Seakiller antiship missile. In addition,
Iran has four landing ships and three resupply vessels, at
least one of which carries an armed helicopter
The Iranian Navy has over 30 patrol boats, some of
which have been used in recent ship attacks. These
boats also suffer from low operational ready rates. Iran
has started stationing some patrol boats on board larger
landing ships to increase the patrol boat's operational
range
Iran's Navy has five armed AB-212 helicopters to
attack ships. These also have been stationed on landing
ships, Iran can also use the airfields at Bandar-e 'Abbas
and Bandar-e Bushehr for air operations against ship-
ping, Iran's flyable, if not fully operational, aircraft
inventory consists of 20 to 25 F-4s, 20 to 25 F-5s, and
10 to 12 F-14s. Not all would be stationed near the Gulf.
In addition to parts shortages and equipment problems
that limit the aircraft, most of the air-to-surface missiles
Iran uses to attack shipping are beyond their shelf life
and are of questionable operability
The Revolutionary Guard naval forces have approxi-
mately 40 Swedish Boghammer 10.7s, 13-meter patrol
craft, and three North Korean Chaho patrol boats. The
aluminum Boghammers can only carry the rocket
grenades and other light arms the Guard uses with
them. The Chahos carry a BM-21 122-mm multiple
rocket launcher. The Guard also has many other small
boats, rubber rafts, and civilian aircraft that would be
used for suicide attacks, sabotage, or mining operations.
Iran has several hundred moored contact mines and
possibly has bottom and limpet mines in its inventory.
The Navy and Revolutionary Guard probably have
enough trained personnel and support equipment to
sporadically conduct mining activities=
Continued shortages of equipment will prevent Iran
from improving its capabilities significantly in the near
term. In addition, the shortage of trained personnel,
particularly technicians, further constrains Iranian na-
val capabilities. Despite these problems, Iran can use a
variety of weapons to conduct antiship operationsF-
Figure 5. Silkworm missile. (U)
anti-US sentiments make them a graver threat to US
ships, but there is little evidence that the Guard's naval
forces are acting as a "rogue elephant" in the Gulf.
The institutionalization of the Revolutionary Guard in
recent years has brought Guard forces more closely
under the central government's authority, improved
military discipline, and led to better coordination with
the regular armed forces. Other analysts, while recog-
nizing the increasing institutionalization of the Revolu-
tionary Guard, do not entirely discount the possibility
that a local Revolutionary Guard commander might
act independently to attack a US-flag ship, especially
as any confrontation heats upF___1
The Terrorist Threat
22. We believe sabotage and terrorism will be
important elements of Iran's efforts to achieve its
 objectives in the Gulf. For some Iranian leaders,
sabotage and terrorism will be the preferred methods
of dealing with Kuwait and the United States and, if
ultimately necessary, with the USSR. Terrorism and
sabotage offer some degree of plausible denial and
present target countries with a less clear-cut justifica-
tion for retaliation. Iran, remembering the precedent
of Lebanon, probably believes terrorism and sabotage
are more likely than military attacks to break the
resolve of the target countrie~
23. Iran is almost certain to sponsor increased ter-
rorism and sabotage against the Sunni-dominated Ku-
wait Government, possibly including the assassination
of Kuwaiti officials or targeting of key installations
such as desalinization plants and oil facilities, Iran
would hope such acts would intimidate the Kuwaitis
into withdrawing their request for superpower protec-
tion and rethinking their support for Iraq. The Irani-
ans also appear to believe terrorism will foster sectari-
an divisions, destabilize Kuwait, and create conditions
for the overthrow of the government. The recent spate
of bombings by pro-Iranian Shias has already height-
ened sectarian tensions, but is unlikely to threaten the
government in the short term
24. Bahrain also is a probable target for renewed
Iranian subversion because of its largely Shia popula-
tion and the presence of the US Middle East Force.
Bahraini officials have reported cells of pro-Iranian
Shias in Bahrain. They probably cannot pose a serious
near-term threat to the regime's survival, but they
could create serious security problems by conducting
terrorist operations similar to the recent bombings in
25. There is a growing possibility that Iran will
conduct or sponsor terrorism against US and Soviet
targets. The threat to the United States is greater.
Iranian leaders will weigh the impact that terrorist acts
have on US public opinion, hoping to weaken public
support for US activities in the Gulf. The most likely
US targets for Iranian terrorism are in the Persian Gulf
and the Middle East, but there will be an increased
threat to US interests elsewhere
26. Because of the Iranian sensitivity to currents in
US politics, the controversy in the United States over
protecting Kuwaiti ships is likely to reinforce Iranian
boldness. Assembly Speaker Rafsanjani and other lead-
ers have noted the debate in the United States over
involvement in the Gulf. The Iranian perception of
serious divisions in the United States over policy in the
Gulf will help create an atmosphere for some dramatic
act against the United States to crystallize US opinion
against an expanded role in the Gulf.
The United States in the Gulf; Likely Terrorist Targets
US facilities and personnel in the Persian Gulf offer
Iran a variety of targets if Tehran decides to wage a
terrorist campaign to get the United States out of the
Gulf. We believe Tehran or its surrogates in the Gulf
would probably prefer to attack a facility that housed or
hosted US servicemen. Iranian officials and leaders of
pro-Khomeini extremist factions in Lebanon have made
pointed reference in recent speeches to the October
1983 bombing of the Marine barracks in Beirut, which
they credit with forcing the United States out of
Lebanon.F__~
We believe the greatest risk to US interests is in
Kuwait, where Iran and its surrogates have already
demonstrated their capability to conduct terrorist oper-
ations. Security at the Embassy in Kuwait has been
improved since the 1983 bombing by several measures,
including the construction of a cement wall, but Shia
extremists have shown themselves to be inventive in
finding new ways to attack seemingly secured facilities.
Terrorists could ? attempt to hijack an American, Ku-
waiti, or Gulf airliner in order to take US passengers
hostage; two USAID officials were killed during a
similar operation in December 1984. They could also
single out US military advisers (serving with USLOK) or
civilians working for US or local companies=
The most obvious US target in the Gulf states after
Kuwait are the military facilities provided to the United
States in Bahrain and, to a much lesser extent, in
Dubayy. The USS Stark and the USS Acadia are
currently in port; in addition, Bahrain permits the
Middle East Force and CENTCOM to use facilities,
dubbed the Administrative United, as a base for storing
equipment and as a virtual home port. Dubayy, which
has a heavy concentration of Iranians, allows the United
States use of drydock facilities and occasional ship visits.
Nearly 50,000 Americans-government, military, and
civilian employees-live in Saudi Arabia, but the risk to
them from Iranian terrorism is probably slight, given
stringent Saudi security measure
Iranian Reaction to Superpower Retaliation
27. In our judgment, Iranian leaders will expect
retaliation by either of the superpowers for Iranian
military or terrorist attacks against their interests that
are directly attributable to Iran. Although Iranian
leaders will weigh carefully the probable superpower
reaction, they probably calculate that a nation that has_
suffered massive damage and over 700,000 casualties
in the war with Iraq will be able to absorb the
punishment the United States or the USSR would be
likely to inflict. We believe Tehran would consider
destruction comparable to the US strike against Libya
as an acceptable risk j
13
 28. Iranian leaders may seriously miscalculate their
ability to manipulate events. Their view is shaped by
the perception of a string of Iranian successes against
Tehran's enemies: they ousted the Shah; forced an end
to the US military presence in Lebanon; beat back the
Iraqi invasion of 1980 and took the fight to Iraqi soil.
This perception is almost certain to incline Iranian
leaders to boldness in dealing with the su erpowers,
Kuwait and the GCC states, and Iraq
Soviet Intentions and Capabilities
29. The Soviet decision to assist Kuwait reflects the
activism of Soviet foreign policy under Gorbachev and
was meant as a message for various players in the
region:
- It demonstrated to the GCC states that the Soviet
efforts in recent years to increase and improve
relations are serious and that Moscow is willing to
shoulder new responsibilities as part of this ef-
fort, even as the United States seems to be having
second thoughts.
- It signaled to Iran that Moscow did not believe
the near-term prospects for improved relations
with Iran were high enough to offset their inter-
est in bolstering Iraq and increasing the Soviet
role in the Gulf.
- It let the United States know that the USSR is
going to play a more active role in the Persian
Gulf, where Soviet influence has been limited
and where US interests and influence have been
primary=
30. The Soviet leadership almost certainly per-
ceived this course as risky, but several factors probably
led the Soviets to think the risks were limited:
Iranian military capability to interdict shipping
is limited.
- Soviet experience with Iran probably led Moscow
to believe that Iran does not want a confrontation
with the USSR.
-- The Soviets probably think they can manage
effectively the public dimension of their Gulf
involvement-keeping it quiet and mitigating
the pressures to react to less provocative chal-
lenges,
31. Recent developments-the attack on the USS
Stark and particularly the increased US military role-
have probably increased the risks for Moscow by
focusing attention on superpower involvement. But
Gorbachev and company probably believe that the
Soviets are less exposed than the United States and that
the USSR is better placed to improve its position:
- Moscow can use its lower military profile to
enhance its image as a "peacemaker" and to
draw a sharp contrast with the United States.
This would be especially true should Iran goad
the United States into an attack.
- The Soviet acceptance of Tehran's request for a
visit by Deputy Foreign Minister Vorontsov indi-
cates Moscow's ability to talk with both sides and
Moscow's desire to play a role in any settlement.
32. Moscow seems reluctant to press Baghdad and
would not want to get ahead of the Gulf states by
appearing to be too accommodating to Iran. At the
same time, however, Moscow has attempted to avoid
provoking Iran. It has kept its naval presence low, and
Soviet officials in their public comments have largely
avoided direct threats to Ira
33. Moscow is unlikely to augment its naval forces
in the Gulf solely in response to an increased US naval
presence. The USSR may, however, feel compelled to
respond-perhaps by deploying intelligence collection
ships or combatants to monitor US forces-should it
perceive that the level of US forces in the Gulf far
exceeds that necessary to protect Gulf shipping.=
34. The Iranians may be interested in having the
Soviets mediate the Gulf shipping war. The Iraqis state
that a cease-fire in the shipping war is unacceptable
except as part of a comprehensive peace, but they
might compromise somewhat in return for greater
Soviet and international pressure on Iran to agree to
negotiations. Iraq probably would demand in return a
more effective arms embargo against Iran and a UN
Security Council resolution on the war that includes
sanctions against the side refusing to end the fighting.
35. Iran and the USSR have incentives for continu-
ing the dialogue, even without an end to the shipping
war. It offers Tehran the chance to avoid taking on
both superpowers at once, although Iran would remain
fundamentally hostile to the USSR's presence in the
Gulf. At the same time, the Soviets would be a counter
to the United States-the real threat to Iranian domi-
nance and the superpower most likely to engage in
hostilities with Iran if the Kuwaiti agreement remains
in force
36. The USSR's opportunities in Iran could increase
if the United States becomes involved in military
clashes with Iran while the Soviets avoid such inci-
14
JG~~
 dents. A US attack on Iranian territory, whether
preemptive or in response to an Iranian attack on a US
target, is almost certain to foreclose a rapprochement
between Iran and the United States for the foreseeable
future
37. T e Soviets have indicated their willingness to
cooperate with the United States in securing passage of
a UN Security Council resolution on the Iran-Iraq war
calling for a cease-fire. Moscow has been reluctant,
however, to use sanctions against Iran if it refuses to
join a cease-fire
38. There is only a slim chance that Moscow will
cooperate with the United States to protect Gulf
shipping, even though a multilateral arrangement
would have some advantages for the Soviets. Such an
arrangement would improve the safety of Soviet mer-
chant ships at little cost to the Soviet Union; the
damage to Soviet prestige from a successful Iranian
attack would be shared by others; greater legitimacy
would be conferred on the Soviet presence in the Gulf;
and such a proposal, if made publicly, would put the
onus on Washington to justify a refusal. Moscow thus
far has sharply contrasted its actions in the Gulf with
US policy, however, and we believe the Soviets would
be reluctant to link their political fortunes in the Gulf
to Washington=
39. The USSR currently has three minesweepers
operating in or near the Gulf. These ships have limited
combat capability and would have difficulty defend-
ing against Iranian air or naval strikes. In addition to
the minesweepers, a Soviet frigate and cruiser recently
joined the Soviet Indian Ocean squadron, and are
available for duty in the Gulf.
40. Moscow almost certainly would increase its
naval capability in the Gulf if Iran attacks another
Soviet vessel. The Soviets would probably judge that
the political benefits of a low-profile naval presence
would be outweighed by the need to better protect
their Gulf shipping. Moscow probably would replace
the minesweepers with more capable ships. Moscow is
unlikely under any forseeable circumstances, however,
to receive basing rights from any of the Gulf states. If
Iran continued to attack Soviet ships after Soviet
protests and a naval buildup, Moscow might publicly
endorse sanctions against Iran and impose an embargo
on arms sales from Eastern Europe=
41. While Soviet ships would respond immediately
to Iranian attacks, the Soviets would be highly unlikely
to retaliate against Iranian territory. Naval gunfire
against Iran or-even more severe-a surgical airstrike
would set back Soviet efforts to improve relations with
Iran in the near term and probably even after Kho-
meini dies. Moscow also is unlikely to respond militari-
ly to a US strike against Iranian territory but would
emphasize its own peaceful approach in an attempt to
win political capital in Iran and the Gulf states.F_
Impact of the Iranian Power Struggle
42. Domestic political considerations may encour-
age a confrontational approach by Iranian leaders in
dealing with the superpowers, especially the United
States. The dominant coalition led by Rafsanjani,
while prepared for confrontation, will try to achieve
Iran's objectives through measured responses and will
consider the views of those wanting to end the war.
The coalition must also be responsive to others who
would see a confrontation with the superpowers in the
Gulf as kindling popular nationalistic fervor for the
regime. Ayatollah Khomeini will guide overall policy
on this issue and keep factional discord at a minimum,
but he will press for aggressive prosecution of the war.
The Role of the Gulf States
43. Kuwait sought US and Soviet naval protection
to deter Iranian attacks on Kuwait-bound shipping
generally, and, specifically, attacks on the most vulner-
able ships in Kuwait's merchant fleet. Kuwait proba-
bly believed that an increased US and Soviet presence
in the Gulf might induce Baghdad and Tehran to scale
down or even to abandon the tanker war. The ships to
be protected include gas carriers and large product
carriers for the European and Asian runs and addition-
al carriers that could be used for a Kuwait-Khor
Fakkan shuttle run if necessar~
44. Kuwait is not likely to curtail its support for
Iraq or to renounce its deal to secure US and Soviet
protection, despite increasing Iranian pressure. The
government's death sentence against several Shias
convicted in early June for bombings of oil facilities
and heightened security measures have increased ten-
sion between Shias and Sunnis, a development Iran
will try to exploit. If terrorism fails to change Kuwait's
policies, Iran may be prepared to launch air attacks
against Kuwait. Iranian aircraft bombed a Kuwaiti oil
installation in 1981
45. Saudi Arabia privately has urged the United
States not to cut and run, has endorsed the Kuwaiti
reflagging effort, and has indicated that the Gulf states
might consider assisting the US effort. Nonetheless,
Riyadh fears that increased superpower presence
would lead to a growing militarization of the region
 and draw the Saudis more directly into the war. Iran
has continually tried to convince the Saudis to press
Iraq to end attacks on Iranian ships and has pressed
Kuwait to abandon its request for superpower protec-
tion.)
46. Other GCC members have reacted cautiously to
the increased superpower role in the region. The
smaller Gulf states privately say they appreciate
Washington's willingness to help protect Gulf shipping
and have endorsed Kuwait's effort to protect its ships,
but they are reluctant to raise the profile of their
relationship with the United States. They are con-
cerned that US protection of Kuwaiti tankers will
provoke Iran and not provide sufficient US protection
for them. Even so, they would look to the United
States for increased support if confronted with Iranian
attacks against their shipping and oil facilities.=
47. Most Gulf states are signaling Tehran their
desire to ease tensions, and some have taken steps to
improve relations with Iran. Iran is exploiting GCC
fears to persuade the Gulf states to distance themselves
from Kuwait and Iraq. If Iran were to mount an
isolated air attack against facilities in Kuwait or in
other GCC states, we believe there would be little
GCC reaction other than pro forma public protests.
None of the militarily weak GCC states would launch
counterstrikes. The GCC states, however, probably
would seek further assurances of US support if they
believed Tehran were likely to intensify attacks=
48. The GCC states will watch closely for evidence
that the United States continues to support the reflag-
ging project. Public support of Saudi Arabia and most
of the other GCC states for the project would improve
markedly if they were convinced that the United
States were committed to guaranteeing their security.
They would still hesitate, however, to assume a high
profile by granting access or basing rights to US forces
or entering into military agreements with the United
States. Additional access or basing rights would be
granted only if there were sustained Iranian attacks on
GCC facilities or if" Iranian forces appear poised for
imminent attack on Kuwait or other Gulf states
49. In the event of stepped-up Iranian threats or an
actual Iranian attack on US-flag shipping or a US
warship, the GCC states probably would privately
support a strong US response. They would expect US
naval escorts to defend convoys against Iranian attacks
and might privately approve of US strikes on Iranian
shore targets. They probably would not endorse a
preemptive US strike against the Silkworm sites, even
in response to Iranian threats to employ the missiles. If
the Iranians were to attack shipping with Silkworms,
however, most GCC states privately would approve of
a surgical US strike on the site but would oppose
repeated attacks on the missile sites or other targets.
50. Except for Kuwait, most GCC states would
prefer to put the reflagging project in abeyance or
limit the number of sailings if a face-saving mecha-
nism can be found. They would strongly oppose,
however, a public US decision to shelve the project
entirely because this would be seen as bowing to
Iranian pressure, They would welcome diplomatic
initiatives to induce Baghdad and Tehran to abandon
the tanker war or to end the conflict. In the Gulf
states' view, this would deescalate regional tensions
and permit the United States to abandon the reflag-
ging project without a loss of credibility. If the United
States were to abandon the project outright, there
would be a critical loss of faith in Washington's ability
to meet its commitments.
51, The GCC states would probably be relieved if
Moscow were to quietly back out of its commitment,
although Kuwait would regret the loss of leverage on
US policy it believes it gets from the Soviet presence.
52. Improved relations with Oman is Iran's most
recent success in its efforts to drive a wedge between
Iraq and the GCC states. A senior Omani official
visited Tehran in mid-May, resulting in an agreement
to develop jointly a gasfield in the Strait of Hormuz
and to establish a telecommunications link. Following
the visit, the Omani official said that Washington
should neither break nor implement the agreement
with Kuwait, arguing that the reflagging would goad
Tehran into taken more aggressive action against the
Gulf states
58. The UAE, which has a sizable Iranian commu-
nity, is anxious to maintain its lucrative commercial
ties to Tehran. An Iranian attack on a UAE oilfield last
fall exposed the Emirates' vulnerability to Iranian
attack and has confirmed their inability to confront
Iran. Bahrain may also be moving toward easing
tensions with Iran. Bahrain is concerned that its
largely Shia population and the presence of the US
Middle East Force make it a prime target for Iranian
subversion)
54. Iran will interpret the GCC states' attempts to
reduce bilateral tensions as validating its policy of
intimidating smaller Council states to persuade them
to distance themselves from Iraq. Their favorable
response to Iranian overtures and reluctance to en-
dorse increased superpower involvement in the Gulf
16
X
 will Increase Tehran's confidence. The Gulf states'
caution probably will encourage Iranian boldness; Iran
probably believes that heightened tensions will force
the Gulf Arab states to choose between accepting even
greater superpower protection or accommodation with
Iran. Tehran seems to believe they will opt for accom-
modation
55, If the United States is perceived as failing to
follow through on its promise to protect Kuwaiti
shipping, the Gulf states will point to a lack of US
resolve. If the United States becomes engaged in
hostilities with Iran but fails to moderate Iranian
behavior, the GCC will blame the United States for
expanding the Iran-Iraq war and for ineffectualness.
In either event, the Gulf states probably will be more
inclined to keep their distance from the US military
presence, to ease tensions with Iran, and to improve
relations with the USSR.I
The Threat to Oil Exports
56. Despite the shipping war in the Gulf, the vital
flow of oil has not been disrupted, and the oil market
remains calm. Surplus capacity and government stocks
provide the market with adequate protection from
most potential disruptions. Limited Iranian terrorist
and military attacks against Gulf oil flow probably
would not have a lasting effect on the market. Many
Figure 6
OPEC: Excess Capacity, May 1986
Persian Gulf
Total=7.4 million bid
Sec
Non-Persian Gulf
Total=2.3 million bld
shipowners would continue to operate despite greater
risk, and world surplus production capacity could
offset substantial war damage to facilities. Industry
sources report that 30 or more empty tankers are
usually at the entrance of the Gulf waiting to be
chartered. The Saudis, with nearly 4 million b/d of
surplus capacity, remain key to a major disruption
because they alone could replace most lost supplies
elsewhere in the Gulf=
57. Tehran is likely to escalate its attacks on tankers
in the Gulf if Iraq launches sustained and effective
attacks on Iran's oil export or domestic refining sys-
tem. In addition, the level of Iranian attacks would be
influenced by other developments: a weakening of oil
prices, increased Iraqi exports, or an increase in Arab
assistance to Iraq could raise the Iranian threat to oil
flows. Therefore, the Iranian threat is likely to grow as
Iraq increases exports this fall by using additional
pipeline capacity through Turkey; expansion of the
Iraqi-Saudi pipeline is also scheduled to be completed
by 1989
~
58. Iran is unlikely to attempt a major disruption in
oil exports from the Gulf, such as closing the Strait of
Hormuz, unless its own exports are reduced substan-
tially. However, Iran has developed contingency plans
to disrupt the flow of oil from the Gulf. These plans
reportedly call for the use of most or all of Iran's naval
forces and a sizable portion of its Air Force. The effort
is likely to include systematic attacks on critical oil
installations throughout the Gulf, such as those in
Kuwait and Saudi Arabia, and the use of Silkworm
missiles against shipping in the Strait of Hormuz. We
believe the condition of Iran's naval and air forces
makes it doubtful they could accomplish their mission
for more than a week or two, even if unopposed. In
the worst case, Iran could destroy unique oil process-
ing and export equipment in Saudi Arabia and Kuwait
that would take months to repair. If this happened,
there could be a serious disruption in world oil supplies
and an increase in spot prices
59. Actual supply shortages are not necessary, how-
ever, to spark large jumps in spot oil prices. A
significant increase in the number or effectiveness of
Iranian tanker attacks or a widening of the war could
create enough uncertainty in the market to boost spot
prices by at least several dollars
Implications for the Iran-Iraq War
60. The increased superpower role in the Gulf is
unlikely to alter significantly the overall course of the
Iran-Iraq war unless one or both of the superpowers
engage in a campaign to deny Iran the economic or
military resources to continue the war. Total US and
17
S T
 SEZ'Fi~Z
USSR success in protecting the Kuwaiti ships would
not significantly change Iran's military position. Iraq
will be able to increase its attacks on Iranian ships with
less concern about Iranian retaliation against shipping,
but increased Iraqi attacks on shipping alone are likely
to have only a marginal effect on Iranian oil exports.
Tehran will compensate for any increase in Iraqi
attacks on shipping alone, and for Iran's diminished
ability to attack Soviet- and US-flagged ships in the
Gulf, by increasing attacks. on other ships serving
Kuwait. These developments will not affect the
ground war
61. Limited military action by the United States or
the USSR against Iran, such as strikes against Iranian
land targets including naval facilities or ports, is
unlikely to have significant impact on the ground war.
Such attacks, in fact, are likely to stiffen Tehran's
resolve to continue the war and to punish Iraq=
62. The adoption of UNSC resolutions now under
informal consideration would strengthen the super-
powers' hand in dealing with Iran. Its key provisions
provide for a comprehensive cease-fire and withdrawal
of forces to internationally recognized boundaries.
Consultations have included discussion of a provision
for sanctions against the party that refused to comply.
The adoption of a resolution approved by the United
States and the USSR and containing sanctions would
enhance the prospects for an effective arms embargo
against Iran. It would also signal Iran that international
opinion was turning decidedly against i~
63. Iran is likely to pursue the ground war unless it
is deprived of the economic or military resources to
continue. Denying Iran oil revenues or imposing a
total arms embargo could severely limit Iran's ability
to fight the war and ultimately force the regime to
reconsider its policy, but Iran still would be unlikely to
seek a formal peace through negotiations. Iran would
husband its resources with the intention of continuing
to fight Iraq as long as possible
64. Tehran would be likely to expand substantially
its efforts to promote terrorism and destabilization
throughout the Gulf before it would accept economic
or military strangulation at the hands of Iraq or the
superpowers. Iran would increase its support for anti-
Iraqi Kurds and probably attack Baghdad and Iraqi oil
facilities with Scuds. Iran also would increase support
for Shia dissidents in Kuwait and probably promote
dissidence among Shias in other Gulf countries, There
would be a high probability of terrorism against
countries supporting anti-Iranian economic or military
actions, possibly including terrorist acts inside the
United States.=
65. The regime would derive some benefits if for-
eign countries attacked Iranian territory. At least
initially, this would rally the populace behind the
regime and probably make Iranians more willing to
endure hardships to continue the war at whatever
level possible=
66. Iran's call for negotiations on navigation and the
free flow of oil is designed to serve Tehran's war
policy. Iran would welcome a cease-fire in the ship-
ping war. Iran is more vulnerable in the Gulf than
Iraq because Iraqi attacks threaten Iran's oil lifeline.
Tehran probably also is trying to draw the USSR into a
dialogue on the shipping war as one means of forestall-
ing US-USSR cooperation against Iran. Iran's call for
talks on the shipping war does not indicate Iran has
doubts about continuing the war or is ready to negoti-
ate a comprehensive peaceF__1
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