PROSPECTS FOR IRAQ

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CIA-RDP86T00302R000901440011-5
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RIPPUB
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S
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32
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December 21, 2016
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June 2, 2008
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11
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Publication Date: 
July 19, 1983
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SNIE
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Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Director - Secret Central Intelligence Special National Intelligence Estimate Secret SNIE 36.2-83 19 July 1983 352 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 225X1 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? SECRET ? SNIE 36.2-83 PROSPECTS FOR IRAQ Information available as of 13 July 1983 was used in the preparation of this Estimate. Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 0 ? 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 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? SECRET ? CONTENTS Page KEY JUDGMENTS .................................................................................................... 1 DISCUSSION .............................................................................................................. 7 Military Situation .................................................................................................... 7 Iran's Strategy ......................................................................................................... 7 Iraq's Likely Response ............................................................................................ 9 Economic Impact of the War ................................................................................ 10 Economy Deteriorated in 1982 ......................................................................... 10 More Revenue Shortfalls in 1983 ....................................................................... 10 Diminished Financial Assistance ....................................................................... 11 Retrenchment Ahead .......................................................................................... 13 Seeking Financial Reprieve ................................................................................ 14 Political Impact of the War ................................................................................... 14 Weakness of the Regime .................................................................................... 14 Strengths of the Regime ..................................................................................... 15 Possible Succession Scenarios ............................................................................. 15 Opposition Groups .............................................................................................. 19 Regional Implications ............................................................................................. 20 Iraq's Foreign Policy .......................................................................................... 20 The View From the Gulf ................................................................................... 20 The Radical States .............................................................................................. 21 Relations With the Superpowers ........................................................................... 2:2 The Soviets .......................................................................................................... 22 The United States ............................................................................................... 23 Prospects for US Influence ................................................................................. 23 Annex: Equipping Iraq's Military ............................................................................. 23 iii SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 9 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. I SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 S 1 -1-1 0 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. 2 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? 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 irn- 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 3 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 0 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 4 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? CFC'RFT ? 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. 5 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? SECRET ? 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- 7 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? Figure 1 Iraq-Iran: Distribution of Forces and Major Occupied Areas Ahvaz ramshahr AMSd$n q Regular Army Units Iraqi Iranian I Infantry division Mechanized division Armored division if Infantry brigade Armored brigade 8 SECRET 0 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? ? 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. 9 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? 0 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 Etenclard 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 10 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 ? 0 Figure 2 Iraq: Oil Exports and Revenues Net Exports Revenue Thousand b/d Billion US $ 5,000 10 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- 11 SECRET Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 Approved For Release 2008/06/02 : CIA-RDP86T00302R000901440011-5 0 Figure 3 Iraq: Major Oilfields and Pipelines raq-Turkey Pipeline (p7 mtllmn barrels/daY c c Mediterranean BEIRUT Sea Egypt o zoo Kilometers Boundary representation is not necessarily authoritative C=> Oilfield Oil pipeline m Pump station Oil terminal Note: Pipeline alignments are approximate 12 SECRET W - r/_ Baniyas S y rf i 4s IS dP Tripoli, /7.