IRAN-IRAQ WAR

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R001302000001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: August 20, 2010
• Sequence Number: 1
• Publication Date: August 28, 1984
• Content Type: MEMO

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cn ra ntc i9cncc Agency
28 August 1984
SUBJECT: Iran-Iraq War
destructive power that the Iranians cannot match.
The Military Situation
The military balance has shifted overwhelmingly in favor of Iraq during
the past year. Iraq now has a 4 to 1 advantage in armored vehicles and an 8
to 1 edge in combat aircraft. Recent major arms deals with the Soviet Union
and France will increase Iraqi air and mechanized forces. Iraq's development
of chemical weapons also provide its armed forces with an advantage in
in manpower, Tehran's troops suffer from poor training and declining morale.
Iran has been unable to find major foreign arms suppliers to arrest the
steady deterioration in its forces. Much of its equipment is no longer
operational because of a lack of spare parts. Although Iran outnumbers Iraq
Unless the Iraqis make a serious tactical error, Iraqi morale collapses,
or Iran has many more troops at the front than we estimate, Baghdad's forces
should be able to win this battle. Iran may be able to make some tactical
gains but is unlikely to achieve a breakthrough. Baghdad has been expecting
the Iranian attack at Al Basrah for months and has used the time to improve
its already formidable fortifications there. Iraq has at least 200,000 troops
with what he has called the final offensive.
Since then, Iran has continued to position its forces for another
offensive at Al Basrah. Tehran has massed a force of about 400,000 men near
the city, but has delayed its attack at least twice during the past six
months. Many influential clerics and military leaders in Tehran are against
launching the attack because they anticipate heavy casualties with little
gain. Ayatollah Khomeini, however, apparently remains determined to proceed
least 40,000 killed and wounded in that attack.
In February 1984 Iran attacked in the marshes north of Al Basrah, Iraq's
second largest city, its only major offensive this year. Iran suffered at
NESA M 84 10255
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The War in the Gulf
Iraq's campaign of attacking oil tankers serving Iran is designed to
squeeze the Iranian economy, increase international concern over the
escalation in the war, and force Tehran to the negotiating table. Baghdad
claims its aircraft have hit about 50 ships--at least 12 of them tankers--
since late January. Iraq is launching strikes against Gulf shipping about
every five to ten days and is likely to maintain this pace as long as it loses
no aircraft.
Iraq will be able to increase the frequency of its attacks on shipping
this fall after a newly delivered squadron of Exocet firing French Mirage F-1
fighter aircraft becomes operational. Iraq is unlikely to launch a sustained
attack against facilities on Khark Island, Iran's main oil export terminal,
unless Baghdad decides its more intensive campaign against Iranian shipping is
having no substantial effect on Iranian oil exports.
Since Iraq has not been able to severely reduce Iranian oil exports,
Tehran has retaliated with only sporadic attacks on tankers serving Gulf Arab
ports. Iran has attacked 8 tankers serving the Arab Gulf states. Iranian
leaders have indicated that they will try to reduce Gulf Arab oil exports only
in the same proportion as Iran's exports are reduced by Iraqi attacks.
Although Iran can sustain its campaign of harassment against Gulf shipping
indefinitely, it cannot engage in sustained, large-scale air operations over
the Gulf because of shortages of equipment.
Impact on Shipping
The attacks so far have had little impact on the willingness of most
tanker owners to operate in the Gulf. Even when charter rates were at their
peak in mid-June--up nearly three-fold from pre-attack levels--oil flows
continued at essentially normal levels. With a substantial worldwide surplus
of tankers, we believe some owners will remain willing to take the risk of
Gulf voyages as long as insurance is available. At least 50 million
deadweight tons (168 ships)--about 20 percent of world tanker tonnage--are
idle worldwide and charter rates have been severely depressed, forcing very
large tankers to consistently operate at a loss. The higher charter rates
available for risky voyages to the northern Gulf offer lucrative profits to
shipowners willing to commit their ships to the journey. According to
industry press reporting, an oversupply of crewmen from less developed
countries virtually guarantees a sufficient number of seamen to man vessels
making the trip.
As long as most tanker owners are willing to make Gulf voyages, we
believe the most important determinant of the level of Gulf exports will be
the delivered price of oil. The high charter rates and cargo insurance costs
facing crude buyers have to be offset by Gulf producer discounts in some form
as long as buyers can find competitive alternatives elsewhere. Kuwait has
responded by providing free cargo insurance. Tehran has set up an insurance
fund in London in addition to discounting the price of oil. We believe that
only if Gulf oil producers become unwilling to offset growing insurance and
charter costs--possibly when the net price of Gulf oil is reduced to $20 per
barrel--will Gulf oil exports decline significantly.
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Iranian Oil Exports
One important indicator of impending Iranian military action in the Gulf
will be the level of Iranian oil exports. Tehran is threatening to restrict
oil flows from the Gulf if its exports fall dramatically. We believe Iranian
oil exports currently are about 1.4 - 1.5 million barrels per day, down about
300,000 barrels per day since July because of excess oil supplies in the, world
market. Should exports fall to about 500,000 barrels per day for an extended
period because of the war from their recent normal levels of 1.6 - 2.0 million
barrels per day, we expect Tehran to broaden i t s acks on shipping or to
retaliate against Iraq's Arab allies.
Oil Market Reaction
Market reaction to the increasing frequency and severity of Iraqi and
Iranian attacks against shipping has been relatively calm because most market
participants appear to believe that a significcant, sustained oil supply
disruption is unlikely. Spot crude oil prices initially rose following a
series of attacks in April and May, but subsided quickly. Most of the
increase in spot prices was generated by speculative trading and was not
sustainable given underlying weak oil market conditions. Moreover, most of
the oil industry believes surplus productive capacity and inventories outside
the Persian Gulf would be readily available in the event of a major supply
disruption.
In our view, the market's muted response rests primarily on present
industry perceptions that the combatants are not capable of significantly
disrupting Gulf oil supplies. Should these industry perceptions change
substantially in response to an escalation of hostilities against oil targets
a significant, albeit shortlived, increase in spot oil prices could occur.
Severe damage to Gulf export capabilities or, at the extreme, partial closure
of the Strait of Hormuz probably would produce a substantial ($10-15 per
barrel) oil price rise.
Confidence in Baghdad
Iraqi leaders believe their military and diplomatic strategies will force
a weakening Iran to end the fighting. They believe that their airstrikes on
Iranian oil shipping have forced Tehran to worry about its finances and that
the war-weary Iranian populace will put increasing pressure on the
government. The Iraqis see the Iranian clerics as pragmatists who will
negotiate when these pressures reach a critical state--by mid-1985 in
Baghdad's view.
Iraq is eager for a ceasefire, but it has hardened its terms for a final
settlement as the military balance has swung in its favor. Iraqi leaders are
indicating that they will not be willing to make territorial and political
concessions to Iran.
There is little chance that Iraqi President Saddam Husayn will be
overthrown, despite Iranian insistence that the war can end only if he is
ousted. Other influential Iraqis are loathe to take on responsibility for
dealing with Iran,and Saddam has acted forcefully to strengthen his personal
control and popularity. The ruthless and effective security services have
cowed most dissidents.
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arranging new pipelines through Turkey, Jordan, and Saudi Arabia.
The economy is Iraq's weak point. The Iraqis face another year of
economic austerity, but their economic situation has stabilized. Baghdad is
covering its debts with aid from its Arab allies and trading partner_
Iraq's confidence is reflected in Baghdad's relations with the US and
USSR. Iraq concluded an economic deal worth billions of dollars with Moscow
last April and also got commitments for more sophisticated arms. But Baghdad
is also seeking closer ties with the US. The Iraqis think such ties aid their
diplomatic efforts to end the war, maintain US help in cutting Western arms
sales to Iran, and increase US support for the expansion of Iraqi oil
exports. Essentially Baghdad would like to play the superpowers off against
each other.
Doubts in Tehran
Failure to win a military breakthrough, high casualties, and Iraqi
threats to Iranian shipping in the Gulf have undercut Iranian confidence.
Iranian leaders are deeply divided over how to manage the war. Some have
concluded that Iran cannot win a military victory and cannot afford to
continue diverting revenue from internal development. Their ability to
maneuver is limited, however, by Ayatollah Khomeini's close association with
the effort to topple Saddam. Moreover, many clerics fear a domestic backlash
if the Iranian people come to believe that the high human and material costs
of the war have been in vain.
of technocrats and has been unable to convince them to return to Iran.
services. At the same time, the regime has alienated a significant percentage
The Iranian economy has deteriorated despite a 73 percent increase in oil
revenue over 1981--to $19 billion--and a 50 percent rise in imports--to $15
billion--in the same period. Iranian economic difficulties are primarily of
the regime's own making. Bureaucratic mismanagement and inefficiencies,
Khomeinist ideology and austerity, and factional disputes have prevented the
effective use of oil revenue. Massive migration to urban areas and the influx
of refugees from the Iran-Iraq war and from Afghanistan tax already limited 25X1
Despite these signs of stress--and even if Khomeini should die soon--the
Iranian regime is in no danger of imminent collapse. Tehran's security forces
are effective and remain loyal to clerical rule. The fractious exile
community Poses no challenge.
The Khomeini regime is trying to limit domestic dissatisfaction by
modifying some of its radial social and economic policies. Tehran has, for
example, announced a wide-ranging amnesty for political prisoners, put token
-
officials on t
foreign trade.
It is also staging a diplomatic offensive to reduce its isolation and to
hamper the Iraqi war effort. Tehran quickly accepted a UN-sponsored truce
ending attacks on civilian targets and is pressing for agreements banning the
use of chemical weapons and attacks on shipping in the Persian Gulf. These
r r P n r T
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JL VL
are all moves to lessen the Impact of Iraq's military superiority. The
Khomeini regime has not altered its insistence that Iraqi President Saddam
Husayn must be removed before peace is possible.
Outlook
Iraq's military superiority makes it unlikely that Iran can win a
military victory in the war. A major Iranian assault could well result in a
100,000 Iranian casualties with no appreciable gains. The Iranians will need
years to rebuild and improve their military capabilities. Nevertheless, we
believe Tehran will continue to seek the removal of the Saddam Husayn regime
in Iraq. For the forseeable future we believe Iran will be unwilling to make
peace and unable to make war.
Because of its military weakness, Iran may now turn to terror as a means
to weaken Baghdad's support in the Gulf. The Arab Gulf states have often been
subject to claims of Iranian hegemony and have substantial Shia populations
that could be receptive to an Iranian appeal for support. We do not believe
the Shia groups will be strong enough to take power in any of the Arab Gulf
states in the next few years. Even so, Iranian-backed terrorism could cause
serious damage and probably would be targeted specifically against Saudia
Iraq is likely to increase its attacks on tankers this fall, but short of
a direct attack against facilities on Khark Island, we do not believe Iraq
will be able to curtail Iranian oil exports significantly. Should Iraq
successfully attack Khark we believe the chances are high Tehran would
increase terrorist activities in the Gulf, undertake commando raids against
Gulf oil facilities, and perhaps launch air strikes against targets inside
Kuwait and Saudi Arabia. We believe Iran would only attempt to block the
Strait of Hormuz as a last resort. Mining the Strait would result in a cutoff
of Iranian shipping and raise the possibility of a Western military response,
two developments that Tehran hopes to avoid.
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Iranian and Iraqi Forces
Iraq
Iran
Troops
650,000
750,000
Armored Vehicles
8,000
2,000
Aircraft
500
60
Estimated Military Casualties
(September 1980 to July 1984)
Killed
70,000
200,000
Wounded
150,000
350,000
6
ccrocr
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JLI.I\L I
SUBJECT: Iran-Iraq War
Distribution:
Orig & 3 - DDI
1 - NI0/NESA
1 - C/PES
1 - CPAS/ILS
4 - CPAS/IMD/CB
1 - D/NESA
1 - NESA/PPS
1 - C/NESA/PG
1 - C/NESA/I
1 - Chrono
DDI/NESA/PG 28 Aug 84)
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