SPECIAL ANALYSIS -- IRAN-IRAQ: STILL ABLE TO FINANCE WAR EFFORT

Created: 4/13/1988

OCR scan of the original document, errors are possible

National Intelligence Daily

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Special Analysis

Able To Finance War Effort

fren end freq mill hare llttla trouble financing Use Mr'fca* areraee ITSl per bar'*J.oat barrel antf flared row /or fAe remainder ol Ihe rearan uMtkattimiulHng economic prob'ems wo*rfd nor be liHalj lo affect fir wllllnanatt ol Iha combatant* lo III Mill

Iraq's oil revenues proDaOry wll be higher tNs year than anystar; of the war and win easily cover essential military andexpected to bellcn8 Baghdad'swas much improved iasi year by the expansion ot itsthrougn Turkey, wtslcn increased Iraq's expoit capacitybarrels per dayillion. The Iraqis wil continuetarge cashto reach aooulllhonSaudi Arab* arid Kuwait. In addition. Baghdad willimports lo conserve scarce foreign exchange, continueto finance its imports, andarpe portion olpayable this year

i'an has leaver sources of iirenccg avaneble to it than Iraq Dot asrevenues probablyover its "sport riassrimenti mrsStO bason worth Tehrannvnod ovaxen anports by nearlyntlvsndnweang to bwrow or turlhar draw down lis Cua-VOT tyf aj*cls STM JPr.oV certainly would cere cnnlian spend,rg further- to covermports The Iranans wil aiso con-mue to 'Cy on countertrade deals lo finance Doth military and ch-aan mpo-ts |

trans financing efforts would be attained more severely than Iraq's II oil prices were to drop snarply ano remain low lor Ihe remainCer of lie year. Still, prices would have to (all to on overageer8 before Iranian rxl revenues would dodine lo lite low hii6 Even at this level. Tehran probably would muddle through by

reducing imports ana otherwise increasing austerity. In

Mnoe Iran maintains the offensive in ihe ground war. it oan moro

control the pace ana intensity ol the flghllng according to Ms

Lower oil prices prooaofy would rsot hul Iraq ssgn-tscanlly because of its increased export capacity Pncea woukl have lo average bekower ba--rc!o- 'raqi rnvenuea IO drop to theOf

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