NATIONAL INTELLIGENCE DAILY

Created: 6/1/1984

OCR scan of the original document, errors are possible

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PERSIAN GULF: Tough Talk From Krtrt alOee

Iraq Ii hardening na position on tho Dull ecnfWcl and la setting ihaitaga for further escalation. Iran pel fires ll cantheetes Into withdrawing tuppatl from Iraq, and II haa boarded another ahip In the aoulhatn Quit Iran probably will ralallaia forataat alratrtkai, and the Quit Araba are aaaklng additional air defame weapon: There hare bean no major ehanget In oH apot marker* or Inturenee rates.

The rising Ba'th Party newspaper threatened yesterday matwill be destroyed If Iran launches the new land offensiveexpects. To underscore the threat. Iraq claimedhave struck the Iran an oil refinery at TabrizumpingKho-ramebad. Another Iraqi newspaper warned that theworsen if diplomatic efforts do not force Iran to negotiate^

Comment Baghdad la sotting tne stage for ma|ev attacks cnfscllites. perhaps oven before anflreckati capable of striking Khar* Island and also can use Itsif it Is wHOng to ebsorb losses. Although Iraq earlier appearedseating that It would moderate its stance If progress couldon olternate outlets for He oil exports. It now seems toto Intensify Ha pressure on Iran to end the war ratherforpartial cease-lire In tha

Iraq has attacked the Tabriz refinery on three previous ocesslans, inflictingnonwwa*lr*rv he* suffers- serious damage this lime, Iran could lose approximaieiy ib parcent of im domestic ofl reining capability. Iran probably will feel compelled to retaliate for Iraq's lalstt attacks, possibly by trying to hit an Iraqi o' Kuwaiti refinery.!-

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Iran IB Interpreting efforts at tha UN lo achieve an evenhanflod resolution on the crisisHflfi mat world opinion Is shying In Ils favor and that tha Arab position haseci-rtty Count* resolution condemning both Iranian and Iraqi attacks on shipping "IIIlow to tha Gull states, whose own draft singled oji Iran as the party responsible for the eacslstlon.

Tanker Attack

The Identity ol shlps-lf any-hit by Iraq's attack on Wednesday remains unclear. Some reporting. Indlcsles ths!on Llbertan tanker Atlanllcos was htt, but other reports cla'm that the ship successfully loaded oil at Khark and departed.I

The crude spot markut reacted narvouny yesterday when the Iraqi claims were first announced. Some further reaction can be expected If Lloyds' ol Londoiuccessful attackanker. No tanker appears lo have been damaged enough Io warrant salvEgeNo ehwoe In charter or Insurance rates Is likely as long ss the reports ot Ihe Iraqi attacks on Wednescay remain unconfirmed or damage la Inconsequential.

Military Situation

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Comment: The Iranians apparently are beginning to Ineoect soma Bhlpa Ihey suspect may be carrying supplies (or Iraq. Most ships entsrlrg the Gulf carrying arms bound foroviet. Tehran probably is not yet prepared torisis wllh Moscow byoviet shlpJ

The Increase In the Iranian actMly eno the new air defense deployment along the Gulf are efforts lo protect ahlpa calling at Iranian ports. These activities could alsorecaution in case Iran decides It must conduct retaliatory strikes against Gulf stale shipping or other economic facilities.)-

Gulf Stales Seek Osfenelve Wii il laa

A Soviet military delegation Is now in Kuwait lo study Its air defame needs.

Comment: Kuwait hu Sovietisaies and haa ordereds. As the crls's In Ihe Gull worsens, Kuwait may appeal to ths USSR to speed deliveries or to Sjpply additional air defense weapons. Moscow would be eager to eetl Kuwait eddlt onat armaj

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