(UNTITLED) MEMORANDUM FOR GEOFFREY KEMP FROM HENRY S. ROWEN RE NOTE CONCERNING

Created: 7/20/1982

OCR scan of the original document, errors are possible

HtmwmH FOR: Geoffrey Kemp, Senior Staff National Security Council

I thought it would be useful to address American interests at stake in the Iran-Iraq war and possible subsequent developments, and therefore wrote thenote.

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_ - The Iranian Threat to American Interests in the Persian Gulf

The consolidation of power in Teheran by the Islamic Republican Party and its apparent intent to spread its Islamic revolution to its Arab neighbors could inflict grave damage on American interests and those of its allies. What the IRP seems to intend and may achieveabsent adequate countervailing poweris not only the replacement of Saddam Hussein but also the Saathist regimeundamentalist Islamic one. This aim Is to be achieved by the defeat of Iraqi forces defending Basra and, if this is not sufficient to bring about the desired changeaghdad, then military conauest of at least the southern, Shia populated part of Iraq will presumably be sought. It may also be an IRP aim to occuoy this region, including the Shia holy cities of Karbala and Ha.iaf*. Further possible aims include arousing the Shia populations of Bahrain, Kuwait, and other Gulf states and the replacement of these regimes with ones more compatible with Teheran. More broadly it appears to seek dominance over the Persian Gulf region.

The importance of the Gulf region to the US resides largely in Its oil. It containsf known world oilf the non-Communist world's production capacityf current output. The power to interrupt the supply of this flow entails the power to -wreak havoc on the economies of the West. Even given today's oilhe interruption of oil suoplies from the Gulf areaallowing for the use of all shut-in production capacity elsewhere in the worldwould reduce the non-Communist world oil supply by about Such an interruption, if prolonged for months, would resultall in

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worldwide economic outout comparable to the Great Depression of}he US. More broadly, whoever Is In control of the Gulfsullionay of currentillionay of capacity!illion barrels of reserves isosition toery larqe political as well as economic influence on the world. Iran's, Iraq's and Kuwait's oil supply alonef current non-Corwunist world productionf potential production.

Could Iran achieveosition of influence? In the absence of outside military support for Kuwait and other Gulf states, an Iranian defeat of Iraq would set Into (notion forces for acconwodation with anti-Western goalswhether by overthrow of existing regimes or accommodation by them. It Is imaginable that it could helo bring intoundamentalist reo'^es of such anti-Western anlmositv, hostility against neighbors, or internal incoherence that oil supplies could be seriously disrupted. For example, the coming to power of the mullahs In Iran followed by the Iran-Iraq war caused combined oil production from Iran and Iraq to decline8ittle The world economy would have been even more damaged by this decline than It was but for the ability and willingness of Saudi Arabia to Increase production by several millionay. But now Saudi Arabia is in the "target zone."

Victory by Iran in Iraq would not only enable Its forces easily to take Kuwait and Us large oil facilities, again in the absence of outside support, but also to exert influence without an outright Invasion of Saudi Arabia. If Iraq's Shias come to life politically fn response to Iran's success, there is also likely toeaction among Kuwait's0 outillion total) Shia

peculation. reover, the Shia pooulation of Saudi Arabia is concentrated nearbyn the main oil-producing areas.

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Instability night also, or instead, proceed via other paths. Although President Assad's, like Saddam Hussein's, hold on power is sustained through tloht internal controls and brutal repression, Assad's power has been threatened by Sunni fundamentalistss*em Brotherhood!. Despite the recent brutal crushing of their revolt in Han, if Saddam Hussein were to fall, and, esoeclallyhe 8aathist regime in Baghdad were to be thrown out, the example could give heart to those who fervently want to end Assad's and the Syrian 8aathists hold on power. In Jordan, King Hussein fears the PLO, Assad and, increasingly, musllm fundamentalism. And in Riyadh, the "emory of the attack on "ecca is no doubt being refreshed by the challenge from Khomeini. In short, assuming Iranian success (and perhaps evert without it) the next months or several years mayeneral overturning of regimes in the Gulf region and beyond, both "radical" and "moderate."

To call attention to these possibilities is not to predict their happening. The Iraqis may hold against the Iranians until they get discouraged and give upalthough they are likely to keep trying for some time to come. The Shias in Iraq and elsewhere may remain in their thousand-plus year passive, largely aoolitlcal state, perhaps because Arab-Persian hostility wfll dominate aver co-rellgfous feelings. The Arab regimes' tenacity of control may withstand all challenges.

Hcwever, we cannot be at all sanguine that events will developavorable way to our interests. We may soon be facedituation inignificant proportion of the oil supplies to the West are

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heavily influenced by Iran or by oolUical forces hostile to the West or by forces unable or uninterested in maintaining the flow of oil.

In this situation. It is the first Instinct of the Gulf Arabs toow profile, to hope that the threat will recede or, if not, that money will propitiate it. If these means work, then our interests will be served by and large. If not, then the determining factor for us is what we might be able to do to protect them.

Of the two threats that have been described above, military and political, the former is less difficult for us to affect than the latter. However, the threats are not independent. If Iraq were not threatened with Iranian invasion, the possibility of Saddan Hussein's fall or the replacement of the Baathist partyundamentalist regime and the poltt1ci*ation of its Shias probably would not be serious possibilities. If Kuwait, Saudi Arabia and the other sheikdoms can obtain military protection, their internal vulnerability is also be Hkely to bo reduced.

These governments do not see it this wayo far. Evidently they believe that the domestic political costs of inviting outside, especially US, military protection exceeds the potential benefits. However,hey may soon change their mindshe Iranians win against Iraq;

This protection miaht not have to be dcminantly American at

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least on the ground. ombination of Jordanian, Egyptian,even Turkish or some European forces, might be palatable. The essential point Is the likely need for such protection and possibly very soon.

Finally, consideration needs to be given to possible actions by the Sovietshe event of Iranian successes. They seen to have no good moves available in the region at the ronent. ore far-reaching agreement with Assad is one possibility and aiming for renewed cooperationost-Saddam Hussein regime in Iraq isong-shot. The third possibility suggested by this analysis is that Iran's conflict with the Arabs may cause it to need and to seek military support from the Soviet Union; whatever incentive it has for doing this might be enhanced by the direct involvement of the "Great Satan" on behalf of the Arabs.

Henry S. Rowen

Original document.

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