731 October 20,1989 RESPONDING TO THE SOWET cGE INTHEPERSIANGULF INTRODUCTION The Soviet Union is expanding its political influence in the Persian Gulf the strategic storehouse fo r 63 percent of total world oil reserves. Soviet leader Mikhail Gorbachev is seeking to open new doors in the region by eradicating the image of the Soviet Union as a threatening power. He has moved quickly to exploit diplomatically the Soviet troop withd rawal from Afghanistan, completed February Uth, by dispatching Foreign Minister Eduard Shevardnadze to Middle Eastern capitals.

By downgrading ideological conflict and stressing mutual economic interests, Moscow is gaining a diplomatic foothold in the conservative Arab states of Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

What is most disturbing to United States interests, the Soviet Union is wooing revolutionary Iran by playing up to Irans hostility to the West and offering economic, military, diplomatic, and technical assistance.

Limits of New Thinking. Moscow cemented ties withTehran during the June 20 to 23 visit to the Soviet Union by Irans top leader, Hojatolislam Hashemi Rafsanjani. During this visit, Rafsanjani and Gorbachev sp oke of a new stage of Soviet-Iranian relations and signed important agreements committing both states to long-term cooperation on military, economic, and political issues. In contrast to the U.S Moscow does not insist that Iran renounce sponsorship of ter rorism and its attempts to destabilize the Persian Gulf. This reveals the limits of Gorbachevs vaunted :new thinking in foreign affairs, at least as applied in the Persian Gulf.

Soviet gains in the Persian Gulf are particularly worrisome because of the imp ortance of this oil-rich region to Western security.The Gulf states hold an estimated 565 billion barrels of oil, approximately 70 percent of the noncommunist worlds oil reserves. Persian Gulf oil exporters supplied I roughly 10 million barrels per day (m bd) or one-quarter of total world oil consumption in 19

88. By 1995, the Gulf is projected to supply up to 45 percent of world oil consumption.The U.S. is expected to become more dependent on Persian Gulf oil as U.S. oil imports rise to a projected 8 mbd t o 10 mbd in the 1990s (about half of its annual oil colmumption up from 5.2 mbd (about one-third of its consumption) in 1986 Important Buffer. Iran looms large in U.S. policy considerations because Tehrans efforts to export its revolution make it the chie f immediate threat to Persian Gulf stability. In the long run, Irans 45 million people, military potential, industrial base, and geostrategic location could make it a dominant regional power. In addition, Iran is an important square on the geopolitical che s sboard because it remains a buffer between the Soviet Union and the oil-rich Persian Gulf A pro-Soviet Iran, equipped with Soviet arms, would challenge Western security by jeopardizing Western access to Persian Gulf oil To blunt the Soviet diplomatic driv e to expand its influence in the Persian Gulf and prevent the emergence of Soviet-Iranian hegemony in the region the U.S. should Keep the door open to a U.S.-Iran rapprochement. This would provide Tehran an alternative to becoming dependent on the Soviet U n ion and reduce Irans incentives for close relations with Moscow Challenge Gorbachev to demonstrate in the Persian Gulf that his new thinking will not work against U.S. interests in Iran These interests include ending Iranian-sponsored terrorism, assuring r egional stability, and protecting the conservative Arab states of the Persian Gulf from Iranian intimidation Call on Gorbachev to accept Irans abrogation of the 1921 Soviet-Iranian Treaty of Friendship that the Soviets maintain gives them the right to int e rvene in Iran Seek improved U.S. ties with Iraq, which is disgruntled with Moscows courtship of Iran Emphasize the common interests of the U.S. and Iran in ousting the pro-Soviet communist regime in Afghanistan RUSSIAN ENCROACHMENTS ON IRAN Although Sovie t -Iranian relations have improved recently, the two countries have a long, bitter history of national antagonism, military conflict and ideological tension. Czarist Russia defeated Persia, in a series of wars in the 19th century, gained hegemony over north e rn Persia, and annexed Persias northern territories, including Georgia, Armenia, and part of Azerbaijan. The 1917 Bolshevik revolution added an ideological impetus to Russias imperial drive to the south I I 1 U.S. Department of Energy, Energy Security, a R epti lo fhe Residenf of the United States, March 1987, p. 3 I 2 One-sided Treaty. The Soviet strategy toward Iran combined the long-term incremental accumulation of influence through dipl9matic and economic initiatives with the seizure of short-term advan t ages. The Red hy invaded Irans Gilan province on the Caspian Sea coast in 1920 and set up a Soviet Republic under Kuchek Khan, a local rebel leader. Soviet troops were withdrawn only after Moscow had extracted a one-sided Treaty of Friendship from Iran in 19

21. Article VI of the treaty gives the Soviets the right to intervene if Iran is occupied by a third party or if Iranian territory is used as a base for anti-Soviet aggre~sion Although Iran repeatedly has announced the abrogation of the 1921 treaty, Mo scow insists that it remains in force in August 1941, in collaboration with Britain, which occupied southern Iran.

The joint intervention was aimed at keeping German influence out of Iran and maintaining a warm-water supply line for the transport of allie d military materiel to the Soviet Union. Although both powers pledged to withdraw their troops after the end of World War II, Moscow failed to honor its obligations and installed puppet governments in Irans northwestern provinces of Azerbaijan and Kurdist an. This grab for territory provoked one of the first confrontations of the Cold War. The SovietsJinally withdrew in May 1946 under strong American diplomatic pressure cautious wait-and-see attitude toward the 1978-1979 Iranian revolution.

Moscow did not write off Shah Mohammed Reza Pahlavi until late 1978 when it was obvious that he was losing control. Soviet leader Leonid Brezhnev warned the U.S. in November 1978 not to intervene in Iran.

Meanwhile, clandestine radio stations broadcasting from Soviet territory launched an inflammatory propaganda campaign to exacerbate anti-American sentiments, and exiled Tudeh (communist) party members returned from the Soviet Union to join the antiShah co alition.

After the fall of the Shah, Moscow posed as the protector of the revolution and claimed that Soviet warnings had deterred the U.S. from intervening against the Iranian revolutionaries. Moscow encouraged Irans anti-Western radicalism and sought to block the normalization of Irans relations with the West, particularly the U.S. After the November 4,1979, seizure of the U.S.

Embassy inTehran, the Soviets exploited the ensuing 444-day hostage crisis to ingratiate itself with Iran. Moscow, for example, vetoed a United Nations Moscow invoked the 1921 Treaty, in fact, to justify occupying northern Iran Moscow and the Iranian Revolution. The Soviet Union initially adopted a 2 See Milan Hauner, Soviet Eurasian Empire and the Indo-Persian Corridor, Roblems o f Communism January-February 1987 3 A subsequent exchange of letters specified that Article VI referred only to antiBolshevik White Russian forces, but the Soviets have tried relentlessly to widen the interpretation of the treaty to afford themselves a con venient pretext for intervention in Iran 4 an exhausted Britain as the chief counterweight to Soviet expansion toward the Persian Gulf. See James A.

Phillips, A Mounting Soviet Threat to the NorthernTier, Heritage Foundation Bockgrounder No. 274, July 1 19 83 Iran was the fvst country liberated from Soviet occupation following World War 11, when the U.S. replaced 3 MOSCOV Security Council Resolution in January 1980 that called for economic sanctions against Iran. When the U.S. and its European allies impose d sanctions in April 1980, Moscow offered Iran full transit privileges for its imports and exports through Soviet territory and signed a protocol pledging aid to Iran in the event of a naval blockade Exploiting the Hostage Crisis. Throughout the hostage cr isis Soviet radio propaganda denounced the U.S. military buildup in the Persian Gulf, warned of imminent American attack, and promised Iran support in case of an attack.

When Iran moved to resolve the hostage Crisis, Moscow warned against doing so in an ed itorial in the Communist Party daily pravda: The U.S. has rejected Iranian demands and instead has put forth demands whi h are insulting to your country and are therefore totally unacceptable.

In addition to poisoning Irans relations with the West, the ho stage Crisis distracted both Iran and the West from mounting strong or coordinated responses to the December 1979 Soviet invasion of Afghanistan. This aggression reinforced Irans ingrained anticommunism and distaste for Soviet atheism. Ayatollah Ruhollah K homeini denounced the invasion and escalated Iranian propaganda attacks on Soviet oppression of the 50 million Muslims in the Soviet Central Asian Republics. Iran gave diplomatic support and limited military aid to the Afghan resistance.This was funneled t o radical fundamentalist Afghan groups, primarily Nasr and Pasdaran, whose members are Shiites, a religious sect that makes up only about 15 percent of Afghanistans population, but 88 percent of Irans s UVD THE IRAN-IRAQ WAR Iranian aid to the Afghan muja hideen Freedom Fighters also was constrained by Irans preoccupation with Iraq, which invaded western Iran on September 22,1980 The Iran-Iraq war continued until Iran was compelled to accept a cease-fire on July 18,19

88. Moscow earlier had warned Iran secretly of Iraqs impending attack and provided Iran with satellite intelligence on Iraqi military deployments!

Although the Soviet Union had developed close ties with Iraqunder their 1972 Treaty of Friendship, Moscowjnitially was neutral in the Iran-Iraq war But this neutrality had a pronounced pro-Iran tilt. Moscow, formerly Iraqs chief source of arms (including MiG-25 Fm6at fighters,Tu-22 Blinder bombers, T-62 tanks, and numerous artillery, missile, and infantry weapons halted direct arms transfers to Iraq , although it permitted Poland and Czechoslovakia to continue meeting Iraqs military needs. At the same time Moscow in principle offered to supply arms to 1ran.Tehran spumed the offer but bought Soviet-madeT-62 tanks, artillery, and small arms from Libya N orth Korea, South Yemen, and Syria. Moscow discreetly and indirectly 5 Zravdu, January 6,19

81. See also Bruce Porter, The U.S.S.R. and the Hostage Crisis: Scurrilous Propaganda, Radio LibeQ Research, January 19,1981 6 Shahram Chubin, The Soviet Union and Iran, Foreign ifluin, Spring 1983, p. 934 4 armed both sides in the war in an effort to cultivate Iran without sacrificing its privileged position in Iraq.

January 1981 resolution of the hostage crisis,Tehran no longer needed a Soviet card to deter a poss ible U.S. intervention. And Iran grew increasingly critical of the Soviet war in Afghanistan, Soviet support of Iraqs war effort and Soviet ill-treatment of Central Asian Muslims the Iran-Iraq war. When Iran invaded Iraqi territory in July 1982, Moscow wa s confronted with the prospect of an Iranian victory, which would have destroyed a pro-Soviet Iraqi regime and imposed an Islamic fundamentalist regime modeled on Khomeinis Iran. Such a victory would have set a dangerous precedent for Afghanistan and Sovie t Central Asia. To prevent this, the Soviet Union tilted back toward Iraq, resuming direct arms shipments that included SCUD surface-to-surface missiles in mid-1982 Khomeini Crackdown. Inside Iran, meanwhile, the communist Tudeh party grew more critical of the Khomeini regimes economic policies and refusal to negotiate a settlement with Iraq, saying that continuing the war only benefited Israel and the U.S.The 1982 defection to Britain of Vladimir Kuzichkin, a Soviet KGB officer stationed inTehran, yielded information on Soviet spy activities, which was passed on to the Iranian government exacerbating-Soviet-Iranian tension. The Khomeini regime cracked down on Iranian communists in February 19

83. More than 1,000 Tudeh party members were arrested; its top leaders confessed to spying for the Soviet Union in televised show trials.

Despite the subsequent chill in Soviet-Iranian relations, however, some 2,000 Soviet technicians and advisers continued to work in Iranian steel mills power plants, and other heavy i ndustrial projects that had been built with Soviet aid during the Shahs reign. Because of its self-created isolation from the West, Iran became increasingly dependeht on Soviet technical assistance to maintain its industrial infrastructure Tilting from Ir an to Iraq. Soviet-Iranian relations soured in 19

82. After the A further cause of Tehran-Moscow friction was the changing Soviet role in GORBACHEVAND THE PERSIAN GULF I The hallmark of Mikhail Gorbachevs foreign policy is a new thinking that downgrades th e ideological basis of Soviet foreign policy and emphasizes political settlements of regional conflicts, such as those in Afghanistan Angola, and Cambodia. Apparently, Gorbachev is trying to ease East-West tensions and diminish perceptions of the Soviets a s a threat to relax Western support for anti-Soviet liberation movements and dissolve anti-Soviet coalitions, such as the U.S.-Pakistani-Chinese-Saudi-Egyptian ad hoc coalition, which succesfully contained Soviet expansion in Afghanistan. Most important, G orbachev needs to reduce tensions to carry out his ambitious domestic economic reforms, which depend on Western loans and technology 5 I I Public Relations Strategy. Gorbachevs Persian Gulf policy has been an adept balancing act, in which Moscow has sough t to maintain close ties to Iraq while cultivating ties with Iran and with the conservative Arab states of the Persian Gulf, which are threatened to varying degrees by both their northern neighbors. Under Gorbachev, Soviet Persian Gulf policy has boiled do w n to what one analyst calls opportunism plus polish. Rather than rely on naked force, as Stalin did in occupying northern-Iran in 1941 or as Brezhnev did in Afghanistan in 1979, Gorbachev is exploiting his flair for public relations while stressing econom ic cooperation, technical assistance and diplomacy.

Moscow has sought to broaden its options by reaching out to all the Gulf states, proffering carrots rather than sticks.The Soviets sold Kuwait up to 300 million worth of SAM-7 and SAM-8 anti-aircraft missiles and Frog-7 surface-to-surface missiles in July 1984 after Kuwaits request for U.S.-made Stinger anti-a ircraft missiles was rejected by Washington.

Moscow accommodated Saudi Arabia in January 1987 by announcing that Soviet oil production would be cut by 7 percent, a move that helped firm up oil prices during the oil glut. The Soviets also cooperated with th e Saudis in April 1987 to set up a secret meeting between Syrian leader Hafez Assad and Iraqi leader Saddam Hussein in a failed effort to reduce tensions between Syria and Iraq. High-level Saudi officials have visited Moscow since 1986, and Soviet officia ls have visited Saudi Arabia, most recently last December to discuss Afghanistan. Although Saudi Arabia continues to reject Soviet requests to restore diplomatic relations, suspended by Moscow in 1938, the Soviet Ambassador to Egypt announced in June 1\\ 89 that formal Soviet-Saudi diplomatic ties soon will be resumed.

Seeking Superpower Protection. When Gorbachev came to power in March 1985, Iran appeared to be moving relentlessly toward victory in its brutal war with Iraq. This prompted the small Gulf state s to upgrade their ties with the Soviet Union as an insurance policy against Iran. Oman opened diplomatic relations with Moscow in September 1985, and the United Arab Emirates followed suit in November shipping, appealed to both Moscow and Washington for h elp. Washington dragged its feet, reluctant to jeopardize the possible improvement of relations with 1ran.The Soviets, eager to exploit Arab uneasiness over the November 1986 revelation of secret U.S.-Iran contacts and arms sales responded promptly and al lowed Kuwait to charter three Soviet oil tankers.

Stung by Moscows success in gaining an unprecedented role as a guarantor of the Wests petroleum jugular vein, Washington agreed to reflag eleven Kuwait, seeking superpower protection from Iranian attacks ag ainst neutral 7 8 See Carol Saivetz, nte Soviet Union and the Gurfin fhe 1980s (Boulder: Westview Press, lW p. 110.

The Ernes, London, June 22,1989 6 Kuwaiti oil tankers despite Kuwaits past criticism of the defensive U.S. naval presence in the Gulf Scori ng Points in Tehran. The Soviets deployed a low-profile naval force in the Gulf, consisting of one frigate and a half dozen minesweepers and supply ships. Moscow knew that Iran was unlikely to pick a fight with the Soviet Navy when a confrontation loomed w ith the U.S. Navy? Soviet propaganda persistently claimed that the U.S. was exploiting the tanker war to expand its own naval presence and gain control over Persian Gulf oil. By stressing its opposition to the Western naval presence, Moscow scored points inTehran.

Rather than participate wholeheartedly in U.N efforts to jumpstart the Iran-Iraq peace process the Soviets chose to exploit the war. Despite Gorbachevs new thinking, Moscow sidetracked the 1987 U.N.-sponsored peace initiative to end the Iran-Iraq war to curry favor with Iran, which then was winning the war. Although the Soviet Union had voted in July 1987 for U.N. Security Council Resolution 598, which called on Iran and Iraq to accept a cease-fire, it stalled U.N. fforts to impose sanctions on I r an to force compliance with that Reso1ution.lMoscow reportedly was rewarded for its efforts on behalf of Iran in the U.N. Security Council by a reduction in Iranian support for the Afghan mujuhideen and by a toning down of Iranian proselytization directed at Soviet Muslims.z1 A Warm-Water Port. The Soviets also gained when the U.S. threatened a naval blockade of Irans coast.This forced Iran to consider exporting its oil and importing goods through the Soviet Union. Irans Prime Minister, Mir Hussein Mousavi , a radical in favor of closer ties with Moscow, announced in July 1987 that Iran and the Soviet Union had negotiated contingency plans for trans orting Iranian oil through Soviet territory to the Black Sea for export. And in August, Moscow and Tehran sign ed an economic agreement, which included a decision in principle to build a new railroad to link the Soviet rail network to Irans port of Bandar Abbas at the mouth of the Persian Gulf. This would give Moscow its long-sought warm water port to 12 9 19

87. A nd when the U.S.S. Stank was mistakenly attacked by an Iraqi warplane later that month, Moscow blamed the U.S. for the incident and denounced the menacing nature of the U.S. naval presence 10 Resolution 598 called for Iran and Iraq to accept a cease-tire, withdraw their armies to the border, and negotiate a peace settlement. Failure to comply within ninety days would have triggered a U.N.-sponsored arms embargo against the offending party. Iraq quickly accepted these conditions, but Iran pressed for ClarEc ations as a delaying tactic and made an unsatisfactory counterproposal without explicitly rejecting Resolution 598.

When Western and Arab states pressed the U.N. Security Council in fall 1987 to follow through on sanctions against Iran, the Soviet Union st alled efforts to impose the sanctions by muddying the waters with a divisive and unworkable proposal to replace the Western naval forces in the Persian Gulf with a U.N. naval presence 11 Jim Hoagland, A Soviet Tilt to Iran, nit? Washington Post, December 2 ,1987, p. 2 12 Dilip Hiro, MOSCOW)s Double-Dealing in the Gulf, The Wall Sfmet Journal, July 30,1987 The Soviets minimkd an Iranian attack on a Soviet freighter and the mining of a Soviet oil tanker in May I 7 the south, which could freepviet shipping fro m bottlenecks at theTurkish straits and the Suez Canal Shielded from U.N. sanctions by Moscows veto of Resolution 598 in the Security Council, Iran continued its costly war against Iraq until it was forced by mounting Iraqi military victories to accept the Resolution in July 1988 Moscow then repeated previous offers to mediate Iraq-Iran peace negotiations, hoping to make the talks a showcase for Soviet diplomacy.

Gorbachev presumably was hoping to repeat the Soviet diplomatic triumph of the 1965 Tashkent De claration. This Soviet-mediated agreement ended the 1965 Indo-Pakistani War, burnishing Moscows diplomatic prestige by freezing the U.S. out of the peace process MOSCOWS POST-AFGHANISTAN DIPLOMATIC OFFENSIVE Less than one week after the February 15,1989, d eadline for Soviet military withdrawal from Afghanistan, Soviet Foreign Minister Eduard Shevardnadze was dispatched to Syria, Jordan, Egypt, Iraq, and Iran. The highest ranking Soviet visitor to Iran since the 1979 revolution, Shevardnadze met with the Ay atollah Khomeini and at a rare public appearance declared We welcome your exit from Afghanistan, and we can cooperate against the troublemaking of the West.14 Shevardnadze hailed the visit as a turning point in Soviet-Iran relations.

Despite the uproar ove r Khomeinis February 14 death threat against author Salman Rushdie, which led Western European nations to recall their ambassadors fromTehran, Shevardnadze said nothing publicly about the issue, content that Moscow was expanding its influence inTehran whi le Irans relations with the West again deteriorated.

Hashemi Rafsanjani visited the Soviet Union. He did not postpone his trip even though it fell within the official 40-day mourning period for the June 3 death of Ayatollah Khomeini. This was a sign of the importance that Irans foremost power broker attached to the visit Massive Economic Reconstruction. While in Moscow, Rafsanjani signed a package of long-term political, economic, and military agreements with the Soviets. Although a joint communique hailed a new stage in Soviet-Iranian relations, pledged noninterference in internal affairs, ruled out the use of force, and called for exchanges of religious leaders, the details of the agreements were sketchy.

According to Iranian reports, one agreement commit s Moscow to participate in a 15 billion economic reconstruction program in 1ran.The Soviets are expected to send hundreds of advisers and technicians to boost Then this June 20 to 23, Iranian parliamentary speaker Hojatolislam 13 Milan Hauner and John Rob e rts, MOSCOWS Iran Gambit: Railroading a Friendship, The Washington Post August 16,1987, p. D2 14 The Washington Post, February 27,1989, p. A14 8 Iranian coal, iron ore, and steel production; help operate Iranian dams power stations, and natural gas pipeli n es; complete a 100-mile rail link between the Soviet border and the city of Massbad in northeastern Iran; staff a joint oil development program in the Caspian Sea; and assist Iran in harnessing the peaceful use of atomic energy. Iran is scheduled to resum e natural gas exports to the Soviet Union, interrupted sinc! 1980 by a bitter price dispute, at a rate of 3 billion cubic meters per day. Since much of this natural gas apparently will be bartered for Soviet arms and technology, it will allow Moscow to inc r ease its own exports of natural gas and oil, thereby bolstering the Soviets chief source of hard currency earnings unspecified arms estimated to be worth up to $3 billion. This comes despite U.S. appeals to other countries, including the USSR, not to arm a state that sponsors terrorism and prolongs the captivity of the sixteen Westerners held hostage in Lebanon by pro-Iranian terrorist groups. Just prior to Rafsanjanis visit to Moscow, American officials warned Soviet Middle East policy makers that any maj o r arms sales to Iran would make U.S.-Soviet relations more difficult.l6 This appeal went unheeded. And so far, Washington has not made good its threat to Moscow to make U.S.-Soviet relations more difficult defensive and modest in quantity. They refused, h o wever, to divulge which arms would be provided. Irans highest priority is to rebuild its air force whose aging U.S.-supplied F-4 Phantoms and F-14 Tomcats have been disabled by lack of maintenance and spare parts. Iranian officials sought sophisticated So viet MiG-29 Fulcrum warplanes, although the Soviets promised Iraq that no new systems would be sold to Iran. In addition to aircraft, the Soviet arms package for Iran is believed to include anti-tank and anti-aircraft missiles.

Rafsanjani, elected Irans pr esident on July 28, was welcomed warmly by Gorbachev who proclaimed: We are ready to go ahead as far as Iran is ready to go toward us. When Rafsanjani appeared impressed by a visit to Star City the Soviet space training center outside Moscow, Gorbachev or dered Soviet officials to consider a future joint flight by Soviet and Iranian astronauts.

Gorbachev sought to capitalize on Irans need for technology in the military economic, and scientific fields, which has been exacerbated by Irans isolation from the West.

Driving a Wedge. Gorbachev also pressed Rafsanjani to persuade Iran-supported Shiite Afghan mujahideen to open direct talks with the Soviet-backed Najibullah regime in Afghanistan. Although Rafsanjani Ignoring U.S. Appeals. The Soviet Union also agreed to sell Iran The Soviets downplayed the arms sales, maintaining that the arms would be 15 Maria Kielmas, The Soviet-Iranian Deal: More Words Than Substance, Middle East Intemationd, July 21 1989, p. 16 16 Tile Washington Post , June 21,1989, p. A19 9 I praised the mujahideen as heroic defenders of Islam, the Soviet news agency Tass quoted Rafsanjani as also saying that Iran and the Soviet Union had similar views about Afghanistans future as a an independent nonaligned, neutral c ountry which is friendly toward all its neighbors. This suggests that Moscow is attempting to drive a wedge between Afghan Shiites and Sunnis by exploiting Irans distrust of American, Pakistani, and Saudi nation, Iran distrusts Saudi Arabia, the self-proc l aimed protector of Sunni Islamic orthodoxy, and that it distrusts Pakistan because of its ties to the U.S influence in Afghanistan. Moscow knows that, as a predominantly Shiite THE U.S. RESPONSE TO GORBACHEVS PERSIAN GULF POLICY While Iran remains an impo r tant bulwark in the long-term containment of Soviet expansion toward the Persian Gulf, the Iranian revolution poses the chief threat to Persian Gulf stability and U.S. interests in the region.The challenge to the U.S. is to tame the Iranian revolution in the short run, while preserving Iran as a long-term barrier to Soviet expansion.

Irans harsh anti-American bias, its self-imposed isolation from the West and the lingering hostage problem give Moscow an advantage over the U.S in constructing a working rela tionship with revolutionary Iran. Unlike Washington, Moscow enjoys diplomatic relations with Tehran and is increasingly involved in rebuilding the Iranian economy.

What is needed now is not a blind rush into competition with Moscow for Irans favor, but a long-term policy of patient pressure and calibrated rewards that will lead Iran to abandon terrorism and seek accommodation with the West and lead Moscow to reconsider and mute its attempts to enhance its influence in Iran at the expense of the West.To ac c omplish this, Washington should 4 4 Maintain its strong naval presence in the Persian Gulf The U.S. deploys approximately fourteen warships, including six minesweepers and an amphibious landing ship, in the Persian Gulf.This strong U.S. naval presence not only deters Iranian terrorism and constrains Irans ability to destabilize its Gulf neighbors, it reassures Arab states that the U.S. is a dependable ally against Iran, thereby limiting their incentive to seek Soviet support to guard against Iranian aggres s ion. Since Iran wants to reduce the U.S. naval presence, Washington could offer to do so only if Iran were to cease to intimidate its neighbors and release the Western hostages held by pro-Iranian groups in Lebanon 4 4 Keep the door open to improved U.S.- Iran relations.

Gorbachevs courtship of Iran has succeeded to a great degree because Tehran has few alternatives to Soviet economic and technical assistance.

Khomeini burned Irans many bridges to the U.S. because he feared the return of U.S. influence. He denounced America as the Great Satan 17 l?ie New York limes, June 21,1989 10 calling the Soviet Union only the Lesser Satan. In the last months of his life he leaned more toward the Soviet Union, which unlike the U.S. did not pose a threat to his cultura l revolution because of the ideological bankruptcy and lack of popular appeal of communism. Early this year he even exchanged personal letters with Gorbachev.

Khomeinis successors have strong reasons to rebuild bridges to the West including the U.S. Irans postwar reconstruction will cost up to 150 billion.

Although Iran has shunned foreign loans in the past it will come under growing pressure to borrow from the West since Irans oil revenues have fallen from 20 billion in 1983 to $12 billion to $13 billion this year.18 Rafsanjani has staked his political future on Irans economic recovery.

Undoubtedly, therefore, he realizes that the Soviets cannot provide the loans that Iran needs. Such loans can come only from Western and Japanese banks or governments.To o btain the loans, Rafsanjani will have to moderate Irans revolutionary foreign policy and reduce tensions with the West.

Washington should work for a united front with Japanese and West European governments, which insists that Iran abandon its support for terrorism and its violent efforts to export its revolution before it receives any loans If Iran were to do so, the U.S. could offer technical assistance in rebuilding Iranian industries, particularly its crucial oil roduction and export facilities, where W estern technology is sorely needed?Washington immediately should informTehran privately that it will end efforts to block Western loans to Iran and will offer technical assistance as soon as Western hostages are released from Lebanon and Iran suspends its support for terrorism Challenge Gorbachev to follow through on his new thinking.

Washington should call on Gorbachev to stop exploiting Western tension with Iran over the hostages, the Western naval presence in the Persian Gulf and the Rushdie affair. Gor bachev should be pressed to put his new thinking into practice by refusing to sell arms to Iran as long as it supports terrorism. Although Iran now threatens pro-Western states, in the long run Iran poses a challenge to Soviet control over 50 million Musl i ms in Soviet Central Asia. Washington should point out that Soviet policies antithetical to U.S. interests in the Persian Gulf region will sour bilateral superpower relations and harden U.S. resolve to maintain East-West trade barriers and to exclude Mosc ow from Western financial institutions such as the World Bank.

It should remind Moscow that the success of Gorbachevspemtmika, like Rafsanjanis, depends on Western assistance. Such assistance will not be forthcoming unless Gorbachevs new thinking applies t o regional conflicts outside of Europe 18 Financial Times, August 31,1989 19 See James A. Phillips, Planning for a Post-Khomeini Iran, Heritage Foundation Backgroundet No. 625 December 27,1987 11 Call on Gorbachev to renounce the 1921 Treaty Washington sh ould urge Moscow to accept Irans repeated claims that the 1921 Treaty of Friendship is null and void. This treaty is similar to the one that Moscow used as a pretext for its 1979 invasion of Afghanistan.

Washington should press Gorbachev to demonstrate his good intentions by accepting Irans abrogation of this treaty that was imposed by Soviet force.

Failure to do so would reveal the hollowness of Gorbachevs new thinking in the Persian Gulf Improve relations with Iraq.

Washington should exploit Baghdads anxiety over Moscows courting of Iran to raise the diplomatic costs of the Soviet tilt to Iran. Iraqs conflict with Iran has led to a convergence of U.S.-Iraqi interests in many areas.

Preoccupied by the long-term threat of its bigger neighbor Iran, Baghdad seeks to avoid another Arab-Israeli war, which would divert Arab attention from the Iranian threat. Iraq quietly has supported every peace initiative on the Arab-Israeli question since 19

82. It has aligned itself wit h moderate Arab states friendly to the U.S. such as Egypt, Jordan, and Saudi Arabia.The end of the Iran-Iraq war eased Iraqi dependence on Moscow and sparked increased Iraqi interest in securing Western aid and trade.The U.S. could help Iraq recover from t he war by providing technical assistance for rebuilding Iraqs oil export facilities, agricultural credits, and perhaps weapons if the Soviet-Iranian rapprochement becomes an open alliance 4 Emphasize common U.S.-Iran interests in a noncommunist Afghanista n.

Washington should stress the interests that it shares withTehran in removing the communist regime in Kabul. In particular, the U.S. should press the Afghan interim government, formed by Pakistsni-based mujahideen, to reach out to Shiite mujahideen based in Iran and give them a role in determining Afghanistans future. Afghan Shiites should be given roughly 15 percent of the positions in the interim government, corresponding to their share of the total population t CONCLUSION Despite his rhetoric about su p erpower cooperation in regional conflicts Gorbachev has sought to maximize Soviet influence in the Persian Gulf at the expense of the U.S. Gorbachev has continued his predecessors policy of exploiting to the hilt Iranian tensions with the West. Moscow den o unced the Western naval presence in the Persian Gulf despite the fact that Western navies, like the Soviet Navy, were responding to Kuwaiti appeals for protection. Now Gorbachev has begun arming Iran even though it still refuses to free Western hostages. W ashington must convince Moscow that such behavior will impose a heavy cost to bilateral relations True Threat to Gulf. Washington should insist that Gorbachevs new thinking be applied to the Persian Gulf, not just Europe. At the same time Washington must b e more innovative in dealing with Iran and Iraq 12 In the long run, the great threat to the Persian Gulf is not Iran. It is the Soviet Union. What may be a new Soviet reasonableness in some areas of the 1 world and in some old theaters of U.S.-Soviet conf rontation should not mask what is happening in the Persian Gulf. There, Gorbachev challenges America. And America needs a policy to meet this challenge I James A. Phillips Senior Policy Analyst 13