SAUDI POLICY TOWARD IRAN

S E C R E T SECTION 01 OF 08 RIYADH 05470

E.O. 12356: DECL: OADR
TAGS: KPRP PREL MOPS ENRG IR SA
SUBJECT: SAUDI POLICY TOWARD IRAN

REF: 84 RIYADH 7002


1. S - ENTIRE TEXT


2. SUMMARY: EVENTS AND PASSAGE OF TIME HAVE COM-
BINED TO MITIGATE SAUDI FEARS AND HOPES REGARDING
IRAN. MORE CONFIDENT NOW THAT IRAQ WILL NOT BE
DEFEATED, THAT THERE IS LESS DANGER OF A DIRECT
IRANIAN ATTACK ON SAUDI ARABIA, THAT THE LIKELI-
HOOD OF EFFECTIVE IRANIAN-INSPIRED SUBVERSION IN
SAUDI ARABIA IS NOW SMALL, AND THAT THE DANGER OF
SUBVERSION IN OTHER GULF COUNTRIES IS PROBABLY
CONTAINABLE, THE SAG HAS GROWN COMFORTABLE WITH
THE IRAQI STRATEGY OF ATTEMPTING TO FORCE IRAN
TOWARD THE NEGOTIATING TABLE THROUGH MILITARY,
ECONOMIC AND DIPLOMATIC PRESSURE THAT, OVER TIME,
MAY CONVINCE THE IRANIANS THAT THEY HAVE NO
ALTERNATIVE. THE SAG DISTRUSTS IRAN AS MUCH AS
THE IRAQIS DO AND DOES NOT BEAR THE DIRECT BURDEN
OF CONTAINING ITS REVOLUTION; THUS SAUDI PATIENCE
IS IN FACT GREATER THAN THAT OF IRAQ. THE SAG FULLY
ACCEPTS IRAQ'S ANALYSES OF THE WAR AND THE SITUATION
IN IRAN AND IS GIVING IRAQ FULL DIPLOMATIC BACKING,
INCLUDING IN ITS RECENT CONTACTS WITH IRAN. THE
MESSAGE THE SAG IS SENDING IRAN IS THAT THE
SAUDIS CANNOT BE SEPARATED FROM IRAQ WHILE THE
CONFLICT LASTS, BUT THAT THEY WISH TO REMAIN IN
CONTACT WITH IRAN AND HOPE FOR A COOPERATIVE RELA-
TIONSHIP ONCE IRAN CEASES TO PURSUE ITS GOALS
ABROAD BY MILITARY MEANS. THE CHIEF SAG POLICY-
MAKERS, IN THIS AS IN OTHER FIELDS, ARE PROBABLY
FAHD, ABDULLAH, SULTAN, AND NAIF, AND THERE DO NOT
APPEAR TO BE IMPORTANT DIFFERENCES AMONG THEM. THEY
RECOGNIZE THE FUNDAMENTAL, THEOLOGICAL HOSTILITY
OF THE IRANIAN REGIME AND UNDERSTAND THAT UNTIL THE
REVOLUTION HAS BEEN BLUNTED AND ITS NATURE SIGNIFI-
CANTLY TRANSFORMED, IT WILL REPRESENT A THREAT TO
THE AL SAUD. THEY RECOGNIZE THE NEED TO BE FIRM
IN DEFENSE OF WHAT IS THEIRS, LEST IRAN ESCALATE
ITS THREATS, AS SHOWN IN LAST SUMMER'S SHOOTDOWN
OF AT LEAST ONE IRANIAN AIRCRAFT AND SUBSEQUENT
ANNOUNCEMENT OF RSAF RULES OF ENGAGEMENT. THEY
HAVE NOT ABANDONED THEIR TRADITIONAL CAUTION,
HOWEVER, AND CONTINUE TO MAKE IT CLEAR THAT THEY
INTEND NO AGGRESSIVE THREAT TO IRAN, AS SHOWN IN
THEIR CONCILIATORY STANCE AFTER THE AIRCRAFT
SHOOTDOWN. THEY ARE ACUTELY AWARE, TOO, OF THE
LONG-TERM NEED FOR A DECENT WORKING RELATIONSHIP
WITH IRAN, AND HOPE THAT OVER TIME THE REVOLUTION
WILL MODERATE AND SHARED INTERESTS WILL ASSERT
THEMSELVES. END SUMMARY.


3. A NUMBER OF FACTORS HAVE SHIFTED, EITHER WITH
EVENTS OR THE MERE PASSAGE OF TIME, SINCE OUR LAST
OVERALL LOOK AT SAUDI-IRANIAN RELATIONS (REFTEL).
THE NET RESULT HAS BEEN INCREASED SAUDI CONFIDENCE
AND LESS SHARP SAUDI SWINGS BETWEEN FEARS AND HOPES.
PRINCIPAL CHANGES INCLUDE: (A) CONTINUING CON-
FIRMATION OF IRAQI ABILITY TO HOLD THE IRANIANS ON
THE GROUND; (B) THE GROWING RELATIVE STRENGTH OF
THE IRAQI AIR FORCE AND NAVY; (C) THE "SANCTIFYING"
OF A BROAD RSAF AIR DEFENSE ZONE IMPLICIT IN THE
ABSENCE OF IRANIAN ATTACKS IN THE NORTHERN GULF
SINCE THE SAUDI SHOOTDOWN LAST JUNE OF AN IRANIAN
F-4 OR TWO (THOUGH IRAN MAY BE MOUNTING A NEW TEST
ON THIS FRONT); (D) DEVELOPMENT OF SOME SKEPTICISM
ABOUT ALLEGED "FAVORABLE TRENDS" IN IRAN, FOLLOWING
GREATER EXPERIENCE WITH IRANIAN PLOYS DESIGNED TO
DISTANCE GCC COUNTRIES FROM IRAQ OR TO GAIN GREATER
INTERNATIONAL SUPPORT OR SYMPATHY BY APPEARING
"REASONABLE" ON SUCH HUMANITARIAN QUESTIONS AS
BOMBING CITIES (WHILE REFUSING TO DISCUSS A GENERAL
SETTLEMENT); (E) THE DULLING OF THE ALLURE OF
IRAN'S REVOLUTION AS THE STALEMATE CONTINUES AND
APPEARS INCREASINGLY UNFAVORABLE TO IRAN; (F)
THE APPOINTMENT OF A DYNAMIC NEW RULING-FAMILY
GOVERNOR IN THE EASTERN PROVINCE; (G) THE APPARENT
FIRMING OF KUWAITI RESOLVE (BUT INCREASED CONCERN
ABOUT THE UAE AND, PERHAPS, OMAN); AND (H) THE CHANGING
FINANCIAL RELATIONSHIP AS COMPLETION OF IRAQ'S MAJOR
NEW/EXPANDED PIPELINES NEARS.

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FEARS AND HOPES
--------------


4. IT HAS NOT BEEN LONG SINCE A LITTLE BAD NEWS--
AN IRANIAN OFFENSIVE OR A FEW IRANIAN OR IRAQI
ATTACKS ON SHIPPING--WOULD SEND THE SAG INTO A
MOMENTARY NEAR-PANIC, IN WHICH IT WOULD RAISE SUCH
QUESTIONS AS WHAT "MILITARY MOVES" THE USG MIGHT
MAKE TO HELP ASSURE SECURITY IN THE GULF. THIS
IS NO LONGER TRUE. THE SAUDIS, REPORTEDLY ALONG
WITH OTHER GCC OFFICIALS ATTENDING THE MARCH 1985
GCC MINISTERIAL CONFERENCE, CERTAINLY EXPERIENCED
UNEASY MOMENTS DURING THE RECENT IRANIAN OFFENSIVE
IN THE HAWAIZAH MARSHES, AND HAD THE IRAQIS BROKEN,
WOULD HAVE SEEN THEMSELVES BACK IN THE BAD OLD
DAYS OF 1982-83, WITH THEIR WORST FEARS ALL BUT
REALIZED. AS THE IRAQIS DID NOT BREAK, HOWEVER,
SUCH FEARS HAVE RECEDED AND THE BASIS FOR SAUDI
CONFIDENCE HAS BEEN REAFFIRMED.


5. THE SAUDIS' "WORST FEARS," OF COURSE, ENTAIL
A VISION OF A TRIUMPHANT REVOLUTIONARY IRAN LOOMING
MENACINGLY OVER KUWAIT AND OVER SAUDI ARABIA
ITSELF. ITS OTHER FEARS INCLUDE A DIRECT IRANIAN
ATTACK OF SOME SORT, AN ESCALATION THAT WOULD
DRAW SAUDI ARABIA OR SMALLER GULF COUNTRIES INTO
THE WAR, IRANIAN-DIRECTED SUBVERSION AGAINST
SAUDI ARABIA, AND IRANIAN-DIRECTED SUBVERSION
AGAINST ONE OR MORE OF THE SMALLER GULF STATES.
ALL OF THESE FEARS HAVE DIMINISHED, WITH THE
PARTIAL EXCEPTION OF FEARS ABOUT SUBVERSION.


6. THE RISK OF ESCALATION, TOO, HAS GROWN LESS
FEARSOME. IRAN HAS RESPECTED THE SAUDI-DECLARED
AIR DEFENSE ZONES SINCE SAUDI F-15'S SHOOT DOWN
AN IRANIAN F-4 LAST JUNE. THIS FACT HAS EASED
SAUDI FEARS AND INCREASED SAUDI CONFIDENCE IN
THEIR ABILITY TO DETER DIRECT IRANIAN ATTACKS.
THIS REMAINS TRUE DESPITE QUESTIONS ABOUT THE
IMPLICATIONS OF THE SOMEWHAT MYSTERIOUS JUNE 1
ATTACK ON THE CONTAINER VESSEL "ORIENTAL IMPORTER"
IN THE NORTHERN GULF, AND SPECULATION IN INDUSTRY
CIRCLES THAT IF THE ATTACK REPRESENTS A NEW
TURN IN IRANIAN TACTICS, IT MAY BRING A NEW
CONFRONTATION BETWEEN IRANIAN AIRCRAFT AND THE RSAF.
THE SAUDIS HAVE SEEN NUMEROUS UPS AND DOWNS IN THE
TANKER WAR, AND HAVE SEEN THE TANKER WAR ATTACKS
SETTLE INTO A PATTERN OF IRAQI ATTACKS SOUTH OF
KHARG AND IRANIAN REPRISALS EAST OF QATAR, OUTSIDE
THE ZONE COVERED BY RSAF CAPS. IN THESE ZONES
ATTACK FREQUENCY MAY WAX AND WANE, BUT THE SAG NO
LONGER GREATLY FEARS THAT THESE ATTACKS WILL
ESCALATE OR SPREAD THE CONFLICT. IT HAS ALSO SEEN
THAT THE EFFECTS ON AVAILABILITY OF VESSELS IN THE
GULF AND ON INSURANCE RATES ARE FAR LESS DRASTIC
THAN PREVIOUSLY FEARED. THE SAG WAS ANNOYED AND
PUZZLED BY IRAQI ATTACKS IN MARCH IN THE VICINITY
OF RAS TANURA LIGHT, BUT APPARENTLY TOOK THIS UP
WITH BAGHDAD AND WAS SATISFIED WITH THE RESPONSE.
IF IRAN DOES MOUNT FURTHER ATTACKS IN THE AREA OF
THE ATTACK ON THE "ORIENTAL IMPORTER," WE BELIEVE
THE RSAF WOULD AGAIN ATTEMPT TO RESPOND, AND THAT
A SUCCESSFUL RESPONSE WOULD PROBABLY BRING A HALT
IN THE NEW IRANIAN ATTACKS. IF THE RSAF SHOULD
INITIALLY FAIL, OF COURSE, THE GULF COULD SEE SOME
TENSE DAYS.


7. IRANIAN-DIRECTED OR INSPIRED SUBVERSION AGAINST
SAUDI ARABIA, WHILE IT REPRESENTS A POSSIBILITY THAT
WILL NEVER BE TREATED LIGHTLY HERE, NEVERTHELESS
NO LONGER AMOUNTS TO A BUGABOO, THOUGHTS OF WHICH
AWAKEN SAUDI LEADERS AT NIGHT. THE FIRM, NOT
TO SAY BRUTAL, HANDLING OF THE 1979 DISTURBANCES
IN QATIF AND AL-HASA, CONTINUING CLOSE SURVEILLANCE
OF THE SHI'A, CLEAR WARNINGS OF THE REACTION THAT
MAY BE ANTICIPATED TO FUTURE DISTURBANCES, SOME-
TIME TRAVEL CONTROLS ON SHI'A, AND OCCASIONAL
ARRESTS ALL GIVE SAUDI AUTHORITIES CONFIDENCE
THAT THEY HAVE THE SITUATION WELL IN HAND. THE
STICK BEING HIGHLY VISIBLE, THE SAG HAS BROUGHT
FORTH A FEW CARROTS OF LATE, DEVOTING SOME
RESOURCES TO IMPROVING THE LOT OF THE EASTERN
PROVINCE SHI'A. IT APPEARS LIKELY THAT NEW
EASTERN PROVINCE AMIR MUHAMMAD IBN FAHD, HAVING
MADE AN EARLY AND FAVORABLY RECEIVED OPENING
TO THE SHI'A, WILL ATTEMPT TO COME UP WITH MORE
CARROTS. NEITHER STICKS NOR CARROTS HAVE
GREAT MEANING, OF COURSE, TO SHI'A IN LOVE WITH
MARTYRDOM, BUT EVIDENCE IS LACKING THAT MORE THAN
A FEW IN THE EASTERN PROVINCE SHARE THIS DEGREE
OF FANATICISM WITH THEIR IRANIAN CO-RELIGIONISTS.
THE SAG SUSPECTS, OF COURSE, A DIRECT OR INDIRECT
IRANIAN HAND IN THE TWO RECENT EXPLOSIONS IN
RIYADH, AND IS CONCERNED ABOUT THE EFFECTS OF
SUCH INCIDENTS ON THE SENSE OF SECURITY THAT IS
CONSIDERED, BY SAUDIS AND EXPATRIATES ALIKE, A
MAJOR BENEFIT OF (OR COMPENSATION FOR) LIFE IN
SAUDI ARABIA.
-

8. THE ANNUAL HAJJ OF COURSE PROVIDES THE OTHER
SOURCE OF SAUDI ANXIETY ABOUT IRANIAN TROUBLEMAKING.
THE SAUDIS GAINED MUCH CONFIDENCE LAST YEAR WHEN
THEY HANDLED 150,000 IRANIAN PILGRIMS WITH CON-
SIDERABLE SUCCESS. THE SINGLE MAJOR INCIDENT,
A FRACAS BETWEEN IRANIAN AND IRAQI PILGRIMS, WAS
HANDLED WITH DESPATCH, AND THE SAUDIS FIRMLY
REJECTED IRAN'S PROTEST AND OFFERED THEIR OWN
PUBLIC ACCOUNT OF THE EVENTS. NEVERTHELESS, HAJJ
SECURITY DEEPLY CONCERNS THE SAG, AND IT IS MAKING
PREPARATIONS TO HANDLE THE PROBLEMS THAT ARE
ANTICIPATED. NEGOTIATIONS OVER THE SIZE OF THIS
YEAR'S IRANIAN HAJJ INFLUX HAVE, ACCORDING TO SIRO,
BEEN CONCLUDED, AND THE NUMBER OF IRANIAN PILGRIMS
AGAIN SET AT 150,000. SAUDI SECURITY OFFICIALS
UNDOUBTEDLY URGED THAT THE NUMBERS BE KEPT DOWN.
THE POLITICAL LEADERSHIP MAY HAVE DECIDED TO SEEK,
THROUGH AGREEING TO RECEIVE A LARGER NUMBER,
IMPLICITLY TO PUT THE LIE TO IRANIAN CHARGES
THAT THE AL SAUD ARE UNWORTHY CUSTODIANS OF THE
HOLY CITIES. WERE A PROMINENT CLERIC TO AGREE
TO HEAD THE OFFICIAL IRANIAN DELEGATION, THAT
MESSAGE WOULD BE UNDERSCORED.


9. THE POSSIBILITY OF IRANIAN SHENANIGANS IN THE
SMALL STATES OF THE GULF CONTINUES TO HAUNT THE
SAUDI OFFICIAL PSYCHE. THERE WAS GREAT CONCERN
HERE, OF COURSE, ABOUT THE BAHRAIN PLOT DISCOVERED
IN DECEMBER OF 1982, AND ALSO ABOUT THE PLOT IN
QATAR IN THE SUMMER OF 1983 (THOUGH THERE WERE
SUGGESTIONS, AS WE RECALL, THAT THAT MAY HAVE
INVOLVED LIBYAN ADVENTURISM). CONTINUING CONCERN
ABOUT THE STEADFASTNESS OF THE KUWAITI AUTHORITIES
HAS BEEN ASSUAGED SOMEWHAT BY KUWAIT'S RESPONSE
TO THE DECEMBER 1983 BOMBINGS AND THE HIJACKING
LATE LAST YEAR, AND BY WHAT IS PERCEIVED HERE AS
KUWAIT'S GENERALLY FIRMER SECURITY POLICY,
INCLUDING ITS INCREASED INTEREST IN GCC MILITARY
COOPERATION. (SIRO NOTES THAT THE SAG ADVISED
THE GOK EITHER TO EXECUTE THE PRISONERS IT HELD
IN CONNECTION WITH THE DECEMBER 1983 BOMBINGS OR
TO LET THEM GO, TO AVOID FUTURE PROBLEMS.)
IRAN IS GENERALLY CONSIDERED TO BE IMPLICATED,
DIRECTLY OR INDIRECTLY, IN THE RECENT ATTEMPT ON
THE LIFE OF THE AMIR OF KUWAIT. THE SAG LEADERSHIP
SEEMED SHOCKED BY THIS ATTEMPT, GUT IN RETROSPECT
APPEARS RELIEVED THAT THE SHOCK ADMINISTERED TO
KUWAIT'S BODY POLITIC IS PROVING A SALUTARY ONE,
FURTHER FIRING KUWAITI DETERMINATION TO STRENGTHEN
ITS SECURITY. THE SAG APPEARS SOMEWHAT CONCERNED
ABOUT THE POLITICAL DRIFT IN THE UAE AND THE
INCREASED IRANIAN ACTIVITY THERE.


10. SAUDI HOPES CONCERNING POSSIBLE POSITIVE
DEVELOPMENTS IN IRAN, NEVER GREAT, ARE NOW VERY
MODEST INDEED. THE SAUDIS HAVE EXPERIENCED
OCCASIONAL SURGES OF HOPE ABOUT APPEARANCES OF
RELATIVE MODERATION AND REASONABLENESS IN IRAN,
AND THE NEED TO NURTURE ANY SEEDS OF SUCH MODERA-
TION. THIS OCCURRED, FOR EXAMPLE, AFTER LAVASANI'S
VISIT LAST SUMMER. BUT THESE HOPES HAVE TURNED
TO DUST. THE SAUDIS SAW IRAN APPEAR TO STIMULATE
A GCC INITIATIVE LAST SUMMER AND THEN HOLD BACK.
THEY ALSO SAW JAPAN STIMULATED BY IRANIAN OFFICIALS
TO TAKE A SPECIFIC INITIATIVE WHICH IRAN THEN
REBUFFED. THE IRAQIS PREDICTED THIS FAILURE. THE
SAUDIS FIRST BELIEVED THE IRAQI ANALYSIS AND THEN
SAW IT CONFIRMED. IT IS NOT THAT THE SAUDIS SEE NO
SIGNS OF MODERATION IN IRAN, BUT RATHER THAT THEY
NOW SHARE THE IRAQI ANALYSIS THAT THAT MODERATION
CAN ONLY EXPAND UNDER PRESSURE, MILITARY AND
DIPLOMATIC PRESSURE THAT OVER TIME MAY CONVINCE
THE IMMODERATE MAJORITY OF IRANIAN LEADERS THAT
THEIR INTRANSIGENCE IS LEADING ONLY TO INCREASING
FAILURE: PRESSURE, IN OTHER WORDS, THAT IN TIME
MAY PROVE THE MODERATES CORRECT. FURTHERMORE,
THE SAUDIS UNDERSTAND THAT IT IS A VERY LONG ROAD
INDEED FROM IRAN'S PRESENT FUNDAMENTAL, THEOLOGICAL
HOSTILITY TO THE AL SAUD REGIME TO A DEGREE OF
MODERATION THAT WOULD MAKE IRAN A TOLERABLY SAFE
NEIGHBOR. THUS, THEY SUFFER LITTLE TEMPTATION
TO GRASP AT STRAWS.


11. THE SAG, WE BELIEVE, NOW SHARES ALL BUT TOTALLY
THE IRAQI ANALYSIS OF THE IRANIAN SITUATION AND OF
THE IMPLICATIONS OF THAT SITUATION FOR BOTH IRAQI
AND SAUDI POLICY. WE DETECT NO DAYLIGHT, FOR
EXAMPLE, BETWEEN SAUD'S LINE ON THE WAR AND THAT
OF TARIQ AZIZ. THE FORMER HAS IN RECENT MONTHS
PRESSED FOR CONTINUED AND INCREASED U.S. EFFORTS
TO STANCH ARMS FLOW TO IRAN AND HAS MADE SUCH
EFFORTS HIMSELF. HE HAS ALSO BRUSHED ASIDE
EXPRESSIONS OF CONCERN ABOUT ESCALATION ARISING
FROM THE SHIPPING WAR, ARGUING THAT THE IRAQIS
MUST KEEP UP THE PRESSURE ON IRAN.

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PATIENCE
--------------


12. WITH THIS LOWERING OF HOPES AND FEARS, SAUDI
POLICY TOWARD IRAN IS CHARACTERIZED BY GREATER
PATIENCE. THE IRAQIS HAVE CONVINCED THE SAG THAT
PATIENT APPLICATION OF PRESSURE IS THE ONLY WAY
TO END THE WAR. IN THIS SITUATION, WITH THE IRAQIS
BEARING THE DIRECT BURDEN, SAUDI PATIENCE--A
DOMINANT CHARACTER TRAIT FROM EARLY TIMES--HAS
COME TO THE FORE. THE SAG DOES NOT SEE THE WAR
AS RISK-FREE, OF COURSE, AND WOULD PREFER TO SEE
IT EDGE TOWARD NEGOTIATED SETTLEMENT. EVEN A
SMALL POSSIBILITY OF CONFLAGRATION, AFTER ALL,
DISCOMFITS SAUDIS INTENSELY. STILL, AS THE THREAT
APPEARS TO BE CONTAINED AND TO BE LOSING FORCE, THE
SAUDIS CAN RAISE THEIR HEADS AND SEE THAT ALL IS
NOT GRIM. A SOLUTION IS ESSENTIAL, BUT THE SAG
IS NOT EAGER, FOR EXAMPLE, TO SEE AN EARLY RETURN
OF LARGE VOLUMES OF IRANIAN AND IRAQI OIL TO THE
WORLD MARKET. WE BELIEVE THE SAUDIS SEE GRADUAL
MOVEMENT TOWARD PEACE AS PREFERABLE TO AN EARLY
FRAGILE SETTLEMEN1 OR TO CONFLICT CONTINUED AT THE
CURRENT LEVEL. AN IRAQ FREE OF THE WAR WITH IRAN,
FURTHERMORE, COULD REPRESENT A GREATER THREAT TO
THE SAUDIS AND THEIR GCC BRETHREN. HOWEVER, WE
BELIEVE THE SAG WOULD CONCUR IN EMBASSY BAGHDAD'S
INSIGHT THAT IRAQ IS NOT LIKELY TO SEEK TO ASSERT
INFLUENCE THROUGH A RETURN TO SUBVERSION OR
TERRORISM, SINCE IRAN WOULD BE THE MORE LIKELY
BENEFICIARY OF INSTABILITY IN THE GULF STATES.

---
OIL
---


13. WE DO NOT BELIEVE THAT IN PRESENT CIRCUMSTANCES
SAUDI OIL POLICY IS SIGNIFICANTLY AFFECTED BY
CONCERN FOR ITS RELATIONS WITH IRAN, NOR THAT
SAUDI-IRANIAN RELATIONS IN THE ENERGY FIELD ARE
CURRENTLY A VITAL OR MAJOR COMPONENT OF OVERALL
RELATIONS. WHILE THE PRICE OF OIL USED TO BE
(OR AT LEAST APPEAR TO BE) A BONE OF CONTENTION
BETWEEN SAUDIS AND IRANIANS, BOTH BEFORE AND
AFTER THE REVOLUTION, THIS IS NOW A MINOR THEME.
SAUDI ACCEPTANCE OF MOST OF THE BURDEN OF THE
CURRENT SLACK MARKET APPEARS TO HAVE EARNED A
MEASURE OF GRUDGING IRANIAN APPRECIATION, DESPITE
OCCASIONAL IRANIAN GRUMBLING ABOUT LOWER PRICES
AND ABOUT SAUDI RELUCTANCE TO CARRY THE WHOLE
BURDEN. THE SAUDIS, HOWEVER, FOLLOW THIS
POLICY NOT TO EARN IRANIAN KUDOS, BUT BECAUSE
THEY PERCEIVE IT AS THE LEAST DAMAGING IN TERMS
OF THEIR OWN CONCERNS ABOUT SHORT- AND LONG-TERM
REVENUES AND ABOUT THE PRESERVATION OF OPEC. IT IS
A MEASURE OF THE LOW PROFILE OF OIL POLICY IN
BILATERAL RELATIONS THAT DURING HIS MAY 8 VISIT TO
RIYADH, IRANIAN MINISTER FOR OIL AND OLYMPICS
GHAFURI-FARD MET WITH FOREIGN MINISTER SAUD AND
WITH DEFENSE MINISTER SULTAN, BUT DID NOT MEET WITH
YAMANI. IRAN IS DOUBTLESS ANGERED AND FRUSTRATED
BY SAUDI ASSISTANCE TO IRAQ IN THE FORM OF OIL
EXPORTED ON IRAQI ACCOUNT AND PERMISSION TO BUILD
AN OIL PIPELINE CONNECTING IRAQ'S SOUTHERN FIELDS
TO THE SAUDI EAST-WEST PIPELINE, WHICH MAY IN
TIME CONTRIBUTE TO FURTHER WEAKENING OF THE MARKET.
HOWEVER, GIVEN IRAN'S FUNDAMENTAL HOSTILITY TO THE
SAUDI MONARCHY, IRANIAN IRRITATION IN THIS RESPECT
IS A MARGINAL CONSIDERATION THAT APPEARS TO HAVE
HAD LITTLE VISIBLE EFFECT ON EITHER SAUDI OR
IRANIAN ACTIONS. IN SUM, SAUDI OIL POLICY IS
NOT DICTATED BY CONCERN ABOUT EARNING THE GRATITUDE
OR THE HOSTILITY OF IRAN, BUT RATHER BY CONSIDERA-
TIONS INVOLVING THE WELFARE OF SAUDI ARABIA AND
OF THE INTERNATIONAL ECONOMIC SYSTEM IN WHICH
SAUDI ARABIA HAS INVESTED HEAVILY, AND BY THE
PERCEIVED NECESSITY OF AIDING IRAQ. FURTHERMORE,
THE SAG FULLY UNDERSTANDS THAT THE BASIC HOSTILITY
OF THE CURRENT IRANIAN REGIME HAS ROOTS DEEPER
THAN PASSING CONSIDERATIONS OF OIL POLICY.

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POLICY
--------------


14. THE PRESCRIPTION THAT THE SAUDIS SEE IN ALL
THIS FOR SAG POLICY TOWARD IRAN IS NOT ONE OF
ACTIVISM. THE MESSAGE THEY WISH TO SEND TO IRAN
IS THAT THEY (AND OTHER GCC STATES) CANNOT BE
SEPARATED FROM IRAQ WHILE THE WAR LASTS, BUT THAT
THEY ARE ALWAYS READY TO TALK AND WILL BE READY
TO IMPROVE RELATIONS AFTER THE WAR ENDS. THE
SAUDIS HAVE A SMALL EMBASSY IN TEHRAN--THREE TO
FOUR OFFICERS AND THEIR WELL-REGARDED CHARGE,
MARWAN AL-ROUMI. IRAN HAS ITS SMALL EMBASSY--A
CHARGE AND THREE OFFICERS, CLOSELY WATCHED--IN
JEDDAH. SIRO REPORTS THAT IRAN HAS NOW OBTAINED
AN EMBASSY BUILDING IN RIYADH, WHERE IT HAS STATIONED
AT LEAST ONE PERSON SO FAR. HIGH-LEVEL IRANIAN
EMISSARIES ARE WELCOMED; SAUD PROMPTLY AGREED TO
VISIT TEHRAN, WHEN IRAN OFFERED TO RECEIVE HIM
PUBLICLY, AND HE ISSUED A RECIPROCAL INVITATION
WHICH VELAYATI HAS NOW ACCEPTED. SAG POLICYMAKERS
WITH REGARD TO IRAN AND THE IRAN-IRAQ WAR, AS ON ALL
OTHER SUBJECTS VITAL TO SAUDI ARABIA, ARE THE KING,
CROWN PRINCE ABDALLAH, PRINCE SULTAN, AND PRINCE
NAIF. WE HAVE SEEN NO CLEAR EVIDENCE OF IMPORTANT
DIFFERENCES OF VIEW AMONG THE FOUR OF THEM. THEY
APPEAR TO BE IN COMPLETE AGREEMENT, FOR EXAMPLE,
ON THE BASIC HOSTILITY OF THE IRANIAN REGIME AND
THE THREAT IT CONTINUES TO CONSTITUTE FOR THE
AL SAUD. THEY APPEAR AGREED ON THE NEED TO BE FIRM
BUT NOT FOOLHARDY TOWARD IRAN, AS DEMONSTRATED
IN LAST SUMMER'S SHOOTDOWN OF AT LEAST ONE IRANIAN
F-4, FOLLOWED BY PUBLIC ANNOUNCEMENT OF THE RSAF'S
RULES OF ENGAGEMENT AND A CONCILIATORY STANCE
TOWARD IRAN. THERE HAVE BEEN HINTS IN THE PAST
THAT CROWN PRINCE ABDALLAH MAY FLIRT WITH THE
IRANIAN EXILE OPPOSITION, BUT THIS WOULD APPEAR
LITTLE MORE THAN KEEPING IN TOUCH.


15. THE SAUDIS WOULD OF COURSE WISH, ON BEHALF ALSO
OF THEIR GCC ALLIES, TO DISCUSS A BROAD RESOLUTION
OF THE CONFLICT--NOT LIMITED MEASURES SUCH AS A
HALT TO BOMBING CITIES OR TANKERS. THE SAG STANDS
READY--PREFERABLY THROUGH THE GCC OR THE OIC--TO
PROMOTE MEDIATION WHENEVER THERE ARE CLEAR SIGNS
THAT IRANIAN INTRANSIGENCE HAS ABATED SUFFICIENTLY
TO OFFER SERIOUS HOPE OF PROGRESS. THEY ARE ALSO
ACTIVE, OF COURSE, IN URGING OTHERS TO WITHHOLD
ARMS FROM IRAN OR TO PRESS IRAN TO MOVE TOWARD
NEGOTIATION. IN THE MEANTIME, THEY WILL CONTINUE
SUPPORTING IRAQ FINANCIALLY AND DIPLOMATICALLY,
WHILE MAKING IT CLEAR THAT THEY WISH TO SEE IRAN
EMERGE FROM THE CONFLICT INTACT AND VIABLE, AND
THEY MAY BE WILLING TO CONTRIBUTE RESOURCES TOWARD
RECONSTRUCTION, IF THAT WOULD CONTRIBUTE TO A
SETTLEMENT. SAUDIS WILL NEVER LIKE OR TRUST THE
IRANIANS--THEY DID NOT DO SO EVEN BEFORE THE REVOLU-
TION WHEN AT LEAST THEY BELIEVED THERE WERE MAJOR
SHARED INTERESTS--BUT THEY REMAIN ACUTELY CONSCIOUS
OF THE LONG-TERM NEED TO LIVE WITH THEIR LARGE AND
UNRULY NEIGHBOR, AND ARE CONFIDENT THAT, FOR THE
MOMENT, THEY HAVE FOUND THE BEST FORMULA FOR
MOVING MATTERS, HOWEVER SLOWLY, IN THAT DIRECTION.


16. A NUMBER OF FACTORS IN AND ASPECTS OF CURRENT
SAUDI-IRANIAN RELATIONS MERIT SPECIAL MENTION, AT
LEAST IN PASSING:

-- LEBANON: SAG REACTION TO THE GROWTH OF IRANIAN
INFLUENCE IN LEBANON HAS BEEN FUNDAMENTALLY ONE
OF CONCERN, TEMPERED BY A MEASURE OF CONFIDENCE
THAT SYRIA COULD AND WOULD KEEP THE SITUATION FROM
GETTING OUT OF HAND. EMOTIONAL REACTIONS OF
INDIVIDUAL SAUDIS, UP TO AND INCLUDING HIGH
GOVERNMENT OFFICIALS, HAVE BEEN SHARP AND CON-
FLICTING. THE SPECTACLE OF THE "LEBANESE NATIONAL
RESISTANCE" DRIVING THE ISRAELIS FROM SOUTHERN
LEBANON HAS ACCELERATED PULSES AND SWELLED BREASTS
AND THE "BRIDE OF THE SOUTH" WAS EMBRACED HERE AS A
TRUE MUSLIM (BUT NOL "SHI'A") AND ARAB HEROINE. AT
THE SAME TIME THE GROWING POWER OF LEBANON'S SHI'A
AND HIZBALLAH/ISLAMIC JIHAD TERRORISM HAS BRED
DISQUIET, WHILE IN RECENT DAYS, AMAL'S CAMPAIGN
AGAINST THE PALESTINIAN CAMPS HAS ENGAGED SAUDI
SYMPATHIES FOR THE PALESTINIANS AND REIGNITED
SMOLDERING SAUDI DISLIKE AND DISTRUST OF THE SHI'A.
THE RETURN OF KIDNAPPED SAUDI CONSUL FARRASH AND
THE EXPLOSION OF TWO BOMBS IN RIYADH AS FOREIGN
MINISTER SAUD VISITED TEHRAN ARE INEVITABLY READ
HERE, CORRECTLY OR INCORRECTLY, AS A CRUDE ATTEMPT
TO SEND A MESSAGE ABOUT IRAN'S ABILITIES TO REWARD
OR PUNISH. IN SHORT, IRAN IN LEBANON IS A SOURCE
OF CONTINUING BUT CURRENTLY CONFUSED CONCERN HERE.

-- SYRIA: SYRIA'S CONTINUED DIPLOMATIC AND LOGIS-
TICAL SUPPORT FOR IRAN REMAINS A MAJOR FOREIGN
POLICY PROBLEM FOR THE SAUDIS AND THEIR GCC ALLIES.
SYRIAN INTRANSIGENCE DESPITE REPEATED SAUDI
ENTREATIES, NOTABLY BY CROWN PRINCE ABDALLAH,
CONTINUES TO MAKE A MOCKERY OF THE IDEAL OF ARAB
UNITY; TO ADD TO THE BURDENS IRAQ AND SAUDI ARABIA
BEAR AS THEY CONFRONT REVOLUTIONARY IRAN; AND
THROUGH THE SUPPLY OF ARMS (POSSIBLY INCLUDING THE
TRANSSHIPMENT OF SCUD MISSILES),TO PROLONG THE
WAR. ALTHOUGH THE GREATEST IMPEDIMENT TO CONVENING
THE LONG-OVERDUE ARAB SUMMIT MEETING IN RIYADH IS
THE DISPUTE OVER THE LEGITIMACY OF ARAFAT'S LEADER-
SHIP OF THE PLO (AN ISSUE ON WHICH THE SAUDIS AND
SYRIANS ARE ALSO IN OPPOSITE CAMPS),SYRIAN
SUSTENANCE OF THE IRANIAN WAR EFFORT ALSO PRE-
CLUDES THE HOLDING OF A SUCCESSFUL SUMMIT. THE
REPEATED POSTPONEMENTS HAVE BEEN POLITICALLY
AWKWARD FOR THE SAUDIS AND PERSONALLY EMBARRASSING
TO KING FAHD; ARAB DISARRAY DUE IN PART TO THE
SYRIAN STANCE TOWARD THE IRAQ/IRAN WAR HAS, FINALLY,
FURTHER COMPLICATED ARAB EFFORTS TO ELABORATE A
COMMON STAND VIS-A-VIS ISRAEL, BUILDING ON THE FEZ
PRINCIPLES.

-- DIPLOMACY/MEDIATION: THE SAG CONTINUES TO
SUPPORT IN PRINCIPLE ALL MEDIATION EFFORTS, DESPITE
ITS REALISTIC APPRECIATION THAT THEY WILL CONTINUE
TO PROVE FUTILE UNTIL IRAN FINDS ITSELF UNABLE
TO ESCAPE THE CONCLUSION THAT IT MUST SEEK A
NEGOTIATED SETTLEMENT. IN PARTICULAR, THE SAG
CONTINUES IN A LOW-KEY MANNER TO ENCOURAGE AND
PARTICIPATE IN EFFORTS OF THE OIC, THE GCC AND THE
ARAB LEAGUE, AS IT CONTINUES TO CULTIVATE RELATIONS
AND MAINTAIN A LIMITED DIALOGUE ON THE WAR WITH
NATIONS IT SEES AS POSSIBLE MEDIATORS WHEN THE
TIME IS RIGHT, PRINCIPALLY TURKEY, PAKISTAN, SYRIA
AND ALGERIA. SAUDI ARABIA AND ITS GULF ALLIES HAVE
FOUND THE SECURITY COUNCIL RECEPTIVE TO THEIR
EFFORTS TO STIGMATIZE AND ISOLATE IRAN BECAUSE OF
ITS PROSECUTION OF THE WAR BUT HAVE RESIDUAL DOUBTS
ABOUT MEDIATION BY THE SECRETARY GENERAL, WHO AT
LEAST UNTIL HIS GULF SWING AND VISIT TO TEHRAN WAS
SEEN AS UNCONCERNED ABOUT ENDING THE WAR AND BIASSED
TOWARD TEHRAN.

-- PROPAGANDA: AN FSN WHO HAS BEEN MONITORING
ARABIC-LANGUAGE BROADCASTS FROM IRAN REPORTS THAT
IRANIAN PROPAGANDA HAS CONTINUED UNABATED IN RECENT
WEEKS, WITH NON-STOP ATTACKS ON GULF REGIMES AND
THEIR SUPPORT FOR IRAQ, ON THE EGYPTIAN GOVERNMENT
OF HOSNI MUBARAK, ON KING HUSSEIN, ON THE U.S. AND
ON ISRAEL. ATTACKS ON THE SAG, HOWEVER, DROPPED
OFF SHARPLY DURING AND AFTER FOREIGN MINISTER SAUD'S
MAY 18-20 VISIT TO TEHRAN AND CONTINUE TO BE HELD
IN ABEYANCE. WE BELIEVE AN FBIS READING ON IRANIAN
PROPAGANDA WOULD BE USEFUL, BUT OUR FSN'S READING
SEEMS TO US CONSISTENT WITH IRAN'S CURRENT EFFORT
TO VEIL THE UNCOMPROMISING IDEOLOGY THAT HOLDS SWAY
THERE WITH DIPLOMATIC CIVILITY AND MERELY VERBAL
FLEXIBILITY.

-- RELIGIOUS AND SOCIAL ATTITUDES, ELITE AND POPULAR:
AT THE LEVEL OF THE ULEMA AND OTHER ISLAMICALLY-
EDUCATED SAUDIS, WE PERCEIVE A DIVISION OF THOUGHT
AND FEELING BETWEEN REGARDING THE IRANIANS AND
OTHER SHI'A AS BROTHER MUSLIMS, WITH WHOM THE
TIES OF SHARED VALUES ARE STRONGER THAN THEIR
DIFFERENCES, AND A DEEPER AND STRONGER STRAIN OF
SUSPICION BASED ON THE PERCEPTION THAT SHI'A
BELIEFS ARE FUNDAMENTALLY HERETICAL, ALMOST NOT
TRULY MONOTHEISTIC, AND THAT THEY CONTAIN IN FACT
SOCIAL AND POLITICAL STRAINS DEEPLY HOSTILE TO
SUNNI ARAB SOCIETIES. SUCH SENTIMENTS ARE SHARED
IN CRUDER FORM AT MORE POPULAR LEVELS AND ARE OF
COURSE MIRRORED ON THE OTHER SIDE OF THE GULF.
THE RELIGIOUS AND SOCIAL ANTIPATHIES INVOLVED ARE
NEVER FAR FROM THE SURFACE AND WILL NOT DISAPPEAR.
IN SAUDI ARABIA THEY ARE, OF COURSE, SOMETIMES
EXACERBATED BY THE ALWAYS UNCOMFORTABLE, AT TIMES
TENSE, RELATIONS BETWEEN SUNNIS AND THE DISCRIMINATED-
AGAINST ARAB SHI'A MINORITY.

-- THE SOVIET UNION AND AFGHANISTAN: CONIINUING
SAUDI CONCERN ABOUT SOVIET INTENTIONS KEEPS ALIVE
SAUDI DISQUIET ABOUT THE POSSIBILITY OF IRAN-SOVIET
RAPPROCHEMENT; AND ALTHOUGH SAUDI AFGHAN POLICY
FOCUSES ON PAKISTAN AND THE AFGHAN MUJAHIDEEN,
THE SAG COULD BE EXPECTED TO BECOME CONCERNED AT
ANY HINT THAT IRAN MIGHT DISCOMFIT AFGHAN REFUGEES
OR HINDER THE RESISTANCE IN ORDER TO AVOID
DIFFICULTIES WITH THE USSR. FOR THE MOMENT, WE
BELIEVE, THE SAG IS REASONABLY CONFIDENT THAT THE
SAME POWERFUL IDEOLOGY THAT LEADS IRAN TO REJECT
A NEGOTIATED PEACE WILL PREVENT ANY SIGNIFICANT
SACRIFICE OF MUJAHIDEEN INTERESTS TO AN ACCOMMO-
DATION WITH THE USSR. IF, HOWEVER, A GROWING
PERCEPTION BY IRAN OF A FAILURE OF ITS WAR EFFORT
FORCES GRADUAL MODIFICATION OF IRANIAN POLICY IN
MORE PRAGMATIC DIRECTIONS, SUCH AS GREATER RECEP-
TIVENESS TO A NEGOTIATED SOLUTION, A POSSIBLE SIDE
EFFECT COULD BE A MORE PRAGMATIC, ACCOMMODATIONIST
IRANIAN POLICY TOWARD THE SOVIET UNION, WHICH COULD
SIGNIFY A PERIOD OF GREATER RISK FOR THE AFGHAN
MUJAHIDEEN.

-- TRADE: SAUDI-IRANIAN TRADE, UNSURPRISINGLY,
REMAINS MINISCULE. SAUDI IMPORTS FROM IRAN IN
THE FIRST HALF OF 1984 AMOUNTED TO SR54.6 MILLION,
ALMOST ALL ACCOUNTED FOR BY CARPETS, NUTS, AND
DRIED FRUITS. SAUDI EXPORTS TO IRAN WERE SR51.5
MILLION IN 1980, UP TO SR43.8 MILLION IN 1981 AND
DOWN AGAIN TO SR22.6 MILLION IN 1982, THE LAST YEAR
FOR WHICH THE SAG PUBLISHED FIGURES FOR EXPORTS
TO IRAN. IN 1981 AND 1982, SAUDI EXPORTS TO IRAN
CONSISTED PRINCIPALLY OF UREA AND OTHER NITROGEN
FERTILIZERS. AN END TO THE WAR WOULD PROBABLY MEAN
AN INCREASE IN TWO-WAY TRADE, BUT PROBABLY NOT A
DRAMATIC ONE.


17. CONCLUSION: IF THE GULF WAR IS RESOLVED IN
TIME BY NEGOTIATION OR SETTLES INTO A LONG-TERM,
LOW-VIOLENCE STALEMATE, SOME ABATEMENT OF IRANIAN
REVOLUTIONARY FERVOR AND SOME ADJUSTMENT OF IRANIAN
REVOLUTIONARY IDEOLOGY WILL PROBABLY HAVE ACCOM-
PANIED SUCH DEVELOPMENTS. IF THIS OCCURS, LONG-
TERM PROSPECTS FOR CIVIL RELATIONS BETWEEN SAUDI
ARABIA AND IRAN MAY NOT BE BAD. THE TWO STATES
HAVE SOME PERMANENT COMMON INTERESTS THAT MAY
REASSERT THEMSELVES ONCE IRANIANS NO LONGER SEE
POLITICS PRIMARILY AS THEOLOGY. AFTER A PERIOD OF
FLIRTATION WITH STATISM IN IRAN, BOTH REGIMES
BASICALLY FAVOR PRIVATE ENTERPRISE. TRADE AND
EVEN INVESTMENT COULD GROW. BOTH STATES HAVE
ABUNDANT OIL RESERVES AND A CONCERN OR INTEREST
IN MAINTAINING OPEC SOLIDARITY. BOTH STATES, TOO,
WILL CONTINUE TO SHARE AN INTEREST IN PREVENTING
IRAQ FROM BECOMING TOO POWERFUL. (THIS OVER TIME
COULD DEVELOP INTO A SHARED INTEREST IN MAINTAINING
A THREE-WAY BALANCE OF POWER AMONG IRAQ, IRAN AND
THE GCC.) BOTH STATES, OBVIOUSLY FOR VERY DIFFERENT
REASONS, HAVE CONCERNS ABOUT SUPERPOWER INVOLVE-
MENT IN GULF AFFAIRS (ALTHOUGH THE SAUDIS CLEARLY
DO NOT OBJECT TO THE MODEST "OVER THE HORIZON"
U.S. NAVY PRESENCE AND THAT REPRESENTED BY THE
SHIPS OF COMIDEASTFOR). FINALLY, BOTH STATES SHARE
AN ANTIPATHY FOR THE SOVIET UNION AND DESIRE TO
MAKE THE PRICE IT IS PAYING IN AFGHANISTAN AS
HIGH AS POSSIBLE. IF THE IRANIAN URGE TO ACHIEVE
ITS GOALS BY MILITARY MEANS DECLINES AND IF
IRANIAN IDEOLOGY MODERATES IN THE FACE OF POLITICAL,
ECONOMIC AND MILITARY FRUSTRATION, THEN SUCH SHARED
VIEWS AND INTERESTS MAY AGAIN COME TO THE FORE.
THIS IS CLEARLY A SAUDI HOPE, AND A POSSIBILITY
THE SAG STRONGLY DESIRES TO KEEP ALIVE, EVEN AS
IT EMPHASIZES ITS PREEMINENT SHORT-TERM GOAL
OF HELPING AVOID AN IRAQI DEFEAT. END CONCLUSION.


SUDDARTH