C O N F I D E N T I A L STATE 244856

FOLLOWING BAGHDAD MRN 04277 DTG 26 JUL 90 SENT ACTION
SECSTATE WASHDC INFO ARAB LEAGUE COLLECTIVE BEING
REPEATED FOR UR INFO:

QUOTE : C O N F I D E N T I A L BAGHDAD 04277

E.O. 12356: DECL:OADR
TAGS: PREL, KU, IZ
SUBJECT: IRAQ BLINKS -- PROVISIONALLY

1. CONFIDENTIAL - ENTIRE TEXT.

2. SUMMARY. SADDAM HAS BLINKED: HOSTILE
REFERENCES TO KUWAIT HAVE DISAPPEARED FROM THE
MEDIA AND IRAQ WILL ATTEND A MEETING WITH
SENIOR KUWAITI OFFICIALS IN JEDDAH. BUT
ANTI-KUWAITI SENTIMENT CONTINUES STRONG HERE
AT ALL SOCIAL LEVELS, DRIVEN BY JEALOUSY,
BITTERNESS AND CONTEMPT. END SUMMARY.

WHAT DISPUTE?

3. AS FAR AS IRAQ'S GOVERNMENT-DIRECTED MEDIA
JULY 26 ARE CONCERNED, THE DISPUTE WITH KUWAIT
IS A "SUMMER CLOUD." GONE ARE THE HEADLINES
OUTLINING KUWAITI MISBEHAVIOUR, GONE ARE THE
AD HOMINEM ATTACKS ON KUWAIT FONMIN SABAH,
GONE ARE THE EDITORIALS OUTLINING IRAQ'S CASE.

4. INSTEAD, THE MEDIA FOCUS IS BACK ON DOMESTIC
AFFAIRS (THE DRAFT CONSTITUTION) AND THEY
HIGHLIGHT CONTINUING DIPLOMATIC ACTIVITY:

- SADDAM RECEIVING A PHONE CALL FROM MUBARAK.
(BUT MUBARAK IS NOT GIVEN CREDIT FOR MEDIATING
AND THERE IS NO/NO MENTION OF THE UPCOMING
KUWAIT-IRAQI MEETING IN JEDDAH).

- SADDAM'S ENVOYS DELIVERING THEIR MESSAGES IN
THE GULF AND MAGREB.

- SADDAM MEETING WITH ARAB LEAGUE SYG KLIBI TO
DISCUSS RECENT DEVELOPMENTS IN THE REGION AND
ARAB ARENA. (ALTHOUGH A PHOTOGRAPH OF KLIBI
WITH SADDAM MADE THE FRONT PAGES, THE MEDIA
(AND THE GOI) DOWNPLAYED HIS VISIT. HE WAS
SEEN OFF AT THE AIRPORT BY A MERE MFA UNDER
SECRETARY. KLIBI PROVES NOT TO BE A
MAHMUD RIAD, BUT THEN TUNISIA IS NOT EGYPT).

- SADDAM "SUMMONING" (VICE THE USUAL IRAQI
WORD "RECEIVING") THE AMERICAN AMBASSADOR,
FEATURED IN ALL THE MEDIA.

5. SIGNIFICANTLY, THE IRAQI MEDIA HAVE DROPPED
MENTION OF THE US/UAE JOINT EXERCISES. THE
ARMY'S DAILY "AL-QADISSIYAH" GIVES FRONT PAGE
COVERAGE TO JORDANIAN PRESS REPORTS LAUDING
SADDAM'S IDEA FOR ESTABLISHING AN ARAB FUND
(WHICH IS POPULAR IN JORDAN, EGYPT AND YEMEN)
AND CONDEMNING THE US NAVAL PRESENCE IN THE GULF.
EDITORIALS AND COMMENTARIES RETURN TO EARLIER
THEMES: THE DANGER OF SOVIET JEWISH IMMIGRATION
TO ISRAEL; THE NEED FOR ARAB UNITY; THE USG'S
DESIRE FOR HEGEMONY IN THE GULF.

IRAQ BLINKED

6. THAT SADDAM ACCEPTED MUBARAK'S MEDIATION
AND AGREED TO A MEETING OF OFFICIALS IN JEDDAH

REINFORCES OUR VIEW THAT THE CENTRAL ISSUE FOR
IRAQ IS REVENUE, NOT THE BORDER. EVEN BEFORE
THE OPEC MEETING BEGAN, THE GOI'S SABER-
RATTLING HAD BEEN A MAJOR FACTOR IN THE SHARP
RISE IN OIL PRICES. THEN AT ITS JULY 25
SESSION, OPEC REPORTEDLY CAME TOWARD THE IRAQI
POSITION, AGREEING TO A MINIMUM PRICE OF USD
20 PER BARREL. WE EXPECT THE GOI TO BE
TOUGH DURING THE OPEC MEETING TODAY (JULY 26)
AND TO STAND OUT FOR USD 25. BUT HAVING RAISED
KUWAITI APPREHENSIONS SO HIGH BY CRUDE TACTICS,
THE GOI MAY HOLD OUT FOR OTHER CONCESSIONS;
E.G., OPENING OF THE DIRECT AIR ROUTE TO
KUWAIT.

7. IRAQ MIGHT ALSO PRESS FOR FORGIVENESS OF
WAR DEBTS. THE IRAQIS HAVE TOLD US THAT THE
GOK (BUT NOT THE SAG) CARRY THESE DEBTS ON THE
BOOKS THEY SHOW TO INTERNATIONAL FINANCIAL
ORGANIZATIONS. IN FACT, WE HAVE FROM A
WESTERN EMBASSY, TWO SEPARATE SENIOR SAUDI
SOURCES SAYING KUWAIT RECENTLY TRIED TO
COLLECT USD TWO BILLION FROM IRAQ, EVEN
GIVING IRAQ A JULY 31 DEADLINE. THIS SURPRISING
STORY, SHOULD IT PROVE TRUE, WOULD SHED
CONSIDERABLE LIGHT ON THE IRAQI CONCLUSION
THAT KUWAIT IS NOT AS SYMPATHETIC TO IRAQI
FINANCIAL STRAITS AS IT SHOULD BE.

KUWAIT BLINKED, TOO

8. THE IRAQIS WILL CONCLUDE THAT THE KUWAITIS
HAVE BLINKED TOO, SINCE ACCORDING TO BBC REPORTS
TODAY, KUWAIT HAS AGREED NOT/NOT TO ASK FOR
HIGHER PRODUCTION QUOTAS DURING THE LAST QUARTER
OF 1990.

EGYPTIAN MEDIATION CONTINUES

9. EGYPTIAN EMBASSY CONFIDED TO US JULY 26
THAT MUBARAK'S ADVISOR USAMA AL-BAZ HAS
ARRIVED IN BAGHDAD. IRAQI MEDIA ANNOUNCED
THAT HE MET WITH SADDAM JULY 26.

DEEP ANTI-KUWAITI SENTIMENT

10. IT IS DIFFICULT TO OVERSTATE THE DEPTH OF
ANTI-KUWAITI SENTIMENT IN IRAQ. THIS IS THE
EXTREMELY IMPORTANT BACKDROP TO CURRENT
TENSIONS. THE DISLIKE IS OLD AND DEEP -- NOT
SOMETHING TRUMPED UP BY THE MEDIA FOR THE
OCCASION. EVEN OUR MOST SOPHISTICATED IRAQI
COLLEAGUES AND CONTACTS BECOME NEANDERTHAL ON
THE ISSUE OF KUWAITIS.

11. THE KUWAITIS WHO COME TO IRAQ WITH POCKETS
FULL OF IRAQI DINARS (PURCHASED AT THE BLACK
MARKET RATE WHICH IS LESS THAN ONE-TENTH OF THE
OFFICIAL RATE) AND WHICH THEY OSTENTATIOUSLY
SPEND, ARE NOT THE EDUCATED MIDDLE CLASSES --
THEY GO TO EUROPE. IRAQ GETS THE EQUIVALENT OF
"PO WHITE TRASH", THE LOWER MIDDLE CLASSES,
WHO CAN BE SEEN IN BASRA IN THEIR SCORES ON
A FRIDAY, AND IN THE NORTHERN SUMMER RESORTS,
OFTEN DRUNK, SOMETIMES DISORDERLY, AND OFTEN
GAMBLING IN THE OTHERWISE EMPTY CASINOS. THEY
ALSO COME TO BAGHDAD IN DROVES, PROVIDING THE
CLIENTELE FOR CHEAP NIGHTCLUBS AND CALL GIRLS.

12. IRAQIS DEEPLY FEEL THAT THE KUWAITIS ARE
IMMENSELY STINGY SHYLOCKS, LIVING HIGH WHILE
IRAQ, WHICH MADE SUCH TERRIBLE SACRIFICES
DURING THE WAR, IT STILL SUFFERING. INDEED,
WHEN SADDAM MADE THAT POINT TO THE AMBASSADOR
(BAGHDAD 4237), TWO OF HIS STAFFERS (WHO BOTH,
WE CAN SAFELY ASSUME, LOST RELATIVES IN THE
WAR) BURST INTO TEARS. AND AS A MEASURE OF
JUST HOW MUCH IRAQIS DISLIKE THE KUWAITIS,
TWO OTHER IRAQIS ON THAT DAY VOLUNTEERED TO
US THEIR DISLIKE. ONE COMPLAINED HIS SISTER
COULD NOT WALK ALONE IN CENTRAL BAGHDAD
ANY MORE BECAUSE OF HARRASSMENT FROM KUWAITIS,
WHILE A SUCCESSFUL IRAQI TRADER COMPLAINED
BITTERLY ABOUT THE KUWAITI OBSESSION WITH
MONEY.

13. IRAQI ATTITUDES TO KUWAITIS CONTRAST
SHARPLY WITH THEIR ATTITUDE TO MOST OTHER ARABS.
NO MATTER HOW BAD RELATIONS BECOME WITH, FOR
EXAMPLE JORDAN, THERE IS ALWAYS A FELLOW
FEELING TOWARDS EAST JORDANIANS, A FEELING
ABSENT TOWARD KUWAITIS.

ARENS' PROPAGANDA SUCCESSFUL

14. THE ISRAELI PRESS AND DEFMIN ARENS HAVE
SUCCEEDED IN MAKING THE IRAQIS BELIEVE THAT
ARENS WAS SUMMONED TO WASHINGTON TO DISCUSS
THE GULF. CERTAINLY SADDAM EXPRESSED THIS
VIEW IN HIS JULY 25 MEETING WITH AMBASSADOR
AND WE INVITE DEPARTMENT'S ATTENTION TO ARENS'
TV INTERVIEW JULY 25 (FBIS TA2507201890) IN
WHICH HE REFERS TO HIS CONVERSATION WITH
DEFENSE SECRETARY CHENEY ON THE GULF.
MILITARY ACTIVITY

15. JULY 26 IS THE FIRST DAY FOR A WEEK WHEN
WE HAVE NOT/NOT SEEN RAILWAY CARS LOADED WITH
MILITARY EQUIPMENT IN THE MARSHALLING YARDS
IN MANSUR. THIS COULD MEAN THAT ALL THE
EQUIPMENT THE GOI FORCES ON THE BORDER NEED IS
ALREADY IN PLACE, OR THAT NO NEW FORCES ARE
BEING SENT SOUTH.

GLASPIE
UNQUOTE

EAGLEBURGER