R 121431Z JUN 85
FM AMEMBASSY RIYADH
TO SECSTATE WASHDC 4322
INFO GULF WAR COLLECTIVE

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. 
 
--------------- 
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. 
 
-------- 
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. 
 
------ 
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