Order Code RL31533
Report for Congress
Received through the CRS Web
The Persian Gulf:
Issues for U.S. Policy, 2003
Updated December 19, 2002
Kenneth Katzman
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

---

The Persian Gulf:
Issues for U.S. Policy, 2003
Summary
The September 11, 2001 terrorist attacks in the United States have expanded the
security challenges facing the United States in the Persian Gulf region, although no
major crises have occurred in the Gulf since 1998. Since U.N. weapons inspectors
left Iraq in December 1998, the United States has feared Iraq might reconstitute its
banned weapons of mass destruction (WMD) programs, and possibly use these
weapons against the United States and its allies directly or by transferring them to
terrorist groups.
Iran’s tacit cooperation with the United States against the Taliban regime in
Afghanistan after the September 11 attacks had appeared to forecast an improvement
in U.S.-Iran relations. However, the expected improvement did not materialize
because of Iran’s stepped up support to Palestinian and other groups that are using
violence against Israel. There is substantial U.S. concern about Iran’s WMD
programs and the potential for Iran to transfer that technology or materiel to the
terrorist groups it supports, such as Palestinian Islamic Jihad, Hizbollah, or Hamas.
The lack of tangible moderation in Iran’s policies has led U.S. officials to lose hope
that engaging Iran’s President Mohammad Khatemi would be productive.
The September 11 attacks have shaken U.S. relations with some of the Gulf
states, particularly Saudi Arabia. Fifteen of the nineteen September 11 hijackers
were of Saudi origin, as is Al Qaeda leader Osama bin Laden himself. Some of the
funding for the September 11 attacks apparently was transferred from financial
institutions in the United Arab Emirates, and several Islamic charities operating in
the Gulf and the broader Islamic world have been accused of providing funds to Al
Qaeda and other terrorist movements. However, the Gulf states, despite public
sentiment that sympathizes with some aspects of Al Qaeda’s anti-U.S. views, have
been supportive of the U.S. military effort against the Taliban and Al Qaeda. Several
of them have allowed U.S. combat missions to be launched from their territory. The
Gulf states have shut down some of the financial networks used by Al Qaeda. Some
Gulf states are reluctant to support possible U.S. military action against Iraq although
others, such as Kuwait and Qatar, appear ready to host U.S. forces without
conditions.
The United States is applauding and encouraging Gulf political reform
initiatives, which are especially pronounced in Bahrain, Qatar, and Oman, that it
hopes will encourage greater support for U.S. and Western values over the longer
term. At the same time, greater political openness in the Gulf has made Gulf
governments more aware of popular sympathy for the Palestinians in the context of
ongoing Israeli-Palestinian violence. That sentiment could complicate future defense
cooperation between the United States and the Gulf states and could generate unrest
in the Gulf states in the event of U.S. military action against Iraq.
This report will be updated, as warranted.

---

Contents
Threats and U.S. Interests in the Gulf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Iraq: U.S. Efforts to Contain and End the Threat . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bush Administration Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Congressional Views . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Iran: Continued Concerns Derail Rapprochement . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Bush Administration, the September 11 Attacks, and Iran . . . . . . . 8
The Persian Gulf Monarchies: Coping With
Internal and External Threats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Domestic Stability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Leadership Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Political Liberalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Economic Reform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Gulf Foreign Policy and Defense Cooperation with the
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Arab-Israeli Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Policy Toward Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
War on Terrorism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Defense Agreements and U.S. Forces in the Gulf . . . . . . . . . . . . . . . . 19
U.S. Arms Sales and Security Assistance . . . . . . . . . . . . . . . . . . . . . . 23
Excess Defense Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Foreign Military Sales, FMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Joint Security/ “Cooperative Defense Initiative” . . . . . . . . . . . . . . . . . 25
Prospects and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Appendix 1. Gulf State Populations, Religious Composition . . . . . . . . . . . . . . 28
Appendix 2. UNSCOM Accomplishments and Unresolved Issues . . . . . . . . . . . 29
Appendix 3. No Fly Zones in Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Appendix 4. Map of the Persian Gulf Region and Environs . . . . . . . . . . . . . . . . 32
List of Tables
Table 1. Gulf Oil Exports (2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Table 2. Comparative Military Strengths of the Gulf States . . . . . . . . . . . . . . . . 17
Table 3. U.S. Troops in the Gulf Area/ Host Nation Support . . . . . . . . . . . . . . . 22

---

The Persian Gulf:
Issues for U.S. Policy, 2003
The Persian Gulf region, rich in oil and gas resources but with a history of
armed conflict that has necessitated occasional U.S. military action, remains crucial
to United States interests. This report, which will be revised periodically, discusses
U.S. efforts to manage both longstanding Gulf security interests as well the new
challenges highlighted by the September 11 attacks on the United States and the U.S.
insistence that Iraq end all its weapons of mass destruction (WMD) programs. The
report is derived from a wide range of sources, including press reports, unclassified
U.S. government documents, U.N. documents, observations by the author during
visits to the Gulf, and conversations with U.S, European, Iranian, and Gulf state
officials, journalists and academics. For further reading, see CRS Issue Brief
IB92117, Iraq: Weapons Threat, Compliance, Sanctions, and U.S. Policy; CRS Issue
Brief IB93033, Iran: Current Developments and U.S. Policy; and CRS Issue Brief
IB93113, Saudi Arabia: Post-War Issues and U.S. Relations.
Threats and U.S. Interests in the Gulf
Iran, Iraq, and the six Gulf monarchy states that belong to the Gulf Cooperation
Council (GCC, comprising Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab
Emirates, and Oman) possess about two thirds of the world's proven reserves of oil.
The countries in the Gulf produced over 28% of the world’s oil supply in 2001,
according to the U.S. Energy Information Administration. Saudi Arabia and Iraq are
first and second, respectively, in proven reserves. Iraq, which is relatively
unexplored and in which new energy exploration is barred by U.N. sanctions, might
ultimately be proven to hold more oil than does Saudi Arabia. Iran and Qatar,
respectively, have the second and third largest reserves of natural gas in the world;
gas is an increasingly important source of energy for Asian and European countries.
Difficulties in the discovery and transportation of oil and gas from the Central
Asian/Caspian Sea countries ensure that the Gulf will almost certainly be a major
source of energy well into the 21st century, although many experts increasingly see
the Central Asia/Caspian countries and Russia as energy sources likely to rival the
Gulf. Each of the Gulf states, including Iran and Iraq, appears to have an economic
interest in the free flow of oil, but past political conflict in the Gulf and broader
Middle East has caused oil prices to rise sharply and has increased hazards to
international oil shipping. Despite that economic interest, Iran and Iraq have
sometimes, and generally without success, attempted to organize or been willing to
join oil embargoes to protest U.S. policy in the Middle East.
Both Iran and Iraq have threatened U.S. security interests directly and indirectly.
Iran and Iraq fought each other during 1980-1988, jeopardizing the security of the

---

CRS-2
Gulf states, and each has fought the United States, although in differing degrees of
intensity. Iran and the United States fought minor naval skirmishes during 1987-88,
at the height of the Iran-Iraq war — a war in which the United States tacitly backed
Iraq. During one such skirmish (Operation Praying Mantis, April 18, 1988) the
United States fought a day long naval battle with Iran that destroyed almost half of
Iran’s largest naval vessels. On July 3, 1988, the United States mistakenly shot
down an Iranian passenger aircraft flying over the Gulf (Iran Air flight 655), killing
all 290 aboard. To liberate Kuwait from Iraq, which invaded and occupied Kuwait
on August 2, 1990, the United States deployed over 500,000 U.S. troops, joined by
about 200,000 troops from 33 other countries. That war (Operation Desert Storm,
January 16 - February 27, 1991) resulted in the death in action of 148 U.S. service
personnel and 138 non-battle deaths, along with 458 wounded in action. The Gulf
war reduced Iraq's conventional military capabilities roughly by half, but Iraq is still
superior to Iran and the Gulf states in ground forces. Iran’s financial capabilities are
limited, but it faces no mandatory international restrictions on its imports of
advanced conventional weapons, and Iran has been slowly rearming since 1990.
In addition to their conventional forces, both Iran and Iraq have developed
weapons of mass destruction (WMD) programs. Iraq's missile, chemical, nuclear,
and biological programs, begun during the Iran-Iraq war, were among the most
sophisticated in the Third World at the time of Iraq's invasion of Kuwait. During the
1991 Gulf war, Iraq fired 39 enhanced Scud missiles at Israel, a U.S. ally, and about
50 enhanced Scud missiles on targets in Saudi Arabia. One Iraqi missile, fired on
coalition forces on February 25, 1991 (during Desert Storm) hit a U.S. barracks near
Dhahran, Saudi Arabia, killing 28 military personnel and wounding 97. During the
Iran-Iraq war, Iraq fired enhanced Scud missiles at Iranian cities.1 On ten occasions
during that conflict, it used chemical weapons against Iranian troops and Kurdish
guerrillas and civilians, killing over 26,000 Iranians and Kurds.2 U.N. weapons
inspectors dismantled much of Iraq’s WMD infrastructure during 1991-1998, but
they left in 1998 due to Iraqi obstructions and without clearing up major unresolved
questions about Iraq’s WMD. New inspections began, under threat of U.S. force,
in November 2002; the inspections will focus on whether Iraq reconstituted any
banned WMD programs since the inspectors were last there in 1998.
Iran's WMD programs are not under U.N. restrictions as are those of Iraq.
Some of those programs have made significant strides during the 1990s with
substantial help from Russia, China, North Korea, and other countries and entities.
It is openly testing extended range missiles and building civilian nuclear
infrastructure that could further a nuclear weapons program.
1The missiles were supplied by Russia but Iraq enhanced their range to be able to reach
Tehran, which is about 350 miles from the Iraq border. The normal range of the Scud is
about 200 miles.
2Central Intelligence Agency. Iraq’s Weapons of Mass Destruction Programs. October
2002, p. 8. According to the study, Iraq used mustard gas, tabun, and other “nerve agents.”
According to the report, the majority of the casualties were Iranian, suffered during major
Iranian offensives, including Panjwin (October - November 1983, Majnoon Island
(February-March 1984), the Hawizah Marshes (March 1985), Al Faw (February 1986),
Basra (April 1987), and Sumar/Mehran (October 1987).

---

CRS-3
Both Iran and Iraq are on the U.S. list of state sponsors of terrorism, although
annual State Department reports on international terrorism (“Patterns of Global
Terrorism”) have consistently deemed Iran a larger terrorist threat than Iraq. The
Islamic regime in Iran, which came to power in February 1979, held American
diplomats hostage during November 1979-January 1981, and the pro-Iranian
Lebanese Shia Muslim organization Hizballah held Americans hostage in Lebanon
during the 1980s. Since then, Iran has supported groups (Hizballah and the
Palestinian groups Hamas and Palestinian Islamic Jihad) that oppose the U.S.-
sponsored Arab-Israeli peace process and carry out terrorist attacks against Israelis.
Some pro-Iranian groups have sought to destabilize some of the Gulf states, although
Iran’s support for these groups has diminished since Iran’s relatively moderate
President Mohammad Khatemi came into office in 1997 and subsequently improved
relations with the Gulf states. U.S. law enforcement officials say Iranian operatives
were involved in the June 1996 bombing in Saudi Arabia of the Khobar Towers
housing complex for U.S. military officers, in which 19 U.S. airmen were killed.
Iraq publicly supports Palestinian violence against Israel, but reports indicate that,
over the past decade, Baghdad has had limited contact with the groups that are most
active in violence and terrorism against Israel. According to publicly available
information, neither Iran nor Iraq has been linked to the September 11 attacks,
although press reports say that some Al Qaeda activists fleeing Afghanistan have
transited or taken refuge in both countries.
Both countries have been accused by successive U.S. administrations as
systematic violators of human rights. Iraq has long been considered by the U.S.
Government as a gross violator of human rights based on its treatment of dissidents
and ethnic minorities, and the Clinton Administration began pressing for a war
crimes tribunal for Saddam Husayn and 11 other Iraqi officials. The Bush
Administration reportedly will seek a war crimes trial for those 12 Iraqi officials if
Saddam Hussein’s regime is overthrown. U.S. and U.N. human rights reports have
accused Iran of numerous human rights abuses, although not to the degree cited for
Iraq.
The Gulf states face internal threats not attributable to Iran or Iraq. All six
Gulf states — Saudi Arabia, Kuwait, Bahrain, the United Arab Emirates (UAE),
Oman, and Qatar — are hereditary monarchies. They allow limited formal
opportunity for popular participation in national decision-making, although several,
particularly Bahrain, Qatar, and Oman, are opening up their political processes and
earning U.S. official praise for doing so. Kuwait has had a vibrant, elected
parliament for over four decades, although female suffrage is still banned there.
Some of the Gulf states, including Saudi Arabia, Kuwait, and the United Arab
Emirates, are undergoing leadership transitions; Bahrain's leadership passed to a new
generation in March 1999, when the long serving Amir (ruler) died suddenly.
The September 11 attacks have heightened U.S. concerns about radical Islamic
activists operating in the Gulf states. These activists, who might be linked to or
sympathetic to Al Qaeda, do not currently appear to threaten the stability of any of
the Gulf regimes, although the networks could be planning acts of terrorism against
U.S. forces and installations there. The September 11 attacks have stimulated some
sources of tension between the United States and the Gulf monarchy states over

---

CRS-4
allegations that Gulf donors have, wittingly or unknowingly, contributed to groups
and institutions linked to Al Qaeda and other terrorist organizations.
Iraq: U.S. Efforts to Contain and End the Threat
In May 1993, shortly after taking office, the Clinton Administration articulated
a policy of “dual containment” of Iran and Iraq. The Administration explained the
policy as an effort to keep both Iran and Iraq strategically weak simultaneously, in
contrast to past policies that sought to support either Iran or Iraq as a counterweight
to the other. Iraq’s refusal to fully comply with post-Gulf war U.N. Security Council
resolutions kept the United States and Iraq at odds, and in October 1998 the Clinton
Administration publicly added a dimension to U.S. policy that went beyond
containment – promoting the change of Iraq’s regime.
U.S. efforts to keep Iraq strategically weak and politically isolated have
undergone several adjustments since the Gulf war ended in 1991. During 1991-
1997, the United States and its allies relied largely on U.N. weapons inspections
established by U.N. Security Council Resolution 687 (April 3, 1991) to eliminate and
prevent the rebuilding of Iraq’s WMD capabilities. U.N. Security Council
resolutions, including 661 (August 6, 1990), which imposed a comprehensive
embargo on Iraq, prohibit it from importing conventional weaponry.
Iraq accepted U.N. weapons inspections by the U.N. Special Commission on
Iraq (UNSCOM) as long as Iraq believed that it would obtain a ruling from
UNSCOM that all its WMD programs had been ended. Under Resolution 687
(April 3, 1991), such a ruling would open Iraq to the unrestricted exportation of oil.
In 1997, Iraq apparently determined that it would not obtain a favorable U.N.
Security Council decision to ease sanctions, and it reduced its cooperation with
UNSCOM. Beginning in October 1997, Iraq obstructed the work of UNSCOM
teams (designating certain sites “off-limits,” attempting to alter the composition of
inspection teams) to the point where UNSCOM withdrew from Iraq (December 15,
1998). In response to Iraq’s non-cooperation, the United States and Britain
conducted a 70 hour bombing campaign (Operation Desert Fox, December 16-19,
1998) against Iraq’s WMD-capable factories and other military installations.From
1998 until November 2002, there had been virtually no independent WMD
inspections in Iraq, with the exception of a few International Atomic Energy Agency
(IAEA) visits to monitor Iraq’s compliance with its Nuclear Nonproliferation Treaty
(NPT) obligations. In December 1999, the U.N. Security Council attempted to
persuade Iraq to accept new inspections under U.N. Security Council Resolution
1284 (December 19, 1998), but Iraq refused to allow new inspections.
In the absence of U.N. inspections during 1998 until late 2002, the United
States has had to rely on its own intelligence capabilities to determine whether Iraq
is rebuilding WMD. An unclassified report by the Central Intelligence Agency,
released in October 2002, says that Iraq has rebuilt the infrastructure needed to restart
WMD manufacture, and that it has reconstituted active biological and chemical
programs. The report says that “most analysts assess that Iraq is reconstituting its

---

CRS-5
nuclear program.”3 Defense Secretary Rumsfeld said in July 2002 that the United
States has evidence that Iraq is using mobile facilities to develop biological weapons
and has placed some WMD munitions and programs in deep, underground facilities.
(See Appendix 2 for information on the outstanding WMD issues left during the
1991-1998 inspections process by UNSCOM.)
To ensure that Iraq cannot use its still formidable conventional forces against
its neighbors, the United States and Britain patrol “no fly zones” over northern and
southern Iraq in the “Northern Watch” and “Southern Watch” operations,
respectively.4 Together, the zones cover approximately 62% of Iraq’s territory. The
enforcement of the zones is not specifically authorized by U.N. Security Council
resolutions, but they were set up by the United States, France, and Britain to monitor
Iraq’s compliance with Resolution 688 (April 5, 1991), which demands that Iraq
cease repressing its people. See Appendix 3 for a map of the no fly zones over Iraq.
Bush Administration Policy. The Bush Administration, in the aftermath
of the September 11 attacks, has linked Iraq policy to the overall war on terrorism.
In his January 29, 2002 State of the Union message, President Bush called Iraq part
of an “axis of evil,” along with North Korea and Iran. He identified the key threat
as Iraq’s potential to deliver WMD against the United States and its friends and
allies, or to transfer WMD technology to terrorist groups. Bush Administration
policy has had several major aspects:
! disarmament and regime change. The stated thrust of Administration policy
has oscillated between these two major goals, although many believe the two
goals are synonymous. To some, the current Iraqi regime will never disarm
and must be overthrown if the goal of eliminating Iraq’s WMD programs is
to be accomplished. To others, Iraq can be persuaded, possibly by threatening
force, to cooperate with a U.N. disarmament process, and that this would
ensure U.S. interests without necessitating a change of regime. Depending
on the degree to which the Administration emphasizes regime change,
reported options under consideration range from stepped up U.S. covert action
in support of Iraqi opposition groups to an all-out ground invasion conducted
by over 250,000 U.S. troops. The outcome of the debate within the
Administration will likely hinge on the degree of cooperation Iraq
demonstrates with the new inspections regime, restarted on November 27,
2002, under the mandate of U.N. Security Council Resolution 1441
(November 8, 2002). Iraq accepted that resolution when faced with President
Bush’s threat to disarm peacefully under that resolution or face a U.S.-led
coalition that would disarm Iraq by force. Other considerations include those
of anticipated U.S. military casualties from a frontal assault, the willingness
of the Gulf monarchies to host a U.S. invasion force, and the degree of
European and other international support or opposition for U.S. plans.
3Central Intelligence Agency. Iraq’s Weapons of Mass Destruction Programs. October
2002.
4In January 1997, following a U.S. confrontation with Iraq in August 1996, France ended
its participation in Northern Watch. It ceased participating in Southern Watch following
Operation Desert Fox (December 16-19, 1998).

---

CRS-6
! modifying sanctions to build international support for U.S. policy.
Immediately after it took office, the Bush Administration claimed that
international enforcement of the sanctions regime on Iraq was deteriorating
because some countries viewed it as too punitive of the Iraqi people. To
counter this criticism and attempt to shore up international enforcement, the
Administration announced a “smart sanctions” proposal. Under that proposal,
the regulations governing the U.N.-sponsored “oil-for-food” program – a U.N.
supervised program under which Iraq sells its oil and uses the proceeds to buy
needed goods – would be changed to ease the flow of civilian goods to Iraq.
The major element of the proposal, the easing of the regulations governing
the export of civilian goods to Iraq, was agreed to in U.N. Security Council
Resolution 1409 (May 14, 2002).
Congressional Views. Congress has generally supported the
Administration throughout the various confrontations with Iraq, and has sometimes
urged even stronger action against Iraq than the Administration appeared ready to
take. Congress led the Administration in adding to U.S. containment policy a more
ambitious dimension – promoting the overthrow of Saddam Husayn. Congressional
sentiment for a strategy of overthrow of Saddam Husayn was encapsulated in the Iraq
Liberation Act, which passed the House on October 5, 1998 (360-38) and the Senate
on October 7 (unanimous consent). The Act gave the President the discretion to
provide up to $97 million in defense articles and services to Iraqi opposition
organizations designated by the Administration. The President signed the bill into
law (P.L. 105-338) on October 31, 1998, the same day Iraq cut off all cooperation
with UNSCOM. The Clinton Administrations refused to provide lethal military
equipment under the Act on the grounds that it judged the Iraqi opposition not ready
to use such equipment effectively. The Bush Administration took the same position
initially but, on December 10, 2002, President Bush authorized the draw down of the
remaining $92 million worth of articles and services under the Act as part of a
reported plan to build an opposition force of about 5,000, which would receive some
lethal aid under the Act, according to press reports.
Most Members have voted in support of the President’s position on Iraq, but
several Members have questioned the need for a large scale ground offensive.
congressional resolution, H.J.Res. 75, which passed the House on December 20,
2001, called Iraq’s WMD capabilities a mounting threat to the United States, but did
not authorize military action against Iraq. In press statements and other appearances
during 2002, some congressional leaders have said that a ground attack on Iraq would
need congressional authorization, and some have questioned whether other options,
such as sanctions, less robust covert or military options, containment, or deterrence
could reduce the threat from Iraq successfully without requiring a major offensive.
On October 11, 2002, Congress completed passage of a joint resolution
(H.J.Res.114) authorizing the President to use U.S. forces against Iraq if he
determines doing so is in the national interest and would be necessary to enforce
U.N. Security Council resolutions. The President signed the congressional resolution
into law on October 16, 2002 (P.L. 107-243).

---

CRS-7
Iran: Continued Concerns Derail Rapprochement
The May 1997 election of a reformist, Mohammad Khatemi, as Iran’s President
prompted the United States to attempt to end 20 years of mutual acrimony that had
occasionally led to confrontation. However, Khatemi is surrounded by a power
structure and officials, in place since the 1979 Islamic revolution, that is deeply
suspicious of the United States and which controls the coercive arms of the state
(military, police, and judiciary). The establishment has curbed Khatemi’s ability to
improve relations with the United States and has slowed the momentum of internal
reform to the point at which U.S. officials no longer believe that engaging Khatemi’s
government would prove productive.5
Even before Khatemi’s election raised U.S. hopes for internal change in Iran,
U.S. foreign policy experts had been arguing that improved relations with Iran could
help the United States accomplish several goals, including: containing Saddam
Husayn's Iraq; reducing the threat to the United States and to the Arab-Israeli peace
process posed by Islamic terrorist groups; easing Iran's opposition to a large U.S.
military presence in the Persian Gulf region; dissuading Iran of the need to acquire
weapons of mass destruction; and curbing the regional threat from the Taliban regime
in Afghanistan, which was at odds with Iran from the time it took power in Kabul in
September 1996. Some U.S. corporations, meanwhile, argued that improved U.S.-
Iranian relations could help open up new energy routes for Caspian/Central Asian
energy resources, benefit U.S. exporters, and end trade disputes with U.S. allies
precipitated by U.S. secondary sanctions laws.6 Others maintained that the United
States could not and should not isolate a country of over 65 million people, with a
location and resources as strategic as those of Iran.
U.S. hopes that Khatemi would quickly move to improve relations with the
United States intensified when Khatemi agreed to a special Cable News Network
interview on January 7, 1998, portrayed by Iran and CNN as an "address to the
American people." However, Khatemi offered only people-to-people contacts with
the United States, and the Clinton Administration subsequently stated that people-to-
people contacts alone would not lead to a breakthrough in relations. On June 17,
1998, in a speech to the Asia Society, then Secretary of State Albright proposed that
the two countries undertake mutual confidence-building measures that could form a
"road map" to eventually normalizing relations. On March 17, 2000, Secretary
Albright again attempted to induce Iran into a dialogue with a speech that announced
an easing of U.S. sanctions on the imports of Iranian luxury goods,7 and an
accelerated effort to resolve outstanding financial claims dating from the Islamic
revolution. The Secretary also came close to an outright apology for past U.S.
interference in Iran’s internal affairs – including the U.S.-backed ouster in 1953 of
nationalist Prime Minister Mohammad Mossadeq and U.S. support for the Shah of
5 Kessler, Glenn. U.S. Changes Policy on Iran. Washington Post, July 23, 2002.
6The most widely known example of U.S. secondary sanctions on Iran is the Iran-Libya
Sanctions Act, P.L. 104-172, of August 5, 1996. For analysis of that and other U.S.
sanctions on Iran, see CRS Report 97-231, Iran: U.S. Policy and Options.
7The four category of goods that can be imported are caviar, dried fruit, nuts, and carpets.

---

CRS-8
Iran – as well as for the U.S. tilt toward Iraq in the Iran-Iraq war. The speech
followed a July 1999 easing of the U.S. trade ban on Iran to allow commercial sales
to Iran of food and medical products.8 The renewed overture still did not prompt Iran
to accept the U.S. offer of an official dialogue, although Iran did begin broadening
its contacts with Members of Congress.9
In its attempts to forge a dialogue with Iran, the Clinton Administration asserted
that there were no substantive preconditions for the beginning of talks with Iran but
that the two sides openly acknowledge the dialogue, that both sides must be free to
raise issues of respective concern, and that the Iranian interlocutors must be
authoritative representatives of the Iranian government. The Clinton Administration
said it would use the dialogue to press U.S. concerns, which it defined primarily as
Iran’s attempt to acquire weapons of mass destruction and delivery means, opposition
to the Arab-Israeli peace process, and support for international terrorism. Some
believed that Iran’s human rights practices should also be a priority concern for the
United States.
The Bush Administration, the September 11 Attacks, and Iran. The
Bush Administration came into office espousing much the same policy toward Iran
as the preceding administration - offering dialogue but repeating U.S. concerns and
insisting those concerns be addressed. After the September 11 attacks, there was
substantial optimism for a major breakthrough in relations when Iran largely
cooperated with the U.S. effort to defeat the Taliban and install a new government.
Some note that Iran had long wanted the Taliban ousted, so that backing the U.S.
effort was in Iran’s own interests and did not necessarily represent a new effort to
reach out to the United States or a turning away from support for international
terrorism. Immediately after the defeat of the Taliban, revelations of an Iranian arms
shipment to Palestinians linked to the Palestinian Authority (January 2002), and
indications of Iranian meddling inside Afghanistan, reversed the warming trend and
revived longstanding U.S. suspicions of Iran. President Bush characterized Iran as
part of an “axis of evil,” along with North Korea and Iraq, in his January 29, 2002
State of the Union message. U.S. officials have since added that there is evidence
some Al Qaeda activists have been allowed to transit or take refuge in Iran, although
there is no evidence that this is official Iranian policy.
In the first few years of his presidency, Khatemi stated on several occasions that
Iran opposes the interim accords reached between Israel and the Palestinians but that
Iran would not actively try to derail their peace talks. Iran did not publicly oppose
Syria’s decision to renew talks with Israel in December 1999, although those talks
quickly broke down and have not resumed. Despite these public pronouncements,
Iran, according to U.S. officials in 2002, has stepped up financial and materiel aid to
anti-Israel terrorist groups, particularly Hizballah, Hamas, and Palestinian Islamic
Jihad, in the context of the ongoing Palestinian uprising against Israel and its
8The conference report on H.R. 4461, the FY2001 agriculture appropriation (H.Rept. 106-
948), eases licensing procedures for food and medical sales to Iran and other terrorism list
countries and authorizes the President to allow the use of U.S. export credits for these sales.
9Slavin, Barbara. "Iran, U.S. Elected Officials’ Meeting First in 20 Years." USA Today,
August 31, 2000.

---

CRS-9
occupation. Iran’s aid to Hizballah has continued, even at times increased, since
Israel’s withdrawal from southern Lebanon in May 2000, a withdrawal certified by
the United Nations. Hizballah asserts that the withdrawal was not complete, as do
the governments of Syria and Lebanon.
Khatemi has not sought to curb Iran's WMD programs; all factions in Iran
appear to agree on the need to continue developing these programs. They perceive
that Iran is threatened on virtually all sides – by erstwhile adversary Iraq and a
nuclear-armed Israel to the west; by a nuclear-equipped Pakistan and a now U.S.-
dominated Afghanistan, to the east; by U.S. forces in the Gulf, to Iran’s south; and
by U.S. forces now based in Central Asia and increasingly present in the Caucusus,
to the north. U.S. government officials and reports say Iran is actively pursuing a
long-range missile program, that it is building a chemical and biological weapons
infrastructure, and that it is acquiring expertise and technology that could be used in
a nuclear weapons program. Since July 1998, Iran has conducted four tests of its
Shahab-3 (Meteor) ballistic missile (800-900 mile range), which could enable Iran
to threaten Israel, Turkey, and parts of Central and South Asia. The latest of the tests,
in May 2002, appears to have been successful. A test in October 2002 of an
enhanced Shahab, with a reported range of about 1,200 miles, apparently failed,
according to U.S. officials.
Russia has rebuffed repeated U.S. efforts to persuade it to stop or limit work on
the civilian nuclear power reactor it is building under contract to Iran at Bushehr, and
there are increasing worries that the plant, when it becomes operational, will produce
nuclear material that could fall into the hands of terrorist groups for the production
of a radiological “dirty” bomb. In December 2002, commercial satellite photos
revealed at least two new sites — Arak and Natanz — which U.S. experts believe
could be part of a nuclear weapons program. On the other hand, there are
disagreements over the degree to which Iran should cooperate — or appear to
cooperate — with international anti-proliferation regimes. Governing bodies of
several international non-proliferation regimes, including the Nuclear Non-
Proliferation Treaty and the Chemical Weapons Convention, say Iran is generally
fulfilling its obligations under these agreements.
The United States is also watching the balance of factions inside Iran to
determine whether or not more moderate forces might prevail, on the assumption that
reformist elements might eventually shift Iran’s foreign policy course. President
Khatemi has attempted to liberalize social and political life since taking office, but
conservative forces in Iran appear to have gained the upper hand politically and are
thwarting most of his internal reforms. U.S. officials say that they doubt that
Khatemi can gain the upper hand in this power struggle, and a July 12, 2002
statement issued by President Bush indicated a shift in U.S. policy by expressing
support for Iranian reformers and Iran’s people, not for Khatemi or his government.
Since 2000, hardliners have repeatedly closed pro-reform newspapers and imprisoned
some of their editors, although the newspapers usually reopen under new names.
Some pro-Khatemi members of parliament have been arrested or questioned over the
past year. Reformist efforts to curb the legislative powers of unelected bodies such
as the Council of Guardians have failed. The internal schism escalated in late 2002
with growing student demonstrations demanding reform and clashes between the
demonstrators and the security forces controlled by hardliners.

---

CRS-10
The Persian Gulf Monarchies: Coping With
Internal and External Threats
Over the past two decades, U.S. attempts to contain the threats from Iran and
Iraq have depended on cooperation with the Persian Gulf monarchies of the Gulf
Cooperation Council (GCC).10 The September 11 attacks have added a new
dimension to U.S. relations with the Gulf states – pressing for their cooperation
against Al Qaeda activists and financial channels located in their territories. The
need for the United States to deal with all the security threats emanating from the
Gulf gives the United States a stake in the political stability of the Gulf states.
Despite the threats they face, the GCC states have proved more durable politically
than some experts had predicted, surviving attempts to subvert them by Iraq (1970s)
and Iran (1980s and 1990s), the eight year Iran-Iraq war (September 1980-August
1988), the Iraqi invasion and occupation of Kuwait (August 1990 - February 1991),
and post-Gulf war unrest and uncertain leadership transitions in a few of the GCC
states. See Appendix 4 for a map of the Gulf region.
Domestic Stability
Many of the Gulf monarchies face potential threats to political stability.
Although some, such as Bahrain and Saudi Arabia, have experienced open unrest
since the 1991 Gulf war, virtually all of the Gulf governments appear to be firmly
in power. Several are undergoing leadership transitions, and some are gradually
opening up their political processes. Since the September 11 attacks, the United
States has heightened its attention to public attitudes in the Gulf in light of surveys
and reports that many Gulf citizens are sympathetic to at least some of the goals of
radical Islamic movements such as Al Qaeda. Al Qaeda leader Osama bin Laden is
viewed by some in the Gulf as a revolutionary Islamic figure who is fighting to
overcome U.S. influence over the Islamic world.11 Bin Laden supporters and other
Islamic activists present in the Gulf, do not appear to pose a major challenge to the
other Gulf regimes at this time, but some U.S. officials are concerned that Al Qaeda,
defeated in Afghanistan, might turn its attention to destabilizing pro-U.S. Arab
governments in the Gulf or elsewhere and to attacking U.S. forces based in the Gulf.
Leadership Transition. Still governed by hereditary leaders, several of the
GCC states are coping with current or imminent leadership transitions. Although few
observers forecast bloody succession struggles in any of the Gulf states, succession
uncertainties have already begun to cloud political or economic reform efforts under
way or planned.
10For further information on the Gulf states, see CRS Issue Brief IB93113, Saudi Arabia:
Post-War Issues and U.S. Relations; CRS Report RS20354, Qatar: Background and U.S.
Relations; CRS Report 95-1013, Bahrain; CRS Report 95-1071, Oman; CRS Report 98-436,
United Arab Emirates: U.S. Relations and Prospective F-16 Sale; and CRS Report 98-600,
Kuwait: Current Issues and U.S. Policy.
11For more information on bin Laden, see CRS Report RL31119, Terrorism: Near Eastern
Groups and State Sponsors, 2002. February 13, 2002, by Kenneth Katzman.

---

CRS-11
! In Saudi Arabia, King Fahd suffered a stroke in November 1995 and, although
still holding the title King, he has yielded day-to-day governance to his half-
brother and heir apparent, Crown Prince Abdullah. Abdullah is the same age
as Fahd (about 79) but Abdullah appears to be in reasonably good health.
Abdullah has been more willing than Fahd to question U.S. policy in the
region and U.S. prescriptions for Saudi security, which, together with his
image of piety and rectitude, could account for his relative popularity among
the Saudi tribes and religious conservatives. There have been repeated reports
in recent months that King Fahd would formally relinquish power, but he has
not done so to date.
! In Bahrain, the sudden death of Amir (ruler) Isa bin Salman Al Khalifa on
March 6, 1999 led to the accession of his son, Hamad bin Isa Al Khalifa, who
was commander of Bahrain’s Defense Forces. In February 2002, he formally
changed Bahrain into a kingdom and took the title King instead of Amir.
King Hamad has moved decisively to try to address the grievances that caused
Bahrain’s unrest in the mid-1990s, as discussed below. King Hamad is about
53 years old and has named his son Salman, who is about 33 years old, as
Crown Prince. This has caused some friction with King Hamad’s uncle,
Khalifa bin Salman Al Khalifa, who serves as Prime Minister and is
considered a traditionalist rather than a reformer.
! The UAE is in transition from the ailing Shaykh Zayid bin Sultan al-
Nuhayyan, ruler of the emirate of Abu Dhabi who helped found and became
President of the seven-emirate UAE federation in 1971. His eldest son,
Crown Prince Khalifa, who is about 45, is the likely successor, and Khalifa
has been assuming a higher profile in the UAE over the past few years.
Khalifa’s formal succession could become clouded if the rulers of the other
six emirates of the UAE federation, or even factions within Abu Dhabi itself,
oppose him as leader. However, the UAE is well placed to weather this
transition because it has faced the least unrest of any of the Gulf states, its
GDP per capita ($22,000 per year) is the highest in the Gulf, and there are few
evident schisms in the society.
! The reform-minded ruler of Qatar, Shaykh Hamad bin Khalifa Al Thani,
overthrew his father in a bloodless coup in June 1995. Although the Amir
accused his father and other GCC states of attempting a countercoup in early
1996, the Amir and his father reconciled to some extent in late 1996. The
Amir’s reform agenda has garnered wide support and there has been little
evidence of unrest. However, there are indications that, prior to September
11, Al Qaeda activists were present in or transited Qatar. Amir Hamad is
about 50 years old.
! In Kuwait, virtually the entire top leadership – particularly Amir Jabir al-
Ahmad Al-Sabah and Crown Prince/Prime Minister Sa’d al-Abdullah Al-
Sabah, is ailing. Deputy Prime and Foreign Minister Sabah al-Ahmad Al-
Sabah runs the government day-to-day. This has created significant delays
in making key political economic decisions, such as allowing foreign
investment in the energy sector, and fostered an image of political stagnation.
There are several younger potential successors with significant experience in

---

CRS-12
government, such as Minister of State for Foreign Affairs Mohammad Al
Sabah, but they have not sought to persuade the existing leaders to step down.
Islamic fundamentalist opposition to the ruling Al Sabah family is contained
within the context of Kuwait's elected National Assembly, and virtually no
anti-regime violence has occurred there since the Gulf war.
! With the exception of an alleged Islamist plot in 1994 that led to a few
hundred arrests, Oman has seen little unrest since Sultan Qaboos bin Said Al
Said took power from his father in 1970. Qaboos is about 63 years old and in
good health, but the royal family in Oman is relatively small and there is no
heir apparent or clear successor, should he pass from the scene unexpectedly.
Like his colleagues in Qatar and Bahrain, Qaboos has undertaken numerous
reforms, although at a more gradual pace than the other two.
Political Liberalization. Some of the Gulf leaders are gradually opening
the political process, in part to help them cope with the challenges of modernization
and globalization. The Gulf leaders undertaking these steps hope that political
liberalization will ensure stability, although some fear that this process could
backfire by empowering Islamic extremists and providing the Islamists a platform
to challenge the incumbent regimes. In the immediate aftermath of the 1991 Gulf
war, the United States actively encouraged the Gulf states to open their political
systems, but largely dropped that from the U.S. agenda in the late 1990s and early
2000's as defense and security needs of containing Iraq and Iran took priority. Since
the September 11 attacks, encouraging political liberalization has returned to a
leading position on the U.S. agenda for the Gulf, and the United States expects to
provide some U.S. funding to encourage liberalization in the Gulf. U.S. officials see
liberalization as a means of reducing support in these countries for extremist
movements. U.S. officials also stress that they are not pressing the Gulf states to
adopt a U.S. or European concept of democracy, but rather to widen popular
participation within their own traditions. U.S. diplomats are pressing for adherence
to the rule of law, economic transparency, judicial reform, improvement in the
education system, and the opening of the media. The Bush Administration is
promoting these reforms with U.S. Agency for International Development (USAID)
programs as well as those funded by the State Department’s Near East Bureau and
its Bureau of Democracy, Human Rights, and Labor. On December 12, 2002,
Secretary of State Powell announced a new “Middle East Partnership Initiative,“ to
include new funds ($29 million in FY2003) for promoting these reforms in the Gulf
and elsewhere in the Middle East.
! Kuwait has traditionally been at the forefront of political liberalization in the
Gulf, but it has not moved further on this front in the past few years. In
response to popular pressure after its 1991 liberation, Kuwait revived its
elected National Assembly in October 1992, after six years of suspension.
Kuwait’s Assembly still has more influence in decision-making and more
scope of authority than any representative body in the GCC, with the power
to review and veto governmental decrees. However, on two separate
occasions in 1999, a long awaited effort by the government to institute female
suffrage was rebuffed by a coalition of conservative tribal deputies and
Islamists in the National Assembly. The U.S. Administration expressed

---

CRS-13
support for the government’s effort. The government has not aggressively
renewed the push for female suffrage since.
! In March 1999, Qatar held elections to a 29-member municipal affairs council.
In a first in the Gulf, women were permitted full suffrage and 6 women ran for
the council, but all six lost. In late 1998, the Amir of Qatar announced that a
constitution would be drafted providing for an elected National Assembly to
replace the appointed 35-member consultative council in place since
independence in 1971. The draft constitution was presented to the Amir in
early July 2002; its approval would pave the way for elections to a one-
chamber assembly, to be held in 2004. Thirty of the seats are to be elected,
with the remaining fifteen appointed. The constitution will also provide for
an independent judiciary. Qatari officials say the assembly’s proceedings will
be public.
! On September 14, 2000, Oman held the first direct elections to its 83-seat
Consultative Council. The electorate consisted of 25% of all citizens over 21
years old - mostly local notables and elites. The process contrasted with past
elections (1994 and 1997) in which a smaller and more select electorate chose
two or three nominees per district and the Sultan then selected final
membership. Two women were elected to the Consultative Council in the
September 2000 elections. Qaboos also made new appointments to the 53-
seat State Council which serves, in part, as a check and balance on the elected
Consultative Council. State Council appointees tend to be somewhat older
than the members of the Consultative Council; many State Council members
are former government officials. Qaboos named five women to the State
Council, up from four in the previous State Council. On November 21, 2002,
Qaboos announced he was extending voting rights to all citizens over 21 years
of age, beginning with the 2003 Consultative Council elections.
! The King of Bahrain has largely abandoned his late father’s refusal to
accommodate opposition demands to restore an elected national assembly.
In February 2002, Bahrain held a referendum on a new “national action
charter,” establishing procedures for electing a 40-member national assembly.
Those elections (two rounds) were held in late October 2002, and most of the
seats were won by moderate Islamists. None of the eight female candidates
were elected. Shiite opponents of the Sunni-dominated government boycotted
the elections, claiming that the formation of an appointed upper body of the
same size represented an abrogation of the government’s promise to the 1973
parliamentary process. (No appointed upper body was established during the
1970s, but the parliamentary experiment lasted only 2 years when it was
closed for fears the parliament represented a challenge to Al Khalifa rule.)
The boycott lowered turnout to about 50%. Shiites constitute about two-thirds
of the population and opposition leaders charge that the government is
preventing them from achieving the degree of representation in decision-
making that they deserve.
In the other Gulf states, political liberalization has been significantly slower.
Saudi Arabia expanded its national consultative council to 90 seats from 60 in 1997,
and again to 120 seats in 2001, but it continues to rule out national elections or the

---

CRS-14
appointment of women to the Council. On the other hand, within the past few years,
the Saudi government has parted with tradition by naming two women to high
ranking government positions, and it now allows women to observe the proceedings
of the Council. The UAE has not moved to broaden the authority of its forty seat
advisory Federal National Council, and has undertaken few, if any political reforms,
although some observers say the press has become increasingly open. The wife of
UAE President Shaykh Zayid bin Sultan al-Nuhayyan said in January 1999 that
women would be given a role in the political life of the UAE in the future, and
Shaykh Zayid subsequently appointed a woman to be undersecretary of the Ministry
of Labor and Social Affairs, the first woman to hold a high-ranking post.
Despite the move toward political openness in some of the Gulf states, the
United States believes that the Gulf states continue to rely heavily on repression and
denial of internationally recognized standards of human rights to maintain political
stability. Even the moves toward political liberalization in the Gulf states do not
give Gulf citizens the right to peacefully change their government, and the foreign
workers on which their economies rely have virtually no political rights at all.
Almost all the Gulf states are cited by human rights organizations and U.S. human
rights reports for arbitrary arrests, religious discrimination, and suppression of
peaceful assembly and free expression. Saudi Arabia actively prohibits the practice
of non-Muslim religions on its territory, even in private, with limited exceptions.
Qatar prohibits public non-Muslim worship but tolerates it in private. In Kuwait,
Bahrain, the UAE, and Oman, there are functioning Christian churches and
congregations. Small Jewish communities in some Gulf countries are generally
allowed to worship freely.
Economic Reform.12 At the same time the Gulf states are coping with
political change, some are taking steps to reform their economies and to shore up
their key asset, energy resources, by inviting foreign investment in that sector. As
noted in Table 1 below, oil export revenues still constitute a high percentage of GDP
for all of the states of the Gulf, including Iran and Iraq. The health of the energy
infrastructure of the Gulf producers is also a key concern of the United States – Gulf
petroleum comprises almost one quarter of the United States’ approximately 10
million barrels per day (mbd) net imports.
12For further information on the GCC economies, and trade and investment policies and
practices, see CRS Report RL30383, U.S.-Gulf Cooperation Council (GCC) Trade and
Investment: Trends and Implications. December 3, 1999, by Joshua Ruebner.

---

CRS-15
Table 1. Gulf Oil Exports (2001)
Total Oil
Oil Exports
Oil
GDP
Country
Exports
to U.S.
Revenues
(billion
dollars,
(mbd)
(mbd)
as % GDP
2000)
Iran
2.6
0
45%
99.0
Iraq
2.0
0.78
100%
15.0
Kuwait
1.8
0.26
50%
33.4
Saudi Arabia
7.4
1.66
40%
185.0
Qatar
0.8
negligible
30%
12.4
U.A.E.
2.1
negligible
33%
58.0
Oman
0.9
0
40%
17.7
Bahrain
0.02
0
30%
6.9
Total
17.82
2.70
N/A
N/A
Source: DOE, Energy Information Agency (EIA), OPEC Revenue Fact Sheet. Some
figures from supporting EIA data.
A sharp oil price decline in 1997-98 prompted the Gulf monarchy states to
reevaluate their longstanding economic weaknesses, particularly the generous system
of social benefits they provide to their citizens. However, the strong expectation in
these countries of continued benefits led the Gulf regimes to look to other ways to
reform their economies. Rather than cut benefits, institute or raise taxes, or
dramatically reduce their defense budgets, some of the Gulf states have chosen to
focus on attracting international capital to the energy and other sectors. Qatar has
invited foreign investors to develop its North Field, the world’s largest non-
associated gas field, which now has customers in Asia and sells some liquified
natural gas (LNG) to the United States.
Kuwait and Saudi Arabia have begun discussions with Western oil companies,
including several American firms, about further developing their oil and gas
reserves. However, internal opposition to opening up this vital asset to foreign
investors has significantly slowed the entry of international firms into this sector in
the two countries. Proponents of foreign investment maintain that international
firms bring technology and capital that are now in short supply to the Gulf's state-
owned oil companies, such as Saudi Aramco and Kuwait Petroleum Company
(KPC). The Kuwaiti government has not obtained National Assembly approval for
opening the energy sector to foreign investment. As a result, “Project Kuwait,” a
plan under which foreign investors would develop Kuwait’s northern oil fields, has
moved forward only slowly - the Kuwaiti government has continued discussions with
foreign firms that might participate in the project but no firm agreements have been
signed. Similarly, Saudi Crown Prince Abdullah’s initiative to open the Kingdom’s
gas reserves to foreign development, has stalled. Saudi Arabia and eight foreign
firms signed a preliminary agreement in June 2001 to develop three Saudi gas fields;
two of the three would be led by Exxon Mobil. However, the agreement has not been
finalized and has come close to collapse in recent months. Factors contributing to
the apparent derailment of the deal reportedly include obstructions by Saudi officials

---

CRS-16
who do not want Saudi Aramco to lose influence, and differences between Saudi
Arabia and the foreign investors on commercial terms of the deal.
As part of the process of attracting international investment, the Gulf states are
starting to open their economies. The Gulf states have passed laws allowing foreign
firms to own majority stakes in projects, and easing restrictions on repatriation of
profits. U.S. officials have recognized progress by the GCC states in eliminating the
requirement that U.S. firms work through local agents, and protecting intellectual
property rights of U.S. companies. Oman was admitted to the World Trade
Organization (WTO) in October 2000, and Saudi Arabia, the last GCC state not a
member of that body, is in negotiations to join it. Some Saudi officials blame the
United States for insisting on terms of entry that are too strict, and U.S. officials say
that Saudi Arabia is seeking terms that are overly generous and which would allow
it to avoid required reforms. In 1994, all six GCC countries relaxed their
enforcement of the secondary and tertiary Arab boycott of Israel, enabling them to
claim that they no longer engage in practices that restrain trade (a key WTO
condition). In December 2002, the GCC states agreed to implement a “customs
union,” providing for uniform tariff rate on foreign imports for all the GCC states;
the move had been under negotiation for many years.
Gulf Foreign Policy and Defense Cooperation with the
United States
Even with a weakened Iraq, most experts believe the GCC countries cannot
face their security challenges alone or in concert, should either Iran or Iraq turn
toward aggression. The GCC countries have chosen to ally with the United States
and, to a far lesser degree, other outside powers. Although their combined forces
might be equipped as well as or better than Iran or Iraq (see Table 2 below), the GCC
countries suffer from a shortage of personnel willing to serve in the armed forces or
commit to a military career, and they generally lack much combat experience.

---

CRS-17
Table 2. Comparative Military Strengths of the Gulf States
Naval Units
Defense
Patriot
Military
Surface-Air Combat
Budget
Country
Tanks
Firing
Personnel
Missiles
Aircraft
(billion
Surface
Sub-
Units
dollars)
Combatants marines
201,000 (incl. 1,055 (incl. 33 batteries, 348
Saudi
75,000 Saudi
315 M-1A2
(about half I- (incl. 174
34
0
20
27.2
Arabia
National
Abrams)
Hawk)
F-15)
Guard)
5
411 (incl. 330
UAE
64,500
(I-Hawk
101
18
0
--
3.9
Leclerc)
batteries)
Oman
43,400
153
2 batteries
40
13
0
--
2.4
385 (incl. 218
82 (incl.
10 batteries
Kuwait
15,500
M-1A2
40 FA-
10
0
5
3.3
(incl. 4 Hawk)
Abrams)
18)
75 SAM’s
Qatar
12,300
35
(incl. 12
18
7
0
--
1.5
Stinger)
34 (incl. 11 (incl. 1
Bahrain
11,000
106
2 batteries
0
--
.315
22 F-16)
frigate)
1,500
launchers
Iraq
424,000
2,200
(incl. SA-
316
6
0
--
1.4
2,3,6,7,8,9,13,
14,16)
Iran
513,600
1,565
76 batteries,
283
66 (incl. 10 6 (incl.
--
9.1
(incl. I-Hawk)
Hudong)
3 Kilo)
plus some
plus 40
Stinger
Boghammer
Source: International Institute for Strategic Studies, The Military Balance 2001-2002. (Note: Figures shown
here do include materiel believed to be in storage)
Iraqi aircraft figures include aircraft flown from Iraq to Iran during 1991 Gulf war. Patriot firing unit figures
do not include firing units emplaced in those countries by the United States. Six U.S. Patriot firing units are
emplaced in Saudi Arabia, according to Teal’s World Missiles Briefing.

---

CRS-18
Arab-Israeli Dispute. In return for providing protection to the Gulf states,
the United States has hoped that the Gulf states would provide tangible diplomatic
and material support to all aspects of U.S. policy in the Middle East, including U.S.
policy toward the Israeli-Palestinian dispute. In the aftermath of the 1993 Israeli-
PLO mutual recognition, the GCC states participated in the multilateral peace talks,
but only Bahrain, Qatar, and Oman hosted sessions of the multilaterals. As noted
above, in 1994 the GCC states ceased enforcing the secondary and tertiary Arab
League boycott of Israel, and Oman and Qatar opened low-level direct trade ties with
Israel in 1995-1996. A regional water desalination research center was established
in Oman as a result of an agreement reached at the multilaterals. In November 1997,
at a time of considerable strain in the peace process, Qatar bucked substantial Arab
opposition and hosted the Middle East/North Africa economic conference, the last
of that yearly event to be held. Diplomats from all six Gulf states met with Israeli
diplomats during reciprocal visits or at the margins of international meetings.
The Gulf states often remain within a broader Arab consensus, and differences
between the Gulf states and the United States on the Palestinian-Israeli dispute have
widened since the latest Palestinian uprising began in September 2000. After the
Palestinian uprising began in September 2000, Oman closed its trade office in Israel
and ordered Israel’s trade office in Muscat closed. Qatar announced the closure of
Israel’s trade office in Doha, although observers say the office has been tacitly
allowed to continue functioning at a low level of activity. (Qatar did not open a
trade office in Israel). Even though the Gulf states resent PLO leader Yasir Arafat
for supporting Iraq in the Gulf war, the Gulf states have bowed to public sympathy
for the plight of the Palestinians by giving financial assistance to Palestinian families
that have lost members to Israeli military operations or in the course of perpetrating
violence against Israelis. Although all the Gulf leaders have expressed sharp
disagreement with Bush Administration policy that they believe is too heavily tilted
toward Israel, the Gulf states have not, as was feared, taken steps to reduce defense
cooperation with the United States. Saudi Crown Prince Abdullah has tried to guide
and support U.S. policy on this issue; he engineered Arab League approval of a
vision of peace between Israel and the Arab states at the March 2002 Arab summit.
Policy Toward Iraq. The Bush Administration faces disagreement with
several of the Gulf states on policy toward Iraq, even though the Gulf states have
historically been the most threatened by Iraq. For the most part, Gulf leaders have
indicated that they would only support a U.S. attack if such action were authorized
by the United Nations and had broad international support. Two of the Gulf states
have appeared to be more supportive of the U.S. position. Kuwait and Qatar have
hosted a substantial buildup of U.S. forces that might be used in an offensive against
Iraq, an indication that these two states, at least, might support a U.S. offensive even
if not formally authorized by the United Nations. All segments of Kuwait’s elite
soundly rejected Saddam Hussein’s December 7, 2002 professed “apology” to
Kuwait for the 1990 invasion, and criticized Saddam for omitting from his speech
any mention of the more than 600 Kuwaitis missing from the Iraqi occupation. All
of the Gulf states want the United States to ensure that a stable and more peaceful
Iraq would result from any military action. Each Gulf state supports Resolution
1441 and says Iraq must comply with it, although the Gulf states also have tended to
push for relatively lenient criteria for judging Iraq’s cooperation with the new
inspections regime and for lifting international sanctions.

---

CRS-19
War on Terrorism.
The September 11 attacks introduced new frictions in
U.S. relations with the Gulf states. The revelation that fifteen of the nineteen
September 11 hijackers were of Saudi origin led to additional strain in U.S.-Saudi
relations – which had already been tense because of the Israeli-Palestinian dispute --
and to speculation that U.S. forces might be asked to leave the Kingdom. There
were also reports that the hijackers had used financial networks based in the UAE in
the September 11 plot. The Saudis reportedly have been offended by U.S. press
articles that equated Saudi human rights practices to those of the Taliban, and that
discuss Saudi funding of religious schools in Pakistan that were linked to the Taliban
and Al Qaeda. There have been reports that some Bush Administration officials,
weighing these and other criticisms of Saudi Arabia, now view the Kingdom as more
an adversary than a friend of the United States. In late November 2002, the U.S.-
Saudi relationship was further rocked by press reports that some unofficial gift of
money from the wife of the Saudi Ambassador to the United States, given to a Saudi
family living in the United States, might have inadvertently benefitted a few of the
September 11 hijackers.
Publicly, the Administration has responded to the criticisms of the Gulf states
by stressing that all the Gulf states strongly condemned the September 11 attacks, and
have responded, to varying degrees, to U.S. requests that they shut down financial
networks used by Al Qaeda and other terrorist groups. Virtually all of the Gulf states
have at least tried to identify bank accounts of known or suspected terrorists or
Islamic charities allegedly funding terrorist organizations, although they have been
hesitant to actually begin freezing such accounts. In November 2002, Saudi Arabia
announced the formation of an oversight authority for Saudi charities to enure that
donations to them do not end up in the hands of terrorist groups. The Gulf leaders
defend Islamic charities as needed vehicles to help poor Muslims, and they have
challenged some U.S. assertions that these funds are used for terrorism. During a
visit to the Gulf in April 2002, then Treasury Secretary Paul O’Neill praised Gulf
state cooperation with the United States, particularly that of the UAE, on terrorism
financing issues. Saudi Arabia announced in November 2002 that it had incarcerated
more than 100 Saudi nationals suspected of having ties to Al Qaeda.
Defense Agreements and U.S. Forces in the Gulf. In the aftermath of
the 1991 Gulf war, the Gulf states, with the exception of Saudi Arabia, renewed or
formalized defense agreements with the United States. The agreements provide not
only for facilities access for U.S. forces, but also for U.S. advice, training, and joint
exercises; lethal and non-lethal U.S. equipment prepositioning; and arms sales. The
pacts do not formally require the United States to come to the aid of any of the Gulf
states if they are attacked, according to U.S. officials familiar with their contents.
Nor do the pacts give the United States automatic permission to conduct military
operations from Gulf facilities — the United States must obtain permission on a case
by case basis.
The September 11 attacks offered a new opportunity to exercise the
longstanding defense cooperation with the Gulf states. The Gulf states were asked,
and most of them agreed, to host U.S. forces performing combat missions in
Afghanistan in Operation Enduring Freedom (OEF, the war against the Taliban and
Al Qaeda). Saudi Arabia did not offer to allow U.S. pilots to fly missions in
Afghanistan from Saudi Arabia, but it did permit the United States to use the

---

CRS-20
Combined Air Operations Center at Prince Sultan Air Base, south of Riyadh, to
coordinate U.S. air operations over Afghanistan. Published accounts indicate that the
other Gulf states did allow such missions to fly from their territory, and they allowed
the United States to station additional forces for OEF. Qatar publicly acknowledged
the U.S. use of the large Al Udaid air base in OEF, and Bahrain publicly deployed its
U.S.- supplied frigate naval vessel in support of OEF.
The number of U.S. military personnel in the Gulf theater of operations is listed
in Table 3 below, although the numbers may vary greatly in times of a crisis in the
Gulf or nearby. The number of U.S. personnel currently in the Gulf, reflecting a
buildup for OEF and the possibility of military action against Iraq, is more than
double the approximately 20,000 U.S. personnel in the Gulf prior to OEF. The
20,000 figure is a rough “baseline” number of U.S. forces there since 1991, in the
absence of any crisis. The buildup is especially pronounced in Qatar, where U.S.
forces currently in that country are about ten times the number there prior to OEF.
Press reports in mid-December 2002 say that U.S. troops in the Gulf region might
double, to about 100,000, by early February 2003, as part of the U.S. effort to
develop an option to launch an offensive against Iraq by that time. 13 The following
is a brief overview of U.S. operations and presence in each of the six GCC states:
! Concerned about internal opposition to a U.S. presence, Saudi Arabia has
refused to sign a formal defense pact with the United States. However, it has
entered into several limited defense procurement and training agreements with
the United States.14 U.S. combat aircraft based in Saudi Arabia fly patrols of
the no fly zone over southern Iraq, but Saudi Arabia does not permit
preplanned strikes against Iraqi air defenses - only retaliation in case of
tracking or firing by Iraq.
! Bahrain has hosted the headquarters for U.S. naval forces in the Gulf since
1948, long before the United States became the major Western power in the
Gulf. (During the 1970s and 1980s, the U.S. presence was nominally based
offshore.) Bahrain signed a separate defense cooperation agreement with the
United States on October 28, 1991. In June 1995, the U.S. Navy reestablished
its long dormant Fifth fleet, responsible for the Persian Gulf region, and
headquartered in Bahrain. No U.S. warships are actually based in Bahraini
ports; the headquarters is used to command the 20 or so U.S. ships normally
in the Gulf. About 850 U.S. personnel deployed to Shaykh Isa air base in
Bahrain in OEF.
! An April 21, 1980 facilities access agreement with Oman provided the United
States access to Omani airbases at Seeb, Thumrait, and Masirah, and some
prepositioning of U.S. Air Force equipment. The agreement was renewed in
1985, 1990, and 2000. In keeping with an agreement reached during the 2000
access agreement renewal negotiations, the United States is funding the $120
13Jaffe, Greg. Number of U.S. Troops in Gulf Is Expected to Nearly Double. Wall Street
Journal, December 19, 2002.
14For more information on these agreements, see CRS Report 94-78, Saudi Arabia: U.S.
Defense and Security Commitments. February 3, 1994, by Alfred Prados.

---

CRS-21
million cost to upgrade another base near al-Musnanah. When completed in
2003, the base will be able to handle even the largest U.S. aircraft.15
! On September 19, 1991, Kuwait, which sees itself as the most vulnerable to
Iraqi aggression, signed a 10-year pact with the United States (renewed in
2001 for another 10 years) allowing the United States to preposition enough
equipment to outfit a U.S. brigade. Joint U.S.-Kuwaiti exercises are held
almost constantly, meaning that about 4,000 U.S. military personnel are in
Kuwait at virtually all times. The United States opened a Joint Task Force
headquarters in Kuwait in December 1998 to better manage the U.S. forces in
Kuwait. With few limitations, Kuwait allows the United States to conduct
airstrikes on Iraq from its territory and to station additional air and ground
forces in Kuwait during times of crisis, as happened during OEF. The United
States has spent about $170 million since 1999 to upgrade the two Kuwaiti air
bases that host U.S. aircraft – Ali al-Salem and Ali al-Jabir, and to upgrade the
headquarters of U.S. Army troops in Kuwait. The U.S. prepositioning site is
expected to move to southern Kuwait, at Arifjan, in the near future; the site is
being expanded and can hold more equipment than the current site at Camp
Doha. Relocating there also places U.S. equipment further from Iraq and
thereby adds some strategic depth to the U.S. presence.
! Qatar is building an increasingly close defense relationship with the United
States, possibly to ensure that its neighbors do not try to encroach on its huge
natural gas reserves. It signed a defense pact with the United States on June
23, 1992, and has thus far accepted the prepositioning of enough armor to
outfit one U.S. brigade, and the construction of a facility (As-Saliyah site) that
could accommodate enough equipment to outfit at least two U.S. brigades.
Press reports say the United States is building an air operations center at Al
Udaid that would supplement or eventually supplant the one in Saudi Arabia,
and CENTCOM set up and tested a command headquarters at the As Saliyah
site in December 2002. The United States is currently helping Qatar expand
Al Udaid air base at a cost of about $1 billion, and U.S. support aircraft began
using the base during OEF. Over 2,000 U.S. Air Force personnel deployed to
Al Udaid in OEF. On December 11, 2002, visiting Secretary of Defense
Rumsfeld signed an accord with Qatar reaffirming U.S. access to Al Udaid
and provide for additional upgrades to the base.
! The UAE did not have close defense relations with the United States prior to
the 1991 Gulf war. The UAE then determined, however, that it wanted a
closer relationship with the United States, in part to deter and balance out
Iranian naval power. On July 25, 1994, the UAE announced it had signed a
defense pact with the United States. The UAE allows some U.S.
prepositioning, as well as U.S. ship port visits at its large man-made Jebel Ali
port. It also hosts U.S. refueling aircraft participating in the southern no fly
zone enforcement operation (al-Dhafra air base). Concerned about a
perceived loss of sovereignty, the UAE also insisted on a clarification of the
15Sirak, Michael. USA looks to Expand Bases in Oman and Qatar. Jane’s Defence Weekly,
April 17, 2002.

---

CRS-22
defense pact's provisions on the legal jurisdiction of U.S. military and other
official personnel in the UAE; the issue was resolved in 1997.
Table 3. U.S. Troops in the Gulf Area/ Host Nation Support
Country
U.S. Forces/Equipment Hosted
Host Nation
U.S. Aid
(Pre-September 11)
Support, 1999
(FY2003
(Millions)
Request)
Saudi Arabia
- About 6,000, mostly Air Force; no
$2.16 direct
$25,000 IMET
increase from baseline
$78.29
- Combined Air Operations Center at
indirect
Prince Sultan Air Base.
$80.44: Total
- About 160 U.S. aircraft
Kuwait
- About 12,000 mostly Army, more
$172.09 direct
than double the baseline.
$4.90 indirect
- About 40 U.S. aircraft
$176.99: Total
- Armor for one brigade stored (Camp
Doha, moving to Arifjan), other
armor being used in exercises
UAE
- About 500, mostly Air Force
$0.06 direct
$350,000 IMET
insignificant increase from baseline
$14.62
- Port facilities at Jebel Ali; some U.S.
indirect
support aircraft
$14.68: Total
Qatar
- About 3,300, well above baseline of
$0.00 direct
under 100
$11.00
- Air Force planes, equipment at Al
indirect
Udaid Air Base, new air command
$11.00: Total
center there.
- Armor for at least one brigade, and
CENTCOM forward hq at As-
Saliyah
Oman
- About 2,400, well above baseline of
$0.00 direct
$20 million
about 200
$34.91
FMF; $750,000
- Some Air Force equipment, access
indirect
IMET;
to air bases: Seeb, Thumrait,
$34.91: Total
$150,000
NADR
Masirah, and Musnanah
Bahrain
- About 3,000, mostly Navy
$1.25 direct
$450,000 IMET
- Fifth fleet headquarters
$0.15 indirect
- use of Shaykh Isa air base
$1.40: Total
Turkey
1,805 Air Force (Northern Watch)
N/A
$17.5 million
About 24 aircraft (Northern Watch)
FMF; $2.8
million IMET;
$600,000
NADR
Afloat in the Gulf
About 13,000 personnel and 70
N/A
aircraft per aircraft carrier task force.
2 U.S. ships help enforce Iraq
embargo.
Sources: Various press reporting during November - December 2002

Note: Direct support: financial payments to offset U.S. costs incurred. Indirect: in-kind support such as
provision of fuel, food, housing, basing rights, maintenance, and the like. IMET: International Military
Education and Training funds; FMF : Foreign Military Financing; NADR: Nonproliferation, Anti-Terrorism,
Demining, and Related Programs.

---

CRS-23
U.S. Arms Sales and Security Assistance. A key feature of the U.S.
strategy for protecting the Gulf has been to sell arms and related defense services to
the GCC states. Congress has not blocked any U.S. sales to the GCC states since the
Gulf war, although some in Congress have expressed reservations about sales of a
few of the more sophisticated weapons and armament packages to the Gulf states in
recent years. Some Members believe that sales of sophisticated equipment could
erode Israel’s “qualitative edge” over its Arab neighbors,16 if the Gulf states were to
join a joint Arab military action against Israel. Others are concerned that some U.S.
systems sold to the Gulf contain missile technology that could violate international
conventions or be re-transferred to countries with which the United States is at odds.
Few experts believe that, absent a major Arab-Israeli war, the Gulf states would seek
conflict with Israel. Even if they were to do so, successive administration have
maintained that the Gulf states are too dependent on U.S. training, spare parts, and
armament codes to be in a position to use sophisticated U.S.-made arms against
Israel.17 The Foreign Relations Authorization Act of 1994-95 (P.L. 103-256, signed
April 30, 1994) bars U.S. arms sales to any country that enforces the primary and
secondary Arab League boycott of Israel. The Administration has waived the
application of this law to the Gulf states every year since enactment.
Most of the GCC states are considered too wealthy to receive U.S. security
assistance, including Foreign Military Financing (FMF) and excess defense articles
(EDA). Only Bahrain and Oman – the two GCC states that are not members of the
Organization of Petroleum Exporting Countries (OPEC) – receive significant
amounts of U.S. assistance, which in Oman’s case will include Foreign Military
Financing (FMF) in FY2003. Saudi Arabia is receiving a nominal amount of
International Military Education and Training funds (IMET) in FY2002 and FY2003
to lower the costs to the Saudi government of sending its military officers to U.S.
schools. The move is intended to preserve U.S.-Saudi military-to-military ties over
the longer term, amid fears of recent erosion in those ties.
Excess Defense Articles. Bahrain and Oman are eligible to receive EDA
on a grant basis (Section 516 of the Foreign Assistance Act) and the UAE is eligible
to buy or lease EDA. In 1998-99, Oman received 30 and Bahrain 48 U.S.-made M-
60A3 tanks on a "no rent" lease basis. The Defense Department subsequently
transferred title to the equipment to the recipients. Since July 1997, Bahrain has
taken delivery of a U.S. frigate and an I- HAWK air defense battery as EDA.
Bahrain is currently seeking a second frigate under this program.
Foreign Military Sales, FMS. Some of the major U.S. arms sales (foreign
military sales, FMS) to the Gulf states, either in progress or under consideration,
include the following.18
16Towle, Michael. "Senators Say They Now Support F-16 Sale." Fort Worth Star-
Telegram. August 25, 1998.
17Ratnam, Gopal and Amy Svitak. "U.S. Would Keep Tight Rein on Missile Sold to
Bahrain." Defense News, September 11, 2000.
18Information in this section was provided by the Defense Security Cooperation Agency
(DSCA) in Security Assistance Program Summaries (unclassified) for each of the Gulf
(continued...)

---

CRS-24
! The UAE historically has purchased its major combat systems from France,
but UAE officials now appear to believe that arms purchases from the United
States enhance the U.S. commitment to UAE security. In March 2000, the
UAE signed a contract to purchase 80 U.S. F-16 aircraft, equipped with the
Advanced Medium Range Air to Air Missile (AMRAAM), the HARM (High
Speed Anti-Radiation Missile) anti-radar missile, and, subject to a UAE
purchase decision, the Harpoon anti-ship missile system. The total sale value
is estimated at over $8 billion, including a little over $2 billion worth of
weapons, munitions, and services.19 The aircraft are in the process of being
manufactured; deliveries have not begun. Congress did not formally object
to the agreement, although some Members initially questioned the inclusion
of the AMRAAM as a first introduction of that weapon into the Gulf region.
The Clinton Administration satisfied that objection by demonstrating that
France had already introduced a similar system in an arms deal with Qatar.
On July 18, 2002, the Administration notified Congress it would upgrade the
UAE’s 30 AH-64 Apache helicopter gunships (bought during 1991-94) with
the advanced “Longbow” fire control radar. The UAE is evaluating the Patriot
PAC-III theater missile defense system, as well as a Russian equivalent, to
meet its missile defense requirements.
! Saudi Arabia is still absorbing about $14 billion in purchases of U.S. arms
during the Gulf war, as well as post-war buys of 72 U.S.-made F-15S aircraft
(1993, $9 billion value), 315 M1A2 Abrams tanks (1992, $2.9 billion), 18
Patriot firing units ($4.1 billion) and 12 Apache helicopters. Few major new
U.S. sales are on the horizon, and the Defense Security Cooperation Agency
(DSCA) says Saudi Arabia is not, at this point, considering ordering any more
F-15's. In July 2000, the United States proposed a sale to Saudi Arabia of up
to 500 AMRAAM missiles and related equipment and services, at an
estimated cost of $475 million, to outfit their F-15s. Congress did not attempt
to block the sale.
! In early September 2002, the United States and Kuwait signed a long-delayed
agreement for Kuwait to purchase 16 U.S. Apache helicopters, equipped with
the Longbow fire control system - a deal valued at about $886 million. A
U.S. offer to sell Kuwait 48 U.S.-made M109A6 "Palladin" artillery systems,
(worth about $450 million) was withdrawn in July 2000. The sale had
languished for about two years because of opposition from several members
of Kuwait’s National Assembly, who believed that the purchase primarily
represented an attempt to curry political favor with the United States.
According to DSCA, Kuwait is considering purchasing additional F/A-18
aircraft to complement its existing fleet of 40 of those aircraft. Kuwait also
bought 5 Patriot firing units in 1992 and 218 M1A2 Abrams tanks in 1993.
18(...continued)
states. July - September 2000.
19 See CRS Report 98-436, United Arab Emirates: U.S. Relations and F-16 Aircraft Sale.
Updated June 15, 2000, by Kenneth Katzman and Richard F. Grimmett. Transmittal notices
to Congress, No. DTC 023-00, April 27, 2000; and 98-45, September 16, 1998.

---

CRS-25
! In 1998, Bahrain purchased 10 F-16s from new production at a value of about
$390 million; delivery began in early 2001. In late 1999, the Administration,
with congressional approval, agreed to sell Bahrain up to 26 AMRAAMs, at
a value of up to $69 million, but delivery has been delayed by the war in
Afghanistan, according to DSCA. Among the more controversial sales to a
Gulf state, in August 2000 Bahrain requested to purchase 30 Army Tactical
Missile Systems (ATACMs), a system of short-range ballistic missiles fired
from a multiple rocket launcher. The Defense Department told Congress the
version sold to Bahrain would not violate the rules of the Missile Technology
Control Regime (MTCR),20 an effort to allay congressional concerns that the
the sale would facilitate the spread of ballistic and cruise missiles in the
Gulf.21 In addition, the Administration proposed a system of joint U.S.-
Bahraini control of the weapon under which Bahraini military personnel
would not have access to the codes needed to launch the missile.22 Bahrain
accepted that control formula, and delivery is to begin in July 2003. In March
2002, President Bush issued Presidential Determination 2002-10 designating
Bahrain a “major non-NATO ally,” a designation that will open Bahrain to a
wider range of U.S. arms that can be sold to it in the future.
! Although Qatar has traditionally been armed by France and Britain, the
Foreign Minister said in mid-1997 that it is "probable" that Qatar will buy
arms from the United States in the future. No major U.S. sales seem
imminent, but DSCA says that Qatar is expressing interest in a few U.S.
systems including the Patriot (PAC-III), the M1A2 Abrams tank, a Low
Altitude Surveillance System (LASS), and the Harpoon system. The United
States has told Qatar it is eligible to buy the ATACM system (see above)
because the Administration has approved Bahrain for purchases of that
system, but Qatar has not requested to purchase the ATACM to date.
! Oman has traditionally purchased mostly British weaponry, reflecting British
influence in Oman’s military, and the British military’s mentoring and
advisory relationship to Qaboos. In October 2001, in an indication of waning
British influence, the United States announced that Oman would buy 12 F-16
A/B aircraft, at an estimated value of $1.1 billion. Oman does not appear to
be considering the purchase of any other major U.S. systems at this time,
although it has requested some items be supplied as EDA, including patrol
boats to combat smuggling.
Joint Security/ “Cooperative Defense Initiative”. The United States
has encouraged the GCC countries to increase military cooperation among
themselves, building on their small (approximately 5,000 personnel) Saudi-based
force known as Peninsula Shield, formed in 1981. Peninsula Shield did not react
20The MTCR commits member states not to transfer to non-member states missiles with a
range of more than 300 km, and a payload of more than 500 kilograms. Turkey, Greece,
and South Korea are the only countries to have bought ATACMs from the United States.
21Ratnam, Gopal and Amy Svitak. "U.S. Would Keep Tight Rein on Missile Sold to
Bahrain." Defense News, September 11, 2000.
22Ibid.

---

CRS-26
militarily to the Iraqi invasion of Kuwait, exposing the force's deficiencies. After the
war, manpower shortages and disagreements over command of the force prevented
the GCC states from agreeing to a post-Gulf war Omani recommendation to boost
Peninsula Shield to 100,000 men. Gulf state suspicions of Syria and Egypt
prevented closer military cooperation with those countries, as envisioned under the
March 1991 "Damascus Declaration." In September 2000, the GCC states agreed in
principle to increase the size of Peninsula Shield to 22,000.23 It should be noted that
the GCC states have announced similar agreements to expand Peninsula Shield in the
past without implementation, and that no timetable has been set for reaching the
targeted level of strength. In a further step, at their summit in December 2000, the
GCC leaders signed a “defense pact” that presumably would commit them to defend
each other in case of attack.
The GCC states have made some incremental progress in linking their early
warning radar and communication systems. In early 2001, the GCC inaugurated its
“Belt of Cooperation” network for joint tracking of aircraft and coordination of air
defense systems, built by Raytheon. The Belt of Cooperation is expected to
eventually include a link to U.S. systems. The project is part of the United States’
“Cooperative Defense Initiative” to integrate the GCC defenses with each other and
with the United States. Another part of that initiative is U.S.-GCC joint training to
defend against a chemical or biological attack, as well as more general joint military
training and exercises.24 The Cooperative Defense Initiative is a scaled-back version
of an earlier U.S. idea to develop and deploy a GCC-wide theater missile defense
(TMD) system that could protect the Gulf states from Iran's increasingly sophisticated
ballistic missile program and from any retained Iraqi ballistic missiles.25 The
Department of Defense, according to observers, envisioned this system under which
separate parts (detection systems, intercept missiles, and other equipment) of an
integrated TMD network would be based in the six different GCC states. That
concept ran up against GCC states’ financial constraints, differing perceptions among
the Gulf states, some level of mistrust among them, and the apparent UAE preference
for Russian made anti-missile/air defense systems.26 As noted in Table 3 above,
Kuwait and Saudi Arabia have Patriot anti-missile units of their own; the other four
GCC states have no advanced missile defenses.
23"GCC States Look to Boost 'Peninsula Shield' Force to 22,000." Agence France Press,
September 13, 2000.
24Press Conference with Secretary of Defense William Cohen. Office of the Assistant
Secretary of Defense (Public Affairs), April 8, 2000.
25Under Resolution 687, Iraq is allowed to retain and continue to develop missiles with a
range of up to 150 km, which would put parts of Kuwait and Saudi Arabia within range of
Iraq, even if Iraq abides completely by the provisions of the resolution.
26Finnegan, Philip. "Politics Hinders Joint Gulf Missile Defense." Defense News, March
22, 1999.

---

CRS-27
Prospects and Challenges
U.S. Gulf policy faces numerous uncertainties as the Bush Administration
moves toward decisions on whether to launch a military offensive to disarm Iraq and
change its regime. Should the Administration rely on continued weapons inspections
to ensure Iraq is free of WMD, it faces uncertainty over whether the inspections
could be thorough and comprehensive enough to detect evidence that Iraq retains
WMD. Should the Administration decide to undertake a military offensive, there is
uncertainty over whether spillover effects could be contained, such as unrest in pro-
U.S. governments in the region, skyrocketing oil prices, economic effects on the U.S.
budget and U.S. economy, Iraq’s use of WMD in any war with the United States, and
how long U.S. troops might need to remain in Iraq to restore stability.

In Iran, the Administration faces the consequences of its apparent decision to
support reformists within or outside the political structure rather than try to engage
Khatemi’s government directly. One possible consequence of the U.S. stance is that
reformers might respond by seeking to overthrow the current political system
entirely, throwing Iran into instability. Another possibility is that Khatemi’s
authority might erode further in favor of factions who fear potential hostilities with
the United States and who might want to accelerate Iran’s WMD programs. The
Bush Administration is closely watching the construction of the nuclear plant at
Bushehr as well as two newly discovered sites in central Iran. The Administration
might face a decision whether to prevent the Bushehr plant or the related sites from
becoming operational - either through military or other means - or whether to accept
the proliferation risks posed by Bushehr and the other sites. Other questions remain
about how to curb Iranian support to Palestinian and other groups engaged in
violence or terrorism against Israel.
The Administration faces major questions about the course of its relations with
the Gulf states. One significant unknown is whether or not Gulf public sympathies
with the Palestinians and Iraq will cause the Gulf regimes to refuse to cooperate with
any U.S. military offensive against Iraq. The Gulf states already have faced some
internal pressure to downplay their involvement in containing Iraq, because Iraq is
increasingly perceived among Gulf populations as unjustly victimized by U.S. and
international sanctions. The Iraq issue aside, the Gulf states’ long term commitment
to cooperating with the United States against Al Qaeda is also uncertain. According
to numerous but largely anecdotal accounts, Gulf publics tend to agree with Al
Qaeda’s stated grievances against the United States, although not necessarily with its
terrorist tactics.
Another unknown is how some Gulf states might respond to the Bush
Administration’s new initiatives to promote political and economic reform. Some
might welcome it as reinforcement of steps already taken by those Gulf leaders
initiating reform; others might view its as unwelcome U.S. interference.

---

CRS-28
Appendix 1. Gulf State Populations, Religious
Composition
Country
Total
Number of Non-
Religious Composition
Population
Citizens
Iran
66.1 million
607,000
89% Shia; 10% Sunni; 1%
Bahai, Jewish, Christian,
Zoroastrian
Iraq
23.3 million
—
60-65% Shia; 32-37%
Sunni; 3% Christian or
other
Saudi Arabia
22.7 million
5.3 million
90% Sunni; 10% Shia
Kuwait
2.04 million
1.16 million
45% Sunni; 40% Shia;
15% Christian, Hindu,
other
United Arab
2.4 million
1.58 million
80% Sunni; 16% Shia; 4%
Emirates
Christian, Hindu, other
Bahrain
645,300
228,600
75% Shia; 25% Sunni
Qatar
769,000
516,000
95% Muslim; 5% other
Oman
2.6 million
527,000
75% Ibadhi Muslim; 25%
Sunni and Shia Muslim,
and Hindu
Source: Central Intelligence Agency World Factbook, 2001. Population figures are estimates as of
July 2001. Most, if not all, non-Muslims in GCC countries are foreign expatriates.

---

CRS-29
Appendix 2. UNSCOM Accomplishments and Unresolved
Issues
Weapons Category
Accomplishments
Unresolved Issues
Overall Status: Nuclear
IAEA reports Iraq's
Questions remain about
nuclear program
nuclear design drawings,
dismantled and rendered
documents, and fate of
harmless (April and
some equipment
October 1998 reports)
Nuclear Fuel
All removed by IAEA
––
Nuclear Facilities
Dismantled by IAEA
––
Suppliers
IAEA says it has
Most of 170 technical
assembled a picture of
reports from a German
Iraq's nuclear suppliers
supplier unaccounted for
Overall Status: Chemical
Declared munitions,
Most outstanding
chemical precursors
questions involve Iraqi
destroyed by UNSCOM
production of VX nerve
agent
VX nerve agent
Iraq admits producing 4
No verification of the fate
tons
of the agent
VX precursor chemicals
191 tons verified as
About 600 tons
destroyed
unaccounted for, enough
to make 200 tons of VX
Other chemical munitions
38,500 found and
Fate of 31,600 munitions,
destroyed by UNSCOM
550 mustard shells, and
107,000 chemical casings
unaccounted for
Chemical Weapons
690 tons found and
3,000 tons unaccounted
Agents
destroyed by UNSCOM
for
Precursor Chemicals
3,000 tons found and
4,000 tons unaccounted
destroyed by UNSCOM
for
Chemical Monitoring
170 sites monitored during
No monitoring since
UNSCOM tenure
UNSCOM departure
Overall Status:
UNSCOM has obtained
UNSCOM says most work
Biological Program
Iraqi admissions that it had
remains in this category;
a biological warfare
no biological weapons
program
found by UNSCOM
Biological Agents
Iraq admitted producing
No verification of
19,000 liters of botulinum;
destruction or amounts
8,400 liters of anthrax; and
produced
2,000 liters of aflatoxin
and clostridium
Munitions
Iraq admits loading
No verification of bomb
biological weapons onto
destruction; fate of
157 bombs
additional 500 parachute-
dropped bombs unknown

---

CRS-30
Weapons Category
Accomplishments
Unresolved Issues
Agent Growth Media
Supplier records show 34
4 tons unaccounted for
tons imported
Delivery Equipment
Iraq admits testing
Fate of these systems
helicopter spraying
unknown
equipment and drop tanks
Production Facilities
Salman Pak facility buried
UNSCOM notes that
by Iraq before inspections;
biological agents can be
Al Hakam bulldozed by
produced in very small
UNSCOM
facilities
Monitoring
86 sites monitored during
No monitoring since
UNSCOM tenure
UNSCOM departure
Overall Status: Ballistic
Almost all imported
Questions about Iraq's
Missiles
missiles accounted for
indigenous missile
production remain
Imported Scud Missiles
UNSCOM says it has
Two Scuds missing by
accounted for 817 of 819
UNSCOM accounting;
Scuds imported from
U.S. and Britain believe
Russia
10-12 Scuds still
unaccounted for
Chemical/Biological
75 warheads declared. 30
Two declared chemical
Warheads
destroyed by UNSCOM,
warheads may be missing.
and at least 43 others,
Undeclared chem/bio
including 25 biological
warheads may exist
warheads, verified as
destroyed
Imported Conventional
Iraq admits importing 50
Warheads unaccounted for
Warheads
Scud warheads for high
explosives
Indigenously-produced
––
30 warheads and 7
Missiles
missiles unaccounted for
Missile Propellant
––
300 tons unaccounted for
Production Equipment
Iraq admits having 150
Fate unknown
tons of equipment
Monitoring
63 sites monitored during
Missiles of up to 150 km
UNSCOM tenure
range permitted. U.S.
reports note permitted
programs can benefit
research on prohibited-
range missiles.
Source: The information in this table is derived from reports to the U.N. Security Council by the U.N.
Special Commission on Iraq (UNSCOM) and the International Atomic Energy Agency (IAEA).

---

CRS-31
Appendix 3. No Fly Zones in Iraq
T u r k e y
N O R T H E R N
Z O N E
I r a n
3 6 °
S y r i a
I r a q
B a g h d a d
3 3 °
S O U T H E R N Z O N E
( E X T E N D E D )
J o r d a n
3 2 °
S O U T H E R N
Z O N E
K u w a it
S a u d i A r a b i a
A d a p te d b y C R S fro m M a g e lla n G e o g r a p h ix . U s e d w i th p e r m is s io n .
Northern No Fly Zone Established April 1991
Southern No Fly Zone (South of 32nd Parallel) Established August 1992
Southern No Fly Zone Extended to 33rd Parallel Established September 1996

---

CRS-32
Appendix 4. Map of the Persian Gulf Region and Environs

---