Order Code RL31533
Report for Congress
Received through the CRS Web
The Persian Gulf:
Issues for U.S. Policy, 2003
Updated February 3, 2003
Kenneth Katzman
Specialist in Middle Eastern Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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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,
prior to the current U.S.-Iraq confrontation, 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 thaw 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 express support for the
Iranian people and their calls for reform, rather than seek to engage Iran’s President
Mohammad Khatemi.
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, and
the Gulf states have shut down some of the financial networks used by Al Qaeda.
The Gulf states are reluctant to publicly support possible U.S. military action against
Iraq, but most of them, particularly Kuwait and Qatar, appear ready to host U.S.
forces without conditions in the event of conflict.
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 generate unrest in the
Gulf states in the event of U.S. military action against Iraq.
This report will be updated as warranted by regional developments.

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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 . . . . . . . . . . . . . . . . . . . . . . 24
Excess Defense Articles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Foreign Military Sales, FMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Joint Security/ “Cooperative Defense Initiative” . . . . . . . . . . . . . . . . . 27
Prospects and Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Appendix 1. Gulf State Populations, Religious Composition . . . . . . . . . . . . . . 30
Appendix 2. UNSCOM Accomplishments and Unresolved Issues . . . . . . . . . . . 31
Appendix 3. No Fly Zones in Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Appendix 4. Map of the Persian Gulf Region and Environs . . . . . . . . . . . . . . . . 34
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 . . . . . . . . . . . . . . . 23

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List of Figures
Figure 1. Facilities Used by U.S. Forces in the Gulf . . . . . . . . . . . . . . . . . . . . . 24
Figure 2. Iraq: No-Fly Zones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

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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

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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.
1 The 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.
2 Central 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).

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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 the parliament has periodically been suspended and 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,

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particularly Saudi Arabia, over 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 failure to fully comply with U.N. Security Council resolutions
since its military expulsion from Kuwait in 1991 kept the United States and Iraq at
odds. In November 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 any 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
then 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 17, 1998), but Iraq refused to allow new inspections.
In the absence of U.N. inspections during 1998 until late 2002, the United
States relied 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

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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.
President Bush has said that if Iraq does not disarm peacefully, the
United States would lead a coalition to disarm Iraq by force, and he
has left no doubt that such a move would include the overthrow of
Saddam Hussein. The President says no decision has been made to
use force but that “time is running out” for Iraq to disarm peacefully
in accordance with the mandate of U.N. Security Council Resolution
1441 (November 8, 2002).
! 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
3 Central Intelligence Agency. Iraq’s Weapons of Mass Destruction Programs. October
2002.
4 In 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).

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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 war at this time. A 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 said that a ground attack on Iraq would need
congressional authorization, and some 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). In January 2003, some Members, even some who voted in
favor of that resolution, signed on to a letter urging that inspections be given more
time.

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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). This part of the power structure, led by Supreme
Leader Ali Khamene’i, who is Iran’s top leader under Iran’s constitution, 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. However, Khatemi offered only people-to-people
contacts with the United States. On June 17, 1998, seeking to build momentum for
a rapprochement, 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 Iran – as well as for
the U.S. tilt toward Iraq in the Iran-Iraq war. The speech followed a July 1999 easing
5 Kessler, Glenn. U.S. Changes Policy on Iran. Washington Post, July 23, 2002.
6 The 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.
7 The four category of goods that can be imported are caviar, dried fruit, nuts, and carpets.

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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
occupation. Iran’s aid to Hizballah has continued, even at times increased, since
8 The 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.
9 Slavin, Barbara. “Iran, U.S. Elected Officials’ Meeting First in 20 Years.” USA Today,
August 31, 2000.

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CRS-9
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. Iran has said it will allow the IAEA to
inspect the facilities in February 2003. There are disagreements inside Iran 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, clashes between the

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CRS-10
demonstrators and the security forces controlled by hardliners, and a legislative
challenge by Khatemi to boost the power of his office.
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. 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
10 For 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.
11 For more information on bin Laden, see CRS Report RL31119, Terrorism: Near Eastern
Groups and State Sponsors, 2002. February 13, 2002, by Kenneth Katzman.

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CRS-11
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.
! 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 51 years old.

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CRS-12
! 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
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 those two states.
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.

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CRS-13
! 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 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 as early as the end
of 2003. According to observers in Qatar, thirty seats of the 45-seat
body 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

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CRS-14
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
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. 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.

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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 1997-1998 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
partnered with foreign investors such as Exxon Mobil, Totalfina Elf (France), and
others 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

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CRS-16
not been finalized and was at one point in late 2002 close to collapse. Factors
contributing to the near derailment of the deal reportedly include obstructions by
Saudi officials who do not want Saudi Aramco to lose influence, and differences
between Saudi Arabia and the foreign investors on commercial terms.
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.

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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.

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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
some 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
publicly 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 been more openly supportive of the U.S. position; Kuwait and Qatar
have hosted substantial buildups of U.S. forces and equipment that might be used in
an offensive against Iraq. This indicates that these two states would likely support
a U.S. offensive even if not formally authorized by the United Nations. Of the Gulf
states, Saudi Arabia has been publicly the most vocally opposed to a U.S. offensive
against Iraq and it has not allowed additional U.S. forces to deploy to the Kingdom
for possible military action. All of the Gulf states want the United States to assure
then that a stable and more peaceful Iraq would result from any military action.
Every Gulf state supported Resolution 1441 and said 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.

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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. U.S. officials have praised Qatari cooperation on shutting down
terrorism financing channels as well. 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

---

CRS-20
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
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 expected to rise
to about 150,000 by mid February, about seven times 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, and in Kuwait, from which the bulk of any
U.S. offensive is likely to launch. 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.12 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
12 For 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
an agreement reached during the 2000 access agreement renewal
negotiations, the United States is funding the $120 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.13
! 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.
(Most of that armor had moved from storage in Qatar up to Kuwait
by December 2002, presumably for possible use against Iraq.) The
United States has built 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 expanding U.S. access to Al Udaid and
providing for additional upgrades to the base.
13 Sirak, Michael. USA looks to Expand Bases in Oman and Qatar. Jane’s Defence Weekly,
April 17, 2002.

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CRS-22
! 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 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.

---

CRS-23
Table 3. U.S. Troops in the Gulf Area/ Host Nation Support
Country
U.S. Forces/Equipment Hosted
Host Nation
U.S. Aid
(January 31, 2003)
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 80 U.S. aircraft
Kuwait
- About 25,000 mostly Army, heading
$172.09 direct
to over 100,000 by mid February.
$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 buildup
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
refueling aircraft, and drones
$14.68: Total
Qatar
- About 3,300, well above baseline of
$0.00 direct
under 100
$11.00
- KC-10 and KC-135 refueling planes,
indirect
equipment at Al Udaid Air Base, new
$11.00: Total
air command center there.
- Armor for at least one brigade (now
deployed to Kuwait), and
CENTCOM forward hq at As-
Saliyah
Oman
- About 3,000, 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, Masirah.
$34.91: Total
$150,000
NADR
B-1B bombers deploying.
Bahrain
- About 4,200, mostly Navy
$1.25 direct
$450,000 IMET
- Fifth fleet headquarters
$0.15 indirect
- use of Shaykh Isa air base
$1.40: Total
Turkey
About 4,000, about half are Air Force
N/A
$17.5 million
(Northern Watch)
FMF; $2.8
About 60 aircraft (Northern Watch)
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 2002 - January 2003

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-24
Figure 1. Facilities Used by U.S. Forces in the Gulf
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,14 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
14 Towle, Michael. “Senators Say They Now Support F-16 Sale.” Fort Worth Star-
Telegram. August 25, 1998.

---

CRS-25
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.15 The Foreign Relations Authorization Act of 1994-1995 (P.L. 103-236,
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 1998-1999, 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.16
! 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
15 Ratnam, Gopal and Amy Svitak. “U.S. Would Keep Tight Rein on Missile Sold to
Bahrain.” Defense News, September 11, 2000.
16 Information in this section was provided by the Defense Security Cooperation Agency
(DSCA) in Security Assistance Program Summaries (unclassified) for each of the Gulf
states. July - September 2000.

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CRS-26
of weapons, munitions, and services.17 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 1991-1994) 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.
! 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
17 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-27
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),18 an effort to allay congressional concerns that the the sale
would facilitate the spread of ballistic and cruise missiles in the
Gulf.19 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.20 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 militarily to the
18 The 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.
19 Ratnam, Gopal and Amy Svitak. “U.S. Would Keep Tight Rein on Missile Sold to
Bahrain.” Defense News, September 11, 2000.
20 Ibid.

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CRS-28
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 22,000.21 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.22 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.23
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.24 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.
21 “GCC States Look to Boost ‘Peninsula Shield’ Force to 22,000.” Agence France Press,
September 13, 2000.
22 Press Conference with Secretary of Defense William Cohen. Office of the Assistant
Secretary of Defense (Public Affairs), April 8, 2000.
23 Under 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.
24 Finnegan, Philip. “Politics Hinders Joint Gulf Missile Defense.” Defense News, March
22, 1999.

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CRS-29
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 or provide only minimal cooperation. 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 some of 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.

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CRS-30
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.

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CRS-31
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

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CRS-32
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).

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CRS-33
Appendix 3. No Fly Zones in Iraq
Figure 2. Iraq: No-Fly Zones
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.

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CRS-34
Appendix 4. Map of the Persian Gulf Region and Environs

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