THE NEW BALANCE OF GULF ARMS.

Cordesman, Anthony H.

Even before the current "oil crunch," fundamental changes began to take place in the arms trade to the Gulf. The end of the Iran-Iraq War, the Gulf War, U.N. sanctions against Iraq, and "dual containment" had a major impact on both Gulf military expenditures and arms imports. Iraq lost the ability to recapitalize its military forces, much less modernize them effectively. Iran spent far less on both its total military forces and arms than it had during the Iran-Iraq War. Contrary to conventional wisdom, Southern Gulf military expenditures and arms transfers also dropped significantly.

Since the Gulf War, Iraq has virtually had to drop out of the race. It has had no major arms imports since the U.N. embargo in mid-1990. Iran has lacked the funds and access to arms to launch a major new conventional arms build-up, and has taken advantage of its rival's defeat to limit its expenditures. The Southern Gulf states did make significant purchases at the time of the Gulf War, but then cut back to levels notably lower than before Iraq invaded Kuwait.

These cuts in arms sales are certain to accelerate as part of the oil crunch. A loss of 30-40 percent on oil revenues has had a major impact in a region where governments get an average of 70-80 percent of their revenues from oil exports. Countries like Saudi Arabia have already had to delay existing arms contracts, and many other countries are having to delay new purchases and delay or cancel existing orders. Only the UAE seems committed to continuing the reckless kinds of arms purchases that wasted so much money in the past. The other Southern Gulf states are learning to be far more cautious as to how they use their funds.

But some things do not change. Iraq is not importing arms because it cannot, and its present government seems certain to choose guns over butter the moment sanctions are lifted. Iran has not given up its ambitions. It has kept a carefully focused build-up in the lower Gulf. Both Iran and Iraq continue to develop long-range missile systems and continue to proliferate. The tendency of the Southern Gulf states to buy different arms from different sources has not changed at all. They spend less, but generally without a proper focus on their military needs and with little real interest in regional cooperation and interoperability.

ARMS TRANSFERS SINCE THE GULF WAR

Tables One and Two summarize the recent trends in the regional arms imports. It is important to note that these figures are based on declassified U.S. intelligence data, not guesswork by some NGO, and that they show the trends in arms imports in directly comparable, constant 1996 U.S. dollars. Comparisons in current dollars can still have value, but they do not provide a true picture of changes over time.

Table One

Cumulative Arms Imports of the Gulf States - 1986-1996 (measured in constant millions of 1996 U.S. dollars)

[ILLUSTRATION OMITTED]

 86 87 88 89 90

Saudi Arabia 8,832 10,410 7,880 7,442 8,303
Iraq 8,288 7774 7,117 3,050 3,508
Iran 3,125 2,240 3,304 2,196 222
Kuwait 258 250 153 329 409
UAE 217 264 241 1,190 1,871
Yemen 513 1,054 1,150 885 573
Oman 163 211 76 73 12
Bahrain 82 422 127 98 327
Qatar 7 0 38 220 117

[SUM: 21,485 22,625 20,086 15,483 15,342

 91 92 93 94 95

Saudi Arabia 10,010 9,088 8,535 8,128 9,168
Iraq 0 0 0 0 0
Iran 1,800 931 1,174 406 306
Kuwait 349 1,095 1,067 406 1,324
UAE 529 526 613 547 968
Yemen 45 5 21 261 143
Oman 56 11 139 302 438
Bahrain 79 120 96 104 71
Qatar 22 44 11 10 51

[SUM: 12,890 11,820 11,656 10,164 12,469

 96

Saudi Arabia 9,800
Iraq 0
Iran 350
Kuwait 1,700
UAE 775
Yemen 80
Oman 380
Bahrain 50
Qatar 5

[SUM: 13,140]

Source: Adapted by Anthony H. Cordesman from U.S. Arms Control and Disarmament Agency, World Military Expenditures and Arms Transfers. GPO, Washington, various editions.

Table Two

Comparative Arms Imports of the Gulf States -- 1986-1996 (measured in constant millions of 1996 U.S. dollars)

[ILLUSTRATION OMITTED]

 86 87 88 89 90

Qatar 7 0 38 220 117
Bahrain 82 422 127 98 327
Oman 163 211 76 73 12
Yemen 513 1,054 1,150 885 573
UAE 217 264 241 1,190 1,871
Kuwait 258 250 153 329 409
Iran 3,125 2,240 3,304 2,196 222
Iraq 8,288 7,774 7,117 3,050 3,508
Saudi Arabia 8,832 10,410 7,880 7,442 8,303

 91 92 93 94 95

Qatar 22 44 11 10 51
Bahrain 79 120 98 104 71
Oman 56 11 139 302 438
Yemen 45 5 21 261 143
UAE 529 526 613 547 968
Kuwait 349 1.10 1,067 406 1,324
Iran 1,800 931 1,174 406 306
Iraq 0 0 0 0 0
Saudi Arabia 10,010 9,088 8,535 8,128 9,168

 96

Qatar 5
Bahrain 50
Oman 380
Yemen 80
UAE 775
Kuwait 1,700
Iran 350
Iraq 0
Saudi Arabia 9,800

Source: Adapted by Anthony H. Cordesman from US Arms Control and Disarmament Agency. World Military Expenditures and Arms Transfers. GPO, Washington, various editions

The following broad trends shape the patterns in the arms sales to the Northern and Southern Gulf that are reflected in these tables:

* Iranian conventional arms imports have dropped to about one-fifth to one-fourth of their Iran-Iraq War level.

* Iraqi military expenditures have dropped to about one-tenth of their Iran-Iraq War level, as measured in constant dollars. Iraq has had no major arms imports since 1990.

* The rise in deliveries to the Southern Gulf that occurred following the orders placed during the Gulf War was much smaller than many analysts seem to realize. Southern Gulf arms purchases and deliveries are now at notably lower levels than they averaged before the Gulf War. They now average about half of their pre-Gulf War level in constant dollars.

* Southern Gulf arms purchases are driven largely by the purchases of Kuwait, Saudi Arabia, and the UAE. Bahrain, Oman, and Qatar have been comparatively small importers, and their economies have experienced little strain.

* The net effect has been to fundamentally change the balance of conventional arms in the Southern Gulf. Since 1990, the trends in new conventional arms deliveries have sharply favored the Southern Gulf and the strategic interests of both the Southern Gulf states and the West.

While declassified U.S. intelligence data are only available through this period, an examination of other sources indicates that the trends shown in this table are valid through the end of 1998. There have been no major new Iraqi imports, only minor increases in Iranian imports, and a steady decline in most Southern Gulf imports.

NEW ARMS AGREEMENTS VERSUS NEW DELIVERIES

Table Three summarizes the recent trends in new arms purchases and actual deliveries before and after the Gulf War. These estimates are made in current dollars, but cover sales through 1996. They also provide a way of tracking the average patterns in sales during the period just before the Gulf War, during and immediately after the Gulf War, and since 1997.

Table Three

Gulf Arms Agreements and Deliveries: 1987-1997 (measured in current millions of U.S. dollars)

[ILLUSTRATION OMITTED]

 Agreements: Agreements: Agreements:
 87-90 91-94 94-97

Iran 10,200 2,700 1,600
Iraq 10,500 0 0
Saudi Arabia 45,700 30,200 14,100
Other GCC 5,600 13,500 10,500

Iran 10,200 2,700 1,600
Iraq 10,500 0 0
Northern Gulf 20,700 2,700 1,600

Total GCC 51,300 43,700 24,600
Bahrain 600 200 300
Kuwait 3,500 5,700 2,300
Oman 400 600 600
Qatar 100 2,000 2,200
Saudi Arabia 45,700 30,200 14,100
UAE 1,000 5,000 5,100
 (GCC less Saudi) 5,600 13,500 10,500

Yemen 300 1,200 700

 Deliveries: Deliveries: Deliveries:
 87-90 91-94 94-97

Iran 7,800 3,900 1,900
Iraq 16,600 0 0
Saudi Arabia 26,300 27,900 36,400
Other GCC 5,100 4,400 9,000

Iran 7,800 3,900 1,900
Iraq 16,600 0 0
Northern Gulf 24,400 3,900 1,900

Total GCC 31,400 32,300 45,400
Bahrain 800 300 200
Kuwait 1,300 2,500 4,500
Oman 200 300 1,200
Qatar 300 0 700
Saudi Arabia 26,300 27,900 36,400
UAE 2,500 1,300 2,400
 (GCC less Saudi) 5,100 4,400 9,000

Yemen 2,800 300 500

0 = less than $50 million or nil, and all data rounded to the nearest $100 million.

Source: Richard F. Grimmett, Conventional Arms Transfers to the Developing Nations, Congressional Research Service, various editions.

It is again clear that new agreements in the Northern Gulf have fallen precipitously since the Gulf War, and that new agreements in the Southern Gulf are reaching average levels far lower than those made during a similar period before the Gulf War. It is also clear, however, that the drop in actual arms sales has been much sharper than the drop in deliveries would indicate. The previous data on deliveries often reflect the impact of arms orders placed years before the actual delivery. Table Three shows, however, that total new arms orders have dropped from $72 billion in the four year period 1987-90 to $46.4 billion 1991-94, and $26.2 billion 1994-97. The drop in new orders from the Northern Gulf is particularly striking. Recent new orders are less than 10 percent of the volume of new orders at the end of the Iran-Iraq War and before the Gulf War. Southern Gulf arms imports have also dropped. They shrank from $51.3 billion in the four year period 1987-90 to $42.7 billion 1991-94, and $24.6 billion 1994-97. New Saudi orders totaled only one-third the amount during 1994-97 that they did during 1987-89.

"FOCUSED POVERTY" IN THE NORTHERN GULF

For all the criticism of U.N. sanctions and "dual containment," it is clear from Tables Two to Four that they have not been without their benefits. Iraq has had virtually no arms imports since 1990. Even before the Gulf War, it would have taken about $1.5 billion a year in imports to sustain Iraq's military machine. Iraq's massive equipment losses during the Gulf War have reduced its need for imports to sustain existing systems, but have created a massive new set of requirements to rebuild Iraq's forces and act on the lessons of the Gulf War.

[TABULAR DATA FOUR NOT REPRODUCIBLE IN ASCII]

The full strategic impact of these differences has already been illustrated in discussing Table Three. It can also be illustrated, however, in terms of market share. Table Four shows just how dramatic the shift has been in the share of Northern Gulf orders versus those of the Southern Gulf, and it is important to stress that these patterns have now gone on for a decade. Iran and Iraq have no prospect of getting the funds or aid to suddenly reverse these patterns, and even if they had the money, it would take years to obtain the resulting deliveries.

THE CASE OF IRAQ

Iraq has paid many prices for its invasion of Kuwait, but one price has clearly been the inability to maintain and modernize its conventional arms imports. When Iraq invaded Kuwait, it was the dominant regional military power in the Gulf. It had decisively defeated Iran during the spring and summer of 1988, in battles that cost Iran some 45-55 percent of its inventory of major land-force weapons. Furthermore, the United States and Britain had inflicted major losses on the Iranian Navy in the "tanker war" of 1987-88. Iraq had the only modern, combat-effective, armored and mechanized forces in the Gulf and an air force that was emerging as combat-effective for the first time. It had massive missile forces and chemical-warfare capabilities, was beginning to deploy large numbers of biological weapons, and was making substantial progress in developing a nuclear capability.

Iraq has rebuilt and reorganized its forces that survived the Gulf War. It still has some 2,700 main battle tanks in its active forces and can still launch a force of five heavy divisions against Kuwait with only limited warning. In spite of Desert Fox and the war of attrition that has followed, it still has around 350 combat aircraft and significant land-based air defense assets. Kuwait has only two light combat-ready brigades with an active strength of less than 174 tanks, and 40 modern F-18A/B fighters. Saudi Arabia has an excellent air force with 315 modern F-15s and Tornados, but it only has about 650 operational main battle tanks in its combat-capable main divisions and its land forces are scattered over much of the kingdom.

At the same time, Iraq has only about half the land and air capability it had when Desert Storm began. Many of its missile, chemical, biological, and nuclear capabilities have been dismantled by UNSCOM and the IAEA, and its efforts to develop its military industries have been severely limited by the impact of seven years of U.N. sanctions. Iraq has not had any significant imports of arms or military technology since the summer of 1990 and has had no opportunity to react to many of the lessons of the Gulf War. In fact, Iraq's arms imports have been reduced to levels that are so low that U.S. intelligence no longer releases an estimate.

Iraq's regime has not changed in character and it remains a significant threat to all its neighbors. It is likely to be a revanchist state as long as Saddam Hussein is in power, and will remain determined to rebuild its military power as soon as it can do so. However, Table Five shows that Iraq now faces massive problems in terms of military obsolescence. Table Six shows that Iraq also has built up such a massive deficit in terms of new arms orders and deliveries that it will take years to correct the situation.

Table Five
Iraqi Dependence on Decaying, Obsolete or Obsolescent Major Weapons

Land Forces

* 600-700 M-48s, M-60s, AMX-30s, Centurions, and Chieftains
 captured from Iran or which it obtained in small numbers
 from other countries

* 1,000 T-54, T-55, T-77 and Chinese T-59 and T-69 tanks

* 200 T-62s

* 1,500-2,100 (BTR-50, BTR-60, BTR-152, OT-62, OT-64, etc.

* 1,600 BDRM-2, EE-3, EE-9, AML-60, AML-90

* 800-1,200 towed artillery weapons (105 mm, 122 mm,
 130 mm, and 155 mm)

* Unknown number of AS-11, AS-1, AT-1, crew-portable
 anti-tank-guided missiles

* More than 1,000 heavy, low-quality anti-aircraft guns

* Over 1,500 SA-7 and other low-quality surface-to-air
 guided missile launchers & fire units

* 20 PAH-1 (Bo-105); attack helicopters with AS-11 and
 AS-12, 30 Mi-24s and Mi-25s with AT-2 missiles, SA-342s
 with AS-12s, Allouettes with AS-11s and AS-12s

* 100-180 worn or obsolete transport helicopters

Air Force

* 6-7 HD-6 (BD-6), 1-2 Tu-16, and 6 Tu-22 bombers

* 100 J-6, MiG-23BN, MiG-27, Su-7 and Su-20

* 140 J-7, MiG-21, MiG-25 air defense fighters

* MiG-21 and MiG-25 reconnaissance fighters

* 15 Hawker Hunters

* I1-76 Adnan AEW aircraft

* AA-6, AA-7, Matra 530 air-to-air missiles

* AS-11, AS-12, AS-6, AS-14; air-to-surface missiles

* 25 PC-7, 30 PC-9, 40 L-29 trainers

* An-2, An-12, and I1-76 transport aircraft

Air Defense

* 20-30 operational SA-2 batteries with 160 launch units

* 25-50 SA-3 batteries with 140 launch units

* 36-55 SA-6 batteries with over 100 fire units

* 6,500 SA-7s

* 400 SA-9s

* 192 SA-13s

Navy

* Ibn Khaldun

* Osa-class missile boat

* 13 light combat vessels

* 5-8 landing craft

* Agnadeen

* 1 Yugoslav Spasilac-class transport

* Polnocny-class LST

Source: Estimate made by Anthony H. Cordesman based discussions with U.S. experts.

[TABULAR DATA SIX NOT REPRODUCIBLE IN ASCII]

While it is impossible to make reliable estimates, it is difficult to see how Iraq could recapitalize and modernize its forces for less than $35 to $50 billion. Even if all sanctions stopped today, it would take at least half a decade for Iraq to buy and receive deliveries on such orders. In the interim, Iraq has no choice other than to smuggle what it can, seek to transform its military industries from centers of vainglorious rhetoric to centers of actual production, and obtain what it can.

THE CASE OF IRAN

Iran in contrast, has partially recovered from its defeat in the Iran-Iraq War, and is again a major military power by Gulf standards. However, it is scarcely a modern military power by the standards of the United States. Its post-Gulf War arms imports have been far smaller than most analysts predicted. Table Seven shows the patterns in Iran's arms imports since the end of the Iran-Iraq War in 1988. It is clear that Iran did not keep up its spending after 1988, in spite of the loss of nearly half its inventory of major land weapons in the final battles of the war. It is equally clear that Iran took full advantage of Iraq's shattering defeat in the Gulf War in 1991 and made further major cuts in its arms imports. Ironically, the U.S. sanctions that came years later not only had little impact on Iran's arms imports, but Iran's only increases in arms imports have come since U.S. sanctions have gone into force.

[TABULAR DATA SEVEN NOT REPRODUCIBLE IN ASCII]

As Table Eight shows, this does not mean that Iran's conventional arms imports have not involved some significant purchases. Iran has developed carefully focused military capabilities The massive infantry-artillery dominated forces of the Iran-Iraq War are being replaced by forces that focus on specific missions. It has developed a substantial capability to threaten shipping through the Straits of Hormuz and the rest of the Gulf and has developed a substantial capability for unconventional warfare that it can project into the Gulf and throughout the region. It has steadily expanded its missile, chemical and biological warfare capabilities, and is seeking nuclear weapons.

Table Eight
Key Iranian Equipment Developments

LAND

* Russian, and Polish T-72 Exports. Reports indicate Iran
 has procured about 120 T-72Ss from Russia, and 100 T-72M1s
 from Poland since 1990. Inventory of about 220 T-72s of
 various types in mid-1996.

* Claims to be producing the Iranian-made Zolfaqar MBT,
 an M-48/M-60-like tank

* Has upgraded to T-54/T-54 called "Safir-74." Claims to have
 upgraded Iraqi T-54s captured in Iran-Iraq War.

* Purchased Russian BMPs. Inventory of 300 BMP-1s and 100
 BMP-2s in mid-1996

* May be producing T-72s and BMP-2s through licensing
 from Russia

* Domestic production of a Chinese version of the BMP
 called the Boragh

* Domestic production of an APC called the BMT-2 or Cobra

* May have purchased of 100 M-46 and 300 D-30 artillery
 weapons from Russia

* Testing prototype of 122 mm self-propelled gun called
 Thunder

* Has shown a modified heavy equipment transporter called
 the "Babr 400"

* Has Russian and Asian AT-2s, AT-3s, and AT-4s. Does not
 seems to include 100 Chinese Red Arrows.

* Has Chinese and 15+ North Korean 146 mm self-propelled weapons

* Has 60 Russian 2S1 122 mm self-propelled howitzers in inventory

* Has growing numbers of BM-24 240 mm, BM-21 122 mm and Chinese
 Type 63 107 mm MRLs

* Has Iranian Hadid 122 mm - 40 round MRL

* Manufacturing Iranian Arash and Noor rockets (variants of
 Chinese and Russian 122 mm rockets)

* Manufacturing Iranian Haseb rockets (variants of Chinese
 107 mm rocket)

* Manufacturing Iranian Shahin 1 and 2, Oghab, Nazeat 5 and
 10 (may be additional versions), and Fajr battlefield rockets

AIR/AIR DEFENSE

* Keeping up to 115 combat aircraft that Iraq sent to Iran
 during Gulf War, apparently including 24 Su-4s and four MiG-29s

* Has 30 MiG-29s with refueling in inventory, may be
 receiving 15-20 more from Russia

* Has 30 Su-24s in inventory (probably Su-24D version), may be
 receiving 6 to 9 more from Russia

* May be negotiating purchase of AS-10, AS-11, AS-12,
 AS-14/16s from Russia

* Has Su-25s (formerly Iraqi), although has not deployed

* May be trying to purchase more Su-25s, as well as
 MiG-31 s, Su-27s and Tu-22Ms

* Considering imports of Chinese F-8 fighter and Jian
 Hong bomber

* Has 25 Chinese F-7M fighters with PL-2, PL2A, and PL-7 AAMs

* Has purchased 25 Brazilian Tucano trainers and 25
 Pakistani MiG-17 trainers.

* Uncertain report has bought 12 MiG-29UB trainers from Russia.

* Has bought 12 Italian AB-212, 20 German BK-117A-3, and
 12 Russian Mi-17 support and utility helicopters

* Claims to have fitted F-14s with I-Hawk missiles
 adapted to the air-to-air role

* Claims to produce advanced electronic warfare systems

* IRGC claims to be ready to mass-produce gliders.

LAND-BASED AIR DEFENSE

* May be negotiating purchase of SA-10, SA-12,
 SA-14/16s from Russia

* May have acquired four HQ-23/2B (CSA-1) launchers
 and 45-48 missiles, plus 25 SA-6, and 10-15 SA-5 launchers

* Has acquired Chinese FM-80 launchers and a few RBS-70s

* More SA-7s and HN-5s man-portable missiles, may
 have acquired 100-200 Strelas

* May be seeking to modernize Rapier and 10-15 Tigercat
 fire units

* May be modifying and/or producing ZSU-23-4 radar-guided
 antiaircraft guns

* Claims to produce advanced electronic warfare systems

SEA

* Claims will soon start producing 6 multi-purpose destroyers

* Has taken delivery on three Russian Type 877EKM Kilo-class
 submarines, possibly with 1,000 modern magnetic, acoustic,
 and pressure sensitive mines

* Reports of North Korean midget submarines never confirmed

* Has obtained 10 Hudong-class Chinese missile patrol boats

* US Mark 65 and Russian AND 500, AMAG-1, KRAB anti-ship mines

* Negotiating to buy Chinese EM-52 rocket-propelled mines

* Claims to be developing non-magnetic, acoustic, free-floating
 and remote controlled mines. It may have also acquired
 non-magnetic mines, influence mines and mines with
 sophisticated timing devices

* Wake-homing and wire-guided Russian torpedoes

* Seersucker (HY-2) sites with 50-60 missiles -- Iran
 working to extend range to 400 km

* Has 60-100 Chinese CS-801 (Ying Jai-1 SY-2) and
 CS-802 (YF-6) SSMs

* Developing FL-10 anti-ship cruise missile, a copy
 of Chinese FL-2 or FL-7

* Boghammer fast interceptor craft

MISSILES

* Obtained up to 250-300 Scud Bs with 8-15 launchers

* Up to 150 Chinese CSS-8 surface-to-surface missiles
 with 25-30 launchers

* Reports of China giving Iran technology to produce
 long-range solid fuel missile

* Possible Iran-130 missile

* Has bought North Korean Scud Cs with 5-14 launchers

* South Korea reports that Iran has bought a total of
 100 Scud Bs and 100 Scud Cs from North Korea

* May be developing the Zelzal-3 missile with a range
 of 900 kilometers with Chinese and North Korean support

* May be planning to purchase North Korean No-Dong 1/2s

* Interested in North Korea's developmental Tapco Dong 1
 or Tapeo Dong 2

* Claims will launch its first experimental satellite
 by 2000 with Russian aid

* Reports of tunnels for hardened deployment of Scuds and SAMs

CBW

* Chemical weapons (sulfur mustard gas, hydrogen cyanide,
 phosgene and/or chlorine; possibly Sarin and Tabun)

* Biological weapons (possibly Anthrax, hoof and mouth
 disease, and other biotoxins)

* Nuclear weapons development (Russian and Chinese reactors)

Source: Based on interviews, reporting in various defense journals, and the IISS, Military Balance, various editions.

At the same time, the arms purchases listed in Table Eight only partially offset the steadily growing obsolescence of its Western-supplied equipment reflected in Table Nine. Iran has given its economy a higher priority than arms ever since the end of the Iran-Iraq War and has had only limited imports of modern aircraft and armor. The United States and its allies have blocked many transfers of advanced arms to Iran, particularly from Europe and the former Soviet Union (FSU).

Table Nine
Iranian Dependence on Decaying Western-supplied Major Weapons

Military Weapon Comments (all worn,
Service reliability hampered by
 lack of updates, parts)

 Type Number

Land
Forces
 Chieftain 240-260 Underarmored, underarmed,
 tank underpowered. Fire-control
 and sighting system
 obsolete. Cooling problems.

 M-47/M-48 150-260 Underarmored, underarmed,
 underpowered. Fire-control
 and sighting system
 obsolete.

 M-60A1 150-160 Underarmored, underarmed,
 underpowered. Fire-control
 and sighting system
 obsolete.

 Scorpion AFV 70-80 Light armor, underarmed,
 underpowered.

 M-114s 70-80 Light armor, underarmed,
 underpowered.

 M-109 155 150-160 Fire-control system
 mm SP obsolete. Growing
 reliability problems.

 M-107 175 20-30 Fire-control system
 mm SP obsolete. Growing
 reliability problems.

 M-110 203 25-35 Fire-control system
 mm SP obsolete. Growing
 reliability problems.

 AH-1J Avionics and weapons
 Attack heli. 100 suite obsolete. Growing
 reliability problems.

 CH-47 35-45 Avionics and weapons
 Trans. heli. suite obsolete. Growing
 reliability problems.

 Bell,
 Hughes,
 Boeing,
 Agusta,
 Sikorsky 350-445 Growing reliability
 helicopters problems.

Air
Force
 F-4D/E FGA 55-60 Avionics obsolete.
 Critical problems.

 60 F-5E/FII 60 Avionics obsolete.
 FGA Serious problems.

 F-5A/B 10 Avionics obsolete.
 Serious problems.

 RF-4E 8 Avionics obsolete.
 Serious problems.

 RF-5E 5-10 Avionics obsolete.
 Serious problems.
 (May be in storage.)

 F-14 AWX 60 Avionics obsolete.
 Critical problems.
 Cannot operate some
 radars at long ranges.
 Phoenix missile
 capability cannot be
 used.

 P-3F MPA 5 Avionics and sensors
 obsolete. Many sensors
 and weapons cannot be
 used. Critical problems.

 Key PGMs - Remaining Mavericks,
 Aim-7s, Aim-9s,
 Aim-54s long past rated
 shelf life. Many or most
 are unreliable or
 inoperable.

 I-Hawk SAM 150-175 Electronics, software,
 and some aspects of
 sensors obsolete.
 Critical problems.

 Rapier SAM 30 Electronics, software,
 and some aspects of
 sensors obsolete.
 Critical problems.

Navy
 Babar DE 1 Weapons and electronics
 suite obsolete, many
 systems inoperable or
 partly dysfunctional due
 to critical problems.

 Samavand DDG 5 Weapons and electronics
 suite obsolete, many
 systems inoperable or
 partly dysfunctional due
 to critical problems.

 Alvand FFG 3 Weapons and electronics
 suite obsolete, many
 systems inoperable or
 partly dysfunctional due
 to critical problems.

 Bytander FF 2 Obsolete. Critical
 problems.

 Hengeman LST 4 Needs full scale refit.

Source: Estimate made by Anthony H. Cordesman based on the equipment counts in IISS, Military Balance, 1995-1996, "Iran," and discussions with U.S. experts. Note that different equipment estimates are used later in the text. The IISS figures are used throughout this chart to preserve statistical consistency.

According to declassified U.S. intelligence estimates, Iran signed new agreements worth $10.2 billion during the four-year period 1987-90 -- the time between the final years of the Iran-Iraq War and the Gulf War. Iran's new arms agreements again dropped sharply during the four-year period following the Gulf War and totaled only $4.8 billion 1991-94. Despite some reports of massive Iranian military build-ups, new agreements 1991-94 totaled only a quarter of the value of the agreements that Iran had signed during the previous four years.

Iran signed only $1.6 billion worth of new arms agreements 1994-97, a period heavily influenced by an economic crisis inside Iran, low oil revenues and problems in repaying foreign debt. Iran ordered $200 million from Russia, $900 million from China, $100 million from other European states (mostly Eastern European), and $300 million from other countries (mostly North Korea). The drop in agreements with Russia reflected both Iran's financial problems and U.S. pressure that had led President Yeltsin not to make major new arms sales to Iran. Iran's new agreements with China and North Korea heavily emphasized missiles and missile production technology. Similar trends are reflected in deliveries. Iran took delivery on $7.8 billion worth of arms 1987-90, $3 billion 1990-93, and $1.9 billion 1994-97.

Moreover, Iran is in the middle of considerable political change. The election of President Khatami in May 1997 has revealed growing divisions among Iran's "moderates," "traditionalists" and "extremists." Iran has steadily improved its relations with its Southern Gulf neighbors. There is at least some prospect that the United States and Iran can reestablish diplomatic relations over the next few years, although no one can predict the future course of the Iranian revolution and how "moderate" Iran will really become.

It is Iran's continuing focus on weapons of mass destruction and systems that may threaten tanker traffic and the Southern Gulf that makes Iran dangerous in spite of its relatively low level of arms imports and the obsolescence or low quality of much of its order of battle. These orders are shown in Table Five, and they make an impressive list. Iran has bought enough arms to rebuild its army to the point where it can defend effectively against a weakened Iraq. It has begun to rebuild its air force and land-based air defenses, and can put up a far more effective defense than in 1988. It has restructured its regular forces and the Iranian Revolutionary Guards Corps to improve the defense of its Southern Gulf coast and create a far more effective ability to attack naval forces, tanker traffic, offshore facilities and targets along the Southern Gulf coast.

THE SOUTHERN GULF

The data in Tables One to Three have shown the patterns in Southern Gulf arms purchases: Saudi Arabia is the region's largest arms buyer, but its economic and budget-deficit problems have led to significant cuts in the rate of new arms orders -- in spite of the Gulf War. New Saudi arms agreements dropped from $45.7 billion 1987-90 to $30.2 billion 1991-94, and $14.1 billion 1994-97. Once again, the scale of these cuts in Saudi new orders has often been disguised in media reporting by the momentum of deliveries from past orders. Saudi arms deliveries totaled $26.3 billion 1987-90 and $27.9 billion 1991-94, then leaped to $36.4 billion 1994-97 as deliveries caught up with the backlog of past orders.

Similar trends affected Kuwait, which ordered $5 billion worth of arms 1990-93 and only $2.3 billion 1994-97, but saw its deliveries rise from $2.4 billion 1990-93 to $4.5 billion 1994-97. Although Bahrain and Qatar also followed in Kuwait's pattern, the UAE has emerged as a major sustained buyer. It ordered $5.3 billion worth of arms 1990-93 and $5.1 billion 1994-97. Most of these are still to be delivered; the UAE took delivery on $2.6 billion worth of arms 1990-93 and $2.4 billion 1994-97.

It is impossible to discuss all of the qualitative problems accompanying these arms purchases, but some trends are painfully clear. For all the rhetoric surrounding the Gulf Cooperation Council, the Southern Gulf states remain as divided as at the start of the Gulf War. Their arms purchases reflect the same lack of effective standardization, interoperability, and focus on key missions. Some countries have made significant improvements in individual aspects of their military capabilities, but most Southern Gulf military planning remains dominated by politics and petty rivalry. In addition, far too many arms purchases focus on new technology and the "glitter factor," rather than on effective war-fighting capability.

It is equally clear that far too many Southern Gulf countries buy arms without a consistent strategy, proper regard for coalition warfare, or meaningful mission priorities. A review of the land-force buys since 1991 reveals far too many types of different weapons from different countries, both between Southern Gulf states and often within their force structures. If one looks through both the naval order of battle in the Gulf and the performance characteristics of the ships purchased since 1991, many naval purchases seem to reflect a contest as to which country can buy the most complex frigate or corvette.

The problems in air orders of battle and land-based air defenses are less obvious, but there are far too many types of aircraft and short-ranged air defense systems that are not integrated into a common and fully-computerized, Southern Gulf-wide system or concept of air operations. Only Saudi Arabia has fully integrated airborne sensor and battle management systems into its concept of air operations. Purchases for offensive air operations reflect a lack of meaningful reconnaissance and targeting capabilities, a failure to integrate battle damage assessment into the loop, and a lack of integrated concepts of joint warfare.

This is not to say that individual countries have not made major progress in some areas. The fact remains, however, that wasteful and poorly-planned Southern Gulf arms imports are as much a threat to the Southern Gulf as Iran and Iraq. This lack of interoperability is summarized in crude terms in Table Ten, which shows the source of recent arms purchases by Gulf countries. This table sharply understates the problem because it does not distinguish individual national suppliers in detail, show what is being purchased, or count purchases of less than $50 million. Nevertheless, one does not have to be a military expert to realize that buying radically different mixes of equipment from a wide range of different suppliers presents major problems in terms of interoperability and standardization.

Table Ten Too Many Suppliers Changing Constantly Over Time (new arms agreements measured in current millions of U.S. dollars)

Buyer Country US Russia China

Iran
 1987-90 0 3,500 2,300
 1991-94 0 200 200
 1994-97 0 200 900

Iraq
 1987-90 0 300 700
 1991-94 0 0 0
 1994-97 0 0 0

Bahrain
 1987-90 300 0 0
 1991-94 200 0 0
 1994-97 300 0 0

Kuwait
 1987-90 2,500 200 0
 1991-94 3,500 800 0
 1994-97 500 800 200

Oman
 1987-90 100 0 0
 1991-94 0 0 0
 1994-97 0 0 0

Qatar
 1987-90 0 0 0
 1991-94 0 0 0
 1994-97 0 0 0

Saudi Arabia
 1987-90 18,800 200 300
 1991-94 15,600 0 0
 1994-97 4,200 0 0

UAE
 1987-90 300 0 0
 1991-94 300 500 0
 1994-97 300 400 0

 Supplier Country

Buyer Country Major W European Other European

Iran
 1987-90 200 1,200
 1991-94 100 100
 1994-97 100 100

Iraq
 1987-90 500 500
 1991-94 0 0
 1994-97 0 0

Bahrain
 1987-90 0 0
 1991-94 0 0
 1994-97 0 0

Kuwait
 1987-90 200 200
 1991-94 1,800 0
 1994-97 700 0

Oman
 1987-90 600 0
 1991-94 500 0
 1994-97 400 100

Qatar
 1987-90 0 0
 1991-94 2,000 0
 1994-97 2,200 0

Saudi Arabia
 1987-90 23,000 2,300
 1991-94 6,600 100
 1994-97 7,000 1,100

UAE
 1987-90 300 0
 1991-94 3,900 100
 1994-97 3,700 500

Buyer Country All Others Total

Iran
 1987-90 1,600 8,800
 1991-94 600 1,200
 1994-97 300 1,600

Iraq
 1987-90 1,000 3,000
 1991-94 0 0
 1994-97 0 0

Bahrain
 1987-90 0 300
 1991-94 0 200
 1994-97 0 300

Kuwait
 1987-90 200 3,300
 1991-94 100 6,200
 1994-97 100 2,300

Oman
 1987-90 0 700
 1991-94 100 600
 1994-97 100 600

Qatar
 1987-90 0 0
 1991-94 0 2,000
 1994-97 0 2,200

Saudi Arabia
 1987-90 200 44,800
 1991-94 0 22,300
 1994-97 1,800 14,100

UAE
 1987-90 400 1,000
 1991-94 0 4,800
 1994-97 200 5,100

0 = less than $50 million or nil, and all data rounded to the nearest $100 million.

Source: Richard F. Grimmett, Conventional Arms Transfers to the Developing Nations, Congressional Research Service, various editions.

It is not coincidental that the last two USCENTCOM annual seminars dealing with security assistance have focused on the need to provide for adequate training, infrastructure, and sustainability and have stressed the fact that Southern Gulf states are buying too many major weapons too quickly. This focus does not mean "buy American," since Europe and Russia are perfectly capable of supplying excellent systems, many of which are better suited to Gulf needs than U.S. systems designed for long-range and global deployment. It also does not halt all new purchases. The Southern Gulf should not cease modernization or its effort to create forces with technological superiority to those of Iran and Iraq. What is does mean is that the Southern Gulf should buy wisely and at the proper rate.

Unfortunately, the cuts in oil export revenues and growing budget deficits make this even more unlikely than in the past, and there is no unifying threat serious enough to catalyze collective action. Furthermore, each Gulf state still has a large backlog of undelivered arms orders which were placed with limited regard to mission priorities, interoperability, and collective defense. The decline in new arms agreements means that Southern Gulf states will have to live with this lack of interoperability and standardization for the next decade. They have already bought many of their arms -- and their problems and enduring military ineffectiveness -- for the early twenty-first century.

MERCHANTS IN DEARTH

Table Ten provides some equally useful insights into who sells arms to the Gulf. It shows that the collapse of the Soviet Union, China's failure to develop weapons with advanced military technology, sanctions on Iraq, and Iran's financial problems have all combined to sharply cut the flow of arms from Russia and China, as well as to Iran and Iraq. During the four-year period 1987-90, Russia and China signed nearly $7 billion worth of new arms agreements with Gulf states, $6.8 billion going to the Northern Gulf and $700 million to the Southern Gulf. During the four-year period 1994-97, they signed only $1.1 billion dollars worth of new arms agreements with the Northern Gulf states. In contrast, they signed $1.4 billion worth of new arms agreements with the Southern Gulf, largely with Kuwait and the UAE.

Table Eleven shows that the figures are very different if they are calculated in actual deliveries, largely because of the immense "pipeline" of ongoing deliveries resulting from orders placed during the Iran-Iraq War and the period before the Gulf War. During the four-year period 1987-90, Russia delivered $8.8 billion worth of arms to the Gulf, with $1.1 billion going to Iran and $7.4 billion going to Iraq. China delivered $7.3 billion worth of arms to the Gulf, with $2.5 billion worth going to Iran, $1.8 billion going to Iraq, and $3.0 billion going to Saudi Arabia (largely long-range missiles). During the four-year period 1994-97, Russia and China still delivered $2.7 billion worth of arms, although only $1.5 billion went to Iran and none to Iraq, while $800 million went to Kuwait, $100 million to Saudi Arabia, and $300 million to the UAE.

Table Eleven Major-Supplier Share of Gulf Arms Agreements and Deliveries: 1987-1997 (measured in current billions of U.S. dollars)

[ILLUSTRATION OMITTED]

 Agreements: Agreements: Agreements:
 87-90 91-94 94-97

All Others 4.8 1 2.5
China 7.5 0.4 1.1
Russia 7 2.2 1.4
All Other Europe 5.8 0.7 1.8
Major West Europe 29.5 17 14.1
US 17.4 25.1 5

 Deliveries: Deliveries: Deliveries:
 87-90 91-94 94-97

All Others 4.6 0.7 0.7
China 7.3 1.4 0.9
Russia 8.8 2.8 1.8
All Other Europe 6 1.9 4.4
Major West Europe 21.4 15.4 22.2
US 7.5 14 17.5

0 = less than $50 million or nil, and all data rounded to the nearest $100 million.

Source: Richard F. Grimmett, Conventional Arms Transfers to the Developing Nations, Congressional Research Service, various editions.

This massive decline in conventional arms sales helps explain some of the willingness of Russian and Chinese firms to sell the technology and equipment needed for long-range missiles and weapons of mass destruction to the Gulf. The collapse of the Warsaw Pact has left the Russian arms industry with vast overcapacity and the near-collapse of the Russian economy has left everyone desperate to sell. Chinese arms sellers cannot compete with the high-technology, Western-made arms that dominated the Gulf War, and they have lost much of the market for conventional arms.

These trends have had another side effect. The decline in Russian and Chinese sales has inevitably raised the share of Western sales as a percentage of total sales to the Gulf. This has led many inside and outside the Gulf to talk about the West "dominating" Gulf arms sales, and some have focused on the United States as if it were driving regional arms sales. It is certainly true that the collapse of the Iranian and Iraqi markets has increased the Western share of the Gulf arms market, but it is equally true that Iran and Iraq still have very powerful conventional forces and still pose serious threats to the Southern Gulf. There is still a very real need for the Southern Gulf states to improve their forces even if they are not doing so particularly wisely.

Another fact shown in Table Ten is that Western sales to the Gulf are not increasing and the United States is not dominating them. There are eight major arms buyers in the Gulf, excluding Yemen (which placed a total of only $500 million worth of orders 1994-97, almost none of which came from the United States or major West European states).

The United States has never delivered any meaningful arms to Iraq, nor has it made any significant contribution to its efforts to proliferate. It has not sold any arms to Iran since the fall of the shall. These are not minor points. The military balance in the Gulf is not some kind of game in which all sides are equal players. Iran and Iraq are the proven or potential aggressors. They are the threat, not the Southern Gulf states. It is sales to these two countries that are the problem, and they have come almost solely from Russia, China, Europe, and North Korea (the driving force behind the "All Others" category in Table Eleven).

Since 1987, the United States has dominated new arms agreements in selling to only two of the eight Gulf states: Bahrain and Kuwait. It has never been a major seller to Oman and Qatar, which are supplied largely by Europe. U.S. sales to Europe have been only a fraction of the UAE's purchases. In fact, 60 percent of all new French arms orders in 1998 -- some $5 billion out of total exports of $8.3 billion -- came from the UAE. The seemingly endless discussions of U.S. Fl 6 sales disguise the fact that the French arms industry would have virtually collapsed without the UAE market. Many of the U.S. transfers to Bahrain have been on concessional terms, and Bahrain has never been a major arms buyer. As Tables Ten and Eleven show, the United States ceased to be the major seller to Kuwait after 1994.

The United States is often seen as dominating the Saudi market. It does not, and it certainly has not increased sales to Saudi Arabia since the Gulf War. A review of new arms agreements during 1987-90, 1991-94, and 1994-97 shows that the United States sold more than 50 percent of new Saudi arms agreements only during 1991-94. West European sales exceeded U.S. sales during two of the three periods, and have nearly doubled U.S. sales in the most recent period. The United States sold only 30 percent of the $14.1 billion in new sales to Saudi Arabia during 1994-97, versus 42 percent 1987-90 and 70 percent 1991-94. There is something almost incredible about the fact that Saudi Arabia bought $81.2 billion worth of arms during this period, but well under half of this amount was bought from the United States.

It is equally important to note that Saudi Arabia has scarcely made recklessly large new purchases since the Gulf War. The massive Saudi buys 1987-90 were driven by what was then the very real risk that Iraq would be defeated in the Iran-Iraq War. It is important to note that virtually every Gulf and Western newspaper was still reporting successful Iranian offensives and stressing the risk of an Iranian victory as late as February 1988. Saudi Arabia did make major buys during 1991-94 of the U.S. land and air equipment that had won the Gulf War, but its total new purchases were less than 50 percent of its purchases in the previous four years, even measured in current dollars. Since that time, Saudi new purchases have dropped steadily, and so has the U.S. share of such sales.

As might be expected, the decline in sales shown in Tables Ten and Eleven has also had a major economic impact. It is impossible to make meaningful statistical comparisons of Gulf arms transfers relative to the trends in GNP, total government expenditures, total exports and imports, and other measures of the burden arms sales place on national economies without going into immense statistical detail by country. Further, no meaningful directly comparable data for the period after 1997 have yet been declassified, in spite of the statistical rubbish sometimes used to make such estimates.

In broad terms, however, the declassified data made available by the U.S. intelligence community shows that Gulf arms sales have dropped steadily as an economic burden on Gulf states. This is obvious in the case of Iran and Iraq, but it is equally true of most Southern Gulf states. For example, Saudi arms imports peaked as a percent of Saudi exports in 1986, when they totaled 34 percent in constant 1996 U.S. dollars. They totaled 19 percent in 1991, when Saudi arms purchases surged to $10 billion. In 1996, they still totaled 17 percent, but this was only because of past orders. New orders had dropped to about 7 percent of the value of all exports, the lowest figure in nearly a quarter of a century.

It is worth noting that Iraq spent nearly 50 percent of all its export income on arms during the Iran-Iraq War (it survived only because of massive loans) and was still spending nearly 30 percent in 1990, two years after it "won" the Iran-Iraq War. Iran's large population means that its economy must spend far more of its export income on its people in order to function, and it is not directly comparable to Iraq or Saudi Arabia. Nevertheless, the trend is still revealing. Arms deliveries to Iran peaked at about 32 percent of all exports during the Iran-Iraq War, dropped to 16 percent in 1989, to 10 percent immediately after the Gulf War, and then to 6 percent in 1992. They were already only about 2 percent during 1994-96, before the U.S. imposed sanctions.

As for the rest of the Southern Gulf, no country has ever devoted anything like the percentage of its exports and economy to arms purchases as Saudi Arabia. Kuwait reached levels of 11-15 percent during the peak years after the Gulf War, but now is well below 8 percent. Bahrain has not spent more than 3 percent since 1988 and now spends less than 1 percent. Oman has never spent more than 7 percent and now spends less than 4 percent. Qatar's arms deliveries peaked at 7.2 percent of its exports in 1989 and have averaged less than 1.5 percent since 1993. U.S. arms imports peaked at 7 percent of total export income in 1990. They have since averaged below 4 percent.

FUTURE OF GULF ARMS SALES

It is important to note several things about the patterns reflected in the previous tables. Gulf arms sales change in cycles and rise and fall in proportion to real and perceived threats. Market shares vary sharply over time by both purchaser and supplier. There also is no reason to assume that the sharp decline in arms sales since the end of the Iran-Iraq War and the Gulf War will continue. It is due mostly to the fact that Iraq suffered massive military losses in the Gulf War and has been under an arms embargo since mid-1990. If Iraq had emerged from the Iran-Iraq War unchallenged, Iran would almost certainly have bought far more arms. If Iraq had not been checked in its ambitions in 1991, the resulting arms race in the Southern Gulf would almost certainly have approached total desperation.

The Gulf may well be on the edge of a new kind of arms race that is not fully reflected in these figures. Iran and Iraq may well find that their cuts in conventional arms transfers act as an incentive to proliferate, and it is long-range missiles and weapons of mass destruction which are the status symbols of the twenty-first century, not tanks and fighter planes. Iran's test of the Shahab 3 has already inspired Saudi Arabia to consider modernizing its own long-range missile force in spite of its economic problems. Iraq built massive new additions to its missile-production facilities after the Gulf War in spite of its economic problems and sanctions. Only the strikes during Desert Fox have delayed Iraq's capability to rapidly produce missiles with ranges far beyond the now legal 150 kilometers the moment that sanctions are lifted. Both Iran and Iraq are working on long-range cruise missiles as well. This means that at some point the Southern Gulf states may have to make massive new investments in ballistic and cruise missile defense, air defense, and civil defense.

This, in turn, may require the United States to make major changes in its power projection forces and military expenditures. The U.S. "edge" in conventional weapons provides a high degree of regional deterrence, containment and stability today. These capabilities are critical to countering the Iranian development of a focused threat to Gulf shipping that is summarized in Table Seven and to defending Kuwait and Saudi Arabia from Iraq's still massive conventional threat. In the not-too-distant future, however, the United States is almost certainly going to have to shift more of its force posture to one that has a lower profile in the region and the rest to forces which are truly "over-the-horizon." It also is going to have to provide power projection capabilities to deter and defend against Iranian and Iraqi threats or use of weapons of mass destruction. Barring a sudden and totally uncharacteristic regional outbreak of arms control and common sense, the current patterns in arms sales may only be the lull before the next storm.

Dr. Cordesman is a co-director of the Middle East Program and senior fellow for strategic assessment, Center for Strategic and International Studies (for more details on the material below, see www.csis.org).3