304. Telegram From the Interests Section in Baghdad to the Department of State1

372. Subj: Iraqi Relations with the United States—Prospects and Problems.

1. Begin summary: Iraqi policies are evolving in a direction that could bring about at some point a resumption of diplomatic relations between Iraq and the United States. It is difficult to predict the timing of such an event, but we have noted a rather steady expansion in the scope of activities permitted to USINT, and the Iraqi press, while still capable of strident anti-American polemics, seems to have reduced somewhat the frequency and vehemence of its attacks on the United States. It is quite clear, moreover, that Iraq hopes to reduce its previous international isolation and expand its commercial ties with the West, including expanded business relations with U.S. companies. These policies will, no doubt, eventually trigger a resumption in diplomatic rela[Page 824]tions, but there are still a number of outstanding problems that at the present time would make it difficult to establish U.S.-Iraqi relations on a basis of even minimal cordiality. But there are also trends at work that may ameliorate these problems with the passage of time. End summary.

2. First among the problems that stand in the way of more normal U.S.-Iraqi relations is Iraq’s public espousal of the “rejectionist front.” Publicly, at least, Iraq has denounced USG’s efforts to bring about an Arab-Israeli settlement as a “liquidation” of Arab rights. The GOI and its controlled press have however, been rather selective in picking their targets for attack on this issue. They have generally concentrated their fire on the Syrian regime, whom they are always happy to attack with or without a plausible reason. Hussein and Bakr, when speaking publicly on this issue, have avoided name calling and limited themselves to the observation that recent efforts to bring about a settlement will not lead to any positive Arab goal. In our diplomatic exchanges with FonMin officials, we have received hints that Iraqi participation in the “rejection front” is primarily rhetorical and that Iraq will not, in fact, work hard to block movement towards a settlement.

3. Related to Iraqi alignment with the “rejection front” is Iraq’s possible support for terrorism. Officially, the GOI denies that it supports terrorism except within the borders of Israel, where it considers any action against the “aggressor” Israelis to be justified. In fact, its past conduct and its present association with certain known terrorists, such as George Habash, raise serious questions about the extent of Iraqi involvement in terrorist activities.

4. Perhaps less important, but still significant, are the problems related to Iraq’s brutal police state system of internal control. The arbitrary exercise of power by Iraqi security authorities makes life in Iraq difficult for foreigners and Iraqis alike. Life is particularly difficult for Iraqis who have social, or even business contact with foreigners. Iraq’s lack of respect for accepted principles of international comity, and lack of due process in dealing with real or suspected violators of Iraqi law, have clouded Iraq’s relations with a number of states and will pose continuing problems for American firms interested in doing business in this country.

5. Normalization of relations is also hindered by the years of anti-U.S. and anti-imperialist rhetoric which has had an inevitable impact on the attitudes of the Iraqi people, particularly the younger generation. Although the GOI has been known to make major policy reversals overnight, it doubtedly would need some popular justification for a significant alteration in its policies of hostility towards the United States.

6. The developing split between Syria and Egypt may, ironically enough, provide an opening for some improvement in relations be[Page 825]tween Iraq and the United States. Iraq may now find common ground with Egypt in its opposition to the Syrian regime and there is an increasing parallelism in the reorientation of the two economies away from the Soviet bloc and towards the West. While the Iraqi regime still carries considerably more Marxist ideological baggage than the Egyptian, the Iraqi leadership is, in practice, more Arab nationalist than Marxist. Its devotion to socialism probably has more to do with gaining and exercising central control over the disparate elements that constitute Iraq than with an ideological commitment to Marxist principles. The Baath Party obviously has little interest in a dictatorship of the proletariat (or of anyone other than the Baathi elite) and it certainly does not believe in the ultimate withering away of the central state.

7. What the regime does want is a rapid transformation of Iraq into a modern industrial and agricultural nation. It would also derive tremendous emotional satisfaction from the overthrow of the present Syrian regime. In both these respects, it may now perceive a growing identity of interests with Egypt and will no doubt watch with great interest the extent to which the United States helps Egypt in achieving current Egyptian national goals. As Iraq’s ambitious development program begins to press on the limits of its budgetary resources, the Baath regime may also become increasingly intrigued by the sight of enormous capital transfers from Saudi Arabia and the oil-rich Gulf states to Egypt. It might then conclude that a closer alignment with the conservative Arab states would be more conducive to the achievement of Iraq’s number of national goals of economic development than would continued participation in the more radical and more Soviet-oriented “rejectionist” Arab grouping.

8. One major inhibition on Iraq’s Westward movement is its continued reliance on the Soviet military supply relationship and on East European support for Iraq’s powerful security and intelligence apparatus. Here too, however, there is some movement Westward as Iraq explores arms purchase possibilities with France and Great Britain and contracts for security equipment from Western European and American suppliers.

9. All this has certain implications for U.S. policy. For one thing, we could enter into a more active dialogue with the Egyptian leadership on the subject of U.S. and Egyptian relations with Iraq. We might be able to develop triangular commercial relations with Egypt and Iraq that would have the effect of building a three-way community of interests. We could encourage the British and French to sell arms to Iraq and thereby reduce Iraq’s dependence on the Soviet Union. We could ourselves be more forthcoming on supplying non-lethal military items to the Iraqi armed forces and security services. We could find new ways to support U.S. commercial interests in Iraq; for example, we could [Page 826] open up the facilities of the Ex-Im Bank to American companies bidding for Iraqi contracts.

10. As the Baath Party becomes more absorbed in Iraq’s economic development and more secure in its own internal power position, the problems in normalizing relations mentioned at the start of this message should ameliorate and the Iraqi regime should become more committed to goals similar to our own in the region, i.e. peace, stability, and expanding commerce with the West.

  1. Source: Ford Library, National Security Adviser, NSC Middle East and South Asian Affairs Staff, Box 7, Country File, Iraq (1), 1/13–11/15/76. Secret. Repeated to Abu Dhabi, Amman, Ankara, Beirut, Cairo, Damascus, Doha, Jidda, Kuwait, London, Manama, Muscat, Paris, Tehran, Tel Aviv, and USUN.