The Middle East and South Asia are the most dangerous regions in the world today because of the combination of bitter local conflicts, great power involvement, and a new and frightening arms race. President George Bush will face a range of difficult foreign policy choices in this area early in his term, from the new U.S. opening to the Palestine Liberation Organization (PLO), through a postwar settlement in the Persian Gulf between Iran and Iraq, to the fragile domestic scene in Pakistan and India, and the precarious situation of the Soviets in Afghanistan.

The agenda for the region is already set in place as the Bush Administration takes office. Although there is room for flexibility in the American approach, the basic determinants were laid down by the events of 1988 and the eight-year record of the Reagan Administration.

Dramatic and often surprising events across the region marked the year 1988; some pointed to a lessening of tensions, some intensified confrontations that had long simmered below the boiling point, and some, coming in the last days of the year, increased the need for timely diplomatic initiatives by the United States.

II

The most immediate of the diplomatic challenges involves the emerging U.S. policy toward a restive Israel and a seemingly more conciliatory PLO. The long-standing U.S. relationship with Israel and a new official relationship with the Palestinian national movement have thrown U.S. policy toward the region into uncharted waters. The evolution of the Palestinian problem in the last year of the Reagan Administration was rapid, even startling, to those who have become accustomed to futile impasse in this long-standing rivalry.

In early December 1987 the Palestinians living in the West Bank and Gaza initiated the intifadeh, or uprising. The sudden drama of this event forced Secretary of State George Shultz to become reengaged in the peace process. Among others, Shimon Peres, Israeli foreign minister at the time, believed that the only way to achieve a breakthrough in the peace process was to involve Jordan's King Hussein, under the rubric of an international conference. Shultz undertook his own version of shuttle diplomacy and made three visits to the area in February, April and June 1988, trying to gain support for a revised Middle East peace plan.

The "Shultz plan," which drew upon the provisions of the Camp David accords and the September 1, 1982, Reagan peace plan, was based on the well-known "land for peace" formula laid out in U.N. Resolution 242. It called for an international conference and implied that Israel would have to give up some of the Arab territory it occupies. Contained in the peace plan was an accelerated version of the time frame set out in the Camp David accords, particularly the period required for autonomy before a permanent negotiated settlement could be reached.

The Shultz plan was a gamble. While many of the provisions were already familiar, Shultz' efforts to meet the Arabs' need for an accelerated peace process and the Israeli need for an interim arrangement before handing territory back ran into predictable trouble. Apart from Peres and Egypt's Hosni Mubarak, no other Middle East leaders wanted to consider the plan. King Hussein encouraged Shultz in his efforts but refused to endorse the policy. Israeli Prime Minister Yitzhak Shamir and his Likud supporters adamantly rejected it. So did the PLO, since the plan did not provide for the creation of a Palestinian state or accept the right of the PLO to participate in the peace process.

Two dramatic events ultimately overshadowed the Shultz plan: King Hussein's decision on July 31 to relinquish Jordanian sovereignty over the West Bank in favor of the PLO, thus severing historical ties between his kingdom and the West Bank; and the Palestinian National Council (PNC) meeting in Algiers in November, which passed a resolution proclaiming an independent Palestinian state and giving implicit recognition to Israel by accepting, under certain conditions, U.N. Resolutions 242 and 338. Even so, the United States did not consider the language explicit enough to open a dialogue.

Following the Algiers meeting, PLO leader Yasir Arafat applied for an American visa to attend a U.N. General Assembly meeting in December. But his application was turned down by Shultz, who argued that to admit Arafat to the United Nations would be to condone the leader of an organization that had conducted terrorist acts against American citizens. Shultz' decision was intensely personal and subjected to worldwide criticism. However, at least 68 U.S. senators came out in support of Shultz' position. For just over two weeks the United States was internationally isolated, along with Israel, in its seeming rejection of the PLO's new peace offensive. The United Nations voted almost unanimously to move the General Assembly to Geneva to hear Arafat speak on December 13 (only the United States and Israel voted against the proposal). This was a telling rebuff to American policy and it put pressure on the administration to find some way to be more positive toward Arafat's initiative.

Arafat himself was being urged to bend a little more. In December prior to the Geneva General Assembly session, he met in Stockholm with a group of American Jews committed to more activist American and Israeli policies toward compromise on the Palestinian issue. At the end of the Stockholm meetings, which were expertly brokered by Sweden's Foreign Minister Sten Andersson, a joint statement was issued clarifying the position previously taken by the PNC in Algiers, saying it "established the independent state of Palestine and accepted the existence of Israel as a state in the region" and "declared its rejection and condemnation of terrorism in all its forms, including state terrorism." A breakthrough seemed possible, provided Arafat repeated this language in Geneva.

But Arafat did not say the magic words in his U.N. speech. Only after much overnight diplomatic activity, at a press conference the next day, did Arafat affirm the rights of all parties in the conflict to "exist in peace and security, including the state of Palestine, Israel and their neighbors." He repeated his call for an international peace conference based on U.N. Resolutions 242 and 338. On terrorism, Arafat declared, "I repeat for the record that we totally and absolutely renounce all forms of terrorism, including individual, group and state terrorism." His use of the word "renounce" was taken as significant because he had previously always said he "condemns" terrorism.

In a matter of hours Shultz announced that the United States would enter into the long-withheld dialogue with the PLO. Two days later U.S. Ambassador to Tunisia Robert Pelletreau met for the first time with PLO officials in Tunis for preliminary talks to discuss the procedures for a substantive dialogue. A new, historic watershed in the Arab-Israeli conflict had been crossed.

Israel's election in November was followed by the formation of another broad coalition government, as well as the resurgence of the extreme religious parties. The motivation to retain the coalition was in part to deny the religious parties the right to dictate new legislation as to "who is a Jew" and to enforce stricter Sabbath codes. Such legislation would have been extremely unpopular both at home and within the American Jewish community. After much debate the coalition government was finally announced in December, brought together as a direct result of the political earthquake caused by the U.S. decision to meet with the PLO, and the need for Likud and Labor to work together to resolve potential economic crisis.

As for Lebanon, the United States and Syria tried to select a new Lebanese president in September but the divided confessional groups within the Lebanese parliament rejected these efforts and could not even muster a quorum to vote. Fears that Lebanon would eventually be partitioned grew at year's end as the constitutional crisis remained unresolved.

During the U.S. election campaign Vice President Bush had come out strongly against a Palestinian state. His position paper on the Middle East was especially tough on conditions for accepting a PLO role in the peace process. It stated that the PLO must not only accept U.N. Resolutions 242 and 338, accept Israel's right to exist and renounce terrorism, but also that the PLO must "remove language from its charter demanding Israel's destruction." The paper does recognize, however, that the Palestinian problem must be solved and that Palestinians "must be involved in every step of the process."

President Bush's flexibility on the Palestinian problem is circumscribed by political realities. How should the United States respond to the inevitable acts of terrorism that will be committed by radicals determined to prevent a settlement? What should it do if Israel cracks down harshly on the Palestinian population, establishes new Jewish settlements in the occupied territories and continues to reject any notion of dialogue with the PLO? Bush must not only show that he is tough on terrorism; he, unlike his predecessors, also has to face the reality that on the Palestinian issue there is a growing convergence between European, Soviet and moderate Arab positions. The United States cannot ignore this trend. Indeed, it is an issue that Israel must eventually come to terms with.

One possible initiative would be for President Bush to urge the Soviet Union to restore diplomatic relations with Israel without conditions, to urge the moderate Arabs to be as forthcoming as Arafat (and, earlier, Egypt) in openly acknowledging Israel's right to exist, and to urge Israel to hold free and open elections in the occupied territories. If the Soviet Union restores relations with Israel it can hardly be kept out of the peace process; if the Arabs make a gesture to Israel they will expect some reciprocity toward the PLO; and if Israel agrees to free elections in the occupied territories it will give the PLO de facto recognition. This last option may pave a way for Israel to deal eventually with the PLO.

Israel can throw the ball back into Arafat's court if it takes the initiative. It might:

-Agree to hold free elections in the occupied territories within six months, provided that organized protests and violence stop. Allow international observers to witness the process. All Palestinians living in the territories should be eligible to run unless they have criminal records or openly advocate destruction of the state of Israel.

-Accept the fact that most of the candidates will be PLO supporters whether they acknowledge it or not. Make clear that there are two Israeli-Palestinian agendas: economic and social policy (such as roads, schools, housing, law and order) and foreign policy (such as a peace settlement and relations with the diaspora Palestinians and Jordan). The elected officials would enter into an immediate dialogue with Israel to move to some form of local autonomy and an early end to military occupation.

-Make available the necessary resources to rebuild the depleted economies of the territories, rebuild homes for the Arabs and restrict construction of new Jewish settlements.

-Work with the United States to persuade the PLO to accept this interim step. The presumption is that, to ensure PLO compliance, the elected officials would not enter into any discussions with Israel over the final status of the territories. It would be the U.S. job to find a formula for peace talks, possibly to include an international conference. This would allow the PLO and elected officials from the territories to participate.

Obviously this approach would meet with fierce resistance in both Israel and the PLO, but some variant of it may be the only way to break the logjam. The economic plight of the Palestinians in the territories is so bad that something has to be done soon, irrespective of what is happening in the international arena.

III

The conflict between Iran and Iraq took on new and dramatic dimensions when Iran announced, in July 1988, that it would accept U.N. Security Council Resolution 598, which outlined a ten-point peace plan to end the eight-year-old war. Ayatollah Ruhollah Khomeini blessed the agreement but admitted that taking this decision was "more deadly than taking poison." A cease-fire began and negotiations for exchanges of wounded prisoners were soon under way. A U.N. Iran-Iraq Military Observer Group was established to patrol the cease-fire lines and report violations.

The Iranian decision to reverse its militant policy was not a surprise to those who had been following that country's intense internal debate over the war. The timing was directly linked to severe military defeats. Since the summer of 1982, when the Iranians took the offensive following the invasion by Iraq in 1980, Khomeini believed that the war was necessary to sustain the revolution. By the early summer of 1988, however, it became apparent that continuing the war could destroy the revolution. Eight years of fighting had gained little except international isolation and hundreds of thousands of martyrs.

President Bush will have to think carefully about the future American policy in the Gulf. A gradual withdrawal of the American and European presence is already under way, and there is no reason for this not to continue as long as the cease-fire holds. But ultimately some regional balance of power will have to emerge to keep peace between Iran, Iraq and the Gulf Cooperation Council countries. It is in the American interest to encourage these GCC countries to do more to bolster their defense capabilities, but this means continued arms transfers and controversy with Israel. American, Israeli and Arab interests are not served by public brawls on these sensitive matters. The new administration and Congress should work out a formula to settle their differences before they become debilitating and time-consuming struggles.

Regarding Afghanistan, the bipartisan policy of supplying arms to the Afghan mujahedeen while actively engaging in U.N.-sponsored diplomacy to negotiate a settlement seemed to be vindicated. The increasing political costs of escalating the war were deemed too high by the new Soviet leadership.

In early 1988 Mikhail Gorbachev announced that Soviet troops would initiate a withdrawal from Afghanistan if a settlement was reached between Afghanistan and Pakistan at U.N.-sponsored peace talks then in progress. A three-part agreement was signed providing for the withdrawal of Soviet forces by February 15, 1989, the establishment of a neutral Afghanistan and the repatriation of millions of Afghan refugees. A fourth agreement made the United States and Soviet Union joint guarantors. Soviet troop withdrawal began in May 1988, but the Soviets threatened to slow down the process because of continued fighting by the mujahedeen. By the end of the year it was not yet clear that all Soviet troops would in fact be out by the February 15 deadline.

One source of confusion was Gorbachev's speech before the U.N. General Assembly on December 7, in which he called for several steps: a complete cease-fire in Afghanistan as of January 1, 1989, the simultaneous halt of all arms supplies to belligerents, the dispatch of U.N. peacekeeping forces while a broad-based government is established, and an international conference on the neutrality and demilitarization of Afghanistan. Gorbachev's failure to mention the February 15 deadline aroused suspicion that the Soviet intention was to partition Afghanistan, which would be a serious setback to U.S.-Soviet cooperation.

In August General Mohammed Zia ul-Haq of Pakistan was killed in an airplane crash almost certainly caused by sabotage. In December his nemesis, Benazir Bhutto, was appointed the first woman prime minister of a Muslim country, following an orderly and democratic election. She assumed office facing severe social and economic problems as well as ongoing conflicts with Afghanistan and India. Bhutto has many clients to please, and support from the Pakistani armed forces is essential for her to cope with her domestic agenda. In this regard Bhutto must put good relations with the Bush Administration and the U.S. Congress near the top of her agenda. Without continued American military assistance the military could become disgruntled. This could put Pakistan's new democracy in jeopardy.

U.S. relations with India improved despite an increase in arms sales to Pakistan. Agreements reached included approval for the sale of an American ring laser gyroscope considered essential for the development of the inertial guidance system for a new Indian-designed lightweight fighter. Washington has also agreed to sell India a supercomputer to assist in weather forecasting.

On the subcontinent President Bush must establish a close working relationship with Prime Minister Bhutto. It appears that she has made a compromise with the Pakistani army and will not tamper with its operations in return for a free hand in domestic politics. Perhaps the trickiest problem she and President Bush face relates to Pakistan's nascent nuclear weapons program. The president is required under U.S. law to certify to Congress every year that Pakistan does not possess nuclear weapons, if military aid is to continue. This certification has become increasingly difficult as evidence mounts that Pakistan is indeed building a nuclear bomb. In January 1988 the Reagan Administration and Congress "winked" at the bomb program in view of the sensitive stage of Afghan peace talks. The administration certified that Pakistan did not "possess" a bomb, even though it admitted later in testimony that a Pakistani nuclear weapons program was under way.

When the Afghan war winds down, some in Congress may again try to enforce U.S. law and threaten to cut off military aid. Such an action would be very harmful to Bhutto's future, since it would generate a strong backlash within the Pakistani national security establishment. Bhutto has been very ambiguous about her intentions on the nuclear program, knowing full well that any explicit acceptance or rejection of nuclear weapons puts her in trouble with powerful groups in both the United States and Pakistan. President Bush could help by persuading Congress not to force her hand at this time, for to do so would undermine the world's newest and third-largest democracy.

President Bush must also continue to nurture relations between the United States and India, a relationship which has often been antagonistic, since the United States provides arms to Pakistan while the Soviet Union is the most important supplier of arms to India. Because of close Indian-Soviet ties, American officials have been wary of approving the sale of high-technology items to New Delhi for fear they might end up in Soviet hands. India, on the other hand, has been very reluctant to conform to congressional restrictions concerning the "end use" of American products, arguing that if a country pays for an item, rather than accepting it as part of an aid package, the United States should not impose such conditions.

In principle it is very much in the American interest for India to develop a more independent base and become less dependent upon Soviet cooperation. But since the Soviet industrial and technical commitment to India is so extensive, there is no way this process can be achieved quickly. India must retain close ties to the Soviet defense establishment at the same time that it is improving relations with the Pentagon.

Up until 1985 it was very difficult to persuade the Pentagon to pursue a more active role in helping India develop its indigenous base. However, Rajiv Gandhi's accession to the office of prime minister following his mother's assassination in October 1984, and the parallel awareness in Washington that U.S.-Soviet relations were on a more cooperative footing, led to a more relaxed attitude toward technical ties to India.

It is therefore appropriate that the high-water mark in recent U.S.-Indian relations has been the willingness of the United States to approve export licenses for high-technology items for the Indian defense establishment. In the context of bilateral relations this makes sense and should be supported. However, since much the same logic applies to U.S. military cooperation with Pakistan, the Arab countries and Israel, an age-old dilemma arises: How does one reconcile arms sales with arms control objectives?

IV

The Reagan legacy in the Middle East and South Asia will remain fertile ground for future historians. The failures over the past eight years are obvious. Few would disagree that the intervention in Lebanon and the Iran-contra affair were the worst foreign policy blunders of the Reagan Administration.

The terrorist attacks on the American embassy in Beirut in April and November 1983, and the bombing of the marine barracks at Beirut airport in October 1983, demonstrated the limitation of using American forces for "peacekeeping" operations in a hostile environment and the inability of massive firepower (represented by the battleship New Jersey) to contain insurgency warfare.

The Lebanon experience made a lasting impression on Secretary of State Shultz. It was humiliating; it made him suspicious of promises made by Arab leaders, who had given him the impression that if he brokered an agreement to get Israel out of Lebanon, they would put pressure on the Syrians to leave; and it left with him a personal hatred of terrorism. He became the leading advocate within the administration for using military force to curb terrorism. Ironically, though, it was Shultz' failure to persuade Reagan not to trade arms to Iran for hostages that triggered the Iran-contra affair.

Lebanon and the Iran-contra episode had several elements in common. Both demonstrated how ill-equipped the Reagan Administration was in dealing with the byzantine and violent internecine conflicts of Lebanon and Iran, and both crises involved Israel. The United States went into Lebanon to stop Israel from occupying Beirut, but U.S. forces eventually came under attack from Muslim groups for supporting the Christian Lebanese president, who had made a deal with Israel. In the case of the Iran-contra affair, the United States and Israel together seemed to believe that they could develop a covert opening to Iran, even though each had different agendas. In the final count, U.S. policies in Lebanon and Iran fell apart because of bitter differences of opinion within the executive branch over how to deal with terrorism.

For the United States, about the only residual benefit of the exodus from Lebanon was the lessening of friction with Israel. This paved the way for closer strategic cooperation between the two countries, a process that had been started and suspended in 1981, and then renewed in late 1983. Many advantages to U.S. forces resulted from this cooperation, including access for U.S. navy ships to Haifa and valuable exchanges on advanced technology.

But what about the rest of the Reagan record? Since Americans are great problem solvers, many regard the absence of a breakthrough in the Arab-Israel peace process until December 1988 as a sign of failure. It was not the lack of progress per se that troubled critics, rather it was the belief that progress was essential to prevent a dangerous war in the future. In this regard the administration can claim credit for setting up the Sinai peacekeeping forces in 1981-82, and the late Walter Stoessel's mission to Egypt and Israel to put the finishing touches on the Israeli-Egyptian peace treaty in March and April 1982. So long as that treaty continues and the United States maintains good relations with both countries, the chances of a full-scale war between Israel and the Arab countries are low, and that is surely good news.

Until the U.S. decision on December 14 to open talks with the PLO, efforts to expand the peace process had been stymied. In part this was because of Shultz' long reluctance until 1988 to pursue new initiatives. More to the point has been the inherent divisiveness of Israeli, Palestinian and Arab politics. Until the parties themselves are prepared to pay a negotiated price for further peace, the United States has limited diplomatic options. But when the PLO unequivocally met the U.S. requirements for talks, the United States acted quickly and decisively.

Critics argue that the administration could have acted sooner and more effectively to further the peace process. It could have committed the time and prestige of the president to a new initiative at the beginning of his second term; or it could have put more pressure on Israel, including the threat to tamper with aid programs; or it could have leaned more heavily on the moderate Arabs to pressure the PLO into fundamental policy changes. Of these options only the first was politically realistic; yet even in this case it is not clear that Reagan's prestige should have been spent on another Arab-Israeli peace mission when he had other important foreign policy problems to confront, such as forging a better relationship with the Soviet Union.

Another legacy worthy of careful examination is the number of times U.S. military forces, aside from the Lebanon experience, were used in the region during the Reagan Administration. Some of these actions were quick, in-and-out affairs: the deployment of U.S. Airborne Warning and Control System (AWACS) aircraft to Egypt in 1983-84 to assist the Egyptian air force against Libyan threats to Sudan; several direct military encounters with Libya, beginning with the shooting down of Libyan jets in the Gulf of Sidra in August 1981 and most recently over the Mediterranean Sea in January 1989, and the bombing raid on "terrorist related targets" in Libya in April 1986; joint operations with European allies in August 1984 to clear the Red Sea of mines laid by Libyan ships; and the October 1985 interception of an Egyptian airliner carrying the hijackers of the Italian cruise ship Achille Lauro. By most reckoning these rapid interventions were successful.

Longer-term deployments of American power have included the continued presence of U.S. troops in the Sinai desert as part of the 2,556-man Multinational Force and Observers. This unobtrusive presence is a cornerstone of American strategic policy in the region and, precisely because there has been no publicity associated with this mission, it has set a good precedent for future peacekeeping operations.

The U.S. military presence in the Gulf has been more controversial. Gulf deployments began in earnest in the late spring of 1984, when the so-called tanker war got under way. There were some very precarious moments-the attack on the U.S.S. Stark by Iraqi aircraft in 1987, which killed 37 U.S. sailors, and several incidents when American ships were hit by mines. At various times, President Reagan was criticized for the Gulf operation, partly because the rationale for a U.S. presence seemed based on spurious logic. But the president's luck persisted: the Europeans, under the auspices of the West European Union, boosted their own forces in the Gulf in the fall of 1987, and became an integral, though not integrated, component of the Western military presence; and the decision to shoot at Iranian ships and offshore oil platforms showed American resolve.

There can be no doubt that the deployment of American warships in the Gulf played a role in forcing Iran to end the war. But it would be unwise to read too many lessons into this operation. The circumstances and the environment were in many ways unique. The United States and Europe not only had common interests and goals, but the naval forces were deployable for long periods without having to use land bases, which thereby avoided generating friction with local Arab countries.

In other areas of the Middle East, the United States and Europe have significant policy differences. The Europeans believe the United States is overly protective of Israel and unwilling to put pressure on Israeli leaders to make the compromises necessary for peace. And while the Europeans share American hatred of terrorism, they feel the United States overstates the dangers and detaches the phenomenon from its broader causes. A common argument made by Europeans is that if the United States invested more heavily in resolving the Palestinian problem, many of the sources of Middle East terrorism would be contained. Thus, while the Gulf operations can be called "successful," they are not good paradigms for American-European "out of area" activity.

V

The escalation of the regional arms race received particular attention over the past year, especially the effective use of chemical weapons and surface-to-surface missiles (SSMs) by Iraq. New weapons proliferation is widespread throughout the region. There is no effective regime in place to control the flow of non-nuclear weapons from a myriad of external suppliers, and most of the recipients are united in their suspicions of efforts by outsiders to curb their military capabilities. But unless some way is found to control the arms race, chances are great that these new and deadly weapons will become part of the established arsenal of the region and will be used in combat with terrifying results.

Saudi Arabia has purchased an undisclosed number of Chinese "East Wind" surface-to-surface intermediate-range ballistic missiles which may be able to reach targets up to 1,800 miles away-putting Iran, Israel, India and the southern Soviet Union within range. They are technically capable of carrying nuclear warheads, though the Saudis have recently ratified the Nonproliferation Treaty. The Saudi decision was motivated by two factors: the spread of the Iran-Iraq War to include the Gulf states, and U.S. congressional refusal over the years to support Saudi requests for certain types of advanced combat aircraft. In addition, Saudi Arabia signed an agreement with Great Britain in July 1988, valued at approximately $20 billion, which involved the sale of some 50 additional Tornado fighter planes, along with other military aircraft and the construction of two new air bases.

Syria has about 36 new, operational Soviet SS-21 missiles. These are much more accurate than the Soviet Scud-Bs used in the Iran-Iraq War. Moreover, there is evidence that Syria is producing nerve gas in a facility located in the desert far to the north of Damascus. Syria could eventually fit nerve gas into submunitions (cluster warheads) for its SS-21s (accurate to within about 160 feet, according to U.S. estimates). Syria also possesses a number of advanced Soviet MiG-29 fighter aircraft.

Israel, in addition to its formidable inventory of long-range combat aircraft, has its own arsenal of missiles, including more than 160 U.S. Lance-SSMs, which have a range of over 60 miles. Israel has also developed a 400-mile-range missile, the Jericho II, and last year reportedly flight-tested a new version, which may have a range of close to 1,000 miles. This could reach targets inside the Soviet Union. In addition, on September 19, 1988, Israel succeeded in launching its first satellite into orbit using the Shavit II (Comet) rocket, believed to be a version of the Jericho II missile. Israel also continues an extensive nuclear weapons program and is reported to have its own chemical weapons facilities.

Israeli military planners worry about a scenario in which chemically armed Syrian missiles would strike Israeli airfields and bases in the early hours of a full-scale war, hindering Israeli mobilization. Israel has reportedly developed contingency plans to take out the Syrian chemical production capability, but this would mean a preemptive air strike which could trigger an all-out war with Syria-a dangerous scenario for both sides.

Egypt also has a growing missile capability combining foreign-supplied systems such as the Frog-7, Scud-B and Silkworm, and newly developed indigenous systems such as the Saqr-80 rocket, with an estimated range of 50 miles, and the Badr-2000 (under development with Argentina where the system is known as the Condor II), with an estimated range of 480 to 600 miles. This missile could serve as a potential counter to Israel's Jericho II. Egypt is believed to have been among those having assisted Iraq in modifying its Scud-Bs for longer range. Egypt is also reported to possess chemical weapons.

Iran used Scud-B missiles against Iraq during the "war of the cities" in the spring of 1988. Iran has an indigenous missile development program under way which includes the Oghab (Eagle), a short-range rocket, and the Chinese-assisted Iran-130 guided missile. In addition, Iran has acknowledged that it produces chemical weapons and has been accused of using them in the Iran-Iraq War.

Iraq has both an extensive ballistic missile capability on hand, in terms of Soviet-supplied missiles, and a growing ability to produce and modify existing ballistic missiles on its own. Apparently with the assistance of a number of countries, believed to include Egypt, East Germany and North Korea, Iraq succeeded in upgrading its Scud-Bs from their original range of 190 miles to as high as 540 miles. On November 19 Iraq tested an indigenous rudimentary antitactical ballistic missile named Al-Faw-1, declaring that this system was the answer to Israel's long-range missiles. Iraq also used chemical weapons in its war with Iran and against its Kurdish minority. Iraq's chemical weapons production capacity is believed to be among the most extensive in the Middle East.

Libya is negotiating with Brazil for the eventual delivery of SSMs that could have a range of over 600 miles-enough to hit targets in Israel, Greece and Italy. More important, Libya now possesses what U.S. analysts describe as the largest chemical weapons plant in the Third World. The government of Chad claims that Libya has already used chemical agents procured from Iran in its war with Chad. In addition, in December 1987 Muammar al-Qaddafi called for the development of an "Arab" nuclear weapons program.

Kuwait will soon receive $1.9 billion in U.S. military hardware including 40 F-18 fighter aircraft and advanced Maverick-G antiship missiles, under the foreign military sales program. Kuwait is also negotiating with France for the purchase of 40 Mirage-2000 fighter/bombers.

India flight-tested in February 1988 its own domestically produced SSM, the Prithvi, which is reported to have a range of 155 miles. Prime Minister Gandhi declared that the missile would be used "purely for defense purposes." India also has a sophisticated space and satellite launch program. India is on its way to a missile capability with a range sufficient to hit targets in China, the Soviet Union, the Middle East and beyond.

India is also intent on becoming a world-class naval power and extending its strategic reach. Indian military interventions in Sri Lanka in 1987 and in the Maldives in November 1988 are indicative of this capability and intention. In early 1988 India received "on loan" a Soviet nuclear-powered submarine. It intends to acquire more over the course of the next few years. According to a recent study by the Carnegie Endowment for International Peace, since 1974 when India detonated its first nuclear device, it has acquired enough fissionable material to fabricate 30 bombs a year. Finally, India maintains an impressive arsenal of fighter aircraft including MiG-23s, Jaguars, Mirage-2000s and 40 top-of-the-line Soviet MiG-29s.

Pakistan is well on the way to producing nuclear weapons and may already have stockpiled enough fissionable material for three bombs. Disclosures about India's growing military capabilities make it likely that Pakistan will probably press ahead with its nuclear program, irrespective of what the United States says or does. As a result of its close relationship with Washington since 1981, Pakistan has undergone a tremendous military modernization including the acquisition of 40 F-16 fighter aircraft and advanced Harpoon antiship missiles. In addition, Pakistan is likely to receive versions of the sophisticated U.S. AWACS surveillance aircraft.

To compensate for the potential spread of SSMs, countries in the Middle East and South Asia are examining ways to upgrade their air defense systems. Israel and the United States are cooperating on the development of an antitactical ballistic missile (ATBM). A new generation of highly sophisticated surface-to-air missiles may also find their way into the region to compensate for the new offensive capabilities, thus raising the qualitative arms race another notch.

VI

Both the United States and the Soviet Union have a clear interest in preventing local wars that could escalate and involve them on opposite sides. But do they share a common interest in brokering peace and reconciliation between Israel and the Arabs, or India and Pakistan? If they do, what compromises are they and their respective friends and clients prepared to make to secure lasting agreements?

These questions go to the heart of the new U.S.-Soviet dialogue and the hopes for an end to the cold war. They can only be addressed by U.S. policymakers if the Soviet military withdrawal from Afghanistan is completed in early 1989 and the Afghan problem ceases to dominate regional politics. So long as this problem is unresolved, Soviet motives will be suspect and future cooperation in doubt.

A Soviet withdrawal from Afghanistan on schedule, however, will further enhance Moscow's growing diplomatic credibility and generate goodwill, especially in the Muslim world. The practical implications are many but three stand out: full diplomatic relations with several key Arab states, especially Saudi Arabia; a possible Soviet role as an "honest broker" in the Indian-Pakistani conflict; and a legitimate claim to a role in resolving the Palestinian problem.

It will be a challenge for the Bush Administration's diplomatic skills to deal with initiatives by a more assertive and popular Soviet Union. If the United States is too casual about problems in the Middle East and South Asia while focusing on other trouble spots, the Soviet Union may indeed be able to undermine long-standing American diplomatic hegemony. Since President Bush is unlikely to allow this to happen, the net effect of new Soviet initiatives will be to pressure the administration to come up with new ideas of its own.

It is a sign of our times that the test of American friendship in so many parts of the world depends upon our willingness to sell or give away our high-technology military items. As a result, we face many policy contradictions. On one hand we stress the importance of regional arms limitations, but on the other hand we put great emphasis on preserving the military strength of our friends. Bush has expressed concern over the regional arms race, but he will need much help and patience if he wants to control it. For while the unregulated spread of advanced military technology into an area beset with traditional sources of conflict is inherently troubling-and the horrors of chemical warfare have become all too apparent-there is little agreement on policy solutions.

Consider, for instance, the new president's basic problem. He wants to put limits on the arms race, but banning and restricting the transfer and production of SSMs is difficult. The United States is currently a party to the Missile Technology Control Regime that was signed in April 1987 by the United States, United Kingdom, France, West Germany, Italy, Canada and Japan. Its purpose is to restrict the transfer of technologies and equipment that contribute to the development of unmanned nuclear delivery systems. But the major suppliers of SSMs to the region are the Soviet Union and China. They would have to be included in the regime if it were to have any teeth.

The United States has a long-standing bipartisan policy of keeping Israel ahead of all its neighbors in high-technology weapons, the so-called qualitative edge. If Israel is ever to be persuaded to withdraw from most of the West Bank, Gaza and the Golan Heights, that qualitative edge will become even more important.

The executive branch and Congress have different views on the wisdom of supplying certain types of advanced weapons to Arab countries that also face serious threats to their security. Israel's supporters in Congress have tried to stop the United States from selling items such as AWACS, advanced F-15 fighters and Stinger missiles to Arab countries. To persuade the Arab countries to slow down their procurement of weapons, when they believe they have a genuine need for them, is going to be difficult. At a minimum it would be helpful if the new administration and Congress could work out some agreement over Arab arms sales. There are several pending arms requests which could lead to damaging public brawls, including Saudi plans to replace its aging F-5 fleet and buy a large number of frontline battle tanks.

The chemical weapons problem is even tougher. During the Iran-Iraq War, the United States condemned Iraq for using such weapons, but at the same time supported massive Soviet, French and Chinese conventional arms sales to Iraq in order to prevent an Iranian victory. Iraq and many other Arab countries do not worry about chemical weapons as much as the West does. They remember that at various times during the Iran-Iraq War a frequently expressed sentiment in the West was that "the longer the war goes on, the better," provided, of course, that Western oil supplies were not disrupted and Western sensitivities were not shocked by film footage of gas attacks.

Underlying much of this Third World antipathy to Western moralizing about chemical weapons is the deep-seated belief that the United States is highly selective in its outrage. Furthermore, the fact that these weapons are cheap and effective and that Israel is particularly worried about them is cause for Arab satisfaction. For instance, in July 1988 the former head of Egypt's chemical warfare department argued that the Arabs must develop an "ultraconventional force," including chemical and biological weapons. It is viewed as one small step in redressing the most important asymmetry in the Arab-Israeli balance-Israel's nuclear weapons.

The nuclear question and inconsistencies in U.S. policy on nonproliferation are key components of the arms control dilemma. America is concerned about Pakistan's emerging nuclear capability but won't cut off military aid, and no one in Congress or the administration will discuss Israel's nuclear program. To expect the Arabs to give up or put restrictions on the very categories of technology which trouble Israel, without any effort to place limits on Israel's missiles and nuclear devices, is unrealistic.

In the absence of full-fledged peace treaties, is there anything the United States can do to stop chemical weapons and missile proliferation? If the objective is to "ban" these items, it will not happen; there are too many suppliers, and verification is too difficult. The first task is to face up to the inconsistent policies. It will be difficult to continue a policy which has stressed strategic cooperation, an enhanced military intervention capability and arms transfers, and then expect to be taken seriously when advocating highly selective weapons restraints.

Since the production and use of chemical weapons is a serious problem and getting worse, efforts must be made to address it. This will not be an easy task. In January 1989 at a U.N. conference on chemical weapons in Paris, a declaration was issued that reaffirmed a 1925 convention banning the use of poison gas and other chemical weapons. But the declaration stopped short of endorsing new export controls and referred only indirectly to the possible use of sanctions against nations using chemical weapons. Currently there is no international agreement that bars the production and stockpiling of chemical weapons, and the prospects for such an agreement appear slim.

If multilateral agreements to prevent the diffusion of these capabilities are impractical, ways must be found to cope with chemical weapons using passive and active countermeasures. U.S.-Israeli cooperation on antitactical ballistic missiles is a sensible insurance against arms control failures. If such defensive technologies work, the United States might encourage ATBM proliferation, though this course is not without risks.

The United States should also try to reach an "understanding" with the Soviet Union, Israel and key Arab friends about constraints on the numbers and quality of SSM deployments. In exchange for an agreement by Israel not to deploy missiles that can reach the Soviet Union, the Soviet Union might agree to limits on SSM transfers to its Arab clients, notably Syria. It might also work with the United States to limit Chinese transfers. This will not stop missile proliferation and it will not stop the overall arms race, but it is better than open-ended competition and could become a building block for conflict resolution.

Finally, while the immediate issues facing the Bush Administration in the Middle East could become overwhelming, it is important for the president not to lose sight of the longer-term trends in the region which are influencing American policy and the prospects for war and peace. The combined effects of demography and environmental disasters will have enormous political and economic consequences in the years ahead. Expanding populations and diminishing oil revenues could mean instability, poverty and the violent overthrow of regimes. Expanding populations and increasing oil prices could put the United States in a more vulnerable position than any time since the late 1970s. Anticipating these socioeconomic trends correctly and structuring policy accordingly while coping with the day-to-day chaos of the region will require adroit skills.

New presidents, with the exception of Jimmy Carter, rarely want to put the Middle East at the top of their agendas. There are no understandings with these states that commit the president and the secretary of state to regular summit or ministerial meetings, unlike the U.S. relationships with Canada, Europe, Japan and, to some extent, Southeast Asia and Latin America. There is no equivalent, for instance, of the annual economic summits which assure close and frequent dialogue with America's key economic partners.

Yet historically the region has forced itself upon the attention of the White House early in each president's term. When Ronald Reagan assumed power in 1981 he intended to focus on curbing inflation, cutting taxes and raising the defense budget. But within his first ten months Reagan had to address the Syrian missile crisis in Lebanon, the Israeli bombing of Iraq's nuclear reactor, the fight over the sale of AWACS aircraft to Saudi Arabia and the assassination of Egyptian President Anwar al-Sadat.

The presumption is that George Bush will want to put domestic issues ahead of foreign ones. He has to attend to the economy, and unlike Reagan, his job is to cut the defense budget, not raise it. But one can safely predict that President Bush will have to address several thorny international problems early on in his first year. The most serious challenges he faces have their origins in long-standing regional conflicts. Some may remain in limbo, but others if left unresolved could lead to catastrophe.

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  • Geoffrey Kemp is a Senior Associate at the Carnegie Endowment for International Peace. He served on the National Security Council staff from 1981 to 1984 as Senior Director for Near East and South Asia.
  • More By Geoffrey Kemp