The Gulf Standoff in a Wasteland

The war between Iran and Iraq has dragged on for 5 1/2 years, claimed an estimated 350,000 to 400,000 lives, and caused badly frayed nerves in the region. Two months ago, thousands of Iranian troops stormed across the Shatt al Arab, the long-disputed waterway that lies between the two countries, and established a toehold in Iraq's Fao Peninsula, a desolate strip of land that juts into the Persian Gulf. Despite superior firepower, Iraqi forces have been unable to dislodge the Iranians. The Fao beachhead was established just as falling oil prices threatened to starve both Iran's and Iraq's military and civilian economies. The protracted battle for Fao could prove to be a critical turning point in the war. TIME Correspondent Barry Hillenbrand traveled to the front and sent this report:

If logic prevailed, Fao would be awarded not to the winner but to the loser of the struggle for this wet, muddy wasteland. Heavy trucks carrying Iraqi soldiers and supplies to the front rumble over roads running along levees, above the marshy terrain approaching Fao. The Iranians, using flat-bottomed boats with powerful outboard engines, roar across the blue-green waters of the gulf to deliver ammunition and reinforcements, who bring the latest , exhortations of the Ayatullah Ruhollah Khomeini.

The front is five to six miles wide. Iranian troops are dug in around a massive evaporator system used for making salt. It is a complex network of ponds, retainer walls and narrow approaches that is well suited for Iranian defenses. Iraq's Soviet-made tanks are unable to advance along the narrow roads and soft levees leading to the town. When tanks do get into position, they are badly exposed and easily crippled by fire from Iranian rocket- propelled grenades. Should the Iraqis succeed in driving the Iranians out of the salt evaporator, notes a Western military observer, "they will have to fight in the ruins of Fao." Once an Iraqi oil-exporting terminal in the gulf, the town is now a collection of bombed-out buildings that serve as perfect cover for the Iranians.

At times, the war appears to be waged with hydraulics rather than firepower. The Iranians flood the low areas to bog down Iraqi tanks and heavy equipment. The Iraqis use earthmoving vehicles and hundreds of dump trucks to fill in the soggy earth. Despite sustained Iraqi artillery barrages, the Iranians have been aided by heavy rains, which have made it impossible for the Iraqi air force to home in on their positions.

Until the assault on Fao, the Iraqis seemed to be in control of the military situation. Says one Western ambassador: "We used to ask how long the Iraqis could sustain such costly victories. Now we wonder how long they can sustain such costly defeats." Nonetheless, the Iraqi command seems to have regained its composure since the first weeks of the Iranian onslaught. They are well prepared for a long-predicted Iranian offensive through the Hawazia marshes that flank the highway north of Basra, which is just 50 miles from Fao. Defensive earthworks have been built along the road, with machine-gun nests and tank positions placed every 500 yards. The Iraqi brass is determined not to be diverted from retaking the Fao Peninsula. Declares Defense Minister General Adnan Khairallah, brother-in-law of President Saddam Hussein: "I can assure you we will do so with the least possible casualties."

So far, the fighting at Fao has highlighted basic differences between the two armies. Iranian soldiers are fearless under fire. Judging by their corpses, they seem older than the children Khomeini sent to the front to die en masse in 1984. They are also apparently better trained, well equipped with light arms and grenade launchers and ever ready to sacrifice themselves. A reliable estimate puts Iran's losses over the past two months at 30,000 to 40,000, compared with 10,000 for Iraq. The Iraqi army relies on modern armored weaponry and aircraft to harass the Iranians while reducing the risk to its own combatants. Day after day, Iraqi rockets, artillery shells, mortar rounds and Soviet-made Frog-7 surface-to-surface missiles pound the invaders. "Iraq," says one Western observer, "has every advantage but enthusiasm for the fight."

The pinch of the war and the glutted oil market is felt in both Iran and Iraq. The Tehran government has been forced to reduce imports for heavy industry, unleashing a general economic depression and an unemployment rate of at least 15%. Despite the hardship on civilians, war spending remains the top priority. In Iraq, revenues from oil exports have plummeted by as much as 50%. The Baghdad government once managed to finance economic development as well as its military campaign by drawing on $35 billion in foreign-exchange reserves, mostly from oil. But that is no longer the case. Iraq's hard-currency earnings have long since been depleted, and creditors have become impatient.

Still, Iraqi soldiers will continue to get the best of everything. Their saviors are likely to be Baghdad's neighboring Arab friends. In spite of diminished oil revenues, Saudi Arabia and Kuwait are not prepared to risk the security of the gulf by letting the military resistance to Iran collapse. Both countries are expected to ante up millions of dollars in the coming months to pay for arms and materiel for the Iraqis.

Some observers, however, argue that the drawn-out conflict is sustained solely by the murderous rivalry between Saddam Hussein and the Ayatullah Khomeini. Says a Western ambassador in Baghdad: "What's central to the question is Saddam and Khomeini. Nothing else counts. It's like a medieval war of kings." For the moment, Saddam Hussein is incapable of ending the war, and Khomeini is unwilling to stop it.