The Persian Gulf region is rich in oil and gas resources but has a history of armed conflict and of challenging U.S. national security. The Gulf states—Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman, bound together in a 1981 alliance called the Gulf Cooperation Council (GCC)—have experienced three major wars in the past twenty five years: the Iran-Iraq war (1980-1988), the Persian Gulf war (1991), and Operation Iraqi Freedom (2003-current). This report, which will be revised periodically, discusses U.S. and Gulf efforts to manage the new challenges posed by the September 11, 2001, attacks on the United States and the aftermath of the overthrow of Saddam Hussein. The report is derived from a wide range of sources, including press reports, unclassified U.S. government documents, U.N. documents, observations by the author during visits to the Gulf, and conversations with U.S., European, Iranian, and Gulf state officials, journalists, and academics. Prior to the 2003 war against Iraq, the United States was repeatedly drawn into conflicts in the Gulf to counter Iranian or Iraqi aggression and contain regional escalation. In the "Iran-Iraq War," Iran and Saddam Hussein's Iraq fought each other from Iraq's invasion on September 22, 1980, until August 20,1988, jeopardizing the security of the Gulf monarchy states, which collectively backed Iraq. Similarly, the United States tilted toward Iraq in that war to defeat the radical Islamist threat posed by Iran's Islamic revolutionary government, which came to power in February 1979 after ousting the U.S.-backed Shah. Iran and the United States fought minor naval skirmishes during 1987-1988, at the height of the Iran-Iraq war. During one such skirmish ( Operation Praying Mantis, April 18, 1988) the United States fought a day long naval battle with Iran that destroyed almost half of Iran's largest naval vessels. On July 3, 1988, the United States mistakenly shot down an Iranian passenger aircraft flying over the Gulf (Iran Air flight 655), killing all 290 aboard. After about 400,000 Iraqi and almost 1 million Iranian casualties, the Iran-Iraq war ceased in August 1988 after Iran's forces collapsed from a series of successful Iraqi offensives and Iran accepted U.N. Security Council Resolution 598, amounting to an Iraqi victory in the war. The Iran-Iraq war victory emboldened Saddam Hussein to assert himself as the "strongman" of the Gulf. He invaded and occupied Kuwait on August 2, 1990, asserting that he did so because Kuwait (and UAE) were overproducing oil and thereby betraying Iraq (by lowering world oil prices). Others believe Saddam Hussein wanted to position Iraq to control, directly or indirectly, oil exports from the Gulf. To liberate Kuwait, the United States deployed over 500,000 U.S. troops, joined by about 200,000 troops from 33 other countries. That war (Operation Desert Storm, January 16–February 27, 1991) resulted in the death in action of 148 U.S. service personnel and 138 non-battle deaths, along with 458 wounded in action. The 1991 Gulf war reduced Iraq's conventional military capabilities roughly by half, but, prior to Operation Iraqi Freedom (March 2003), Iraq was still superior to Iran and the Gulf states in ground forces. The Gulf is one of the few theaters where weapons of mass destruction (WMD) and ballistic missiles have been used in hostilities. Iraq's missile, chemical, nuclear, and biological programs, accelerated during the Iran-Iraq war, were among the most sophisticated in the Third World at the time of Iraq's invasion of Kuwait. Israel was sufficiently concerned about Iraq's nuclear program that it conducted an air-strike against Iraq's French-built Osirak nuclear reactor on June 7, 1981, temporarily setting back Iraq's nuclear effort. During the Iran-Iraq war, Iraq fired enhanced Scud missiles at Iranian cities, and Iran fired its own Scud missiles at Iraqi cities as well in the so-called "war of the cities." On ten occasions during the Iran-Iraq war, Iraq used chemical weapons against Iranian troops and Kurdish guerrillas and civilians, killing over 26,000 Iranians and Kurds. U.N. investigation missions found that Iran also used some chemical weapons against Iraq during the war, although Iran's capability was less advanced than that of Iraq during that period. During the 1991 Gulf war, Iraq fired 39 enhanced Scud missiles at Israel, a U.S. ally, and 39 enhanced Scud missiles on targets in Saudi Arabia. One Iraqi missile, fired on coalition forces on February 25, 1991 (during Desert Storm) hit a U.S. barracks near Dhahran, Saudi Arabia, killing 28 military personnel and wounding 97. U.N. weapons inspectors dismantled much of Iraq's WMD infrastructure during 1991-1998, but they left in 1998 due to Iraqi obstructions and without clearing up major unresolved questions about Iraq's WMD. New U.N. inspections began, under threat of U.S. force, in November 2002, but were ended after the Bush Administration and its allies determined that Iraq's regime was not fully disarming and that it was necessary to overthrow the regime by force (Operation Iraqi Freedom, OIF). During 1993-1997, the Clinton Administration articulated a policy of "dual containment," an effort to keep both Iran and Iraq weak rather than alternately tilting toward one or the other to preserve a power balance between them. During this period, Saudi Arabia and Kuwait were primarily concerned about the conventional threat from Iraq and saw Iran as a counterweight to Iraqi power. The states of the lower Gulf were further from Iraq and tended to view Iran as a greater danger than Iraq. Bahrain, in 1981 and again in 1996—the latter a period of substantial Shiite-inspired unrest—openly accused Iran of plotting to destabilize that country by supporting radical Shiite movements there. In 1992, the UAE became alarmed at Iranian intentions when Iran asserted complete control of the largely uninhabited Persian Gulf island of Abu Musa, which Iran and UAE shared under a 1971 bilateral agreement. All the Gulf states improved relations with Iran significantly at the end of the decade, particularly after the May 1997 election of the relatively moderate president Mohammad Khatemi, who curtailed Iran's support for Shiite dissident movements in the Gulf states. Despite the rapprochement, which was matched by unsuccessful attempts by the Clinton Administration to open direct talks with Khatemi's government, the United States continued to try to constrain Iran's WMD programs, but with mixed success. Unlike Iraq, which was the target of U.N. sanctions after it invaded Kuwait, Iran faced no mandatory international restrictions on its imports of advanced conventional weapons or of "dual use" technology (civilian goods useful for WMD). Some of Iran's WMD programs made significant strides during the 1990s, reportedly with substantial help from Russia, China, North Korea, and other countries and entities, such as the network of Pakistani nuclear scientist A.Q. Khan. The dual containment policy also had little success in curbing Iran's (or Iraq's) support for international terrorism. Iran has been on the U.S. list of terrorism state sponsors ("terrorism list") since 1984 (the list was created in 1979). Iraq was on the terrorism list during 1979-1982, and again from 1990 until the U.S.-led overthrow of Saddam Hussein. Over the past decade the State Department's annual report on terrorism has described Iran as "the most active state sponsor of terrorism. The Islamic regime in Iran had held American diplomats hostage during November 1979-January 1981, a seizure for which Iran has not apologized. The pro-Iranian Lebanese Shiite Muslim organization Hizballah held Americans hostage in Lebanon during 1984-1991, occasionally releasing some and then abducting others. Some U.S. law enforcement officials say Iranian operatives were involved in the June 1996 bombing in Saudi Arabia of the Khobar Towers housing complex for U.S. military officers, in which 19 U.S. airmen were killed, although some indications from the "September 11 Commission" final report (p.60) says Al Qaeda operatives might have had some role in that bombing. According to the recent annual State Department reports on international terrorism ("Country Reports on Terrorism: 2005," released April 2006) Iran provides material support to the following groups that oppose the U.S.-sponsored Arab-Israeli peace process: Hizballah and the Palestinian groups Hamas, Palestinian Islamic Jihad, the Al Aqsa Martyr's Brigade, and the Popular Front for the Liberation of Palestine-General Command. Iraq's former regime was on the terrorism list and publicly supported Palestinian violence against Israel. According to the September 11 Commission report, neither Iran nor Saddam's Iraq was linked to the September 11 attacks and neither had an "operational" relationship with Al Qaeda. However, press accounts say that some Al Qaeda activists fleeing Afghanistan transited or took refuge in both countries, including Al Qaeda-Iraq leader Abu Musab al-Zarqawi, and there apparently were some limited contacts between Al Qaeda and the Saddam Hussein regime. The new government in Iraq, which consists of political leaders who are generally well disposed toward the United States, was removed from the terrorism list on September 24, 2004. No observer is predicting that Iran will soon be removed from the U.S. list of state sponsors of terrorism ("terrorism list"). The Gulf threat profile has been altered—but not necessarily reduced—by the overthrow of Saddam Hussein's regime in Iraq. The fall of Saddam had initially generated a sense of relief among the Gulf states because the conventional and WMD threat posed by Iraq was essentially ended.