********************************
Iraq
Saddam's goals remain to reassert his rule over the Kurds in northern Iraq, undermine all UN restrictions on his military capabilities, and make Iraq the predominant military and economic power in the Persian Gulf and the Arab world. The on-going UN sanctions and US military presence continue to be the keys to restraining Saddam's ambitions. Indeed, years of UN sanctions, embargoes, and inspections, combined with US and Coalition military actions, have significantly degraded Iraq's military capabilities. Saddam's military forces are much smaller and weaker than those he had in 1991. Manpower and equipment shortages, a problematic logistics system, and fragile military morale remain major shortcomings. Saddam's paranoia and lack of trust – and related oppression and mistreatment – extend to the military, and are a drain on military effectiveness.
Nevertheless, Iraq's ground forces continue to be one of the most formidable within the region. They can move rapidly and pose a threat to Iraq's neighbors. Baghdad's air and air defense forces retain only a marginal defensive capability. The Air Force cannot effectively project air power outside Iraq's borders. Still, Saddam continues to threaten Coalition forces in the No Fly Zones, and remains committed to interfering with Coalition military operations monitoring his military activities.
Iraq retains a residual level of WMD and missile capabilities. The lack of intrusive inspection and disarmament mechanisms permits Baghdad to enhance these programs. Iraq probably retains limited numbers of SCUD-variant missiles, launchers, and warheads capable of delivering biological and chemical agents. Baghdad continues work on short-range (150 km) liquid and solid propellant missiles allowed by UNSCR 687 and can use this expertise for future long range missile development. Iraq may also have begun to reconstitute chemical and biological weapons programs.
Despite the damage done to Iraq's missile infrastructure during the Gulf War and Operation Desert Fox, Iraq may have ambitions for longer-range missiles, including an ICBM. Depending on the success of acquisition efforts and the degree of foreign support, it is possible that Iraq could develop and test an ICBM capable of reaching the US by 2015.
Saddam's regime will continue to pose political and military challenges to Coalition interests. Should sanctions be removed formally or become ineffective, Iraq will move quickly to expand its WMD and missile capabilities, develop a more capable strategic air defense system, and improve other conventional force capabilities. Saddam is intent on acquiring a large inventory of WMD and modernizing and expanding his fleet of tanks, combat aircraft, and artillery guns. While Iraq would still have to grapple with shortcomings in training and military leadership, such a modernized and expanded force would allow Saddam to increasingly threaten regional stability and ultimately, the global economy.