With its major oil installations talking a pounding, Iran's already faltering economy may have dealt a crippling blow in its undeclared war with Iraq.
While the extent of the damage remains unclear, Iran will be hard pressed to find either the money or the outside assistance to make whatever repairs prove necessary.
Oil experts here said Iran will find it difficult, if not impossible, to patch up its war-damaged refineries and export facilities with at least half of its foreign reserves blocked by a U.S. freze and no oil revenues to provide the ready cash.
Moreover, the United States and some Western European nations in an attempt to force Iran's Islamic revolutionary government to release the 52 American hostages seized in Tehran almost 11 months ago, is seen here as likely to prevent Iran from getting the sophisticated equipment it will need to put its oil facilities back in operation.
Some experts here suggest that Iran will also have trouble getting the expert help it will need because of its internal instability and the increasingly anti-Western attitude of the government.
Iraq, on the other hand, is on good terms with Western, particularly French, companies and should have no trouble getting the equipment and expertise it will need to repair its oil installations once the fighting stops.
Both sides in this destructive war surprised observers by the ferocity with which they attached, with planes and artillery, each other's oil installations -- economic base that makes Iraq and Iran international powers. i
There is some speculation among oil experts and diplomats here and in other states along the Persian Gulf that Iraq wants to capture all of Iran's major oil-producing region of Khuzestan, which is populated heavily by Arabs, who are a distinct minority in that Persian nation.
Such a takeover, however, appears unlikely to other area specialists who believe the Khuzestan Arabs remain loyal to the Iranian state even though they have, along with other ethnic minorities, been waging an often violent campaign to win more local autonomy from the central government.
Nonetheless, it has been the oil revenues that kept Iran's revolutionary government afloat in the face of the United States freezing of $8 billion in Iranian foreign assets and the Western trade embargo.
But the decreased oil exports -- estimated variously at between 500,000 barrels and 800,000 barrels a day -- have not been enough to keep the Iranian government solvent. Before the overthrow of the late shah in February 1979, Iran produced at its peak 6 million barrels a day, making it the second biggest oil exporter in the world.
The Middle East Economic Digest reported last week that Iran has been dipping into its unfrozen foreign assets to make up for the falling oil revenues and to pay for needed imports.
An Iranian budget official, Ezzatollah Sahabi, estimated earlier this month that oil revenues were $10 billion less than expected in the first six months of Iran's fiscal year which started in March.
Attempts to cut government spending this summer ran into trouble from civil servants, whose salaries make up the largest single portion of Iran's budget. They fought efforts to cut their pay in the face of rapidly rising prices, especially of essential foodstuffs.
It now appears that even the reduced oil revenues are lost to Iran for the foreseeable future.
Its major oil refinery in Abadan, one of the world's largest, has been under repeated attack by Iraqi planes and artillery for almost a week. According to observers of the battle, it is still aflame.
So is Iran's nearby Kharg Island depot, from which it exports almost all of its oil. Furthermore, Iraqi troops are battling at the outshirts of Ahwaz, the capital of Khuzestan where the sophisticated computers that control Iran's oil industry are located and at Dezful, north of Ahwaz, which controls communications between Tehran and the oil fields of Khuzestan.
It is hard to assess from across the gulf what the damage is to Iran's oil installations. The fires of Abadan, one expert said, could merely be burning oil which would leave the refining capacity essentially undamaged. But even if only the storage tanks are destroyed it could take a long time to get them replaced, given Iran's lack of ready cash and the economic embargo.
If the refining plants themselves have been destroyed, some experts said it could take as long as four years to get them working again.
The first at Kharg Island are believed to be almost certainly oil from storage tanks. It is unknown, however, whether ships were sunk in the channel -- which could entail a major clearing job.
There are indications already that the war is pinching Iran. The Central Bank admitted yesterday that many banks are short of cash and asked depositors to withdraw money only in emergencies.
It said there have been runs on some banks since the fighting started Sept. 22. A Tehran radio broadcast said Iranians should use checks to pay bills and deposit their savings in banks "to help the country's economy and stability."
The run on the banks, indicates, however, that many Iranians are pulling their money out of the state-run institutions and putting it in mattresses, hoping to convert it to either hard currency, gold or jewels.
There are, however, some elements among Iran's ruling clergy which appear to welcome the country's economic collapse. Their aim is to purge Iran of oil Western influences, especially those bought with oil money, so it can follow a fundamentalist Islamic line.
In the Persian Gulf ports dubai and Kuwait, which have become the major centers for the transhipment of Western goods to Iran as a way of circumventing the embargo, traders today were reported to be scurrying around to find extra warehouse space to store the cargoes piling up on the docks because the fighting has stopped ship traffic across the gulf to Iran.
Some of those merchants were reported to be worrying where Iran would get the money to pay for the goods now that its oil exports have dropped to nothing.