The Iraqi government has protested several times to the United States over Israel's reported supply of arms and military equipment to Iran, demanding that the Reagan administration order Israel to halt the shipments, reliable sources reported.
American diplomats at the small U.S. Interests Section here have responded by saying equipment provided by Israel to Iran is not, as far as Washington knows, subject to reexport controls imposed on U.S.-made arms sold to Israel or on arms produced in Israel under U.S. license, the sources said.
"The Israelis have quite an arsenal of their own" to supply, a Western diplomat with knowledge of the exchanges explained.
The issue seems likely to complicate U.S. efforts to win acceptance here for its proclaimed policy of strict neutrality in the 18-month-old Iranian-Iraqi war at the northern end of the Persian Gulf.
According to a recent report published in The New York Times, Israeli officials have acknowledged a secret arms supply relationship with Iran but said it was on a small scale, while Israeli spokesmen have declined official comment on the matter.
A State Department spokesman said the United States is not aware of anything being shipped to Iran that would be subject to U.S. controls, but said that some military equipment has been getting through to both Iran and Iraq from various sources.
The spokesman said some arms of U.S. origin may be sold to Iran, but they appear to be sold by private, commercial arms merchants.
Comments from officials in Iraqi President Saddam Hussein's Baathist government indicate that they feel Israel would not have entered into an arms-supply relationship with the supposedly anti-Israeli government in Tehran without Washington's acquiescence. Without reference to technicalities of U.S. reexport control legislation, U.S. identification with Israel is so strong in the Arab world that almost any Israeli actions often are viewed as remote-controlled U.S. policy.
First Deputy Prime Minister Taha Yassin Ramadan, a member of Saddam Hussein's Revolutionary Command Council, underlined this when asked to sum up U.S.-Iraqi relations following the State Department's recent removal of Iraq from the U.S. list of countries supporting terrorism.
"Bad," he responded in an interview, going on to cite U.S. support for Israel as the chief obstacle to improved relations despite what he said were opportunities for fruitful economic exchanges.
The United States has not indicated any willingness to sell arms to Iraq, sources said, despite speculation to this effect in the Arab press. At the same time, Washington views favorably French deliveries of previously contracted Mirage fighters and recent sales of French artillery and missiles, they added.
In part, this flows from U.S. hostility toward the radical Islamic rule of Ayatollah Ruhollah Khomeini, whose student followers held U.S. Embassy employes hostage in Tehran for 14 months. In addition, any arrangement that draws Iraq toward the West and away from the Soviet Union, its principal arms supplier for a decade, is considered a plus, the sources said.
In this perspective, the Reagan administration is believed likely to view with similar favor a recent deal between Iraq and Britain for British experts to repair about 160 British-made Chieftain tanks captured from Iranian forces. British diplomats are said to feel the tank-repair agreement could lead to more substantial military sales.
It is unclear whether Iraqi leaders regard Israeli arms supplies to Iran as a major military factor in last winter's reversals at the hands of Iranian troops. Israel has reportedly supplied or helped arrange about half of at least $100 million worth of arms, parts and ammunition supplied to Iran during the last 18 months.
Although Iraqi comments indicated general dissatisfaction with U.S. support of Israel, there were no specific references in several conversations with Iraqi officials to the question of U.S. export controls over the equipment. Indignation seems just as high over what Iraq charges is Syria's authorization for Iranian planes to use Syrian airfields and airspace for attacks on Iraqi targets.