Leaving aside a humanitarian concern for the carnage (upwards of 700,000 dead in four years), the Iraq-Iran war is a loser any way you look at it.

Having fought themselves punch- drunk along the battlefront, the parties have taken the war to each other's economic lifelines in the Persian Gulf. The threat of a serious interruption of the oil flow, with all its consequences for Western industries and economies, is ever present.

So you would suppose that the last thing any peace-loving and practical outsider would want to do would be to fuel the conflict, right?

Wrong, according to Tariq Aziz, the foreign minister (and deputy prime minister) of Iraq, who passed through town the other day on the occasion of the resumption of full diplomatic relations between his country and the United States. In the course of a long conversation at the Iraqi ambassador's residence, Aziz described a stunning triumph of commerce-as-usual over common sense -- America's best friends shoring up the defenses and the striking power of the armed forces of the Ayatollah Khomeini's terrorism-prone, Islamic fundamentalist government. Aziz's list of past or present suppliers of arms or war-related materials to Iran includes Britain, West Germany, Japan, Portugal, Greece, Switzerland, Belgium, Holland, Argentina, South Korea, Israel and Spain.

Some, like Israel, deny it. Others, when confronted with documentary evidence, as Aziz has been presenting it in Washington and on his global rounds, offer hollow alibis that strike him as outright "hypocrisy."

Pressed for examples, he told of a Spanish sale of 155-mm artillery shells to Iran -- some 300,000, or the equivalent of six months' supply. When pressed by the Iraqis, the Spanish government said that it sold the shells to Syria. When reminded that Syria, a close ally of Iran, has Soviet armaments that do not include 155-mm artillery, the Spanish authorities apparently pleaded ignorance.

The Iranians bought hundreds of what were described as "civilian" (pleasure) boats from Japan -- or so the Japanese insisted. Aziz insists these boats were ideal for carrying Iranian troops through marshland into battle. When Aziz asked the Japanese whether they thought Iran's religious leaders were going to "take up water skiing," the Japanese, too, pleaded innocent, according to Aziz.

Now you can argue that it was Iraq's roughneck regime that started the war for territorial gains. Another argument -- the fallback position of Western arms suppliers when pushed to the wall -- is that somebody is going to do it and that, anyway, there's something to be said for keeping lines open to Iran against the day when its religionist crusaders might give way to more moderate leadership.

But it is hard to see how the arrival of moderation is hastened by giving Iranian hard-liners the wherewithal to press on. That's the nub of Aziz's argument. That it is self-serving takes nothing away from the fact that his purpose and assessment coincide with those of the Reagan administration -- up to a point.

Once thought to be on the ropes, Iraq has bounced back -- with the help of French arms. But its staying power, like Iran's, is in doubt. The difference is that Iraq seems to be more of a mind to negotiate a settlement while Iran shows scant signs of abandoning its aim: the overthrow of the Sunni Moslem government in Baghdad. Its replacement by Iran's Shiite co-religionists would create another center for the export of extremism and subversion in the region.

That would seem to be reason enough not to undermine whatever moderate forces exist in Tehran by prolonging Iran's capacity to carry on the war. On this much, Aziz says, he got no argument from the Reaga administration.

But U.S. pressure so far has not done much to stop the flow of Western supplies to Iran. Apparently the business of the arms business continues to be business, even in Western countries supposedly alert to Iran's terrorist activities and professing to be working for an early end to the Iraq-Iran war.