After 5 1/2 brutal years of war with Iran, the Iraqi Army is faltering because of the lackluster performance of its troops and political constraints placed on commanders by the government of President Saddam Hussein, according to western military analysts and diplomats here.

Despite overwhelming superiority in sophisticated armaments and firepower and nearly total command of the skies over the battlefields, the assessment of military experts here is that Iraq is slowly but inexorably losing the war. Iraq's nearly 1 million men under arms, the military analysts say, are simply not up to the task of resisting a fanatical Iranian Army that keeps coming at them, no matter how badly it is punished.

"It is all very sad, but Iraq proclaims victory after victory but is still losing territory," said one western military expert here who, like virtually every other foreign observer interviewed, asked not to be identified.

"They have air superiority; they have the best and the most weapons; they talk a good game of defending their homeland and issue a stream of optimistic statements. Yet the fact is that since 1982, they have been steadily losing ground, meter by meter maybe, but still losing."

"Any way you look at it, Iraq is not doing well, no matter what they say officially," the western military expert said. "Since the Iranians forced them out of Khorramshahr, their last real foothold in Iran, in 1982, Iraq has lost some 4,000 square kilometers 1,540 square miles of their territory."

In the past these losses were dismissed as insignificant, the territory being isolated pockets jutting into Iran in the rugged Kurdish mountains of northeastern Iraq, or slivers of lands behind the Hawizah marshes north of Basra, Iraq's second-largest city.

But the fall nearly a month ago of the oil terminal town of Faw, south of Basra, in a surprise Iranian amphibious attack across the Shatt al Arab waterway, Iraq's main outlet to the Persian Gulf, has changed all that. The Iranians' continued possession of Faw gives them unquestioned control of the Shatt al Arab, over which Iraq originally went to war with Iran on Sept. 26, 1980.

A month of Iraqi counterattacks against the 30,000 or so Iranian soldiers, revolutionary guards and armed mullahs now dug in amid the battered rubble of Faw has pointed up the basic problems of the Iraqi Army, according to foreign military observers and diplomats here.

The biggest problem for the Iraqis is their refusal to commit infantry in trying to repulse the Iranians, choosing instead to fire artillery from behind their lines and attack with jet bombers and rocket-firing helicopters.

The effects of such long-range bombardment -- seen from near the front or in the endless hours of film clips that run nightly on Iraqi television interspersed with propaganda songs -- seem devastating. There is an awesome rumble of guns, the concussions of explosives, vast plumes of smoke.

But the effect, as military men know from experience, is something less devastating than it appears.

"It is like in World War II, when we rained high explosives of much greater power than those used today against entrenched enemy lines," said a western military attache here. "In the end, if a position was to be taken, it still had to be taken by men going over the top of their trenches, grenade in hand, bayonets on their rifles, fighting hand to hand. Real Audie Murphy stuff -- the nastiest kind of war."

Such fighting requires high motivation and commitment, something military observers find lacking in the Iraqi Army. Whether this is because of a historical lack of confidence, doubts about their authoritarian Arab Baath Socialist Party civilian rulers, insufficient training, or a combination of factors, one leading military analyst here said, "the evidence seems to be that the Iraqis just don't have the right troops to accomplish their ends."

The problem, military observers say, is compounded by political considerations that hamper the military command -- mostly a determination that high casualties are to be avoided at all cost lest they cause political unrest at home.

Diplomats and military analysts here talk of a vague "red line" for the number of casualties, beyond which the political leadership in Baghdad fears it cannot cross, even if it means swallowing, and publicly rationalizing, losses of territory.

The 10,000 casualties that the Iraqi Army is estimated to have suffered in the Faw campaign since the Iranian invasion of the peninsula Feb. 9, is believed to have approached -- if not surpassed -- the government's "red line."

As one foreign analyst put it, "The government is very unforgiving of failure at the front and has been known to execute commanders who failed." Loss of territory is one such failure that has caused commanders to disappear; too many casualties, it is suspected, may be another.

Because senior commanders are held personally responsible for the success or failure of their field commanders, they naturally demand to control all field decisions, the analyst said. This factor makes for a "rigid and cumbersome" command structure that prevents the sort of fluid field command decisions that are the basis of modern warfare, he added.

While, to observers, Iran's Army seems to suffer from just the opposite, often appearing to lack a command structure, it is given high marks here for its planning of offensives to catch the Iraqis by surprise at their weakest points and, usually, on the sort of mountainous or marshy terrain where Iran's overwhelming edge in tanks and armor is neutralized.

More important, however, remains the high motivation of Iranian troops, who go to battle persuaded by their revolutionary Shiite Moslem mullahs, or religious leaders, that to die in battle for their God is to be guaranteed a place in Paradise.

"The Iranian soldier is a very tenacious guy, very highly motivated," one military observer said. "The Iraqi instead seems to have his morale boosted by promises that if he dies his family will be given cash handouts, land, a house, a car."

No one doubts that Iran has taken more casualties than Iraq in the Faw campaign, as in virtually all other offensives in this war. But, with three times the population of Iraq, it has the manpower to afford greater losses, and this, in the end, could be the most telling military factor in the war now being carried out exclusively on Iraqi ground.

"Iran can afford to lose, as it did finally in the marshes campaign last year and may eventually appear to have in Faw if Iraqi counterattacks do prevail," commented one European ambassador here. "Yet Iraq can't afford any more 'victories' such as its current operations in Faw."