Europeans Have Much to Lose in the Gulf Puzzle : France, which has pinned its Mideast policy on Baghdad for two decades, probably has the most at stake in the region.

On the ground in Saudi Arabia and on the waters of the Persian Gulf, the United States carries the biggest stick in the showdown with the forces of Iraqi leader Saddam Hussein.

But in terms of economic and political risk, Western Europe probably has more at stake in the gulf conflict, particularly if it erupts into a fighting war. This is particularly true of France, which for 20 years has pinned its Middle East foreign policy on Iraq. It is least true of Britain, which is the only net exporter of oil in the European Community.

In general, however, the European countries are far more dependent on the Persian Gulf for oil than is the United States, which receives only 7% of its total supply from the region. In contrast, the 17 European members of the International Energy Agency, the West’s answer to the Organization of Petroleum Exporting Countries, receive more than 24% of their total oil supplies from the gulf.

The geographic proximity of the volatile Middle East and Arab North Africa also produce anxieties in Europe that do not exist as strongly in the United States--particularly, fears that a gulf conflict could spark another Arab-Israeli war and unleash a new generation of weapons.

Christoph Bertram, diplomatic correspondent for Die Zeit newspaper in Hamburg, commented: “People here have been drawing maps measuring the range of the new Israeli and Egyptian missiles. They are horrified to see that it takes in a sizable chunk of Europe. Although the gulf is far away, in our political subconscious it is the proximity of a potential Arab-Israeli conflict that worries us.”

Concerns about security include fears that a gulf war would create a new wave of terrorism on the Continent, like those that swept through France, Italy and West Germany in the 1980s. Europeans are acutely aware that although terrorist activity is directed against American foreign policy, the most serious attacks usually occur outside the United States.

“If the war breaks out, the first risk is terrorism,” warned Gilles Munier, a French pro-Arab militant active in the Iraq lobby in Europe. “There will be many repercussions. In any case, the bombs never explode in your country (the United States), they are always planted in Europe.”

Several of the European countries also have large Arab and Muslim minorities that react sensitively to events in Muslim lands. In both France and Britain, several leading Muslim clerics have condemned the presence of U.S. troops in Saudi Arabia. Talk programs on Europe’s Arabic language radio stations are inundated with callers supporting Saddam Hussein.

So far in the tense standoff that the French call the drole de guerre-- the “phony war”-- the United States and European allies have shown impressive solidarity in both military and political terms. Except for a few dissenters, notably French Minister of Defense Jean-Pierre Chevenement, the Europeans and the Americans have spoken with one consistent voice. (Chevenement, a founding member of the Franco-Iraqi Friendship Assn. in his country, embarrassed French President Francois Mitterrand by publicly opposing French participation in the naval blockade of Iraq.)

More important, the Europeans have been willing to back up the talk with military hardware and personnel. Fourteen European warships are already in the gulf area, compared to 23 for the United States. Another 26 European vessels are on the way, representing military commitment from seven European countries.

“We are witnessing a very considerable buildup,” said John Roper, director of the research institute for the Western Europe Union. “It may be that before long there will be as many European vessels in the gulf as there are American.”

Still, critics like British Prime Minister Margaret Thatcher contend that most European countries have done only a minimum. “It is sad that at this critical time Europe has not fully measured up to expectations,” she told a gathering of European conservative party leaders late last week.

“We cannot expect the United States to go on bearing major military and defense burdens worldwide, acting, in effect, as the world’s policeman if it does not get a positive and swift response from its allies when the crunch comes--particularly when fundamental principles as well as their direct interests are just as much at stake,” Thatcher said.

And European analysts interviewed by The Times warn that the allied front could crack if Hussein continues to weather military and economic pressures from the international community. If the drole de guerre stretches into months and years, they said, the differences in American and European interests would be exacerbated, undermining the consensus on economic sanctions.

Here are some of the main European interests that influence continental policies on the gulf:

Energy:

Except for Britain and Norway, the only two net exporters of oil in the region, most European countries depend much more heavily on gulf oil than does the United States. The oil dependency is highest in Greece, which receives more than 65% of its domestic supply from the gulf. But France (36%), Belgium (34%), the Netherlands (31%), Spain (29%) and Italy (28%) are also highly dependent on gulf crude.

In some ways, as Die Zeit commentator Bertram noted, the source of oil in world markets is not as important as the price. Importers pay approximately the same price for oil whether it comes from the Yucatan or the Yukon, Siberia or the Sahara. Sudden fluctuations in supply such as those caused by the U.S.-led embargo on Iraqi and Kuwaiti oil, raise the prices for everyone. (In addition, crude oil prices are fixed in dollars, currently at near-record lows on the international exchanges--a plus for Europeans, but one that could change.)

Regional disturbances in supply also greatly disrupt distribution systems in the importing countries. In France, for example, several of the refineries at the country’s main oil port near Marseilles have already been forced to lay off workers because they dealt exclusively with Iraqi oil.

In addition, France and Italy, among other European countries, had entered into barter arrangements with the Iraqi government, drained of cash after its bloody eight-year war with Iran. This allowed Iraq to pay for manufactured goods, including sophisticated French weapons, with crude oil instead of currency.

Trade:

Although it has declined sharply in recent years because of Iraq’s inability to pay its debts, European trade with Hussein’s regime has been extensive. Last year, for example, West Germany sold $1.1 billion worth of machine goods, automobiles and pharmaceuticals to the Iraqis. Until it exploded into an international scandal, West German exports of chemicals helped Iraq build a stockpile of chemical weapons.

Meanwhile, the French military-industrial complex sold Iraq most of the sophisticated weaponry that American, French and British troops face in the gulf.

According to the Stockholm International Peace Research Institute that monitors international arms transactions, France sold Iraq more than $5 billion worth of major weapons systems between 1980 and 1989.

Commented Herbert Wulf, a senior researcher at the Stockholm Institute:

“France provides the most prominent example of how this kind of weapons supply backfires and how shortsighted business interests (in earning) a quick franc eventually led to a situation where you get shot at with your own guns.”

According to a survey by The European newspaper, the 12 member states of the European Community exported more than $4 billion in goods last year to Iraq, despite the country’s shortage of cash and continuing controversy over its use of poison gas on the indigenous Kurdish population living on Iraq’s border with Turkey and Iran. The same survey showed $1.5 billion in European Community exports to Kuwait in the same period.

In addition, the Hussein regime still owes billions of dollars to the Europeans, including $4.6 billion to the French, $900 million to West Germany and $900 million to Italy. According to SACE, the Italian export credit insurance company, Italian businesses stand to lose as much as $11 billion in business deals with Iraq because of the economic sanctions.

Of course, the economic damage is not limited to business with Iraq and Kuwait.

The crisis has already affected spending by the other oil-rich kingdoms and emirates in the gulf region for products ranging from German luxury cars to racehorses. In fact, events in the gulf cast a pall over the annual sale of French yearlings held recently in Deauville, on the Normandy coast. Hordes of buyers from the gulf normally show up at the thoroughbred auction, the European version of the annual Kentucky yearling sale at Keeneland.

This year, however, reporters said only one Arab came to Deauville and he bought only one modestly priced horse.

Geopolitics:

On the geopolitical front, the big loser in the Persian Gulf crisis is France.

For more than 20 years, since President Charles de Gaulle forged the French-Arab policy in the wake of the Arab-Israeli Six-Day War, Iraq’s best friend in the West has been France.

In much the same way that Iran was once the pillar of U.S. interests in the region, Iraq was the pivot for the French in the Arab world. “Americans learned their lesson about putting all their eggs in one basket with the Shah of Iran (Mohammed Reza Pahlavi),”commented Wulf of the Stockholm Institute. “The U.S. banked on the shah as the guarantor of stability in the region and watched as its Middle East policy was wiped out” when the shah was ousted from power in the Iranian revolution. “All of a sudden, France finds herself in the same boat.”

The warm Franco-Iraqi relations began under De Gaulle but intensified after the economically devastating 1973 oil shock. Terrorist actions in France by pro-Iranian agents made the French feel even closer to the Iraqis. French supplies of weapons and expertise during the Iran-Iraq War cemented the relationship.

During the war, French writers, journalists and politicians donned battle fatigues and toured the front, sending back glowing tributes to the “progressive” Saddam Hussein regime. A spectrum of political leaders ranging from Chevenement to former Gaullist Prime Minister Jacques Chirac had only fond words for the Iraqi regime.

The Iraqi lobby in France was large and powerful. In addition to Chevenement, the Franco-Iraqi Friendship Assn. included prominent leaders in the defense industry. The impressive Iraqi cultural center in Paris was housed in a mansion owned by the Dassault family, owners of the aerospace company that sold Iraq more than 150 Mirage fighters. Stories circulated widely that the Iraqis had contributed lavishly to political parties, from the right to the left.

Francois Heisbourg, French director of the International Institute for Strategic Studies in London, noted that receptions at the Iraqi Embassy in Paris were among the most popular on the political social scene. “The Iraqis had a broad sweep of friends,” Heisbourg said.

Cynics suggested that this explained why France moved relatively slowly to respond to U.S. appeals for support in the gulf intervention. “Speedy Diplomats, Slow Boats,” the Times of London commented caustically. Even after President Mitterrand ordered French ships, commandos and helicopters into the gulf, Chevenement made a statement attacking his own government’s policy.

Since then, France has become the second-largest military presence in the gulf behind the United States. The result is a terrible sense of betrayal on the part of the Iraqis--who reportedly offered to release French citizens from Iraq and Kuwait if the French would stay neutral in the conflict--and a French Middle Eastern foreign policy that is in ruins.

“What we cannot understand,” Iraq’s Hussein said in a bizarre, rambling interview with a French journalist the other day, “is the position of France. The only country we blame is France. We don’t directly blame the United States or Great Britain because they were never objective. They were never our friends.”

The Muslims:

The mystery factor in the European response to the gulf crisis is the Continent’s large Arab and Muslim population.

France has 3 million Muslims, mostly ethnic Arabs from the Maghreb countries (Algeria, Morocco, Tunisia) of North Africa. Britain has 400,000 Arabs and 1.5 million Muslims, most from Pakistan and India. West Germany has fewer Arabs but a huge Turkish population estimated at nearly 2 million. Turks are also Muslims who tend to react similarly on Middle East issues.

In all, there are an estimated 7 million Muslims living in Europe. Together, they form an increasingly volatile and sensitive element of European life that has no equivalent in the United States.

Reaction to the allied intervention in the Persian Gulf has so far been mixed, although leading Muslim clerics in Marseilles, France, and in London have condemned the U.S. military presence in Saudi Arabia. According to reports in the French press, police have kept 30 suspected Iraqi agents under surveillance to prevent them from inciting Muslims against the military action in the gulf. Three small pro-Iraq demonstrations have been held in Paris since the Aug. 2 Iraqi invasion of Kuwait.

Meanwhile, phone lines to Arabic radio stations in Europe, including Radio Maghreb in France, have been jammed with callers.

“The first reaction of the callers after the attack was unanimous condemnation of Iraq,” said Dahmane Abderrahmane, manager of Radio Maghreb. “But from the moment when the Americans became engaged militarily, there was a unanimous condemnation of America.”

A key factor is resentment of U.S. policy regarding Israel and Palestinians.

In general, as Bertram of Die Zeit commented, Europeans do not share the special relationship the United States has with Israel. “European countries,” Bertram said, “tend to distance themselves more from Israel.”

The attitude is much stronger in the European and Muslim communities. European Muslims have no strong affection for Kuwaitis. “The Maghrebians are not going to weep for the rich Kuwaitis in the casinos on the Champs Elysees,” said Abderrahmane.

Nor are they particularly fond of Saddam Hussein. “There is not one of us who would lift his little finger for Saddam Hussein, and he knows it,” said Arezki Dahmani, director of the predominantly Arab civil rights organization, France Plus.

But according to Dahmani and other European Arab leaders, the European Muslim community feels it is hypocritical for the United States to condemn the Iraqi invasion of Kuwait without moving more strongly to reverse the 23-year Israeli occupation of the West Bank.

“If Bush doesn’t integrate the Palestinian question into the discussion,” predicted Dahmani, “irrationality will have the day.”