THEY were thinking it might be another Iraqi invasion of Kuwait. But what US military monitors in the Persian Gulf caught out of the corner of their eyes last October was a potentially greater cause for concern: an Iranian buildup of troops, artillery, and several missiles on islands within range of the world's biggest oil-shipping corridor - the Strait of Hormuz.
Whether the buildup presents a threat to the West and to the Gulf states has become the subject of heated debate, ever since it was disclosed last month by Gen. John Shalikashvili, the chairman of the Joint Chiefs of Staff.
Arab nations in the Gulf and some US experts worry that the buildup signals a dangerous new bid by Tehran to expand its power and possibly threaten the flow of oil to the West. The US imports 20.2 percent of its oil from the Gulf. Europe imports almost half.
Other experts believe the new Iranian deployments were initially a reaction to the deployment of US forces in the Gulf after last October's Iraqi army movements toward Kuwait. Thereafter, they believe, the troops were maintained to bolster Iran's grip on the islands, over which it has had a long-running territorial dispute with the United Arab Emirates.
``The Iranians' body language is not at all threatening as far as Western strategic interests are concerned,'' says Prof. Anoushiravan Ehteshami of the University of Durham in England, a leading expert on the Iranian military. ``As far as the region goes, the deployments could be part of a bullying tactic.''
Professor Ehteshami suggests that the deployments could also be intended as protection for several new free-trade zones that Iran is developing in the southern Gulf. The Clinton administration has given ambiguous interpretations of the Iranian moves. The Pentagon says it is watching closely, but calls the Iranian deployments ``primarily defensive.''
General Shalikashvili, however, offers a darker analysis: ``All of [this] can lead you to lots of conclusions, one of which is they [Iran] want to have the capability to interdict the traffic in the Strait of Hormuz.''
Several days after Shalikashvili's disclosure, Deputy Secretary of State Robert Pelletreau told a Senate subcommittee that a ``comprehensive review'' is now under way of steps Washington can take to ``intensify'' its efforts to contain Iran's political and military power and end its support for radical Islamic groups.
To that end, the Clinton administration condemned the awarding of a contract this week by Iran to a US oil company to develop two Gulf oilfields. The contract is the first of its kind signed since 1979, when Washington broke trade ties with Tehran after US Embassy personnel were taken hostage by Iranian students.
US officials say that in addition to the Hawk missiles, Iran has deployed about 10 tanks, artillery, and 3,300 troops on Abu Musa Island. It is believed to have Chinese-made Silkworm antiship missiles on another island, Qeshm.
The Iranian Navy has also stationed two recently acquired Russian-built Kilo class submarines in the area; a third is due for delivery. One submarine was reportedly involved this week in major naval wargames in the southern Gulf.
These developments follow Iran's acquisitions of Russian and Chinese arms, including aircraft, and North Korean-made Scud missiles. Tehran is also buying up to four Russian nuclear reactors that it says are for electricity. But Washington fears they will enhance Iran's alleged nuclear-weapons development effort. It is pressuring Moscow to halt the deals.
Taken together, these developments show that the Islamic republic is bent on asserting its dominance over the other Gulf states and threatening the flow of oil to the petroleum-thirsty West, particularly the US, some observers say.
``There is broad consensus regarding the brutal, undemocratic, revolutionary nature of the Iranian regime,'' says Sen. John McCain (R) of Arizona. ``Much of its behavior, however, impinges directly on US national security interests and offers disturbing indications about its aims in acquiring an enhanced nuclear capability.''
Other experts contend that Iran's new deployments pose little threat to the flow of oil because the Iranian forces are no match for Western military technology, especially that of US units stationed permanently in the region. ``The islands are fairly barren,'' says a Pentagon official. ``If they make any attempt to block or challenge access to the Gulf, it would not be very difficult to neutralize them.''
As for fears of a major Iranian military buildup, the official agrees with other experts that Tehran is eager to make large-scale arms purchases and that it may become a matter of serious concern in the future. But for now, these experts say, Iran's domestic economic crisis is so dire that it cannot afford a major military expansion program.
``There has been a striking decline in their arms imports, a clear sign that it [the economic crisis] is a crisis that extends in economic and military terms to every level of Iranian society,'' says Anthony Cordesman, a senior fellow at Washington's Center for International and Strategic Studies. He says foreign weapons deliveries to Iran have dropped from almost $2.8 billion in 1990 to no more than $900 million today.
Mr. Pelletreau acknowledges that the amounts of weapons Iran has recently acquired ``have been nowhere near'' what they desire.
Finally, some experts hold that the Iranian military has still not recovered from past purges or equipment losses incurred during the eight-year war with Iraq.