World Notes THE GULF

July has not been kind to Tehran. Only two weeks after the U.S.S. Vincennes downed an Iran Air Airbus, Baghdad began the last stages of a counteroffensive that promised to drive the remaining Iranian soldiers from Iraqi soil. By overrunning Iran's military headquarters on the southern front, Iraq gained control of the vital Shatt al Arab waterway, providing another sign that the eight-year-old gulf war was tilting in Iraq's favor.

Iraqi soldiers also reclaimed a string of mountain peaks on the northeastern frontier, placing them in good position to recapture the strategic Kurdish city of Halabja. Iranian leaders tried to sound optimistic, but they could not hide the reversal of their fortunes. Said Prime Minister Mir Hussein Mousavi: "War is a complicated and technical matter, and naturally at a certain point retreat will help the final victory."