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Jan. 8 - What to do about the deepening quagmire of Iraq? The Pentagon’s latest approach is being called "the Salvador option"—and the fact that it is being discussed at all is a measure of just how worried Donald Rumsfeld really is. "What everyone agrees is that we can’t just go on as we are," one senior military officer told NEWSWEEK. "We have to find a way to take the offensive against the insurgents. Right now, we are playing defense. And we are losing." Last November’s operation in Fallujah, most analysts agree, succeeded less in breaking "the back" of the insurgency—as Marine Gen. John Sattler optimistically declared at the time—than in spreading it out.

Now, NEWSWEEK has learned, the Pentagon is intensively debating an option that dates back to a still-secret strategy in the Reagan administration’s battle against the leftist guerrilla insurgency in El Salvador in the early 1980s. Then, faced with a losing war against Salvadoran rebels, the U.S. government funded or supported "nationalist" forces that allegedly included so-called death squads directed to hunt down and kill rebel leaders and sympathizers. Eventually the insurgency was quelled, and many U.S. conservatives consider the policy to have been a success—despite the deaths of innocent civilians and the subsequent Iran-Contra arms-for-hostages scandal. (Among the current administration officials who dealt with Central America back then is John Negroponte, who is today the U.S. ambassador to Iraq. Under Reagan, he was ambassador to Honduras. There is no evidence, however, that Negroponte knew anything about the Salvadoran death squads or the Iran-Contra scandal at the time. The Iraq ambassador, in a phone call to NEWSWEEK on Jan. 10, said he was not involved in military strategy in Iraq. He called the insertion of his name into this report "utterly gratuitous.")

Following that model, one Pentagon proposal would send Special Forces teams to advise, support and possibly train Iraqi squads, most likely hand-picked Kurdish Peshmerga fighters and Shiite militiamen, to target Sunni insurgents and their sympathizers, even across the border into Syria, according to military insiders familiar with the discussions. It remains unclear, however, whether this would be a policy of assassination or so-called "snatch" operations, in which the targets are sent to secret facilities for interrogation. The current thinking is that while U.S. Special Forces would lead operations in, say, Syria, activities inside Iraq itself would be carried out by Iraqi paramilitaries, officials tell NEWSWEEK.

Also being debated is which agency within the U.S. government—the Defense department or CIA—would take responsibility for such an operation. Rumsfeld’s Pentagon has aggressively sought to build up its own intelligence-gathering and clandestine capability with an operation run by Defense Undersecretary Stephen Cambone. But since the Abu Ghraib interrogations scandal, some military officials are ultra-wary of any operations that could run afoul of the ethics codified in the Uniform Code of Military Justice. That, they argue, is the reason why such covert operations have always been run by the CIA and authorized by a special presidential finding. (In "covert" activity, U.S. personnel operate under cover and the U.S. government will not confirm that it instigated or ordered them into action if they are captured or killed.)

Meanwhile, intensive discussions are taking place inside the Senate Intelligence Committee over the Defense department’s efforts to expand the involvement of U.S. Special Forces personnel in intelligence-gathering missions. Historically, Special Forces’ intelligence gathering has been limited to objectives directly related to upcoming military operations—"preparation of the battlefield," in military lingo. But, according to intelligence and defense officials, some Pentagon civilians for years have sought to expand the use of Special Forces for other intelligence missions.

Pentagon civilians and some Special Forces personnel believe CIA civilian managers have traditionally been too conservative in planning and executing the kind of undercover missions that Special Forces soldiers believe they can effectively conduct. CIA traditionalists are believed to be adamantly opposed to ceding any authority to the Pentagon. Until now, Pentagon proposals for a capability to send soldiers out on intelligence missions without direct CIA approval or participation have been shot down. But counter-terrorist strike squads, even operating covertly, could be deemed to fall within the Defense department’s orbit.

The interim government of Prime Minister Ayad Allawi is said to be among the most forthright proponents of the Salvador option. Maj. Gen.Muhammad Abdallah al-Shahwani, director of Iraq’s National Intelligence Service, may have been laying the groundwork for the idea with a series of interviews during the past ten days. Shahwani told the London-based Arabic daily Al-Sharq al-Awsat that the insurgent leadership—he named three former senior figures in the Saddam regime, including Saddam Hussein’s half-brother—were essentially safe across the border in a Syrian sanctuary. "We are certain that they are in Syria and move easily between Syrian and Iraqi territories," he said, adding that efforts to extradite them "have not borne fruit so far."

Shahwani also said that the U.S. occupation has failed to crack the problem of broad support for the insurgency. The insurgents, he said, "are mostly in the Sunni areas where the population there, almost 200,000, is sympathetic to them." He said most Iraqi people do not actively support the insurgents or provide them with material or logistical help, but at the same time they won’t turn them in. One military source involved in the Pentagon debate agrees that this is the crux of the problem, and he suggests that new offensive operations are needed that would create a fear of aiding the insurgency. "The Sunni population is paying no price for the support it is giving to the terrorists," he said. "From their point of view, it is cost-free. We have to change that equation."

Pentagon sources emphasize there has been no decision yet to launch the Salvador option. Last week, Rumsfeld decided to send a retired four-star general, Gary Luck, to Iraq on an open-ended mission to review the entire military strategy there. But with the U.S. Army strained to the breaking point, military strategists note that a dramatic new approach might be needed—perhaps one as potentially explosive as the Salvador option.

With Mark Hosenball