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Secretary of State Edmund Muskie says the Soviet Union...

CHICAGO -- Secretary of State Edmund Muskie says the Soviet Union might intervene in the Iraq-Iran war if instability in the region persists.

During a speech to the Chicago Council on Foreign Relations Monday, Muskie reaffirmed Washington's policy of viewing the Iraq-Iran war as a very interested but uninvolved bystander.

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'In light of Afghanistan,' Muskie said, without mentioning the Soviet Union, 'we must also be concerned about the possibility of new intervention presented by any instability in the region.'

The Soviet Union understands the U.S. position and has assured Washington of its impartiality in the conflict, Muskie said.

'We will continue to exercise restraint and expect the Soviets to do likewise,' he said.

Muskie said the United States is prepared _ together with its allies _ to keep open the vital Strait of Hormuz at the southern entrance to the Persian Gulf to guarantee a free flow of Western-bound Arab oil.

Muskie, however, dismissed hopes the 52 American hostages in Iran might be released before the Nov. 4 election.

'I have nothing to say to raise expectations,' Muskie said after his address. But 'it could happen. It might happen.'

Muskie said the United States is willing to negotiate for the hostages' release but 'we will never yield on matters of principle.'

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On the arms race, Muskie, in an apparent swipe at Ronald Reagan, criticized the idea of rejecting the SALT II treaty and starting new negotiations with the Soviets.

'The result would be a non-treaty and, in my judgment, the beginning of another nuclear arms race,' he said.

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