Tug of war looms over Gulf POWs. Iraqi prisoners who changed loyalties don't want to go home. BARRIER TO IRAN-IRAQ PEACE ACCORD

A prisoner-of-war exchange sounds simple enough. But for negotiators seeking to end the Iran-Iraq war, the issue has a surprising complication. As many as 25,000 Iraqi POWs - half the total held by Iran - have switched loyalties and refuse to go home. The estimate is based on Western intelligence reports on living conditions in the 16 Iranian POW camps, and on the conclusions of a confidential United Nations report prepared in July by a four-man investigation team that visited both Iran and Iraq.

Thousands of Iraqi detainees, chanting slogans against their own government and asking to be granted political refugee status by the UN, greeted the investigators at each camp, a Brussels-based European diplomat who had access to the UN report confirmed.

UN investigators reportedly believe that the prospect of peace may persuade some of the recalcitrant prisoners eventually to return home. But they also believe that 20 percent will never agree.

``Iranians have for years brainwashed their Iraqi prisoners, and they have been very successful,'' the Brussels-based diplomat says.

Since the outbreak of the war, the Geneva-based International Committee of the Red Cross (ICRC) has repeatedly criticized Iran's authorities for what it terms ``pressures applied on POWs to suppress the loyalty they owe to their power [country] of origin.'' This, the Red Cross said, was a clear violation of the Geneva conventions on prisoners of war.

Baghdad wants all its soldiers back, saying it will subject reluctant ones to ``reeducation.'' Diplomats fear that they may face even worse measures.

Iraq's intentions are a dilemma for the ICRC, which is to carry out the prisoner swap. The ICRC has said that no prisoner will be repatriated against his will. But Tehran hasn't yet decided to let them remain.

Earlier this year the ICRC announced that it had lost track of 7,000 Iraqi POWs it had registered in Iran in the early '80s. But the UN team found out that most of those missing prisoners were freed by the Iranians after they pledged allegiance to the Islamic regime. They later settled in Iran or joined Hizbullah in Lebanon, and refuse any contact with the ICRC.

Tension between the ICRC and Tehran peaked between October '84 and August '85, when Red Cross officials were denied access to Iran's POW camps.

Iranian diplomats accuse the ICRC of siding with Iraq. They say that their regime is an Islamic one and thus treats its prisoners according to Islamic laws.

``In Islam, a POW is a guest,'' an Iranian ambassador in Europe explains. ``We treat Iraqi prisoners and our own soldiers alike. That means they eat the same food. Every prisoner is entitled to his own bed. We installed TV sets in each barrack room. We also raised the educational level of the prisoners by setting up schools inside the camps.''

``Of course, the curriculum includes Islamic guidance,'' he adds.

The UN investigation team confirmed that living conditions for Iraqi POWs in Iran are much better than those for Iranians in Iraq. The team reported that most of the 35,000 Iranian prisoners have to sleep on straw mattresses. Barracks rooms are overcrowded. The food is of poor quality. Recalcitrant prisoners are often beaten.

On the other hand, Iraqi authorities refrained from trying to indoctrinate their prisoners. Only a small number expressed their intention to refuse repatriation and to join the People's Mojahedin, a Baghdad-based group of Iranians opposed to the Islamic regime.

The UN commission report also noted that Iranian prisoners in Iraq are extremely well organized. They reportedly rebuilt a military hierarchy within each camp. In every barrack room, UN investigators were welcomed by an English-speaking prisoner who had prepared a list of fellow detainees' grievances against their Iraqi guards.

A European diplomat, just back from Baghdad, says Iraqi authorities have been warned that many of their soldiers refuse to come home. The Iraqi government insists it wants all its men back.

``Some of them will have to be reeducated in special camps,'' an Iraqi official reportedly told the investigation team.

Iranian officials seem to be uneasy about the problem. Some told the commission that Iraqis who do not want to return home will be granted permanent residence in Iran. Other officials said they wanted to get rid of all Iraqi POWs.

``The Iranians are in an embarrassing position,'' a European diplomat in Tehran explains. ``They had pledged to replace the existing Iraqi regime by an Islamic republic patterned on the Iranian model. They believed those indoctrinated prisoners could later form the backbone of an Iraqi Revolutionary Guards corps. Now that their dream has been shattered, they don't really know what to do with those Iraqi Islamic zealots.''

Claude van England, who visits Iran regularly, writes from Brussels.