Iraq, Kuwait Talks on Border and Oil Disputes Collapse : Mideast: New troop movements are reported. Baghdad has ‘just upped the ante,’ an analyst said.

Talks aimed at defusing a potentially explosive oil and border dispute between Kuwait and Iraq collapsed Wednesday when Iraqi officials, apparently unwilling to ease their multibillion-dollar claim for money and territory, abruptly returned to Baghdad.

In a statement later to the official Iraqi News Agency, Deputy Prime Minister Sadoun Hammadi said the delegates gave up on the talks in Jidda, Saudi Arabia, because they “did not see any seriousness by the Kuwaiti officials in tackling the major damage inflicted on Iraq due to their recent behavior and stands against Iraq’s fundamental interests.”

Kuwaiti officials, clearly stung, said the talks collapsed because Kuwait refused to “give in” to Iraqi demands. They said they are ready to hold further talks in the Iraqi or Kuwaiti capitals.

A London-based military analyst said there were unconfirmed reports that Iraq was moving more troops toward the Kuwaiti border.

Similar rumors circulated throughout the European oil markets Wednesday afternoon, and although Kuwaiti officials denied the reports, a variety of analysts and diplomats here said it would not be unexpected for Iraqi President Saddam Hussein to move troops or initiate jet flights over disputed border territory in coming days as a show of force.

“I think the situation is very serious,” said the analyst, who specializes in the Persian Gulf region. “The Iraqis have just upped the ante. They will continue to talk. But that doesn’t preclude a military operation just to scare the hell out of the Kuwaitis,” said the analyst, who, like other sources, refused to be identified.

Reports from Kuwait and Washington indicate that Iraq already has massed up to 100,000 troops near the Kuwaiti border, although diplomats in Baghdad and reports from the region put the figure closer to 30,000.

A Western official in Cairo with close ties to the gulf region said that Iraq, as recently as a year ago, moved troops to the border in an abortive conflict over Kuwaiti plans to build a vacation resort on disputed territory.

The collapse of the talks reflects the hard bargaining stance that both countries have adopted in a dispute worth billions of dollars and involving strategic territory, particularly important to an increasingly restive Iraq, several analysts and diplomats said.

“What you’re seeing is bargaining over the price of a carpet,” one said. “The Iraqis today opened up with their price for the carpet. The Kuwaitis refused. We know the carpet is eventually going to be bought, but we don’t know yet at what price.”

Iraq, which benefited from about $30 billion in Kuwaiti largess during Iraq’s eight-year war with Iran, believes Kuwait should write off the loans and also compensate it for $2.4 billion in oil that it claims Kuwait illegally pumped from a disputed field along the border.

Iraq is also accusing Kuwait and the United Arab Emirates of costing Iraq $14 billion by pumping oil in excess of their quotas assigned by the Organization of Petroleum Exporting Countries.

Sources familiar with the dispute said it is likely that Iraq entered the talks Tuesday demanding full compensation plus forgiveness of the loans. Kuwait, they said, likely responded that it would be willing to pay some compensation, but would consider it as a credit against the war debt Iraq still owes Kuwait.

Kuwait is also believed to be unwilling to link the decades-old border dispute with the financial discussions, while the Iraqis are insisting on a comprehensive settlement, several analysts said.

After an initial two-hour meeting, chief Iraqi delegate Izzat Ibrahim, deputy chairman of Iraq’s Revolutionary Command Council, left Jidda without holding a scheduled second round of talks with Kuwait’s prime minister, Sheik Saad al Abdullah al Sabah.

A Kuwaiti official in Jidda told Reuters news agency that the talks “have collapsed because Kuwait did not give in to Iraqi demands to write off the (Gulf War) debts and to relinquish some of its territory.”

Before departing Saudi Arabia, Saad issued a statement agreeing to Iraqi proposals to move the talks to Baghdad.

But it was clear from the beginning that Iraq did not consider the Jidda meeting as a give-and-take bargaining session.

“Without recognizing Iraq’s rights and giving them back . . .,” the newspaper of Iraq’s governing Baath party said, “it is not only difficult, but impossible, to achieve any progress in the Jidda meeting and settle the differences.”

Saddam had earlier said he regarded the Jidda meeting as a protocol session to be followed up by substantive talks in Baghdad.

Saudi Arabia’s King Fahd and Egyptian President Hosni Mubarak, who have tried to mediate the dispute, are believed to be preparing for another round of talks, perhaps a summit-level discussion between the leaders of the two countries, in the near future.

In Washington, the House Foreign Affairs Committee on Wednesday approved new restrictions on trade with Iraq, while the State Department called in Iraq’s ambassador to encourage the talks between Baghdad and Kuwait.