GULF WATCH: Day 21 : A Daily Briefing Paper On Developments In The Crisis

Diplomatic Front:

Setting the stage for another showdown with Saddam Hussein, the United States announced that it would defy Iraq’s order to shut down the U.S. Embassy in Kuwait by Friday. But Washington said it would reduce staffing at the embassy to minimal levels.

At the United Nations, the United States continued to press for Security Council endorsement of military actions by member nations to enforce the naval blockade of Iraq and Kuwait. Insiders said the Soviet Union is reluctant to approve the move.

Defense ministers of the six-member Gulf Cooperation Council met in Saudi Arabia to discuss a unified defense strategy. One member predicted that the group would mobilize the 10,000-man Peninsula Shield rapid deployment force. Military Front:

President Bush authorized the first call-up of reserves in two decades. Cargo handlers, medical professionals and other specialized personnel will be assigned to active duty for up to 180 days. The initial mobilization is expected to number about 40,000.

Military officials said particularly large numbers of reservists would be pressed into service in Mississippi and Georgia, where reserve units supplement active-duty forces already assigned to the Middle East. Trade Front:

Signs of some holes in the international embargo emerged. President Bush said he was reviewing reports that supplies were crossing into Iraq from Jordan. If that is true, he said, it would be a violation of the U.N. sanctions and of what Jordan’s King Hussein told him last week. Meanwhile, officials in Yemen allowed a second Iraqi tanker, which earlier had defied warning shots from an American warship, to dock at the port of Aden. A Yemeni official said the nation did not intend to “intercept or obstruct” ships.

Oil prices soared to their highest level in nearly five years in response to discord within OPEC and plans by Saudi Arabia to curtail shipments to Japan. Stock prices continued to skid as traders focused on the economic repercussions of the Middle East crisis. Crisis Indicators:

Iraqi troops in Kuwait: 160,000

U.S. troops on the ground: 35,000

U.S. personnel aboard ships: 20,000

U.S. ships in the region: 70

U.S. aircraft in region: 500

Americans missing in Iraq and Kuwait: 53

U.S. diplomats and dependents in Kuwait: 120

Total Americans in Iraq and Kuwait: 3,000

Crude oil (per barrel, September futures, New York Mercantile Exchange): $31.22, up $2.51

Wholesale gasoline (per gallon, September futures, New York Mercantile Exchange): $1.0411, up $.0285

Dow Jones industrial index: 2,560.15, down 43.81

Gold (per ounce) $411.00, up $3.60