GULF WATCH: Day 35 : A daily briefing paper on developments in the crisis : Diplomatic Front:

At this weekend’s summit in Helsinki, President Bush will offer to arrange international financial aid for the Soviet Union if Soviet President Mikhail S. Gorbachev agrees to withdraw advisers from Iraq and possibly send troops to the region, U.S. officials said.

Iraqi President Saddam Hussein declared that the international trade embargo could kill Iraqi children and urged Arabs to overthrow the leaders of Saudi Arabia and Egypt for backing the international effort to expel his forces from Kuwait.

Secretary of State James A. Baker III departed for the Persian Gulf, the Soviet Union and Europe to encourage international support for the campaign against Iraq.

Britain said it will help finance the cost of the Middle East campaign.

Military Front:

An independent analyst predicted that the United States and Saudi Arabia would prevail in a military offensive against Iraq but would lose five to six armored divisions, which some government analysts said implied casualties of 32,000 to 48,000 troops.

The United States moved missiles and troops closer to Saudi Arabia’s border with Kuwait in nighttime operations and airlifts. Meanwhile, an estimated 2,000 Egyptian special forces troops and Kuwaitis were deployed at the front below the Kuwaiti border.

Trade Front:

Shipments of goods are reaching Iraq by air despite the international trade embargo, Secretary of State James A. Baker III told members of Congress. The reports have spurred discussion of a possible air blockade to complement the current naval interdiction effort.

In the Gulf of Oman, the U.S. Navy released a tea-laden Iraqi cargo ship that it had impounded on Tuesday after apparently receiving a guarantee that the vessel would honor the ban on trade with Iraq.

Crisis Indicators:

* U.S. troops on the ground: 50,000+

* U.S. sailors aboard ships in region: 35,000

* U.S. ships in region or en route: 70

* Iraqi troops in/near Kuwait: 265,000

* Iraqi tanks in Kuwait: 1,500

* U.S. diplomats remaining in Kuwait: 10

* U.S. diplomats and dependents held in Iraq: 58

* Other Americans detained in Iraq and Kuwait: 70

* Retail gasoline (U.S. average per gallon): $1.24, down $.002

* Crude oil (spot price per barrel): $29.77, down $.65

* Dow Jones Industrial Average: 2,628.22, up 14.85