Hussein Cuts Rations of 3rd World Workers : Iraq: The Baghdad leader assails the blockade. He calls for an Arab holy war against the Americans.

President Saddam Hussein, in a speech brimming with religious zeal, Wednesday assailed the blockade of his country, while behind the scenes, he cut rations of thousands of foreign workers from the Third World and warned their governments that unless they provide food, the workers will face starvation.

“When in history has someone tried to starve people to death by denying them food?” he asked. “When in history have some children died because of a premeditated decision to deny them milk?”

Hussein repeated his call for Arabs to overthrow governments that support the U.S.-led siege and military buildup and appealed to Muslims to join a “holy war” against the Americans. He began to refer to his own troops as moujahadeen, or holy warriors.

Fight “against those people who would strangle Iraq,” he said in a televised speech delivered through a dapperly dressed reader. “The slogan of the believers is ‘No retreat.’ ”

His appeal was peppered with calls to liberate Muslim holy land in Saudi Arabia from infidels. Hussein has urged such action before, and Arab analysts speculated that he was disappointed in the initial response and was trying again.

Religious fervor is new for Saddam Hussein. He leads a staunchly secular ruling party, and his 1980 invasion of Muslim fundamentalist Iran made him suspect in the eyes of many believers.

The half-hour speech, Hussein’s first in more than two weeks, also included references to the U.S. defeat in Vietnam.

“Sophisticated air force and military cannot win the war on the ground,” he warned. “Even if all cities in Iraq are destroyed, the resistance will never end.”

At the White House, Press Secretary Marlin Fitzwater said the statement “read on behalf of Saddam Hussein amounts to another rhetorical diatribe designed to split Arab unity.”

“We see it as a sign of desperation that Iraq is lashing out with hypocrisy and irrelevant statements. For Saddam Hussein to claim moral rectitude is totally beyond belief,” he said.

Asked whether there is any evidence that Iraqi children are dying as a result of the sanctions--or that the embargo is having any other physical impact--Fitzwater said: “We have noevidence to that effect.”

“The statement had so many outrageous statements in it . . . (I) don’t intend to try to respond to each one of them,” he said.

Hussein’s impassioned reference to the embargo came amid signs that the sanctions imposed by the United Nations and enforced by the American and other navies are taking hold. Spare parts for machinery are in shorter and shorter supply, and bread lines are growing.

Marchers in a government-sponsored demonstration at the American Embassy in Baghdad held signs saying the “Blockade Is Illegal” and “Our Children Want Milk.”

“The children of Iraq reject that we beg for milk,” Hussein said in his speech.

The embargo, along with a military buildup by the United States and its allies, is meant to drive Iraq out of Kuwait, which Hussein’s army invaded Aug. 2. By United Nations agreement, food and medicine can be sent to Iraq for humanitarian reasons when supplies run short.

The Iraqi strongman clearly intends to try to force the blockade open before then by creating a crisis among the tens of thousands of Asian workers in Kuwait and Iraq.

Late Monday, his Foreign Ministry here summoned ambassadors from India, Pakistan, Sri Lanka, the Philippines, Bangladesh and Thailand to deliver what diplomats described as a “blunt” warning. Either their countries begin sending food, they were told, or the workers will have to fend for themselves.

“We were stunned,” said an Asian diplomat.

In a veiled warning to Asian governments, a government spokesman was quoted as by the English-language daily Baghdad Observer as saying: “Under food embargo conditions, Iraq would not be responsible for the dilemma of foreign nationals which is caused by the shortage of foodstuffs.”

The same article said that Foreign Minister Tarik Aziz has “urged states with many nationals to take urgent steps to provide Iraq with food supplies to enable it to meet (the foreigners’) needs.”

Normally, visiting work crews are provisioned by the government through the Ministry of Foreign Trade, but that program has been suspended, the diplomats said. When the foreigners have tried to buy food independently, they were told that sales to foreigners are banned.

In addition, many of the Asians are forbidden to leave because they are under contract with the Iraqi government.

Asians in Iraq have been thrown into near-panic by the latest developments, and their governments’ representatives were expressing concern Wednesday.

“We are pawns in a big game,” sighed an Asian diplomat. “Everyone focuses on the Western hostages, but at least most of them are living in air conditioning and have food. Our people hardly have a proper roof over their heads, and now they are being denied food.”

Ten thousand Indians live in Iraq along with 6,000 Pakistanis, 7,000 Bangladeshis and 4,000 Sri Lankans. In tiny Kuwait, the numbers are much larger: 170,000 Indians, 90,000 Pakistanis, 92,000 Sri Lankans, 89,000 Bangladeshis. The figures on Filipinos and Thais were not available.

Some Western diplomats here are having second thoughts about the decision to deny food and medicine to Iraq under the general embargo on trade and arms sales. One diplomat, who said he was not reflecting the views of his government, called the sanctions “criminal.”

Hussein’s assault on the sanctions has developed into the concept of the “siege within a siege”: As the outside world lays economic siege to Iraq, Hussein’s regime is putting pressure on the colonies of foreigners in Iraq and Iraqi-occupied Kuwait.

In Kuwait, Iraqi troops have cut off food, water and electricity to foreign embassies that refused to leave the conquered city. Iraq insists that the embassies are redundant now that Baghdad has annexed Kuwait. Any diplomat who leaves his embassy is subject to arrest and deportation to Baghdad.

The embassies are slowly giving way under the pressure. Norway announced that its embassy would close today, and the 12-member European Community is expected to meet soon to work out a common policy on its members’ embassies.

With a siege of sorts on Third World workers, Iraq hopes to get food supplies brought in and, on its own terms, put a chink in the blockade.

By forbidding foreign airlines to pick up hostage women and children and take them to freedom, Hussein created a small opening for Iraqi Airlines to earn some money as a charter carrier. West Germany and the United States chartered Iraqi jets on Monday, while France rented an Iraqi passenger plane Tuesday to ferry out 130 women and children; nine Americans were in that group.

One diplomat wondered whether the effort to starve Iraq out of Kuwait would backfire in the Muslim world because of Islam’s emphasis on providing food and water to those in need. In his speech, Hussein was clearly trying to evoke that religious reference.

In one of the stories told during the Muslim fasting month of Ramadan, enemies of a descendant of the Prophet Mohammed denied him and his followers food during a siege. The descendant, named Hussein, led his followers into a suicidal battle rather than submit.

Staff writer James Gerstenzang in Washington contributed to this report.

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