GULF WATCH: Day 60 : A daily briefing paper on developments in the crisis.

Diplomatic Front:

Iraqi President Saddam Hussein said he would welcome dialogue if it replaces “threats” and “military buildups” but once again linked negotiations to a comprehensive peace settlement in the Middle East. He said Iraq would not compromise on its demand for the withdrawal of foreign forces from the gulf and the end of the economic blockade.

Meanwhile, Saudi Arabia’s King Fahd appealed for a peaceful end to the gulf crisis, saying Iraq could still “overcome the barriers” and help find a negotiated settlement.

Military Front:

Syria is ready to send more troops to face Iraq and could do so without jeopardizing its defenses against “the Israeli enemy,” Vice President Abdel-Halim Khaddam said. Syria has deployed about 4,000 troops, and promised 11,000 more.

More than 1,000 troops of France’s Foreign Legion arrived in Saudi Arabia. About 3,000 more are expected to arrive today, raising the total French troop presence to about 9,000.

Belgium said it would increase its participation only as part of a U.N. force. The nation, which has two minesweepers, a support ship and two transport planes in the region, is also sending a frigate and four other transport planes.

In London, the Observer newspaper reported that British forces will retaliate with battlefield nuclear weapons if Iraqi troops attack them with chemical gas. The source was identified as a senior officer in the 7th Armored Brigade, which is on its way to the gulf.

China denied a British newspaper report that it had sold Iraq a large amount of a chemical used to make nuclear weapons and missile fuel.

Refugee Front:

Jordan threatened to restrict the flow of foreigners fleeing Iraq into Jordan unless it got more international aid. More than 600,000 people have poured into Jordan from Iraq since the invasion, officials said.

Crisis Indicators: Allied forces in the Persian Gulf as of Sunday: * Britain: 5,000 troops * France: 6,000 troops * Egypt: 5,000 troops * Syria: 4,000 troops * Pakistan: 2,000 troops * Bangladesh: 2,000 troops * Morocco: 1,200 troops * Saudi Arabia: 55,000 (total armed forces) * Other Arab forces *: 10,000 troops * includes Bahrain, Oman, Emirates, Qatar and Kuwait