ANALYSIS : U.S. Allies Fear ‘Peace Fever’ Will Aid Iraq

Saddam Hussein’s order to release foreign hostages seems to have defused a vexing and emotional issue, clearing the way for talks with the United States that could give Iraq a graceful way to escape the Persian Gulf crisis.

But there is growing concern among Washington’s Arab allies that Hussein may propose a settlement that would meet U.S. objectives without hobbling Iraq’s formidable army.

“There is a strong perception that a deal can be cut,” said an Arab diplomat here. “How far that deal will go is causing a panic in all of the gulf states.”

The diplomat speculated that Hussein may be ready to cut his losses and agree to a total withdrawal from Kuwait, asking in exchange only for assurances that the U.S.-led multinational force will not attack and that new efforts will be made to settle the Arab-Israeli conflict.

“That isn’t much of a concession (to Iraq), but it might look like one,” he said.

Despite repeated American assertions that the gulf crisis must not be linked to other Middle East issues, it would be very difficult for the Bush Administration to refuse such a proposal. It is inconceivable that Congress, U.S. public opinion or the world community would support a war if Iraq agrees to pull out of Kuwait and allow its legitimate government to be restored.

The diplomat said Hussein’s decision to release the foreign hostages removes a seemingly insurmountable obstacle to an Iraqi peace strategy and eliminates much of the international dimension of the crisis in advance of the upcoming face-to-face talks.

The United States and Iraq have agreed that Iraqi Foreign Minister Tarik Aziz and Bush will meet in Washington and Secretary of State James A. Baker III will confer with Hussein in Baghdad. Dates for the meetings have not been announced.

A U.S. official reluctantly agreed that Hussein can expect a propaganda bonanza from the release of the hostages.

“He didn’t find it useful to hold hostages any more,” the official said. “He found it counterproductive. This is a way to defuse one really emotional issue. He also may believe that by releasing them now, he can fuel the anti-war sentiment in the United States and the international community.”

In fact, Hussein noted growing opposition to war in the United States when announcing the hostage release.

“The reason for which the foreigners were prevented from travel have diminished and have been replaced by something more powerful--a change in the American public opinion which will impose restrictions on the decisions and intentions of the evil ones, led by Bush, the enemy of God,” the Iraqi president said.

The U.S. official said Hussein “wants to make the atmosphere as favorable as possible” for the exchange of visits by each foreign affairs chief.

“Just prior to these meetings, you are going to have all these smiling faces on television of families being reunited for Christmas,” he added. “The Iraqis will try to portray themselves as having caused all this happiness.”

The official conceded that Hussein may also try to use his upcoming talks with Baker to depict Iraq as a regional superpower worthy of meeting on equal terms with the United States.

“This is a risk that we decided to take because we had to show domestically and within the (international) coalition that we were going the extra mile,” the official said.

The growing concern among U.S. allies in the Arab world that Hussein will emerge with his army intact parallels a growing fear in Israel that Hussein will menace the Jewish state if he emerges militarily unscathed from the gulf crisis.

Earlier this week, Israeli Foreign Minister David Levy told U.S. Ambassador William A. Brown that Israel expects the United States to dismantle Iraq’s nuclear and chemical warfare capacity.

In Saudi Arabia, a source close to the government said the Saudis are afraid that “peace fever” will break out in Washington, causing the Bush Administration to soften its terms for ending the crisis.

Although most Arab leaders support an international conference to address the Israeli-Palestinian dispute, the source said, they do not want Hussein to be able to claim credit for bringing it about.

“If that happens, it’s a victory for him (Hussein),” the source said. “He’s a hero in Amman (Jordan). He’s a victor in Tunis.” Worse, he said, Iraq lives to fight another day.

“If you allow him to keep his military, he’s won,” the source said.

Another Saudi official said: “The issue is not Kuwait. The issue is Saddam Hussein and Iraq.” Some Western officials in Saudi Arabia echoed the message.

“In effect,” said one, “we won’t be content with a withdrawal to a status quo ante . Saddam Hussein has shown his true colors too clearly. I don’t think anybody will be content to let him go back to his lair and stockpile his chemical and biological weapons.”

In public statements made Thursday, both President Bush and Baker said Hussein decided to release the foreign hostages in response to growing pressure from the United States and its allies.

“We’ve got to continue to keep the pressure on,” Bush said in Santiago, Chile. “The release of all hostages would be a very good thing, but the problem is the aggression against Kuwait, and the man must leave Kuwait without reservation, without condition.”

“It seems to me no coincidence that this comes just one week, just one week, after the international community has authorized the use of force,” Baker told the House Foreign Affairs Committee.

However, it is difficult to see how the threat of the use of force could have persuaded Hussein to act now.

At the time that Iraq effectively seized the hostages by barring the departure of all foreigners from Iraq and occupied Kuwait, Hussein said many of the foreigners would be held at strategic sites to deter an attack by the United States and its allies.

In light of repeated Pentagon statements that the presence of hostages would not prevent U.S. military action, the Iraqi leader may have decided that the hostages are ineffective shields. But there is nothing in the U.N. resolution authorizing the use of force that would make the hostages any less effective as a deterrent.

However, by releasing the hostages, Hussein eliminates one potential provocation. He makes it more difficult for Washington to launch an offensive if Iraq makes a peace offer which, on the surface at least, seems to meet U.S. objectives and those set forth in the resolutions adopted to date by the U.N. Security Council.

Kempster reported from Washington and Murphy reported from Dhahran, Saudi Arabia.