Iraq Says It Will Free Hostages : Bush Welcomes News but Vows to Keep Up Pressure : Gulf crisis: Saddam Hussein cites ‘positive changes’ in U.S. His ambassador says all should be home by Christmas.

In a surprise move, Iraqi President Saddam Hussein announced Thursday that he will release all foreign hostages in Iraq and Kuwait, citing “positive changes” in the United States and the additional security provided by recently deployed Iraqi troops.

“The reason for which the foreigners were prevented from travel has diminished and has been replaced by something more powerful--a change in the American public opinion . . . ,” Hussein said in a message broadcast by his government’s news agency.

A complete hostage release would include more than 700 Americans, 88 of whom are detained as human shields at strategic sites in Iraq and Kuwait. They are among more than 3,000 foreign nationals still in the two countries.

The Bush Administration welcomed the announcement but said it would not ease its demand for a complete Iraqi withdrawal from Kuwait. “We’ve got to continue to keep the pressure on,” President Bush said in Santiago, Chile, during a tour of South American capitals.

Nevertheless, the announcement signaled the possibility of the first real movement in the four-month-old Persian Gulf crisis and raised hopes in some quarters that Hussein is actively seeking to avoid a military confrontation over his occupation of Kuwait.

Hussein’s statement followed several recent moves that appeared to increase the likelihood of war, including plans to nearly double the U.S. force in the region and the approval of a U.N. Security Council resolution authorizing military action if Iraq remains in Kuwait after Jan. 15.

Despite the apparent gesture of goodwill, the Pentagon reported that Iraq has deployed 30,000 more troops in Kuwait and southern Iraq in recent days, increasing the total to 480,000. They face a U.S. force of 250,000 that is expected to top 400,000 by mid-January.

Hussein’s rubber-stamp National Assembly (Parliament) is expected to vote today to ratify the hostage release. Similar proposals in the recent past to free all French and German hostages were promptly endorsed by Parliament, and exit permits were granted within days.

Iraq’s ambassador to the United States, Mohammed Mashat, said in a televised interview that the hostages will be allowed to leave as soon as their exit visas can be processed and flights can be arranged. He said all of them should be home by Christmas.

“We are working to do that,” Mashat said. “We are doing every possible way to make them join their families during Christmas-time.”

U.S. officials interpreted Hussein’s proposal to include all foreign hostages, although a high-ranking Iraqi official in Baghdad responded cryptically when asked about the the hundreds of Westerners still hiding in Kuwait and in safe locations in Iraq.

“They will regret that they have been in hiding. . . . They are not guests. They are something else,” Information Minister Latif Jasim said at a news conference. “Don’t worry,” he added, laughing, “they will be treated like guests.”

In a message to be broadcast on the Voice of America radio network, the State Department said it has not yet received information from the Iraqi government on when American citizens will be allowed to leave the region.

“We are making preparations to evacuate all U.S. citizens as soon as they are permitted to leave,” the advisory said. “Until that time, stay where you are, stay in touch with the U.S. Embassy and monitor the VOA closely. We will let you know as soon as we have more information.”

The announcement of Hussein’s proposal came 24 hours after Iraq formally accepted Bush’s proposal to meet with Foreign Minister Tarik Aziz in Washington and to send Secretary of State James A. Baker III to Baghdad for talks with Hussein.

Rumors in Arab capitals over the last few days have suggested that Hussein is preparing to offer a partial withdrawal, allowing him to hold onto a strip of northern Kuwait that includes a disputed oil field and two islands that block Iraq’s access to Persian Gulf waters.

Nearly three weeks ago, Hussein outlined a plan to release the hostages in groups over a three-month period beginning Christmas Day if “the atmosphere of peace” were not disturbed.

In a letter to the National Assembly on Thursday, Hussein apologized for any harm done to any of the hostages and insisted that their detention had served a useful purpose in detering a military offensive against Iraq by the multinational forces in Saudi Arabia.

Although Hussein’s letter made no reference to the pending talks between Washington and Baghdad, he suggested that other events have made peace as likely as war. Among other things, he cited opposition to rapid military action by Democrats in the U.S. Senate.

“The appeal by some (Arab) brothers, the decision of the Democratic majority in the U.S. Senate and the European Parliament invitation to our foreign minister for dialogue . . . will have a major impact in world public opinion in general and U.S. public opinion in particular in restraining the evil ones who are seeking . . . war,” Hussein wrote.

He urged members of the Iraqi Parliament “to make your just decision and allow all foreigners on whom restrictions were placed to enjoy the freedom of travel and to lift these restrictions, with our apologies for any harm done to any one of them.”

In the letter, Hussein sought to justify the detention of hostages by asserting that the widely condemned action had “rendered a great service to the cause of peace” by deterring military action in the region.

The announcement prompted a joyous celebration at Baghdad’s well-appointed Monsour Melia Hotel, a “halfway house” where some Western hostages have been held before being taken to strategic military and industrial sites as so-called human shields.

The hotel crowd included 17 American hostages, whose wives and other relatives arrived here Wednesday night to plead for their release, and about 40 newly released Japanese men whose relatives also had traveled to Iraq to seek their freedom.

In the hotel’s dining room, which the Iraqis had decorated with yellow balloons and a Christmas tree, the hostages and their relatives ate a sumptuous meal of grilled chicken, curried lamb, split-pea soup and rice pilaf. Liquor flowed freely, in a celebration that resembled a New Year Eve’s party in America.

“There’s no question about it. It’s done,” said an exuberant Robert Vinton, a Santa Fe, N.M., man who was among the 17 American men reunited with loved ones.

But some hostages were more guarded. Said one Texan, who did not want to be named: “I won’t believe it until we clear Iraqi air space.”

Joseph C. Wilson IV, the charge d’affaires at the U.S. Embassy in Baghdad, was equally cautious.

“I’ve put a bottle of California champagne in the icebox. I’ll uncork it when I see these people with their exit visas and on the airplane,” he said.

Wilson acknowledged that the announcement appeared to be a key development in the crisis. The taking of hostages was “something that should not have been done in the first place, and now it’s behind us,” he said. “So, we’ve got at least one of the key issues off the board.”

Other Western diplomats agreed with Wilson’s assessment. British Ambassador Harold Walker, whose compatriots compose the largest group of hostages, told reporters in Baghdad: “It must augur well for the diplomatic process.”

Jasim, the Iraqi information minister, said at his news conference here that the growing strength of his nation’s military force prompted Hussein’s decision to free the hostages, insisting that Baghdad remains prepared to wage war over Kuwait.

“The United States can attack any time,” he said. “We are afraid of no one but the Almighty. . . . We have completed all our military preparation.”

Jasim said Baghdad also had been encouraged by a 177-37 vote among Democrats in the U.S. House of Representatives to adopt a non-binding resolution urging the President to seek a declaration of war from Congress before launching a military offensive.

Despite the apparent goodwill generated by Hussein’s announcement, Jasim characterized Bush in belligerent terms, calling the President “an enemy of the people” and “an enemy of God.”

“The Bush Administration still thinks in a stupid way,” Jasim said, adding that Defense Secretary Dick Cheney has continued to “beat the drums of war.”

Asked specifically about a timetable for the hostages’ release, Jasim said, “It’s too early to ask this question.”

Hussein’s announcement came after a two-day Arab summit in Baghdad in which King Hussein of Jordan, Palestine Liberation Organization Chairman Yasser Arafat and Yemeni Vice President Ali Salim Bidh agreed to press for resolution of all issues raised by the gulf crisis, including the Palestinian question.

The three Arab leaders issued a statement saying that their aim should be “to achieve a permanent and comprehensive peace based on international legitimacy and principles of justice and fairness,” according to a report by the Iraqi News Agency.

Meanwhile, Pentagon deputy spokesman Bob Hall said that in addition to 30,000 new troops, Iraq has moved 400 more tanks into Kuwait and southern Iraq, boosting its armored units there to 4,000 tanks.

He said that despite Hussein’s proposal to release Western hostages, the Iraqi leader has given no signs that he plans to comply with demands that he withdraw his army from Kuwait.

“It’s another indication that he has no intention of leaving Kuwait,” the official said. “Putting more people in is not something you normally do when you intend to withdraw.”

The Pentagon said the planned hostage release would have no effect on Operation Desert Shield, the huge U.S. military buildup based in Saudi Arabia.

Times staff writers Nick B. Williams Jr. in Amman, Jordan, and John M. Broder in Washington contributed to this report.

FOREIGNERS IN IRAQ AND KUWAIT Listed here are estimated numbers of foreigners in Iraq and Kuwait by nationality as of Thursday. According to U.S. State Department figures, more than 900,000 of the estimated 3 million foreigners who were in Kuwait and Iraq on Aug. 2 have since left. Shaded countries have sent troops to Saudi Arabia, or warships to help enforce U.N. sanctions.

Number in Iraq and Kuwait: Country BEFORE AUG. 2 THURSDAY Notes AUSTRALIA 127 76 Includes some diplomats AUSTRIA 140 5 All are ethnic Arabs BANGLADESH 110,000 15,000 Some said to be forced labor in Kuwait BELGIUM 59 5 BULGARIA 690+ 320+ BRAZIL 450 40 All married to locals BRITAIN 4,000 1,310 Hundreds are in hiding CANADA 800 42 CHINA 10,000 4,800 CYPRUS 35 20 All remain voluntarily CZECHOSLOVAKIA 470 46 Six in Kuwait are married to locals DENMARK 100 16 EGYPT 1,600,000 1,237,000 FINLAND 46 5 All diplomats or remaining voluntarily FRANCE 560 Under 300 GERMANY 1,000 15 All remain in Iraq voluntarily GREECE 127 3 Two are diplomats HUNGARY 178 32 None are in Kuwait INDIA 190,000 22,000+ Most are in Kuwait IRELAND 380 164 12 told they can leave ITALY 540 200 Six in Kuwait voluntarily JAPAN 790 200+ LEBANON 60,000 55,000 10,000 in Iraq remain voluntarily NETHERLANDS 200 150 Over 100 told they could go but have not been able to leave NEW ZEALAND 36 9 NORWAY 46 6 All told they can leave PAKISTAN 130,000 90,000 Some 430 scheduled to leave soon PHILIPPINES 93,000 5,800 POLAND 3,300 477 Most are contract workers PORTUGAL 48 8 ROMANIA 3,055 300 All told they can leave SOUTH KOREA 1,327 149 SOVIET UNION 10,000 3,300 All told they can leave SPAIN 183 6 All are diplomats in Iraq SRI LANKA 150,000 65,125 All but 125 are in Kuwait SWEDEN 200 5 SWITZERLAND 168 8 None are in Kuwait THAILAND 8,150 320 TURKEY 4,000 100 40 in Kuwait, mostly married to locals UNITED STATES 3,500 700+ VENEZUELA 38 28 VIETNAM 15,000 14,000 Iraq only; no figures for Kuwait YUGOSLAVIA 10,000 310 10 in Kuwait, mostly married to locals