CRISIS IN THE PERSIAN GULF : Iraq Feels Cheated on Release of Hostages : Diplomacy: Officials wonder if they were fooled into a gesture of goodwill by the prospect of talks with the United States.

With peace talks with Washington on hold, Iraqi officials Sunday began to say they are wondering if Iraq was fooled into releasing all its foreign hostages on the false assumption that a reduction of the level of hostility was in the works.

In private conversations, Iraqi officials say that President Saddam Hussein’s decision to accelerate the process of freeing the foreigners was a show of goodwill in answer to President Bush’s proposal for talks by each country’s top diplomat in the capital city of the other.

Iraq had originally announced it would begin freeing the hostages Christmas Day and complete the process by mid-March.

In the Iraqi view, that gesture was undone when President Bush announced that the first session of talks--with Iraqi Foreign Minister Tarik Aziz in Washington--is “on hold” because Baghdad and Washington cannot agree on a date for Secretary of State James A. Baker III to visit Iraq for the second session.

The Iraqis give no indication that Bush’s offer of talks and the subsequently announced release of the hostages was any kind of prearranged bargain, but they say that, in Arab tradition, reciprocal moves are to be respected. With the talks now apparently off, Iraq feels cheated.

“The freedom of the ‘guests’ was a humanitarian gesture which Iraq made independently,” a Foreign Ministry official said, using the official euphemism for the hostages. “But it is hard not to be offended.”

On Sunday, Iraq continued to insist that it will not bow to U.S. demands for an early date for a Baghdad meeting between Baker and Hussein. President Bush had been scheduled to meet with Iraqi Foreign Minister Aziz today in Washington. But the date was contingent upon the scheduling of the second-round meeting between Hussein and Baker.

Hussein offered to meet Baker Jan. 12, just three days before the deadline fixed in a U.N. Security Council resolution that calls for Iraq to withdraw unconditionally from occupied Kuwait by Jan. 15 or face the threat of military action by U.S. and other forces now deployed in the Persian Gulf.

Washington rejected such a late date as a ploy to buy time and asked for the meeting on or before Jan. 3.

Iraqi officials are resentful of any suggestion that Iraq needs the talks. “You think we are begging for talks?” asked Naji Hadithi, a government spokesman. “We are happy to sit here and talk to our own people.”

Hadithi argued that time is on Iraq’s side as the deadline for possible war approaches. “Opposition to Bush is growing and over time will grow more,” he said.

A group of anti-war activists gathering in Baghdad will soon be taken to a camp on the border with Saudi Arabia as a protest against impending conflict, Hadithi reported. They will camp in tents between Iraqi and allied forces at a desert way station for pilgrims to Mecca, the Islamic holy city in Saudi Arabia.

A London-based anti-war group, which calls itself the Gulf Peace Team, is currently sheltered on an island in the Tigris River.

Iraq appeared to be stepping up preparations on the home front to defend itself against attack. The official Iraqi News Agency reported that government ministries are working out civil defense plans. “The preparedness by Iraqis form a deterrent factor against all those who try to harm the security and safety of Iraq,” said Interior Minister Samir Mohammed Abdul-Wahab.

Civil defense delegates visited schools in Baghdad on Sunday to teach students how to protect themselves in case of attack. They were told to go indoors, close the windows and crawl under their desks. Sirens would announce an air raid.

On television, lecturers advise viewers to prepare for explosions by taping windows in a crisscross pattern to avert splintering and to turn out the lights if an air raid begins.