GULF WATCH: Day 166 : A daily briefing paper on developments in the crisis : Diplomatic Front:

As tonight’s deadline neared for Iraq to withdraw from Kuwait or risk a military confrontation with U.S.-led forces, France proposed a peace plan to the U.N. Security Council. The plan calls for an Iraqi withdrawal from Kuwait, a U.N. peacekeeping force in the region and an international conference that would address “the Arab-Israeli conflict.” French Foreign Minister Roland Dumas was expected to travel to Baghdad to discuss the plan.

In Washington and Baghdad, officials seemed to anticipate war. President Bush, meeting with leaders of Congress, said there had been “no ray of hope” from Iraq for a diplomatic solution. Secretary of State James A. Baker III said any final peace initiative “must come from Baghdad.”

A White House spokesman would not indicate how soon allied forces might strike but said “any moment after the 15th is borrowed time.”

Democratic leaders of Congress, who sought unsuccessfully to block Bush’s request for authorization to wage war, said the debate has ended and they now fully support U.S. forces and their mission in the gulf. “It’s time for America to stand together,” said Senate Armed Services Committee Chairman Sam Nunn (D-Ga.).

Military Front:

Allied officials have agreed that American and British troops will conduct all offensive military actions while French and Arab troops will remain in defensive positions in the event of war. The arrangement is designed to prevent potential disastrous communications problems and “friendly fire” casualties.

The United States has deployed in the gulf two prototype electronic surveillance planes that were not scheduled for actual military use for at least six years, officials said. The JSTARS aircraft--Boeing 707s equipped with advanced radar systems--would be used to track the movement of Iraqi ground forces.

Domestic Front:

Anti-war protesters staged demonstrations in many American and European cities.

Government policy-makers are considering a range of options to protect the already stumbling U.S. economy from the blow of a gulf war and to ensure that the nation has adequate supplies of fuel, officials said. The options include further interest rate cuts and the using supplies from the Strategic Petroleum Reserve.

France’s Military Deployment:

Troops in Saudi Arabia: 10,000

Personnel aboard ships: 2,500

Other troops in region: 4,500

Jet fighters: 40

Tanks: 350