U.S. Cool to Gulf Peace Plan : Bush Has 'Serious Concerns' Over Soviet-Iraqi Bid : Diplomacy: Baghdad would withdraw from Kuwait two days after a cease-fire if U.N. resolutions are lifted and sanctions ended. War operations will continue.

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The Soviet Union said early today that Iraq has agreed to withdraw its troops from Kuwait after a cease-fire in the Persian Gulf War if there is agreement to lift U.N. resolutions, including economic sanctions against Baghdad and a demand for war reparations. President Bush said he has "serious concerns" about the proposal but will study it.

In the meantime, a ground assault into occupied Kuwait "is a matter that is still under consideration," Bush said in a statement issued by his spokesman, Marlin Fitzwater. "There is no change at this point in our schedule for prosecution of the war."

The proposal, outlined in eight points, was announced by a spokesman for Soviet President Mikhail S. Gorbachev after the Soviet leader met for more than two hours at the Kremlin with Iraqi Foreign Minister Tarik Aziz to hear Iraq's response to a Soviet peace initiative. The Soviet spokesman, Vitaly N. Ignatenko, called the Iraqi response "positive" and said the Soviet-Iraqi proposal subsequently "evolved."

Gorbachev and Aziz "came to the conclusion," Ignatenko said, "that it was possible to find a way out of the military conflict."

But Bush, in the statement that Fitzwater read to reporters at the White House, said he will consult with his partners in the anti-Iraq military coalition before making a final decision on the Soviet-Iraqi proposal. Fitzwater said that decision could come sometime today, adding that "the war itself continues."

"We will continue to seek compliance with the U.N. resolutions," Fitzwater said, "and the President will make decisions concerning the ground war as appropriate."

As presented by Ignatenko, the new proposal agreed to a "full and unconditional" withdrawal from Kuwait "in a fixed time frame" and monitored by neutral nations. It called for the pullout to begin the "following day after the cessation of hostilities." But the proposal also called for an end to U.N. economic sanctions against Iraq when two-thirds of its troops have gone, and a cancellation of all other U.N. resolutions once withdrawal is complete.

The U.N. resolutions include one that holds Iraq responsible for all financial losses resulting from its invasion of Kuwait. The same resolution seeks evidence of human rights abuses in Kuwait by Iraqi troops.

Previous Iraqi peace proposals have tied any pullout from Kuwait to an Israeli withdrawal from occupied territories. The Soviet-Iraqi proposal, however, made no mention of Israel.

Gorbachev telephoned Bush personally to advance the new proposal. Fitzwater said the two leaders talked for 33 minutes. "President Bush thanked President Gorbachev for his intensive and useful efforts," Fitzwater reported. But he said Bush "raised serious concerns about several points of the plan."

"The President has indicated," Fitzwater said, "there could well be some difficulties here."

Fitzwater declined to spell out the points in question or the difficulties with them. He said Bush will have a more complete response to the proposal after consulting with other allied leaders. Bush was not available for comment.

After talking to Gorbachev and meeting with his advisers, the White House said, Bush went to Ford's Theater to see "Black Eagles," a play about black Air Force pilots in World War II.

He returned after the play and met with senior national security advisers until midnight. After the meeting, one White House official said that the group did not officially reject the new proposal but concluded that it is unacceptable because it imposed conditions on the Iraqi withdrawal from Kuwait.

"Our conclusion at this time," said the official, who requested not to be identified, "is that the Soviet proposal represents a conditional withdrawal." He said the White House planned to communicate this conclusion to its allied partners today.

In London, British officials said they, too, were studying the new proposal, and the response there was similar to that at the White House. "At first sight, these developments don't seem to change the picture of Iraq setting preconditions for withdrawal," one government official told Reuters news service.

"Nothing from Moscow suggests any change in our position."

At the United Nations, Saudi Ambassador Samir Shihabi said the proposal poses a series of problems and does not address all resolutions passed by the Security Council.

Egypt's U.N. ambassador, Amre M. Moussa, called it "an important first step." But he said the proposal does not address the question of the legitimacy of the Kuwaiti government.

Said one U.N. ambassador from a Western country, who asked to remain anonymous, "This is the beginning of a very long end."

In Moscow

Aziz arrived at one of Moscow's VIP airports at 11:40 p.m. Thursday, Moscow time, in a plane the Soviets had placed at his disposal. He was driven directly to Gorbachev's office in the Kremlin, where he met with the Soviet president for about 2 hours and 20 minutes.

At 2:30 a.m. today, Ignatenko, Gorbachev's spokesman, walked into the Foreign Ministry's press center and told reporters: "After comparing their respective positions, the two sides (the Soviet Union and Iraq) came to the conclusion that it was possible to find a way out of the military conflict in the Gulf."

Ignatenko ticked off the points of the Soviet-Iraqi proposal, the final one of which said that "work on determining details of the agreement continues."

The Soviet spokesman ended by saying, "I do think that I can say, 'A very good morning.' " He added: "I think we can applaud."

Some correspondents clapped.

Ignatenko took one question.

In his introduction to the specific points in the proposal, he had said they were "approaches being evolved" in the Soviet peace process.

But now, when he was asked if any part of Gorbachev's original peace initiative had been altered to reach a final consensus with Iraq, Ignatenko would say only that Iraq had given "a positive answer" to Gorbachev's earlier recommendations.

Ignatenko said members of the U.N. Security Council, including France, Britain and China, would be informed of the new proposal, as would U.N. Secretary General Javier Perez de Cuellar.

The Security Council is likely to meet today to be briefed by Soviet representatives.

Judging by the remarks of one top Soviet Foreign Ministry official, however, there was a possibility of some remaining disagreements between Aziz and his Soviet hosts.

"There are grounds to believe that a breakthrough to peace can be made," Deputy Foreign Minister Alexander Belonogov said after the meeting between Gorbachev and Aziz broke up. But he told the official Tass news agency that much remains to be done.

"Specific plans are emerging, allowing one to believe that a peaceful settlement of the conflict is possible," Belonogov said. "But work has not been finished.

"It will continue in the morning."

Bringing peace to the Persian Gulf would be a multifaceted triumph for Gorbachev.

First, it would dust off his 1990 Nobel Peace Prize laurels at a time when many in the United States and Europe are worried about a dramatic turn to the right in Soviet domestic policy.

Second, by floating a successful peace proposal without first clearing it with the United States, Gorbachev also would demonstrate that his country is still very much a global power to be reckoned with.

Third, by negotiating a halt to the U.S.-led air raids on Baghdad, and possibly the invasion of Iraq, the Soviet Union would once again appear as an influential and loyal friend of the Arabs.

Finally, there is a domestic consideration.

Gorbachev would move to cover himself against attacks from his right flank, which in a revival of a Cold War mind-set, has seized upon the allied pummeling of Iraq as a vivid example of the American dreams of colonial conquest.

In Washington

The new Soviet-Iraqi proposal brought Secretary of State James A. Baker III directly to the White House at about 7 p.m. EST, about 25 minutes after Ignatenko began his televised statement in Moscow. After watching the statement in his office, Fitzwater, the President's spokesman, rushed from his office toward the Oval Office.

"Nothing, nothing," he said in response to reporters who shouted questions at him.

Then, after huddling with the President and his top advisers, Fitzwater appeared in the White House Press room.

He said Bush and Gorbachev "went through the various points" of the new proposal on the telephone and "President Bush did state the concerns that he felt the coalition would have on this matter, both in terms of points that are in the plan that we have problems with, as well as issues that are not included.

"So there are a number of issues to resolve."

But Fitzwater said Bush and Gorbachev did not discuss "follow-on procedures."

He declined to characterize the Soviet-Iraqi proposal and denied that the United States is involved in any form of negotiation with the Iraqis.

"I remind you again," Fitzwater said, "that this is a matter between the Soviet Union and Iraq, that we are commenting on their proposal, and we are not directly involved in that sense."

He said the President wants full compliance with all 12 U.N. resolutions relating to Iraq's invasion of Kuwait.

"Those are the guideposts that we would use," Fitzwater said, "in judging any consideration of (Iraqi) withdrawal."

In Baghdad

On Thursday, several hours before Aziz arrived in Moscow, Iraqi President Saddam Hussein spoke for 45 minutes on Baghdad Radio. In his address, he resigned himself to an allied rejection of his offer to withdraw from Kuwait, but defiantly stressed that he is prepared to face a ferocious land battle if the plan is rejected.

Without describing any of the specifics of the plan being discussed in Moscow, he clearly associated the Aziz peace initiative with earlier Iraqi proposals that linked any pullout from Kuwait to Israel's withdrawal from occupied territories and other conditions that allied leaders had already termed unacceptable.

Soviet spokesman Ignatenko gave no indication that the proposal Aziz brought to Gorbachev included such linkage. In fact, Ignatenko did not mention Israel.

In what several analysts called an indication that Hussein thought the Soviet-Iraqi proposal might be rejected as well, Hussein declared in his speech: "Our political efforts, which materialized in Tarik Aziz's trip to Moscow, have not been able to neutralize the aggression being unleashed against us.

"The 15 February initiative, which we launched, and before that, the initiative of 12 August, what did they say about it?" Hussein asked his radio listeners. "Bush rejected it, and he called it a cruel hoax.

"King Fahd (of Saudi Arabia) also rejected the initiative--our peace efforts, our peace approaches--and they say the war will continue."

Baghdad Radio said the Iraqi leader had recorded his radio address in an undisclosed location, and many analysts said its tone indicated that it was intended mainly for domestic consumption.

At one point in his speech, Hussein issued both a challenge and a warning to the allied leaders if they should turn down his peace offer being discussed in Moscow.

"If the initiative is rejected," he said, "then this really reveals their real premeditated intentions, and we'll continue the struggle, confident that we will win victory. The battle, the mother of battles, is our great battle of victory and martyrdom."

Hussein chided the allies for "avoiding the land battles, the ground fighting, and instead concentrating on killing civilians from the air. . . . They don't want to confront our ground forces in southern Iraq."

And, using the strongest language in a speech that most analysts said was among his most measured and sober in recent months, the Iraqi leader declared, "A lot of people still don't know the real capability of our army. . . .

"They want us to surrender. Of course, they will be disappointed."

Still, Hussein made clear in his speech that he and his eight-member ruling council finally were willing, at least in principle, to withdraw from Kuwait--the occupied emirate that until recently Hussein had insisted would always remain a part of Iraq.

It was the Iraqi president's first public use of the word withdraw as applied to Kuwait , and he condemned allied leaders for rejecting outright a heavily conditional pullout proposal put forth by his Revolutionary Command Council last Friday.

"Notice," he said, "that those who are calling for our withdrawal with one face--they're not saying now what they used to say. . . . "

Hussein made no reference to the many conditions imposed in last Friday's withdrawal offer--demands that included an Israeli withdrawal from the occupied territories, allied war reparations to Iraq and a ban against any return to power by the exiled royal family of Kuwait.

All were softened to "talking points" in later pronouncements by Iraqi diplomats in Europe and the United Nations.

The Iraqi president, however, did begin his speech with a lengthy preamble that restated his commitment to the Palestinians who live in the occupied territories and in refugee camps throughout the Middle East, to Islamic fundamentalists and to Arab nationalists who together now constitute Hussein's most avid audience.

And he leveled some of his angriest rhetoric at Arab leaders who have sided with the three dozen nations opposing him in the anti-Iraq alliance, chief among them Egyptian President Hosni Mubarak and Saudi Arabia's King Fahd.

Mubarak, Hussein declared, "has a deep-rooted malice against the Iraqi leadership," and he insisted that Iraq has always "acted in the spirit that we want the Egyptian people to be real brethren, and so their government."

In Hussein's condemnation of the Egyptians, some analysts sensed frustration. Hussein has consistently called for all Arabs in the nations opposing Iraq to rise up and overthrow their governments--but these popular rebellions have not materialized.

"These misled people are no good for the Iraqis anyway. . . ," Hussein continued. "Every slogan you (the Iraqis) have raised rejecting the Zionist and imperialist designs, they (the Egyptians) feel that this slogan is a slogan directed against them, these misled people."

In a direct appeal for the continued loyalty of his own people, Hussein then tried to explain why so many Arab nations continue to oppose Iraq in the conflict.

"Needless to say, some Arab rulers hate you, hate our people, and they went so far as cooperating with others in the war now being unleashed against us," he said. "Those Arabs who are fighting against Iraq now have lost their honor and the justification of their moral existence.

"They have no honor left. They have no faith left."

Hussein indicated clearly that his regime will not change its stand beyond the withdrawal offer Aziz took with him to Moscow.

"There is no road but this road which we have chosen," he said. "And we have chosen this path, the path of struggle. . . .

"Our people and armed forces are determined to continue the struggle. . . . A lot of people still don't know the real capability of our army."

Although some analysts characterized the tone of Thursday's speech as relatively moderate, it came against a distinctly hard-line backdrop at home.

Hours before Hussein's early evening speech, Baghdad's nearly 4 million residents were treated to a litany of militant rhetoric in the capital's state-run daily newspapers. And, on a day that Hussein insisted was one devoted to efforts toward peace, their editorials spoke only of war.

Al Jomhuriya, the government's daily paper, told its readers that "all Iraq is one army, which has a beginning but no end. . . . They are all ready for the biggest, the fiercest battle ever in the history of Arabs and Muslims." The army's daily paper, Al Qadissiya, added that the days ahead "will bring glorious victories and will humiliate the enemy."

The newspapers did contain a first-ever reference to Aziz's trip to Moscow, but they took pains to play down its significance--and Iraq's Information Minister Latif Jasim sounded like anything but a peacemaker when a group of Western journalists in Baghdad asked him to comment on Gen. H. Norman Schwarzkopf's allegation that the Iraqi military is near collapse.

"This is just another fabrication of this damned criminal's rotten mind," Jasim told them. Schwarzkopf's comments, Jasim said, were designed to "patch up the battered morale" of the allied forces.

"Our fire will burn whomever among these immoral dwarfs of the aggressive alliance who wishes to try his luck."

Dahlburg reported from Moscow and Fineman from Amman, Jordan. Times staff writers John J. Goldman at the United Nations and James Gerstenzang in Washington contributed to this story.

WHAT THE SOVIETS SAY IRAQ AGREED TO

The Soviets and Iraqis agreed on an eight-point plan: WITHDRAWAL. A full and unconditional withdrawal from Kuwait.

WHEN. The pullout would begin the day after hostilities end.

TIMETABLE. Pullout on a fixed timetable.

EMBARGO. U.N. economic sanctions would end after two-thirds of Iraqi forces leave Kuwait.

U.N. After a full pullout, other resolutions adopted after Iraq's Aug. 2 invasion of Kuwait would cease to have a purpose.

POWS. All prisoners would be released immediately after a cease-fire.

MONITORING. Pullout would be monitored under the aegis of the United Nations by countries not directly involved in the war.

DETAILS. They are to be worked out. Notification is to be made to the U.N. Security Council.

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