Next Step : Six Building Blocks for Mideast Peace : The blueprint involves not just Kuwait and Iraq but 24 nations--ranging from Morocco to Israel to Iran.

By ROBIN WRIGHT

March 5, 1991 12 AM PT

TIMES STAFF WRITER

WASHINGTON —

As the guns fall silent in the Persian Gulf, the focus has quickly shifted to an even more complex and risky task than Operation Desert Storm’s ouster of Iraq from Kuwait: finding a formula for stability in the world’s most volatile region.

“We do not seek to chart the destiny of other nations,” President Bush declared when he announced deployment of U.S. troops in the Persian Gulf last August.

But when Secretary of State James A. Baker III heads to the Middle East on Wednesday, he will be seeking, in consultation with the Gulf allies, to draw up a blueprint for peace affecting two dozen nations--ranging from Morocco on the Atlantic to Israel on the Mediterranean and Iran on the Indian Ocean.

The peace agenda centers on six major goals:

* Reconstructing Kuwait politically and physically.

* Providing enduring security arrangements in the Persian Gulf.

* Ending the 43-year Arab-Israeli dispute.

* Setting up new arms-control systems on weapons of mass destruction.

* Closing the gap between the region’s super-rich and super-poor.

* And transforming Iraq into a state that can coexist peacefully with its neighbors.

Unlike Operation Desert Storm, the odds of success are daunting. Two popular Middle East axioms are pertinent:

* First--diplomacy is always overtaken by events on the ground. Baker’s own five-point plan to generate movement on the Palestinian problem was overtaken and outdated by Iraq’s aggression, for example.

* Second--change always follows military upheavals. The singular success in Mideast mediation--the 1978 Camp David accords between Israel and Egypt--grew out of the 1973 war. But radical regimes have also been born out of conflict--Egypt’s monarchy was overthrown after the Arab-Israeli War in 1948, when the state of Israel emerged, and Iraq’s monarchy was ousted after the 1956 war. The emergence of Saddam Hussein and Hafez Assad, the strongmen who went on to lead Iraq and Syria, respectively, followed the 1967 Six-Day War.

The Bush Administration is counting on the unprecedented clout of the United States and its allies after routing Iraq and the political shifts this has spawned to move toward peaceful change.

A senior Administration official said: “I think we have a new chance to tackle (the region’s problems) and a more favorable basis than there has been since 1948.” Still, this official was cautious in assessing prospects for solving those six major issues. “I’m not dumb,” he said. “This is the Middle East.”

KUWAIT: RESTRUCTURING A NATION

The immediate task in devastated Kuwait will be physically rebuilding a nation almost from scratch. The government of Sheik Jabbar al Ahmed al Sabah has pledged $800 million just to restore emergency health care, utilities, communications and to provide free food for three months. Cleanup from the seven-month occupation could total $100 billion.

But the political reconstruction of Kuwait will be the bigger issue and challenge. And the political course charted by Kuwait is almost certain to have sweeping impact on the five other Gulf monarchies and increase internal pressures for change throughout the Arabian peninsula.

The most contentious issue is how far the sheikdom will move toward pluralism and democracy. It has been virtually a family-run business for the Sabah clan since 1756. Long the most liberal of the Gulf kingdoms, Kuwait is the only emirate with a constitutional provision for a national assembly.

Yet whenever it has become a genuine forum for opposition, the assembly has been suspended. It last met in 1986, when press freedoms were also suspended. And only men whose families have been residents since 1921 can vote.

The 1991 U.S. human rights report cites concerns about Kuwait’s “restrictions on freedom of assembly and speech, the right of citizens to change their government, women and workers’ rights, and instances of arbitrary arrest, mistreatment of prisoners and lack of due process.”

The political divide, once tolerated as Kuwaitis enjoyed the world’s highest per capita income through much of the 1980s, has deepened since Aug. 2, according to U.S. officials.

Upon its return, the government faces a serious cleavage between those who stayed behind, bitterly enduring or resisting Iraq’s occupation, and the Kuwaitis who abandoned their nation for the safety of exile, including most of the royal family.

In the royal family’s absence, the resistance also established an efficient and committed political corps that wants a significant role in Kuwait’s political future.

The Bush Administration is gently urging political change. Last week, the National Republican Institute for International Affairs, which promotes democracy overseas, met with the Kuwaiti ambassador, Sheik Saud al Nasir al Sabah, to offer advice on building political parties, parliamentary procedures and expanding the franchise.

“They have shown over the last six months that they’re very aware of their situation,” said the senior Administration official, referring to the exiled government. “There are indications that they know that kind of compliant sort of political participation won’t do it.”

POSTWAR GULF SECURITY

Although the immediate threat of Iraqi aggression has been checked, the six emirates of the Gulf Cooperation Council (Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Oman, and Bahrain) will remain vulnerable for the foreseeable future. Indeed, the need to call in help from 28 nations to counter Iraqi aggression underscored the failure of the council to provide self-defense.

Saudi Arabia, for example, has a mere 67,000 ground, air and naval forces to protect a territory one-third the size of the United States and sitting atop the world’s largest oil reserves. Total gulf council forces number less than 200,000, according to the International Institute for Strategic Studies in London.

In contrast, both Iraq and Iran still have armed forces of more than 500,000 men.

Saudi Arabia has also made potential enemies in its punitive actions toward the Palestine Liberation Organization, Jordan, Yemen and others.

The population of newly united Yemen--which Riyadh deeply embittered by ejecting Yemeni workers and diplomats for siding with Iraq--is larger than Saudi Arabia. And Yemen’s loss of hundreds of millions of dollars in foreign remittances has left relations deeply strained and potentially volatile.

In the short term, the Saudis and other emirates plan a weapons buying spree and reliance on coalition support--notably personnel from Arab and Muslim countries--for their security. But it also means a larger U.S. naval and air presence in the region--and a commitment from Washington to deploy troops again if needed.

“We will come to the aid of those who are subject to that kind of aggression,” the senior Administration source confirmed. U.S. war materiel will also be prepositioned in Saudi Arabia.

But over the long term, the Gulf states will have to come to terms with both Iran and Iraq. The premise of peace in the Gulf historically was based on strategic parity between those two regional powers as a means of checking aggression by either.

“First and foremost, security means encouraging the Gulf states and Iran to recognize their commonality,” said the State Department official. “That’s what’s going on now.” Relations with Tehran were broken off by Riyadh in 1987 after Iran undermined the annual Haj pilgrimage in Mecca. But both sides have launched new talks.

“Iraq will also eventually have to be brought in, though not under Saddam Hussein,” the official added.

But many also speculate about internal threats to Saudi stability. “Everyone who watches the Middle East is asking: Will this crisis so traumatize Saudi Arabia that it will unleash forces for change? Can the Saudis manage it? There’s a lot of uneasiness,” said a ranking U.S. analyst.

ARMS PROLIFERATION

Iraq is not the only Mideast nation with--or close to having--weapons of mass destruction. Syria, Libya, Egypt and Iran also have or are developing chemical weapons and missiles, while Israel has chemical and biological weapons, ballistic missiles and a nuclear capability.

How Iraq managed to amass its deadly arsenal with outside help reflects the broader problem in the postwar Mideast. “Starting with Kuwait, a number of states--and the (Security Council’s) permanent five are high on the list--are guilty of helping to create the monster we just dealt with,” the Administration official said. The same applies to other regional arsenals.

The coalition intends to begin with Iraq, through the United Nations as well as a new suppliers cartel, to push for elimination of Baghdad’s chemical and biological stockpiles--and then move on to other parts of the region.

“If the industrialized world really follows through, it can be controlled,” the official said.

On chemical weapons, “most still do rely on shipments of large amounts of precursor chemicals. Basically, we want to go to the suppliers and get an agreement that has some teeth. We’ve now seen the consequences of people saying a little there and a little here doesn’t matter. We can now demonstrate what a difference it makes.”

But critics charge that instead of promoting cutbacks, the Gulf War will instead accelerate the arms race as countries feel a need to improve their deterrent capabilities--already evident in Saudi Arabia.

“The real key to preventing proliferation is political solutions, not new arms regimes,” argued a U.S. military official. “Unless there’s a solution to the Palestinian problem, we’re going to have more and more of these wars with deadlier weapons.”

THE ARAB-ISRAELI CONFLICT

Although the Bush Administration refused to link Iraq’s invasion with the Palestinian issue, U.S. officials concede that the Gulf crisis will not really end until that longstanding flash point has been resolved. It is the most difficult of the six--and the source of the deepest division within the coalition.

“There are some new opportunities and some monumental obstacles,” conceded the State Department official. “When have Palestinian-Israeli relations ever been lower?”

The Europeans are pushing for an immediate international conference bringing together all sides in the dispute, a position the Bush Administration is resisting but not rejecting. “An international conference is a process, not a solution,” said the Administration official. “If you get people to a conference, even if it’s an umbrella, very soon you reach a deadlock. Then the umbrella turns into a club or it breaks down.

“We’re not necessarily against a conference, but that’s mixing substance with process. There are things we might do first to reduce the bitterness, antagonism and paranoia,” he added.

The Administration is instead pushing for “confidence-building” measures on dual military and political tracks to create a new climate as a prelude to mediation.

Among the military measures, according to European envoys who met last week with Baker, are notification of troop maneuvers and movement by all states, and a Center to Prevent Conflicts, to which Arab states and Israel could take complaints and concerns.

Among the political measures are persuading the Arabs to end their boycott of firms that do business with Israel, a declaration of non-belligerence and a renunciation of the “Zionism is racism” charge. In turn, Israel could formally accept the premise of land for peace and recognize the rights of Palestinians.

The Administration made clear to the British, French and German foreign ministers during talks last week that the United States is the only channel with sufficient clout to orchestrate these measures, which has begun to strain coalition relations.

Baker plans to test these ideas on his trip this week, according to the Europeans. “They want to find out if both sides are ready for peace,” said one European envoy who expressed open skepticism.

“We think 99% this idea won’t work,” the envoy commented. “The Arabs will be stubborn and the Israeli government is going to try to gain time. It won’t say no to the Americans, but it will drag its feet and hope that sooner or later the U.S. will recognize that Israel will not give up the West Bank or Gaza and that Jordan is the Palestinian state.”

Nevertheless, several European governments and private U.S. experts are concerned that the momentum and international commitment to a greater Mideast peace generated by the Gulf crisis will dissipate unless there is more rapid movement.

The Administration is counting on the new triad of power to offer new Arab leadership: Saudi Arabia with the region’s greatest wealth, Egypt with more than half the Arab world’s population and Syria as a symbol of Arab nationalism.

“The new Arab constellation provides unique opportunities,” said the State Department official. “Now you have three key states marching to the same drummer, not arguing with each other.”

The problem, he conceded, is that “there’s not a dynamic figure among the Arabs who could conceivably conceptualize a new approach and then run with it. The same is true in Israel. It’s led by the most conservative government in its history. It’s not predisposed to peace. This process will be like walking through a minefield.”

ECONOMIC DISPARITY

Shrewdly exploited by Saddam Hussein, the yawning gap between the region’s haves and have-nots will continue to be a flash point for intra-Arab tension, U.S. officials acknowledge.

The annual per capita income among the Arabs ranges from a few hundred dollars in places like Somalia and Yemen to well over $10,000 in the oil-rich sheikdoms.

The war’s byproducts have since widened the gap. Jordan’s economy is on the verge of collapse because of sanctions against Iraq, while Egypt, Morocco and Tunisia have lost tens of millions in dollars due to cutbacks in tourism, the return of laborers from lucrative jobs in Iraq and other factors. Half of Yemen’s foreign exchange came from workers in Saudi Arabia.

In the past, Gulf largesse has bailed out poorer nations. But Riyadh has indicated it will maintain its punitive policy on countries that either sided with Baghdad or did not support the coalition. Jordan and Yemen will particularly suffer, with potential political overspill.

The Administration had proposed a mini-World Bank, capitalized jointly by the super-rich states and industrialized nations to help development projects in the super-poor bloc. But last week, the Saudis and British rejected the idea.

Meanwhile, economic disparity increases as a destabilizing factor throughout the Arab world.

THE FUTURE OF IRAQ

Although the coalition has hardly hidden its hopes that Saddam Hussein will fall from power, U.S. officials admit deep concern about Iraq’s future. “Everyone is concerned about fragmentation and chaos in Iraq,” the State Department official said.

Because of deep splits among its Sunni, Shiite and Kurdish populations, private U.S. analysts have expressed concern that Iraq will fall into the kind of sectarian and communal chaos that destroyed Lebanon--and was exploited by neighbors.

“On disintegration, we have at least verbal guarantees from all Iraq’s neighbors that will not happen,” the senior Administration official said. In other words, Iraq’s territorial integrity will not be challenged by Turkish claims on the Kurdish north, Iranian manipulation of the Shiite south or Syrian maneuvering with Sunni and nationalist elements.

“Right now there are sanctions on and hopefully we can use sanctions to guide Iraq back into more productive channels,” the official said. U.S., European and Arab officials say that, in terms of alternatives to Hussein, they have not been able to identify anyone with a strong enough power base to hold the country together.

The most likely alternatives are from within the military. “Probably a Sunni colonel or general who probably wouldn’t change the system all that much,” said a U.S. official specializing in the region. “We can probably deal with him, but it’s not likely to make the Gulf states rest any easier.”

And the dangers of political deterioration--whoever is in power--will almost certainly be exacerbated by the economic devastation, U.S. officials said.

With its infrastructure in tatters and reconstruction due to the air bombardment estimated at between $100 billion and $150 billion, Baghdad would have to spend every penny of its oil revenues for the next decade to get back to where it was in 1990. It also has at least $40 billion in debts from its eight-year war with Iran.

And Baghdad will be unable to resume full oil production for months. Because of damage to its own refineries, Iraq will have to import oil for domestic use for at least six months, oil analysts predict.