Regional Outlook : Hussein Defies Odds--He's Still in Power : Humiliated in war, isolated in the Mideast, despised by many at home, the Iraqi leader retains the reins. And he may for a while. But eventually. . . .

TIMES STAFF WRITER

Sanctioned by the outside world, isolated within the Middle East, and despised by many of his own people, Iraqi President Saddam Hussein's staying power has defied the stunning odds against him. And there may be more surprises to come.

"At this stage, it does look like he could survive a couple of years or longer," said Peter Galbraith, a Senate Foreign Relations staffer who was in northern Iraq last month. "That's not to say he will. But he's spilled enough blood to secure his own position and maybe even improve it. He's a latter-day Dracula."

After the swift and devastating conclusion to Operation Desert Storm on Feb. 27, Washington had hoped the military humiliation, economic devastation and political fury within Iraq would trigger an equally swift end to Hussein's 12-year rule. Unofficial U.S. "guesstimates" gave him weeks or, in the worst-case scenario, a few months.

Instead, Baghdad's ruthless repression of the simultaneous Kurdish and Shiite rebellions may have provided a means for Hussein to reconsolidate his control of the strategic and oil-rich Gulf nation.

Despite blunt ongoing calls for Hussein's overthrow, the Bush Administration has been left without an alternative plan or specific prognosis on his future. Its hopes now depend, by a process of elimination, on elements within the Iraqi regime itself to oust him.

The latest official scenario rather vaguely envisions the military cementing the hold of Sunni Arabs, rather than Shiite Muslims or non-Arab Kurds, on the state apparatus. Aware of the economic and political costs of Hussein's continued rule if Baghdad ever hopes to rebuild the shattered nation, a small group of army officers or political insiders would then move to replace him with one of their own.

But even that alternative may be derailed, ironically, by the deployment of U.S. and European troops in northern Iraq to facilitate the return of Kurdish refugees and ensure their protection.

"The international outrage over the Kurdish situation is not as widely shared among Arabs and Sunni Muslims as it is with us. In a sense, these disasters may have a contrary and positive effect on (Saddam Hussein) in terms of his standing in his own community," said Michael Hudson of Georgetown University's Center for Contemporary Arab Studies.

As a result, he suggested, Hussein "may have already weathered the period of maximum danger."

The leadership of one of the Middle East's most vital geo-strategic properties now centers on the answers to several questions:

* After two costly wars that dominated nine of his 12 years in power and bankrupted his country, how resilient is Hussein?

Obviously more than most both inside and outside expected.

"He is a very tough customer who is very well entrenched and who has survived several assassination attempts," said James Placke, a former U.S. envoy to Iraq. "If getting rid of him had been easy, it would have been done long ago."

The Iraqi president's cunning ability to finesse and to convert losses into gains has been a trademark of his rule.

He translated military losses during six of the eight years of the Iran-Iraq War into financial and diplomatic gains. By exploiting fears of Iran's Islamic fundamentalism, Hussein won billions in aid from Gulf sheikdoms, widened Iraq's diplomatic relationship with the West and gained access to sophisticated technology.

He is now trying to convert Iraq's massive losses in Kuwait into gains with similar tactics. At home, he is playing to Sunni fears of Shiite and Kurdish challenges to ensure his own future.

"Since the end of the war, what he's done is re-establish control of central authority. He may be challenged to a minor extent by the Shiites and the Kurds, but he's demonstrated that he can handle those threats," said Placke.

In the region, he is trying to discredit or diminish the coalition's victory by muddying the war's aftermath.

"Simply by surviving, he is taking the edge off the American victory," said Hudson.

"By butchering his own people, Saddam Hussein has scored the political victory that eluded him in the Gulf War," commented Galbraith. "He's sullied the (coalition) triumph of the Gulf War by massacring his own people," triggering U.S. and European intervention in northern Iraq.

Hussein may have lost the war, but he is still able to manipulate events in the Gulf.

* How well can he withstand continued sanctions?

The main challenge to Hussein's regime is economic. Bombed to a "pre-industrial level" according to a U.N. survey, Iraq will have to rebuild much of the nation's infrastructure from scratch.

U.N. sanctions, which had a limited impact on the average Iraqi in the run-up to the conflict, are expected to have a far deeper impact now that the war is over and the devastation so pervasive.

Baghdad needs massive imports of machinery from outside to put basic systems, from phones to electricity, together again. And it needs money to buy that equipment, which can only happen after sanctions are lifted, said Riad Ajami, a political economist who surveyed Iraq shortly before the war. "But neither will be available as long as Saddam is around."

Manufacturers and industries will be unable to gain access to new machinery or raw materials. Businesses will be unable to import.

In the process, thousands of jobs in dozens of fields may be put on hold or eliminated, with no alternatives to absorb the unemployed and limited funds in the state coffers to provide welfare. People will continue to live in Iraq's ruins.

Immediately after the war, Iraqi emotions centered on relief that the coalition's punishing air bombardment had ended. But over the next few months, as electricity remains off, food gets both more expensive and more difficult to find, inflation and black marketeering soar and disease increases, the focus of anger may shift from the 28 nations arrayed against Iraq to the leadership at home.

"In the next three to six months, Saddam will run out of bags of tricks to manipulate Iraqi society," said Ajami. "The aftershock and numbness that pervades Iraqi society today will then be turned into opposition and begin to pressure Saddam."

But aren't these the same people who survived the hardships of an eight-year war with Iran?

True, but Iraq--once the most industrialized of the Arab League's 22 members--did not feel the same economic pressure then. Hussein went through billions of a foreign-exchange surplus and then spent his country into a massive deficit to ensure ongoing domestic support. From a new satellite telephone system to posh hotels, Baghdad blossomed.

He had billions more in support from Saudi Arabia, Kuwait and other oil-rich neighbors, while the West provided access to materiel and credits for other major construction at home. Few Iraqis outside the military or front-line cities felt the physical or economic impact of that war.

The Gulf War, however, represents the opposite extreme. Iraq went into the war broke and came out of it with damages estimated between $100 billion and $150 billion, with no immediate hope of financial aid or reconstruction assistance from any nation--as long as Hussein is in power.

The key to Hussein's future, said Geoffrey Kemp, a Reagan Administration National Security Council staffer now at the Carnegie Endowment for International Peace, "is money."

* What does Hussein have going for him?

Because of deep ethnic and sectarian differences, Iraq has traditionally needed strongmen to hold the country together. Even when Iraq was a monarchy, the late King Faisal once lamented, "My country is ungovernable."

Since coming to power in 1979, the Iraqi leader has exploited the country's diversity to secure his dominance with carrot-and-stick tactics. He executed Shiite dissidents in the early 1980s and used chemical weapons against the Kurdish uprising in the late 1980s.

Yet he has rewarded loyalists within both communities. Hussein allocated millions for shrines and development in the Shiite-dominated south to placate the country's largest community and lure them away from pro-Iranian groups during Baghdad's war with Tehran. In the last Cabinet reshuffle, he made a Shiite, Saadoun Hamadi, prime minister, and brought three Kurds into his government.

Militarily, Hussein could not hold off a 28-nation coalition, but his armed forces are still among the largest in the Gulf, with an impressive array of weaponry. Without foreign military intervention, the Saudis would probably still be unable to defend themselves against Iraq.

Hussein's impressive network of security and intelligence agencies have also consistently been able to root out opposition forces before they become a serious threat. The network has ensured that not a single internal or external opposition group built a power base strong enough to provide alternative leadership.

Among the most striking issues during the prolonged run-up to the war was the inability of the U.S., European or Gulf governments to identify even one figure capable of replacing Hussein--and lasting.

During Baathist Party rule, Iraq also arguably became the most organized and institutionalized regime in the Arab world. "It is one of the least lovely regimes, but it does seem to be among the most competent," said Placke.

"What may be keeping Saddam afloat is the institutional web. It's not accidental that he can get things done."

Traumatized Iraqis may also, in the short-term, be averse to more upheavals than they have already absorbed. "Many Iraqis may feel this is not the time to have a bloody changing of command and even greater uncertainty," said Hudson.

"There is something to the argument that when these rebellions broke out, they were a powerful factor concentrating the minds and focusing the loyalty of people and organizations whose prestige and existence were at stake."

* How much has Hussein's prestige been damaged--particularly among those who have been his closest supporters?

Politically, the Iraqi leader's inability to provide meaningful leadership of a physically fragmented country and Baghdad's isolation from the outside world may, over time, create resentment even within the inner circle.

"Saddamism," which promised to redress grievances of impoverished Arabs and to win a settlement for the Palestinians, has proven to be a spent force, the U.S. experts said. And so far there is nothing to replace it.

"The feeling that there's nothing good in today or far ahead in tomorrows, and that Saddam does not have any answers to their questions, will result in a very dissatisfied situation," said Placke. Even his Cabinet will feel frustrated.

And being ostracized by other Arabs as well as the international community will not sit well with Iraqis, who pride themselves on living in a land where civilization first took root in codified laws and man's first writings.

Outside intervention in the north on behalf of the Kurds and a U.N. demilitarized zone in the south may also generate anger against Hussein for his military misadventures that helped carve up the country. Proud Iraqis may also react against his acquiescence to humiliating terms to end the war.

"In the end, one of the damaging things laid at his door will be accepting the U.N. terms for a cease-fire," said Placke. "They are so onerous and unprecedented and so resented by Iraqis that it's likely to be the final straw."

Simply put, the Iraqi leader will survive as long as his own immediate constituency survives. And, after years of raised expectations, that may not be very long.

"I'd give him through the summer," said Hudson. "Conditions by then may be so bad and people may be so desperate that, if they see only this man standing between them and relief, they might act."

* Who has the best chance of challenging him?

Most analysts agree that the biggest threat to the Iraqi leader has never been the northern Kurds or the southern Shiites, even though they account for at least 70% of the Iraqi population.

The opposition's diversity and disunity was evident during a summit in Beirut during the war to develop an alternative. But the motley collection of Shiite Islamists, secular Sunnis and Kurdish guerrilla groups were unable to come to consensus on either leadership or a long-term agenda.

The only real threat is instead from one of three components in his own inner circle: Sunni officers within the military, the Revolutionary Command Council, or the ruling Baath Party.

"The internal coup theory has the most real possibilities," said Carnegie's Kemp.

Added Placke: "It'll take a small group of conspirators to change power. At some point, a half dozen--it can't be more than that--will get together and say the situation is so disastrous that it's time to do something."

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