PERSPECTIVE ON IRAQGATE : Another Classic Appeasement : After the Iran hostage- taking and Iran-Contra, this kowtow to foreign dictators should not have happened again.

“It’s worse than a crime: It’s a blunder!” This adage from the 19th-Century French diplomat Talleyrand cuts through the increasingly complex controversy over President Bush’s past relations with Saddam Hussein.

Whether the Bush Administration built up or appeased Iraq’s dictator has become the presidential election’s main foreign-policy issue. Even the White House feels compelled to appoint a special investigator to look into how it handled U.S. aid and bank loans to Iraq before Hussein’s invasion of Kuwait.

Democrats, obsessed by the Watergate scandal that brought them their sole presidency in the last two decades, seek proof that U.S. officials broke laws. The media engage in a frantic search for some document proving malfeasance by the CIA or Justice Department.

The public can only be confused by the growing heap of charges. But the mistakes made are already known, and only by confronting the real issues can anything be learned from the blunders that forced America to wage war in the Persian Gulf.

During the Iran-Iraq War (1980-88), the United States properly tilted toward Iraq, judging Iran’s Islamic fundamentalism the immediate danger to the Gulf area’s petroleum fields and oil money. When the war ended with Iraq’s victory, it was no longer in the United States’ interest to be nice to Iraq. But that escaped notice of the Bush Administration, which also seemed not to notice that victory had only emboldened Hussein’s intent to rule the region himself.

As Iraq set a course for aggression, the Bush Administration made excuses instead of reassessing its policy toward Hussein. When Congress tried in 1989 to punish Iraq for using chemical bombs and massive repression on its Kurdish minority, the White House blocked action on sanctions.

When evidence surfaced that Iraq was misusing hundreds of millions of dollars of U.S. credits in 1989, Bush and Secretary of State James A. Baker overruled four U.S. government agencies to keep credits flowing to Baghdad. As a result, U.S. taxpayers must now shell out $2 billion to pay for Iraq’s default on credits and loan guarantees. The government did raid the Atlanta branch of an Italian bank funneling money to Baghdad, but Baker assured Iraq that this scandal would not effect U.S.-Iraq relations.

In 1990, when Iraq threatened to use chemical weapons against Israel, tried to mobilize the Arab world for an anti-American campaign and continued building up its missile and nuclear forces, the Administration again chose not to challenge Baghdad. Up to the day of Hussein’s invasion of Kuwait, Bush and Baker hadn’t even threatened him.

Bush argues that he never gave Hussein a green light to invade Kuwait. But the point is that he never gave Hussein a red light, either. Carefully worded official statements and documents allow the Administration to argue that it intended to deter Iraq’s aggression. Unfortunately, those same statements persuaded the Iraqis that we were too weak, scared or indifferent to stand up to them. The United States did not build up Hussein as an aggressor; it simply did nothing to stop him.

During the Kuwait crisis--from August, 1990, through February, 1991--the Bush Administration did a superb job in confronting and defeating Hussein’s aggression. The Administration was right, and its critics--many of them Democrats, but not Bill Clinton or Al Gore--were wrong. As Iraq’s statements show, those arguing here against a war made Hussein think that America feared a confrontation--as Bush had earlier made him think--thus hardening his heart and making him more intransigent. Once victory was won, however, the White House reverted to its old ways, let Hussein survive and watched Iraqi soldiers murder thousands of Iraqi civilians and turn a million Kurds into refugees.

These mistakes were made not through some malign intent but because U.S. officials still did not understand Middle East politics. What took place after the 1979-81 Iran hostage crisis and the 1985-86 Iran-Contra affair should not have happened again. In each case, the real issues have been buried in an ever more obscure chase after nonexistent crimes and conspiracies.

The Bush Administration and its predecessors made all the classical errors of appeasers: They underestimated their own power, they undertook the impossible task of convincing militant, anti-American dictators that the United States was a friend and they thought that Arab moderates would eagerly support any other Arab in conflict with America. In fact, Arab rulers wanted the United States to defend them from neighboring Arab dictators. But no one would confront Hussein as long as Washington did not do so.

The answer is not to appease dictators in Iraq, Iran and Syria--by ignoring their terrorism, subversion and threats--but to use the opportunity given by U.S. victory in the Cold War and the Gulf War to press them to appease the United States.