COLUMN ONE : When Two Outcasts Join Forces : A Yugoslav general went to Iraq reportedly to trade arms for oil and to gain tips on allied air strikes. His visit hints at potential power of a new breed of alliance among nations ostracized by the West.

In the practical world of pariah politics, Yugoslav Gen. Zivota Panic’s agenda when he arrived here for a secret meeting appeared to be the perfect marriage of convenience: arms for oil.

Through an impressive postwar reconstruction program, Iraq has restored its ability to produce as much as 6 million barrels a day; its sale of oil abroad is prohibited under harsh U.N. trade sanctions that also bar Baghdad from importing spare parts for its war-wounded armed forces.

And the rump Yugoslavia, starved for oil under its own strict U.N. sanctions, is awash with military hardware, including scores of Iraqi MIG-21 and MIG-23 fighter-jets that Baghdad sent to the Balkans for maintenance before President Saddam Hussein invaded Kuwait in August, 1990.

United solely in their international isolation, Panic, the Yugoslav military chief of staff, and his Iraqi counterparts agreed in March to set up teams to search for geographic and logistic cracks in the U.N. embargo that prohibits such trade to or from either country, Serbian and Iraqi sources say. They add that it is unlikely any arms or oil actually have changed hands.

But, Serbian sources confirm, Panic did achieve another key part of his mission during five days of touring Baghdad and meeting with top military strategists, including powerful Defense Minister Ali Hassan Majid: He gathered advice on how to survive U.S.-led allied air strikes.

At a time when rebel Serb forces in Bosnia-Herzegovina, a former Yugoslav republic, were--and remain--a U.S. presidential order away from becoming an American military target, Panic sought advice from the world’s experts in ground-zero survival. The Iraqi regime, after all, lived to rebuild its nation after enduring thousands of U.S.-led bombing runs and cruise missile strikes in the allied assault that destroyed much of the country in 1991.

Such are the first hints of emerging alliances and potentially powerful anti-American blocs in what the Iraqi leadership calls “the New World Disorder.” In this era, many Western and Eastern diplomats agree, pragmatism and nationalism are rapidly replacing communism and socialism as the unifying forces of America’s international foes.

Those links among nations shunned, impugned and isolated by the West--including North Korea, Iran, Libya, Cuba and Iraq--are often difficult to detect, let alone assess, by the countries that put them on the pariah list. But a glimpse of recent meetings between Belgrade and Baghdad offers a rare but telling illustration of the motives and methods behind one such new economic and military relationship.

For the Serbs, who had sought to keep quiet Panic’s visit to Iraq and a similar fact-finding mission to Libya a month before, the issue is, in the words of one diplomat, “purely a question of how do we survive. The U.S. and the international community have thrown us out of the class. We are not bound by their rules anymore. So, the question is, ‘How can we help each other survive?’ ”

The Iraqi leadership briefly acknowledged but played down the practical import of the Yugoslav commander’s visit. The state-run press reported simply that he and Iraqi military chiefs discussed ways to coordinate stands “to counter moves by the U.S.-led camp to destroy the unity of the Third World peoples.” But the visit’s symbolism clearly mattered to them.

Panic’s trip, Baghdad says, is an illustration of “American shortsightedness” in employing pariah lists and U.N. sanctions to promote its foreign policy and contain its enemies abroad.

“The problem is this: It is very hard for the United States to be a policeman and at the same time try to change the world into its own culture and in its own way,” Iraqi Information Minister Hamid Youssef Hammadi said in a recent interview, discussing the possible emergence of anti-American, sanctions-bound blocs. “That is a very big burden, and all this talk about the New World Order is rubbish. You will have all these problems coming up. It’s not an order. It’s a disorder. It’s a New World Disorder.”

As a result, he added, “trying to contain everyone in the world is extremely difficult, impractical and will not get (the United States or United Nations) any . . . positive results. . . . Whenever you differ with a regime, and then try to contain it or blow it up from inside, no people will trust the United States.

“The United States can very well do the following--have good relations even with regimes that they don’t like,” he said. “It’s one thing if you don’t like the regime or the people in the government. You can still make some kind of relations (with them) that will help you in the future to have your political gains.”

Panic’s trip may not have immediate effects on Iraq, say diplomats and military analysts in Baghdad and elsewhere in the Mideast. They speak with admiration about Iraq’s success in rebuilding its military, despite acute shortages of machinery and spare parts.

But as for benefits for the Serbs, who learned much from Iraq’s experience under relentless, U.S.-led aerial assaults, Hammadi added: “To them? Well, maybe.”

Both Iraq and the rump Yugoslavia--made up now of Serbia and Montenegro--were strong allies economically, militarily and politically as socialist-style members of the Nonaligned Movement for decades.

But in the post-Cold War era, they would appear to be worlds apart.

After all, Hussein, a longtime secular socialist, is trying to Islamicize Iraq, largely to win new allies within and outside his borders; in contrast, Serbian attacks on Muslims in Bosnia have made Belgrade a pariah in the eyes of many Islamic countries.

Similarly, for the Yugoslav leadership, which is trying to temper its image in the West, a high-level military session with a regime still viewed with Western disfavor might have seemed highly counterproductive.

“I was surprised” by the Serbian delegation’s visit, said one diplomat in Baghdad. “It does not appear to be in the political interests of either country.”

Further, there are huge geographic obstacles that would make it tough to fulfill a deal between countries whose borders have been placed under intensive scrutiny by U.N. inspectors and neighbor nations.

But, as a practical matter, such barter arrangements are in the vital, strategic interests of both nations, the diplomat added, concluding: “In today’s world, perhaps the desperation of isolation is more than enough motive to do it. And it can be done, but not in an open way.”

Indeed, beyond the air-strike survival data that Panic sought from Iraq, it was oil and military spare parts, and the powerful forces of supply and demand, that combined to drive the regimes together.

Hussein has, within just two years, reassembled a military machine that is estimated at half the size of his prewar arsenal; before the Persian Gulf War, some military analysts had ranked the Iraqi military as fourth in the world in size and firepower.

In May, the regime demonstrated its return as a regional military power during an impressive parade through Baghdad for Hussein’s 56th birthday. For 3 1/2 hours, sophisticated Soviet-made tanks rolled five abreast, along with artillery pieces, missile batteries and crack commandos. Squadrons of jet fighters screamed overhead.

But in at least one Baghdad neighborhood, there was a stark reminder of the awesome challenge facing the regime. Several tanks broke down and had to be removed by cranes and trucks.

“The regime has done a superb job of rebuilding, but now the test will be maintenance,” said one military analyst in the region. “Iraq desperately needs military spare parts.”

Enter the Serbs. Belgrade, which maintained warm ties with the former Soviet Union, remains a major manufacturer of military components for Soviet weapons, which make up a large percentage of Iraq’s remaining arsenal.

And before its invasion of Kuwait brought a U.N. trade embargo, Iraq had military maintenance contracts with Belgrade, say officials in the former Soviet Union; one of those pacts called for servicing the engines of Iraqi MIGs now stuck on the ground in the rump Yugoslavia.

The Yugoslavs, meanwhile, lack oil--desperately. At a time when some in parts of the former Yugoslav federation such as the Bosnian capital of Sarajevo are burning tree limbs to cook and fewer people can afford to drive, a gallon of gasoline costs just 0.4 of a cent in Iraq. Baghdad has the world’s second-largest oil reserves, once sold almost 3 million barrels a day to the world and now claims it can produce twice that amount.

So strong is the meshing of supply and demand between the nations that many defense analysts and diplomats in the Mideast suspect that the regimes may well find a way to overcome the legal and geographic odds against a marriage of convenience.

Further, the analysts see this happening with a possible further twist in the pariah politics: Iraq, some say, would use neighboring Iran as a transit point for Yugoslav-bound oil and Turkey as the route for inbound military spare parts.

Both Iran and Turkey have flatly denied those persistent reports. And, on the surface, both appear unlikely candidates for cooperation with the rump Yugoslavia and Iraq. As overwhelmingly Islamic nations, both have routinely condemned Serbian aggression in Bosnia, joining in the Islamic world’s call to arm the outgunned Bosnian Muslims against the well-equipped Serbs. And Iran and Iraq, which fought a bloody eight-year war that left tens of thousands dead, remain bitter political foes.

But, in reports confirmed by Western and Asian diplomats and intelligence sources, Iraqi traders said there has been a sharp increase in trade across Iraq’s eastern frontier with Iran in recent months, particularly at the southern border crossing of Shalamcheh. The traffic reportedly includes not only food, cement and fertilizers but also tanker trucks.

On the Turkish side, officials privately concede that it is difficult to police the legal trade in food, medicines and other goods permitted under the sanctions. They note that there is routine commerce from Turkey into Iraq, with some prohibited items passing through at the border town of Zakhu in the autonomous Iraqi region of Kurdistan.

“On the borders, whether Iraq’s borders or the Serbs’, there’s simply no politics--only money,” one Iraqi trader said, explaining how such trade has taken place despite the U.N. embargoes. “You can get anything across--anything, I tell you--for a price.”

Iran, noted one diplomat in the region, has another possible motive for quietly cooperating in Belgrade-Baghdad trade: Tehran--against which American officials as recently as last week sought tough trade restrictions to counter a reported Iranian arms buildup--shares a hatred of the United States and a deep distrust of the United Nations. That animus goes well beyond the Iranians’ hatred and mistrust of the Iraqis or Serbs. It further illustrates the trend of bridge-building for survival among U.S.- and U.N.-declared pariah states and regimes.

“It is, potentially, a very great danger,” the diplomat said. “You’ve got a growing list of nations and leaders who have been thrown out of the club. Some, like Iran and North Korea, have strong and sophisticated armies and nuclear-weapons programs. And, through sanctions resolutions and trade embargoes, the West is not merely pushing them out but pushing them together--uniting them in their isolation. For the moment, they appear to be contained, but what about the future?

“It’s only logical to assume that these pariah states are going to grow closer and closer to each other as time goes on,” the diplomat said, “regardless of their respective ideologies, religions or individual nationalist distinctions. In a world where ideology means less and less, eventually survival will mean everything.”

The Economic Noose

The terms of the sanctions against Iraq and Yugoslavia:

IRAQ

* Sanctions imposed: April, 1991

* What they prohibit: All imports and exports, including oil. Food and medicine exempt. Stiff disarmament regime imposed.

* Purpose: To force Iraq to comply with the resolutions that ended the Persian Gulf War.

YUGOSLAVIA

* Sanctions imposed: May, 1992

* What they prohibit: All imports and exports, including oil and arms. Food and medicine exempt.

* Purpose: To force an end to the Balkan war by applying economic pressure on Serbian-led Yugoslavia.