Gulf War Leaves Legacy of Hard Times for Iraqi People : Mideast: The effects of U.N. sanctions and inflation take toll. Child mortality rises as food shortages persist.

At dusk, as the minarets of its mosques are silhouetted against a rose-colored sun sinking in the autumn haze, this Mideast capital with its exotic skyline can still cast an enchanting spell.

But in the hot, gritty light of day, from the bleak Syrian desert in western Iraq to the banks of the Tigris River that bisects the city, a harsh reality takes hold.

Gone are the heady days filled with bellicose talk of Iraq’s having annexed Kuwait as its 19th province. Gone from the street markets are the mountains of loot taken from Kuwait.

The souks no longer brim with bins of pistachios, almonds and raisins, sides of mutton and lamb, Western cigarettes and a profusion of consumer electronics equipment.

Instead, the weekend flea market downtown has become nothing but a sprawling bazaar of old clothes and castaway household knickknacks that can be sold for food money.

From the empty open-air fish cafes along downtown Baghdad’s riverfront to a forlorn outpost near the Jordanian border, the ravages of Iraq’s Gulf War defeat and the ensuing, grinding economic sanctions are evident all around.

Along Abu Nawas Street, on one bank of the Tigris, is a line of normally popular restaurants that specialize in a dish called mazgouf , or spiced whole fish. But on Sunday, a lone operator sat staring vacantly over a tamarisk wood fire.

On the sidewalks, and in the narrow, dusty alleys, the baleful vendors are lucky to have a few open packs of cigarettes to peddle, one cigarette at a time.

Along busy Sadoun Street, a few fruit and vegetable stands remain, but most Baghdadis hardly even cast a glance as they grimly go about their business.

“It looks good, but all that is out of reach for most Iraqis,” said one European diplomat here Sunday.

Such jarring contrasts between past affluence and present hardship are everywhere in this nation of 18 million people almost four years after Iraq’s defeat, followed by the most severe international economic embargo in recent history.

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The government made a new appeal Sunday for the lifting of sanctions, with a senior health official warning of “imminent catastrophe” for Iraqi children who, he said, are dying of malnutrition at an alarming rate.

Shawi Murqus, the undersecretary of health, told the Iraqi News Agency that 29,558 children younger than 5 have died this year--compared to 8,903 in all of 1990.

Still, at first glance much of Baghdad seems to have recovered surprisingly well from its devastating Gulf War defeat. Most of the bombed-out structures, including the towering International Telephone & Telegraph building, have been rebuilt. There are even new high-rises dotting the skyline. And all but two of the 11 bridges that span the Tigris have been completely repaired and are choked once more with automobiles and buses.

“In this aspect, they have done well,” said another diplomat, whose embassy here has close ties to the United States.

But talk to an Iraqi here and there and a glimmer of another truth begins to emerge.

An ailing 60-year-old grandfather, call him Adnan, confided in the dark of night that he is working harder than ever. He would prefer not to. But he still has a wife and five daughters at home, the youngest only 8. Life has been especially tough, he sighed, after food prices shot up 300% in 1993.

And just this month, the government reduced food ration packages of rice, flour, oil, sugar and the like by more than 35%.

To make ends meet, Adnan shuttles passengers between here and Amman, Jordan--a rugged 12-hour drive across the desolate Syrian desert--always stuffing his trunk on the return trip with goods regularly available in Jordan. The only thing that remains cheap in Iraq, he said with a laugh, is gasoline.

With rampant inflation, an unprecedented black-market currency exchange is flourishing, with transactions often conducted with all the furtiveness of major drug deals, complete with calls made from pay phones and late-night rendezvous in shadowy neighborhoods.

“You may not need a cart to carry all your dinars, but a sack helps,” quipped one East European diplomat here.

Only four years ago, the Iraqi dinar commanded as much as $3; now $1 can fetch up to 600 dinars in the right places. Inflation has reached 24,000% a year, even by a recent official estimate.

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A restaurant meal (with no liquor, which has been banned) can cost 3,000 dinars or more--probably beyond the reach of most of Baghdad’s 7 million residents, who subsist largely on fixed incomes. Two chickens, for example, may deplete an average schoolteacher’s monthly income.

And crime has become a growing source of concern. One Baghdadi, a self-avowed good Samaritan, said the other night that he no longer stops after dark “for anybody.”

Just last week, foreign journalists on a government-sponsored bus trip to the southern port of Basra were beaten and robbed on a deserted highway by armed thugs.

Still, the greatest wariness among Iraqis seems reserved for the possibility of new military confrontation with a U.S.-led coalition.

Near the Jordanian border crossing, a young Iraqi customs official, stamping entry approval on a passport, whispers to an American: “No war with Iraq. Please? War no good.”

He leans forward from behind a grimy counter and is about to say more but pulls back as a co-worker passes. The clerk quickly returns to his task, scooping up the next batch of passports for processing.

Despite such a pervasive clandestine aura, the tensions arising from Iraq’s latest confrontation with the outside world seem nowhere near the level of four years ago, when war loomed.

Indeed, diplomats said Sunday, there has been very little tension here except for a day or two, and that was caused more by the Clinton Administration’s quick show of force and aggressive talk than by the unexpected deployment of Iraqi troops near Kuwait.

One European official, who asked to remain anonymous, said that several days before the Iraqi troop movements were actually under way, Iraqi officials circulated “rumors” in diplomatic circles of the impending deployment--with the caveat that it would be merely a “military exercise.”

“I’m not sure I believe that, but that’s what we were told,” he said.

There is growing speculation among diplomats here that Hussein deployed his elite Republican Guard troops precisely as a gambit to refocus world attention on the plight of his nation. That assessment was shared privately by some officials in the Iraqi government working with foreign journalists.

“Life here may be hard,” said one diplomat, “but it’s rarely ever dull.”

* WARNING FROM U.S.: Baghdad was cautioned against threatening Kuwait again. A8