Gulf War Victors, Losers No Longer Clear : Mideast: Five years after Iraq’s invasion of Kuwait, Hussein remains in power and winners face money woes.

Five years after Iraq’s stunning invasion of Kuwait, a watershed event that mobilized one of the largest and most effective military coalitions of the past 40 years, the winners and losers are no longer so clear-cut.

Although his forces were driven out of Kuwait in the 1991 Persian Gulf War, Iraqi President Saddam Hussein remains in power, defying predictions by Western intelligence agencies of his early demise. His military is still the strongest in the oil-rich Persian Gulf region. And, over the last year, the major internal opposition groups have either withered or fallen to fighting each other.

In contrast, the Gulf states, notably Kuwait and Saudi Arabia, are still financially crippled from footing much of the $65-billion bill to wage the Gulf War. Despite the absence of Iraqi oil from international markets, oil prices have remained low since the war, further undermining these countries’ economies.

The United States remains the primary security guarantor of the vulnerable Gulf sheikdoms. Up to 20,000 U.S. troops and tons of military equipment are still deployed in the region.

And the U.S.-led coalition of 32 nations that forced Iraq to retreat is all but formally dead, especially as several members begin to deal with Baghdad again in anticipation of a lifting of U.N. sanctions.

“Five years ago, who would have believed it possible?” wondered a leading U.S. expert on Iraq. “The change in fortunes reflects some of the inherent flaws in Operation Desert Storm.”

The Clinton Administration may soon have to decide how to play the end game that the George Bush Administration avoided. Forcing the Administration’s hand, France, Russia and China--three of the five permanent members of the U.N. Security Council--are pushing to ease U.N. sanctions as soon as Iraq complies with resolutions demanding the elimination of its weapons of mass destruction.

The U.N. Special Commission set up to monitor Iraq’s compliance has all but acknowledged that Iraq’s missile systems and nuclear and chemical weapons programs have been dismantled, and that long-term monitoring is in place, according to Rolf Ekeus, the head of the commission. U.S. assessments are similar but wary.

To the U.N. commission, the only outstanding issue is Iraq’s biological weapons program. Ekeus left for Iraq on Wednesday to receive Baghdad’s report on biological weapons, which Hussein’s government only last month finally admitted it had. The U.N. commission will need at least several weeks to verify the report.

U.N. sources say the Western powers will then be forced to decide whether to lift the embargo on Iraqi oil as the first step toward normalizing trade relations with Iraq. America’s allies are poised to move quickly.

“We will take a very strong position once the United Nations says Iraq satisfies the conditions,” a French envoy said. “We will ask the Security Council to abide by its own words.”

France, Russia and China are backed by a growing list of European and Asian countries that want to deal with Baghdad. Last week, a group of German business representatives made the pilgrimage to Baghdad to lay the foundation for post-sanctions trade.

And on Tuesday, Jordan’s King Hussein became the latest to offer to mediate between the West and Iraq on terms that will lead to elimination of the economic embargo.

Once the chief strategist in containing Iraq, the United States may soon look isolated as the consensus behind sanctions erodes.

The United States and Britain are now the only Security Council members insisting that dismantling Iraq’s weapons of mass destruction is not enough. They also demand that Iraq comply with international human rights accords and return 600 missing prisoners of war and assets, from art to medical supplies, looted from Kuwait during its seven-month occupation.

“The policies and actions of the Saddam Hussein regime continue to pose an unusual and extraordinary threat to the national security and foreign policy of the United States,” President Clinton said in a letter to Congress last Tuesday.

“The leadership in Iraq is not in itself a subject of U.N. sanctions,” Robert Pelletreau, assistant secretary of state for Near East affairs, said in an interview. “But the United States would have great difficulty establishing any kind of normal relationship with an Iraq still ruled by Hussein.”

After years of belligerence and deceit, U.S. analysts say, Hussein’s regime has mounted a charm offensive at home and abroad, aimed at swaying world opinion in advance of a likely U.N. vote next month on the lifting of sanctions. Hussein is not expected to prevail then, but two other votes are possible later this fall.

On July 30, Iraq announced that all political prisoners--numbers unspecified--would be freed. Hussein also pardoned political opponents not yet charged or convicted, including dissidents in the underground or in exile, if they report to authorities within two months.

To soften his chief adversary, the United States, Hussein decided last month to release David Daliberti and William Barloon, two Americans who had been sentenced in March to eight years in prison for illegally crossing the border from Kuwait into Iraq.

“Iraq is definitely in a cooperative mood. This appears to be a conciliatory phase,” said Phebe Marr, a senior fellow at National Defense University in Washington.

In the region, Hussein’s government has made multiple overtures to his Gulf state neighbors and moved toward recognizing Kuwait as an independent state--including eliminating school textbook references to Kuwait as Iraq’s 19th province.

Having previously denied that it held prisoners of war, the government has indicated to the International Committee of the Red Cross that it is willing to discuss the issue. And it has slowly begun to return some military equipment and museum articles to Kuwait.

Among Iraq’s neighbors, Oman, Qatar and Iran have softened their attitudes, while Kuwait and Saudi Arabia have staunchly resisted and called for continued sanctions. “Kuwait will not allow or welcome any visit by an Iraqi envoy or official until the pending issues are finished,” Foreign Minister Sheik Sabah al Ahmed al Jabbar al Sabah told the Kuwaiti daily Al Anbaa last week.

But U.S. analysts say the public in Kuwait and Saudi Arabia, as in most of the Arab world, favors some easing of sanctions because of their serious impact on ordinary Iraqi citizens.

Iraq has endured the U.N. sanctions far better than most Western analysts had expected. Baghdad has been rebuilt and shows almost none of the damage from the punishing aerial bombardments during the 1991 war.

“Overall, Hussein is not a winner, but he has proven he is a survivor,” an Administration source conceded.

The Iraqi people, rather than viewing the United States as their savior, widely blame it for hardships and shortages of food, medicines and other goods.

“The responsibility for the crisis does not fall on Iraq but on America in the first place and Kuwaiti rulers in the second,” the government daily Al Jumhuriya said Wednesday. It claimed sanctions had killed more than a million Iraqis.

Internal opposition to Hussein remains weak despite his unpopularity in Kurdistan in the north and in the southern provinces where Shiite Muslims dominate. The two northern Kurdish parties are at war with each other, and the CIA-funded Iraqi National Congress, a coalition of Shiite, Sunni and Kurdish parties based in Kurdistan, has turned out to be largely ineffectual, experts say.

In spite of massive sales of U.S. arms to the Gulf, the hard reality for the sheikdoms is that neither wealth nor weapons can protect their sparsely populated nations or oil riches. Since Operation Desert Storm, each of the sheikdoms has signed a defense cooperation agreement with the United States.

Their dependence on the West was reflected last October when Hussein massed troops on the Kuwaiti border. The coalition once again had to step in with troops, and the cost was $390 million for the United States alone.

The Clinton Administration argues that Iraq has been contained and in many ways crippled.

“Five years later, the overall fabric of deterrence has been strengthened,” Pelletreau said. “The chances today of another Iraqi invasion are greatly reduced.”

But the prognosis for U.S. involvement in 1995 seems even more open-ended than it did in 1990. “As long as Hussein remains in power,” Marr said, “we’re going to have to have a robust posture in the Gulf to deter him from aggression.”