MIDEAST : Iraqi Kurds Fret That Divisions Hamper Hopes : Plans to build democracy and outlast Hussein unravel as outside forces exploit split.

Up in his aerie overlooking the Iraqi plain as it sweeps down toward Baghdad, Iraqi Kurdish guerrilla leader Masoud Barzani twisted his hands in embarrassment.

“Everyone has been hurt, and we have ourselves to blame for the mess,” Barzani said of a bloody 18-month-old conflict that has split Iraqi Kurdistan into rival camps. “It has affected people’s psychology. They are frustrated, disappointed, and I don’t blame them. We had so many hopes, ambitions that we would build democracy here.”

The Kurdish split has also undermined a main plank of Western strategy against Baghdad: keeping guerrilla-ruled northern Iraq stable and self-sufficient until it can be reunited with a regime that replaces the dictatorship of President Saddam Hussein.

State Department official Robert Deutsch restarted talks with the two factions in northern Iraq this week to try to consolidate a cease-fire that they agreed upon in Ireland in August.

But not everybody is happy about what Hussein’s party newspaper called “a flagrant and impudent intervention in Iraq’s internal affairs.”

Increasingly, Iran and Syria are also pressing their own view of what the Iraqi Kurds should be doing. They have been quick to exploit weaknesses, co-opt factions and set them against each other. Even North Atlantic Treaty Organization ally Turkey has become an active player in this fertile new arena for Middle Eastern proxy wars.

“The internal conflict has invited regional intervention. When we were united, we were capable of standing up to pressures. Now everybody is interfering,” said Barzani, dressed in a traditional checkered turban, baggy trousers and a thick cummerbund around his waist.

Outstanding issues include Barzani’s control of $5 million to $10 million in monthly customs taxes on Turkish-Iraqi transit, the reconvening of a Kurdish Parliament, a new Cabinet, possible parliamentary elections in May and the demilitarization of the Iraqi Kurdistan capital of Irbil, which is now controlled by Barzani’s main rival, Jalal Talabani’s Patriotic Union of Kurdistan.

“We are agreed on 70-80% of points,” said Sadi Ahmed Pire, chief negotiator for Talabani’s party and minister of agriculture in Irbil. “There is no hate. It is not like Lebanon. We were together at school. We are the same people, we have the same religion.”

Negotiators do indeed use only mild insults against each other. Ordinary people pass freely through lightly armed checkpoints between the front lines with scarcely a care.

But high initial hopes of re-integration have foundered on decades of animosity between the two sides and the realities of a region that, in the words of Barzani negotiator Hoshyar Zibari, is in a “very, very bad neighborhood.”

The 3.2 million people of Iraqi Kurdistan are locked in by four states that, with restive Kurdish minorities of their own, hate the prospect of any Kurdish success even more than they dislike each other. So they seek ways to divide and rule, the traditional curse of the 25 million Kurds whose mountainous homeland is split among Turkey, Syria, Iraq and Iran.

In this lethal game of tag, Damascus’ backing of the Syria-based Kurdistan Workers Party, or PKK, has forced Barzani into an understanding with the PKK’s traditional enemy, Turkey. And since Turkey is involved with Barzani in the west, Talabani in the east has snuggled up closer to Iran.

Despite the quarrels of their leaders, however, everyday life in Iraqi Kurdistan has continued to improve since people began returning to their homes after a refugee emergency in 1991. That year, hundreds of thousands of Kurds fled after the collapse of their post-Persian Gulf War rebellion against Hussein.

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Intercity highways have been paved, bridges have been rebuilt, harvests are better, television stations have multiplied, and flocks of sheep and goats appear bigger.

The key to confidence remains allied protection from Operation Provide Comfort, whose small ground contingent patrols a corner of northwestern Iraqi Kurdistan and whose 100 warplanes make sure that Hussein does not fly air attacks against the Kurds north of the 36th Parallel.

“There was great suffering when we brought [the 1991 refugees] down from the mountains. But now it looks really good when you go through markets,” said H.D. Swartzendruber, American team leader of the Office of Foreign Disaster Assistance. “But . . . it all depends on the security supplied by Operation Provide Comfort. If the coalition breaks up, people could be all over the mountains again.”