The MacNeil/Lehrer NewsHour

MR. LEHRER: Good evening. The Iraqi invasion of Kuwait leads the news this Thursday. Iraqi troops took complete control of the neighboring Arab state following heavy fighting, Kuwait asked for military assistance from the Arab world and the United States, Pres. Bush froze Iraqi assets and did not rule out military help, oil prices in financial markets reacted with their own kind of violence. Robin.

MR. MacNeil: We devote tonight's Newshour to the Kuwait crisis. We have reports [FOCUS - BLITZKRIEG!] on the invasion, the reaction from Pres. Bush, the U.S. Congress, and the Arab world. Then we discuss what the U.S. and other nations [FOCUS - WHAT RESPONSE?] can do to force Iraq to withdraw. We analyze the impact on oil prices and supplies today and in the future [FOCUS - OIL SHOCK] and we examine the career and personality of the man behind the invasion [FOCUS - "THE SWORD OF THE ARABS"], Iraq's Saddam Hussein. NEWS OF THE DAY - IRAQI INVASION

MR. MacNeil: Kuwait is now an Iraqi occupied nation. Iraq's president, Saddam Hussein, launched an invasion before dawn, overwhelming his small neighbor with hundreds of tanks and thousands of troops. Kuwait's ruler or Emir fled to Saudi Arabia. We have a report narrated by Alex Thompson of Independent Television News.

MR. THOMPSON: Kuwait's city tonight is effectively part of Iraq. The puppet government is installed, the Emir has fled, the fighting is all but over, and all this in 12 hours flat. Latest reports suggest the city is calm, except for sporadic gunfire.

HETTIE LUBBERDING, Dutch Radio Journalist: [Kuwait] The statement by the transitional free government of Kuwait, as they're called, a pro-Iraqi group, an Iraqi-backed group, it now says it has deposed the Emir, that it has dissolved thenational assembly, imposed an indefinite curfew, and banned all foreign travel, closed the airports. Otherwise, the situation in the city, Kuwait City, seems to be very quiet in most areas. It was not a model army that came rolling in. It's all pick up trucks and whatever they could have assembled came in. It's rolling down the streets of Kuwait City, and taking up positions in several cities and places.

MR. THOMPSON: No pictures have emerged of the invasion, but the super rich economy and lifestyle of Kuwait have now been seized by their heavily armed neighbor. Reports from Kuwait during the night were as follows. At 3:13 AM our time Iraqi soldiers crossed the border according to reports from Kuwaiti diplomats. At 3:54, Western diplomats there reported that two border posts have been overrun. By 3:59, a Kuwaiti official in Washington confirmed that "a major offensive has begun". At 4:31, Kuwait Radio interrupted programs to broadcast the following defense ministry announcement.

ANNOUNCER: [Speaking through Interpreter] While Kuwait asks Iraq immediately to stop this irresponsible hostile action and withdraw all its forces to within its borders, it stresses that it will exercise its natural and legitimate right to self defense with all the ways and means that would erase this aggression.

MR. THOMPSON: By 5:30, eye witnesses spoke of heavy explosions in the capital and gunfire near the Emir's palace. At four minutes past six, Baghdad announced that revolutionaries had overthrown the Kuwaiti government and it had sent troops in support. Then at 6:28, the airport was bombed and shut down as Kuwait Radio began broadcasting messages pleading the country's innocence.

ANNOUNCER: [Speaking through Interpreter] Arab leaders, Arab kings, Presidents and Emirs - the Kuwait of the Arabs is sending you an SOS appeal. Had we not done our duty fully towards the Arab nation we would have excused you -- had we wronged an Arab, we would have excused you.

MR. THOMPSON: Then at 7:28, local reports said the Emir's Palace was occupied and troops were in the capital's streets. Following that came reports that the city had fallen. One hundred thousand Iraqis had mobilized, five for every Kuwaiti soldier. The Iraqis brought 300 tanks and bridging equipment. The Kuwaitis had no chance and offered little resistance. The country's leader, the Emir, had some warning of the invasion, but one of his brothers was killed. Most people were simply taken by surprise.

HETTIE LUBBERDING, Dutch Radio Journalist: [Kuwait] We all went to work as normal this morning and round about 7 o'clock fighting had also started also in Kuwait City and long ago started on the borders, but people were very much unaware of it. Traffic in the city was very heavy. I mean, it looked as if people were on their way to work as normal.

MR. THOMPSON: But tonight they work for new masters. Iraq has seized the oil wells she craves. Kuwait no longer exists, and the world looks on appalled.

MR. MacNeil: The world condemnation began at the United Nations. After an all night session, the UN Council voted 14 to 0 to condemn Iraq and demand its immediate withdrawal. It also called on both sides to begin immediate negotiations. The session was called by Kuwait and the United States. Jim.

MR. LEHRER: Iraq's ambassador to the United States read a statement in Washington explaining why Iraqi troops were sent into Kuwait.

MOHAMED AL-MASHAT, Ambassador, Iraq: They went apparently appearing in Kuwait and internal affairs which Iraq has no relations. Two, their entering free government has asked the Iraqi government to extend assistance for maintenance of law and order with a view of sparing the people of Kuwait any harm. The Iraqi government has decided to extend their assistance requested on the basis of this consideration and no other. Three, the Iraqi government vigorously reaffirms that Iraq harbor no special objective in Kuwait and is desirous of establishing relation of fraternity and good neighborliness with it. The Iraqi forces will be withdrawn as soon as the situation is settled down and as soon as the free government of Kuwait has so wished. We hope that this will be a matter of few days or few weeks at the latest.

MR. LEHRER: The ambassador took no questions. U.S. State Department Spokesman Richard Boucher called the Iraqi statement "just patent fraud". Kuwait's ambassador to the United States held a news conference in Washington. He asked for U.S. military intervention.

SHEIKH SAUD NASIR AL-SABAH, Ambassador, Kuwait: We have appealed to all our friends and I repeat, we have appealed to all our friends around the world, including the United States, to come to our aid and assistance. The situation inside Kuwait is serious. We have occupied all the important facilities in Kuwait, including the ministries who are commanding the whole country with their fingers. I appeal to you again that my country's under occupation, my people are suffering, and I appeal to you again for assistance and help, immediate assistance and help, immediate assistance and help from you and from everyone who has conscience and fair play around this world.

REPORTER: Would you like to see the United States send military assistance?

SHEIKH SAUD NASIR AL-SABAH, Ambassador, Kuwait: We have and we've had always friendly ties with the United States, as we've had with others in the European world, and we expect our friends to stand by us when we are in need.

REPORTER: Does that include military troops, United States military troops, in your country?

SHEIKH SAUD NASIR AL-SABAH: My friend, we are desperate for any kind of assistance we can get.

REPORTER: Mr. Ambassador, can your country survive without U.S. military assistance?

SHEIKH SAUD NASIR AL-SABAH: Let me say that we would like to have military assistance in order to survive. I think the U.S. intervention at this stage is of paramount importance.

MR. LEHRER: Pres. Bush froze Iraqi assets in the United States and did not rule out military intervention. Iraq responded to Pres. Bush's sanctions by announcing it will freeze its debt payments to the United States. Pres. Bush spoke to reporters this morning before a meeting with his cabinet.

PRES. BUSH: The United States strongly condemns the Iraqi military invasion of Kuwait, and we call for the immediate and unconditional withdrawal of all the Iraqi forces. There is no place for this sort of naked aggression in today's world, and I have taken a number of steps to indicate the deep concern that I feel over the events that have taken place. I signed an executive order early this morning freezing Iraqi assets in this country and prohibiting transactions with Iraq. I've also signed an executive order freezing Kuwaiti assets. That's to ensure that those assets are not interfered with by the illegitimate authority that is now occupying Kuwait.

MR. LEHRER: Later Mr. Bush flew to Aspen, Colorado for a meeting with Britain's Prime Minister Thatcher. At a joint news briefing, they both condemned Iraq's invasion. A U.S. aircraft carrier has been sent to the Persian Gulf from its normal station in the Indian Ocean. The USS Independence has up to 80 jet fighters and bombers aboard and is escorted by six other ships. The U.S. already had eight Naval ships in the Gulf. There are 3,000 Americans in Kuwait. The State Department said late today some American oil workers have been rounded up by advancing Iraqi troops. The whereabouts of those workers are not known. The State Department today urged all other Americans to stay away from Kuwait. SOVIET REACTION

MR. MacNeil: The Soviet Union reacted to the invasion by suspending arms sales to Iraq. It did so at the request of the United States. Moscow is Iraq's largest arms suppliers. Sec. of State Baker is flying to Moscow tomorrow to issue a joint super power statement on the invasion.

MR. LEHRER: There was also much reaction today from members of the United States Congress. Here's a sampling of what was said at Senate news briefings.

SEN. JOHN McCAIN, [R] Arizona: There is absolutely no excuse or rationale for the Iraqi invasion. Their pretexts are of the flimsiest nature, and the United States, I believe, is going to have to reaffirm the Carter doctrine, which clearly states that the United States will take whatever steps necessary to assure the free flow of oil.

SEN. PATRICK LEAHY, [D] Vermont: You're talking about something that could completely unravel, the whole Middle East. If there is ever the metaphor the fuse is being lit, it's being lit in Kuwait, and all the Western nations, as well as the modern Arabs, ought to have their full attention on this, and at some point they have to realize that they may have to take steps far, far more extreme than anything that they've ever considered before.

SEN. ALFONSE D'AMATO, [R] New York: It is a very real possibility that the world community will have to respond militarily given Saddam Hussein's actions, thank God that he didn't have the atomic reactor.

MR. LEHRER: For further perspectives now on what the United States can and should do, Sen. David Boren, Democrat of Oklahoma, is chairman of the Senate Intelligence Committee, Congressman Howard Berman, Democrat of California, is a member of the House Foreign Affairs Committee and sponsor of a resolution that passed the House today calling for new sanctions against Iraq. Congressman Duncan Hunter, Republican of California, is a member of the House Armed Services Committee, Thomas McNaugher is a senior fellow at the Brookings Institution in Washington, he is a former army officer who has written extensively about military strategy in the Persian Gulf. Sen. Boren, to you first, you've been briefed today by U.S. Intelligence Agencies. Was the, first of all, was this attack on Kuwait totally unprovoked?

SEN. DAVID BOREN, Chairman, Intelligence Committee: I think it was totally unprovoked. I'd have to say it's not completely a surprise. We're dealing with a situation here that is not only an immediate emergency but it's a long range problem for our country. We've known for a long time that Saddam Hussein is a person who has extreme nationalistic aims for the region. He really in the long run wants to establish a rocky hegemony over the region. He wants to establish himself as the unchallenged leader in the region and he's now showing that he's willing to use military force to do that. So we've got not only an immediate crisis here. We have a long range problem and we have to realize also that these key Saudi oil fields so important to the United States are only 250 miles away from the location of the current fighting.

MR. LEHRER: But, Senator, the experts and I understand even the intelligence people were saying just in the last three or four days that it was unlikely Saddam Hussein would do what he did this morning. What changed?

SEN. BOREN: Well, I don't think that all the intelligence sources have been saying it was unlikely. There was a feeling that on the part of some, and this has certainly been reported in the media, that he was showing strength simply because he wanted the oil prices to go up. There are many of us who felt that he had a broader aim, that he was also really wanting to establish himself in the position that perhaps the Shah used to occupy as the unchallenged leader of the whole region, and I think that's always been there, and many in the intelligence community have continued to warn that he might use force to further his imperial aims, and I now think we're seeing exactly that happen.

MR. LEHRER: Have you had any late word on these reports that some American oil workers have been rounded up by the Iraqi troops and are being held prisoner?

SEN. BOREN: No, I haven't. We've been trying to track that down, but we've not had any late word. But I think what we really have to understand here, Jim, is that we're now, we've had an alarming increase of dependence of the United States on oil from this regime. Iraq we get 600,000 barrels a day, Saudi Arabia twice that amount. 25 percent of all of our oil imports are coming from this region, up 500 percent in just five years. So we have a very, very serious national security problem on our hands that could really impact the American economy if he decides to try to extend his influence further.

MR. LEHRER: Mr. McNaugher, from a military standpoint, there was no contest, is that right?

THOMAS McNAUGHER, Military Analyst: No. I think the military issues are the least relevant ones. It was widely recognized that if Iraq wanted to move, that it would be a brief and exciting afternoon's walk. The imbalance is dramatic.

MR. LEHRER: What have we heard -- the reports are that the Iraqis sent in over 100,000 troops and the Kuwaiti National Guard, as it's called, had what, 15,000?

MR. McNAUGHER: I'd say roughly 15,000, and it's more of a token force than a real force, whereas Iraq's troops, especially these, are fairly battle hardened by the last years of the Iran-Iraq War.

MR. LEHRER: And 300 tanks, put that in perspective, what could 300 tanks do militarily to what was on the other side awaiting them in Kuwait?

MR. McNAUGHER: It's not clear that they even used the tanks, but that's roughly an American division size number of tanks. I think our tanks have roughly 350 divisions. So it's, you know, an American division has 18,000 people and a great deal of fire power, so they can cut through that pretty fast.

MR. LEHRER: So as far as a tank being effective there, how effective would it be?

MR. McNAUGHER: If they needed to use them, and I doubt that they did, very effective. These are tanks that are used in the last months of the Iran-Iraq War fairly successfully, so the troops that are driving them know what they're doing.

MR. LEHRER: Sen. Boren, has your intelligence briefings given you any information on casualties in this confrontation?

SEN. BOREN: I've not had any exact numbers. We think the casualties were relatively low because the fighting was over so quickly, although apparently there's still some sporadic fighting going on in the Southern suburbs. So it's hard to know how many casualties there were, not many in number. As it's just been indicated the superiority was so overwhelming there was very little resistance that could be put up. And let me say superiority not only in this case but regionwide now in the Arabian Peninsula, here's Iraq sitting with well over a million troops, all of the other troops put together, including Saudi Arabia, have only about 200,000. So we have a real power imbalance, and it looks like Mr. Saddam Hussein is going to try to occupy that vacuum of power.

MR. LEHRER: Congressman Hunter, the Kuwaiti government has officially asked the United States for military assistance. What should the United States respond?

REP. DUNCAN HUNTER, [R] California: Jim, I think the President first has got to martial his friends and his allies, and that means bringing together all of the Western democracies. He was with Maggie Thatcher today. He's a guy who does that very well, but he's going to have to work with all the Western allies, as well as the other Arab nations, and importantly here the Soviet Union. The Soviet Union I think is, and our relationship with the Soviet Union is one of the assets that we have in this particular situation. Whatever he does he is going to have to do in concert with our allies and with our friends. The problem is that Iraqis have massive armor. They have more tanks than Romel and Eisenhower and Montgomery combined in the Northern African campaigns, and we do not have the wherewithal in the Middle East right now to dislodge the Iraqi forces from Kuwait, and if we did, and if we have to ultimately, even with our allies, it will be a very long and bloody contest, and I think there's a couple of lessons for the U.S. Congress here, Jim. Two days ago, the House Armed Services Committee slashed the American defense budget under the proposition that the world is a much more peaceful and less dangerous place. Secondly, a few months ago we passed a technology transfer bill that will allow high technology to go to some very unstable middle men, and the weapons that they're using right now are Italian weapons, French weapons, and unfortunately some American weapons.

MR. LEHRER: Sorry, Congressman, that's another argument. Let's keep it on Iraq and Kuwait if I can, please, sir. Is it an intolerable situation from your perspective that this situation remain the way it is? In other words, must Iraq remove its troops?

REP. HUNTER: Absolutely. I think the United States is in a position where ultimately there's a very high chance of conflict with Iraq. I think it is intolerable, I think we are going to have to move, and that's why it is absolutely important for the President to have solidarity with the Western democracies. But it will be very bloody if Mr. Hussein is intransigent.

MR. LEHRER: Mr. Berman, what do you think? What should the United States do, and do you share Congressman Hunter's point that the status quo, as we speak tonight, cannot remain?

REP. HOWARD BERMAN, [D] California: Well, the status quo won't remain. I fear and many others fear that this is just a beginning. The irony is that this is just a beginning. The irony is that until yesterday our administrations have had a policy of tilting towards Iraq, of encouraging our allies to supply Iraq in the Iraq-Iran War, of looking the other way at Iraqi use of poison gas, of Iraqi support for terrorism, and I think it's important to notice that Iraq is not simply a very well armed country at this point. They have an incredible ballistic missile capability. They have the ability to fire ballistic missiles with poison gases in the warheads. They are a very, Iraq is a very dangerous country under the government of Saddam Hussein, and we, two administrations now, for geo political reasons which were really not well founded, have discarded principle in order to provide support for Iraq, now at last, and I applaud it, the administration recognizes what is happening. They have taken the first beginning step. I agree with Duncan that we have to get our Western allies, Japan, to stop the arms flow to Iraq, to cut off the flow of technology, hopefully to engage in the massive kind of embargo that is needed. Iraq is a very desperate country economically right now.

MR. LEHRER: But should the United States be prepared to use U.S. troops?

REP. BERMAN: Well, I think the first question should be going to the multi-national question. The Arab League really wimped out today. They met and adjourned without even condemning the Iraqi invasion as a violation of international law, without responding whatsoever to the pleas of the Kuwaiti leaders. The Arab countries have to recognize that the threat is most directly to the them, to the Saudis, the Jordanians, to these countries, and I think we have to approach these by getting the Arab countries, and working with the Arab countries and our Western countries to take a unified kind of an action. There are questions about Iraqi flow of oil, things that can be done in terms of blockades, in terms of pipelines, that could be very instrumental in tilting the balance here.

MR. LEHRER: Sen. Boren, what is our obligation to Kuwait as a nation?

SEN. BOREN: I think we have an obligation to try to again free them of foreign domination. And I think it's very important at this point that we not rule out anything. I think it would be imprudent of the President to immediately commit American forces. It's been said we're limited as to what we can do right now to change the situation. We have nothing like the amount of force available to us in that region that the Iraqis have, but we ought to, he's bringing the carriers in, we should increase our level of strength in the region. The main thing we need to let him know right now is if he proceeds further, especially if he were to proceed against Saudi Arabia, which is so vital for national interests in this country, that he could be in for a long, protracted struggle. He's very strong, but his people are war weary, he has a lot of racial and ethnic divisions in this country, but I think if he were to think that he might get engaged in a long, drawn out struggle with the United States, it would cause him to think twice. I think we really need to take actions that make him think long and hard about whether he would ultimately want to engage us. Then I think in the meantime we ought to go the economic sanction route while we bring forces in that would increase our options.

MR. LEHRER: Mr. McNaugher, what are our options militarily?

MR. McNAUGHER: At the moment nothing. I mean, we've got Naval forces in the area. We're moving some more in, but Naval forces really can't get any leverage over the ground situation?

MR. LEHRER: Why not?

MR. McNAUGHER: To meet ground forces, you're going to have to go on the ground. If you want to bring aircraft in, fine, you've got some on a carrier, but the carrier is not going to come into the Gulf. It's going to be way down off Oman, and that means even to get aircraft up into the vicinity of Kuwait, you've got to refuel. That's a pretty complicated operation. I think that's a nice gesture to Saudi Arabia and Kuwait that we're on the way, but I think more relevant to the situation would be air power. We moved a couple of squadrons of F-15s back into Saudi Arabia back in 1978, when the Iranian situation was deteriorating. I wouldn't be surprised to see that now. Ground forces are available and so is the lift, but it'll take a long time to put it together. The question is what do you do with them when you have them there, and I would just distinguish between ground forces that you would use to retake Kuwait and ground forces that you would use to reassure the Saudis as part of a much broader international strategy designed primarily to bring economic pressure on Iraq and convince Iraq that the costs of this naked aggression, which is what it is, are very high. I think it's more likely that those forces would be a reassurance to the Saudis, but I'm not ruling out the possibility that we would get into a conflict with Iraq. I think that's unlikely.

MR. LEHRER: You mean, put, mass a bunch of American troops in Saudi Arabia?

MR. McNAUGHER: Well, look, we aren't doing anything in Saudi Arabia until the Saudis tell us and ask us.

MR. LEHRER: Right.

MR. McNAUGHER: So the first thing I think the administration has to do is approach the Saudis, and that requires a certain amount of subtlety. As was mentioned earlier, the Arab League is really quite in disarray at the moment. It's not clear what they're going to do. We want to approach the Saudis, convince them, you know, we're capable of subtlety here, we're going to couch this in an international effort, but we're prepared to reassure them and honor our security relationship.

MR. LEHRER: As a practical military matter, could the Iraqi Army be defeated?

MR. McNAUGHER: Oh, yes. I mean, it depends upon what it's doing. If it's attacking Saudi Arabia, I don't think that's a big problem, because I think the logistics trail on that gets very long and very vulnerable. I think their air force is no match for our air force. They've got heavy forces, lots of tanks, but I think putting aside the elite elements, maybe 200,000, then it gets a lot weaker and less well trained.

MR. LEHRER: But it would be a long, bloody war?

MR. McNAUGHER: Oh, it would be a very tough fight, no question about it. I think before one does that there are, as was mentioned, you know, economic strategies. Do we want to cut their oil exports? If we do, and we can do that, there are pipelines through Saudi Arabia and Turkey that can be turned off it comes to that, if we do that, unless you want to see the price of oil go very high, you're going to have to replace that oil, and the only country that can do that is Saudi Arabia, and it's not clear how quickly they can bring excess production capacity on line, but the important thing is will the Saudis make that decision. I mean, they have a very tough set of choices here. Do they sort of let the dust settle and come to terms with Iraq, or do they confront Iraq with our backing? And that's the decision we want to work on, and it's going to require some subtlety and some real diplomatic finesse on our part.

MR. LEHRER: Well, thank you, and gentlemen, thank you all. Robin.

MR. MacNeil: And we turn next to the reaction of Iraq's Arab neighbors in the Middle East. First, Nik Gowing of Independent Television News has this report.

MR. GOWING: Ten years ago, Saddam Hussein moved his forces into Iran for a short, sharp strike aimed at gaining control of the Chaetal Arab Waterway and expanding the tiny gulf coast from which Iraq exports its main asset, oil. The Iraqi leader decorated his soldiers, but the costly, prolonged military adventure had failed. Two years ago, the United Nations brokered a fragile peace. It ended hostilities, but left Saddam's ego bruised by failure and a massive war debt. Now on the Kuwaiti border with Iraq, Saddam is likely to achieve more in 10 days by military bullying than he achieved in 10 years against Iran, the likely annexation of oil rich Bubiyan Island, until now under Kuwaiti control, a sizeable world oil price rise created by this crisis, and Kuwait's suspension of her massive war loans to Iraq. For Iraq, military force appears to be paying, and that's what's sending shivers down the spine of Iraq's Arab neighbors, neighbors who threw the Arab League nominally both Pan Arab solidarity against non-Arabs. All are already privately terrified by Saddam's acquisition and development of chemical weapons known as the poor man's nuclear weapon, and by the latest launch systems for all manner of conventional weapons, the super gun developed in Canada by the late Gerald Bull being the most obvious and recent reminder. Today in Cairo, foreign ministers of the Arab League were coincidentally meeting in emergency session, wrestling with how to react and the words to use to condemn Iraq. In the complex shifting sands of Arab politics, no one will again trust Iraq. Kuwait had been a supporter of Iraq in the Gulf War, funneling cash and arms to Baghdad. Saudi Arabia had backed Iraq's oil price worries and until two days ago was trying to broker peace. The tiny oil rich Emirits could not defend themselves and must be petrified. Further afield, Saddam's old enemy, Pres. Assad of Syria, must be wondering if he'll get the next bloody nose. And then comes Jordan, Saddam Hussein assiduously courting King Hussein. The king must now wonder where it is all leading for him. Iraq promised another mediator, Egypt, it would not invade Kuwait. And beyond the Arab world is the arch enemy, Israel, whose foreign ministry today compared Saddam Hussein to Hitler. Three months ago, Saddam Hussein talked publicly of his ability to take on Israel. Today Israel claimed it has the might to take on Iraq. Meanwhile, royal Saudi Arabia, which spends 40 percent of its oil income on defense, is the only Arab country with military might bought from America and Britain which begins to rival Iraq's. Saudi Arabia has military and economic muscle, but probably not the will to take on Baghdad.

MR. MacNeil: For more on the regional reaction to the invasion here is Judy Woodruff. Judy.

MS. WOODRUFF: We turn now to Clovis Maksoud, the Chief Representative to the United States of the League of Arab States. He has held that post since 1979. He joins us from a studio in Washington. Mr. Ambassador I don't know if you just heard but our guests just said that the Arab League by its actions today wimped. That League is in disarray and that while your states are the ones that ought to be reacting you are not.

AMB. MAKSOUD: Well first of all the Arab League is meeting in emergency sessions. They have already had three sessions and that is because the nature of the challenge that has taken place to the Arab League has to be dealt with assiduously where by we are able to bring about a restoration of the negotiating process. Last night after midnight the UNited Nations Security Council emphasized that the efforts of the Arab League should be supported and today President Bush has spoken with three leaders of the Arab League and they have said that they want an Arab solution and they suppose that at this moment the international community with any reservations that they might have would want as a preferred option. It is basically an Arab problem.

MS. WOODRUFF: Has the Arab League condemned what Iraq has done?

AMB. MAKSOUD: Moral judgements are pre mature if we are going to undertake a mediation effort or an arbitration effort. We want to maintain an objective distance in order that we can bring about in our role as a catalyst to contending parties.

MS. WOODRUFF: So you are saying it is not likely that the League will condemn Iraq. Is that right?

AMB. MAKSOUD: Well I will say we will exhaust all of our diplomatic means in order to bring about the desirable solution. Namely the withdrawal and the restoration of legitimacy and in the response answer all the issues that have risen that has led to the contention that has taken place and has interrupted the negotiating process.

MS. WOODRUFF: Is this an act of naked aggression as President Bush has called it or was Iraq invited in to Kuwait as the Iraqis are claiming?

AMB. MAKSOUD: In our opinion we would not want to describe it at this moment. We are describing a consequence that it is unfortunate and if the hemorrhage remains it has an effect on national security and we have seen how Israel is trying to exploit this hemorrhage in order to continue to marginalize the center issues in the Middle East namely the Palestinian question and the sovereignty of Lebanon. In that respect we have our own priorities there we have a more calculated aspect and we have our declared objects that we want to restore the negotiating process and we want to bring about the legitimate Government and we want to being out the withdrawal which Iraq has indicated it would like to expedite as soon as possible with in a few days.

MS. WOODRUFF: Why should Hussein listen to members of the Arab League. I mean what leverage do your countries have on him?

AMB. MAKSOUD: Well he is first of all a founding member of the Arab League. He has a member State that the Arab League has supported in its conflict with Iran.

MS. WOODRUFF: With all due respect Mr. Ambassador Kuwait supported Iraq also in the War with Iran and this is the way Kuwait is repaid.

AMB. MAKSOUD: We hope that this form of repayment will not be a lasting one. We hope that we are able to use ourselves as a catalyst and we want the Arab solution to be credible and effective and that is why we are anxious that we are given a breathing space for this our efforts. We are actually in an agonizing mood. We realize that this is one of the few times that an Arab dispute has resulted in such interruption of the negotiating process. We are eager to restore the situation in to a frame work where all the outstanding and contested issues between the two countries would be addressed peacefully in a negotiating way.

MS. WOODRUFF: Specifically what are you doing? Are you in contact with Hussein?

AMB. MAKSOUD: Of course. And today the very Senior Leader and former Foreign Minister of Iraq has come and joined in the meetings of the Arab League.

MS. WOODRUFF: And do you feel that you made any progress?

CLOVIS MAKSOUD, Ambassador, Arab League: I think that some progress has been made. I think the progress would be further achievable if we don't have the intrusiveness at this particular juncture from the outside World.

MS. WOODRUFF: Well Kuwait has asked the United States to get involved. Not only get involved but military help if possible. They say they are desperate. We had the Ambassador quoted on the program a few minutes ago?

AMB. MAKSOUD: We understand the plea of the contending parties would be factored in to an input in our decision in the negotiating process. There is no doubt that we are extremely sensitive to the situation in Kuwait and also to the situation. We do not want to have this situation be a permanent break down. We are the healers of this situation. This is the primary task of the Arab League as we go about our national commitment and national duty.

MS. WOODRUFF: How much more would Hussein have to do in order for the League to feel that it was necessary to condemn him. There are analysts saying that he may next move on Jordan, on other Arab nations.

AMB. MAKSOUD: Well these are anticipatory aspects and we would not like to give them to much credence because if we do give them any kind of credence we would be interrupting our deliberate pursuit to achieve the necessary objectives of peace and negotiating settlement between two Arab countries.

MS. WOODRUFF: Well Mr, Ambassador we thank you for being with us.

AMB. MAKSOUD: thank you.

MS. WOODRUFF: Robin. FOCUS - OIL SHOCK

MR. MacNeil: We turn next to the implications for oil prices which jumped sharply today on the World market. Iraq is OPEC's second largest producer and exports three million barrels of oil a day. Kuwait's export quota is one and one half million barrels a day. Together the two countries account for 20 percent of OPEC's output and 5 percent of America's oil consumption. Joining is now are Charles Maxwell, Vice Chairman and Senior Energy Strategist, for CJ Lawrence, a New York Brokerage Firm. And Economist Philip Verleger a Visiting Fellow at the Institute for International Economics, a Think Tank in Washington. Charles Maxwell after jumping nearly $3 a barrel today oil prices settled at about $1.50 up. Does that mean this is or is not a major oil crisis?

MR. MAXWELL: I think that it is part of a major oil crisis. What the markets are saying is that price rise which has come off of a bottom of $13.50 a month ago so the price is very pronounced today in the $20 to $21 area. That pronounced price rise has probably discounted the situation that we can see today which implies no further major battles and some kind of process to bring about the withdrawal eventually on Iraqi troops and so on,

MR. MacNeil: So that price today is the markets looking at the bright side?

MR. MAXWELL: I think so. What we worry about of course is the possibility of the next major step and that would be a blockade or an embargo. That would have totally different consequences and would drive the markets up much higher.

MR. MacNeil: Things that President Bush and other world leaders are suggesting is a way of turning the screws on Iraq?

MR. MAXWELL: Yes I am afraid so.

MR. MacNeil: Mr. Verleger if the supply is not further disrupted will we see any further change in prices?

MR. VERLEGER: Yes I am afraid so.

MR. MacNeil: We will even so?

MR. VERLEGER: I think that when one steps back and looks at the events in early July when Hussein made a speech on July 18th denouncing Kuwait. Prior to that the market had been falling. In one way we are fortunate this accident happened right now because we have roughly 200 million barrels of crude oil in the World. Prices would have declined if he hadn't spoken and oil would be a $12 price or $11 price. So roughly it is a 100 percent higher. If Hussein is able to prevail and nothing happens. If the Arab countries do nothing then he clearly wants to achieve a price around $30 a barrel by the end of the year and he will achieve it.

MR. MacNeil: He will achieve it. Why?

MR. VERLEGER: First if you look at the total production of Iraq and Kuwait it adds to about 5 million that will be reduced. Second Saudi Arabia.

MR. MacNeil: He will just cap some wells. Hold things down for a while.

MR. VERLEGER: He will cut production down for a while. In the First place Kuwait was one of the reasons prices were weak. They produced at 2 million a day rather than a million and a half. They are cutting back to a million and a half barrels a day after the OPEC meeting would tend to put upward pressure on prices. So we would have seen something like $22 or $25 by December. Second there will be fear in the UAE which is a country that has over produced substantially.

MR. MacNeil: United Arab Emirits.

MR. VERLEGER: Yes. They have in the past produced as much as 2.1 or 2.2 million barrels a day. As the ITN story showed they are now fearful themselves. They will probably cut back to a million and a half quota. In addition I think that Saudi Arabia will be a little reluctant.

MR. MacNeil: Is this going to be a psychological factor going through the Persian Gulf with out any further military activity will send prices up. You think?

MR. VERLEGER: That will cut supply and the ordinary working supply and demand will push the prices higher, pushing them toward $30 a barrel by the end of the year.

MR. MacNeil: Do you agree with that?

MR. MAXWELL: Well it is of course possible. I would take a slightly different line working on a different set of reasons but Phil's point is well taken and I will admit that is a possibility. There are very large reserves of oil above ground in storage in many parts of the World and that is an offset. The World demand picture is not powerful at the moment. It is coming down a little bit. For instance America is now using a little bit less oil today than it was a year ago.

MR. MacNeil: Because the economic activity has slowed?

MR. MAXWELL: Because of the economic activity. The rise in price itself generally brings about a cautious use of oil which brings down demand a little bit. And I think there will also be a massive switch in many countries to many fuels where that is applicable, natural gas and coal and we have a problem in Eastern Europe and Russia of collapsing demand which is giving us some extra barrels that we didn't anticipate on the demand side. So in total I would say yes there are upward pressures on the price of oil but I would rather think that it will stay close to where it is now and climb a little bit higher in the seasonal highs in December.

MR. MacNeil: Unless Iraq refuses to listen to the United Nations and President Bush and everybody else and stays there and the rest of the World collectively imposes sanctions, embargoes, blockade on the sale of their oil then what happens? Do we shoot ourselves in the foot because of that?

CHARLES MAXWELL, Energy Analyst: Yes to a degree we do but it a question of whether we want to stand up and be counted now and confront Hussein in this problem or do we want to let it ride. There will be a cost for letting it ride and a cost for confronting him. If we confront him with a military blockade a naval blockade by agreement by most NATO powers that they will not accept Iraqi oil then I think that we will be cutting out some production in the World which could not easily be made up from other parts of the World. And we will see prices rise, $2,$3. $4 a barrel. On the other hand if it slides by the natural economics will keep prices in this area. So now I think that it is a decision of the Bush Administration. Higher prices if we confront, the same prices or slightly lower if we back away from it.

MR. MacNeil: Do you agree with that?

MR. VERLEGER: I agree.

MR. MacNeil: That would be the effect of blockades, sanctions, refusing to buy Iraqi oil?

MR. VERLEGER: Directionally Charlie is right. A full blockade on Iraq and Kuwait 5 million barrels a day that is ten percent. Most of the calculations dealing with price elasticity on models show a price of around 40 to 45 dollars a barrel. It is not 3 or 4 dollars a barrel. It is much higher. The consuming countries have built very large strategic stock piles. There are great reserves as Charlie point s out around the world right now. In addition we have almost 600 million barrels of inventory in our strategic oil reserve. Japanese have more that a 100 million barrels and the Germans have substantial reserves. If the United States and the consuming countries are going to act and absorb this cost now. That is a smart thing to do. Then they ought to also start selling those strategic reserves. Selling those strategic reserves and distributing them.

MR. MacNeil: Let me ask each of you quickly the Administration said today any inflationary impact that is going to happen will not tip the United States where the economy is close in to recession. Is that right? Could you say that with confidence?

MR. MAXWELL: I am glad that I don't have to say it with confidence. I think that there is some argument in that way. The big increases in the price of oil in 1973 and 1974, 300 percent, in 79 and 80, 300 percent and it did take us in to recession. In this which the increase is 15 percent therefore has a real chance of not tipping us in to recession but on the other hand it depends on so many other factors that are not to do with the case of oil.

MR. MacNeil: What do you say to that question?

PHILIP VERLEGER, Energy Economist: I talked with Lawrence Meyer who is our economic forecaster. His view was that we are on the verge of a recession and with the price, if the price goes up to $30 or even the higher 20s we are looking at probably two quarters of recession. Negative 3 percent or better in the fourth quarter this year 3 percent or better in the first half next year. Unemployment up to about 7 and 1/2 percent.

MR. MacNeil: Mr. Verleger, Mr. Maxwell, thank you. FOCUS - "THE SWORD OF THE ARABS"

MR. LEHRER: Finally on this story tonight, the man behind it all, Saddam Hussein of Iraq. Charlayne Hunter-Gault reports.

MS. HUNTER-GAULT: He has been called Iraq's big brother, the man who is omnipresent throughout his country in the once romantic city of Baghdad to the vast and dusty countryside where he takes gifts to transform neglected peasants into loyal subjects. In a rare interview in 1981, Saddam, who is also called the perfume of Iraq, explained why he allowed such an extravagant personality cult.

SADDAM HUSSEIN, President of Iraq: [Speaking through Interpreter] That is not my choice. I do not wish it to be. Nor is it of my making or my doing. It is a natural state that has flowed inside the Iraqi behavior, the Iraqi self. Even then I tried to resist it, but this is something that when it comes from the people and in a spontaneous natural way, then we should not be afraid of it.

MS. HUNTER-GAULT: But there are many who are afraid of Saddam, who has also been called "The Butcher of Baghdad", a reputation that started to take shape as far back as 1959. This authorized film recreates Saddam's role in an attempt to assassinate the then prime minister of Iraq. The plot was uncovered and Saddam fled to Syria, but returned in 1963 when his party, the Bathas, seized power in a coup. The Bathas were then toppled but released in 1966 and was propelled into power two years later in another coup. Shortly after becoming president in 1979, the self-described sword of the Arab world executed 21 senior officials by firing squad for conspiring against the state. Also among the regime's first victims were Jews and Shii Muslims, hanged in public for spying. Communists have also been outlawed and many of them executed. A year after he became president, Saddam lived up to the Arabic translation of his name, "one who confronts", by marching his armies into Iran. Although he had hoped to make a quick grab of some disputed territory, the war lasted eight savage years. Before it was over in 1988, Saddam had been accused of using chemical weapons against Iran's soldiers and of firing missiles on Tehran and other cities. At the same time, Saddam was fighting sporadic rebellions inside the country by the Kurds, who were pressing for autonomy. Iraq provoked an international outcry when it was also accused of using chemical weapons against the Kurds. Until now, Saddam's most recent refusal to heed international pressure came in March when he hanged London-based journalist Farsad Basaf for allegedly spying. Relations with the West have suffered because of Iraq's human rights record and efforts to boost its military power this year. This latest drive earned Saddam the title "The Most Dangerous Man in the World". We hear now from a man who has been a longtime observer of Saddam Hussein. He is David Mizrahi, editor and publisher of the Mideast Report, a bi-monthly newsletter of Mideast affairs. David, is it fair to call Saddam Hussein "The Most Dangerous Man in the World", or, indeed, as the Israeli foreign minister today called him, a "Hitler"?

DAVID MIZRAHI, Mideast Analyst: In the world, I wouldn't say so, but he is the most dangerous man in the Middle East today definitely.

MS. HUNTER-GAULT: Why is that?

MR. MIZRAHI: You see, whereas the likes of Gadhafi and Hafa Assad were only threatening, the fact of the matter is that Saddam Hussein has indeed invaded another country, so he is not only threatening, he's actually achieving his aims, taking Kuwait since this morning, and who knows who the next country will be. He threatened to even seize the United Arab Emirits.

MS. HUNTER-GAULT: But what are his aims? I mean, you heard earlier in the program Sen. Boren say it was to occupy a power vacuum, that he wants to extend his influence and make himself the unchallenged leader of the Arab world, is this how you see it?

MR. MIZRAHI: Well, this is a fact, actually he has affirmed himself as the unchallenged leader in OPEC and consequently in the Arab world because the OPEC countries really are the richest countries in the Arab world. But more than that, I don't think he would like to be the leader only. He wants to grab land. Kuwait has always been claimed as a former Iraqi province. Kuwait has always been considered as an Iraqi province detached from Kuwait since its independence in 1961, and in fact, when Kuwait declared its independence in the summer of '61, Iraqi troops entered Kuwait to seize Kuwait, and only then when the British army came to the rescue has Kuwait been an independent country.

MS. HUNTER-GAULT: So you agree with earlier analysis in this program that he wants to extend his influence further into the Arab world?

MR. MIZRAHI: He wants his influence in the Arab world, he wants his influence in the Middle East, he wants his influence in oil affairs, and in other words, he wants also to write off all his debts to the oil rich Arab countries.

MS. HUNTER-GAULT: But do you think he would attempt to extend his influence by taking more territory beyond Kuwait?

MR. MIZRAHI: You see by Middle Eastern standards, grabbing land is a way to ascertain and to show the Arab world that you're strong. It's not in threatening and in talking. This way he has, if anything, he has shown Pres. Hafa Assad of Syria, his arch enemy, that he, Saddam Hussein, means business and Syria could very well be the next country.

MS. HUNTER-GAULT: Does he have the kind of popular support like the title "The Perfume of the Arabs" suggests, or in his own country is he seen as "The Butcher of Baghdad", or --

MR. MIZRAHI: He doesn't need popular support, you see. Kuwait is not a democracy. If he has the army and the intelligence behind him, that's enough, and I don't know if you've been to Iraq, it is a very tightly secure country where security is all over. I mean, I am fluent in Arabic. I couldn't talk to an Iraqi citizen in the streets of Baghdad.

MS. HUNTER-GAULT: Who does Saddam Hussein listen to? Does he march to his own drummer, or -- because I read that he doesn't have that many friends, that he's isolated, and that his advisers don't bring him bad news, is that the case?

MR. MIZRAHI: He is that kind of man. Actually his first cousin, who was minister of defense, Haralla's sister is married to Saddam Hussein, it so happens that all of the people around Saddam dies. They die either through execution, some sort of execution or they happen to fall from a helicopter or their helicopter just blows up in the sky. It happened with the general, the general who won the war, a war on the front with Geran and the spring of last year, Haralla, the defense minister of Iraq was blown out of his helicopter just by chance.

MS. HUNTER-GAULT: The world has alleged human rights violations, things that you've described in the country, they have condemned this action, and yet he's ignored the world in the past. Is that because he doesn't care, or as some have suggested, because he doesn't listen to people, he doesn't really understand what's happening in the outside world, what do you think?

MR. MIZRAHI: Because simply he doesn't care. Public opinion has no bearing whatsoever on his decision. He doesn't care about public opinion. More centrally, he doesn't care about the Arab League. And that's why, by the way, the Arab League could not condemn him and the Arab League is not going to condemn Iraq and like the Security Council here.

MS. HUNTER-GAULT: Given all that, what do you think is the best course of action for the United States particularly and for the rest of the world?

MR. MIZRAHI: I'm sorry to say, the only course of action is exactly what Saddam has ended.

MS. HUNTER-GAULT: What do you mean?

MR. MIZRAHI: I mean, no threaten. Threats have no bearing whatsoever on Saddam Hussein. The only way Saddam Hussein is going to change his position and his policy is when he sees the United States means business. Meaning business could be translated into an embargo or a blockade or an armed attack against Iraqi troops, I'm afraid to say. That's the only way. You are asking me if you want this man to change his policy, that's the way.

MS. HUNTER-GAULT: Well, David Mizrahi, thank you.

MR. MIZRAHI: Thank you. RECAP

MR. MacNeil: In other news today, Pres. Bush proposed a long- term cut in his military arsenal. In a speech delivered at the Aspen Institute in Colorado, he says he favors a 25 percent reduction in the armed forces by the end of 1995. But the President said the United States should maintain its B-2 bomber program and the Strategic Defense Initiative. Late this afternoon, the Senate voted to keep the bomber, but trim the budget for SDI by a billion dollars. Earlier this week, the House Armed Services Committee voted to eliminate both programs. Pardoned mercy killer Rozwell Gilbert said today he regretted murdering his wife. He called it an act of desperation. This morning he left a North Florida prison after serving 5 1/2 years of a life sentence. Yesterday Florida Gov. Bob Martinez granted him clemency because of poor health. Gilbert said he shot his wife to end her suffering from Alzheimer's Disease. The American Peace Corps worker who was kidnapped in the Philippines nearly two months ago was released today. Twenty-six year old Timothy Swanson of Cheyenne, Wyoming, was turned over to a Red Cross team in a rural area of the country. The U.S. embassy said he was unharmed and in good health. Swanson had been working in a remote village when he was kidnapped by Communist rebels. Good night, Jim.

MR. LEHRER: Good night, Robin. We'll see you tomorrow night with a four way about Iraq, the budget, and other things among the four top leaders of the Congress, Senators Mitchell, and Dole, Congressmen Foley and Michel. I'm Jim Lehrer. Thank you and good night.