Saddam is the most immediate threat. Despite his crushing defeat two years ago, the Iraqi dictator is in such a strong position that even a barrage of million-dollar U.S. cruise missiles on June 27 did him little, if any, real harm. Most of the 23 Tomahawk missiles hit their target, the Baghdad headquarters compound of Saddam’s General Intelligence Organization, the dreaded Mukhabarat. Three missiles went astray, killing eight civilians. Americans supported the attack; in a NEWSWEEK Poll, 71 percent of the respondents said Clinton did the right thing, while only 20 percent disapproved. The president claimed that “we did in fact cripple the Iraqi intelligence capacity, which was the intent of our action.”

But senior administration officials said Clinton badly overstated the success of the raid. The Mukhabarat is only one of six security and intelligence organizations that are “critical to the survival of the regime,” said Iraq-watcher Michael Eisenstadt of the Washington Institute for Near East Policy. Three of the others-the Special Republican Guard, the Presidential Bodyguard and the mysterious Special Security Organization-are more important to Saddam. Intelligence sources said the damage inflicted on the unoccupied Mukhabarat headquarters is unlikely to achieve even the minimal U.S. goal of disrupting Iraq’s ability to carry out terrorist operations like the thwarted attempt to kill George Bush in Kuwait last April.

Saddam’s conventional military power has recovered sharply since his defeat in Desert Storm. He is restructuring his army into a smaller but better-trained force (chart), one that over the long term should be more capable than his prewar army. Despite being hampered by allied “no fly” zones, Saddam has gained the upper hand over Shiite Muslim rebels in southern Iraq while in the north his forces are strong enough to overrun the Kurdish rebels whenever he wants to. Washington has quietly consulted key allies, notably Britain and France, on what the Western response should be to such a move by Saddam. The consensus, according to a source involved in the discussions: “We drop a lot of iron"meaning there would be allied airstrikes but no commitment of ground troops.

Eventually, Saddam’s new-model army could take him farther afield. Early last year, the Bush administration war-gamed a scenario in which Iraq invades Kuwait and Saudi Arabia in the late 1990s. Pentagon planners calculated that the United States would have to respond with four or five army divisions, three carrier battle groups, a Marine expeditionary force and 19 air force squadrons. The projected outcome: Washington and its allies win again, but only after a 54-day struggle.

Already Iraq has restored much of the military manufacturing capability it possessed before the war. At least limited production of many conventional weapons has been resumed, including the Soviet T-72 tank, which the Iraqis assemble using parts salvaged from tanks damaged in the war. Production facilities for even deadlier weapons were destroyed by allied bombing or by subsequent United Nations inspections. But Rep. Tom Lantos, a member of the House Foreign Affairs Committee, charges that “Iraq is hellbent on redeveloping and restoring its chemical, nuclear and biological weapons capabilities.” Some U.S. and U.N. officials think Iraq may still be concealing secret facilities for producing the weapons. Even if such facilities don’t exist, the CIA has estimated that, once U.N. sanctions and inspections are stopped, Iraq could produce nuclear weapons within five to seven years, chemical weapons in less than a year and biological agents “in a matter of weeks.”

_B_Lots of sanction-busting:_b_Iraq can draw on resources of its own, including a skilled population, to produce those weapons. The only way to stop the process, or even slow it down, is to keep the entire nation under a permanent technological quarantine. That has been tried only once before, against Germany after World War I, and it didn’t stop Hitler from rearming. The U.N. sanctions against Iraq won’t last much longer; restraints on the sale of Iraqi oil may have to be lifted soon. Already, there is a great deal of sanction-busting across Iraq’s increasingly porous borders. Even archenemy Iran is suspected of selling oil for Baghdad and of shipping technology to Iraq. “Their hatred of the West in this case is stronger than their hatred of each other,” says a Pentagon official.

Clinton’s dilemma in the gulf arises principally from two misjudgments by his predecessor. First, Bush stopped the gulf war before Saddam’s regime was fatally damaged. Then, having incited the Shiites and Kurds to rebel, he failed to support them decisively. Since then, the Americans have been stuck with a major military effort in the gulf. To police the no-fly zones, allied warplanes have already flown more combat sorties over Iraq than coalition forces flew during the war. After the cruise missiles were fired at Baghdad last week, Washington took the precaution of ordering two aircraft carriers, the Roosevelt and the Eisenhower, to the region. Containment of both Iraq and Iran will extend such commitments into the indefinite future, occupying a large portion of U.S. military power. A recent study by the Congressional Research Service reports that to keep one carrier continuously on station near the gulf would require a total force of six to nine carriers, to allow for rotation and refitting. The Clinton administration wants only 10 carriers for all its worldwide responsibilities. For the pared-down forces of the post-cold-war era, containing both Iraq and Iran will be a serious and risky task.

Before the war Tanks 5,800 Armored Personnel Carriers 5,100 Artillery 3,850 Aircraft 3,850 Soldiers 955,000 At the cease-fire Tanks 2,100 Armored Personnel Carriers 5,100 Artillery 1,200 Aircraft 200 Soldiers 300,000 Today Tanks 2,200 Armored Personnel Carriers 2,500 Artillery 1,650 Aircraft 300 Soldiers 400,000

(SOURCE: U.S. DEPT. OF DEFENSE, ANTHONY CORDESMAN, WASH. INST. FOR NEAR EAST POLICY)