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President Bush was confident Saturday that he was on the verge of either a diplomatic or a military victory as Iraqi leader Saddam Hussein neared the deadline to begin pulling his troops out of Kuwait.

With U.S. and other allied forces stepping up their bombing campaign and poised to begin a massive land offensive to liberate Kuwait at any time, Bush pressed his military advantage in the tense war of nerves with Hussein.

The president met with his top national security aides at the presidential retreat at Camp David, Md., one day after he gave Hussein an ultimatum to notify the United Nations of his intentions and begin pulling out his troops from Kuwait by noon Saturday (11 a.m. Chicago time).

After Bush`s ultimatum, Iraq responded quickly with a new agreement with Moscow, one closer to U.S. terms, but it was uncertain whether Hussein would comply with Bush`s demands.

Saturday at a Moscow press conference, Iraqi Foreign Minister Tariq Aziz said his government would accept the new Soviet peace plan, which calls for Iraqi forces to withdraw from Kuwait within 21 days. Aziz did not address the Bush ultimatum.

Wielding the threat of a major battlefield victory over Hussein, the president pressed the allies` military advantage to wring more concessions from Baghdad, though they still may be not enough to avert a bloody ground assault.

”The coalition will give Saddam Hussein until noon Saturday to do what he must do-begin his immediate and unconditional withdrawal from Kuwait,”

Bush said Friday morning.

Later in the day, Radio Baghdad broadcast a response from the Iraqi Revolutionary Command Council that dismissed Bush`s ultimatum as ”shameful” but did not otherwise respond to it. And on Saturday, the radio said in a commentary that ”Iraq will reject the slavery regime which America, enemy of people, wants to impose on the World.”

Stepping up the pressure against Hussein, White House spokesman Marlin Fitzwater said Iraq`s accord with Moscow would not delay a ground offensive to liberate Kuwait. ”Our deadline is noon tomorrow, and our plan is the marker to meet,” Fitzwater said. ”Our attitude is if they can meet the Russian plan, they can meet the coalition plan.”

By spelling out the allies` stringent requirements to avert a ground war, Bush seemed determined to humiliate Hussein and defeat him overwhelmingly, while the Soviets appeared to want to allow the Iraqi president at least some vestige of face-saving.

But with Soviet President Mikhail Gorbachev placing his prestige on the line, the pressure also increased on Bush to give a little in his demands to prevent a rupture in U.S.-Soviet relations and to end the war without a major ground offensive.

After extensive consultations late Thursday and early Friday, Bush still was holding the allied coalition together, though it appeared tinged by shades of difference. France`s initial response to the Soviet-Iraqi deal, for example, was more optimistic than Washington`s.

Bush announced his ultimatum to Hussein in a concise, four-minute statement from a lectern in the Rose Garden. White House officials later provided details of the American demand: Iraqi troops must leave Kuwait City and their front-line emplacements within 48 hours, and the Iraqi army must be completely out of Kuwait in one week.

The short timetable was designed to weaken Hussein militarily by forcing him to leave some of his arsenal behind.

Exchange of prisoners of war also must be held within 48 hours, Fitzwater said, and Iraq must defuse and dispose of all land mines and any explosive booby traps in Kuwait.

While the U.S. assured Iraq that its retreating forces would not be attacked by the allies, it also demanded that Baghdad restrict all flights over the war theater to those needed to transport troops back to Iraq. American officials also insisted that Iraq release all Kuwaiti prisoners and stop all repression against Kuwaiti citizens and destruction of Kuwaiti property.

Within hours of Bush`s statement, the Soviets-presumably with Iraq`s acquiescence-came back with their own announcement of a significantly new agreement on terms much more attractive to the U.S. than those announced Thursday night.

The Soviet counterproposal acceded to the United Nations resolution calling for an immediate and unconditional withdrawal, but it sought to triple the U.S. pullout timetable and give Iraq 21 days to withdraw.

It wanted the U.S. deadline for Iraqi troops to leave Kuwait City doubled to four days, and the Soviets suggested three days instead of two days to exchange POWs.

The latest Soviet-Iraqi agreement fine-tuned the Thursday night accord. The latter version said the withdrawal would begin one day after a cease-fire takes effect and would be under the supervision of a peacekeeping force determined by the UN Security Council.

But, more importantly, the new Soviet-Iraqi agreement still calls for rescinding all 12 Security Council resolutions, including one that provides for compensation to Kuwait, upon a full pullout, a condition the U.S. appeared to reject flatly.

With the stakes rising and the deadline dwindling to hours, Bush and Gorbachev accelerated the raging pace of diplomacy. Friday morning, for the second straight day, they discussed both plans by phone, this time for an hour and 15 minutes.

Secretary of State James A. Baker III and Soviet Foreign Minister Alexander Bessmertnykh also were in close touch throughout the negotiating process, speaking by phone overnight and again Friday morning.

For the first time since the war began, the U.S. held formal diplomatic contacts with Iraq, summoning the Iraqi charge d`affaires to the State Department around midday Friday to present the allies` new demands.

In a larger sense, the U.S. was negotiating with Baghdad through Moscow, with Gorbachev and Bush acting, in effect, as good cop and bad cop, trying to persuade Hussein to accept the untenability of his position before the full weight of allied military might came down hard on him and his nation.

”Baghdad clearly understands that it must count every minute,” said Vitaly Ignatenko, Gorbachev`s chief spokesman, outlining the latest Soviet proposal.

In setting the noon deadline, Bush was heeding the counsel of his military advisers, who fear the allies could lose their edge and unwittingly help Hussein improve his situation on the ground with a cease-fire that the Iraqis could use as a stalling tactic to resupply or reposition their troops. The president continued to carefully avoid alienating or humiliating Gorbachev, thanking him for his efforts several times but also insisting that the endgame of this struggle will be on U.S., and not Soviet, terms.

Bush`s diplomatic counterthrust was met with approval on Capitol Hill, where key members of both parties supported his ultimatum. ”I haven`t heard as clear a deadline since Gary Cooper in `High Noon,` ” said Sen. John Breaux (D-La.).

Senate Minority Leader Bob Dole (R-Kan.) said Bush is ”absolutely right to drop this ultimatum on Saddam: No more stalls, no more doubletalk-it`s time for action.”

”Saddam Hussein has already lost this war,” said Rep. Les Aspin (D-Wis.), chairman of the House Armed Services Committee. ”The Iraqi army . . . is on the verge of collapse. This is not the time for us to lose our nerve and compromise on the UN Security Council resolutions.”

Already, Hussein has backed off from most of his early, ”non-negotiable” demands. He no longer demands linkage to the Arab-Israeli conflict, abandoning his Palestinian supporters.

He dropped his insistence that Kuwait is a permanent part of Iraq and, the Soviets said, Hussein recognizes Kuwaiti sovereignty and its right to return the exiled royal Sabah family to power.

The Iraqi president also has dropped all reference to the withdrawal of allied troops, apparently accepting that he has no say in how long they stay in the region. He dropped a demand that the withdrawal be supervised by countries not involved in the conflict, conceding it could be monitored by anyone selected by the UN Security Council.

Most important of all, for the first time Iraq has agreed to leave Kuwait promptly, one day after a cease-fire takes effect.

Most differences in the physical terms of the withdrawal probably could be worked out if there is political will in Washington and in allied capitals. Bush`s noon ultimatum, for instance, does not necessarily mean a ground offensive would begin this weekend.