BAGHDAD — A YEAR after its invasion of Kuwait last Aug. 2, Iraq does not show any outward remorse.The leadership here seems determined to adhere to the political course that has provoked international hostility against Iraq. President Saddam Hussein maintains he has pursued the right path in the service of Arab national interests. He repeatedly tells his people that they should not judge the result of the war in military terms, but view it in "historical perspective." "In political terms, you have won the battle," he said during a series of televised meetings with groups of Iraqis. To Western observers, Saddam's claims seem delusional, given the destruction of Iraqi infrastructure, the crippling of its military power, and the embargo that is bringing Iraq to the brink of famine. But political observers here, including some of his most ardent critics, assert that the Western campaign against him is increasingly lending credence to his argument that Iraq is being made to pay for refusing to bow to American domination and for trying to lead an Arab renaissance. "The West is certainly not providing a model for the Iraqi people by advocating democracy and destroying our humanity," says Saed Naji Jawad, a political scientist. Information about the war, and the decisions that led up to it, is not widely available here. But after dozens of interviews with high-level officials and observers, it's possible to piece together how the inner circle of the ruling Baathist party sees the war. In their view a confrontation with the West - at least a political one - was unavoidable, in light of Saddam's attempt to lead the Arab world. Saddam's pan-Arab ambitions have been clear since the late 1970s, when Iraq led the so-called rejectionist front against Egypt's peace treaty with Israel. Iraq also controlled many Baathist organizations in Arab countries and saw itself as the capital of Arab revolution against "pro-Western reactionary regimes." But the war with Iran forced Iraq to seek money and political support from Arab nations and put a stop to supporting opposition parties in other states. After the war, however, the Iraqi leadership renewed its bid to lead the Arab world. Baghdad found the Gulf states pursuing what it saw as a pro-Western oil policy, which kept prices low. Iraq needed increased oil revenues to pay for reconstruction after the Iran-Iraq war. It asked the Kuwaitis and Saudis to forgive the Iraqi debt, which Iraq says they refused to do. Baghdad also resented the Gulf states' reluctance to link oil prices with Arab political interests. The Iraqi leadership tells its elite that between the end of 1988 and the first months of 1990 it allegedly discovered that the US and Saudi Arabia were working together to encourage Kuwait to pursue a oil-price policy that would undermine the Iraqi economy. At the Arab summit called by Iraq to thwart this apparent conspiracy, held in Baghdad in the last week of May 1990, Saddam got more than he wanted. The Gulf states and Egypt were compelled to accept resolutions stipulating that oil sales to the West should be determined by political considerations. But Saddam's diplomatic effort did not work. Iraqis now say that Kuwait, encouraged by Saudi Arabia, did not give up its price policy, and continued "provoking the Iraqi leadership." Saddam decided to stop the Kuwaiti ruling family. The goal of the invasion, as party members are now told, was to crush the ruling family. Judging by accounts here, Iraq's historic claim to Kuwait was only invoked to legitimize the Iraqi military move and arouse Iraqi national sentiments. Several Iraqi intellectuals interviewed here, from inside and outside the party, say now that Saddam thought that by controlling Kuwait and the oil, he could force the US to deal directly with him instead of trying to undermine him through what he viewed as Washington's "clients" in the region. Senior Arab officials who were in touch with Saddam before the war say that he did not expect Egyptian President Hosni Mubarak to lead the Arab campaign against Iraq. Saddam's theory was that Mr. Mubarak could be contained. He also expected the Soviets and the French to oppose the war. Perhaps Saddam's most crucial miscalculation concerned Iran. In a meeting with representatives of Arab trade unions two weeks ago, Saddam claimed that Tehran had not only promised him to defend Iraq if attacked but that Iranian officials had privately expressed support for the invasion. Now Saddam calls Iran "the poisonous dagger." According to the same senior Arab officials, up until 48 hours before the allies attacked Baghdad, Saddam was confident that there would be no war. Once war started, Saddam counted on widespread upheaval against the countries that had joined the alliance. "He thought that if Iraq could stand up to the West for more than six days [longer than the period it took Israel to defeat the Arab world in 1967], the Arab masses will rebel against the pro-American governments," recalls an Arab Baathist who met with Saddam during the war. After his withdrawal Saddam seemed ready to take conciliatory steps to reintegrate his country into the international community. But over the last few weeks, Saddam appears to have revived his pan-Arab nationalist claims. According to well-placed Iraqi sources, Saddam compares the result of the war with that of the outcome of the 1956 intervention against Egypt. In Saddam's view, according to the same sources, former Egyptian president Gamal Abdel Nasser was defeated militarily but won a political victory by surviving and by pursuing his struggle against Western interests.