THE ``step-by-step'' approach to the Gulf crisis checked Saddam Hussein's further military advance. It will continue to work to the advantage of the international community, however, only if a regional, Arab-led solution comes next. Otherwise, Saddam Hussein will hold his own, and costs to regional and outside powers will become incalculable. Despite the unprecedented speed with which the United States-led military and economic sanctions against Iraq have become international ones, Saddam Hussein still represents a considerable threat to the region. He will not be easily dislodged from Kuwait and is rapidly becoming the champion of Arab nationalists and - more surprisingly - of Muslim fundamentalists. This support is an unanticipated result of the growing outside military presence in Saudi Arabia, a country whose ruler claims the title of ``Servant of the Two Holy Places,'' and in neighboring states. The next step against Iraq must allow Saddam an exit short of total defeat. Arab and Muslim states must take the lead in shaping this option if it is to succeed.
A military solution carries unpredictable risks to civilians and the possibility of a widening conflict involving Israel. Moscow's efforts to contain ethnic violence in the southern, principally Muslim, regions of the USSR, though only a partial comparison, show the limitations of outside intervention. Even for Egyptians, who are by no means ``insiders'' to the Arabian Peninsula, the memory of intervention in North Yemen in the 1960s suggests limitations to the use of troops, especially in populated areas such as Kuwait.
Saddam Hussein's aggression against Kuwait affects the entire world, but the international community must turn to the Arab states themselves, possibly acting through the Arab League, to achieve regional stability. Action by the Arab states may require patient diplomacy and protracted negotiation, but it offers the best opportunity for lasting results.
The massive outside military buildup is already intensifying an arms race in the region, as countries strive for military ``balance.'' The United States has indicated a willingness to supply more arms to Saudi Arabia and Egypt, and other countries are certain to find willing suppliers as well.
As for economic sanctions, the blockade against Iraq is unlikely to bring about its defeat in the near future. As the crisis is prolonged, popular protest against the intervention of outside powers, and against Arab and Muslim states cooperating with them, will be directed at many governments in the region. Throughout the 1980s, US allies in the Gulf insisted that American forces maintain a low profile out of concern for the political consequences of such a presence.
Some US policymakers shared these concerns and saw a long-term danger in Washington's being perceived as the supporter of conservative, inflexible regimes. Foreign domination in the Arabian Peninsula led to political violence in the past and could do so again.
Saddam realizes that his appeals to social justice, Islamic values, and Arab unity, cynical as they sound to outsiders, draw on powerful undercurrents throughout the region. Muslim fundamentalists, for example, harbor no illusions about Saddam's commitment to Islam. North African, Egyptian, Yemeni, and Afghan fundamentalists initially sided with Kuwait but shifted their support to Iraq after foreign intervention. There is an irony in the support for Iraq from Arab nationalists: They deplore Israel's seizure of Arab land but accept Iraq's seizure of Kuwait.
Saddam's willingness to stand up to the US and Israel overrides such contradictions and carries a powerful appeal. A recent poll in Israel's occupied territories indicates that 62 percent of the population support Iraq's leader. Support for Iraq in Jordan, especially if King Hussein is obliged to close Aqaba to Iraqi trade, threatens major unrest. Demonstrations in other states remind Arab governments of their vulnerability; they know that such demonstrations may spread.
Saddam Hussein, an improbable supporter of democracy and social justice, can rely upon popular dissatisfaction with Arab governments throughout the region. Rumors circulating among informed Arab observers suggest that Saddam hopes a referendum in Kuwait will work against the return of its monarchy. Only 38 percent of Kuwaitis are citizens, and any referendum involving the country's long-term residents, including 350,000 Palestinians, is unlikely to favor the Al Sabah monarchy, liberal as it has been. No Gulf Arabs want Iraqi rule, but many would welcome an accelerated pace of political change. Foreign intervention is seen as setting back the clock on such a possibility.
As uneven as progress toward an ``Arab'' solution may appear, there is no viable alternative for a lasting settlement. Without such a solution, the unprecedented US-Soviet cooperation over the Gulf crisis, combined with other international actions, will take on the aura of a North-South, or West-Arab confrontation, replacing the conflict between East and West.
Few Middle Eastern conflicts can be reduced to a zero-sum game, and Iraq's seizure of Kuwait is no exception. A settlement that leaves an exit for Saddam Hussein is neither appeasement nor a reward for aggression. It offers greater potential for regional stability than further military initiative, the consequences of which are unpredictable. A short-term military victory could become a long-term disaster.