`THE instinct to rely on a military solution prevailed,'' the Soviet Union stated yesterday, expressing a hint of bitterness over the refusal of the United States-led coalition to accept a Soviet-mediated peace plan for the Gulf conflict. ``The Soviet Union expresses regret that a most realistic chance to secure a peaceful outcome of the conflict and achieve the goals set by the United Nations Security Council resolutions without further casualties and destruction has been passed up,'' said an official statement. The Soviets insisted, as President Mikhail Gorbachev did on Saturday in a last-minute round of personal diplomacy with numerous coalition leaders, that the differences between the Soviet plan and the coalition terms ``were not too wide'' and could be resolved within the UN. ``It is still not to late to do this,'' the Soviets said, calling for the Security Council to take up the matter. Even so, the Soviets show little evidence of pushing for UN action without the backing of the Western powers. Indeed, Soviet officials have gone out of their way to emphasize that the start of the ground war will not lead to a split in Soviet-American relations. ``Our relations have a very broad foundation,'' Soviet presidential spokesman Vitaly Ignatenko commented to reporters Saturday, when asked whether there would be any change in US-Soviet ties. He clearly placed the bulk of the responsibility for failure at Iraq's door. ``Today Iraq has lost this chance, to make use of this goodwill,'' he said late Saturday night, after the expiration of the coalition's deadline for Iraqi agreement to their terms for withdrawal. ``Not only during these days but during these past months, this opportunity was available to Iraq.'' Even though Soviet diplomacy fell short of success, Soviet officials privately express confidence that they gained important ground as a result. The US appreciates the Soviet peace bid, says an informed official. ``Our diplomatic activity must be appreciated by the Arab world also,'' he says. Perhaps most important, the ``diplomatic prestige that President Gorbachev has gained will strengthen his position at home,'' the official says, ``which is good for the West as well.'' The official was clearly referring to heavy pressure from conservative Communists who have been critical of what was viewed as Soviet support for Western aggression and the widely expressed fear that Soviet diplomacy had been reduced to blind support for the West. Until the last moments, the Soviet government held to the view that the gap between their six-point plan, to which Iraqi Foreign Minister Tariq Aziz gave his consent, and the coalition ultimatum was not unbridgeable. But Soviet analysts insist there are no grounds to talk about a ``split'' between the US and Soviet Union. ``Surely there is some resentment but the most essential thing for us now is to keep good relations with the US,'' says Vitaly Naumkin, deputy director of the Institute of Oriental Studies, the think tank formerly headed by Yevgeny Primakov, the key Soviet negotiator in the Gulf crisis. ``We have some emotions, but we should not allow these emotions to be expressed, to say the Americans made a mistake.'' Everything depends now on how the war itself goes, he says. If the war is long, with heavy casualties, if the coalition partners enter into Iraq itself, then the situation will change for the worse. ``Then maybe something will be said about those last minutes of diplomatic activity.'' Though Soviet officials clearly felt the deal reached with Mr. Aziz was sufficient, they acknowledge that there were grounds for Washington and others to doubt Iraq's intentions. Speaking before the ground attack commenced, Mr. Ignatenko lamented that the ``Iraqi regime'' had not taken any clear steps to show its willingness to withdraw. ``We don't see these actions,'' he said. ``We see other things. We see from high above the burning oil.'' ``It is absolutely obvious to all of us, to Soviet public opinion, that if Saddam Hussein had really wanted to end the war, he would have declared he was ready to withdraw at a specific time, even if he had declared some other schedule [for withdrawal],'' Mr. Naumkin commented. If Saddam had done so, Naumkin says, it would have made credible the Iraqi agreement to withdraw and put pressure on the coalition. ``It would have been difficult for the Americans to reject.'' Although he believes the Soviet terms were tough enough, Naumkin lends support to Western suspicions that Iraq was seeking to extend the withdrawal process in order to block the restoration of the Kuwaiti government and to implant a regime more favorable to them. ``The main thing for Iraq to save face was to change the government of Kuwait,'' Naumkin says. ``If not, what was the purpose of the adventure?'' Soviet officials also accept Western concerns that Aziz did not have clear authority to talk for Saddam Hussein. ``Tariq Aziz is afraid of saying a word which will displease Saddam Hussein,'' says Naumkin, who has been close to the talks. ``It is not the kind of government we are used to dealing with.'' -PATHNAME- /usr/local/etc/httpd/plweb/DBGROUPS/paper/database/tape/91/mar/week10/osneid.