Saddam Hussein was the ghost at the banquets last week, diverting the attention of both the old Administration and the new. All the galas in Washington could not blot out the uninvited presence of the defiant Iraqi dictator. For the millions watching it all on television, images of Saddam and the U.S. air strikes in Iraq mixed with those of George Bush and Bill Clinton in rapid sequence, as if part of the same show.

Before dawn on Inauguration Day, Brent Scowcroft, the outgoing National Security Adviser, strode up the stairs to Blair House to deliver his final briefing to the President-elect. It focused, naturally, on Iraq. At the Pentagon, General Colin Powell, Chairman of the Joint Chiefs of Staff, made a similar presentation to incoming Secretary of Defense Les Aspin. The sessions amounted to a formal hand-off; what to do about Iraq is up to Clinton and the national-security team he is assembling.

Two years after Operation Desert Storm, Saddam is still the bogeyman who will not go away. The new Administration will be examining him with fresh as well as relatively inexperienced eyes. None of Clinton's key foreign policy people -- Aspin, Secretary of State Warren Christopher, CIA chief R. James Woolsey, National Security Adviser W. Anthony Lake -- are Middle East experts. When they begin their Iraq policy review, they will have to rely on the holdover Bush specialists like Dennis Ross, former director of policy planning at State, and Edward Djerejian, Assistant Secretary of State for Near Eastern and South Asian Affairs.

Clinton's State and Defense departments are barely functioning yet, and Saddam will probably not allow them much start-up time. Having upstaged the outgoing U.S. President, the Iraqi leader has seized the initiative by offering Clinton a "cease-fire" in the no-fly zones in northern and southern Iraq that he has been challenging. It was, said the Iraqi press agency, an "expression of good intention."

Whatever its intentions, Baghdad reinforced its mercurial reputation late last week by opening fire on three U.S. warplanes on patrol in the southern no-fly zone. (All three returned safety.)

Iraq is not in a strong bargaining position. Its military was shattered by the war, and the country is still under tight economic sanctions ordered by the Security Council. But it may turn out that by goading Bush to bomb targets in Iraq, Saddam has improved his situation. He has used the attacks to show his toughness and the Western coalition's weaknesses.

For a man as callous as Saddam, the losses of a few planes and missile batteries, a factory and a total of 50 casualties are pinpricks. But they were enough to unsettle America's allies. France, Britain, Russia, Syria, Turkey, Egypt and Saudi Arabia all expressed concern.

The one thing the new President seemed to know about relations with Iraq last week was the importance of continuity. "We are going to adhere to our policy," he said. "We're going to stay with our policy. It is the American policy, and that's what we're going to stay with."

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