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The United States will bring home the staff of its beleaguered embassy in Kuwait if Iraqi leader Saddam Hussein keeps his promise to free all foreign hostages, ending the mission's dramatic defiance of the Iraqi occupation, the State Department said Friday.

Although the Bush administration insisted that the action would not represent a concession, it would amount to tacit compliance with Baghdad's demand for an end to diplomatic representation in the tiny emirate that Iraq now claims as its 19th province.

Coming a day after Saddam ordered the release of thousands of foreign hostages in Iraq and Kuwait, including about 900 Americans, the decision on the U.S. Embassy appears to be another step back from the brink of war in the Persian Gulf.

"We think we've made the political point -- that we believe we had the right to keep it open," White House spokesman Marlin Fitzwater said in Caracas, Venezuela, where President Bush was concluding a South American tour. "The personnel there have performed courageously at great personal sacrifice, and they deserve to get out when the others get out."

At the very least, the withdrawal of U.S. Ambassador W. Nathaniel Howell and his staff would remove a source of friction between Washington and Baghdad and eliminate the possibility that an incident at the embassy might cause a military confrontation.

Just as Saddam has said that he no longer needs hostages to deter attacks on Iraq, the Bush administration insisted it would have no further need to maintain the embassy once the Americans have been released. In effect, both Washington and Baghdad appear to be taking steps long demanded by the other while refusing to characterize them as conciliatory moves.

"With the legitimate government of Kuwait temporarily residing in Taif (Saudi Arabia), the principal function of our embassy in Kuwait City has been to work for the safe release of all Americans in Kuwait," State Department spokeswoman Margaret Tutwiler said.

"If Saddam Hussein follows through on his commitment to let all Americans depart from Kuwait, the embassy will have fulfilled its major remaining task," she said. "Thus, we expect that Ambassador Howell and his staff would depart after all Americans have departed."

Ms. Tutwiler insisted that the embassy technically will remain open, awaiting the return of the emir and his exiled government. But she said that no U.S. government employees would remain on the premises to keep the doors open or the flag flying.

Bush did not comment on the embassy situation, but Fitzwater cautioned against reading too much into the decision.

"Allowing the embassy staff to leave is the right thing to do," he said. "But it doesn't have greater political meaning. . . . The fact is there are no deals. We are not changing that policy in any way. I'm assured by all our people there is no quid pro quo."

Despite the conciliatory appearance of the hostage release and embassy decision, one senior White House official, speaking on the condition of anonymity, said that the proper assessment of their combined effect on the prospects for war "can go either way."

The absence of American hostages and diplomats, however, clearly would remove a complicating factor from any decision to launch an attack.

"Our purpose is to maintain a steadfast course," the White House official said. "No change in our policy. No change in our attitude."

Iraq ordered all embassies in Kuwait to close Aug. 24, asserting that Kuwait had been annexed to Iraq and no longer existed as an independent country. At the time, the United States, Austria, Great Britain, Denmark, Finland, France, Italy, Spain, Sweden, the Soviet Union and Germany vowed to defy the order.

The day after the deadline passed, Iraqi occupation authorities surrounded the embassies with troops, preventing diplomatic personnel from entering or leaving and cutting off water and electricity. Eventually, all Western nations except the United States and Britain abandoned their missions.

Ms. Tutwiler said that the Iraqi government has said that it will announce today the conditions under which the foreigners will be released. She said that Joseph Wilson IV, the U.S. charge d'affairs in Baghdad, had urged Iraqi officials to waive most formalities, permitting Americans and other foreigners to go directly to the airport and board a flight out.

The U.S. government said that it would charter Iraqi Airlines planes to carry Americans to Amman, Jordan. If Iraqi planes are not available, Ms. Tutwiler said, other aircraft would be provided.

Ms. Tutwiler said the State Department was arranging for Iraqi Foreign Minister Tariq Aziz's visit, probably Dec. 17. But a date for his meeting with Bush won't be set until Iraq sets the date for a subsequent meeting between Secretary of State James A. Baker III and Saddam in Baghdad, she said. She declined to explain why the administration was setting such a condition.

Interviewed by ABC Television's "Nightline" program, the Iraqi foreign minister said of the diplomats in Kuwait, "If they leave, they will be given all the guarantees they are asking for. The building would be secure. . . . We take the responsibility for that, you see."

As for Americans who have been in hiding, "They can appear, and leave," Aziz said.

He said Iraq still was considering the State Department's proposal that Baker's visit to Baghdad should take place Dec. 20, 21 or 22, or else Jan. 3.

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