Iraq is still in tact, but nothing else went the way Washington intended. If anything, Saddam is stronger today than he was before the rebellion started, say Pentagon and CIA analysts. The ethnic rebellion has been crushed. Instead of overthrowing the dictator, the Army and the party operatives have rushed to his defense. Once again Washington has misjudged Saddam’s staying power, assuming wrongly that no Arab leader could survive such a military drubbing. “Saddam let us kill a lot of soldiers he didn’t care much about,” a Republican congressional aide complained last week. “And we’ve let him take care of a lot of Shias and Kurds he has wanted to be rid of for a long time.” For George Bush, the options now are limited. He had ruled out military intervention to dispose the dictator. He is left embracing a policy he scorned before the war-giving economic sanctions a chance to work.

Saddam’s Army turned out to be far more loyal and efficient in crushing the rebellion than the administration anticipated. The Iraqi Army’s traditional mission has been to preserve the regime. Iraqi soldiers were more committed to defending their homeland from insurrection than fighting to hold on to Kuwait. Although many Iraqi soldiers are Shiite Muslims, they proved perfectly willing to kill their coreligionists in the south who rebelled against the Sunni Muslim minority controlling the government. Saddam also moved quickly to keep the Army happy and busy. He gave soldiers returning from Kuwait pay bonuses. The generals were kept preoccupied with fighting guerrillas. “It provided a good outlet for Saddam,” said a Pentagon analyst. “The Army’s energies could be focused on the rebellion rather than on him and the failed mission in Kuwait.”

Saddam is already scrambling to rebuild his military machine. The Army is consolidating its hold on northern Iraq, mopping up pockets of resistance. Relief workers fear soldiers are executing thousands of guerrillas and their supporters. “We may discover something close to the killing fields of Cambodia,” warns Marcel Roux, a French doctor who has just returned from Iraqi Kurdistan. Incredibly, given his defeat in Dester Storm, Saddam may try once again to threaten neighboring countries. Iraqi technicians have been picking through bombed-out nuclear, chemical and ballistic missile production facilities for equipment that can still be used. American spy satellites have spotted crews trying to repair damage to stationary Scud missile sites in western Iraq. Six mobile Scud missiles that survived the bombing, plus their launchers and trailers, have been sighted at a military base near Baghdad, intelligence sources tell NEWSWEEK. “They are salvaging everything they can and regrouping everything they can,” one intelligence official warned.

As a result, the White House is left hoping that as the country’s economy collapses, so will Saddam. Electricity and water run only sporadically. Food and medicine are short in supply. Much of Iraq’s light industry and consumer manufacturing that escaped allied bombing were shut down by the rebellion. Some 80 percent of Iraq’s refining capacity was destroyed. That means no fuel to transport crops to market or power mills to produce flour. Even under the cease-fire signed last week, the Bush administration won’t allow Iraq to rebuild as long as Saddam remains in power. Iraqi oil-production capability is largely intact. But the United Nations will demand that most of the country’s future oil revenues contribute to war reparations, and Washington hopes the coalition will hold.

The administration trusts that shortages will cause two important constituencies to turn against Saddam: Iraq’s middle class and the military. Like any good pork-barrel practitioner in Congress. Saddam has always coddled the middle class with goods and services. “They will have to be bought off after this war,” says a State Department analyst. “But there’s less money to do it now.” Saddam’s generals, who have been shuttling divisions north and south to quell the rebellion, are running out of gasoline. The embargo will deny them military hardware and spare parts. “To rule even a prosperous Iraq, Saddam needed a happy army,” said this official.. “But the Army was happy when it had toys.” Administration officials believe they now have a formula for ousting Saddam. But so far Bush’s postwar policy has had a “Cinderella” quality to it, says Brookings Institution analyst Yahya Sadowski. “If you wish hard enough,” he says, “the fairy godmother will come and solve all your problems.” It will take more wishful thinking to make Saddam go away.