News ANALYSIS : 2 Sides Trade War Talk for Softer Tone : Policy: The shift comes after weeks of tough rhetoric from the U.S. and Iraq. While neither has offered concessions, they have displayed a willingness to talk.

WASHINGTON — After nearly four weeks of headlong escalation in the Persian Gulf crisis, the Bush Administration and the regime of Iraqi President Saddam Hussein now appear to be trying to muffle the rumbling drums of war.

The White House on Sunday endorsed an effort by U.N. Secretary General Javier Perez de Cuellar to mediate a peaceful resolution of the looming confrontation. Hussein has traded his military uniform for a Savile Row suit and toned down his rhetoric. And American officials who last week were talking about massive military strikes are now stressing the possibility of a compromise without combat.

The two sides are still miles apart, but the inflamed rhetoric and threats that have marked the gulf crisis since Iraq’s Aug. 2 invasion of Kuwait have, at least for now, been supplanted by conciliatory overtures. After three weeks of threats of war, there appears to be a tentative groping for peace and the first hints of a dialogue over what shape that peace might take.

Washington and Baghdad now almost seem to be competing to be seen as the party more committed to a diplomatic solution, although fundamental U.S. and Iraqi positions have not yet changed. Washington insists that Iraq must remove its troops from Kuwait and free all foreign hostages before any settlement can be discussed. Baghdad demands that U.S. forces must leave to allow an “Arab solution” to the region’s problems.

But while neither side has offered concessions, the emphasis on a willingness to talk represents a significant shift, making a diplomatic solution at least conceivable. One of the first steps in that direction will take place Thursday, when the secretary general meets with Iraqi Foreign Minister Tarik Aziz in Amman, Jordan, for “a full exchange of views on the crisis.”

The Iraqi ambassador to the United States, Mohammed Mashat, said Sunday that Iraq had “always” been interested in negotiations and in fact had been the first to make a substantive offer.

Aziz said on American television Sunday, “If Americans and other parties involved do not resort to a war of aggression, if they are ready to talk, whether it takes a short time or a long time, we will reach an agreeable settlement to this present situation.” He added, “We have not closed the door to any constructive ideas.”

And Hussein himself, in a couple of ham-handed attempts at presenting a more benign face to the world, appeared late last week to be seeking a resolution short of war with the United States, which inevitably would be a deadly affair.

White House National Security Adviser Brent Scowcroft said Sunday that once Iraq agrees to withdraw from Kuwait and surrender the hostages, “We’re prepared to talk about anything.

“I can see a peaceful way out of it,” Scowcroft said in a television interview from Kennebunkport, Me., where President Bush is vacationing. “Saddam Hussein must now see he’s facing overwhelming world opinion. He is casting about for a way out of the box in which he finds himself.”

Bush, too, must find a way out of a corner, American analysts and Arab diplomats say. The President embarked upon a massive military buildup in the region that has sent world financial markets into wild gyrations and terrified the American public with images of soldiers preparing for a poison gas attack. He called up the military reserves for the first time in 20 years.

But now a conscious effort appears to be under way to put the brakes on a dizzying series of events that for all appearances have brought the nation to the brink of war.

A senior Administration official said late last week, “Sometimes I get the feeling we’ve lost control of the situation. It’s moving too fast for us to keep up with.”

Said Clovis Maksoud, who represents the 21-member Arab League at the United Nations: “Most outside parties are trying to defuse the crisis to give the diplomatic negotiating process a chance. For the moment, the world wants a breathing space from the escalating tension. If it continues on this pace, any little incident can lead to an eruption.

“The next four days are crucial,” Maksoud continued. “For the first time I am no more consumed by anxiety about war. This coming week is crucial to see whether the collision course is reversible or not. At this moment, I’m optimistic that it can be reversed.”

British Prime Minister Margaret Thatcher and Egyptian President Hosni Mubarak were less sanguine about the prospects for peace. Both said Sunday that they could foresee no diplomatic solution to the gulf crisis.

U.S. officials, buoyed by Saturday’s U.N. vote authorizing the use of military action to enforce a rigid trade embargo against Iraq, said Sunday that all the pieces of U.S. policy are in place and it is now time to sit back and let them work.

“It seems to me that the course of prudence for a leader in this situation would be to do what we’re asking, what the world community is asking that he do,” Scowcroft said, referring to Hussein. “I see no reason that would prevent him from doing it.”

The problem, of course, is that what appears reasonable to the White House might prove suicidal for Hussein.

While both sides say they’re willing to talk, there is as yet no common ground from which to start, and senior U.S. officials are adamant that they will not be swayed from their two non-negotiable demands--restoration of Kuwaiti sovereignty and release of all foreigners.

“Negotiations do not mean concessions from the United States,” one senior Administration policy-maker said Sunday. “Saddam must leave Kuwait.”

The Administration appears today to be united in its goal of avoiding war, but the first serious fissures have begun to appear over the question of what the United States’ ultimate aims in the Iraq crisis should be.

Some senior White House advisers, fearing a lengthy, bloody conflict if the United States presses its demands too vigorously, advocate a negotiated settlement, even if it leaves Hussein in power in Iraq.

Scowcroft said Sunday that the United States can accept a deal whereby Kuwaiti rule is restored and all detained foreigners are freed, even if Hussein is not overthrown and his military is not dismantled.

He said that U.S. goals would have been achieved because “collective action will have been shown to work against a case of aggression and, therefore, the situation will not be the same afterward.”

But a substantial number of other officials within the Administration insist there will be no peace in the region and American interests will be permanently compromised if Hussein is not disarmed and deposed.

They believe that the region will remain unstable, and the industrial world’s oil supplies will be threatened as long as Hussein remains in power, backed by a million-man army, vast stores of chemical weapons and an active nuclear-bomb development program.

“Some sobering realizations have hit a lot of us over the past week,” said a senior government official involved in managing the crisis. “No one wants war. But the reality remains the same. Can any of us afford to let a modern-day Hitler with all those deadly weapons run loose in the world?”