Iraq to Free 3,300 Soviets : But Baghdad Says Moscow Must Pay Compensation

In another attempt to divide the world alliance arrayed against Iraq, Saddam Hussein today backed away from his confrontation with the Kremlin, promising to release the almost 3,300 Soviets he is holding.

Moscow last week warned it would use military force against Iraq if Soviets there were harmed. Before the Persian Gulf crisis began four months ago, Moscow was Iraq’s chief weapons supplier and main ally. The Kremlin has not sent troops to join the U.S.-led multinational force stationed in the gulf.

The official Iraqi News Agency said the Soviets, mainly oil industry experts, will be allowed to leave Baghdad beginning Wednesday. It said, however, that Moscow would have to pay compensation for broken contracts.

Iraq had warned foreign companies and employees that it would demand compensation for any contract breached after its Aug. 2 invasion of Kuwait.

In other developments today:

* Iraq said that 1,400 children under the age of 5 have died because of shortages of medicine, vaccines and food caused by the U.N. trade embargo. Doctors and Western diplomats in Baghdad denied the reports.

* Former world boxing champion Muhammad Ali arrived in New York with six Americans who had been detained in Iraq.

* The British Foreign Office said that Iraq sent Britain a $289,000 hotel bill to pay for 27 British construction workers it is holding at two five-star Baghdad hotels.

* French Defense Minister Jean-Pierre Chevenement said the international community should make a “subtle connection” between the Persian Gulf crisis and other Mideast problems if Iraq proclaims its “intention” to retreat from Kuwait.

* The Norwegian Parliament approved a $14.6-million contribution to help keep American forces in the gulf.

* Pope John Paul II told Italian sailors that the crises in the gulf and elsewhere in the Middle East must be resolved through dialogue.

In Moscow, Vitaly Ignatenko, spokesman for President Mikhail S. Gorbachev, said 3,232 Soviets remain in Iraq. Thousands more left in the two months after the invasion.

Moscow last week accused Iraq of breaking a promise to allow Soviets to leave. The accusation came as Moscow adopted a harder line against Iraq.

Iraq is holding hundreds of Westerners, many at strategic sites to deter attack by the 340,000-strong U.S.-led multinational force deployed in the gulf. Soviets are not believed among those used as “human shields.”

Saddam has said he would free all hostages between Christmas and March 25 provided Washington and its allies do not take military action. That period is considered the optimum time for an offensive to drive the Iraqis from Kuwait.