As I visit with people in and out of Washington, the single most frequently asked question is: Are we really going to go to war in the Persian Gulf?

No one -- not even Saddam Hussein or George Bush -- knows the answer for sure. But since Bush's explanation that additional American troops provide him an "offensive option," opinion in this city tilts to the belief that war is inevitable.

The follow-up question then becomes: What would war do to markets and the economy? Most market analysts believe the initial reaction would be at least a 100- to 150-point drop in stock prices, with a big initial upward spike in oil, possibly to $60 a barrel -- which would further depress economic activity.

But, says Barton Biggs of Morgan Stanley & Co., "a lot of money is waiting for the chance to buy stocks in a war panic, so I expect markets to rally after the initial drop, but then maybe to fall back again." Most believe that a quick victory would be a signal for a major economic recovery. If the war went on for some weeks or months, the markets would fluctuate, depending on which way things were going.

But suppose the current Washington odds favoring a war are wrong. Suppose Saddam Hussein, assessing the huge buildup of American forces in the Persian Gulf, makes the diabolically clever move of pulling out of Kuwait, except for the offshore islands and the disputed Rumaila oil field, and declares a victory for "the Arab nation" over the hated American "invaders of the Holy Land"?

That would be a nightmare for an administration that pledged to drive Saddam out of Kuwait and allow him no visible rewards. Saddam could claim not only a psychological win over the United States and its allies, but also material gains. Saddam would of course make no restitution for the plundered wealth wrung out of his occupation of Kuwait and would be free to harass other Middle East countries, including Israel, while building up his military strength and refining his nuclear capabilities.

High Pentagon officials admit privately that a pullout from Kuwait on Saddam's terms and initiatives, rather than our own, would put us in a "difficult" situation. In truth, it would be such a humiliating result for the United States that it's hard to understand what Saddam is waiting for: Bush could hardly go to war over the Rumaila oil field.

Saddam would emerge from the crisis he provoked not only unscathed, but enriched by a political victory over the United States as well, without firing a shot. We would have lost face, after spending billions of dollars deploying the most powerful military force in our history.

A high Pentagon policy maker recently suggested to a Washington audience that Saddam would still face a blockade of Iraqi oil. But it's nonsense to think that Bush could keep economic sanctions going once Saddam headed out of Kuwait. The Arab world would cheer the discomfiture of the United States. And even if the Saudis consented to keeping some American forces at their border with Kuwait as insurance against a new invasion by Saddam, the bulk of the 400,000-plus American troops would be asked to leave.

Bush would be reduced to the rationalization that had he not been gutsy enough to send troops to the gulf in the first place, Saddam would most likely have gobbled up Saudi Arabia, too -- and certainly would not have exited Kuwait. And, to be sure, the specter of thousands of body bags would have been averted, at least for now.

From Wall Street's perspective, a Saddam pullout on his terms would be favorable because the threat to the Saudi oil fields would be ended. Oil prices would probably retreat. But Saddam would be viewed as a loose cannon and the United States would be denied the greater prestige and influence that would be attach to a military victory.

A clear declaration by Bush of our policy goals in the gulf is long overdue. Is it the originally stated intention of defending Saudi Arabia? Is it, as Secretary of State James A. Baker III said the other day, protection of American jobs? Or are we out to destroy Saddam Hussein?

There are hints of considerable ambivalence in a Nov. 2 interview given by Gen. H. Norman Schwarzkopf to the New York Times. Asked if the American strategic goal is to liberate Kuwait or to remove the entire Saddam regime, Schwarzkopf said: "There are alternatives to destroying Saddam Hussein or to destroying his regime. ... I am not sure that {destroying Saddam} is in the interest of the long-term balance of power in this region."

This can be read as a willingness to let Saddam retain enough clout to be a counterweight to Iran. And America's Saudi partners, for their part, reportedly would like to maintain Saddam as a counterweight not only to Iran, but to Israel.

If that indeed is the Machiavellian drift of thinking, Saddam has every incentive to turn tail, and live to fight another day.