What is your ''diplomatic strategy?,'' Rep. Lee Hamilton asked.

Secretary of State James Baker replied that Saddam Hussein didn't look ready for the diplomatic track right now -- the sanctions need more time -- but that negotiation on the future government of Kuwait and on Iraq's territorial claims against Kuwait is ''contemplated by one of the U.N. resolutions'' and can take place after Iraq withdraws from Kuwait -- and, he presumably meant, after the legal government is restored.

This exchange, in House hearings Tuesday, points to an untested but perhaps feasible way out of the Iraq crisis: a post-withdrawal, post-restoration intra-Arab negotiation whose agenda includes, among other items, at least some of Iraq's own grievances.

In any event, it is evidence that the United States is moving toward a ''diplomatic strategy'' -- an idea not just of what it wants but of how to get it.

The first part of the strategy is to join with others to apply enough pressure to draw Saddam's attention to the policy purposes inscribed in the five guiding United Nations resolutions. The second, now quietly dropped into the public discussion by Baker, is to convey an openness to consider some of Iraq's concerns.

Until Tuesday, the United States had simply stated its goals, which are right and worthy but which no one should imagine are achievable easily or even at great cost and difficulty short of Saddam's defeat or death. At the same time, the United States had repudiated, as Baker did again on Tuesday, the suggestion of the several would-be mediators for a ''face-saver'' for Saddam -- something he could hold up in retreat to show he had not been utterly humiliated.

Holding out the lure of post-withdrawal negotiations appears to be the secretary's chosen way of sweetening the terms a bit for Saddam without compromising on basic American goals or ''rewarding aggression.''

Hovering over the proceedings is the earlier U.N. Iran-Iraq cease-fire resolution (598) hinting at an appropriate concern for Iraq's access to the Gulf on either Iraq's Iran side or its Kuwait side. But the particular resolution Baker evidently cited was 660 of Aug. 2, the Security Council's initial condemnation of the Iraqi invasion. It ''calls upon Iraq and Kuwait to begin immediately intensive negotiations for the resolution of their differences and supports all efforts in this regard, and especially those of the League of Arab States.''

Resolution 660 had in mind resuming the difficult discussions -- on border issues, oil quotas and prices, war-loan terms -- that Iraq broke off, claiming Kuwaiti intransigence, when it invaded. These are the issues theoretically available for post-settlement Iraqi-Kuwaiti massage. That Baker should include ''the future government of Kuwait'' as a fit subject for discussion with Iraq is strange, reflecting perhaps a certain embarrassment over the American-supported U.N. demand to restore a monarchy. But Kuwait's ambassador in Washington, a member of the ruling family, tells me his government is willing, with some safeguards, to sit down at the table with Iraq again.

Between the lines of Baker's testimony Tuesday was a further discreet appeal to Saddam. He offered as specific an avowal as the administration has yet given that it does not seek either his ouster or elimination of his gas-nuclear-missile capabilities -- goals the administration has eyed but not formally embraced.

Baker's whole thrust was that Saddam's and Iraq's menace could instead be ''contained'' or ''circumscribed'' over time within a new ''regional security structure,'' and perhaps also treated by extended regional diplomacy.

His secretary of defense is giving President Bush a broad range of military options, restricted though their actual employment may be by Iraq's staking out of hostages, by Saudi Arabia's insistence on leashing American forces and by other prudential concerns.

The secretary of state is turning the world's strong reaction to the Iraqi invasion, plus the options provided by the allied military buildup, into a range of diplomatic options. One set enables an American-led coalition to squeeze Iraq. The set now surfaced by Baker offers Iraq a way out acceptable to us ''down the line.''

The coalition gives impetus to American policy up to the point at which force being amassed becomes force about to be used. Then the coalition may become a check on American policy. Precisely at that point the United States needs a diplomatic strategy, and now it may be getting one.