SADDAM Hussein's announced decision to release hostages, including 900 Americans, is good news. The move promises relief to the hapless victims of his cruel kidnapping. It also puts Iraq on the way to satisfying one of the major United Nations conditions for resolving the Gulf crisis.

Does Iraq figure its gesture will not only undercut American war warnings but also bleed off pressure for compliance with other key U.N. demands -- withdrawal from Kuwait and restoration of its government? President Bush usefully underlined American dedication to these further demands yesterday. The U.N. coalition he built continues its unprecedentedly thorough and far-reaching political and economic isolation of Iraq. The director of Central Intelligence, William Webster, offers powerful testimony -- the more credible for being clearly independent of official policy -- that the sanctions will bite hard as the months pass.

Mr. Webster, reiterating an administration position, said there was no assurance or guarantee that sanctions would, besides hurting, compel Iraqi compliance. Neither, of course, is there assurance that military action would achieve American policy goals at acceptable cost. Uncertainties are everywhere. The administration takes the reasonable position that Saddam Hussein will more likely bow to sanctions if he understands that they constitute an immense and inescapable burden -- but at that a lesser peril than the certain alternative of military attack. But congressional hearings this week and last have made plain that the effort to send this message to Baghdad has alarmed many people; they see in it a run-up to an early American-fought war. The Bush administration should be able to allay these anxieties.

Sanctions are in place. Diplomacy is just starting. Before the Senate Foreign Relations Committee, sanctions-first advocate Zbigniew Brzezinski lauded President Bush for approaching his imminent first talks with Baghdad "not to merely convey an ultimatum but to convince Iraq that its compliance with the U.N. resolutions is the necessary precondition for a peaceful settlement." Mr. Bush himself says that "within the mandate of U.N. resolutions" he is ready to "discuss all aspects of the Gulf crisis." The president is rightly pledged to make full Iraqi compliance his first diplomatic goal and to make no concessions, such as linkage to the Israeli-Arab question, to obtain it. Wielding the punishing lever of sanctions while keeping a plausible threat of military enforcement behind it is the best way to get American diplomacy off the ground.