Given that it was a king of Babylonia -- the present-day Iraq -- who was unable to read the handwriting on the wall, as described in the Book of Daniel, it may be worth asking whether the modern ruler of Iraq will suffer the same fate. Will Saddam Hussein see "the handwriting on the wall," and will someone correctly interpret it for him?

I believe this will happen prior to Jan. 15. Here's the scenario:

While ignoring or again denouncing the U.N. resolutions calling for his unconditional withdrawal from Kuwait and setting the deadline of Jan. 15, Saddam could offer a deal -- but not to the United Nations or the United States. Rather, the offer would be to his fellow Arab leaders. Saddam would agree to withdraw completely from Kuwait in return for the convening of an Arab League summit, which he would attend along with his principal opponents and sympathizers, where a deal would be worked out to resolve the Gulf crisis. Saddam could count on a great deal of pressure being exerted on the Saudis and the Kuwaitis to participate in this deal-making, pressure brought to bear by all the Arab leaders who want to see this crisis resolved short of war.

This retreat by Saddam would be motivated by his overwhelming wish not to see his military forces, his regime and his country destroyed by an all-out war in the Gulf. That is what the handwriting on the wall says, if someone can read it to him.

Naturally he would not explain his reversal in such terms. He would appeal to his fellow Arab leaders to work together to restore the Arab unity that was shattered by his invasion of Kuwait "in order to face together the enemies of the Arab nation." He would couple this with an insistence that concurrent with the withdrawal of his forces from Kuwait, all foreign forces recently deployed to Arab lands also be withdrawn. This would not appeal to the Saudis and the other Gulf rulers, but it would strike tremendous resonance elsewhere in the Arab world.

Where would that leave the United States? Unfortunately this question would be largely irrelevant -- provided that the Arabs could work out a deal reasonably acceptable to the major Arab players. It is difficult to spell out the elements of a deal, but it would surely be a compromise somewhere between the destruction of Iraq and a significant reward for Saddam's aggression.

What about the aftermath with Iraq's military machine more-or-less intact and posing a continuing threat to the region? Intelligent diplomacy -- e.g., an international, indefinite and strict arms and military technology embargo imposed on Iraq -- combined with the deterrent presence of major Western military forces offshore in the region, sea power and air power, could contain the Iraqi threat and over time erode Iraq's ability to threaten aggression against its neighbors.

What are the chances of the Arab leaders joining in this scenario? It should be recalled that seven of the 21 members of the Arab League declined to join the consensus in favor of the Aug. 3 resolution denouncing the Iraqi invasion of Kuwait, calling for the immediate withdrawal of the Iraqi troops and rejecting foreign intervention in Arab affairs. On Aug. 10 the dissenters numbered nine. With Saddam's announcement that he agreed to withdraw, those Arab leaders who continued to insist on war would be in the minority and thus isolated. Would it be possible for the United States to work in concert with this isolated minority of Arabs to launch a war against Iraq after it had agreed to withdraw? Yes, it would be possible, but utterly reckless.

I believe there will be an ''Arab solution'' to this crisis. It will not be much to our liking, but we will have little choice. It will certainly be preferable to war. Now is the time to begin the post-crisis analysis and diplomatic planning to seize the opportunity to work out arrangements for the future security of the Gulf, which will be a much different region from what it was prior to Aug. 2. That is the handwriting on our wall, if we can read it.

The writer is a retired career diplomat.