WHERE IS the United States going in the war against Iraq, and more to the point, where should it be going? The first fact now is that Saddam Hussein, by defying the United Nations' demand to leave Kuwait, is allowing the coalition to attack his military-industrial complex, including his nuclear and chemical works, and to inflict lesser but considerable and daily mounting damage on his forces in being. With the strong justification of protecting their own forces in the conflict, the allies are seizing this strategic opportunity to reduce the current and future military menace of Iraq. It takes Washington beyond the literal goals of the United Nations, but Saddam Hussein has no standing to limit coalition forces to goals he has rejected. That leaves it chiefly to American policy to set restraints on the air war: these must continue to include maintaining a conscientious regard for civilian locations and infrastructure, preserving Iraq's territorial and cultural integrity, and ensuring its viability as a postwar state.

What kind of postwar state? Secretary of State James Baker has had some interesting things to say in the past couple of days about his ideas for reconstruction and reconciliation in the region after hostilities end. These are things Mr. Baker should be thinking about, and he makes some very good points. But as the secretary himself readily acknowledges, the nature of the postwar dispensation will depend on many yet unknown factors -- how the war ends ("in conjunction with a peace treaty . . . or as a consequence of facts on the ground") and, of course, whether Saddam Hussein is still in power.

So at the moment it is the way the war is being conducted and how it will be brought to an end that need to be thought about. There has been much talk of cease-fire prospects. The secretary was clear and, we think, right in his approach to the subject. If a real cease-fire is offered, the United States is bound by word and policy to accept it -- but only if it is a real cease-fire. By this is meant a cease-fire to allow the Iraqi forces, under strict surveillance, to withdraw. A cease-fire offer tied merely to an Iraqi statement of readiness to negotiate, or to a would-be mediator's suggestion of Iraqi readiness to negotiate, could only be read as an attempt to buy time and avoid U.N. compliance. Immediate, substantial, unambiguous steps -- "a convincing withdrawal of forces," as Mr. Baker put it -- constitute the proper basis for testing an Iraqi offer.

With a cease-fire and complete withdrawal, the focus would naturally shift to the political arena. It would make a considerable though not complete difference whether Saddam Hussein remained in power. Surviving in such circumstances, he might still be menacing and tempted to strut the larger Arab/Islamic stage. This -- along with other possible outcomes one could think of -- would compel the coalition's continuation of economic and military sanctions including: 1) international imposition of stiff and thoroughly verifiable restrictions on Iraqi arms and military formations; 2) Iraqi payment of reparations to the victim state Kuwait; and 3) Iraqi meeting of U.N. terms for resolution of all issues lingering from the Iran-Iraq war. At the same time, Iraqis deserve a generous incentive to be rid of Saddam Hussein. An Iraq without him or his like at or near the helm would no longer have to be treated as a menace. An Iraq that was making a transition to another sort of leadership could expect to have international sanctions relaxed more quickly and to be welcomed as a regional peer.

A caution: The war could yet go on to the ground war stage -- if and when it becomes much safer and absolutely essential to commit troops -- and Saddam Hussein could then spring a military surprise. Poison gas comes to mind. Given the outrage that use of this outlawed weapon would stir, it is hard to predict what the reaction would be, except that it would surely be fierce and would inject an extra element of remorselessness into the handling of all other matters involving Saddam Hussein. Nonetheless, Americans cannot be paralyzed any more than they can be panicked by the specter of additional horror fashioned at this man's hands. A war is proceeding that must be fought with courage, intelligence, compassion and confidence in a better time ahead.