DUBAI, AUG. 4 -- As the shock of Iraq's conquest of Kuwait began to fade, the Arabian Peninsula's Persian Gulf states today groped for a strategy to reverse the invasion or at least mitigate its impact on their own future.

So far, Western diplomats and other observers say, the smaller gulf Arab states are following the lead of Saudi Arabia in condemning the invasion in public while privately seeking to use friendly persuasion to get Iraqi President Saddam Hussein to withdraw his troops.

But a key element in that strategy -- the plan to host an emergency summit conference with Saddam and other major Arab leaders in Jiddah, Saudi Arabia on Sunday -- fell through today. The specific reason for the collapse was unclear tonight, but experts said the failure illustrated how difficult it will be for the Saudis and their allies to stitch together a peaceful solution to the gulf crisis -- and how unstable the Saudis' position is.

For a decade, Saudi Arabia, Kuwait and their neighbors sought to ensnare Saddam Hussein in golden threads: $45 billion in loans for his 1980-88 war against Iran and for the reconstruction of his country, plus diplomatic support. All of it was designed to produce both indebtedness and gratitude from the man who commands the Middle East's largest army.

At the same time, they sought to develop the Gulf Cooperation Council -- an alliance of Saudi Arabia, Kuwait, the United Arab Emirates, Bahrain, Qatar and Oman -- to provide both diplomatic clout and collective security against the region's two warring superpowers, Iran and Iraq.

Now that strategy is in a shambles. One of the key members of their small, wealthy but fragile community has been devoured overnight and they appear powerless to do anything about it.

Not only are the gulf states vulnerable militarily, they appear more susceptible to Iraqi accusations that they are artificial creations, propped up by oil wealth and by their ability to seduce, corrupt or hamstring potential enemies. Some experts believe the overthrow of the Kuwaiti ruling family will inevitably trigger radical unrest among the underclass of menial laborers in the other deeply conservative gulf societies.

Gulf leaders "feel totally betrayed by Saddam because by breaking his word and attacking one of them, he has undermined all of them," said a veteran observer of the political scene here. "They are looking to anybody, especially to the Americans, for help."

Observers say initial local reaction to the invasion was that of a rabbit frozen by the headlights of an oncoming tractor-trailer. "They were stunned and amazed," said one source. "And scared, of course, because once it's happened, if nothing is done to try to reverse the situation, then what's next?"

For days before the invasion -- as Iraq accused Kuwait of exceeding oil export quotas and of holding territory that rightfully belonged to Iraq, and while 100,000 Iraqi troops massed at the Kuwaiti border -- the official press in the gulf states insisted on calling the dispute "a brotherly difference of opinion." Official reports carried no information about the invasion until this morning. Most countries in the region are barring foreign journalists and those that do allow entry are warning reporters to be discreet and voluntarily limit their coverage.

Even without restrictions, it is difficult to measure the response of the small ruling elite to the Iraqi threat. More than 80 percent of the residents of the United Arab Emirates are foreign workers. The sheiks and their followers who actually run the country are a diffuse, autonomous collection of clans and interest groups who keep their deliberations closely held. Many are not even here -- they flee the August heat, when temperatures soar above 100 degrees daily, for Europe's cities and holiday resorts.

Analysts say the partners in the Gulf Cooperation Council face a crucial dilemma in seeking to cope with Iraq: While they must rely on American and European defense support to survive, they must be seen as independent Arab nation-states and cannot appear to be puppets of the West.

Instead of appealing publicly for Western help, these governments first sought aid from the Arab League. But the league put off a decision, then issued a belated condemnation of the invasion that diplomats said was fatally diluted by the abstention of seven of its 22 members.

Friday's condemnation by the Gulf Cooperation Council, which is led by Saudi Arabia, was far stronger and a clear indication, according to Western analysts, that the Saudis and their gulf partners are not prepared to acquiesce quietly to Iraqi aggression. Nonetheless, the statement gave no indication that the states were prepared to take military action.

Despite a decade of military buildup and billions of dollars in arms purchases, experts say the gulf states' forces are no match for Iraq's battle-tested army. Iraq has six times the manpower -- 1 million soldiers to about 165,000 -- and four times as many tanks. Much of the weaponry of individual gulf states is incompatible with that of the other states and about 30 percent of their troops are foreigners.

While diplomats discounted press reports of Iraqi troops massing on the Kuwaiti-Saudi border, they said any Iraqi presence in the area would serve as an explicit warning to the Saudis against outright military action or against cutting off Iraq's oil pipeline through Saudi Arabia.

"Obviously when you've got Iraqi troops near your border you're going to think twice about taking any action that might provoke a response," said one Western source.

For now, observers said, the Saudis are playing a waiting game, hoping Saddam honors his pledge to begin pulling out his troops on Sunday. Few experts here believe he will do so.

Nonetheless, the Saudis appear committed at least temporarily to an approach designed to placate Saddam while ensuring his withdrawal from Kuwait. Their closest ally in this attempt is Jordan's King Hussein, who has painstakingly maintained close ties with his giant Iraqi neighbor.

But they may have run into a snag in persuading Kuwait's emir, Sheik Jabir Ahmed Sabah, to accede to the plan. Kuwaiti diplomats had said Sabah would not meet Saddam, and such an position may have scuttled the talks. Or the Iraqi leader may have done so himself by imposing unacceptable preconditions on the meeting.

If the conciliatory approach to Baghdad fails, some analysts believe the Saudis and their neighbors will press the United States, Western Europe and the Soviet Union to mount an international effort -- economic, military or both -- to turn back Iraq, without the gulf states having to commit themselves publicly to such a confrontational course. Such an approach would be similar to the private support and public neutrality they adopted when Washington sent U.S. Navy vessels into the gulf to protect oil tankers.

But Western diplomats contend that such a stance would not be sufficient this time. They say the gulf states themselves would have to be prepared to publicly call for and join in any Western intervention. An oil embargo, for example, could not work unless the Saudis agreed to cut off the Iraqi pipeline through their country.

The worst scenario, some officials contend, is one in which the gulf states and the West haggle privately over who should move first to stop Saddam, while Iraq consolidates its hold on Kuwait.

"Whatever is done has to be done quickly," said a Western source. "If you leave it go for two weeks while you talk it over there's a de facto acceptance of the situation."