The following is an eyewitness account of recent events in Kuwait.

By day, Kuwait City feels like the eye of a storm. Its deserted streets are eerily calm and quiet, even as Iraqi troops and missiles continue to move south past the city to Kuwait's border with Saudi Arabia. Burned garbage and trash smolder in empty lots and on sidewalks, and shelves in most stores become barer day by day. Hundreds of homes are empty, and cars driving on the main highways now give off a low hum from the washboard-like ruts caused by the treads of heavy tanks that have passed through the city in the past three weeks.

The royal palaces are in ruins, and the Kuwaiti flag, which flew over the exiled emir's Dasman Palace, scene of heavy fighting on the first day of Iraq's invasion, was lowered Aug. 13. The scenic coast road that passes by Dasman Palace is littered with wrecked cars, a burned-out Kuwaiti armored personnel carrier and shards of glass. One recent day, a solitary camel walked along the beach in front of the palace, and Iraqi soldiers fooled around with a golf cart stolen from a nearby marina.

Westerners caught by Iraq's invasion, including about 2,500 Americans, are hiding in their homes and apartments to avoid being detected and detained by Iraqi soldiers. For the most part, they have ignored repeated Iraqi demands, first made last Thursday, for American and British nationals to assemble at designated hotels in Kuwait City.

The fate of the Western residents, whom President Bush now calls "hostages," appears to hinge on a showdown at noon Friday, when the Iraqi government has told all foreign embassies in Kuwait City to close. Diplomats who do not voluntarily move to Baghdad by then will lose their diplomatic immunity, they have been told.

It is not clear to many diplomats what will happen if they refuse to comply with this order, but at least one European envoy said he expects the Iraqis to detain those who do not obey. He said he bases his assessment on the local Iraqi authorities' repeated assertions that diplomats will be given protection under the fourth Geneva Convention, which governs treatment of civilian wartime prisoners.

"What is happening now is exactly like what happened before the invasion," he said. "The Iraqis are saying what they are going to do and nobody believes them. With the Iraqis, we have to remember that the unthinkable is thinkable."

It is also not clear whether diplomats who move to Baghdad before this deadline will be allowed to take along their nationals now in Kuwait. But as one Western diplomat said, even if non-diplomats are allowed to accompany embassy personnel to Baghdad, "our belief is that at the moment, it's better for them to be" in Kuwait City because it is safer.

The United States and Britain have already said they will not comply with the Iraqi demand to close their embassies on Friday. U.S. Ambassador Nathaniel Howell III has said that if he is forced to leave Kuwait, he will demand that all Americans who want to do so be allowed to go with him. Howell has also said that he was continuing his efforts to negotiate with the Iraqis an orderly evacuation of Americans, either by an airlift or overland by car to Saudi Arabia, but was making little headway.

While dozens of Americans, including embassy personnel and their dependents, are living inside the embassy compound, the bulk of the American community remains scattered throughout the city in homes and apartments. They are keeping in touch with each other and with the embassy through a warden system. The demand for Americans to gather at hotels set off panic as people feared they would be sent to Iraqi military and civilian installations for what could become long stays in case of a military standoff.

Now restricted to their homes, Americans remain glued to radios and, when available, to Cable News Network television. One item they relished was about the Iraqi ambassador to Washington, Mohamed Mashat, telling reporters that Westerners in Iraq and Kuwait were fine and "having a good time."

Most Americans have already put their belongings into storage for shipment later, have stored enough food to last for weeks and are keeping their automobile fuel tanks full.

The embassy's local phone service, interrupted Aug. 3, the day after the invasion, was restored a week ago. But for more than a week the embassy has not been able to send family messages to relatives in the States, as it did in the days shortly after the invasion, because of technical problems with its already limited communication capability with Washington.

Although some Westerners have escaped Kuwait by driving over the desert into Saudi Arabia, these routes have become increasingly dangerous in the last week as the Iraqis have moved to close them down. They have set up more checkpoints on side roads into the desert, turning back those attempting to flee. There have been unconfirmed reports that they have also begun to mine some desert roads and to arrest people rather than turning them back.

In addition, there have been reports, so far unverified, about cars stuck in the desert sands with families perishing from thirst and the heat, which reaches temperatures of more than 120 degrees.

Meanwhile, the Arab and Asian foreigners who comprise the main work force in Kuwait are leaving the city by the thousands every day. They are traveling by car to Iraq and then Jordan. Asians have also begun crossing the newly opened border between Iraq and Iran.

Many diplomats are faced with terrible dilemmas. An Egyptian recently sat bewildered and dazed in his office as hundreds of his fellow citizens outside demanded information and help on getting out of Kuwait. "Listen to them," he said. "People are in a frenzied mood. They want to get out, and there is no safe way. Egyptians are, after all, feeling that this {embassy} is a place they can call home, but {after Friday} to whom can they turn?"

A Western diplomat told of one of his countrymen calling up in panic after hearing about a possible chemical weapons attack. Sobbing, the man begged the diplomat to take his children into the embassy. "It's the worst feeling," the diplomat sighed. "He's crying, the babies are crying and you are crying." Kuwaiti Resistance Efforts

Kuwaitis themselves remain defiant of Iraqi occupation nearly three weeks after Baghdad's tanks rolled through the streets of their capital.

By day, this opposition is registered in a boycott by Kuwaitis of their jobs, except for essential services such as hospitals and power plants. By night, the message is sent by armed resistance groups that are targeting small units of Iraqi soldiers and military convoys. In one attack early last Thursday, a rocket reportedly hit the former Iraqi Embassy in Kuwait City, which now serves as political headquarters for the local Iraqi authorities. Iraqi officials admitted to Western diplomats that their embassy was hit.

The extent and effectiveness of the Kuwaiti resistance is difficult to assess. The sound of nighttime firefights and the sight of burning Iraqi military vehicles bear witness to these clandestine hit-and-run attacks.

This paramilitary resistance appears to involve several groups, some better organized than others. The participants include both civilian and military people who were in the country at the time of the invasion and who so far have evaded Iraqi detection.

The anti-Iraqi demonstrations by Kuwaiti women that marked the first days of occupation have stopped since Aug. 10. According to several sources, four people, three women and a man, were killed and 15 injured when Iraqi troops opened fire on one of the last demonstrations, which took place in the suburb of Jabiriyah Aug. 8.

An underground newsletter called Samood Eshaab, or Popular Resistance, continues to be published, distributed hand-to-hand after it has been photocopied. Eight issues have come out so far. Kuwaiti women also have been putting out their own newsletter, called Kuwaitein.

One Kuwaiti source said that although Kuwait lost "half" of its warplanes during the invasion, the rest were flown to Saudi Arabia. Iraqi Occupiers Distracted

Up to now, these armed resisters have operated with relative impunity, partly because the Iraqi troop presence within Kuwait City is at a bare minimum. Tanks and military trucks once stationed inside the city are no longer there, presumably sent toward the southern border.

The local Iraqi authorities also appear to be distracted from the local resistance by two more immediate and larger problems: the threat of a military confrontation with the United States and implementing Saddam's demand that foreign embassies close down and Western nationals be rounded up.

These priorities have also slowed down Iraqi efforts to set up an administration in Kuwait City. Government offices and banks for the most part remain closed, as Kuwaitis refuse to report for work and foreigners flee the country. Iraqi doctors, nurses and cooks are now fully staffing the Sabah Hospital, which has been renamed Saddam Hussein Hospital.

Left with no municipal services, Kuwaitis are organizing their neighborhoods, including the burning of garbage. "This is something Kuwaitis normally don't do, as spoiled people," said one Kuwaiti.

Kuwaiti sources say they have confirmed that all 10 of the people named to be in the Kuwaiti temporary free interim government before Iraq annexed Kuwait on Aug. 9 were Kuwaitis who were captured or wounded during the invasion. These sources said that the Iraqis used their names when announcing the temporary government. Six of them are believed to be still alive and held by the Iraqis.

Kuwaitis are quickly finding resources to cope with their new status as underdogs. Long accustomed to lives of luxury, conspicuous consumption and independence generated by their oil wealth, they are now giving top priority to regaining what their prosperity did not protect: Kuwait's identity as a sovereign country.

Many say they are still shocked by the Iraqi invasion. "I can't believe that Arab brothers did this to us," said one woman. "The day that they said that Kuwait doesn't exist anymore," he said, referring to Baghdad's annexation of her country, "I went outside into the garden and looked for my country. I cried. I didn't want to cry in front of my children."

"We are used to wealth, as you can see," her husband said as he pointed to a table spread with food in his well-appointed home. "But even if it gets to where we have only water, we will not leave Kuwait or put our heads down to the Iraqis."

Many Kuwaiti men have sent their families out but refuse to leave themselves. Others, who were vacationing outside Kuwait, have returned since the invasion. "If everyone leaves, we will give Kuwait to them on a dish of gold," said one Kuwaiti. "If Kuwait is empty, that will encourage Iraqis to come with their families to live in our homes."

Food is still available, though not as easily or in the same abundance and choice as before. While fresh vegetables and fruit are becoming scarce, stocks of rice and bread are said to be enough for several more weeks. Most shopkeepers, who are now forced to accept the Iraqi dinar from customers, are not price-gouging.

In some places outside Kuwait City, however, the food situation appears desperate. Near the town of Wafra, close to the Saudi border, for example, about 4,000 foreign workers on a farm had only bread that they were making out of chicken feed only a week after the invasion.

Iraq has announced that students are to report to school when classes are scheduled to begin next month. Few Kuwaitis are likely to turn up. Said one 16-year-old: "Maybe they will bring Iraqi teachers to be over us. We won't go. We won't accept that."

Kuwaitis' hopes remain high that U.S. intervention will win them back their country, and President Bush's popularity is soaring. There is already talk of putting up a statue of Bush after this is all over or naming a street in Kuwait City after him. One Kuwaiti, whose wife gave birth on the day of the invasion, said, "I'm going to name him after a hero who defended the country," adding: "If Bush was a good-sounding name in Arabic, I would name him that."

Iraqi Morale Problems

There are many indications of low morale among Iraqi soldiers, according to diplomats and Kuwaitis. Unlike occupiers elsewhere, Iraqi soldiers do not swagger in town; some appear uncomfortable and embarrassed about having invaded another Arab country and claim that they did not know they were taking over Kuwait.

Kuwaitis report that the Iraqi soldiers tell them that they believed they were coming to help Kuwait overthrow the emir or to conduct a military exercise with other Persian Gulf countries.

A number of Kuwaitis say food appears to be a problem for many soldiers; several have knocked on doors asking for food and water. There are also numerous reports of Iraqi soldiers surrendering their weapons to Kuwaitis and asking for civilian clothes. One Western woman said she watched from her window as three soldiers entered a home and emerged minutes later without their guns and in civilian clothes. A diplomat said he has been told that some wounded soldiers have asked foreign hospital staffers for help in escaping.

One Kuwaiti woman told of seeing an Iraqi soldier buy cake and a Pepsi-Cola in a supermarket, rush outside and sit on the curb. His hands were shaking as he opened the cellophane and wolfed down the cake, she said.

According to Western diplomats, the situation in the south is even worse, with water and food in short supply for the troops on the Saudi border. One diplomat said he had heard of nearly 100 Iraqi deaths from sunstroke.

In addition, there have been indications of clashes between groups of Iraqi soldiers. Several sources reported that between 150 and 200 Iraqi military casualties were brought into Adan hospital Friday. Kuwaiti sources said the casualties had been caused by a fight between two groups of Iraqi soldiers in the south, but this could not be independently confirmed. Some Rapes, Looting Reported

On the whole, Iraqi troops have been disciplined, treating Kuwaitis and others with courtesy and respect. However, there have been several confirmed instances of rape and many automobile thefts by soldiers. One Egyptian said he was stopped on the airport road by three soldiers who forced him out of his car and drove it off. Local residents say there have been scores of such incidents.

Diplomats have confirmed that at least two German women were raped in the early days after the invasion. In addition, 14 Thai women were held and sexually abused for four days, from Aug. 10 to 14, by Iraqi soldiers in Mangaf, about 15 miles south of Kuwait City. Two of the women escaped and notified the Thai embassy, which sent a diplomat to rescue the others.

Kuwaiti sources said a Palestinian doctor working at Mubarak Hospital was raped by an Iraqi soldier.

Looting and property damage, which was not widespread in the initial days after the invasion, gradually increased until the Iraqis began clamping down last week. Witnesses have said that in addition to Iraqi troops, foreign civilians also participated in the looting.

Most of the damage appears to have taken place in the industrial suburb of Shuwaikh, where automobile showrooms have been emptied and burned. One local dealership is said to have lost 4,000 new cars from its showrooms. Civilians have also reported seeing Iraqi military trucks hauling away boats from marinas and other trucks loaded with furniture heading north toward Iraq. Several Kuwaiti Air passenger planes, including huge Airbuses, have also been flown to Baghdad, Kuwaiti sources said.

Residential areas have not been looted or damaged. And despite the losses, Kuwait's infrastructure remains intact: roads, power plants, desalinization plants, oil fields and refineries have not been damaged.

In an effort to stop the looting, Baghdad announced last week that theft is now a capital offense. Iraqi officials told Western diplomats that if they wanted to see evidence of this new get-tough policy, they should go to the Kuwait City corner of Hilali and Ahmad Jabir streets. There they could view the body of a still-uniformed Iraqi officer who hung by the wrists from a construction crane all day last Wednesday. The officer, a lieutenant colonel or a major, had been shot in the head before being hung from the crane and a sign was posted saying, "Here is a man who stole from the people."

The resistance newsletter Samood Eshaab, however, quoted Iraqi sources as saying that the officer had not been looting, but rather led a dissident group in one of the inter-Iraqi military clashes.

A Tunisian taxi driver surveyed the empty streets of Kuwait City and commented, "We are all emigres, but it's still sad. They are making Kuwait into another Beirut." An Influx of Iraqis

Iraqi civilians, whose dinars now equal Kuwaiti dinars and thus have increased 12 times in value, have flocked to Kuwait City to shop. At the Sultan Gourmet Supermarket, one employee said that the Iraqis came "like a hurricane" on Aug. 9 and 10. "They were buying everything," he said. "Even things they didn't know what they were. They were buying cat food, which they thought was bologna, and one of them, holding shaving cream, asked me what is this. I said, 'Oh, it's very good. Try it on toast.' "

Iraqi internal security forces are already making their presence felt. Some of the Westerners recently picked up off the streets were reportedly arrested by plainclothes officers. And when Western diplomats were called to a meeting at the Iraqi embassy last week, they saw a group of prisoners being led out of a room. The prisoners were blindfolded and unable to walk on their own, the diplomatic sources said.

There is no more Kuwaiti television, only broadcasts from Baghdad. This television station now shows a map of Iraq that includes Kuwait. The text on the map says it shows Iraq from Zakhu, near the Turkish border in the north, to the city of "al-Nidaa." Al-Nidaa is the new name of Kuwait's al-Ahmadi, south of Kuwait City.

The Iraqis have also begun to publish a new newspaper called al-Nidaa, which they are putting out in the offices of Kuwait's al-Qabas newspaper. Like every Baghdad newspaper, al-Nidaa runs a huge picture of Saddam on its front page every day.

Among the programs recently shown on Baghdad television in Kuwait was a film about AIDS that said 40 percent of Americans have the disease and the reason American troops are coming to Saudi Arabia is to spread AIDS there.

For many non-Kuwaitis who have lived in the country for decades, the Iraqi invasion is also a disaster. A Syrian who has lived in Kuwait City for more than 30 years, first working in the Ministry of Education and then as a building contractor, said he had his life savings in Kuwaiti banks. "I trusted the banks," he said. If the Iraqi occupation is not reversed and sanctions lifted, it is doubtful that the Syrian will get any of his money out of the country. Last week he sent his wife and five children out of Kuwait through a clandestine desert road. "My house is empty now," he said. "It's a problem."

Saddam, the Syrian said, "has put ink in the water. How can we drink from it anymore?"