One week before he ordered his troops into Kuwait, Iraqi leader Saddam Hussein warned the U.S. ambassador in Baghdad that America should not oppose his aims in the Middle East because "yours is a society that cannot accept 10,000 dead in one battle" and is vulnerable to terrorist attack, according to the Iraqi minutes of the July 25 conversation.

U.S. Ambassador April Glaspie did not respond directly to Saddam's menacing comments, concentrating instead on praising Saddam's "extraordinary efforts to rebuild your country." She also gently probed the Iraqi leader's intentions in massing troops on Kuwait's border, but did not criticize the Iraqi troop movements, according to the Iraqi transcript.

The State Department did not challenge the authenticity of the transcript yesterday. Spokesman Richard Boucher declined to comment on specific remarks it contains. He said Glaspie was not available for comment.

Iraq's version of the meeting shows Saddam giving Glaspie explicit warnings that he would take whatever action he deemed necessary to stop Kuwait from continuing an "economic war" against Iraq. Her response, as recorded by the Iraqis, was to reassure Saddam that the United States takes no official position on Iraq's border dispute with Kuwait.

In response to Saddam's comments about Iraq's need for higher oil prices, the ambassador said: "I know you need funds. We understand that and our opinion is that you should have the opportunity to rebuild your country. But we have no opinion on the Arab-Arab conflicts, like your border disagreement with Kuwait. . . . James Baker has directed our official spokesman to emphasize this instruction."

The disclosure of the transcript to Western news media, which originated with Iraqi officials, appears intended to emphasize that Saddam had reason to believe that the Bush administration would not offer any serious opposition to his move against Kuwait.

The administration has acknowledged that it was caught by surprise by Iraq's Aug. 2 invasion of Kuwait. But the tone and content of the transcript of the July 25 meeting called by Saddam strongly suggest that the official American misreading of Saddam's intentions and capabilities may have emboldened him to commit an act of aggression that has brought the United States to the brink of war in the Persian Gulf.

ABC television on Tuesday night quoted briefly from the Iraqi transcript, which was also the subject of an article in the British newspaper The Guardian yesterday. The Washington Post has obtained a 17-page English translation of the full transcript.

While the Iraqi transcript is disjointed in places, the substance of Glaspie's recorded remarks closely parallels official U.S. positions stated in Washington at the same time, in which other State Department officials publicly disavowed any American security commitments to Kuwait.

A career foreign service officer, Glaspie made a point of telling Saddam that she was acting under instructions from Washington in responding to him.

Greeting her, Saddam said that he wanted his part of their conversation to be "a message to President Bush." Reviewing U.S.-Iraqi differences, he singled out secret shipments of U.S. arms to Iran in 1985 and 1986 and recalled that he magnanimously accepted then-president Ronald Reagan's "apology" to him "and we wiped the slate clean."

Saddam turned next to the devastated condition of the Iraqi economy because of eight years of war with Iran. He suggested that the United States was supporting an effort by Kuwait to wage "another war against Iraq," an "economic war" that deprives Iraqis of "their humanity by depriving them of their chance to have a good standard of living."

The United States should be grateful to Iraq for having stopped Iran militarily because the United States could not fight such a war in the Persian Gulf, Saddam said. "I hold this view by looking at the geography and nature of American society . . . . Yours is a society which cannot accept 10,000 dead in one battle."

Denouncing Kuwaiti efforts to "deprive us of our rights," he demanded that the United States "declare who it wants to have relations with and who its enemies are. . . . If you use pressure, we will deploy pressure and force. . . . We cannot come all the way to you in the United States but individual Arabs may reach you."

The remainder of his opening monologue was filled with attacks on U.S. support for Israel, for the United Arab Emirates and for Kuwait. Saddam made a point of telling Glaspie that he had clearly warned Kurdish tribesmen of Iraq and Iran's leaders before he went to war against them.

In the transcript, Glaspie did not respond to this rhetoric. She began her response by speaking of Bush's desire for friendship with Iraq: "As you know, he directed the United States administration to reject the suggestion of implementing trade sanctions" against Iraq. "I have a direct instruction from the president to seek better relations with Iraq. . . . President Bush is an intelligent man. He is not going to declare an economic war against Iraq."

Saying that the American media's treatment of Saddam resembles its treatment of American politicians, Glaspie is quoted as calling an ABC television interview with him "cheap and unjust . . . . I am pleased that you add your voice to the diplomats who stand up to the media."

She then said she has been instructed "to ask you, in the spirit of friendship -- not in the spirit of confrontation -- regarding your intentions" about Kuwait in light of Iraq's massing troops on the border. Saddam's response was that he hoped to settle his dispute with Kuwait peacefully, but the transcript shows him adding:

"We regard {Kuwait's economic campaign} as a military action against us . . . . If we are not able to find a solution, then it will be natural that Iraq will not accept death, even though wisdom is above everything else."

Glaspie took no notice of this implied threat in her concluding remarks. Instead, she told Saddam that she had worried that she would have to postpone her scheduled July 30 departure from Baghdad for consultations in Washington "because of the difficulties we are facing. But now I will fly" on July 30.

Thirty-six hours after her departure, Saddam launched his invasion. Glaspie has remained in Washington since then to underscore official U.S. displeasure with Saddam's action, according to the State Department.