CIA Director William H. Webster said yesterday that the international trade embargo against Iraq has dealt "a serious blow" to its economy but will probably take up to nine more months to have a significant impact on Iraq's military readiness.

Despite mounting disruptions and hardships in Iraq caused by the sanctions, Webster told the House Armed Services Committee that Iraqi President Saddam Hussein "apparently believes that he can outlast international resolve" to maintain them.

"Our judgment has been, and continues to be, that there is no assurance or guarantee that economic hardships will compel Saddam to change his policies or lead to internal unrest that would threaten his regime," Webster said.

At the same time, the CIA director said that the United Nations embargo and blockade have worked more effectively than Saddam probably expected, shutting off more than 90 percent of Iraq's imports and 97 percent of its exports. Baghdad's financial resources also have been choked off, and it will soon have little cash left as enticement for potential sanctions-busters, the committee was told.

"In fact," Webster testified, "we believe that a lack of foreign exchange will, in time, be Iraq's greatest economic difficulty." He said the embargo has already deprived Baghdad of $1.5 billion a month in foreign exchange earnings. By next spring, he estimated, Iraq "will have nearly depleted its available foreign exchange reserves."

At that point, economic problems will multiply, forcing even more industrial shutdowns. The loss of industrial imports and foreign workers, Webster said, already has shut down production at many light industrial and assembly plants and severely curtailed output at many others, including Iraq's only tire-manufacturing facility.

"Probably only energy-related and some military industries will still be fully functioning by next spring," Webster said in an opening statement, after which the committee moved into closed session. "This will almost certainly be the case by next summer."

So far, however, the sanctions are affecting the Iraqi military "only at the margins," Webster said. Iraq's static, defensive posture reduces the wear and tear on military equipment, he said, so that "under non-combat conditions, Iraqi ground and air forces can probably maintain near-current levels of readiness for as long as nine months."

The Iraqi air force will feel the pinch first because of its reliance on high technology, foreign equipment and foreign technicians, Webster pointed out. But he said Iraqi technicians should be able to maintain the current levels of military aircraft patrols "for three to six months."

Iraqi ground forces are "more immune," Webster said, because of large inventories of basic supplies such as ammunition that Baghdad built up before the Aug. 2 invasion of Kuwait. But eventually, he said, Iraqi armored units will be hurt by an inability to replace old fire-control systems and fill shortages of additives for various critical lubricants. Those shortages also will affect Iraqi cargo trucks, he said.

Webster said that "at present, Saddam almost certainly assumes that he is coping effectively with the sanctions . . . and we do not believe he is troubled by the hardships Iraqis will be forced to endure."

But for the average Iraqi citizen, he said, economic hardships are mounting. Baghdad's actions in rationing food, encouraging smuggling and promoting agricultural production are expected to forestall shortages for the next several months, but food variety is diminishing and prices are sharply inflated, the committee was told.

Sugar bought on the open market, for instance, went up from $32 for a 110-pound bag in August to $580 a bag last month, Webster said. Meanwhile, Baghdad cut civilian rations in late November for the second time while ordering increased rations for military personnel and their families.

By next spring, Webster said, poultry, a major staple of the Iraqi diet, will not be available. Without humanitarian aid or increased smuggling, "some critical commodities such as sugar and edible oils will be in short supply." Even with good weather, Webster said, Iraqis next year will be able to produce less than half the grain they need.

The CIA director emphasized, however, that Iraqis are used to worse hardships. In the eight-year Iran-Iraq war that ended in 1988, he pointed out, "there was not a single significant disturbance even though casualties hit 2.3 percent of the total Iraqi population -- about the same as the percentage of U.S. casualties during the Civil War."

One interested spectator at the open session was Iraq's ambassador to the United States, Mohamed Mashat. Asked about the high-level talks coming up in Washington and Baghdad at President Bush's initiative, Mashat said repeatedly that "everything is negotiable," in contrast to U.S. insistence that nothing is.