WHERE FEUD AND FOLLY RULE

By DOUGLAS WALLER WASHINGTON

Nothing is more divisive than power and money. Only four years after the U.S. and its allies set up an enclave in northern Iraq to protect 4 million Kurds from annihilation by Saddam Hussein's vengeful army, the Kurds are threatening to annihilate themselves--because two rival leaders each hope to establish and control an independent Kurdistan overlapping the borders of Iraq, Turkey, Syria and Iran. Massoud Barzani, who leads the western half of the enclave, is shy, soft spoken and uncomfortable around foreigners. Jalal Talabani, who controls the east, is a garrulous jet-setter who mixes well at embassy parties. The only thing the two have in common is a long-standing hatred for each other. In an increasingly bitter showdown that has turned Kurd against Kurd, they are, says a Western diplomat in Ankara, willing to "risk committing national suicide."

Most of the fighting is taking place around the city of Erbil, which Talahani's forces seized last December. Barzani's army now surrounds the city, exchanging small-arms and mortar fire with the enemy and biding its time before launching a full-scale attack. Elsewhere in Kurdistan, the two factions skirmish and engage in terrorist acts. Three weeks ago, for example, a car bomb exploded in Zakhu, near the Turkish border, injuring 50 people. U.S. intelligence analysts haven't pinned down which side carried out the bombing or whether it was the work of Saddam's agents trying to incite more trouble between the two factions.

The Kurdish leaders ought to be joining hands to secure their independence from an increasingly shaky Saddam, who escaped yet another coup attempt earlier this month. Instead Kurds are killing one another, and northern Iraq and beyond are growing dangerously unstable. Meanwhile, neighboring Turkey, at war with rebellious Kurds in its provinces, was in turmoil last week from rioting by extremist Islamic and nationalist groups. "The area is extremely volatile--all of it," says a worried senior Clinton Administration official. Still more tinder piled up last week after Saddam seized two American civilians who seemed to have accidentally wandered across the border from Kuwait.

For the Kurds who had turned their enclave in northern Iraq and parts of Turkey, Iran and Syria into a virtual semiautonomous state, the infighting is tragic. It is almost entirely the product of animosity between two men leading rival parties who are deeply jealous of each other. "This struggle for power is as personal as it can get," says a Pentagon analyst. When the Kurds held an election for an autonomous government to run Kurdistan in 1992, Barzani's Kurdistan Democratic Party and Talabani's Patriotic Union of Kurdistan split the vote, forcing them to accept coalition rule. Last May open warfare broke out between the rival leaders over a land dispute. In the ensuing free-for-all at least 2,000 Kurds were killed before the two sides agreed in November to hold new elections this May. But then Talabani's army seized the coalition government's capital, Erbil, and kicked out Barzani's parliamentarians and ministers.

Barzani has accused Talabani of stealing $14 million from the Kurdish treasury and being a "jash," or donkey, as Kurds label collaborators with Baghdad. Talabani claims Barzani is pocketing cash from customs fees the Kurds levy on the 10,000 bbl. of diesel fuel Iraq secretly ships through Kurd territory to Turkey every day.

What is evident is that both men live luxuriously by Kurdish standards, with foreign cars and cushy mountain retreats. Most Kurds, while not starving, barely eke out a living with the help of relief supplies from the U.N. and Turkish Red Crescent. This year's harvest has been good, but prices have skyrocketed because of the factional fighting. Children maimed by terrorist bombs, which each party accuses the other of planting, lie with gangrenous limbs in hospitals where there is little medicine or equipment to treat them.

Talabani's party is made up mainly of urban intellectuals and leftists, while Barzani, 48, is a parochial tribal chieftain wary of the West whose political base remains in the countryside. Over the years he has favored negotiation with Baghdad, while the 62-year-old Talabani wants confrontation. Talabani shares the dream of other Kurds of an independent Kurdistan that includes parts of Iraq, Iran and Turkey. When U.S. officials visit Talabani, he regularly serves them turkey for dinner so they will not miss the message that he wants to nibble at his neighbor.

The internecine conflict comes at a time when Saddam's political standing has begun to falter, say U.S. intelligence officials. Last week Washington succeeded in persuading the U.N. Security Council to continue, at least until May, the near total economic embargo that Baghdad desperately wants lifted. Middle-class Iraqi families are drawing from savings to pay for food. The dinar, which traded a year ago at 150 to the dollar, has plunged to 1,500 against the dollar. Crime is rampant in the capital, which has also experienced a rash of car-bomb attacks by dissidents and possibly Iranian agents. There is widespread grumbling in Saddam's 350,000-man army and even dissent within the alite Republican Guard. "He's feeling the greatest pressure he's felt since the Gulf War," says a senior U.S. official monitoring the country.

Early in March, an elaborate coup plot against Saddam was hatched that required the cooperation of the feuding Kurds. But within hours of the attack, the entire plan collapsed. In the first stage, as planned, Talabani's 10,000 troops launched an opening skirmish against the Iraqi army's 5th Corps along the Kurdish border near Kirkuk. Barzani, who has a force of equal strength, refused to get involved in the coup. Shi'ite insurgents next failed to undertake their strike against Iraqi forces in the southern part of the country, and an Iraqi armored division that was to mutiny and march on Baghdad decided to sit it out. "It was the coup that never was," said a U.S. intelligence official.

Though Saddam has lately faced takeover attempts almost every three months, his personal security force has had little trouble foiling each one. Talabani and the Iraqi National Congress, the umbrella for all Iraqi dissident groups, had long hoped that a combined assault by Kurds in the north, Shi'ites in the south and mutinous troops in Baghdad could succeed. Last November, the head of Iraqi military intelligence during the Gulf War, Major General Wafiq Samaraii, defected to Kurdistan with a promise that he could deliver an Iraqi division willing to attack Saddam. A brigade would capture the Iraqi leader on March 4 in his hometown of Tikrit, where he was expected to attend a family reunion.

The CIA, which has provided limited financial backing to Iraqi dissidents, was alerted by the Iraqi National Congress in February that the coup would soon take place. But the agency was skeptical. Talabani and the other plotters could not keep their mouths shut about the planning. The week before the coup, even reporters were picking up rumors that it was imminent. "If the press knew about the coup, you could be sure Saddam knew," said a U.S. intelligence analyst. He did. The week before the coup attempt, Saddam put his entire military on full alert. He never set foot in Tikrit. Samaraii, it turns out, had overstated the strings he could pull in Baghdad. "Clearly there was a lot of wishful thinking in this operation," admits Walid al-Tamimi, an Iraqi National Congress member in London.

The fighting in Kurdistan provides a useful diversion for Saddam. Relief organizations are becoming increasingly worried that their workers will be caught in the cross fire. The Pentagon is uneasy about its warplanes continuing to guard the Kurd enclave in the designated no-fly zone. "We're supposed to be protecting the Kurds, but to do what--have a civil war?" asks a frustrated Pentagon official. Among his Arab neighbors, Saddam is touting the turmoil in the north as an example of what will happen to the rest of Iraq if he is deposed. "It makes him look less odious," says a Middle East expert at the State Department. "He's still evil, but at least he keeps the country together." If the fighting continues, Saddam hopes the side that ends up the loser will rejoin Baghdad.

Last month the State Department dispatched an emissary to urge Talabani and Barzani to make peace. Turkey opposes an independent Kurdistan, but it has nevertheless warned both sides to stop the fighting, fearing a flood of refugees if civil war continues or Iraqi troops move in. Saddam has bolstered his forces in the north but has held off any major attacks, hoping to charm the U.N. into lifting sanctions.

Now that Washington has succeeded in keeping the sanctions in place for the time being, hard-liners in Saddam's inner circle are urging him to strike against the weakened Kurds. Even the Kurdish people are becoming frustrated with their leaders. "This is the worst time in our history, because it is Kurd killing Kurd," says Shazad Saib, a Talabani representative in Ankara. "We are destroying our newly found homeland." A Kurdish poem laments: "Red roses are the blood of brother slain by brother. When will the mountain rose no longer smell of my brother's blood?" Perhaps never.

--With reporting by J.F.O. McAllister/ Washington and James Wilde/Ankara

With reporting by J.F.O. MCALLISTER/WASHINGTON AND JAMES WILDE/ANKARA