GULF WATCH: Day 161 : A Daily Briefing Paper on Developments in the Crisis

Diplomatic Front: The Geneva talks produced no breakthroughs. Secretary of State James A. Baker III said his 6 1/2 hours of discussions with Iraqi Foreign Minister Tarik Aziz failed to provide a peaceful resolution to the Persian Gulf crisis, noting he had “heard nothing . . . indicating Iraqi flexibility.” Aziz said he and Baker had “big differences,” and he repeated Iraq’s demand to link any crisis solution to a broader accord addressing the Palestinian question.

In Washington, President Bush said he was discouraged, characterizing the talks as “a total stiff-arm” by Iraq and pointing out that Aziz had refused to accept a letter that Bush had written to Iraqi President Saddam Hussein. Bush said it was more important than ever for Congress to pass a resolution authorizing use of force. Debate is set to begin today.

U.N. officials said Secretary General Javier Perez de Cuellar will travel to Baghdad in a final bid to negotiate a peaceful solution. Both Baker and Aziz said they will welcome his intervention.

French President Francois Mitterrand said fighting could be avoided if Hussein would announce plans to begin withdrawing troops from Kuwait before the Jan. 15 deadline imposed by the U.N. Security Council. The European Community made a new offer to meet with Aziz to discuss diplomatic possibilities.

Fearing war, foreigners fled the Middle East, and airlines curtailed flights to the region. Baker said the five remaining U.S. diplomats in Iraq will leave Baghdad on Saturday.

Military Front: The Defense Department recommended that President Bush declare a state of national emergency, allowing the government to mobilize as many as 1 million military reservists for as long as two years. Meanwhile, Bush issued an executive order authorizing the military to demand priority delivery of food products and industrial material in the event of war.

Iraqi President Hussein warned that U.S. troops would “swim in their own blood” if they attacked Iraq. Foreign Minister Aziz said Iraq “absolutely” would attack Israel if war broke out. Israel said it would respond to an attack, even if it split the international coalition.

Economic Front: An Energy Department official told Congress that world crude oil stocks are sufficient to offset any disruption caused by a gulf war, but he would not predict the impact on prices. On the futures market, the price of oil soared on news that the Geneva talks had failed.

Deaths of U.S. military personnel in operation:

* In and near Saudi Arabia: 56

* Outside the gulf area: 41

* Total: 97