Mr. President-Elect, Meet Mr. Saddam Hussein...

Saddam Hussein is feeling lucky. As well he might, since rising oil prices and Israeli-Palestinian violence have combined to turbo-charge his campaign to smash international sanctions against his country. Iraq Airways on Sunday flew its first domestic flights over the "no-fly zones" maintained by the U.S. and Britain since the Gulf War, and it repeated the gesture on Monday. Official spin from the White House: We have no problem with civilian air traffic; those zones are to protect Kurds and Shiites from Iraqi military planes. Still, nobody doubts the significance of the gesture. Not when airliners carrying government officials and businessmen are landing almost daily from Russia, Europe and all over the Arab world (including countries that had fought alongside the U.S. in the Gulf War). And not when Turkey, the staging ground for most U.S. air attacks against Iraq since the Gulf War, moves to reopen a pipeline to pump Baghdads oil. This week Baghdad is hosting an international trade fair attended by representatives of some 45 countries — not exactly par for the course for a country subjected to fearsome international sanctions. Even more alarming for Washington is the fact that the biggest delegations came from Russia, China and France, three of the five permanent members of the same U.N. Security Council that maintains the embargo.

Saddam Hussein striding confidently out of his box may be the first foreign policy crisis confronted by the next U.S. president. It's been clear for some time now that the sanctions policy is on its last legs, since almost a decade of restrictions that have crippled the Iraqi economy have done nothing to weaken the dictator's grip on power. The problem for Washington, though, is that it has failed to come up with an alternative strategy despite the fact that most of its Gulf War European and Arab allies have signaled their intention to end sanctions as soon as possible. That's left the initiative with the Russians, French and Arabs — and most important, with Saddam himself. The Iraqi dictator's refusal to budge on the question of U.N. arms inspectors makes it unlikely that the sanctions will formally be lifted any time soon. But European and moderate Arab regimes have, to Washington's alarm, adopted increasingly liberal interpretations of those sanctions that threaten to make them meaningless. Booming oil prices have improbably strengthened Saddam's hand, to the point that even Washington may be cautious about provoking Baghdad into turning off the taps on the 3 million barrels it pumps daily and driving up world oil prices even further. And the anti-American rage that has swept the Arab world in response to the Israeli-Palestinian violence makes it even harder for Washington to consider any punitive action against Baghdad, giving Saddam plenty of within which to challenge the U.S. and Britain. The Butcher of Baghdad appears to have seen off the Bush and Clinton administrations. Now he may be planning a few nasty surprises for the next occupant of the Oval Office.