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DATE=1/17/99 TYPE=CORRESPONDENT REPORT NUMBER=2-244291 TITLE=IRAQ/WAR ANNIVERSARY (L-ONLY) BYLINE=RICHARD ENGEL DATELINE=CAIRO CONTENT= VOICED AT: INTRO: IN BAGHDAD, THOUSANDS OF IRAQIS HAVE BEEN DEMONSTRATING IN THE STREETS TO MARK THE EIGHTH ANNIVERSARY OF THE START OF THE GULF WAR. RICHARD ENGEL REPORTS FROM OUR MIDDLE EAST BUREAU, IRAQI PRESIDENT SADDAM HUSSEIN IS CALLING FOR THE CREATION OF A MIDDLE EAST BLOC TO OPPOSE WHAT HE CALLS A WESTERN ALLIANCE LED BY THE UNITED STATES. TEXT: ABOUT TWO-THOUSAND IRAQIS SHOUTED ANTI-AMERICAN SLOGANS AND DESTROYED A U-S FLAG TO MARK THE EIGHTH ANNIVERSARY OF WHAT SADDAM HUSSEIN ONCE CALLED "THE MOTHER OF ALL BATTLES" -- WHEN IRAQ WAS CONFRONTED BY A U-S LED COALITION TO LIBERATE KUWAIT FROM IRAQI OCCUPATION. THE DEMONSTRATORS ALSO DENOUNCED U-N - IMPOSED SANCTIONS, WHICH HAVE BEEN IN PLACE SINCE GULF WAR ENDED IN DEFEAT FOR IRAQ. PRESIDENT HUSSEIN TOLD THE IRAQI PEOPLE IN A NATIONAL RADIO AND TELEVISION ADDRESS HE IS CALLING FOR THE FORMATION OF A REGIONAL ORGANIZATION TO WORK FOR PEACE AND SECURITY. HE SAYS ALL MIDDLE EASTERN STATES CAN APPLY FOR MEMBERSHIP. THE IRAQI PRESIDENT SAYS THE GROUP WOULD COUNTER AN ANTI-IRAQI WESTERN ALLIANCE THAT INCLUDES THE UNITED STATES, BRITAIN, ISRAEL AND THEIR ALLIES. BUT THE CALL FOR A UNIFIED ARAB STAND BEHIND IRAQ MAY GO UNHEEDED. IT COMES AS A WAR OF WORDS CONTINUES BETWEEN IRAQ AND MUCH OF THE ARAB WORLD. THE EGYPTIAN STATE-OWNED AL AKHBAR NEWSPAPER CALLS [SUNDAY] THE IRAQI LEADERSHIP A PACK OF LIARS. THE OFFICIAL EGYPTIAN MAGAZINE ROSE AL YOUSIF COMPARES SADDAM HUSSEIN TO A MAFIA BOSS. ARAB FOREIGN MINISTERS ARE EXPECTED TO MEET IN CAIRO NEXT WEEK TO COME UP WITH A UNIFIED ARAB POSITION ON THE IRAQI CRISIS. THE MEMBER STATES OF THE GULF COOPERATION COUNCIL SUNDAY HINTED THEY WOULD BOYCOTT AN ARAB SUMMIT IF IRAQ ATTENDED. (SIGNED) NEB/RHE/DW/WTW 17-Jan-99 11:14 AM EST (1614 UTC) NNNN Source: Voice of America .