Iraq has threatened to execute U.S. and other diplomats unless they hand over Westerners they're sheltering, and it pressed on Thursday with its campaign to swallow up Kuwait, ordering Kuwaitis to apply for Iraqi citizenship by Oct. 31.

The threat against the diplomats was contained in official statements to the U.S., French and British embassies in Baghdad Wednesday and Thursday.The Iraqi Foreign Ministry refused to comment on the statement, but Iraqi officials speaking Thursday on condition of anonymity said the memo only contained a reminder of an Iraqi law - issued when Iraq annexed Kuwait last month - which stipulated that those who provide refuge for foreigners could be punished by death. The officials said the law applies only to Iraqis.

The Iraqi statement, first disclosed by Secretary of State James Baker on Wednesday, was denounced by Western governments Thursday.

Asked about the threat, Baker said, "We've received a note. . . . It falls under the heading of the principle of the three R's," Baker continued. "We've read it, it's repugnant and we reject it."

British oil prices fell sharply Thursday after President Bush said he would sell 5 million barrels of oil from the 590-million-barrel U.S. Strategic Petroleum Reserve. Bush announced the move on Wednesday, saying he aimed to stem crude prices that have skyrocketed since Iraq increased its share of world reserves to 20 percent by invading Kuwait Aug. 2.

Brent North Sea crude was quoted at about $36.60 a barrel, down from the $38.10-a-barrel price seen in New York late Wednesday.

Hurt by new and tougher trade sanctions, Iraq's leaders said Wednesday they would cut off food to non-Arabs in their country. They also announced they plan this weekend to extend nationwide rationing to rice, flour, sugar, tea and cooking oil. Bread has been rationed since Sept. 1.

Before it invaded Kuwait and set in motion the retaliatory international moves against it, Iraq was importing three-quarters of its food.

Diplomats in the Iraqi capital said Wednesday that starting Monday, Iraq will halt food rations to diplomatic missions in Baghdad for distribution to their communities.

In other gulf-related developments:

-Algeria's former president, Ahmed Ben Bella, returning home today after a decade in exile, urged tens of thousands of cheering supporters to volunteer to fight in support of Iraq. He also called on Algeria's government to resign.

-Spain Thursday ordered four Iraqi diplomats to leave the country within a week in retaliation for Iraq's expulsion of Madrid's military attache and assistant from Baghdad, the Foreign Ministry said.

-In Tokyo, Prime Minister Toshiki Kaifu unveiled a plan Thursday to dispatch Japanese military personnel overseas for the first time since World War II, but he said they would be unarmed and kept away from combat.

The proposal, which must be approved by the Japanese parliament, calls for the establishment of a group of military and civilian personnel to participate in U.N. peacekeeping activities.

Kaifu acknowledged criticism that Japan is supplying little more than money to the U.S.-led force deployed in the Middle East. Kaifu is to travel Friday to the United States, where some of the harshest criticism has been voiced.