President Bush's effort to give Saddam Hussein a last chance for a peaceful solution of the Persian Gulf crisis and the Iraqi president's decision to free Western hostages have transformed the atmosphere surrounding the 4-month-old standoff.

But neither move has changed the two most significant underlying aspects of the situation: Saddam's apparent determination to keep Kuwait and the president's seeming willingness to force him out.As a result, there seems little evidence so far to justify the rising wave of optimism engendered by the dramatic moves. Every sign is that the two parties remain on a collision course.

Unless Bush or Saddam blinks, the result could be a bloody showdown in the month or two following the Jan. 15 deadline the United Nations imposed for Iraq to get out of Kuwait.

Indeed, most of what Bush and Saddam have said and done in the past two weeks seems primarily designed to achieve their mutually contradictory goals in the crisis.

The decision by Bush to dispatch Secretary of State James Baker to Baghdad had a twofold purpose.

First and foremost, it was designed by the White House to deliver the message directly to Saddam that Bush is serious about the use of force, if necessary, to get the Iraqis out of Kuwait.

Bush has repeatedly said Baker won't go to Baghdad to negotiate.

And everything that the president has done and said since he announced the mission has served to bolster the belief that he is preparing to attack on the basis that that may be the only way to get the Iraqis out of Kuwait.

Second, assuming the Baker mission comes off, it would obviously also give the Iraqi president one last chance to back away from the conflict that his refusal to leave Kuwait might otherwise trigger.

If the president's principal goal is to get the Iraqi leader to back down, Saddam's response seems designed to bolster his own determination to stay. In fact, he has raised renewed doubts about his good faith by turning the proposed exchange of diplomatic missions into a negotiation itself, seeking to delay Baker's visit until the very eve of Jan. 15.

At the same time, Saddam's decision to release the hostages seems to have been motivated less by an outbreak of humanitarianism than by a desire to sway U.S. and other Western public opinion against an American resort to force.

His decision cited the rising resistance to war on Capitol Hill. That seemed to suggest that despite some initial speculation that the Iraqi leader was beginning to retreat, his move was designed more to forestall an attack by fostering greater domestic U.S. opposition.

By appearing to be reasonable in releasing the hostages, Saddam may have gained some valuable public opinion backing for his decision to stay in Kuwait.

In addition, Saddam seems unlikely to back away if he thinks that domestic pressures will force Bush to pull back. And Bush has already created some concern that he is preparing to do so.

One reason was his decision to withdraw U.S. diplomats from occupied Kuwait. While there is certainly some justification for the administration's contention their jobs will end when the hostages are released, Bush had previously said there were important principles in his decision to keep the embassy open.

Finally, Baker's statements that Iraq would be spared from attack if it withdrew, and rumors of a compromise solution that would follow, suggested that the administration was more interested in getting itself out than in any long-term threat to the region from nuclear weapons.

Such judgments are surely premature. Indeed, Bush's statement that the withdrawal of the embassy staff in Kuwait will make it easier to go to war is not only accurate but seems to provide a more accurate reading of his readiness to do so.

At the same time, it seems as difficult to read Saddam's intentions as it was before his initial Aug. 2 attack on Kuwait.

And even if he were unwilling to risk war in order to keep his ill-gotten Kuwaiti gain, he would probably wait to reveal that until he became convinced that there was no other alternative.

Rising domestic opposition may make it harder for Bush to follow through with his threats. But Saddam is probably engaged in wishful thinking if he reads the U.S. reaction to his release of the hostages as indicating that Bush doesn't really mean it.