Two days before Kofi Annan made his "breakthrough" in Baghdad, the U.N. Security Council, with U.S. approval, authorized a huge increase in the amount of oil that Iraq can now sell. In a stroke, this "humanitarian" gesture doubled Iraq's oil income to $10.5 billion a year. Iraq can now sell nearly 2 million barrels a day - about two-thirds of the oil it was selling when producing at peak capacity before the embargo. And that number does not even count the oil that we know Saddam is illegally smuggling through Iranian coastal waters.

At this U.N.- and U.S.-authorized level, Iraq - under sanctions! - becomes the eighth largest oil exporter in the world.This embargo-buster passed with little fanfare. It barely made the back pages of the newspapers. All hands pretended, moreover, that there was no linkage between this bonanza and the subsequent Saddam-Annan deal in Baghdad.

But remember that last November, when the administration was desperately looking for a way out of the last Iraq crisis, the State Department said we'd be willing to offer Saddam a "carrot" to get him to be nice. Such as? Such as a sharp increase in the amount of "humanitarian" oil that Iraq could sell.

So last time, when Saddam broke the gulf war agreements and kicked out U.S. arms inspectors, the carrot was offered. This time, when Saddam broke the gulf war agreements and stymied all the arms inspectors, the carrot was delivered.

Last time, President Clinton flapped about threateningly, then watched meekly as the Russian foreign minister brokered a "compromise." This time, Clinton flapped about threateningly, then watched meekly as the U.N. secretary-general brokered a new "compromise."

Last time, Clinton's U.N. ambassador crowed that Saddam had "blinked." This time, Madeleine Albright's spokesman deemed the deal "win-win" for us.

Last time, the deal turned out to be completely worthless, giving Saddam four more months to hide his nasty stuff. This time, the deal is worse than worthless, giving Saddam crucial victories on the two issues he cares most about: economic sanctions and weapons inspections.

1. Sanctions. Not only did Saddam incur no penalty for his open defiance of the United Nations and open provocation of the United States, he was treated by Annan with a deference and flattery that bordered on the indecent. Moreover, the Annan-Saddam Memorandum of Understanding breathes not a word of criticism about Iraq's violating previous agreements, nor about its creating this crisis.

On the contrary, Annan trashed his own arms inspectors (UNSCOM) as unruly "cowboys" and undertook, in writing, to bring Saddam's ultimate objective, the lifting of sanctions, "to the full attention of the members of the Security Council."

Sure enough, upon his return to New York, Annan began emphasizing the need to show Iraq "the light at the end of the tunnel," the Iraqi code phrase for ending sanctions. Like Russian Foreign Minister Primakov, who brokered the first nonagreement in November, Annan has become Saddam's sanctions-lifting advocate to the world. Unlike Saddam buddy and ex-KGB biggie Primakov, however, Annan is an effective shill.

2. Inspections. The United States had demanded no retreat from free and full access and no tampering by Iraq with the composition and authority of UNSCOM teams. Annan came back with a radical change in the composition of the inspection teams and a serious erosion of their authority. Inspection of "presidential sites," those huge complexes with hundreds of buildings where Saddam could be hiding anything, is taken away from control of UNSCOM, the tough inspectors whose probity we can rely on.

These sites are instead entrusted to a new body, headed by an Annan appointee and reporting to him. It will comprise political appointees, including diplomat-spies from Iraq-friendly France, Russia and China, as well as inspectors who presumably possess the requisite delicacy and sensitivity to Iraqi feelings. Iraqis can be so touchy about their stores of poison gas and anthrax.

How do you carry out a spot inspection - the only kind that has any hope of finding anything - when you first have to notify and await the arrival of, say, the Russian appointee, who has a hotline to the very Iraqi regime he is supposed to inspect? Inspector Clouseau has a better chance of finding concealed nerve gas than this polyglot outfit of compromised politicians and handpicked inspectors.

So tote it up. For Saddam: No penalty. Annan shilling for his demand to end all sanctions. UNSCOM undermined. Presidential palaces secure for storing anthrax and such. And his oil output doubled.

Another landmark in Clinton diplomacy.