Iraqi soldiers arrested East Germany's ambassador to Kuwait and his wife and took them to Baghdad, the East German ADN news agency reported Sunday.

The arrest of East German Ambassador Kurt Merkel and his wife in Kuwait City was believed to be the first such Iraqi action against diplomats since Baghdad ordered all foreign embassies in occupied Kuwait to close Aug. 24.ADN said Iraqi soldiers picked up the Merkels as they made their way back to the East German Embassy after visiting the West German ambassador's residence.

Iraqi soldiers reportedly detained them, questioned them for several hours and then took them to Baghdad. The Merkels are now at East Germany's mission in Baghdad, ADN said.

And Saudi Arabia announced Sunday it has increased its oil production by 2 million barrels a day to offset shortages caused by the worldwide embargo on Iraqi and Kuwaiti oil.

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"A well-informed Saudi source said Sunday that Saudi Arabia has raised its oil production to 7.4 million barrels a day effective Friday," the radio reported, quoting an unnamed Saudi source. Saudi Arabia's previous OPEC-decreed quota was 5.4 million barrels a day.

The unnamed source said the United Arab Emirates has also increased its oil production by 500,000 barrels per day and Venezuela by 300,000 barrels a day.

In other developments Sunday, diplomats said Iraq planned to rotate foreign journalists in and out of Baghdad on short-term visas, and an Iraqi spokesman called British Prime Minister Margaret Thatcher "an old hag whose (physical) attraction and (political) popularity have long waned" after she warned Saddam may eventually be tried as a war criminal.

French television quoted Iraq's ambassador to Paris as saying all 300 or so foreign journalists would be ordered to leave Iraq, and new visas would be issued lasting no more than five days.

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