Half the elite Iraqi troops whose presence threatened Kuwait have moved outside the no-fly zone, a sign that the threat of war with Iraq is receding, Defense Secretary William Perry said Saturday.

"I believe we have been successful in deterring the war with Iraq," Perry told U.S. Army troops at the Kuwait airport before departing for a three-day visit to China.But President Clinton made it clear U.S. forces weren't letting down their guard yet.

"We will stay there until we are sure that the threat is gone," he said during a Connecticut campaign swing.

Sen. John Warner, R.-Va., who was traveling with Perry, said that Kuwait and other Persian Gulf allies have committed to provide financial support for the U.S. military mission in the gulf.

Referring to discussions with the Kuwaiti emir Saturday and earlier talks between Perry and Saudi leaders, Warner said Kuwaiti officials "gave the secretary and me the assurance that this nation together with all other gulf nations . . . .. will help to defray very substantially the cost of this

operation." Perry said Saturday that half of the Iraqi forces threatening Kuwait had pulled north of the 32nd parallel - the line below which the Clinton administration said Iraqi tanks or major troop deployments would draw more U.S. troops and action.

"One of the lessons we've learned from all this is preparedness works and is the key to responding rapidly to ground forces in an emergency," Perry said, adding that planned U.S. deployments were continuing.

Perry said the decision to respond to the threat from Iraq by sending troops immediately rather than waiting for an invasion was critical to avoiding war.

Earlier Saturday, Perry told soldiers with the U.S. Army's 24th Mechanized Division in Kuwait that the Iraqi army unit that stopped in its withdrawal from southern Iraq did not appear to be digging in dangerously close to

Kuwait. "The encampment they're making right now, according to our intelligence, looks like a temporary encampment rather than digging in," Perry told the troops. "It looks like they're simply waiting for the transportation they need to take them north."

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In Washington, a senior Defense Department official said that division of Iraqi Republican Guard troops remained worrisome and decisions on U.S. military deployments would depend in part on what those stalled soldiers do.

"They haven't really changed their position or posture much," said the official, speaking on condition of anonymity.

"They are just kind of sitting there . . . . That's the division that's

worrisome." In contrast, he said, a second Republican Guard division continued to pull back to northern bases and had largely completed its move away from areas threatening to Kuwait. "The signs there are all very positive," the official said.

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