"He is again caught between the hammer and the anvil," a diplomat told AFP on condition of anonymity.
Saddam saw his troops expelled from a seven-month occupation of Kuwait by a US-led multinational force during the 1991 Gulf War.
Twelve years on, the United States and Britain have amassed a huge number of troops in the Gulf in anticipation of a fresh assault to topple Saddam's regime, which Washington and London accuse of possessing and developing weapons of mass destruction.
The resumption of inspections in November after a four-year break was an added dimension to the international supervision already clamped on Iraq, notably through the control of its oil exports by the United Nations.
But the UN Security Council is divided over how best to deal with Saddam.
The United States and Britain formally submitted a draft resolution Monday to the Security Council seeking authority to disarm Iraq by force.
Veto-wielding council member France said ahead of the submission that the second resolution was not necessary.
France, Russia and Germany -- supported by China -- were to submit a counter-proposal at the United Nations calling for stronger weapons inspections in Iraq.
"Saddam Hussein finds himself in a yet tighter corner," said another diplomat in Baghdad.
But he noted that the disarmament envisaged by the United Nations, if it profoundly damages Iraq's military capability, will leave in place a political, police, tribal and clan structure that can ensure the survival of the regime.
And it's for that reason that diplomats in Baghdad remain confident that Saddam Hussein will continue to accept UN demands for disarmament, notably the the latest declaration that its medium--range al-Samoud missiles are banned and must be destroyed.
Iraq, however, remained defiant Tuesday, asserting that it was left with no choice but to take up arms against an imminent US-led war.
Saddam insisted in a rare US television interview that the missiles did not breach UN conditions on their range.
Iraq's state-controlled press took up the charge against US President George W. Bush.
"The insistence of the administration of little Bush to ignore the will of the international community ... only leaves the Iraqis the choice of defending their lands," said Ath Thawra, mouthpiece of the ruling Baath party.
Chief UN weapons inspector Hans Blix has given Iraq until Saturday to begin destroying the missiles, which can carry a warhead of 300 kilograms (660 pounds), as well as its component parts and manufacturing systems.
It came after a panel of weapons experts concluded that they exceeded the allowed range of 150 kilometres (93 miles) - Sapa-AFP.