GULF WATCH: Day 81 : A daily briefing paper on developments in the crisis : Hostage Front:

After a meeting with Saddam Hussein, former British Prime Minister Edward Heath announced that he has arranged for a number of sick and elderly British hostages to be released Tuesday. The list is being drawn up by Heath’s advisers and Iraqi authorities.

Six German nationals recently released by Iraq sharply criticized their government for not doing enough to help the 400 remaining German hostages.

Military Front:

An Iraqi merchant vessel ignored more than 40 warning shots across its bow by an American destroyer. A tense standoff continued into the night as the Iraqi vessel sailed toward the Yemeni port of Aden.

In Japan, about 23,000 leftists and pacifists protested their government’s proposal to send Japanese troops to Saudi Arabia.

From Paris, Defense Secretary Dick Cheney said the United States believes it has all the authority it needs from the United Nations to justify an attack on Iraq and Iraqi forces in Kuwait.

Sanctions Front:

The Iraqi military is suffering from critical shortages of tires and lubricants, limiting the mobility of ground troops and forcing the curtailment of training flights, U.S. intelligence reports said.

Gas shortages are also expected to hurt Iraq’s military. Average motorists in Iraq waited in long lines Sunday, filling up before rationing starts Tuesday. But Iraq’s official press declared the economic blockade a failure and pledged to fight the “battle of all battles.�

Jordan, under pressure to apply U.N. sanctions more rigorously, halted sales of medicine to Iraq, customs officials said.

Persian Gulf Troop Deployments:

* United States: 200,000

* Saudi Arabia: 55,500

* Egypt: 14,000

* France: 13,000

* Gulf Coop. Council: 10,000

* Britain: 9,500

* Kuwait: 7,000

* Syria: 4,000

* Pakistan: 4,000

* Bangladesh: 2,000

* Morocco: 1,700

* Senegal: 500

* Canada: 450

* Czechoslovakia: 200