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European countries reacted to Iraq's seizure of Kuwait with a show of unity, accompanied by anxiety about the impact of President Saddam Hussein's invasion on their economies. Meeting Aug. 4 in Rome, the 12 European Community partners froze Iraqi assets, put a ban on oil imports from Baghdad, and ordered a halt to arms sales to the Iraqi regime. They called for immediate Iraqi withdrawal from Kuwait and pledged total support for any sanctions the United Nations decided to order.

One EC official said after the meeting: ``I cannot remember a time when Europe responded so rapidly and with such unity to an act of aggression. Partly, the reason was the sheer shock caused by Iraq's action. But Europe has a huge amount at stake in the Gulf and must do everything it can to protect its interests there.''

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Britain and France sent extra naval ships to the area, adding to the already considerable strength of the United States force in the Mediterranean.

But the cost to European countries of the invasion could be steep. In London, as prices at oil pumps shot up beyond $3.75 a gallon, government sources made gloomy forecasts of inflation topping 10 percent.

In West Germany and France, where inflation is roughly half the level of that in Britain, oil company executives spoke of probable disruption to oil supplies as imports of Iraqi crude were halted and petroleum prices climbed.

At the Rome meeting Britain, West Germany, France, Italy, and Spain reportedly agreed to freeze Kuwaiti assets in their countries and to coordinate their future actions. Half of Kuwait's foreign investments of $100 billion have been handled through the Kuwait Investment Authority, headquartered in London.

Here, too, there is a down side to punitive action. Kuwait has invested heavily in European industrial and commercial projects. If the assets are frozen for a protracted period, financial analysts said this weekend, these concerns would stand to suffer.

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