What thoughts are now in the mind of the world's most famous, hated man? After 24 years in ultimate power, and almost as many at war against neighbours and then the world, will Saddam say why he chose a route, when so many others were on offer, that led to a squalid hiding place close to where his life began?

Saddam's capture on 13 December will not bring immediate peace to Iraq. Nor will it bring sense to a region maddened by a quarter century of his rule. His physical condition reflected the political realities. Saddam is finished, the Baathist era is over and the violence in Iraq is due to forces he does not command.

In Washington, US President Bush spoke in measured terms the day after Saddam's capture of the work still to be done. UK Prime Minister Tony Blair earlier called for peace and reconciliation within Iraq. Their words softened the blow that Saddam's capture has dealt to millions in the Arab world in thrall to the illusion that he was America's ultimate, unbeatable enemy, the last champion of Arab pride. The reality is that Blair and Bush have won and are about to reap huge political benefits.

The war for Iraq was an enormous gamble. It could have failed on the battlefield, and came close to failure in the early months of reconstruction. Until last weekend, it was Blair and Bush, not Saddam, who were in the dock, charged by world opinion with delivering regime change in Iraq by questionable means. The tables have been turned. Even bitter critics are being forced to concede that the attack on Iraq has, at least for now, been vindicated.

The coalition claimed Iraq had weapons of mass destruction (WMD) ready to use , but no evidence of this has yet been found. It says documents proving Saddam had a WMD programme will soon be published. The issue, however, has become less pressing and may become politically redundant.

The Iraq war involved two battles. One, to reshape the country's politics, is still being fought. The other, for the hearts of American voters, has probably been won. Presidential elections next year were expected to pit a Democratic contender against Bush on ground defined by the war for Iraq. The campaign will now be fought on other issues. On Iraq, Bush looks invincible. For Blair, the issue is less immediate. No election is required until 2006, but his standing had been hurt by dissimulation about Iraq's WMD. After Saddam's capture, the year closes with Blair on a high, a third term of office within grasp.

The international ramifications could be substantial. America and Britain have earned respect for bringing to justice one of last century's greatest outlaws. Their use of money and force to achieve that goal has been impressive. A message has been delivered that present and future enemies cannot ignore.

Pragmatic Arab leaders will now hurry to be on the winning side. Warm words of praise are flowing from the region to the White House and Downing Street in private messages. The Saudi government's statements about Saddam's capture have been muted, but the kingdom's press has repeated the White House's 'good riddance' message. No Arab government so far has diverged from this line. The government of Iran, predictably, is delighted.

In Europe, a similar reaction can be expected. Germany may now decide it is time to fall into step with the British approach to reconstruction in Iraq. French Foreign Minister Dominique de Villepin was one of the first to welcome the arrest. James Baker, appointed to negotiate Iraqi debt reductions, was warmly greeted in Paris on 16 December. These developments raise hopes that the split in the UN Security Council caused by Iraq will heal further. Washington closed the gap with China, France and Russia with the announcement last month of an accelerated political process for Iraq. This trend will probably quicken.

Implications

The arrest could have implications for the Arab-Israel peace process. American presidents hesitate to offend Israel in an election year, and Bush is no exception. But the political rewards he is reaping for Saddam's arrest may create room for a more assertive policy.

Developments in Iraq suggest the war there will continue. The November plan calls for Iraqi sovereignty to be restored on 1 July 2004. Saddam's seizure provides no reason why this timetable should change. The obstacles are neither smaller nor larger than they were before 14 December.

The coalition hopes the psychological impact of Saddam's arrest will reduce levels of violence in Iraq, but do not expect this to happen soon. Attacks on coalition and Iraqi forces come from tribal fighters, foreign fanatics and Iraqi nationalists unconnected with the Baath Party. Security specialists forecast increased violence in the short term.

Nevertheless, the coalition's position in Iraq is stronger. By capturing Saddam, it has demonstrated a capacity that looks limitless. It is a blow, if not yet a decisive one, against the Iraqi resistance that may become more telling as the shift of power to Iraqis unfolds. If their goal is to drive the Americans from Iraq by force, the coalition's opponents now have a larger task.

The White House will fend off domestic criticisms of American casualties. Unless coalition casualties rise radically, US forces will be maintained. Some in America will argue the job is done and that US troops should be brought home. Bush is well-placed to deal with these complaints as well.

The economics of Saddam's arrest were immediately positive. Hopes that the present pro-business, low-tax US administration will be returned next year gave a lift to US and world equity markets. The oil price slipped, but not by much, on expectations that order would be brought more quickly to Iraq, allowing oil production to rise more swiftly.

So for practically everyone, Saddam's arrest is good news. Which brings us back to the photograph of the dishevelled prisoner, now languishing in jail. The world wants a full account of his actions to be delivered in a court of law. Coalition leaders say they prefer a trial in Iraq under rules determined by Iraqis. If that takes place, conviction and execution seem unavoidable. The look on the face of Saddam suggests that he already knows his fate is sealed. n

Iraq: Focusing on the future, 2-3 March, Dubai

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