Saddam Hussein’s propaganda mill blustered on last week, but his threats betrayed a struggle to stay in power. “Traitors and mercenaries” were at work, conceded the government daily Al Thawra, adding: “All of them shall regret it. They will pay.” Iraqi soldiers fought running battles with rebels around the southern city of Basra, springboard for a revolt by Shiite Muslims. They neatly piled corpses in the city’s streets following a tank attack. Yet by the weekend U.S. officials said the revolt had spread to more than two dozen towns and cities; Iraqi opposition figures said rioting was underway in five neighborhoods of Baghdad. Kurdish leaders claimed advances in the mountainous northeast. Dissident exiles issued their own threats. Saddam, Teheran-based Ayatollah Muhammad Bakr al-Hakim told NEWSWEEK, faces “a dark and bitter end.”

The Iraqi dictator has never been in greater danger. For 22 years, he held power through a combination of terror, money and foreign support. Operation Desert Storm knocked away two of those props; Iraq is bankrupt and a world pariah. The nation sinks a notch deeper into despair with every returning soldier’s tale of humiliation in Kuwait. In the short term, can terror alone protect the regime against a restive people, as it did in Pol Pot’s Cambodia? Will the Shiite upheaval give birth to an Islamic Republic of Iraq? “Everything is possible in Iraq now,” said Amatzia Baram, an Israeli expert on Iraq.

The coalition forces that so gravely wounded Saddam fear both possibilities. U.S. officials would like him to go cleanly, in a military coup. This would leave the country still dominated by its Sunni Muslim minority, which the United States sees as a bulwark against expansionism from Shiite Iran. “The position of the administration is precisely that we want to get rid of Saddam, but not his regime,” charged a U.S. Senate staffer. “It’s like getting rid of Hitler but leaving the Nazis in power.”

Iraqi resistance figures are incensed to see those who called for Saddam’s head sitting out the uprising. “You bomb the country to hell; is there no sort of moral responsibility to help these people?” said Ahmed Chalabi, a Shiite banker who has emerged as a spokesman for Saddam’s opposition. Iraq’s expulsion of Western journalists last week added to fears of a slaughter. Then allied intelligence agencies intercepted Iraqi orders to field commanders in the southern cities of Najaf and Karbala to “use the liquids”–chemical weapons–The New York Times reported. There President Bush drew the line, even though Saddam has scrupulously followed his terms for a permanent cease-fire. Iraqi diplomats in Washington and New York were told Bush would not abide any such attacks. Administration officials drew up plans for airstrikes against Iraqi units that use poison gas, the Times reported. The prospect may also have prompted Iran to abandon its neutrality. President Ali Akbar Hashimi Rafsanjani said Saddam should “give in,” not “write the last page of his term with the blood of his own people.”

There was already more than enough blood. Towns strung along the highway between Basra and Karbala, holy to Shiites, erupted in unison on March 2, according to refugees who reached Safwan, near the Kuwaiti border. In almost every case, resistance fighters first broke open the jails, then turned to killing. Soldiers, Baath Party members and government officials were attacked; resistance-led mobs killed entire families. Many fighters, armed with weapons brought in from Iran or seized from Iraqi soldiers, wore green headbands and carried pictures of the late Ayatollah Ruhollah Khomeini and Bakr al-Hakim, head of the Teheran-based Supreme Council of the Islamic Revolution. “Sayyed [al-Hakim] came from Iran; he will kill you, Saddam,’ they chanted. Iranian fighter jets roared low over the city, witnesses said.

After three days, Saddam’s troops began retaking ground, using tanks, artillery and rockets to indiscriminately kill thousands of fighters and civilians. The refugees described the resistance fighters’ position as desperate. “If we don’t get help from the allies, we don’t stand a chance,” said a dockworker who fled from Basra. But reporters freed Saturday from captivity in the region said Army units had been demoralized and under frequent attack. Saddam probably can hang on as long as he retains the loyalty of his elite Republican Guard (which received big pay raises last week). But military leaders traditionally dislike suppressing internal revolts. If popular unrest keeps spreading, the Army may break ranks–and break Saddam’s hold on power too.