New batty theory of mine: the folks in the US government who sold Saddam Hussein all those weapons back in the days, besides selling him all the scary legal stuff we know about, also sold him some really nasty things (call them "Hamdingers") that we don't know about, but that only they and Hussein know about. They've told him that there's no use trying to use the Hamdingers against US forces, because they don't work -- maybe they never actually worked at all, or maybe the US forces have Hamdinger Overrides that render them useless, or maybe they're just expired now. Hussein replies that, to the contrary, they will work quite nicely against US forces, and will make a nasty mess. And so it's a standoff: if the US forces back down, it could be construed as meaning that they're afraid of him using his Hamdingers (an implication that they really can work). If Hussein backs down, it could be construed as meaning that he thinks his Hamdingers really can't work, and so he needs to avoid a situation where he would otherwise try to use them, since that would reveal that he's defenseless.
What's a Hamdinger? Beats me, but (so my batty theory goes) it's something you don't want to be on the wrong end of (if it actually works); and it's something that you don't want to admit that you sold to Saddam Hussein -- and consider the things that people are already on record as having sold him!
Bigger than a breadbox?