Assume for the sake of argument that he could speak fluent English.
I think people underestimate how critical this can be in terms of how Americans perceive a given country or its leader.
Using an interpreter puts a layer of separation between the subject and the interviewer; it's one more layer between the subject and the public. In the YouTube clip, we're not hearing Saddam explaining himself in his own words; we're hearing someone else's disembodied voice speaking halting, stilted English. Nuances are lost. Gestures and facial expressions lose meaning due to time delay. It's probably an even more damning situation to be in when speaking Arabic, since so many of their words and phrases don't translate well into English or are based on Koranic allegories that would be totally lost on American listeners (in the same way all of the expressions English speakers get from Shakespeare or the King James Bible would make little sense when translated into other languages).