US confronts broad diplomatic fallout

The United States role in the Middle East peace process is finished - for the moment, at least. Further US support for anticommunist rebels fighting the Nicaraguan government is highly unlikely.

The Western allies are deeply troubled by the Reagan administration's disarray, and eager to see it end quickly.

The Soviets, meanwhile, are being cautious about exploiting the administration's troubles. While arms control efforts have not been derailed, neither are they enhanced by the turmoil in the Reagan administration.

These are the major elements of the diplomatic fallout from the arms-to-Iran, funds-to-the-contras controversy in which the Reagan administration is embroiled.

Administration officials, diplomats, and other experts say that the longer the controversy drags on, the more damaging it could become.

Here are the effects of the imbroglio in four key areas of the world:

Middle East. News of US arms sales to Iran has already raised serious questions about US antiterrorism policy and - by potentially altering the military balance in the Persian Gulf - the US position regarding the six-year Iran-Iraq war. (US arms shipments enhanced Iran's offensive capability, Page 3.)

The arms deal could also terminate the already moribund effort to find a negotiated solution to the Arab-Israeli dispute over the West Bank and Gaza.

With the weakening of the US's credibility as an impartial broker between competing Arab and Israeli interests and the fueling of Arab hostility toward Israel for abetting the arms-for-hostages deal, the peace process could be put on the shelf at least until after Reagan leaves office.

``The peace process was dead as a doornail,'' says one Washington-based Middle East expert who asked not to be identified. ``The Iranian affair has embalmed it.''

``The incident may ultimately help the State Department get a better grip on US Middle East policy,'' says Philip Stoddard of the Middle East Institute. ``In the meantime, it has left our friends on the Arab side disheartened.''

Central America. The main casualty of the Iran operation could be future US support for Nicaraguan resistance forces.

Chances are ``slim to none'' that Congress will approve new aid to the contras, one committee aide on Capitol Hill speculates.

Confusion over the ultimate objectives of contra aid and allegations that Reagan officials violated congressional restrictions in administering the program have already weakened congressional support for providing funds to the insurgents.

The revelations that National Security Council official Oliver North directed profits from Iran arms sales to contra leaders - profits that may have sustained a secret, perhaps illegal contra resupply operation - may prove the last straw, sources on Capitol Hill say.

Congress could move to block disbursement of the unused portion of a $100 million aid package approved last summer. Alternatively, Congress could simply say no when President Reagan comes back for additional funding next year, as expected.

``The real effect is atmospheric,'' says Susan Benda of the Center for National Security Studies. ``The feeling is that the administration can't be trusted to abide by the spirit of congressional limits. The Iran episode could spell doom and gloom for the [contra aid] policy.''

Western Europe. Relations with America's Western allies are bound to suffer, especially if the Iranian arms controversy drags on.

``They're going to be seriously disturbed by this,'' says Dr. Job Dittberner, an official of the Atlantic Council. ``I think it's going to damage American credibility deeply.''

After pressuring the allies to stand firm against terrorism and policing arms shipments to the Middle East, says Dr. Jeswald Salacuse, dean of the Fletcher School of Law and Diplomacy, the US is now seen ``to have been doing exactly what we told them not to do.''

But University of Kansas political scientist Roy Laird predicts that many Western nations will be more forgiving. ``The people who deal in international affairs are aware of the complexity and secrecy of these kinds of deals'' and will see the necessity of making ``real world'' decisions that preclude full public disclosure, Dr. Laird says.

For now, some US allies are simply viewing the controversy as an American domestic issue and are waiting to see how divisive it becomes.

``Regardless of the political complexion of the White House of the day, Western European governments generally look for stability, reliability, and continuity in US foreign policy,'' a European diplomat says.

``People will be watching very carefully to see how the White House recovers,'' he says, or whether the ongoing controversy ``leads to a kind of paralysis'' in American foreign policy.

The Soviet Union. The Soviets will move cautiously to exploit the administration's troubles. Arms control efforts could be complicated - especially if the White House becomes preoccupied with the crisis. But prospects for an agreement on limiting nuclear arms are not significantly altered by the scandal, according to US experts.

``Arms control may not be as affected as a lot of people would lead us to believe,'' an administration official says. He adds, ``Even if they thought the President was crippled, the Soviets can't simply wait for two years without making any progress. Gorbachev has got to show he's doing something.''

The Soviets ``will be very cautious,'' says Harvard historian and Soviet expert Richard Pipes.

``They know [the President] is extremely popular,'' Dr. Pipes says, and he could eventually be seen as having been ``victimized'' by others within his administration.

``I don't think [the Soviets] will do anything until they see how this thing unravels,'' he says.

Prof. Jonathan Sanders, assistant director of the Harriman Institute for Soviet Studies, says: ``I'm sure [the Soviets] are laughing up their sleeves about the inability of the US to keep secrets, the profit motive, the ineptitude.''.

But, he adds, the Soviets might also have reason for concern. They had counted on President Reagan's ability to gain congressional approval for any arms control agreement that might be negotiated. Now that may be open to question.

``Congress is going to be raising questions about the entire range of foreign policy,'' says the Fletcher School's Salacuse. ``Has this diminished the President's power to get something through Congress? I'm not sure.''

``I can't see the President, with the problems he has now ... thinking about the long-term question of arms control,'' Salacuse says.

On the other hand, says Sanders, ``How better to take some attention away from a scandal than with a major achievement in arms control?''