RIGA, USSR — WITH one eye firmly on neighboring Lithuania, Latvia has striven to reach a formula for independence that would at least soften the blow for Moscow. The Baltic republic's declaration, approved Friday by just over the necessary two-thirds majority in the Latvian parliament, did not proclaim independence outright. Rather, it announced the beginning of a process that would ultimately lead to renewed nationhood.
But Soviet President Mikhail Gorbachev, who now faces a unified Baltic bloc set on breaking away from his country, apparently is not impressed.
The official Soviet news agency Tass said that Mr. Gorbachev has ruled out talks with Latvia until the republic fully restores the Soviet Constitution. Tass quoted Alfred Rubiks, the leader of the pro-Moscow majority of Latvia's Communist Party, as saying that Gorbachev considers Friday's declaration ``a breach of constitutional norms which is leading to a breakdown of state ties between the republic and the USSR.''
Mr. Rubiks, who said he spoke with the Soviet president by telephone, warned that Gorbachev ``reserves the right to take retaliatory political, economic, and administrative measures.''
Many pro-independence Latvians had already been expecting sanctions from Moscow, no matter how muted the declaration of independence. Mavriks Vulfsons, a leading Latvian legislator, reacted with equanimity when asked what he thought Moscow might do.
``Nothing in particular, nothing tragic,'' responded Mr. Vulfsons. ``Well, maybe they'll postpone the May 15 negotiations [with Gorbachev aides].''
As Moscow and Lithuania have been slugging it out loudly and publicly, the Kremlin has continued quiet discussions with the other two Baltic republics.
With the example of Lithuania's escalating economic crisis as a present reminder of what could face Latvia and Estonia, Gorbachev advisers, including Politburo and Presidential Council member Alexander Yakovlev, have offered the other two Baltic republics the ``special status'' of confederation with the Soviet Union.
The term confederation could be interpreted as a loose alliance of independent nations - but many Latvians, remembering that the republic's 1939 ``mutual defense pact'' with the Soviet Union led to annexation in 1940, are leery of such a deal.
``After seeing Gorbachev's attitude to Russian democrats, I personally disbelieve this man,'' says Juris Bojars, a parliament deputy, referring to the Soviet Communist Party's attempt to drive some pro-reform radicals out of the party.
``If we really had a proper confederation - why not? But I cannot believe it. After our very strong pressure, they [promised] us economic independence, but they haven't given it to us. The government constantly undermines this independence. If we cannot achieve even economic independence, how can we achieve, in the framework of the Soviet Union, real sovereignty?''
Meanwhile, Latvians are bracing for harsh economic sanctions. The Latvian Popular Front has formed an antiblockade committee. Vegetable gardening has grown in popularity. Already Latvia is feeling the effect of Moscow's wrath, as sanctions against Lithuania reverberate beyond that republic's borders. Much of Latvia's gasoline comes from Lithuania's Mazeikiai oil refinery, now deprived of deliveries.
Still, Latvia is clearly trying to avoid the experience of Lithuania, which declared immediate independence March 11. Moscow's retaliatory cutoff of oil and deep cuts in gas deliveries have immobilized the republic's economy. Deputy Prime Minister Algirdas Brazauskas says Lithuania will be out of oil in the next two weeks unless it finds alternative sources.
Pro-independence Latvians are also mindful of the republic's sizable non-Latvian population, almost half of its citizens. Although many non-Latvians support independence - 42 percent, according to a recent poll by the Soviet government daily Izvestia - Latvia's minorities nevertheless want assurances that their rights will be protected.
Unlike Lithuania, Latvia left parts of the Soviet Constitution in force, while reinstating some of the underlying principles of Latvia's 1922 Constitution. Latvia also stressed its desire to maintain a dialogue with Moscow during the unspecified transition period toward independence.
In contrast with Lithuania and Estonia, Latvia said it is willing to compromise on the military. The presence of Soviet military bases in Latvia ``should be based on a treaty that would develop from the principles of the Oct. 5, 1939, mutual defense pact,'' Anatolijs Gorbunovs told the Latvian parliament in his nomination speech for the chairmanship.
One form of compromise could be to have only Latvian troops serving on Latvian soil, and no Latvians serving outside the republic.
Of the three Baltic republics, Latvia has the most Soviet troops, and the Army's Baltic unit has its headquarters here. Latvia also has three ports that are key to the Soviet Union's Baltic military strategy.
But Latvia's biggest asset may be the parliament's reelection of Mr. Gorbunovs as the republic's president.
Gorbunovs, an ethnic Latvian despite his Russian name, has long experience with Moscow as a party functionary who rose through the ranks to become leader of Latvia's parliament in October 1988.
Gorbunovs once denounced pro-independence activists as traitors, but has since evolved in his political thinking. The Popular Front supported him in the recent parliamentary elections as a smooth diplomat who can unify the ethnically divided republic. In fact, he is more popular among the republic's Russians than among Latvians.
Throughout his nomination speech, Gorbunovs struck a tone of pragmatism.
``We sometimes idealize or understand the term independence primitively,'' Gorbunovs said, warning that Latvia will have to rely only on itself on the tough road ahead. ``It would be naive of us to wait for Western `CARE packages.'''