The case of Nicholas Daniloff continues to escalate, casting a shadow on talks to firm up plans for a summit meeting later this year. Soviet leader Mikhail Gorbachev has now publicly accused Mr. Daniloff, the Moscow correspondent of U.S. News & World Report, of being a spy. This is a direct challenge to the credibility of President Reagan, who assured Mr. Gorbachev that the American journalist is not a spy.
Gorbachev's reference to Mr. Daniloff as ``the spy who was caught red-handed'' seems likely to fuel demands for firm retaliatory action against the Soviets for continuing to hold the journalist. Adding to the atmosphere of mistrust are the comments of the Soviet ambassador to the UN, Alexander M. Belonogov, who accuses the US of deliberately seeking to torpedo the summit by expelling Soviet diplomats from the UN.
The Reagan administration still hops that a summit can be held. But it is being pummeled for its handling of the Daniloff affair by conservatives who say the administration has caved in and by liberals who accuse it of being provocative.
The Daniloff case will be the first item on the agenda when US Secretary of State George P. Shultz and Soviet Foreign Minister Eduard A. Shevardnaze face each other across a conference table today.
The Soviets are at pains to appear reasonable -- perhaps to position themselves to blame the United States if superpower relations continue to deteriorate and the summit is called off.
Mr. Shevardnadze, arriving in Washington, said the Daniloff case ``can be resolved.''
``Such incidents have happened before and may happen in the future,'' he said. ``But unfortunately it does happen, and on such occasions, it is important that political leaders . . . act wisely and with foresight, that they do not impede normal relations.''
A summit, he said, is ``50 percent'' arranged, but ``everything will depend on the US administration.''
The message from Moscow, however, was far different. In addition to Gorbachev's characterization of Daniloff as a ``spy,'' the Soviets are also threatening to retaliate for the expulsion of 25 diplomats from the Soviet mission to the United Nations.
The US, in announcing the expulsions, denied the move was linked to the Daniloff case. Nevertheless, the timing of the announcement -- just before the meeting today between Mr. Shultz and Mr. Shevardnadze, and just after Shultz had warned of a tougher US response -- strikes the Soviets as hardly coincidental.
``The American side is making a mistake thinking that this provocative step will have no consequences,'' Soviet Foreign Ministry spokesman Boris D. Pyadyshev says. Mr. Belonogov, the Soviet UN ambassador, made a similar claim in a New York press conference. But neither man would say what the consequences might be.
The Soviets claim the expulsion order is illegal, and they gained some support for that view Thursday from UN Secretary-General Javier P'erez de Cu'ellar.
A spokesman for the UN chief said through a spokesman that the US order is incompatible with the 1947 accord that established the US as the host country to the world organization.
Some analysts expect the Soviets to launch a legal challenge or, alternatively, to begin expelling US diplomats from the American Embassy in Moscow. Indeed, some US experts on Soviet affairs say they believe that events are now moving quicker -- and escalating faster -- than either side intended.
Prof. Jonathan Sanders, deputy director of the Harriman Institute for Soviet Studies at Columbia University, says the Daniloff case has opened up a ``chink'' in US-Soviet relations that's allowed the venting of much of the accumulated distrust and suspicion that both countries harbor toward each other.
``It's a very tough one to get out of now,'' says Gen. Brent Scowcroft, a former presidential adviser. Privately, Reagan administration officials argue that both sides do want a summit.
But Jerry Hough of Duke University and the Brookings Institution says that is a serious misreading of the situation. The Soviets probably did not want a summit, he says, and will feel no regret if it is canceled. That way, he says, the US can be held up as a belligerent superpower continuing to threaten Soviet security.