IT is time for George Shultz to step down as secretary of state - but not for the reasons that have been widely mooted since the Iranian arms-for-hostages fiasco and the scandal over diversion of funds to the Nicaraguan contras. He should resign, not because President Reagan pursued a disastrous policy against his advice, but rather because he abrogated his responsibilities as secretary of state by being too much of a team player - and not for the first time. If he felt last January that the arms-for-hostages swap with Iran was as politically and morally wrong as he implied after the blowup last month, he had a duty to himself, to his office, and to the President to make his opposition a resigning issue many months ago.
But, it may be argued, Mr. Shultz had only ``fragmentary'' and ``sporadic'' knowledge of the operation, as he claims. That claim, however, only compounds his failure. He knew enough so that he could, and and should, have demanded the whole story - particularly since he continued to pressure America's friends and allies to honor an arms embargo that he had reason to believe the United States itself was violating.
Given President Reagan's manifest ignorance of the intricacies of foreign policy and the dubious competence of his White House advisers - notably chief of staff Donald Regan and former national-security adviser John Poindexter - Shultz had a special responsibility to make Iran policy a do-or-die issue before it turned into a disaster for the administration, rather than after.
When Mr. Reagan decided to ignore Shultz's objections to the Iran operation, the secretary not only failed to force the issue, but, according to a key aide, ``chose to avert his gaze; he didn't want to know.'' In effect, he became a reluctant accomplice. And then when the administration's Iran and antiterrorist policies became a shambles, he engaged in an unseemly effort to dissociate himself from the whole affair. The upshot is that Shultz lost credibility with the foreign governments he misled, lost the full confidence of the White House despite the President's assertions to the contrary, and lost stature as a public servant by his equivocal behavior.
If this were an isolated incident, it might be dismissed as an aberration. But it is not. There have been other recent actions that must raise questions about the effectiveness of the secretary of state in an administration sorely lacking in foreign policy experience or expertise.
At the Reykjavik summit, Soviet leader Mikhail Gorbachev stampeded President Reagan into a dangerous round of arms control negotiations for which the chief executive was totally unprepared. There was need for a strong and wise secretary of state to restrain an overeager and untutored President.
Shultz played a quite different role. Far from seeking to restrain Reagan, the secretary joined the emotional stampede, apparently driven, like the President, by a Utopian vision of a world without nuclear weapons - a world in which the Soviets' conventional military superiority would be dominant. It was a spectacle that alarmed America's allies and cast doubt on a strategy of deterrence that has preserved the peace for 40 years.
A second recent episode that raises questions about Shultz's judgment and leadership in the conduct of foreign policy was his role in the flap over the administration's disinformation campaign aimed at undermining Libya's Muammar Qaddafi. Like the Iran arms-for-hostages caper, the campaign was plotted by Admiral Poindexter as a clandestine enterprise in the administration's war against the Libyan strong men. The campaign served only to damage US credibility.
Shultz, however, felt constrained to defend it. And he did so in a manner that cast doubt on his sense of values, by citing Winston Churchill's assertion in World War II that ``in time of war the truth is so precious it must be attended by a bodyguard of lies.'' One must wonder about the perspective of a secretary of state who equates the threat posed by Colonel Qaddafi, a tin-pot desert dictator whose terrorists have killed a handful of Americans, with the danger of Adolph Hitler, a fanatic who threatened the survival of European democracy and was responsible for the deaths of millions.
A common threat runs through these episodes: Shultz's proclivity for accommodating the White House, even, as in the Iran controversy, he was convinced that the President was embarked on a policy that could seriously damage the national interest. It is ironic that Shultz, who could be accused of excessive loyalty to the President in the past, now should invite the charge of disloyalty by seeking to distance himself from the White House in the crisis precipitated by the Iran arms deal.
More than anything else, Reagan today needs a team that can help repair the damage caused by the Iran and Contra debacles and restore a modicum of credibility and coherence to US foreign policy. Regan is not qualified to serve on that team any more than Poindexter was. Shultz, too, has been compromised. He looks like a fool if he didn't know about the arms shipments and a hypocrite if he did.
He should stand aside to make room for a secretary of state who can command the respect of US allies, who has the trust of Congress and the confidence of the White House and, above all, who can on occasion tell the emperor that he has no clothes on. Fortunately the ideal candidate for that role is readily available: James Baker, Treasury secretary and former White House counselor, who leads almost everyone's short list of the best and the brightest in Reagan's Washington.
Joseph Fromm, a veteran foreign correspondent and editor for U.S. News & World Report, is US chairman of the International Institute for Strategic Studies and a fellow at the Johns Hopkins School of Advanced International Studies.