Standoff Still an Irritant in Relations, Officials Warn

Despite the twin release of American correspondent Nicholas Daniloff and accused Soviet spy Gennady F. Zakharov from prisons in Moscow and New York, officials warned Friday that the superpower standoff over the two men remains unsolved--and still poses a major irritant in U.S.-Soviet relations.

“What has changed is (Daniloff’s) physical location,” a grim-faced Secretary of State George P. Shultz told reporters at the White House. “That’s all that’s changed. . . . The fact that his location has changed in no way changes the unacceptability of the fact that he’s being held on false charges.”

Asked whether he still considers Daniloff a hostage of Soviet authorities, Shultz snapped, “Of course.”

“The basic problem is still there,” another senior State Department official said. “This isn’t a solution. We’re still working toward a solution.”

Despite strong U.S. protests, Daniloff still faces trial in the Soviet Union as a spy, a prospect the Administration has repeatedly called unacceptable.

His transfer to the custody of the U.S. Embassy in Moscow was part of an explicit swap for the release of Zakharov to the custody of the Soviet ambassador here. That was a link the Administration had sought to avoid, and one it continues to denounce.

And for all his hard-line rhetoric and pressure from conservatives for tougher actions, President Reagan has taken no retaliatory steps against the Soviets for their detention of the U.S. News & World Report correspondent.

Instead, the Administration has worked hard to keep communications open with Moscow, actively sought a solution that would save face for both sides and declared that Reagan still hopes for a summit meeting with Soviet leader Mikhail S. Gorbachev later this year.

Aides said that Shultz plans to meet with Soviet Foreign Minister Eduard A. Shevardnadze next week to discuss summit plans. And a delegation of U.S. officials and private citizens is scheduled to leave today for a cultural exchange conference in the Soviet Union.

Shultz said that the Daniloff case will be raised in every U.S.-Soviet forum until the reporter is allowed to return home. But he argued for continued dialogue with Moscow.

‘Damages the Relationship’

“We feel that it’s important to keep registering our point of view, not to walk away and stop talking about it,” he said.

“Of course it damages the relationship and of course it damages the ability to move forward on other things,” Shultz said. “That doesn’t change the fact, however, that there are possible things that would be in the interests of the United States to bring about.”

One White House official, asked whether Reagan had “blinked” in the showdown over Daniloff, acknowledged that a concession had been made--but insisted it was insubstantial. “If any blinking was done,” he said, “it was because of the situation Nick was in and the realization that this didn’t change anything in terms of where we were in the negotiations.”

Reagan and Shultz said that they approved the swap--officially termed an “interim arrangement”--largely out of humanitarian concern for Daniloff, who had been held in the basement of Moscow’s Lefortovo prison for 13 days.

“We are so relieved and happy that Mr. Daniloff is out of that 8-by-10-foot cell, which he was sharing with someone we think was a (Soviet) informant, and that he won’t be subjected to four hours of interrogation every day,” Reagan told a group of elementary school principals at an award ceremony in the White House Rose Garden.

Daniloff’s Assent

Shultz added, “Before this arrangement was consummated, it was discussed with Mr. Daniloff, because obviously he’s involved, and it was not undertaken without his assent.”

Although Shultz insisted that “there is no equivalency” between Daniloff and Zakharov, Friday’s simultaneous release of the two men was agreed to by the Soviet Union precisely because it suggests that their cases are similar, U.S. officials believe.

The Soviet secret police arrested Daniloff for receiving allegedly secret documents from an acquaintance two days after a New York court denied bail for Zakharov, whom the FBI had arrested for allegedly buying classified documents from a U.S. government informant.

State Department officials say the Soviets have attempted since the start of the episode to establish “symmetry”--to set up a basis for a Daniloff-Zakharov trade. As soon as U.S. officials affirmed that Zakharov would be tried, Soviet officials toughened their insistence that Daniloff, too, would go on trial.

The United States proposed last week that Zakharov could be released to the custody of the Soviet Embassy if Daniloff were freed without charges and allowed to leave the Soviet Union. The Soviets ignored the offer.

Letter to Gorbachev

President Reagan then increased the pressure with a personal letter to Gorbachev appealing for Daniloff’s release and vouching that Daniloff was not a spy. At the same time, Shultz publicly warned that the correspondent’s imprisonment endangered U.S.-Soviet relations.

It was then that negotiations began in earnest, officials said. The Soviets initially reacted with toughness, formally charging Daniloff with espionage--another action intended to link his fate with Zakharov’s.

But as the Administration pressed its warnings that the Daniloff case could become a major obstacle to U.S.-Soviet discussions in other areas, Soviet officials began discussing new ideas for his eventual release. U.S. officials described these ideas only as more complicated than a simple man-for-man swap and geared toward saving face on both sides.

The release of the two prisoners to their ambassadors on Friday was the first step in that process, the officials said. It removed the Administration’s concern over Daniloff’s well-being and health--the correspondent suffers from high blood pressure--and in that sense may strengthen the U.S. hand in the negotiations already under way. But it did not solve the conundrum of finding a way to detach Daniloff’s fate from Zakharov’s.

“So far there has been a mirror-image approach,” said David Gergen, editor of U.S. News & World Report. “We arrested their spy, then they arrest Daniloff. We charged their guy, they charged Daniloff. Then both guys are let out. . . . We are very anxious to smash that mirror. Nick Daniloff should be released on his own.”