Daniloff Freed as Part of a Wider Soviet Deal : Zakharov, Activist, U.N. Case Involved

American journalist Nicholas Daniloff was released from house arrest in the Soviet Union and flown to West Germany on Monday as part of a deal that also will free suspected Soviet spy Gennady F. Zakharov, void the expulsion of some Soviet diplomats at the United Nations and later release a prominent Soviet dissident from exile in Siberia, U.S. officials said.

President Reagan, asked by reporters Monday if he had “blinked” in the standoff, replied: “They blinked,” referring to the Soviets.

Reagan received word that Daniloff’s plane had left Moscow as he landed in Kansas City, Mo., for a political appearance. “That’s good. Thank God,” Reagan said when Chief of Staff Donald T. Regan told him the news. “When can we announce it?”

Remarks at GOP Rally

Twenty-four minutes later, Reagan opened his remarks at a GOP political rally with the announcement that Daniloff and his wife, Ruth, were on their way to Frankfurt.

The complex swap, outlined by government sources, signals the end of a monthlong impasse in U.S.-Soviet relations and clears the path to an expected summit between Reagan and Soviet leader Mikhail S. Gorbachev by the end of the year.

A series of “favorable announcements” leading up to the summit will mask the fact that both sides have abandoned tough positions that had made the Daniloff dispute one of the rockiest in recent U.S.-Soviet relations, said the sources, who refused to be named.

KGB Station Chief

The United States, in particular, has agreed to drop its highly publicized expulsion of several suspected Soviet spies at the U.N. Mission, including one man identified as the KGB station chief in New York, one source said. Another Soviet official likely to remain, a source said, is the resident agent for the Soviet GRU, or military intelligence bureau.

Those expulsions have been touted by White House officials as evidence of the United States’ toughness with the Soviets over their arrest of Daniloff on trumped-up spy charges early this month.

The next step in the agreement is scheduled for 9 a.m. EDT today in New York, where accused Soviet spy Zakharov is to plead no contest before a federal magistrate to three counts of espionage against the United States. A no-contest plea is not an admission of guilt but is legally the same as a conviction, in that it allows a judge to mete out punishment.

Under the agreement, Zakharov will be allowed to leave the country but will not be officially expelled--a detail that one source termed “a distinction without a difference.”

Within a week, the Soviet Union is expected to respond by releasing dissident Soviet physicist Yuri F. Orlov, who has been exiled in Siberia nearly three years after serving seven years in a labor camp, and his wife, Irina, sources said.

Human Rights Monitor

Orlov, 61, is a physicist who was arrested in 1977 after joining fellow dissident Anatoly Shcharansky in founding a group to monitor Soviet compliance with the human rights provisions of the Helsinki accords.

(The Washington Post and CBS News reported that three other well-known Soviet human rights activists would also be involved in the swap. They were identified as Ida Nudel, an economist and Jewish refusenik; Vladimir Slepak, another Jewish refusenik, and David Goldfarb, a retired professor of genetic engineering).

Daniloff, 51, the Moscow correspondent for U.S. News & World Report, told reporters at Moscow’s Sheremetyevo Airport that he was unaware of what kind of deal was struck to allow him to leave. He said he was informed only Monday afternoon, a few hours before his Lufthansa flight took off for Frankfurt, that he was free to leave.

“It is wonderful to be back in the West,” Daniloff declared as he arrived in the West German city. Accompanied by his wife, who acted as his spokesman while he was in a Moscow prison, Daniloff thanked Reagan and other U.S. officials “for dotting all the i’s that permitted me to be here tonight.”

Looking pale and exhausted, Daniloff told a crush of reporters and television crews: “I cannot tell you anything about other arrangements. All I know is that I am free and very grateful and delighted.”

Again declaring his innocence of the espionage charges the Soviet authorities filed against him, the reporter said, “The case was fabricated against me for the narrow, cynical purpose of giving the Soviet Union some political leverage to obtain the release of Zakharov.”

Dismay Over Outcome

Two U.S. officials involved in the cases expressed dismay that the outcome is likely to signal to the Soviets that the United States is abandoning its policy, begun during the Carter Administration, of fully prosecuting Soviet spies who are not protected by diplomatic immunity.

They contrasted the release of Zakharov, which will be accompanied by what one U.S. official called a “bare bones” statement of the case against him, with the hard-line statements made recently by Reagan and Atty. Gen. Edwin Meese III about cracking down on Soviet spies.

To conclude the deal, the United States has agreed to renegotiate its previously ordered expulsion of 25 Soviets at the United Nations, all of whom have been identified by Administration officials as operatives of Soviet intelligence agencies.

Fourteen of the Soviets already have left the country, but the departure date for the remaining 11 has been delayed from Oct. 1 to Oct. 15. Soviet Foreign Minister Eduard A. Shevardnadze is personally attempting to negotiate permission for at least six or seven of the 11 to remain in the United States for the remainder of their terms.

Shevardnadze and Secretary of State George P. Shultz have spent the last month in private talks over the Daniloff affair, which began in August after the FBI arrested Zakharov in a New York subway station, allegedly trying to buy a military contractor’s classified documents from a U.S. double agent.

A week later, the Soviets seized Daniloff after a longtime Soviet friend who had asked to meet him shoved a package into his hands. The KGB secret police later alleged the package contained secret maps and photographs of military installations.

Jailed for 13 Days

Daniloff was charged with espionage and jailed for 13 days. On Sept. 12, under what Shultz described as a humanitarian arrangement, Daniloff and Zakharov were released to the custody of their respective nations’ embassies but were not allowed to leave either country until the charges against them had been resolved.

U.S. officials believe that Zakharov’s no-contest plea is a major concession by the Soviets, who have heatedly insisted that he was framed by the Americans. By pleading no contest, the officials maintain, the Soviets effectively say they can offer no defense against the espionage charges, although they do not admit guilt.

That arrangement, however, appears to fall short of what Shultz had sought in the Daniloff talks. “We insisted on a guilty plea,” one government source said, “and they insisted on a nolo”--nolo contendere, a plea that means no contest.

A senior Administration official traveling with Reagan on Monday on a GOP campaign swing through the Midwest insisted: “There are no conditions attached to his (Daniloff’s) release. Daniloff’s release is an independent event.”

The official, who would not be identified, warned reporters: “Don’t jump to any conclusions until all events connected with this situation are played out.”

When asked about prospects for a superpower summit this year, the official said: “Some judgments will have to be made in light of the events of the Daniloff case. . . . We will now continue with discussions with the Soviets on setting a date for the summit.”

Zakharov’s no-contest plea and the U.S. decision to revoke at least some of the planned U.N. expulsions marks a retreat from the tough line that the Reagan Administration followed on the Daniloff case almost from the beginning, sources contended.

Shultz had said at a mid-September news conference that “there can be no question of equating the cases of Daniloff and Zakharov.” And the White House, while continuing to plan for a summit, had expressly made Daniloff’s unconditional release a condition for the meeting.

The most obvious turnabout for U.S. officials is the quiet backstep on the expulsion of Soviet U.N. employees, which came just three days after Shultz flatly declared in a New York press conference that the United States would not rescind the expulsion order.

Contributing to this story were Times staff writers William J. Eaton in Moscow, William Tuohy in Frankfurt, Norman Kempster and Don Shannon at the United Nations, Robert L. Jackson and Bob Secter in Washington and Eleanor Clift, traveling with the President.