Reagan, Gorbachev to Hold Talks in Iceland : Session Seen as Preliminary to a Summit

After months of spurning Soviet proposals for a meeting somewhere in Europe, President Reagan reversed his position and announced Tuesday that he will meet Soviet leader Mikhail S. Gorbachev on Oct. 11-12 in Iceland.

Reagan insisted that the session will be preliminary to--and not a substitute for--the full-scale summit in Washington to which he and Gorbachev agreed last November in Geneva. “This is not a summit,” the President declared.

But the two leaders are expected to cover a full range of East-West issues--from arms control and regional trouble spots to human rights--and to seek agreement on those issues that hold greatest promise for achieving final accord.

These priorities, perhaps accompanied by statements of agreement in principle that could break current negotiating deadlocks, would guide U.S. and Soviet diplomats making final preparations for the Washington summit later, Administration officials said.

Reagan accepted the Iceland meeting, first proposed by Gorbachev in a letter to the President on Sept. 19, as part of the package of interlocking Washington-Moscow agreements that led to the release of American correspondent Nicholas Daniloff, accused of espionage, in Moscow on Monday.

The package, announced in full Tuesday, also includes:

--A plea bargain that allowed accused Soviet spy Gennady F. Zakharov, a physicist employed by the United Nations, to plead no contest and leave the United States.

Siberian Exile to End

--A promise from the Soviets that they will allow dissident physicist Yuri Orlov, a founder of the Moscow group that monitored Soviet compliance with the 1975 Helsinki accords on human rights, to leave his Siberian exile for the West.

--An apparent softening of the U.S. expulsion order against 25 employees of the Soviet Mission to the United Nations. At least seven of the 25, including the KGB and GRU military intelligence station chiefs, would be allowed to serve out their tours of duty, an Administration source said.

Secretary of State George P. Shultz said that he and Soviet Foreign Minister Eduard A. Shevardnadze discussed these moves at the United Nations last week. Shultz added that the schedule for the Iceland meeting would be “our regular agenda”--arms control, bilateral issues, regional conflicts and human rights.

“All of these subjects will, in various ways, be discussed,” he said. “I think that if we can move things to the point where . . . we can see the gap closed and the prospect of an agreement, that’s all to the good.”

Although the Soviets have not yet agreed to a date for the U.S. summit, Shultz said he remains hopeful that it could take place before the end of this year.

During a talk with reporters at the White House, Reagan refused to predict the outcome of the weekend meeting in Reykjavik, capital of the tiny North Atlantic island nation. Asked if arms control would be on the agenda, Reagan said: “I have no way of knowing. There is no way of knowing.”

Later, in a speech to the board of governors of the International Monetary Fund, the President said: “Ten days ago, Mr. Gorbachev proposed to me that we meet to prepare the ground for a productive summit. And now that Nicholas Daniloff has been freed, I have accepted his proposal.”

Shevardnadze, in a press conference at the Soviet Mission to the United Nations, said the “question of medium-range missiles” in Western Europe “might be the most promising area” for the two top leaders to discuss. He hinted that an agreement might be reached on those missiles in time for Gorbachev and Reagan to sign it at their formal summit in the United States.

2 Principles Abandoned

In agreeing to Gorbachev’s suggestion, Reagan abandoned two principles that had been guiding U.S. summit policy since the two leaders agreed at their first summit meeting to a second summit this year in the United States and a third next year in the Soviet Union.

First, Washington had resisted Soviet proposals for a low-key summit in a third country. Second, the Administration had objected to a Reagan-Gorbachev meeting in the fall because it might affect the Nov. 4 congressional elections.

Asked why the United States reversed its positions, Shultz said: “We believe--and I think they do--that a real, well-prepared, extensive summit meeting in the United States . . . and the Soviet Union . . . can be a good thing.

“Now the general secretary (Gorbachev) suggested to the President that it would help in this preparatory effort if the two of them met, perhaps a little less formally than a summit meeting tends to be, and see if they can’t push the ball along a little bit in perhaps some of the areas that show the most promise. And, as we thought about it, it seemed like a sensible idea. So why not?”

Acting Foreign Ministers

A senior Administration official said later that Reagan and Gorbachev would, in effect, take the places of their foreign ministers in hammering out the underpinnings of the later summit meeting. Before last year’s Geneva summit, Shultz and Shevardnadze met in five preparatory sessions, most of them lasting at least two days. They carefully drafted the script that Reagan and Gorbachev ultimately followed.

This year, Shultz and Shevardnadze began summit planning at meetings Sept. 19 and 20 in Washington. But those meetings and a series of others during the last week at the United Nations were overshadowed by the Daniloff case, leaving the summit largely unprepared.

An Administration official said that Moscow originally suggested another Western European nation as site of the meeting but that the United States preferred Iceland, a member of the North Atlantic Treaty Organization.

Shevardnadze, talking to a press conference at the United Nations at the same time Reagan and Shultz were meeting reporters at the White House, joked about the selection of Reykjavik, located on a wind-swept island subject to severe winter weather by mid-October.

“Other places were discussed,” the Soviet foreign minister said. “But Chairman Gorbachev said what we need is a working season, in a working atmosphere, without unnecessary fuss, without advertising, and the number of reporters will be small.

“Reykjavik is a particular city of graciousness, a small-sized city very favorable for working and to achieve results. Let me tell you a secret. There is a very big (U.S.) Air Force base there. So we feel very secure.”

3,000 Assigned There

The base at Keflavik is used by NATO members Canada, Denmark and Norway in addition to the United States, which maintains about 3,000 Army, Navy, Marine Corps and Air Force personnel there.

Shevardnadze, like Reagan and Shultz, described the Iceland meeting as preliminary to a summit in the United States. But he declined to predict when the U.S. summit would take place.

“We have heard clearly the voice of the America which strongly favors a serious and businesslike dialogue between the Soviet Union and the United States,” Shevardnadze said. “I feel that we have given a worthy response to that wish.”

Shevardnadze made it clear that Moscow has not changed its summit agenda, which gives the highest priority to stopping or limiting the U.S. space-based missile defense program popularly known as “Star Wars.”

“The world will live in a state of recurrent fever if the temperature of Soviet-U.S. relations remains for a long time at a critically dangerous level,” he said. “That temperature cannot be brought down if the arms race is not effectively stopped--which, of course, implies preventing its spread to outer space.”

Shultz, who will accompany Reagan to Reykjavik, canceled a long-planned trip to southern Africa, which had been scheduled to begin Monday.

A State Department official said that Shultz is “still anxious to go at an early date” to white-ruled South Africa and about 10 of the continent’s black-governed nations.

Deteriorating Relations

However, Shultz was known to be wary of the trip because U.S. relations with most African nations have deteriorated as a result of Reagan’s veto of legislation imposing economic sanctions on South Africa. U.S. embassies throughout the continent had warned Shultz to expect vigorous criticism from local leaders.

Shultz and Shevardnadze agreed to announce the summit with simultaneous statements in Washington and Moscow at 7 a.m. PDT. However, the White House meeting was delayed by a few minutes, allowing the Soviet news agency Tass to break the story first.

By the time Reagan entered the White House press room, reporters already had seen accounts of the Tass announcement. So even before Reagan reached the rostrum, he was peppered with questions about Iceland.

“That’s what I am here to tell you about,” the President replied.

Related stories and pictures on Pages 4, 5, 6 and 7.