White House Welcomes Soviet Flexibility on Lithuania : Foreign policy: Bush may still impose some sanctions. But a confrontation is less likely.

The White House on Monday greeted Moscow’s latest statements on Lithuania as a “welcome sign” of “flexibility” as President Bush considered whether to impose limited trade sanctions to punish the Soviets for their oil and gas embargoes against the rebellious Baltic republic.

White House officials indicated that Bush will probably make his decision on sanctions today as he sorts through a list of options that aides have developed. Although all of those options are limited, any step would represent the Administration’s first direct slap at Soviet President Mikhail S. Gorbachev.

Over the weekend, Bush appeared headed toward imposing some punitive steps to protest the Soviet embargo despite the Administration’s reluctance to allow Lithuania to disturb U.S.-Soviet relations. But on Monday, the latest Soviet statements seemed to give Bush an opening to avoid a confrontation.

The Soviet offer--to negotiate and to allow Lithuania to keep its declaration of independence if it suspends for two years actual steps toward independence--does “appear to show some flexibility,” White House spokesman Marlin Fitzwater said. “We are hopeful that is the case.”

Bush, who plans to discuss Lithuania this morning with congressional leaders, faces a deadline of sorts because U.S. and Soviet representatives are scheduled to begin talks today in Paris on trade and economic cooperation.

“I would anticipate you would be hearing from us very soon,” Secretary of State James A. Baker III said in a brief press conference Monday after meeting with European foreign ministers. “The consultations with allies and Congress will be completed very soon.”

Bush’s National Security Council staff was continuing to analyze what steps he might take, and Monday’s Soviet statements “will be factored in,” a White House official said.

The Administration appears to be backing away from a confrontation with Moscow over Lithuania, Stasy Lozoraitis, Lithuania’s representative in Washington, said after meeting with State Department officials. “I’m not so sure anything will happen,” he said. Maybe they will wait for another two or three days. I’m very pessimistic about the situation.”

Bush already has ruled out the most dramatic steps he could take against the Soviets, such as canceling the May 30-June 3 summit meeting with Gorbachev or today’s round of trade talks or other U.S.-Soviet negotiations on arms control. Those sorts of steps, Bush and his aides say, would hurt U.S. interests as much as they would hurt the Soviets.

What remains are mostly steps to delay progress toward new actions the Soviets would like. The most likely candidate for a delay would be the expected move to grant “most favored nation” trade status to the Soviets, which makes available to them the most favorable trade terms available to any country. Planned improvements in airline travel between the two countries and a proposed tax treaty could also be slowed.

Meanwhile, the White House announced that Soviet Politburo member and key Gorbachev ally Alexander Yakovlev had canceled a planned trip to the United States. The trip was to have included a previously unannounced meeting Monday with Bush. The fact the meeting had been scheduled became public only after a reference to it inadvertently was placed on a public schedule. Officials declined to explain why the meeting had been kept secret.

BALTIC ISSUE STALLS TRADE--The U.S. delays lifting curbs on exports to the Soviet Union and Eastern Europe. D1