Bush, Gorbachev Report Progress on Germany Issue : Summit: Baker and Shevardnadze will hold special sessions on the reunified nation’s NATO role. But some say the presidents are merely putting the matter on hold.

President Bush and Soviet leader Mikhail S. Gorbachev, meeting Thursday at their second summit in six months, claimed that they had made progress on the overriding question of whether a reunified Germany should belong to the NATO military alliance.

But it was unclear if they actually had narrowed their basic differences over the issue. Other U.S. officials, speaking not for attribution, said that the leaders had merely hit upon a way to shove the explosive problem into the future so that it would not spoil their four-day summit here.

Specifically, both leaders said that Secretary of State James A. Baker III and Soviet Foreign Minister Eduard A. Shevardnadze would meet in special sessions on the issue. But U.S. officials said no timetable has been set for the meetings and they may not take place until after the summit.

Bush said that Gorbachev had made a proposal on the German issue.

“I took some heart from that,” he said after the second of two lengthy closed-door sessions with Gorbachev on the opening day of the summit.

Gorbachev, also declaring progress on the German question, told reporters that “something had emerged” from his talks with Bush.

In remarks at a White House state dinner, Gorbachev said it was “possible to expect major results from this meeting and maybe even . . . the biggest results, compared to all the other meetings at previous Soviet-American summits. Maybe I’m too optimistic, but let’s wait and see. We have two days; I believe that maybe we will have those major accords.”

He did not specify whether the German issue would be among them.

One U.S. official, however, said that Gorbachev had delivered “no new ideas. . . . I just want to dampen the expectations Gorbachev raised.”

The German issue hung like a dark cloud over a summit that opened on a bright and sunny Washington spring day. The United States has insisted that a united Germany be a full partner in the North Atlantic Treaty Organization. The Soviets, adamantly opposed, have suggested that the United States is not sufficiently sensitive to the deaths of millions of Soviet citizens in World War II.

Bush rejected that notion.

“The United States is not insensitive to the fact that the Soviet Union lost 27 million lives,” he said. “I reminded (Gorbachev) I was the only one of the two of us” who had actually fought in the war.

Bush was a Navy pilot fighting Japan in the Pacific Theater. Gorbachev was too young to participate in the war.

Germany was not the only issue on the minds of the superpower leaders. Gorbachev, speaking to a luncheon gathering of American intellectuals, artists and entertainers at the Soviet Embassy, delivered an extraordinarily frank appraisal of his problems back home.

He acknowledged that he is trying to “figure out how to proceed” with his experiments with democracy and a free-market economy.

As he did during his other Washington summit in 1987, Gorbachev also jumped out of his limousine and plunged into a sidewalk crowd while on his way from the White House to the Soviet Embassy. He shook hands with pedestrians as if he were an American politician.

Spokesmen described the two leaders as upbeat and animated. They said that Bush and Gorbachev were prepared to sign a number of agreements today, including one calling for a drastic reduction--and perhaps an eventual ban--on all nuclear weapons and another that would specify major areas of agreement toward a 50% reduction in strategic arms.

It was at the embassy luncheon that Gorbachev addressed the difficult transition from a centrally planned economy to free markets in his country.

“We’ll figure out how to proceed in our country,” he told his American audience. “We haven’t yet done that but the main thing has been done. Having understood our country, our history, we have come to the conclusion that we cannot proceed as we have been doing all along.”

He cautioned that the Soviet system cannot be expected to embrace capitalism overnight. “It will be done our way,” he said. “Otherwise, if we mechanically adopt somebody else’s model, this will not work. We know this quite well.”

“For the Americans,” Gorbachev said, “it’s all simple, the talk about the market, the credit, the stock markets. All the instruments and all the infrastructure for the markets. We have absolutely nothing, nothing for the markets. We have to establish the infrastructure.”

After the luncheon, one of the guests, former Secretary of State Henry A. Kissinger, said that he thought Gorbachev had been quite frank. He said the Soviet leader had impressed him as being “extremely serene and at peace with himself.”

But the German question dominated the day. Both sides were apparently eager to report progress and relegate the problem to future negotiations so that it would not overshadow other issues, including arms control agreements, economic issues and regional disputes.

Bush, although also in an upbeat mood, emphasized that he had “stated and restated” the U.S. position on the German question.

“Basically my position is the same as when I went into the meeting,” he said.

Characterizing his discussions with Gorbachev as civil, he said, “I’ve been up front with him, and he’s been up front and direct with me.”

Gorbachev, he said, proposed the subsequent Baker-Shevardnadze meetings “to keep discussing things, in effect saying: ‘I know your position, you know mine. Why don’t we have our foreign ministers discuss it?’ ”

But a U.S. official who asked not to be named said that the Baker-Shevardnadze meetings were “not particularly” based on progress between the presidents.

“Absolutely nothing has changed,” he said.

In a White House driveway, Gorbachev, who the day before had warned against the West trying to “dictate” to him, reiterated: “I think dictation is unacceptable.”

Asked later about that comment, Bush replied, “I’m not attempting to dictate . . . but I clearly am entitled to and will put forward the views of the American side as forcefully as I can.

“But you don’t get any progress if you . . . if you give the impression that you’re in a situation of dictation. The age of the dictator is over.”

Recalling military aggression by Germany in two world wars and the allied victory over Nazism in World War II, Gorbachev pointedly declared that he hoped “these horrible wars will forever remain a thing of the past.”

Bush hailed the inevitable unification of East Germany and West Germany as a milestone toward “enduring cooperation in a Europe whole and free.” He assured Gorbachev that “we can work together at this historic moment” to resolve that question and reduce other tensions.

Other U.S. officials seemed to go out of their way to demonstrate sensitivity to Gorbachev’s political problems at home. They said that they understood the Soviet concern that a nation they had helped defeat in World War II might now be reconstituted in such a way as to become a military threat again.

Secretary of State Baker pointed out that all Western allies, and even some members of the East European Warsaw Pact, maintained that a united Germany with full membership in NATO was important to assure European stability.

DESTROYING THE POISON--The two sides will sign a sweeping pact to eliminate chemical weapons, perhaps the century’s most abhorrent killing devices. A12

SAVING THE TRIP--Bush and Gorbachev dodge the explosive German issue, which could have turned their summit into an embarrassing failure. A13

HITTING IT OFF--The two First Ladies greeted each other like old friends on a day of smiles, hand-holding and dog-petting. A13

MOOD SWINGS--Gorbachev began the day in a sober mood, but his manner seemed to lighten after private White House meetings and a star-studded luncheon. A14

EXPERTS VIEW THE SUMMIT

Should the United States vigorously advocate independence for Lithuania, Latvia and Estonia during the summit even at the risk of endangering superpower relations?

No. The stakes in the Lithuanian issue are not only high for Gorbachev in Moscow, but also high for the United States. The stakes are high for Gorbachev because he believes that the entirety of perestroika and change in the Soviet Union is involved and he treats the issue in accordance. There is no merit in jeopardizing either a productive U.S.-Soviet relationship or the positive progress of change in the Soviet Union simply to make a statement about Lithuanian independence, especially when that independence is likely to come as matter of course.

It is not as though the U.S. is betraying the idea of Lithuanian independence by not pressuring Gorbachev at this moment. What we are concerned with is making sure that the process of achieving that independence does not destroy a great many other very desirable objectives.

Yes. The United States for years recognized the principle of Baltic independence. The responsibility of President Bush is now to declare that the republics are entitled to independence, that they now have legitimate governments, and that, accordingly, we recognize those governments. In my view, we could explain to Gorbachev that this is not a provocation. But the real choice is not whether to support Gorbachev; it is whether to support perestroika. By closing its eyes to the Baltics, the Bush Administration risks becoming irrelevant to developments--or at worst, ending up on the wrong side of history.