Democrats Expected to Order Hostage Inquiry : Iran-Contra: House leaders believe there is a need to study alleged Reagan campaign efforts to delay release.

House Democratic leaders have decided to order a formal investigation into allegations that Ronald Reagan’s 1980 presidential campaign sought to delay the release of the 52 American hostages then being held in Iran until after the November elections, sources close to the leadership said Wednesday.

Although the form and the scope of the inquiry are still being debated, the sources said that evidence amassed by a task force of House aides over the last two months has convinced House Speaker Thomas S. Foley (D-Wash.) and other Democratic leaders of the need for a formal investigation of the so-called “October surprise.”

“The circumstantial evidence is overwhelming. . . . What before was idle speculation is now clearly supported by elements of physical evidence,” said one congressman familiar with a completed staff report.

Foley, who is known to be deeply concerned about the political risks for the Democrats if their attempt to look into the allegations is perceived as a partisan maneuver, has not yet announced whether he will order a formal investigation. However, aides and other sources said that, after extensive consultations with other Democrats, Foley and Senate Majority Leader George J. Mitchell (D-Me.) are convinced that some form of formal inquiry, with the power to subpoena witnesses, will be necessary.

“There are enough suspicions now that these allegations can no longer be dismissed without further inquiries,” said Rep. Robert G. Torricelli (D-N.J.), a member of the House Foreign Affairs Committee. “The only question now is the scope of the investigation and the form it will take.”

Calls to investigate the allegations have also been made in the Senate, where the Foreign Relations Committee next week is expected to endorse a proposal by Sen. Albert Gore Jr. (D-Tenn.) to create an independent commission to look into the allegations. Although Mitchell is known to favor an investigation, his informal consultations with other senators have not produced a consensus on how to proceed and he appears to be willing to let the House take the lead.

Other sources, confirming that Foley has decided to order the investigation, said that he plans to make the announcement sometime next week before Congress recesses for its monthlong summer break. In the meantime, they added, Foley will weigh the conflicting recommendations he has received from both Democrats and Republicans and try to decide what form the investigation should take.

Some lawmakers are lobbying for a joint House-Senate investigation on a scale similar to the Iran-Contra inquiry that Congress conducted in 1987. But Foley and other Democratic leaders are said to favor a much more discreet approach--most likely the appointment of a small task force of five members from the House Foreign Affairs Committee. “The idea is to keep this as low-key as possible and to avoid as much media attention as we can, at least at the outset,” one source close to the Speaker said.

Foley is proceeding so cautiously, several sources said, because--despite growing pressure for an investigation--the Democratic leadership remains deeply apprehensive about the direction the inquiry will take and the backlash that could affect Democrats on the eve of an election year.

One concern shared by the leadership centers on the gravity of the allegations themselves.

Throughout October, 1980, the Reagan campaign was known to fear that then-President Jimmy Carter would negotiate the release of the American hostages, resulting in an “October surprise” that would ensure his reelection. Rumors that the Reagan campaign secretly offered to provide weapons to Iran in return for a delay in the hostages’ release first surfaced back then but have never been proved.

However, they were revived recently when Gary Sick, a National Security Council aide during the Carter Administration, said that he had uncovered circumstantial but persuasive new evidence that a deal had in fact been struck between the Iranians and Reagan’s campaign manager, the late William J. Casey. Sick said that he had spoken to several Iranian and Israeli sources who helped to arrange a series of secret meetings between Casey, who later served as the Reagan Administration’s director of central intelligence, and the Iranians in Madrid and Paris between July, 1980, and October, 1980. Also present at one of the final Paris meetings, Sick quoted his sources as saying, was Reagan’s running mate, George Bush.

President Bush has denied taking part in the alleged meeting.

Congressional investigators examining Sick’s allegations have uncovered enough “tantalizing corroborative evidence,” in one source’s words, to suspect that some sort of a deal actually took place and to “recommend that the leadership follow up” with a formal investigation.

However, another misgiving shared by Foley and other House leaders is the fact that the evidence, although compelling to some, is still mostly circumstantial, or drawn from testimony by Iranians and other principals whose credibility is questionable.

That in turn poses a political peril that many Democrats may not want to face before an election year.

“We’re about to leave the fort and go into the desert without knowing if we’re going to find anything to shoot at,” one source close to Foley said. “If the investigation leads nowhere, Democrats will get the blame.”

That in turn has made a number of key Democrats deeply ambivalent about associating themselves with the inquiry, even though they think it should go forward. For example, Rep. Lee H. Hamilton of Indiana, chairman of the Foreign Affairs subcommittee on Europe and the Middle East, has indicated that he thinks the investigation should go forward but he has already told Foley that he does not want to chair it.

“Foley is in a real predicament,” another Democratic aide said. “No one wants to come up to the plate on this one. The people Foley would like on an ‘October surprise’ task force do not want to do it and the people who do want to do it, Foley might not like because they are liable to look too partisan.”

Republicans, meanwhile, seem to be biding their political time, unsure of what to do. House Minority Leader Robert H. Michel of Illinois has met with Foley twice in the last month but has not indicated whether he will cooperate with him in setting up the task force.

“We don’t really know what to do,” a senior Republican aide on the Foreign Affairs Committee said. “We don’t want to be in a position of encouraging the Democrats to go ahead with this. But if they do go ahead, we want to be in a position to hold up our end.”