A New, More Pliable Kadafi: Can Strongman Be Domesticated? : Libya: Westerners say the once-despised leader could be an important link to new Arab world order.

Outside the large Russian Embassy compound here, the burned-out shells of four cars stand on the curb, windshields smashed, diplomatic license plates singed.

The wreckage marks the day a mob of angry Libyans stormed the embassy and were fought back from the chancery door with bursts of tear gas as they demanded an answer from the Russian “traitors.” In many ways, however, the black hulks also mark the end of the Cold War in the Middle East.

Although demonstrations broke out against foreign embassies across Tripoli on the day the United Nations imposed an air and military embargo, it was the assent to the sanctions from the former Soviet Union--the quiet, powerful patron that had allowed desert Arabs’ dreams of revolution to spin dangerously around the globe--that had the most bitter sting.

Libya’s days as the Arab world’s last revolutionary republic are coming to a dramatic close, as an estimated 2,600 former Soviet military advisers and technicians board charter flights for Moscow and as Libya’s starry-eyed Col. Moammar Kadafi lashes out at his own vision of a United Arabia from the Persian Gulf to the Mediterranean.

Never before so isolated from the West that he thought he was confronting, the Arabs that he thought he was saving and a Libyan population that is tired of living as international outlaws, Kadafi and his 23-year-old regime are on the brink of change.

Analysts and diplomats say it could have far-ranging implications for U.S. policy throughout the Middle East. It also could determine the long-term stability of Libya and all its North African neighbors.

Ironically, at a time when the United States has never been closer to toppling the renegade Libyan colonel, a growing number of European and Arab governments are having second thoughts about the leader once described as the most dangerous man in the world. Increasingly, they are calling for a re-evaluation of Kadafi’s role as a stabilizing force in Libya and North Africa--and the possibility that the Middle East may be a more dangerous place without Kadafi than with him in his tent in Tripoli.

A new, more pliable Kadafi has emerged from the ashes of the Cold War, they say, and he is a vital link in keeping Libya united against the prospect of desert tribal warfare and in stemming the reach of Islamic fundamentalists. They threaten neighboring Egypt, Algeria, Morocco and Tunisia. Kadafi has called his own Islamic extremists “maniacs” and thrown about 500 into prison.

Kadafi has become, it seems, if only through a process of age and disillusionment, an important link in the new Arab world order.

“The main question is, ‘Will Kadafi survive the crisis or not? Will Kadafi be capable of leading the country into a transition that Libya needs, not only because of Lockerbie but because history demands it?’ ” asked one Western diplomat in the Libyan capital.

“The Americans must not underestimate him,” he said. “He understands quite well the situation. His reaction sometimes is not quite adequate, but he understands it quite well. He understands that the world has changed, and he understands that it is a matter of his survival that is at stake, that it is a matter of life and death.

“If the West and basically the U.S. decides to press very hard,” he added, “one cannot exclude a bath of blood here for a certain time, and, secondly, we open ourselves to the unknown. . . . Is it in the interest of the West to open in Libya the Pandora’s box?”

Kadafi, a 26-year-old officer when he and his peers took over the country in a bloodless coup in 1969, was the first man who ever succeeded in uniting Libya’s many desert tribes; for centuries they had feuded across the Saharan sands and coastal plain.

He did it with his own blend of Islam, Marxism, feminism and populism. More importantly, he did it by drawing key tribal leaders into lucrative positions of responsibility in the new government. He also unleashed gun-swaggering young revolutionary committeemen and a coterie of up to seven secret-security services to keep the rest of the population on board with the revolution.

The collapse of the Soviet Union brought along the first unlinking in the revolutionary chain, leaving Libya in an era of rock-bottom oil prices, with its economy a shambles and helpless to look after the needs of terrorist and national liberation movements fighting “imperialism” around the world.

But just as Kadafi has made unprecedented steps to mend connections with the West and introduce a new private sector into his own economy, the crisis over two Libyans--accused by the United States and Britain in the 1988 bombing of a Pan Am airliner over Lockerbie, Scotland--threatens the very underpinnings of Libya’s slow moves toward reform.

If the two men are, as the United States alleges, members of Libya’s security forces, how can Kadafi, whose regime depends on the unquestioned loyalty of his security services, hand over two of their own for trial in the West? diplomats ask. And if Kadafi’s regime is threatened, what happens then?

“America wants the regime to go. But after Kadafi, what comes next? Fighting, from east to west,” said one Arab diplomat.

A European envoy added: “If the Americans wanted the truth and not the humiliation of the Libyans, they would allow the (Lockerbie suspects) to be tried in some other neutral country. With this situation, we are creating new time bombs, we are pushing the Arabs into a corner, and the result will not be what we are seeking. . . . Kadafi isn’t dangerous anymore. But he could become dangerous if you keep putting on the sanctions. He will become like a wounded animal.”

Throughout the Libyan capital, a sense of uncertainty has prevailed since the April 15 air and military embargo took effect; there is a feeling of dread about what might come next. An oil embargo, when Libya earns 95% of its foreign revenues from oil? A trade embargo, in a country that imports toothpaste? Another U.S. military attack?

Once again, the Libyans have slapped white paint over road signs around Tripoli, supposedly to foil enemy tanks seeking their way to the capital. Antiaircraft missile batteries ring the city and Libya’s key industrial center at Misurata. Food is being stockpiled, and oil production has reportedly been bumped up from 1.3 million barrels a day to 1.5 million.

To an unprecedented degree, Libyans are expressing disgruntlement about the shoddy Iraqi, Egyptian and Moroccan goods flooding the stores--they were imported because they were manufactured by Libya’s Arab brothers--and about the leader who has not moved to end the international standoff. “Out with Kadafi” graffiti have been seen for the first time on walls here.

“I think most people hope they will do something to stop this. If not, we’re on our way to hell,” said one Libyan civil servant. He snorted at the bravado of Kadafi’s No. 2 man, Maj. Abdel-Salam Jalloud, who asserted that Libyans would “ride mules again” and go back to eating dates and camel’s milk if threatened with further sanctions.

“OK, we can live on dates,” the man said. “But how long? We can’t fight America. It’s too strong. . . . We can’t fight them, so we must find another way. When is he going to realize this?

Libya’s growing class of Western-educated technocrats, largely supportive of the regime, has nonetheless grown edgy over the sanctions. Like everyone else, they are worried about what comes next.

Libyan foreign policy is “zero at the moment. Paralyzed. Nonexistent,” one diplomat said. Oil company data that must be processed immediately by foreign computers is being held up by the air embargo. So are medical supplies. Two of three dialysis machines at Tajura Hospital near Tripoli were covered up on a recent day and posted with signs: “Machin not work.”

Dr. Alewa Mohammed Alewa, a cardiac surgeon, expressed bitterness over shortages of medical supplies, saying: “I’m telling you, I need these things now. The Security Council said there was an exemption for medical flights. I’m telling you, it is a lie. There is no exemption.”

A senior manager at Libya’s National Oil Corp. said of the air embargo: “Of course it has affected the people, mostly psychologically. It takes 48 hours to travel anywhere. . . . If I have business, I try to do it by telex or by telephone. But for an ordinary person, when he faces the inconvenience of these things, he feels he’s been victimized by something he doesn’t have a hand in.”

One businessman said he and other educated Libyans have closely followed Western moves against their country. “When the U.N. resolution came out and it said not only do you have to hand over the suspects but it started talking about so many other points that had nothing to do with Lockerbie, I said, ‘Wait a minute.’ Then it became evident to the ordinary Libyan that the problem is not with these two guys. The problem is something else. And I thought, ‘To hell with you!’ ”

Arab diplomats here say that the West should not see Iraqi President Saddam Hussein and Kadafi in the same light when it comes to U.N. sanctions. “The Americans are making a mistake if they try to compare Kadafi to Saddam,” said one Arab envoy. “Saddam wants so badly to hold his seat that he will agree to anything. Kadafi is different. He knows his people have the ability to suffer.”

Already, Kadafi is showing signs of shifting course, for example, taking a different tack with members of terrorist or otherwise destabilizing groups operating from his country.

Diplomatic sources say that Palestinian fighters allied with Baghdad-backed terrorist leader Abul Abbas left Libya in May; operatives of George Habash’s Damascus-based Popular Front for the Liberation of Palestine have recently been ejected, as well.

Perhaps more surprisingly, a series of editorials in the state-controlled press recently lashed out at Libya’s historic support for Arab nationalist causes at a time when most of the other Arabs were ignoring Libya and forging ties with the West.

Citing such moves, European and Arab officials say the situation in Libya now presents diplomatic opportunities that should not be missed.

“He is a relic of the Cold War, but I think with changes in the economic field, the whole system will change. He is willing to be flexible, if only he can remain on the stage,” said one senior European diplomat.

Observed another envoy: “Let’s bring him a little to his knees, but let’s leave him in place. Domesticate him. Oblige him to open to international inspection, introduce economic changes. But keep him.”