Iran-Contra Clemency Sharpens Power Issues : Inquiry: Pardons go to the heart of conflicts among branches of government. Walsh-Bush clash emerges.

For six years, the Iran-Contra affair has been a constitutional crisis in slow motion, fought out in little-noticed trials of half-forgotten men and obscure legal struggles over access to secret documents.

But President Bush’s decision to grant Christmas Eve pardons to six major figures in the scandal has abruptly sharpened the issues, creating a direct confrontation between the White House and an angry special prosecutor who says bluntly that the President is guilty of “misconduct.”

At stake is the same accusation that led to the fall of President Richard M. Nixon in 1974 after the Watergate scandal: a charge of a cover-up directed from the White House.

Like Watergate, the events of the Iran-Contra affair were a tangled, improbable melodrama. The Ronald Reagan Administration, desperate to free American hostages in Lebanon, secretly sold weapons to the terrorist-sponsoring regime in Iran. Reagan aides, frustrated by Congress’ refusal to aid anti-communist rebels in Nicaragua, secretly skimmed profits from the deal to buy weapons to send to Central America.

But just as Watergate was never really about a burglary, the central questions of Iran-Contra are about far more than a clandestine arms sale. They touch directly on the balance of power among the executive, legislative and judicial branches of government:

* Did Reagan and Bush wage a deliberate cover-up to prevent Congress and the independent counsel from learning the truth about their actions in the affair, and is that cover-up still under way, as independent prosecutor Lawrence E. Walsh charges?

* Should a President and his aides be vulnerable to prosecution if they deliberately deceive Congress, or is keeping secrets merely a normal part of the political process?

* And is it proper for a President to pardon his own former subordinates, especially when he himself is under investigation in the same affair?

On the first question, that of a cover-up, Walsh insists that he plans to press ahead--even though his investigation was scheduled to come to an end this spring. In one television interview, he even said Bush was a “subject” of his inquiry, a legal term that indicates his activities are being scrutinized.

Walsh’s charge, in brief, is that Reagan, Bush and others all knew that illegal acts had been committed in the Iranian arms deals, but they conspired to conceal their knowledge to spare themselves from political harm.

On the second question--the issue of prosecuting officials for deceiving Congress--Bush used his pardon message to make a sweeping argument in favor of executive power. He charged that Walsh’s pursuit of former Defense Secretary Caspar W. Weinberger and the others for withholding information from Congress and the counsel was not a legitimate prosecution but “the criminalization of policy differences.”

That argument, advanced by Sen. Bob Dole (R-Kan.) and other conservatives in the fight over the renewal of the independent counsel law earlier this year, makes most constitutional scholars turn purple.

“Lying to Congress is a serious charge,” said Harold H. Koh, a professor at Yale Law School. “It’s not ordinary politics or ordinary baseball.

“There will often be disagreements about the substance of foreign policy. But if Congress is supposed to be part of the foreign policy process, it has to have reliable information. And whether you like Congress or not, they are answerable to the people through elections every two years.”

The charges Walsh brought against Weinberger and the other five former officials pardoned by Bush all stemmed from either making false statements or withholding information from Congress or the special prosecutor--not from any foreign policy decision or action they took in office.

The third issue, Bush’s decision to pardon officials for a scandal in which his own actions are still under investigation, is apparently unprecedented.

“It’s a particularly inappropriate use of the pardon power to exempt your own subordinates from prosecution,” Koh said.

The only similar case, President Gerald R. Ford’s pardon of Nixon in 1974, is different in several significant ways.

“Everyone would concede that Ford did it out of good motives because he wanted to spare the country from further agony,” Koh said. “It may have been a mistake, but the motive was reasonable.

“Here you don’t have the same freedom from suspicion about what the President’s motives are. Here the President granting the pardons is also a person who was directly involved. And this wasn’t designed to spare the country from further agony; it was designed only to spare these people, the President’s friends, and perhaps the President himself.”

While Bush doubtless hoped that his 11th-hour action would enable him to leave the presidency without any dangling problems, the pardons instead have focused new attention on his own role in the affair.

If Walsh pursues the issues, Bush may be fighting this battle well after he leaves office on Jan. 20. In any case, the prosecutor plans to issue a lengthy report on his findings. Judging from his statements this week, the result will be at least a small blot on Bush’s record, just as his single-term presidency is heading for the history books.