Soviets Formally Charge Daniloff : U.S. Decries Action; Harm to Ties Feared

The White House said Sunday that the indictment of jailed American reporter Nicholas Daniloff in Moscow on espionage charges “could have serious implications for U.S.-Soviet relations.”

Responding to the Soviets’ disclosure that the jailed U.S. News & World Report correspondent had been formally charged with spying and would be put on trial, White House spokesman Larry Speakes told reporters in Los Angeles: “We emphasize in the strongest terms to the Soviets that Daniloff should be released.”

Speakes refused to characterize President Reagan’s feelings about the incident but said that his own remarks represented “the President’s sentiments, expressed by me,” and added: “He is determined to impress upon the Soviet Union that he is personally involved in the matter.”

Reagan Called Determined

In Washington, State Department officials said the Soviet move appears to derail the deal that the Reagan Administration had been offering Moscow: the release of a jailed Soviet spy suspect into the custody of Soviet diplomats if Daniloff were freed without charge

“The proposal that we had been pursuing had been that Nick Daniloff would be released without proferring charges,” Under Secretary of State Michael H. Armacost said on NBC’s “Meet the Press.”

He called news of the Soviets’ move “the most discouraging thing we’ve heard to date.”

“It’s hard to say where we go from here, except that the problem gets worse,” said another official who asked not to be named.

Armacost tacitly confirmed reports that the Administration had suggested to Soviet authorities that if Daniloff were freed, the State Department might then intercede to obtain the transfer of the accused Soviet spy into the custody of Soviet diplomats, pending disposition of his case.

The accused, a physicist named Gennady F. Zakharov who works for the United Nations, was arrested in New York on Aug. 23 and has been held without bail. As a U.N. employee, he lacks diplomatic immunity from arrest and prosecution. Daniloff was arrested on Aug. 30 by eight Soviet secret police agents who suddenly surrounded him after a Soviet acquaintance handed him a sealed package that the Soviets said contained secret documents.

Arrested as a Hostage

Armacost said it was clear that the Soviets arrested Daniloff as a hostage against the release of Zakharov.

“They grabbed him for motives that I think are transparent,” Armacost said. “They’re related precisely to getting their man out of jail.

“I rather suspect that they, recalling past precedents, think they can muscle us on this issue by taking trading bait,” he said.

Officials have said that the State Department proposal was not aimed at “trading” Zakharov for Daniloff, and Secretary of State George P. Shultz and others have ruled out such a swap.

“There will be no trade,” Speakes said Sunday.

But by charging Daniloff formally with espionage--the same crime for which Zakharov is being held--the Soviet authorities have made it more difficult to arrange a solution that would not appear to be the kind of trade that the Administration has rejected.

‘Review Our Options’

“We will continue to review our options . . . and impress on the Soviets that it is indeed a matter of utmost seriousness to the United States,” Speakes said shortly before the President addressed a fund-raising dinner for California Republican senatorial candidate Ed Zschau. The White House spokesman, however, refused to discuss the options under study.

Reagan did not mention the Daniloff case in his speech.

Administration officials have made it clear that they do not want the incident to disrupt preparations for a possible summit conference between Reagan and Soviet leader Mikhail S. Gorbachev later this year.

Speakes said there has been no change in plans for Shultz and Soviet Foreign Minister Eduard A. Shevardnadze to meet Sept. 18 and 19 in Washington in a pre-summit session.

However, Armacost said that Washington may retaliate if the Soviets move toward trying the reporter.

“The case becomes much more complicated if they go through with a trial,” he said.

‘Range of Possibilities’

“Actions may have to be taken to underscore the seriousness of our purpose, but we’ve not decided what actions,” he said. “A range of possibilities exists.”

Other officials have said that options under discussion range from stepping up public denunciations of the Soviet action to scrapping some scheduled U.S.-Soviet contacts. One said a move to cancel meetings might escalate gradually, starting with cultural and academic exchanges.

Armacost said that the Administration believes arms control meetings and other substantive talks with the Soviets should probably continue but that U.S. representatives should raise the Daniloff case in every forum.

“You can still have meetings and not be pursuing business as usual,” he said.

Last week, he noted, arms control negotiator Paul H. Nitze raised the issue in a meeting with Soviet diplomats which had been called to prepare for the summit.

Another session of formal arms negotiations is scheduled to begin in Geneva on Sept. 18.

Intrude on Discussions

“The incident will intrude itself into all of our discussions with the Soviet Union if it’s not promptly resolved,” Armacost said.

Officials said that one possible U.S. action under discussion would be to cancel the participation of several Administration officials in a privately-sponsored U.S.-Soviet peace conference Sept. 15.

“We haven’t made a decision on that issue,” Armacost said.

“If they do go, then they ought to make this issue the centerpiece of their discussions with the Soviets,” he said. “And I would hope in that case that the Soviets would honor the arrangements which permit (American participants at the conference) to speak on television to the Soviet people.”

Another U.S. official cited what he called “an outside chance” that the formal charges against Daniloff could actually lead to his release--although under conditions that would not satisfy the United States.

Similar Case in 1978

The official, who refused to be identified, noted that in a similar case in 1978, Soviet authorities arrested and charged a Moscow representative for International Harvester with espionage--but then released the man into the custody of the U.S. ambassador. The American, Francis Jay Crawford, was later tried and convicted in a Soviet court but was given a suspended sentence and allowed to leave the country. Crawford’s freedom before his trial was traded for the release of a Soviet U.N. employee who had been arrested for espionage against the United States--the same kind of case that led to Daniloff’s arrest.

However, on CBS’ “Face the Nation,” Mortimer B. Zuckerman, chairman and editor in chief of U.S. News & World Report, called the charges against Daniloff “an outrage,” adding, “I suspect and believe there should be retaliatory measures if he is put on trial.”

He pointed out that Reagan sent a private message to Gorbachev last week vouching personally that Daniloff is not a U.S. spy--and that the Soviet action in charging Daniloff implicitly rejected that assurance.

“That they should not accept his word is an outrage,” Zuckerman said.

In a briefing for reporters at the Century Plaza Hotel in Los Angeles on Sunday, Speakes reiterated the central point of Reagan’s letter: “Daniloff is innocent,” he said.

James Gerstenzang reported from Santa Barbara and Los Angeles, and Doyle McManus reported from Washington.