WHILE OLIVER North was challenging Abu Nidal to hand-to-hand combat, Democratic presidential candidates Richard Gephardt and Michael Dukakis were bickering over the site of a debate on trade. Gephardt wanted Boston, to crack into Dukakis's captive media market, but Dukakis wanted Iowa, where he needs the exposure.

Campaign and scandal are spinning in separate orbits. The candidates are mainly jockeying among themselves on issues that appeal to constituencies in early primary states, rather than engaging the broad issues of foreign policy that are central to presidential leadership.

For this collection of candidates, especially, the failure to begin dealing with the biggest issues could damage the Democratic prospects to win the White House. The candidate most clearly fixed in the public mind and, as it happens, the one with the most -- albeit limited -- direct foreign policy experience, is the least likely to succeed: Jesse Jackson. And while the scandal seems to demand a new reign of honesty in government, the public doesnot want another outsider like Jimmy Carter, who rode Watergate to national power. The less mastery of foreign policy the candidates display, the more possible it becomes for the Republicans to raise again the specter of Carter.

In the vacuum caused by the absence of an obvious frontrunner, after Gary Hart disappeared, the jockeying for position has intensified. The back-and-forth between Gephardt and Dukakis about the merits of an oil import fee, for example, may be interpreted as a discussion about the relative importance in the primary schedule of New Hampshire and Texas.

The ritualistic straw polls of previous pre-election years, used to gauge winners and losers before any citizens actually voted, have given way to straw debates. In the only full-dress debate the Democrats have staged so far, the three main issues of the moment -- the Iran-contra scandal, the Persian Gulf imbroglio and the nomination of Robert Bork to the Supreme Court -- were unmentioned or peripheral. Since then, none of the candidates has delivered a complete speech on the meaning of the scandal as it relates to the conduct of foreign policy, nor has any of them given one on the potentially explosive situation in the Persian Gulf.

Trade, the principal topic that the candidates have taken up, is, of course, a legitimate major issue. It also has the advantage of being well-suited to economically distressed Iowa, site of the first primary. Gephardt, in particular, has used the issue to enhance his image of toughness, while trying to cast his opponents as un-American wimps and crypto-Reaganite fellow-travelers. In a phrase borrowed from Jeane Kirkpatrick's Republican convention tirade against the Democratic party, he has accused Dukakis' economics of following a "Blame America first" policy. For Democrats generally, trade allows them to talk about economic readjustment without talking about spending. And, if the economy takes a downturn before the election, they will have anticipated the discontent.

Trade may be precisely the sort of issue that moves primaries and mid-term elections, where local conditions often dominate. But how well will a consuming intra-party battle over trade prepare a Democratic candidate for the ultimate national position?

The seemingly endless rounds of positioning among the Democratic candidates are hardly fitting them for their foreordained encounter with the amassed forces of Reaganism, desperate to retain power. The era that gave Oliver North his license will not simply fade away.

What happened to the Iran-contra special committee when it summoned North before it should offer a cautionary lesson for the Democratic candidates: The militant conservatism of the 1980s will be as difficult to dispose of as nuclear waste. The Democrats might learn more about what they may confront in the fall of 1988 by watching the hearings than by watching each other.

What the viewing public saw in North was a combination of qualities, however distorted, possessed by none of the actual candidates in either party. Through a cracked glass, North appeared as the missing generational figure: an anti-establishment Vietnam veteran, passionately concerned about values and thoroughly telegenic.

To be sure, the Democratic candidates' avoidance of major speaking roles in the scandal's drama has a short-term measure of prudence. They have not wanted to spoil the view. The logic of positioning, too, dictates their distance from the scandal. Because of the candidates' common agreement on the question, it is not a particularly worthwhile issue to help them differentiate themselves from the pack.

The advice the candidates have received from many quarters of the party is to wait: When the investigatory committee has finished grinding through the witnesses and the special prosecutor has issued his indictments, the eventual nominee will assume center stage, with the ruins of the administration as backdrop. Then he will sidestep into the White House. Perhaps.

But the scandal may not be the sheer windfall many Democrats had supposed when the hearings began. The committee's failure to gavel down North's perorations permitted him to brush aside the embarrassing questions of fact and to broadcast his ideology unfiltered. No matter what the committee's report finally says about the details, the basic foreign policy issues raised by the Iran-contra dealings -- the uses of secrecy, the role of Congress, the treatment of allies -- will remain unresolved.

North's moment, as it turns out, may not be just another media epiphenomenon, but a portent of the difficulties the Democratic candidates are riding into. What might happen to the unready may be observed not only in the startle North gave to the committee, but also in the recent case of Sen. Joseph Biden, the Judiciary Committee chairman, whose abrupt series of shifts on the Bork nomination have nearly upended his presidential campaign.

If the Democratic nominee's victories are all narrowly based, winning on farm credit and oil import fees, the cumulative effect may be weak. The addition of all the interest-based issues will no more equal victory in 1988 than Walter Mondale's addition of all the Democratic constituency groups meant success in 1984. Though the logic of the primaries seems to require this sort of political behavior, it is a logic that cannot create a presidential leader.

That requires a candidate's patient effort to find ways to explain why the Reagan policy exemplified in the scandal runs against the grain of American institutions, traditions and national interest. And then a candidate must unfold an alternative. As the response to North proved, the public is yearning for what it perceives to be emotionally satisfying and intellectually honest answers on this very question.

In the meantime, Dukakis and Gephardt have agreed on an August date for their trade debate in Iowa.

Sidney Blumenthal is a staff writer for the Washington Post.