WHEN THE Persian Gulf war erupted last week, a very different kind of conflict with global implications had already exploded in another far corner of the world: the deadly confrontation between Soviet leader Mikhail Gorbachev and the breakaway government of Lithuania.

Though tiny in comparison to the gulf war, the face-off in the Lithuanian capital threatens enormous damage of its own to the promise of a "new world order" in the post-Cold War era. The Vilnius assault, in which 14 Lithuanians were killed by Soviet paratroopers who seized the republic's television center, has speeded a re-evaluation by the Bush administration of Gorbachev's political direction and possible tenure in office.

The trouble in the northwest corner of the Soviet empire has spread to the other Baltic republics of Estonia and Latvia and reflects the consequences of Gorbachev's steady move to the right in recent months. The conflict brings into focus new questions about the possibilities for an expanded and cooperative U.S.-Soviet relationship.

At a deeper, more complex level -- where a leader's authority to rule and his claim to the moral right to do so merge -- Gorbachev's involvement in the confrontation and his handling of the issue has impaired his presidency in ways that may not be reversible. It unfolded at a crucial moment, when Gorbachev's natural constituency of reformers and democratic activists has disintegrated -- partly to follow their own policies, but mostly from discouragement. Simultaneously resurgent conservatives and centrists are calling for a return to the authoritarian ways of the past as the only means to guarantee internal stability and the survival of the empire.

The Vilnius episode may have other effects that could damage Gorbachev's drive for Western aid. For example, the Soviet Union owes Western banks billions of dollars that it cannot easily repay. It is seeking quick entry to various international financial institutions and access to favorable credit that could help ease these problems. Moscow has already claimed $800 million of $1 billion in taxpayer-subsidized U.S. agricultural commodities and is eager to make use of $300 million in U.S. trade credits made available after Moscow finally eased restrictions on Jewish emigration. The administration review is focusing on these issues as well.

Trouble has been afoot between Gorbachev and the independence-minded Lithuanian government of Vytautas Landsbergis for months, ever since the parliament in Vilnius renounced Soviet sovereignty last year. Moscow has used economic boycotts, propaganda, and shows of military strength to intimidate the Lithuanians and the other Baltics, which are intent on regaining the independence lost when they were seized by Soviet troops in 1940. A new confrontation was inevitable after Gorbachev announced to the Soviet parliament last month that only a tough new campaign of "law and order" could save his country from disintegration.

"The only sensible policy now," he declared reasonably on Dec. 17, "is to act together to stem the crisis . . . and steer the country in 12 to 18 months toward normal, healthy development along the path of renewal."

This had a reassuring sound from the leader of a country where economic output is dropping through the floor, ethnic and nationalist activism is rocketing through the ceiling and the disintegration of central authority is accelerating.

But talk of "law and order" from a Soviet leader -- even a Gorbachev -- is seldom reassuring and the question of "steering the country" is no empty phrase: Struggle for political primacy between the center and the increasingly bold and self-confident leaderships of the 15 Soviet republics lies at the epicenter of the Soviet upheaval.

This is why the turn to old-style Soviet tactics -- including the sudden emergence in the Baltics of anonymous National Salvation Committees calling for direct rule from Moscow -- has such sinister implications. Even though Gorbachev sent a special envoy to Vilnius who delivered conciliatory comments to the republic's parliament (a gesture that conceded the legal reality of the breakaway legislature), it did almost nothing to ease the tensions.

A senior U.S. official called the Vilnius confrontation an attempted coup d'etat. "It has an extra-legal character, and that calls into question how much control Gorbachev has," said the official. Gorbachev denied giving the order to the troops to storm the television center, but the senior official said, "He hasn't disowned it or disavowed it."

Indeed, Gorbachev's behavior after the Vilnius assault raises as many warning flags about his ultimate intentions as the episode itself. Westerners grown accustomed to Gorbachev's willingness to denounce crimes by previous Soviet leaders were shocked when he offered flimsy excuses about his connection to the episode, denounced the chorus of critics and then angrily sought to muzzle the Soviet media by proposing to rescind a press-freedom law he himself had ushered into being as part of his glasnost openness. (While the Supreme Soviet turned him down, it did establish a review committee to study the question of "balanced" news reporting.)

Roald Sagdeev, a science adviser to Gorbachev and a member of the Soviet Congress of Deputies, called Gorbachev's denial of prior knowledge "ridiculous." He added, "If only brute force is capable of keeping the union together, the question is, is it worthwhile to keep it together at all?" Gorbachev has heard these agonized questions from liberals before; the Vilnius attack may be the only answer he cares -- or now is able -- to give. In any event, the choices immediately ahead are unsettling for the man who won the 1990 Nobel Peace Prize. He may have earned points from the military for supporting what could have been an out-of-control local commander, but he must wonder about the cost for a leader like himself, who now seems to have no popular base of his own beyond the traditional organs of Soviet control.

The toughest course for Gorbachev -- and therefore one he is unlikely to make -- would be a repudiation of the Vilnius assault. This would open the door to prosecutions of the military men who ordered the troops to open fire on unarmed civilians. Even in the relatively unreformed context of Soviet criminal law, trials are unpredictable: There could be admissions about who actually issued the orders.

If Gorbachev takes the hard-line route of direct presidential rule in Lithuania, prosecution and imprisonment of Landsbergis and others could follow -- ending whatever hopes remain for reform. Arresting a Lithuanian leader would generate far greater negative responses in the West than did, say, the arrests of Azerbaijani Popular Front leaders in Baku last year.

In the peculiar realm of Soviet leadership morality, Gorbachev has fetched up some stark historic comparisons. Melor Sturua, a longtime Izvestia commentator who is now a fellow at the John F. Kennedy School of Government at Harvard, says Gorbachev's moral dilemma now is worse than Nikita S. Khrushchev's after he crushed the Hungarian Revolution in 1956 with Soviet tanks. "There is a profound difference; Khrushchev was a dictator and he never claimed he wouldn't interfere. Gorbachev said he would never interfere -- but he did exactly that."

If, instead of normalizing relations with the Landsbergis government, Gorbachev opens a wide-ranging effort to re-discipline the fractious republics, he will have triggered the opposite effect: weakening the center by speeding the devolution of power from Moscow to the republics. Gorbachev's inability to get the republics to accept his proposed Treaty of the Union, with its seemingly unworkable compromises between provinces and center, accentuates the cascading sequence of disputes descending upon on the president.

"You can't order an economy to improve and can't expect people who are sullenly defiant of the center to take risks to set up a market economy," said Ed A. Hewett, a senior fellow at the Brookings Institution and editor of the journal Soviet Economy. "This is quickly becoming a conflict between democrats and Gorbachev, and the democrats are always the entrepreneurs. Gorbachev always had a strange notion that you can build a market economy by establishing order. But markets are grassroots phenomena -- they come up from the bottom of a society in an environment that encourages freedom."

Economist Judy Shelton, author of "The Coming Soviet Crash," observes, "The republics will say, 'We don't want anything to do with a union structure,' and there will be even more resistance in Ukraine and Georgia. If you assert control through threat of violence over inert organisms that won't produce, what do you have? I think {Vilnius} has killed all chances of reconciling the momentum of the country with what's allowable by the Kremlin."

In his 1987 bestseller "Perestroika," Gorbachev asserted that the "main shortcoming" of the Stalinist centrally planned economy was "above all the lack of inner stimuli for self-development." But he then consistently refused the advice of the radical economists who sought to dismantle central planning and establish conditions for a market economy to develop. Each refusal had the effect of strengthening the traditional bureaucrats and intensifying the ultimate showdown with the reformers. The ensuing turmoil has enveloped the entire upper echelon of original Gorbachev democratic reformers and has been marked by their accelerating departure from the halls of power. Leading the list, of course, are foreign minister Eduard Shevardnadze and longtime Gorbachev confidante Alexander Yakovlev. Shevardnadze's warning of a coming dictatorship and the cautionary outcry of the others has earned headlines but triggered only public scorn from Gorbachev.

In the most recent flurry, top economic adviser Nikolai Petrakov resigned in disgust last week, and he and numerous other reformers issued a joint letter that in part declares: "Economic reform has been blocked, censorship of the media reinstated, brazen demagogy revived and an open war on the Soviet republics declared."

Gorbachev's strongest suit amid the chaos of the leadership crisis is his extraordinary resilience. He has tacked right, tacked left, come close to capsizing, yet saved himself and his perestroika again and again in nearly six years in power. He has spoken repeatedly and forcefully to the world and to his own people of his determination to found a nation based on the rule of law. But it is now unclear where the leader who defended the Vilnius assault can draw a line on his actions.

Comments Shelton: "In the depths of his heart, he would prefer democratic and liberal solutions if it doesn't threaten his own position. But if it is a choice between his own survival and perestroika, as a political animal, he would fight for his self-preservation."

Marshall Goldman, associate director of the Harvard Russian research center and an economist at Wellesley College, has predicted regularly in recent years that Gorbachev soon would be ousted from power. In the Vilnius aftermath, said Goldman, "What we lost sight of in the euphoria of glasnost and perestroika was that the Soviet Union is a hard rock. Period. You don't think of it as a place from which the Magna Carta would evolve."

Even if Gorbachev tacks in the direction of compromise with the republics, there is no guarantee he can succeed. Each republic has its own agenda and its own concept of where self-determination will take it -- without Moscow. Numerous other ethnic groups, such as the Yakuts, have declared various forms of sovereignty or independence from Moscow and from the republics. Yet all seem interested in economic cooperation.

The idea that Gorbachev can juggle all these disparate interests, or that they are even interested in playing ball with him, is problematic. At every turn, he faces no less an adversary than Boris Yeltsin, the Russian Federation's leader, whose own devolution plan calls for sovereign treaties among the republics, separate republican armies and a republics-based replacement for the internal-security organs of the secret police and internal-affairs ministry.

Gorbachev's consuming fury at Yeltsin, his onetime deputy and now the most popular leader in the country, may be the most dangerous single element in the volatile mix. Gorbachev calls Yeltsin "unbalanced," and the newly controlled central press has launched a bitter attack on the ex-Politburo member. Yeltsin has said he expects "an extreme reactionary offensive . . . . We expect nothing good from Gorbachev."

If Yeltsin's worries are borne out, the consequences will be as profound for the struggling world of the new order as will be the consequences of the war in the Persian Gulf.

Kevin Klose, a former Moscow correspondent for The Washington Post, is an Outlook editor.