The United States pulled its ambassador out of Chile yesterday to protest the refusal of the president of the Supreme Court there to order the extradition of three Chilean military officers to face trial in Washington for the 1976 assassination of exile leader Orlando Letelier.
The recall of Ambassador George Landau for "a thorough review" of U.S.-Chilean relations was personally ordered by Secretary of State Cyrus R. Vance.
"We are gravely disappointed by the decision," said State Department spokesman Hodding Carter. "We strongly believe that extradition would permit the most expeditious and fair method for pursuing justice in this case."
The State Department was joined in its protest by Attorney General Griffin Bell. Terming the assassination of Letelier "a heinous crime," he said, "The Department of Justice is committed to ensuring that this case sets no precedent for this type of terrorist act."
Both Carter and Bell emphasized that the evidence presented to the Chilean high court was similar to evidence used in U. S. District Court here to convict three Cuban exile codefendents. Most of the evidence came from Michael Townley, an American who confessed to being the Chilean secret police agent who planted the bomb in Letelier's car. Letelier and an American assisstant were killed by the blast.
Chief Judge Israel Borquez called the U. S. evidence insufficient and said much of it was based on Townley's "compensated confession," referring to the reduced sentence he received from the U. S. court after pleading guilty.
Carter said the State Department is appealing Borquez' decision to the full Chilean Supreme Court.
While the United States was quick to recall its ambassador, it stopped short of taking further punitive action such as suspecting all military and economic aid to Chile now in the pipeline as recommended by Chairman Frank Church (D-Idaho) of the Senate Foreign Relations Committee adn Sen. Edward M. Kennedy (D-Mass).
State Department officials said they do not want to take such drastic steps against Chile's right-wing military government because the full Supreme Court could overrule Borquez and because the three might still be tried in Chile.
U.S. diplomats in Santiago, Chile, said Landau will begin intense discussion today with government officials here to decide what steps the United States should take next.
The alternatives range from cutting of the small amount of military supplies still in the pipeline to breaking off diplomatic relations altogether with the government of Gen. Augusto Pinochet.
The most serious step the Carter administration could take would be to try to persuade U.S. banks to stop lending money in Chile, which is economically dependent on billions of dollars it has borrowed over the past few years for development purposes and to finance imports.
Although a successful cutoff of private bank loans would be unprecedented, U.S. diplomats said there is no question that the Carter administration is "serious" about seeing that the there DINA officials stand trial-preferrably in the United States but at the least in Chile-for their alleged role in the Letelier assassination.
The Carter administration also has several choices on when to impose greater sanctions on Chile. It could move immediately if the full Supreme Court fails to overturn Borquez' decision or hold off acting to give Chile's military courts a chance to study the evidence as Borquez recommended.
The likelihood that the full Supreme Court will overturn Borquez' decision is considered remote, however, and the history of Chile's military courts under the present government is not considered by diplomats in Santiago as particularly hopeful for a full investigation of the three officers' role in the assassination.
While the United States considered its next moves, newspaper in Santiago wanted Washington not to react by exerting either political or diplomatic pressure on Chile. Editorial writers said Borquez' decision was strictly judicial and followed Chile's legal system.
Foreign Minister Hernan Cubillos said in Santiago it would be "intolerable" for the United States to retaliate diplomatically before the Suprme Court has a chance to review the initial ruling.
Letelier, defense minister of Chile in the leftist government of Salvador Allende, and aide Ronni Moffitt were riding in his car when it was destroyed in a bomb blast at Sheridan Circle on Washington's embassy row area in September 1976.
The killing put further strains on relations between the United States and Chile.
According to testimony in the Washington trial, Townley said Letelier's death had been ordered by Gen. Juan Manual Contreras Sepulveda, then the head of Chile's secret police known as DINA, and by Col. Pedro Espinoza, a high ranking DINA official.
The third military officer the United States wanted extradited to face trial here, Capt. Armando Fernandez Larios, helped plan the assassination, Townley, testified. CAPTION: Picture, Manuel Contreras Sepulveda, center, former secret police head, leaves court. UPI