From 1977 through 1978, Paraguay's ambassador here employed as his personal bodyguard an international terrorist convicted of killing Yugoslavia's ambassador to Sweden in 1971.

Miro Baresic, 28, a karate expert with a hot temper who was sprung from a Swedish prison in 1972 as part of a ransom demand by airline hijackers, used the name Toni Saric when he escorted Paraguay's Ambassor Mario Lopez-Escobar around Washington.

U.S. authorities did not know his real identity at the time, State Department sources said yesterday.

Baresic left the Paraguayan embassy after he was accused of assaulting a motorcyclist during a minor traffic incident here in March 1978. He avoided arrest by claiming diplomatic immunity.

In recent months, Baresic has become a target of a major federal investigation into acts of terrorism by right-wing Croatian separatists against Yugoslavians in the United States and elsewhere. He and another Croatian terrorist, both of whom were turned over to U.S. officials by the Paraguayan government in Asuncion last week, are being held in New York on charges of obtaining U.S. visas with false information.

Lopez-Escobar said yesterday that he had no knowledge of Baresic's background or real name while Baresic worked here. "He was sent by the government of Paraguay," Lopez-Escobar said. "He came here, I accept him, that's all."

It is not clear to what extent other Paraguayan officials knew of "Saric's" background. Robert B. Fiske Jr., the U.S. attorney in New York City who is heading the investigation, recently emphasized the "important assistance and cooperation" of the Paraguayan government in securing the return of Baresic and fellow terrorist Ivan Vujucevic to this country.

But the authoritarian regime of Paraguayan president Alfredo Stroessner has long been accused of harboring right-wing fugitives, including Nazi Josef Mengele, who supervised the murder of 400,000 people at Auschwitz.

Baresic is reputedly a member of the Ustashi movement, which sided with the Nazis in World War Ii. The group wants to make Croatia independent from the rest of Yugolslavis.

Since the early 1970s the group has focused most of its terrorist activities on Yugoslavs living abroad.

Croatian terrorists were implicated in or took credit for a series of assassinations and assassination attempts ranging from West Germany to Paraguay in the first half of the decade. In 1972, they took credit for blowing up a Yugoslav airplane over Czechoslovakia, killing 29 people. In 1976, they hijacked a Trans World Airlines flight from New York to Paris.

Last month the Federal Bureau of Investigation attributed several more recent violent acts to the Croatians, including three bombings, two murders and numerous death threats. There were also numerous extortion demands, an FBI spokesman said, in which victims were told to mail their money to an address in Paraguay.

Baresic and Vujicevic were at the vanguard of this wave of violence. In April 1971, Baresic was one of two terrorists who shot and killed Yugoslavia's ambassador to Sweden, Vladimir Rolovic. The same year Vujicevic participated in an armed assault on the Yugoslav embassy in Stockholm.

Both were convicted. Baresic was sentenced to life imprisonment and Vujicevic to 3 1/2 years. But fellow Croatian radicals hijacked a domestic Swedish airline flight in September 1972, and the Swedish government released seven terrorists, including Baresic and Vujiceivic, to comply with their demands.

Baresic and Vujicevic went with the hijackers to Spain, where they were held briefly before going to Paraguay, according to sources close to the investigation.

Lopez-Escobar said yesterday that Baresic was "absolutely not" involved in terrorist activities while he worked in Washington from September 1977 through November 1978.

The ambassador did say that there was an incident in which his bodyguard hit "a Negro young man."

The young man, Metrobus driver Jesse Blac, 26, is the son of Alma Black, District Del. Walter Fauntroy's D.C. office manager.

In March 1978, Jesse Black said, he was riding his motorcycle home from work on Massachusetts Avenue when a limousine the ambassador was riding in pulled out from in front of the Paraguayan embassy, forcing him into the oncoming traffic lane. Black pulled in front of the car and stopped at which point "Saric" got out, Black said.

"It was like he jumped up and kicked me . . .kicked me off the bike," Black said. When he was down on the ground, Saric kicked him again.

Black was taken to a hospital and treated for bruises and sprains before being released. His mother, on hearing the Paraguayan explanation of the incident to the police -- that Baresic was only protecting the ambassador and was covered by diplomatic immunity -- decided to pursue the case with the State Department.

As a result, in July 1978, "Saric" reluctantly paid Jesse Black $1,000 in damages.

The worst part of the incident, said Alma Black, was that "I felt like if me or my son had been in P araguay, they would have just locked us up and thrown away the key. CAPTION: Picture, Miro Baresic, who worked for Paraguay's ambassador here, is a terrorist convicted of killing an ambassador.