Chun Tries To Avoid Iron Hand See CHUN, A26, Col. 1 CHUN, From A1 By John Burgess Washington Post Foreign Service

SEOUL, June 20 -- After 11 days of fierce street fighting between police and demonstrators, the government of President Chun Doo Hwan is desperate to restore order but trying hard to avoid the methods traditionally used here for the task -- tanks and martial law.

Never before has it faced such a challenge. Protesters have burned police posts and smashed windows at ruling party offices. With rocks and firebombs, they have seized control for several hours at a time of the centers of Seoul and major provincial cities.

Yet the government has not responded with the iron hand that might be expected from one run by former military men.

{Clashes continued in Seoul Saturday with Buddhist monks taking part for the first time. Police, possibly reacting to the death of an officer, were more aggressive than usual in battling the protesters. Details, Page A26.}

Night after night, riot police armed only with tear gas and close-order formation training have returned to the streets to fight battles they sometimes lose. On several occasions, whole units have been overpowered by protesters, beaten and stripped of their equipment.

They have not even received permission to use their night sticks.

It all suggests that South Korea is no longer the isolated, military-dominated state that it was in the 1960s and 1970s, when generals could act with little concern over censure, foreign or domestic.

With exports of $35 billion last year, the country is now a significant player in the world economy. In September 1988, it is to host the Summer Olympics. In short, it has an international reputation to uphold that it did not have in the old days.

Domestic politics have changed, too. Ever since Chun came to power in 1980 after a coup, the former Army general has been saying he is a different kind of soldier-president, one who really intends to put the country on the road to democracy.

His term ends in February and he has staked his reputation on a promise to hand over power peacefully to a successor. That would be a first time that had happened since South Korea was established in 1948.

Imposing emergency steps would be a horrible loss of face.

"He's already promised to leave next year," said a Korean political analyst. "But if he imposed martial law in the last stage of his presidency, what would people think he really intended?"

Martial law and the many degrees leading up to it have another drawback: They increase the chances that people will be killed in political conflict, something that almost never happens in South Korea these days.

Confucian concepts of moral government remain strong in South Korea. A government that kills its citizens does not qualify, and even one death is explosive. Early this year disclosure that a student had died during police torture became a cause celebre for the opposition.

Many people expect that major new energy will appear in the street protests if a student who was put into a coma when a tear-gas canister hit him on the head last week dies.

Chun is deeply unpopular here. Much of the hostility grows from the legacy of Kwangju, the city where in 1980 more than 200 people died after Army troops went in to suppress demonstrations.

The public's respect for the South Korean armed forces sank sharply afterward. Today senior officers are not eager to blunder again into a situation in which their troops would be firing real bullets at civilians in the streets.

In 1960, the 12-year-old government of President Syngman Rhee fell after a massacre of demonstrators in Seoul. Some believe Chun's would also if events reached that point.

Emergency steps were discussed at high-level meetings last weekend but rejected, for the time being. Party officials dismiss the idea as unnecessary in the new South Korea.

"We have more shock-absorbing capacity," said Hyun Hong Choo, a ruling party spokesman.

So the government that normally talks tough is eating humble pie. Although yesterday it warned of an impending "extraordinary decision" if things don't calm down, it is devoting much more energy to talking of concessions.

Some party members were shocked by the depth of public support for the demonstrations and appear to have taken it as a strong signal that their party's policies must change.

Much attention is focusing on the so-called April 13 decision, in which Chun postponed until after the Olympics a dialogue with the opposition aimed at amending the constitution to allow direct popular election of the president.

That move was immensely unpopular and is commonly seen to have helped fan support for the demonstrations.

Ruling party officials are casting about for ways to get constitutional talks going again.

Today, ruling party chairman Roh Tae Woo called on the presidents of two minor opposition parties to talk about a deal. But he was unable to see Kim Young Sam, head of the main opposition Reunification Democratic Party. Kim, apparently feeling events have created leverage for him, said he would deal only with Chun.