ATHENS, JULY 11 -- U.S. hopes for early negotiations for the continuance of U.S. bases in Greece have been severely set back as a result of a bitter dispute over an alleged Greek government accommodation with Palestinian terrorist leader Abu Nidal to protect this Mediterranean nation's vital tourist business.
Since U.S. Ambassador Robert Keeley raised the Abu Nidal issue in a private discussion with Greek Foreign Minister Karolos Papoulias two weeks ago, relations between Washington and Athens have gone from bad to worse.
The Greek government has canceled preliminary negotiations on a new bases accord that were supposed to begin this week, and Prime Minister Andreas Papandreou has also said that there will be no negotiations at all unless Washington publicly retracts its allegations. U.S. officials say privately that this seems unlikely.
"There will be no bases talks and the bases will close in 1988 if the United States doesn't withdraw fully, officially and publicly these false and groundless accusations against our country," an angry Papandreou told reporters after his government leaked the gist of Keeley's conversation with Papoulias.
To underscore that point, his government this week lodged protests with the North Atlantic Treaty Organization because a U.S. admiral alluded to the terrorist issue in a NATO Southern Command meeting in Naples. It also canceled a meeting between Greek and Pentagon military procurement officials scheduled for next week and -- though "technical reasons" were cited -- denied passage into Greek territorial waters of two U.S. Poseidon-class nuclear submarines.
At issue is the renewal of agreements covering four major U.S. naval, intelligence and communication bases in Greece and about 20 smaller installations around the Aegean nation. A five-year treaty on the bases signed in 1983 is due to expire December 1988, and if no new agreement to renew the terms is reached by then, the United States is to be given another 17 months to abandon the bases.
The cause of Greek ire was Washington's claim to have information that the Greek government had had contacts with Abu Nidal to try to guarantee that there would be no terrorist activities on Greek soil so that its vital tourist industry would not be disrupted. The Greek government has called such charges "ludicrous, unfounded, slanderous and suspicious."
Abu Nidal is the nom de guerre of Sabry Banna, who was kicked out of the Palestine Liberation Organization in 1974 because of his extremism.
Abu Nidal was mentioned this week during Lt. Col. Oliver L. North's testimony during the Iran-Contra hearings as having issued a death threat against North that prompted him to install a $13,800 security system around his home in Great Falls.
The organization named after Abu Nidal has claimed credit over the years for more than 100 terrorist attacks in the Middle East and Europe. Investigators in Europe have blamed him for the attacks on the Rome and Vienna airports in December 1985 in which 22 persons were killed, including four of the gunmen who staged the attacks.
The Greek government has been sensitive to the charge that it is soft on terrorism since the 1985 hijacking of a Trans World Airlines passenger jet by Arab gunmen who boarded the aircraft at Athens International Airport.
The U.S. State Department, reacting to what it said were inadequate security precautions at the airport, subsequently issued a travel advisory warning American tourists of the dangers of traveling to Greece.
The warning, though lifted six weeks later after improvements were made, was a major blow to tourism, the country's biggest foreign exchange earner. U.S. tourism to Greece dropped 60 percent last year, and Greek officials estimate the country has lost $700 million in tourist revenue since 1985.
Officials in Papandreou's Socialist government say privately that the current controversy was fueled by the prime minister's continuing bitterness over the State Department travel advisory and the economic toll it caused.
"To accuse us again of not being tough enough on terrorism is to threaten our already precarious economic stability," said one deputy in Papandreou's Pan-Hellenic Socialist Movement, asking not to be named. "We need tourism to survive economically."
Papandreou has had to impose controversial economic austerity measures since 1985 to cope with annual inflation rates of 17 to 20 percent and a foreign debt of $15 billion. Those measures, combined with Papandreou's reversal of a 1981 campaign pledge to close the U.S. bases in Greece, have aroused mounting domestic opposition.
Last October the Socialists received a stunning defeat in municipal elections, losing control of the country's three leading cities to the conservative opposition New Democratic Paty. Papandreou's goverment survived a vote of confidence last May, receiving 159 votes in the 300-seat Parliament.
The presence of the U.S. bases that were set up in Greece in the 1950s has long been opposed by Greek leftists. When Papandreou was first elected in 1981 the dismantling of the bases was a key plank in his party platform, along with taking Greece out of NATO and the European Community.
Papandreou has since backed off all three platform issues because, Greek sources close to the prime minister said, he realized that Greece benefits economically and strategically from NATO, the community and the U.S. bases. Greece receives $343 million a year in military credits and aid for hosting the U.S. bases.
Until Keeley met with Papoulias, U.S. officials had been convinced that the base negotiations were on track. In March 1986, after a meeting here between Papandreou and Secretary of State George P. Shultz, the base negotiations were scheduled to begin this year to avoid the pressures of bargaining right up to the December l988 deadline.
Western diplomats here believe Papandreou jumped on the Keeley allegations mainly to bolster his image domestically.
The problem, diplomats said, is that now Papandreou has put himself into a position where compromise seems difficult. Either he must back down or the United States must apologize.
Western officials believe that eventually there will be negotiations but that they probably will not begin until 1988, presenting the U.S. government with just the scenario that it had hoped to avoid.