Arkansas voters have set the stage for the most competitive gubernatorial election in almost a decade by renominating Gov. Bill Clinton (D) with a shaky 54 percent of the vote and picking wealthy first-time candidate Sheffield Nelson (R), a former Democrat and Clinton appointee, to oppose him.

Before then, however, Republicans face a potentially embarrassing June 12 runoff for the nomination for lieutenant governor pitting Ralph Forbes, a former member of the American Nazi Party and avowed segregationist, against Kenneth (Muskie) Harris, a black businessman and former University of Arkansas football star.

Forbes, who once served as an aide to David Duke (R), the Louisiana legislator and former Ku Klux Klan leader who is challenging Sen. J. Bennett Johnston (D-La.), led the Republican voting with 46 percent to Harris' 36 percent, with a third candidate denying him the majority.

Republican National Chairman Lee Atwater publicly denounced Duke's candidacy but yesterday Nelson and state GOP officials said they were staying neutral for now on the Forbes-Harris contest and RNC officials said they were waiting on the state officials. Republican nominees for attorney general and a Little Rock House seat endorsed Harris.

Nelson beat Rep. Tommy Robinson (R-Ark.), 55 to 45 percent, in a turnout of almost 90,000 voters, almost one-third more than the previous high for an Arkansas Republican primary. Clinton defeated Tom McRae, a former foundation president, by 54 to 39 percent, with minor candidates taking the rest.

The spotlight had been on the bitter GOP gubernatorial contest between two former Democrats who switched to the GOP just last year. Robinson, a populist three-term representative whose financial dealings sparked endless controversy, was welcomed to the party by President Bush and encouraged by national GOP leaders to seek the governorship. But Nelson, the former president of the state's largest gas utility and later Clinton's choice to head the state industrial development commission, drew strong support from longtime state Republican officials -- dismissed by Robinson as "the country-club crowd."

Their campaign became, in large part, an exchange of accusations about influence-seeking and personal disloyalty, involving several of the state's wealthiest and most prominent businessmen. Despite the personal character of the campaign, Robinson yesterday said he would support and campaign for Nelson.

Clinton said he was "not surprised" that he narrowly averted a runoff against McRae, but other politicians of both parties said the showing clearly indicated voter weariness with the incumbent, who is completing his 10th year in the governor's office.

Another era ended with the defeat of Knox Nelson (D), the most powerful figure in the state Senate and a 30-year veteran. Nelson, who was instrumental in blocking the tax package Clinton sought to finance his nationally publicized education reform program, lost to a younger colleague when redistricting forced them into the same territory.