``HALT! FRIEND OR FOE?''

By DOUGLAS WALLER WASHINGTON

Rule No. 1: in the world of spying, there is no such thing as a friendly intelligence service. Last week France decided it had had enough snooping by its American friends. Normally these cases are handled with diplomatic discretion. But the French government went public with its request that five CIA operatives allegedly caught gathering French economic and political secrets in Paris leave the country, after the French newspaper Le Monde published a detailed account of dirty tricks by the CIA's station chief in Paris, three of his case officers posing as American diplomats and a fourth officer operating under a business cover.

Officials in Washington were flabbergasted--not that Paris had complained about the spying but that it had done so publicly. The U.S. accused the French Interior Ministry of deliberately leaking the story. The State Department called the action ``unwarranted'' and defiantly declared that the American officers who remained in Paris would not leave until their tours were up. ``This is not the way allies treat each other,'' said an angry U.S. official.

France's counterintelligence service, the Directorate of Territorial Surveillance (DST), had been tracking the spying since 1992, according to Le Monde. A female CIA officer and her male partner first tried to bribe a member of parliament with 500-franc notes to reveal France's negotiating position on world-trade talks, when Washington was pressing Paris to lower agricultural subsidies and open its television-broadcast market to U.S. programs. Another senior official in the Ministry of Communications was offered cash for intelligence on telecommunications and audiovisual policy. A technician for France-Telecom, the French telephone network, was also recruited. All three immediately notified the DST, which ordered them to play along with the Americans to lay a trap, said Le Monde. Guided by the DST, the Telecom technician continued to feed documents to his CIA handlers until a few weeks ago.

On Jan. 26, Interior Minister Charles Pasqua summoned U.S. Ambassador Pamela Harriman to his office to protest the spying. At a second meeting Feb. 10, he demanded that the five CIA officers leave the country immediately. Working their contacts in the French intelligence services, senior CIA officials were assured that the matter would be dealt with behind closed doors. The two countries' spy agencies have had fierce battles over economic secrets, ``but when we fight wars together or life-and-death issues like terrorism, we work closely with the French,'' said a former CIA official.

The agency ordered one of the accused officers to leave France, and was planning to move a second officer. But the cover was blown on the affair by French presidential-election politics, say officials in both countries. Once a sure bet to succeed Socialist President Francois Mitterrand in the April 23 election, Gaullist Prime Minister Edouard Balladur has recently seen his high poll ratings nose-dive. His campaign was badly damaged by revelations that Pasqua, a Balladur supporter, authorized an illegal wiretap last December on the father-in-law of a judge investigating an illegal campaign-funding scheme in Pasqua's district west of Paris.

Both French and American officials suspect that Pasqua leaked the CIA story to get the wiretapping scandal off the front pages. ``The timing is just too transparent,'' says a U.S. intelligence officer. Pasqua denied it and suggested that the leak came from ``the American side.'' The French found that hard to believe. ``Pasqua is trying to make people forget about the wiretap episode by banging his fist on the table to show he still has authority,'' says a Paris counterintelligence agent.

The CIA found the French outrage galling, since France's foreign- intelligence arm runs an aggressive economic-espionage program against the U.S. CIA and FBI officials say French agents have bugged the seats on Air France jets to listen in on the conversations of American businesspeople and have ransacked their hotel rooms. Two years ago, the CIA warned American defense contractors against attending the Paris Air Show because French operatives were lying in wait to pilfer their secrets.

French intelligence agencies may also have wanted to take a public slap at the CIA because it has become a stronger competitor. Although it refuses to spy for American companies directly, the CIA has been more aggressively collecting intelligence on the economic and trading policies of foreign governments. The CIA also alerts American companies when they are the targets of foreign spying or unfair trade practices.

Both governments now want to put the squabble behind them. French Foreign Minister Alain Juppe, a Balladur opponent, pronounced himself ``scandalized that a delicate problem was dragged out in the open.'' Washington was certainly not eager to demand that French agents in the U.S. leave, fearing cold war-style retaliation. The CIA's station in Paris is one of the agency's largest in the world, serving as a base for collecting intelligence not only on the French but also on terrorists, nuclear- material smugglers and arms traffickers throughout Europe. ``You don't want this to get out of hand,'' said a U.S. intelligence official. Rule No. 2: getting even is not worth it if you can't continue spying.

--With reporting by Thomas Sancton/Paris

With reporting by THOMAS SANCTON/PARIS