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They mass by the hundreds and thousands. Some hold candles and chant softly for freedom, some hold automatic rifles and cry out for blood.

From the Baltic Sea to the Caspian Sea, from the coolly logical Lithuanians to the hotly emotional Azeris, the peoples of the Soviet Union are dominating world attention as they play out their roles in a drama of epic importance.

Each in its own way is part of a process that raises a question with monumental historic and political consequences: Is the Soviet Union, the last empire on Earth and a vast patchwork of more than 100 nationalities and ethnic groupings, finally coming apart?

Of all the potential nightmares that crowd in on President Mikhail Gorbachev as he presses ahead with his reform policies, this is the most frightening. And he and his Kremlin colleagues realize it.

”No one has the right to push people toward blind hatred and madness,”

the Soviet leadership said in a statement last week as unchecked ethnic violence set the republics of Armenia and Azerbaijan on a path toward civil war. ”If it is not stopped, today`s tragedy may turn into tomorrow`s national catastrophe.”

The issue took on added urgency as the weekend began with reports that government troops, supported by tanks, had opened fire on nationalist rebels in the Azerbaijani capital of Baku, wresting control of the city from them.

Gorbachev, who will turn 59 in March, has been in power nearly five years. His reforms already have changed the Soviet Union in profound ways, but 1990 may well be the year that tests his political abilities to the fullest.

He faces a collapsing economy, an increasingly disillusioned populace, an entrenched bureaucracy that is stubbornly fighting change, and the exploding ethnic and national pressures.

It takes only a glance to see the staggering extent of the vastly diverse ethnic and national confrontations that Gorbachev must deal with somehow.

In the last two years, ethnic and national unrest, much of it violent, has claimed more than 250 lives in 11 of the Soviet Union`s 15 republics.

In the Baltic republics of Estonia, Latvia and Lithuania, a sophisticated political chess game is being played out by essentially European populations with strong memories of independence before they were forced into the USSR at the start of World War II.

The leaders of their popular fronts and the three Communist Parties have maneuvered skillfully to the brink of declaring their independence.

In local elections that saw independent candidates swamp Communist incumbents and in bold moves in their regional parliaments, the Baltic states have slowly but surely asserted their right to reject control by Moscow.

When Gorbachev flew to Lithuania this month to try by sheer force of personality and political skill to stop the momentum, Western reporters asked the leader of the republic`s nationalist movement, Sajudis, to set a timetable for independence.

”Ten minutes,” quipped Vytautas Landsbergis.

But Landsbergis quickly pointed out that this was not the ”Lithuanian way.” Rather, he said, the process must be step by step, law by law, concession after concession wrung out of Moscow, until a return to

independence was inevitable.

In other European, or Western, parts of the Soviet Union-Byelorussia, Moldavia, the Ukraine-there have been similar, although less rapid political, legal and electoral steps toward greater independence.

While there have been instances when police used clubs and tear gas to break up demonstrations in these areas, the protests for more democracy have been generally peaceful.

That has been far from the case in the Trans-Caucasian republics of Georgia, Armenia, Azerbaijan and the Central Asian republics of Uzbekistan and Kazakhstan, where repeated violence has accompanied struggles against Moscow`s control.

Starting in Kazakhstan in December 1986 and continuing, step after bloody step through the last three years, the Kremlin has found it increasingly hard to deal with riots, inter-ethnic clashes and anti-Soviet demonstrations.

The descent of Armenia and Azerbaijan toward civil war last week was the worst example of what has occurred over and over again as Moscow, clearly fearful that a crackdown would derail Gorbachev`s reform programs, tried to avoid a major military confrontation.

The murderous conflict in Azerbaijan is an important test for Gorbachev, for the outcome may extend beyond the immediate course of ethnic disquiet throughout the Caucasus and Central Asia to the nationalist struggles elsewhere.

If Moscow, which let Eastern Europe slip from its grasp without revving up a single tank engine, is ready to use force in Azerbaijan, what would it do if and when Lithuania declares independence?

The question hangs heavily in the minds of nationalist leaders across this vast country, which spans 11 time zones.

Although it has been slow to awaken, it is the growing nationalist movement in the Ukraine, the heart of the Soviet Union`s bread basket, a huge republic with more than 51 million people, that looms as the Kremlin`s biggest worry.

The frequent refrain among analysts of Gorbachev`s ethnic dilemma is that he can allow fewer than 8 million Balts to go free but he can`t allow the people who grow the wheat to leave the union.

”One who engages in real politics must understand that even the smallest separatist, or nationalist outbursts give rise to confrontation,” Gorbachev told Lithuanians earlier this month. ”In one case a million and a half people are set in motion, in another not less than 50 million.”

It is hardly conceivable that Gorbachev would let some republics break away if he felt the precedent would lead all or most of the others to leave. As he told the Lithuanians, he did not become the president of the Soviet Union to preside over its demise.

At the same time, however, the USSR`s ethnic and national problems, be they peaceful or bloody, have become inextricably bound up with the political and economic reforms Gorbachev is trying to breathe to life.

Nationalist demands grow naturally from the democratic practices he has sought to engender; his people no longer fear to speak their minds. That is Gorbachev`s conundrum: They are doing exactly what he told them to do, but what they are doing threatens the very core of the process he began five years ago.

Gorbachev has promised repeatedly to ease the rigid system, designed and perfected by Josef Stalin, in which Moscow controls the minutiae of political and economic life over the 8.6 million square miles of the USSR. But the absence of significant change had spawned growing cynicism, even among Communist Party members.

Still, the Soviet president is the most adroit political strategist the USSR has seen in a long time, and he has a trump card. In Lithuania a week ago, he hinted at a new structure, a genuine federation, to govern the relationship between Moscow and the far-flung republics it now rules.

”We need the federation,” Gorbachev said in an impassioned argument against radical moves by individual republics. ”It is the second wind of socialism. I hope you understand me. What I have said concerns everyone in the Soviet Union.”

But hints were all Gorbachev gave, suggestions that the republics would have sovereignty over all of their affairs except those that related to defense, foreign relations and some inter-republic dealings. Details are not to be revealed until a major Soviet Communist Party meeting scheduled in October.

Will hints be enough to hold back the tide until fall? Even then, will Gorbachev`s federation satisfy the demands of people with such widely diverse aspirations?

What is the alternative?

Gorbachev provided a chilling hint, a reminder of the darkest days of Stalinist repression, in asking whether the unity of the Soviet Union might not survive the painful transition he has prescribed.

”Our society may not stand this,” he said. ”Then there will appear simple formulas, simple and easy to understand. No symposiums will be needed then; just apply the formula and everything will be `in order.`

”But we know from our own experience what `order` this will be.”