December 3, 1981

An ambitious plan to change Harlem's 125th Street, long a declining thoroughfare of struggling shops and stores, continues to inch forward amid financial uncertainty. The effort, which involves private, city, state and Federal funds, is being led by the Harlem Urban Development Corporation, a state agency, and the Harlem Commonwealth Council, a nonprofit community development corporation. Officials of the two groups still hope to secure support for the plan's two key projects, a 946,150-square-foot International Trade Complex at 125th Street and Lenox Avenue and a four-story shopping mall at 125th Street and St. Nicholas Avenue. Despite the optimism of those involved, however, there remains considerable uncertainty over whether these two projects will ever be built or, if built, will match the development predictions of their proponents. Federal Support Still Uncertain One cause of the uncertainty is that the Reagan Administration has yet to decide if it will financially support the proposal for a trade complex. Donald J. Cogsville, president of the urban development agency, said Federal support would be vital to the construction and future success of the complex.

''We know about isolation, but when your best friend says, 'Don't count on me, except in the face of danger from North Korea,' it's hard to say that Israel's position in the area is strengthened.'' - Abba Eban. (A3:1.)

Secretary of State Alexander M. Haig Jr. met today with Nicaragua's Foreign Minister, the Rev. Miguel d'Escoto Brockmann, and said that the Central American country ''may be interested'' in resuming discussions on relations with the United States. After the hour-and-a-half meeting, which was requested by the Nicaraguans, Mr. Haig Nicaragua and the United States still have diplomatic relations, although they have been strained because Nicaragua is suspected of channeling Soviet-bloc arms to Salvadoran guerrillas. The last Ambassador to Nicaragua, Lawrence A. Pezzullo, returned to Washington in August at his own request and has not yet been replaced. Earlier today in Washington, a senior Administration official, citing intelligence reports, asserted that Nicaragua was becoming a serious threat to Central America because of a military buildup being engineered by Cuba and the Soviet Union. The official also said that Nicaragua was fostering left-wing rebellions in Honduras and Guatemala as well as El Salvador. (Page A12.)

The question is: how free is free? Since the summer of 1980, the law firm of Cravath, Swaine & Moore has been representing the City of New York in an effort to convince the courts that the 1980 census figures, which show a marked decrease in the city's population, were in error. The work has been pro bono publico, ''for the public good.'' Had the firm actually charged the city for the hours its attorneys put in to date, it maintains, the bill would be $1,865,132.

For a black ''homeland,'' sover- eignty and strife A2 Private study group calls for ex- ploratory U.S.-P.L.O. talks A3 Schmidt and Honecker to meet next week A4 South Africa frees 39 and charges 5 in Seychelles plot A9 Warsaw Pact ministers disavow first-strike intent A9 Spain gets new Cabinet aimed at ending party rift A10 Peking critical of Mao's views on the arts A11 Government/Politics Margiotta defends $5,000 pay- ment as share of commission B2 Regan urges Carey to intervene in M.T.A.'s ''paralysis'' B4 Westchester taxpayers face an additional tax rise B12 Reagan moves to re-establish ties with organized labor B18 Senate panel says Casey is not ''unfit'' for C.I.A. post B20 Washington Talk Briefing B16 Lobbyist finds White House friends are pluses and minuses B16 David Stockman is back on Capi- tol Hill as a budget expert B16 Lexicon, some language being bandied about in the capital B16 General Around the Nation A18 San Francisco dedicates George Moscone Convention Center A18 Spending by envoys termed a ''boon'' to New York City B5 Washington getting its buses back in good shape B10 Health/Science Prenatal test for a genetic disor- der found by state researchers A20 Four Brooklyn hospitals plan to merge into two new ones B8 Home Section Home Fear of entertaining: pre-party stategies C1 The fine art of having your house's portrait done C1 ''Depression quilts'': a re- newed interest C3 A wealth of home gifts from some special stores C6 Repairing veneers C7 Hers C2 Helpful Hardware C2 Home Beat C3 Home Improvement C4 Calendar of Events C5 Wind-energy inquiries show marked increase C9 Design Notebook: refurbishing the Waldorf's 1930's interior C10 Conservatism is found in top teen- agers C11 Gardening: defending plants from insect enemies C12 Industry/Labor Teamsters stress industry viabil- ity as pact talks open A19 City officials expect carting rate rise after strike B3 Arts/Entertainment Ex-NBC News unit manager ac- quitted in tax case C13 New music performed at Third St. Music School C14 Eduardo Mata conducts Philadel- phians at Carnegie C15 American Composers Orchestra honors Virgil Thomson C16 Washington Opera puts on a new ''L'Elisir d'Amore'' C17 Link found between ''Satyagra- ha'' and rights movement C19 Peter Orth, pianist, explores sonata-fantasie link C19 Architects are trying to place new buildings in context C20 Collerd, clarinetist, in recital C21 ABC buys 30 percent of U.P.I.'s TV news service C21 City Opera's subscriptions are helped by lower prices C21 Mary Renault's novel ''Funeral Games'' is reviewed C23 Met Museum to open Michael Rockefeller Wing Feb. 3 C24 Julie's TV flying capers continue in ''Skyward Christmas'' C27 Beatty's film ''Red'' benefits from British tax laws C28 Obituaries John L. Gerstad, director, pro- ducer, actor and playwright A25 Sports Nets beat Cavs as Bailey excels D21 Valenzuela is named National League rookie of year D21 Vickers, back with Rangers, set for a major effort D21 Meyer vs. Meyer: Father does best D21 Jets' Bobby Jones is a star, but only part time D23 Dave Anderson on the skiing Mahre twins D24 Features/Notes Notes on People C25 Sports People D25 News Analysis David Margolick analyzes a school issue in New Jersey B2 B.Drummond Ayers Jr. on Rea- gan's ''new federalism'' B18 Editorials/Letters/Op-Ed Editorials A26 Which Constitution? The realty tax veto Change small change Misjudgment in the Senate Letters A26 Anthony Lewis: if it squeals, it's pork A27 William Safire: the Arik-Cap memo A27 Marlene Sokol: stop selling Mo- rocco U.S. arms A27 Tom Gervasi: count all the weap- ons A27