LEAD: As a result of Iraq's surprise offer this week to meet Iran's terms for a peace treaty, Teheran faces one of the most fundamental questions of its 1979 Islamic revolution - whether to use its new position of strength to weaken Iraq or to join with it to push the United States, their common enemy, out of the region?

  For Iranians, a Windfall

LEAD: Pearl Bailey, the entertainer whose distinctive singing style was enhanced by her mischievous witticisms and warm personality, died yesterday at Thomas Jefferson University Hospital in Philadelphia after collapsing at a hotel where she had been staying. She was 72 years old and lived in Lake Havasu,

Pearl Bailey, Cabaret Trouper And Musical Star, Dies at 72

LEAD: In the spring of 1986, George Bush traveled to Saudi Arabia to plead with the world's biggest oil exporter to stop flooding the market. Mr. Bush told the Saudis that their overproduction, by driving down the price, was jeopardizing the American oil industry, in turn undermining the nation's economic strength and security.

CONFRONTATION IN THE GULF: Energy Policy Trade-Off;   Dependency Is Price Of Years of Cheap Oil

LEAD: The nation's trade deficit narrowed a surprising 35 percent in June, to $5.07 billion, its lowest level in seven years. Exports surged to a record and a slowing economy at home cut imports sharply. But economists expect rising oil prices and other factors to push the deficit back up again.

U.S. TRADE DEFICIT LOWEST IN 7 YEARS

INSIDE

LEAD: The cracks in Soviet society are so visible these days that they have become part of the landscape like the gaping ruts that line Moscow's streets.

Some Soviet Items Aren't Scarce: Crime, Strikes, Fighting, Pollution

LEAD: Upstart, cash-wielding Florida State University, widely known for its powerful football team, yesterday beat out the prestigious but perhaps frugal Massachusetts Institute of Technology in a Federal competition for money to build a $100 million center to conduct research on extremely powerful magnets.

Florida State Beats M.I.T. for Science Center

LEAD: President Bush has decided to call up a limited number of military reservists because of the Middle East crisis, Administration officials said today, and the Pentagon commandeered 38 wide-body jets from 16 airlines to carry troops and cargo to the region.

  BUSH SAID TO APPROVE PLAN TO ACTIVATE SOME RESERVES; U.S. TAKING OVER 38 AIRLINERS

LEAD: ''Perhaps the time has come to move toward a voluntary professional army.'' - President Mikhail S. Gorbachev of the Soviet Union. [3:1.]

Quotation of the Day

LEAD: International 2-7       President Bush decided to call up a limited number of military reservists because of the Middle East crisis, and the Pentagon commandeered 38 jets from airlines to carry troops and cargo to the region. Page 1       American reserves await the call for possible duty in the Persian Gulf with a mix of dread and excitement.

News Summary

LEAD: When 543 Albanian refugees marched off a ferry in Marseilles last month, many showed their delight to be in France by belting out a version of this country's national anthem. Now, it turns out, they really meant to sing ''The Star-Spangled Banner.''

Emance Journal;   Welcomed in France, Albanians Reply: 'America'

LEAD: A review yesterday of the movie ''Wild at Heart'' misidentified the director of photography. He is Frederick Elmes, not Mark Plummer.

Correction

LEAD: United States marines today flew about 360 Indian nationals from the U.S.S. Saipan off the Liberian coast to Freetown, the capital of neighboring Sierra Leone. They had been airlifted to the warship from the United States Embassy in Monrovia on Thursday.

Marines Continue Liberia Airlift

LEAD: Fighting between rival black factions swirled through parts of Soweto for a second successive day today as the leaders of major black groups failed to agree on the date and location of a meeting to settle their differences.

31 Dead as Soweto Clashes Continue

LEAD: The Soviet Union and West Germany said today that they expected a final international agreement on German unification to be concluded in Moscow on Sept. 12 at one last round of talks on security arrangements.

German Unity Accord May Be Signed Soon

LEAD: President Mikhail S. Gorbachev vowed today to carry out a profound reorganization of the Soviet military in January, and strongly suggested that the changes could include abolition of the draft.

Gorbachev Vows to Reorganize Military

LEAD: The Iraqi authorities have moved 35 Americans from a Baghdad hotel where they had been held under armed guard and apparently took them to another hotel where their communications with American diplomats in the Iraqi capital were cut off, the State Department said today.

  35 Americans Are Removed From Their Baghdad Hotel

LEAD: United States ships halted two Iraqi cargo vessels in the Persian Gulf today in the first test of the American-led naval blockade of vessels carrying cargo to or from Iraq and occupied Kuwait, the Pentagon said.

  U.S. Intercepts and Frees 2 Iraqi Ships

LEAD: ''Mommy, it's Stephanie,'' she said as tears began to swell in her eyes. ''I got out. I am in Saudi Arabia.''

  Refugees from Kuwait Choose Life Over Money    Relief and Tears

LEAD: As Najib Nasif stepped into the shade of the Jordanian immigration shed here at the bleak border with Iraq today, the strain of the Lebanese merchant's two-day trek across the desert from Kuwait showed in his haggard, unshaven face.

  Refugees from Kuwait Choose Life Over Money

LEAD: Defense Secretary Dick Cheney suggested on Friday that American troops might have to stay in Saudi Arabia for a ''long'' time to deter an Iraqi attack.

  CHENEY FORESEES LONG STAY FOR U.S.

LEAD: Israeli intelligence has learned that several Palestinian terrorist organizations are actively planning attacks on behalf of Iraq against American targets in Saudi Arabia and the Persian Gulf, officials said today.

  Israelis Assert Palestinians Plan Terror Attacks for Iraq

LEAD: While strongly backing United Nations sanctions against the Baghdad Government, France has quietly distanced itself from the American response to the Iraqi crisis, apparently in the hope of protecting its influence and interests in the rest of the Arab world.

CONFRONTATION IN THE GULF: France;   Paris Stressing Independent Role

LEAD: A dispute has developed between Chancellor Helmut Kohl and Foreign Minister Hans-Dietrich Genscher over how far West Germany should go militarily in joining the effort to contain Iraq.

CONFRONTATION IN THE GULF: West Germany;   In Bonn, a Debate On Limits of Power

LEAD: The West German police arrested seven people today on suspicion of supplying Iraq with industrial components used to produce poison gas, the Darmstadt prosecutor's office said.

  GERMANS ARRESTED ON IRAQI EXPORTS

Burrhus Frederic Skinner was an American psychologist, behaviorist, inventor, and social philosopher. He was the Edgar Pierce Professor of Psychology at Harvard University from 1948 until his retirement in 1974.

August 18, 1990

Headlines from August 18, 1990

For Iranians, a Windfall

Pearl Bailey, Cabaret Trouper And Musical Star, Dies at 72

CONFRONTATION IN THE GULF: Energy Policy Trade-Off; Dependency Is Price Of Years of Cheap Oil

U.S. TRADE DEFICIT LOWEST IN 7 YEARS

INSIDE

Billboard 200

Please Hammer Don't Hurt 'Em

Flesh And Blood

Wilson Phillips

Mariah Carey

Step By Step

Notable Deaths

Historical Context for August 18, 1990