Greek reluctance to criticize Soviets creates 'crisis of confidence' in EC

Greece, as the new leader of the European Community, has found itself isolated from its Western allies just as it begins military exercises with NATO. The Socialist government of Andreas Papandreou, which tries to project an image of neutralism at home while working practically with the West, provoked a firestorm of protest at a recent meeting of EC foreign ministers in Athens.

Greece blocked a declaration that would have condemned the Soviet Union for destroying Korean Air Lines Flight 7. The action created what West German Foreign Minister Hans-Dietrich Genscher labeled ''a crisis of confidence'' in the EC.

Since taking over the EC presidency July 1, Greece has received cautious praise for its effectiveness. On July 15, it initialed an agreement with the United States that allows American bases to remain on Greek soil for at least five more years.

And Athens agreed to participate in NATO's ''Display Determination 83'' exercise in the eastern Mediterranean from Sept. 17 to Oct. 15 after NATO agreed to include the island of Lemnos in the maneuvers.

Turkish objections had previously led to the island's exclusion and, as a result, to Greek refusal to take part in joint military exercises until now.

Athens' high-profile obstructionism at the EC foreign ministers' meeting and its continuing attacks against the planned deployment of US Pershing II and cruise missiles in Western Europe have dramatically altered the mood.

But many observers here, including some sympathetic to Papandreou, believe he has made a major blunder in isolating Greece from the West. Its EC partners have reportedly decided not to empower Papandreou to represent the EC in a summit meeting that has been planned at the United Nations General Assembly in New York , an unprecedented snub to a Community president. And the White House has not invited Papandreou to visit even as Greek prime minister.

Greece's posture stems from three policies:

* Papandreou maintains a nationalistic image at home while appeasing the Moscow-oriented Communist Party whose cooperation he needs to avoid more unrest in trade unions.

* Greece wants the economic and military benefits of EC and NATO membership - but without endangering the political and commercial advantages of good relations with Moscow.

* Greece hopes to encourage the disarmament movement in the West. East-West tensions, Greek officials say, are directly responsible for the shooting down of the South Korean airliner.

This policy, a mixture of opportunism and ideology, rests on the conviction that - for military, political, and even emotional reasons - the West will never abandon Greece and must therefore accommodate its views.