As the Central Intelligence Agency cleans house after the Cold War, trimming its roster of foreign agents and writing new rules for hiring them, a retired terrorist who was until recently on the agency's payroll has given it cause for some soul-searching.

The man gave crucial help to the agency's effort to track and trap the notorious Carlos the Jackal. Carlos, the self-proclaimed mastermind of terrorist acts that killed 83 people in the 1970s and 1980s, was arrested last August in the Sudan.That could not have happened without the retired terrorist, government officials said.

Using leads he provided, the CIA developed information that it passed on to the France counterintelligence service, which had sought Carlos ever since he killed two of its officers in Paris in 1975. Armed with that information, the French seized the elusive fugitive in Khartoum, the Sudanese capital, flew him to France and threw him into prison, where he awaits trial on charges of leading six terrorist attacks.

But the retired terrorist himself has a brutal resume. In the mid-1980s he took part in two bombings that wounded Americans in Western Europe.

The retired terrorist broke with his past in 1987 and soon afterward began providing information to the CIA. Despite his value as an informant, some U.S. government officials are now wondering whether CIA officers should have hired a man they knew had American blood on his hands.

The case is a classic example of the dilemma the CIA continually faces in recruiting foreign agents. The intelligence agency struggles to balance the demand to obtain information with its desire to keep its own hands clean, though it frames the issue in terms of national security, not morality.

Government officials outside the CIA who are familiar with the case say the agency would probably hire the retired terrorist again today, given the opportunity. They say the new rules the agency is writing for the recruitment of foreign agents would not bar his becoming a paid informant tomorrow.

But those same officials say the CIA should have told the Justice Department about the retired terrorist's past when he was hired. It did not, although a 1981 executive order signed by President Ronald Reagan suggests that it probably should have.

Officially, as Attorney General Janet Reno said this month while announcing the arrest of a Jordanian in connection with the 1993 World Trade Center bombing, "no ocean is too wide, no distance too far, no time period too long and no effort too great to make those who kill or injure Americans immune from the U.S. justice system."

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Unofficially, the CIA appears to have given the retired terrorist a form of immunity, much as the Justice Department will protect murderers in exchange for testimony against Mafia bosses.

That protection is neither illegal nor unusual in intelligence or in law enforcement. The Justice Department has cut deals with many a killer to convict a kingpin.

"If making deals with terrorists can prevent people from being killed, then there are occasions where it is appropriate, perhaps even necessary, to deal with them," said Carl Stern, the Justice Department's spokesman.

The CIA declined to comment on the case of the retired terrorist.

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