World Notes NEW ZEALAND

The Prime Minister's quandary was the stuff of high political drama: Would David Lange swallow his pride and give a Cabinet portfolio to his onetime friend turned archrival Roger Douglas, as his ruling Labour Party demanded? Lange's answer last week stunned the nation. "I intend to step down," said Lange, who cited his health as the reason for his resignation. But most political observers believe Lange quit rather than work with a man he had forced out of the Cabinet only last December for pushing economic reforms too far. Ironically, both will serve in the government of the new Prime Minister, Geoffrey Palmer, where Lange has accepted the post of Attorney General.

Lange will be best remembered in the U.S. for his government's decision to ban nuclear-armed or -powered ships from New Zealand's harbors, a move that caused a major rift with Washington and led to the suspension of New Zealand from the ANZUS alliance. That rupture seems unlikely to close soon. Palmer said he plans no changes in domestic or international policy.