CITY SEEKS PROBE OF CIA DRUG ALLEGATION.

Byline: Rick Orlov Daily News Staff Writer

The Los Angeles City Council on Friday called on Attorney General Janet Reno to investigate reports that the Central Intelligence Agency provided crack cocaine to street gangs to finance the Contra forces in Nicaragua in the 1980s.

A CIA spokesman said the accusations were untrue, but Councilman Nate Holden said articles by the San Jose Mercury News raise disturbing questions over the role of the government.

``This is as if our own country has declared war on us,'' Holden said before the council's 12-0 approval of his motion. ``This is no different than an enemy dropping bombs on us.''

The Mercury News this week reported allegations that the government sold cocaine at reduced prices to the Crips and Bloods street gangs in Los Angeles and returned money from those sales to the Contra forces opposing the leftist Nicaraguan government.

An official with the CIA disputed the accounts.

``These are old allegations,'' spokesman Denny Klauer said. ``It is ludicrous to think that the CIA would support or condone such actions.''

Congress looked at the allegations in the past and found no wrongdoing by the agency, he said.

Klauer said he was constrained by agency policy from discussing any specifics about the individuals making the allegations or disclosing whether they had any ties to the CIA.

Before the council meeting, the Black American Political Association of California urged Los Angeles officials to call for an investigation.

``The most outrageous part of this problem is the involvement of our own government, the United States of America, in allowing the sales of drugs to its own citizens in order to fund the Nicaraguan Contra army,'' said Glenn Brown, president of the group.

``It is not just the inner city that was affected. There is no part of America that hasn't suffered from this drug epidemic.''