Oliver North, the man at the heart of the Iran-contra affair, has cut the heart out of the criminal case against him. The special federal prosecutor, after struggling to reconcile the needs of national security with the demands of a public trial, has decided that he must drop the major conspiracy and theft charges against the former National Security Council staff officer. It's a heavy loss for justice, denying the public a test of whether Iran-contra was a criminal conspiracy, as well as reckless and duplicitous.

Even so, public accountability can be outweighed by another high value, the right to guard intelligence secrets. Mr. North, one of those entrusted with such secrets, demanded the right to divulge some to defend himself. Federal Judge Gerhard Gesell ruled in his favor concerning some secrets, but then intelligence officials refused to permit their disclosure on national security grounds.Outsiders cannot now judge whether those security demands were reasonable and thus whether the loss in public accountability was necessary. For that judgment, the public will have to rely on the Senate and House Intelligence Committees, whose members are already familiar with many of the secrets.

The heaviest charges against Mr. North were that he conspired with others to divert the profits of Iranian arms sales to the rebels in Nicaragua, usurping official power to pursue private agendas and personal profit. Dismissal of the conspiracy and theft charges leaves for trial a dozen lesser counts in the indictment. Still, even these charges are serious. They include individual acts of deceiving Congress and obstructing legitimate inquiry into whether officials were waging illegal warfare in Central America.

Mr. North retains the right to defend himself, including the right to seek testimony from President Reagan and President-elect Bush on the remaining charges. But it's unlikely that their testimony could provide him with a defense to lying to Congress. In any case, when a president is sought as a defense witness, he is in no position to issue a pretrial pardon to the accused. The case of Oliver North's accountability to the law, though much narrower than before, can proceed.