Inside Report (5)

It's the battle of Glen Cove, Round 2.

As you may recall, Glen Cove, N.Y., officials barred Soviet diplomats from local recreation facilities. Something about lost tax revenue on the Soviet residence there, plus a strong suspicion the Soviets were using the place to eavesdrop on Long Island-based defense contractors. Initially, the Soviets' tit-for-tat - or quid pro quo as they say in the diplomacy biz - was an Aug. 6 ban on US diplomats' use of a Moscow River beach. But Moscow has escalated the battle: The weapons have shifted from beaches to plumbing. According to diplomatic sources in Moscow, the Glen Cove tiff explains why Soviet workers have taken so long to hook up plumbing and electricity to a new cottage at the US Embassy's weekend rest facility.

The cottage was completed in mid-June but still isn't ready for occupancy.m