Inside Report (5)

El Salvador presents another sticky issue for US unionists.

The AFL-CIO, which in 1981 lost two of its international staff people to assassins in El Salvador, has mixed feelings about the Reagan pledge to support the government in its bitter struggle with guerrillas.

The federation approves of military aid, but is unhappy about what it sees as little progress toward democracy by the government of Jose Napoleon Duarte. William C. Doherty Jr., AFL-CIO's Latin American expert, told Congress in late 1981 that unless there is substantial progress toward land reform, free elections, human rights guarantees, and control of right-wing ''death squads,'' the AFL-CIO would oppose further military aid to El Salvador.

But if US aid is cut, the federation fears a Communist takeover of El Salvador. As one AFL-CIO expert put it: ''When it's a choice between two bad alternatives, you take the less bad.''

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