In this dusty town two miles from the Nicaraguan border, there is little doubt whom the Costa Ricans side with in the armed conflict expanding just north of here.
The Costa Ricans, who are staunch anticommunists, believe communism is the root of the problem in Nicaragua.
''Better to fight communism now in Nicaragua than later in Costa Rica,'' explains Lt. Nestor Mora Rodriguez, who commands about 20 members of Costa Rica's paramilitary force in this town of 4,000 people.
''Eighty percent of the people are for the rebels (fighting the Sandinistas), '' said Col. Gilberto Orozco, commander of the province that includes Los Chiles. Colonel Orozco says this sympathy of Costa Ricans for the anti-Sandinistas means, at the least, logistical support for the rebels, including food and shelter.
Lieutenant Mora, in fact, says he has helped put Nicaraguan refugees in contact with anti-Sandinista organizers in Costa Rica. These refugees then are recycled back into Nicaragua as antigovernment troops.
The problem for the Costa Rican government is that while its officials privately may root for the overthrow of the Sandinistas, it insists on an official policy of neutrality.
''We will not allow intervention from the right or the left from our territory. We are neutral,'' says Ekhart Peters, Costa Rica's acting foreign minister.
Costa Rica's neutrality is made somewhat difficult because it does not have the means to rigorously enforce its stand.
Since 1949, the nation's Constitution has prohibited formation of an army. Its approximately 7,000-man paramilitary force is mainly composed of political appointees who came in with the new government a year ago, sources say. Ill trained and ill equipped, the 300 to 500 men stationed along the 220-mile border patrol by foot through jungle that is often dense. Costa Rica's single working helicopter is not available to them.
''It's always been a free-for-all up there. It still is,'' says a Western diplomat based in San Jose, Costa Rica's capital.
Costa Rica has appealed for international help to correct this situation. Eleven observers - eight civilian and three military - have begun to study the situation here. The observers are representatives of Mexico, Panama, Colombia, and Venezuela, the countries that make up the ''Contadora group,'' a self-appointed body trying to work out a regional peace.
For the time being, the Sandinistas appear willing to accept the contradiction between Costa Rican policy and Costa Ricans' sentiment.
''We believe the word of President (Luis Alberto) Monge. We believe in the active neutrality of Costa Rica,'' said the Nicaraguan ambassador to Costa Rica, Rogelio Ramirez Mercado, whose brother Sergio is one of the members of the five-man Sandinista junta.
The Nicaraguan expression of faith comes despite repeated accusations that anti-Sandinista rebels operate out of Costa Rican territory.
''The root of the problem is the inability of Costa Rica to expel the contras (anti-Sandinista counterrevolutionaries). . . . Our intransigent wish is that the contras don't operate in Costa Rica,'' Ramirez says.
The ambassador says 700 rebels are in training camps in Costa Rica. He recently showed a videotape in which seven captured rebels, including one who said he was Costa Rican, recounted how they trained in Costa Rica as recently as March. Some Costa Ricans are known to be fighting with the rebels - the Nicaraguans say there may be 200 of them. Recently, rebels confirmed that a former major in the Costa Rican rural guard died in combat in Nicaragua.
Costa Rican officials deny camps exist in their territory but acknowledge they can't prove it. ''If there were a camp, it would be very difficult to find, '' said Enrique Chacon, vice-minister of government.
Four years ago, the Sandinistas were Nicaragua's rebels. They, too, used northern Costa Rica as a launching pad - for their drive against the Nicaraguan government, then led by dictator Anastasia Somoza Debayle. At that time, Los Chiles was full of rebels openly plotting against Somoza with the consent of the Costa Rican government and people.
But with a change in presidents in Costa Rica (from Rodrigo Carazo Odio of the right-of-center Unity Party to Mr. Monge of the National Liberation Party, a left-leaning non-Marxist party) and a turn for the worse in the economic situation, Costa Rica is not willing to play a supporting role again.
Since May 1, when rebels opened up a southern front in Nicaragua, Costa Rica has stepped up its campaign to assure the international community in general, and Nicaragua in particular, that it is a spectator and not a participant in the war.
On May 12 Costa Rica expelled three anti-Sandinistas working with rebel groups in San Jose. Earlier, Costa Rica had asked the Organization of American States (OAS) and then the Contadora group for help. Costa Rica asked that a peace force be sent to secure its borders.
Critics attacked this request as catering to United States efforts to isolate Nicaragua. The Cantadora group reacted coldly to the idea. But, after 20 hours of debate, it decided May 13 to send a fact-finding mission led by civilians. Costa Rica quickly labeled that decision a diplomatic victory that would bolster its neutrality.
Nicaragua accepted the observer group and has invited its members to Nicaragua. But Ambassador Ramirez could not say whether his government will support the group's recommendations.
Nicaragua has consistently insisted on bilateral discussions. It has rejected an OAS approach because, it says, that regional forum is controlled by the US.
The border situation has been increasingly delicate for Costa Rica since the beginning of the month, when Eden Pastora Gomez, known widely by his nom de guerre Commander Zero, opened up a southern front in Nicaragua. Pastora, who is probably the most popular Nicaraguan in Costa Rica, has lived in exile (mostly in Costa Rica) since announcing a year ago that he opposed the Sandinista regime , in which he once served as deputy interior minister.
Pastora, one of the leaders of the anti-Sandinista Democratic Revolutionary Alliance, previously commanded the southern front against Somoza. He claims now to have 1,500 men inside Nicaragua, though published reports have attributed to him as few as 300.
In northern Nicaragua, the Nicaraguan Democratic Force (FDN), which has received arms and funding from the United States, claims to have 7,000 men. The Sandinistas say the FDN has 4,000 men.
The Contadora observers, who arrived Sunday, may report to the full group in about a week. The full group is expected to consider again the Costa Rican request for an armed peace-keeping force to patrol the border once the group has the observers' report in hand.
Whether a peace-keeping force could actually ensure that Costa Ricans act as neutrals, or merely put a stamp of impartiality on the partisan feeling of the citizenry, remains to be seen.