Should the US send $8 billion to Central America?

As Central America seems to edge closer to an unwanted generalized conflict, the crucial choices confronting US policymakers have come under increasing public scrutiny.

The report by President Reagan's Bipartisan Commission on Central America, headed by former Secretary of State Henry Kissinger, focused further public attention on the region.

Attention is likely to mount even more in coming weeks as Congress debates how much new aid to send to Central America and wrestles with the question of whether to continue or cut off funds to rebels fighting the Sandinista government in Nicaragua.

Lawmakers will be looking to the Kissinger commission's report and to a more liberal analysis by the the Carnegie Endowment for International Peace as they consider these issues. The two studies represent the main schools of thought on US policy options for Central America.

Both try to confront the dilemma of countering Soviet-bloc threats in Central America while promoting needed social reform and development. But they propose very different solutions to the region's problems - and different roles for the US there.

The Kissinger commission lays its principal stress on a policy of stepped-up US economic aid to the region, calling for $8.4 billion over the next five years - more than double the amount currently going to Central America. President Reagan's request for $8 billion in economic and military for the region, made Friday, is based on the Kissinger commission's recommendation.

It says Central America's acute political and financial problems are indigenous, but that the Soviet Union and its allies have aggravated the situation. Any collapse of pro-Western governments there would constitute a threat to the United States, increasing Washington's security burden and necessitating eventual redeployment of US forces, it says.

Regional crisis must be met by a combination of economic, military, political , and social measures, this commission says.

The Carnegie report, in contrast, promotes political negotiations between warring parties ahead of any new aid program. The report's editor, Robert S. Leiken, says real stability and economic recovery depend on political settlements that would permit a Central American economic common market to revive and grow. (The Kissinger commission report does not call for such settlements.)

Without negotiated settlement, the Carnegie study says, a massive US ''Marshall plan'' for Central America would be wasted. Leiken says such a plan would probably reward friends and punish enemies, and lead to continued polarization.

The Kissinger commission builds its proposals around a multibillion-dollar aid program. It pairs this increase in US economic aid with $400 million in new military assistance and calls for greater coordination and long-range planning. It also recommends that a regional development agency be set up to act as think tank and to administer some of the money.

In addition, it puts the region's minimum financial needs at $24 billion over five years and recommends formation of a consortium of aid donors that would include Western Europe and Japan as well as the US.

The Kissinger panel pleased liberal critics with its lengthy analysis of the deep-set historical inequities that played a large part in producing today's situation. And it noted the negative effects of the worldwide economic recession of the last few years.

The report says the potential collapse of the threatened pro-Western states in Central America - Honduras, El Salvador, and Guatemala - would constitute a threat to the United States.

The measures it proposes to meet the Central American crisis do not depart greatly from current administration policy, except for a recommendation that further aid to Salvador be tied to some progress in human rights.

President Reagan proposed Friday that he report to Congress on human-rights and economic progress in El Salvador. But he suggested Congress should not impose any automatic aid shut-off if he cannot prove that the activities of right-wing death squads have been curbed.

A stalemate favoring the guerrillas exists in Salvador, the Kissinger study says. The panel calls for an end to death squads in Salvador and for elections in which all sides participate. But it does not mention negotiations as a route to elections or radical reform of the Army as a means of controlling death squads. Neither does the Reagan administration.

On Nicaragua, the commission is even closer to administration policy. The report largely limits itself to calling on the Sandinistas to negotiate with their opposition and to hold free elections.

Two panel members put in a dissenting note requesting an end of aid to Nicaraguan insurgents. The majority of the commission did not question the policy of trading off subversions, or meeting Nicaraguan subversion in El Salvador with US subversion in Nicaragua. But the commission did hold out the carrot of economic aid to the Sandinistas if they democratize, stop subverting their neighbors, and send home Cuban and other East-bloc advisers.

The Kissinger commission's report has been well received by the Reagan administration - as shown by the President's aid recommendation. The initial reaction from the wider sphere of Republicans and conservatives is also largely favorable.

But a conservative source in the Senate says some lawmakers may balk when they discover that only $400 million of the Kissinger commission request is military aid. Conservatives may think that is too much economic and not enough military aid, she says.

Liberal critics of the Reagan policy welcomed the commission's recognition of the gravity of the Central American problem, its historical analysis of structural problems and, in theory, its call for massive economic assistance. But they strongly oppose the calls for more military aid. These critics largely agree with the Carnegie report's analysis that unless proper regional political settlements are arrived at through negotiation, most economic aid would be wasted.

A liberal Latin American source speaks for many critics when he says, ''The Kissinger commission begins with a liberal analysis of the region's problems, and then proceeds to offer Reagan-style solutions.''

Carnegie report editor Leiken predicts the Kissinger report's economic proposals will not pass Congress in their present form. (He says his own report is intended to crystalize democratic thinking, not to serve as a legislative proposal.)

Many liberals seem to agree with Leiken that, given the current political leadership in Central America, much of the proposed US economic aid would end up in Miami bank accounts.

Leiken cites Honduras as an example of what would happen if US policy is not thought through. Since 1981 Honduras has become the site of a large US military presence, strengthened local military, and US-financed Nicaraguan counterrevolutionaries. It has also more military aid and development assistance - without any basic social change breaking the stranglehold of the upper classes on the nation.

As a result, Leiken says, in just two years the balance of power in Honduras has shifted from the civilian government to the military allied with the oligarchy. Honduran armed forces chief Gustavo Alvarez Martinez has become the real leader of the country.

In Salvador, too, there has been a shift to the right within the military power structure. This occurred during the past year and while US involvement has increased. An extreme right faction led by Col. Sigifredo Ochoa Perez is now ''in the driver's seat,'' according to the Carnegie Endowment report. Last April Colonel Ochoa rebeled against then Defense Minister Jose Guillermo Garcia, helping to precipitate General Garcia's resignation. Garcia had tended at least to listen to US advice.

Finally, Leiken says that in the absence of negotiated settlements, to start a politically selective Marshall plan, rewarding friends and punishing enemies, could only contribute to political and military divisions.

It might also contribute to the destabilization of nonextremist forces in the region, he says.

Leiken said that the 16 writers who contributed to the Carnegie report think real economic recovery and stability depend on a political settlement that would permit the revival of a Central American market.

Summarizing the majority opinion of his report, he says the revival of this market depends on holding internal negotiations in El Salvador and Nicaragua.

Leiken and the Carnegie report call for the US to sponsor negotiations in El Salvador that would lead to ''power-sharing'' between the government and the left before, and in conjunction with, elections there. (However, they do not suggest this for the March elections, which the left has said it will boycott.)

In Nicaragua Leiken proposes that the Sandi-nistas enter into negotiations with their opposition in order to broaden the base of government and to permit greater middle-class and private-sector participation. Without such changes, he says, it would be impossible to reactivate the Nicaraguan economy.

Leiken states that such a broadening would necessitate changes in Nicaragua's ruling junta as well aspassage of an electoral law that would permit the middle classes to have a greater voice.

(The Sandinista government halted consideration of one version of an electoral law Saturday - and stopped all steps toward elections - in response to air attacks Feb. 2 and 3 that reportedly killed several Nicaraguan soldiers and destroyed oil storage tanks and a communications center. Nicaragua alleged that the attacks were launched by Honduran aircraft from a zone where the US has been conducting military maneuvers.)

The Carnegie report suggests the best vehicle for negotiations in both Salvador and Nicaragua would be the Contadora group, through which Mexico, Venezuela, Colombia, and Panama have attempted to persuade the quarreling Central American nations to discuss their differences.

The Contadora groups has not made much progress so far. But Mexico, Nicaragua's main supplier of oil, has begun to pressure the Sandinistas to come to some internal compromises.

Most critics of administration policy agree with Leiken that, given the deteriorating military position of pro-US forces in Salvador and the daily escalation of tension between Honduras and Nicaragua, the dangers of generalized armed conflict are increasing.

Especially in Salvador, the US may eventually have to choose between negotiation or outright military intervention. Unless, of course, the Reagan administration is willing to accept the alternative of withdrawal and possible outright defeat of the Salvadorean military.

While conservatives and liberals debated the issues and wrote reports, events moved forward.

In late December and early January, the Salvadorean Army suffered two sharp setbacks: A key bridge was destroyed, and guerrillas overran a supposedly well-fortified garrison.

In mid-January, the risks of escalating tensions on the Nicaraguan-Honduran border were illustrated when, during relatively large-scale military maneuvers by US forces on the Honduran side of the frontier, Nicaraguan forces shot down a US helicopter. The Reagan administration termed the incident ''unacceptable'' but appeared to do nothing about. The attacks in Nicaragua over the past weekend are raising tensions further.

On a more positive note, in early December the Sandinistas made some concessions that many saw as tentative peace feelers toward the US. These included the departure from Nicaragua of 2,000 Cuban teachers, a limited relaxation of press censorship, the opening of dialogue with opposition groups, and a partial amnesty for political exiles.

Perhaps the biggest ''concession'' came in January, when Nicaragua proclaimed presidential elections for 1985 and opened the way for a new electoral law. But all these steps were thrown into question over the weekend when Nicaragua put its moves on hold.

But 1984 will in many respects be a watershed year. It will be the year in which US elections determine whether President Reagan remains in office and it may be the last year of stalemate in the Salvador war. It will be the year in which Nicaragua's Sandinistas decide whether to hold elections soon and whether to negotiate with the US and others in the region.

If the US does not take advantage of this year of stalemate and produce some shifts in the war-peace equation, 1985 may be a year of wider war.

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