As much as the Reagan administration has been infuriated by Nicaragua over the past week, policy remains the same: to pressure Nicaragua diplomatically and politically into becoming more democratic. This is the only viable option the United States has right now, say administration officials, congressional aides, and diplomats. Nicaragua fears isolation, these analysts say. The nation desparately needs outside economic help; and its revolutionary government craves a sense of legitimacy.
``They don't want to be Albania,'' says a senior administration official.
The key question now is what Nicaragua's ruling Sandinistas will do next. Will they ease up on last week's sweeping political crackdown, which included closing opposition news media, jailing opposition leaders, and expelling eight US diplomats? Or will they keep the lid on the opposition?
``The choice boils down to this: Do they want peace or war?'' says an aide to a moderate House Democrat. ``The way they choose is the way the other dominoes will fall.''
The aide described the call by President Daniel Ortega Saavedra Tuesday for direct discussion with the US as ``useless rhetoric of reconciliation'' that only fuels anger over Nicaragua's ``slap in the face to the peace plan and to Congress.''
One administration official predicted that the Sandinistas will make some concessions toward democratization on the eve of an Aug. 1 meeting of Central American foreign ministers that Secretary of State George Shultz plans to attend. The official cited the Sandinista pattern of being tough, then easing up when it hopes to achieve political goals.
In March, for example, Nicaragua made an incursion into Honduras, then within weeks signed a tentative peace accord with the contras.
Meanwhile, the Reagan administration is gearing up for the Aug. 1 meeting, which pointedly will exclude Nicaragua. Secretary Shultz is attending, officials say, to show political and economic support for the region's four democracies, and to encourage them to pressure Nicaragua. Special envoy Morris Busby left for Central America yesterday to lay the groundwork for Mr. Shultz's visit.
Shultz's attendance at the meeting may cut two ways for those present. The four nations are grateful for the high-level attention, but they are concerned that his presence will overshadow the proceedings.
``I think the US will make a mistake,'' says a Latin diplomat, explaining that if Shultz signs any joint statement that might come out of the meeting, the Nicaraguans will write it off as ``Shultz and his servants.''
The senior administration official says it won't matter if Shultz signs a statement - the Sandinistas have already characterized Shultz's plan to attend as ``Yankee imperialism.'' ``They'd like the whole peace plan to crash, then blame us,'' the official continues.
Originally the purpose of the foreign ministers' meeting was to plan for an Aug. 7 gathering of the five Central American presidents in celebration of the first anniversary of their regional peace plan. But because of events in Nicaragua, it is unsure whether the meeting will take place at all. Costa Rican President Oscar Arias S'anchez, architect of the plan, had hoped to use the occasion to review the compliance of the five nations. The plan calls for democratic reform and national reconciliation in each country.
``Nicaragua would get a zero, Costa Rica would get a 95, and the rest would be in the middle,'' says Danilo Jimenez, Costa Rica's ambassador to Washington, who acknowledges that it has been easiest by far for his own nation to comply.
The recent brouhaha over Nicaragua has heightened calls for renewed military aid to the contras. President Reagan has voiced his support for a Senate bill proposing $47 million in aid, including $20 million in lethal aid to be held in escrow until diplomatic options have been exhausted. The House still doesn't appear ready to approve military aid, but much could happen between now and mid-September, when the House and Senate are expected to hammer out a final package. The Senate is expected to approve the aid bill soon after the Democratic convention ends.
Analysts here see the election of contra military leader Col. Enrique Berm'udez to the organization's directorate as hurting the contras' chances of getting renewed military aid. Colonel Berm'udez's image in Congress is of a hard-liner unwilling to negotiate seriously with the Sandinistas, and he will have to work hard to change that image.
``Berm'udez looks like a very traditional Latin American authoritarian ruler,'' says a congressional aide with long experience on Nicaragua. ``He is Pinochet-in-waiting.... If Enrique does not seem to be negotiating in good faith, he'll put a stake in the heart of military aid to the contras.''
The earliest the contras and the Sandinistas would resume talks is early in September, informed sources say.
The congressional aide adds that the resignation Tuesday of the leadership of the ``Southern Front'' branch of the Nicaraguan Resistance is a sign that Berm'udez's ascension to the top contra leadership could pose problems. The seven commanders, who take with them 2,700 fighters based in Costa Rica, condemned Berm'udez's background as an ex-colonel in the Somocista National Guard and accused him of withholding US aid to the fighters.