NICARAGUA is learning the hard way that one election does not necessarily make a democracy.In February last year, Nicaraguans went to the polls in huge numbers to toss out the Marxist Sandinistas and install a coalition opposition headed by Violeta Chamorro. In the intervening months, Mrs. Chamorro has used her mandate for reform to make progress. There is more freedom than existed under the Sandinistas. The human rights picture has improved. There is more freedom of speech and press. Labor unions are able to operate more freely. But the Sandinistas remain powerful, and the Chamorro government's handling of them is controversial. Many Nicaraguans argue that Chamorro, and particularly her principal adviser Antonio Lacayo, have been too soft on the Sandinistas. They say Chamorro is really in a kind of co-government with the Sandinistas which permits them to remain much of their former power. The Chamorro government argues that it is important to include the Sandinistas in the process of reconciliation. One of Chamorro's most controversial actions has been the retention of the Sandinista military leader, Humberto Ortega, as head of Nicaragua's armed forces. Again, the Chamorro government argues that this conciliatory gesture to the Sandinistas is essential to a peaceful demilitarization of the Sandinista armed forces. But an international commission of experts looking at the first year of democratization in Nicaragua has just concluded that continued Sandinista domination of the armed forces is "thwarti ng the development of civilian rule, the rule of law, respect for human rights and the administration of impartial justice - elements at the very core of democracy." The Sandinista-controlled armed forces, says the commission, enforce the law only when it coincides with their interests. The "Democracy Commission" took testimony from diverse elements in Nicaragua and held discussions. It was sponsored by four organizations: Freedom House, a New York-based organization monitoring human rights around the world; the Puebla Institute, a lay Roman Catholic human rights group; the American Institute for Free Labor Development, an AFL-CIO subsidiary; and the Americas Society, specializing in Central and Latin America. The commission's members were drawn from five different countries and included Peruvian author Mario Vargas Llosa and James C. Wright Jr., former Speaker of the US House of Representatives. The Americans on the commission included such Central American experts as Robert Leiken of Harvard and Susan Kaufman Purcell. The commission concluded that a year after its first free elections, Nicaragua's democratic institutions have yet to be consolidated. Among its recommendations: * That Nicaragua's armed forces be brought under civilian control, professionalized, and reduced in size. * That control mechanisms be established to guarantee accountability in the nation's bureaucracies and government-controlled companies. * That the judiciary and legislature get training and resources to be the strong, independent branches of government essential for building a foundation for the rule of law. * That nongovernmental organizations, like the media, professional associations, business groups, and so on, need training and resources. * That property rights must be secured. Land and asset confiscations must be stopped. Mr. Wright, although agreeing with the commission's recommendations, faulted what he called the report's "gratuitous criticism" of President Chamorro's efforts to promote internal reconciliation within her country. He rejects the charge that she is engaging in "co-governance" with the Sandinistas. By contrast Mr. Leiken finds many of the Chamorro government's actions "astounding" and "appalling." What we have discovered, he says, is that "plebiscitary populism is still not a democracy. Dissent is not democracy.... Political parties remain weak and fairly isolated, with the exception of the Sandinista party, which is not a democratic party at all." Democracy in Nicaragua, in other words, must still be fought for in the face of continuing Sandinista power and influence.