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Banana Republic:

The Making of American Foreign

Policy in Nicaragua, 1981-1987

By Roy Gutman

Simon and Schuster, 403 pages, $19.95

Best Laid Plans:

The Inside Story of America`s War Against Terrorism

By David C. Martin and John Walcott

Harper and Row, 392 pages, $22.50

George Bush and Mike Dukakis ought to throw these two books into their suitcases and read them on the campaign plane.

George thinks he already knows the story, and Dukakis may view these accounts solely as a source of ammunition against his opponent. But these two well-researched books are primers on fundamental flaws in the formation of U.S. foreign policy, problems that neither follow a party line nor carry either party`s label.

Even though the books are on different subjects-foreign policy in Central America and terrorism-they are, of course, linked. These were the two great adventures of the Reagan Administration. Both turned out badly.

One, Central America, Reagan created. The other, terrorism, arguably grew into a monster that will permanently mar his presidency because he and his aides were obsessed with the first.

Roy Gutman, national security correspondent for Newsday, traces how a handful of ill-informed, right-wing ideologues managed to turn U.S. national priorities topsy-turvy.

To what must have been the amazement of many European governments, the main attention of the Central Intelligence Agency, the Department of Defense, the White House and, to a lesser extent, the Department of State shifted from the Soviet Union, the Middle East and the Persian Gulf to the tiny nation of Nicaragua and its attempts to foment revolution in El Salvador.

At root in that shift was a fundamental theme of American policy for four decades, and one that might well dominate a Bush administration or a Dukakis presidency: the notion of a worldwide Communist conspiracy. Subscribers to this view believe that almost every point of turbulence in the world is created by Soviet agents, masterly gameplayers who are determined to conquer democracy and the West.

By the end of Vietnam, many professionals in the U.S. foreign policy establishment and the academic world had come to doubt that thesis. Instead of the KGB and the Comintern being the orchestra conductors of world revolution, it was felt that they were the desperate agents of a failing economic system, trying to save the Soviet Union`s own bankrupt foreign policy.

But Reagan enters office like a blast of air from 1949, committed to the belief that the Soviet conspiracy was gaining ground in the Third World. He brings with him a motley crew of like-minded men and women: neo-conservatives (Jeanne Kirkpatrick, Constantine Menges) old cold warriors (Al Haig, William Casey) and ill-informed local politicians (”Judge” William Clark, Ed Meese).

This group of elders soon was easy prey for such adventurers as Marine Lt. Col. Oliver North, who came to dominate planning on how to overthrow the Nicaraguan government, having doctored his Marine credentials to suggest he was an expert in ”counter insurgency.”

Books that have the word ”policy” in their titles often intimidate the idle reader, but Gutman`s writing saves the day. He has woven into his account rich descriptions of the players:

– Ollie and cohorts, who, discussing their secret plans on an airliner, are chagrined to find themselves overheard by a news reporter

– Dewey Claridge, the CIA man with the nom de guerre Dewey Maroni and the flashy leisure suits, the gold jewelry and cigars

– The CIA para-military expert who tries to persuade the Contras that 4,000 bolt-action, World War II German Mauser rifles will be as good as the AK47 sub-machineguns carried by the Sandinistas.

It would all be quite funny, if thousands of Central American men, women and children had not been killed, maimed or made homeless by fighting that might have ended at a conference table five years ago.

Dave Martin, now with CBS, and John Walcott, a reporter for the Wall Street Journal, were for years a prize-winning team at Newsweek. They don`t have the flair for writing that Gutman enjoys, but their research is rich and their story important.

The same White House crew that Gutman follows trying to stop Communism in Central America was quickly set upon in the early 1980s by international terrorists. Martin and Walcott don`t spend much time trying to tell us why the U.S. became a main terrorist target, but they establish quite convincingly that the American government has not yet got the hang of how to deal with this enemy.

Martin and Walcott seem to like the military, and some of the same people who are portrayed as bumbling and inept in Gutman`s book come out a lot better in ”Best Laid Plans.”

The book`s central thesis is that the U.S. military establishment and bureaucratic system was too cumbersome to deal with swift, unexpected attacks by small groups of committed men and women.

Then as one terrorist attack tumbled upon another-from the kidnapping of Brig. Gen. James Dozier, through the assault on Marine headquarters in Lebanon and the Achille Lauro hijacking-decision making in the Reagan administration seemed driven by emotions that bordered on panic.

At one point, the authors note, the picture of William Buckley, the CIA man who died under torture in Lebanon, was kept in the counter-terrorist planning center to spur on those who were working to free him.

That it may have done. But it also symbolized a romantic, maudlin sentimentality that clouded the eyes and the planning of men and women who should have been coolly directing the efforts of the most powerful nation on earth.

And as Martin and Walcott point out, once the endgame-freeing the hostages-justified the means, deception and deceit followed.

In a way, Ronald Reagan fell into the same trap that snared Jimmy Carter. He let the hostages-in realistic terms, simply a handful of unfortunate Americans-become the object of American policy. The object of American policy should have been finding peaceful solutions for the tensions that had made taking American hostages a useful ploy.