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As the sound of Sandinista rifles, mortars and artillery periodically

breaks the mountain stillness and echoes from distant hills, Orion leads long marches through enemy territory, slogging through muddy jungles and thick forests, scrambling up and down mountains in tropical heat and cutting across green highlands under a steady drizzle. Keeping away from the roads and the cities, the contra forces have learned to use the mountainous spine running north and south through Nicaragua from Honduras to Costa Rica as a clandestine thoroughfare. Along the way, Orion shows the reporters evidence of what he calls an extensive contra civilian support network of collaborators and commandos in the rural areas of the war-torn country.

”I have an operational program to hit all targets such as military infrastructure,” explains Orion-”everything that serves the state, including electrical high-tension wires, light poles, telephone poles, electric plants, hydroelectric plants, highway bridges and government cooperatives.” Near him as he talks, contra fighters are resting against pine trees and listening to enemy radio transmissions. The chatter of Sandinista Popular Army soldiers in helicopters and on foot patrols in the area comes through clearly on the contras` U.S.-supplied push-button, multiband, 200-channel radios.

The U.S. aid cutoff is yet to come, and Orion`s group of about 160 contras is well-armed with captured Soviet-made AK-47 rifles and U.S.-made grenades, rocket launchers and a shoulder-fired Redeye antiaircraft missile launcher. ”We have destroyed much,” says the contra group`s human-rights officer, who goes by the pseudonym ”Spaghetti.” ”We have had eight combats in the last two weeks,” he boasts, noting that the contras have suffered no casualties but wounded or killed ”a mountain of the enemy.”

For Orion, Spaghetti and dozens of contra commanders and soldiers like them, the cutoff of U.S. military assistance this year has made their

struggle much more difficult, if not impossible. By last month, with supplies growing short, an estimated 12,000 rebels had retreated across the border into jungle camps in Honduras. U.S. officials were able to distribute some of the last $17.7 million in humanitarian aid approved by Congress in the spring, and some small contra groups were trying to slip back into Nicaragua. There were occasional minor skirmishes with Sandinista forces during the truce, but it was apparent the contras had neither the logistical capability nor the incentive to resume the war in earnest.

Nonetheless, the contras insist that their morale remains high, their spirits good and their hope of ultimate victory unchanged. ”Tranquilo”

(things are quiet), Orion says as he and his men wait idly early this summer at a jungle camp on the Honduran border for the fighting to resume.

”People are doing what they can with what little they have,” he says, having pulled out of Nicaragua when his supplies ran low. Carrying out U.S. policy with American-bought weapons, the contras have grown accustomed to fighting a war in which U.S. support has ebbed and flowed with the regularity of ocean tides.

Reagan authorized the initial covert contra aid Dec. 1, 1981, providing $19 million to arm and train the first 500 fighters for the stated purpose of interdicting arms shipments from Sandinista Nicaragua to the Marxist-led rebels fighting the government of El Salvador. The effort, it was explained to a skeptical Congress, complemented an Argentina-sponsored training program at contra camps along the Honduran-Nicaraguan border. The Argentine generals were still in power in Buenos Aires, and they were, indeed, helping train the first group of anti-Sandinista rebels because leftist guerrillas opposed to their dictatorship were then operating out of Nicaragua.

Contra leader Sanchez acknowledges that the Reagan administration, aware that Congress and the public would not readily accept or fund a plan aimed at overthrowing a foreign government, used the story about interdicting arms to the Salvadoran guerrillas as a pretext. ”But for us,” Sanchez says, speaking recently from Miami, ”we were fighting for the democracy of our country and not to stop arms for Salvadoran rebels.” In December, 1982, a suspicious Congress moved Reagan to sign the first law prohibiting the expenditure of funds ”for the purpose of overthrowing the government of Nicaragua.”

Later, in 1983, Congress reluctantly approved $24 million to be spent on the contras the next year. But when the CIA`s involvement in the mining of Nicaraguan harbors came to light in April, 1984, Congress rejected the Reagan administration`s request for another $21 million and in October passed a two- year ban against supporting the contras ”directly or indirectly.” The administration sought and received congressional permission to spend $13 million in intelligence and communications assistance in January, 1986, and Congress provided another $27 million in humanitarian aid to keep the rebel army from disintegrating.

Then, in October, 1986, Congress lifted the two-year ban and authorized $100 million for the contras. Once that aid started flowing, the contras left their camps in Honduras, where they had languished for the better part of two years, and moved back into Nicaragua throughout 1987. They were then well armed, had plenty of money to pay peasant farmers for food and were kept resupplied through an extensive CIA-directed airdrop operation that involved some 350 flights last year, analysts say. The civilian support network the contras had been developing inside Nicaragua grew during this period, and the contras scored some of their strongest tactical victories of the war.

Perhaps their best operation was the brief conquest by 4,000 rebels of two mining towns in northeastern Nicaragua and parts of a third last December. During that assault on Bonanza, Siuna and La Rosita, they claim to have captured arms and 1.5 million rounds of ammunition and knocked out a Soviet-made radar station used to monitor the contra supply flights along the northern border. Assistant Secretary Abrams points out that last year`s successes, which far surpassed Reagan`s or even the contras` expectations, were a direct result of the administration`s reviving contra policy and pushing the $100-million aid package through the Congress.

”It is this Congress that failed the policy-once in 1984 and once again last Feb. 3,” says Abrams, arguing that U.S. voters should understand what`s at stake with the administration`s contra policy. ”I wouldn`t say the policy has been a failure. I think Congress has refused to support it. I believe it would have succeeded had it not been twice abandoned and overturned by Congress. You can`t maintain a foreign policy like that-an on-again, off-again policy, as if it were a light switch-when you`re dealing with people`s lives.”

Abrams believes the U.S. owes the contras continued active support. ”The resistance fighters are people who don`t want to live under communism and are willing to risk their lives to fight international communism in Central America (being imposed) by a government that is linked militarily to the Soviet Union,” he says. ”It is a matter of our national interest to be supporting them. It`s not really a moral question. If we decide after these many years that we do not wish to help them . . . and accept a communist Nicaragua permanently, I imagine that many of the resistance fighters will not want to live under a communist dictatorship, and many will want to live here. And I would say we have a moral obligation to take them in.” But the relocation question is premature, Abrams says, because the contras are still hopeful the U.S. will somehow resume the aid program.

Several top contra leaders and a senior U.S. diplomat based in Central America emphasize that the contras existed before the Reagan administration started aiding them and would continue their struggle even if that aid was lost. ”The resistance hasn`t fallen apart,” says the diplomat, speaking anonymously. ”People believe it was a creation of U.S. policy, but it`s not. It`s been given form and shape only by U.S. policy. Our objective now is to keep it as an option for the next president. That`s the bottom line. People don`t want to recognize the nature of the Sandinista regime, and they`re willing to turn their backs on it now, given the election year.”

The diplomat charges that the Sandinistas have used the truce as an excuse to mount a military buildup along the Honduras border and near proposed cease-fire zones inside Nicaragua. ”Their objective has always been the destruction of the resistance; this is classic psychological warfare,” he says. ”The Sandinistas stayed in close contact with the left wing of the Democratic Party,” he adds-to persuade Congress to kill contra aid so the rebels would be forced to lay down their arms and return to civilian life. The delivery of the last humanitarian aid to the contra camps in Honduras, he argues, amounted to ”turning them gradually into refugees; they have to come to Honduras to eat (instead of staying in Nicaragua).” And that, he says, goes against the intent of Congress itself, which was to keep them a viable, though not active, fighting force.

”As long as there`s some expectation of victory, some contras will fight. But once it appears they can`t defeat the Sandinistas, they will lose the heart and the will to fight,” the diplomat continues. ”I would have thought that would have happened by now, but it hasn`t.” Ultimately, he thinks a core group of a few thousand contras may return to Nicaragua if no new aid materializes. ”Some of them will blend back into society. Some of them will fight. Some of them will bury their guns and wait for the situation to change,” he says.

Another Western diplomat in Honduras, also speaking anonymously, says that only a reinfusion of U.S. aid could return the contras to the

battlefield. Otherwise, this diplomat predicts, ”There will be a deal-written or unwritten-whereby Honduras allows them to stay.” He indicates that a slimmed-down contra army of 5,000 to 6,000 would still exist even if all U.S. aid were cut off. Such an army, operating from border bases on Honduran soil, would occupy the Sandinistas enough to keep them from any expansionist military action against Honduras itself.

Military analysts agree that without more aid, the contras will diminish to a hard core of seasoned troops who will go on fighting for years even with scarce supplies. U.S. officials have repeatedly assured the nervous Honduran government that the administration will help with relocation and support if the war ends and thousands of contra refugees and their families elect not to return to their homeland.

But for fighters like Orion and his men, the prospects of surrender and defeat are not yet options as they make camp one evening earlier this year at an abandoned farm in the mountains north of San Rafael del Norte. They post sentries as a cold rain falls, slaughter four cows and light four fires to cook them as night descends over the highlands some 80 miles northeast of Managua. Artillery fire rumbles in the distance, and a fog settles over the hills, but the war stays away on this night. The contras string their hammocks in a drafty barn with a leaky roof and speak of what they want from this civil war.

”There are many reasons why I joined the fight,” says Orion. ”There are many laws imposed by the government we don`t like, including ration cards, market prices and the persecution of youth,” meaning the conscription of young men for the Sandinista army. He also cites repression of the church and the ”persecution, torture and jailing of religious people. There is no liberty of political pluralism. There is no democracy or liberty.”

Spaghetti, the 19-year-old human-rights officer from Ocotal, has been fighting with the contras for four years. He says the contras have not yet taken their fight into the cities but insists that ”we still have strong collaboration here” in the countryside, referring to a secret support network of campesinos (peasants) in this region who supply the contras with food and information. ”All this area is ours. We control it. You will find commandos

(civilian sympathizers) everywhere.”

”Halcon” (Falcon), 26 and also from Ocotal, is the Redeye missile carrier for this group of contras. Wearing his trademark crimson beret and accompanied by his woman, whom he fondly calls ”Tigresa” (Tigress), Falcon has been with the contras for nearly eight years, since their first skirmishes with the Sandinistas. ”I started fighting because I didn`t want to live under the Sandinistas,” he says. ”My parents left Ocotal, and they live in Honduras now. We are strong. Very strong. There will be more struggle. Always. Until the death. We will give nothing. I want there to be peace in Nicaragua, but as long as the Sandinistas are here, there can`t be peace. I won`t accept the Sandinistas because they will try to fool the people. The only solution is to get rid of the nine comandantes. If you do that, the war will stop.”

When Orion was younger, he served as a National Guardsman in Anastasio Somoza`s army during the mid-1970s, and even then his parents warned him, he says, that ”if the Sandinistas came to power, we would be repressed-just as we are now.” Born Jose Abel Hernandez Gutierrez to peasant farmers in Diriamba, Nicaragua, Orion left his parents and four brothers on May 15, 1979, fleeing into exile right before the Sandinistas overthrew Somoza. He hasn`t seen his family since, even when he returned to Nicaragua in August, 1981, to join the contras. ”When I left, all my family were living,” he says. ”I consider my family all of Nicaragua now, and I`m fighting for all my family.” A fervent anticommunist, Orion says he doesn`t trust Ortega to comply with the Central America peace plan. ”Instead of complying, Ortega is filling the jails with more political prisoners,” he claims, noting that only when Ortega restores full democracy will the contras lay down their arms. Orion calls on other democracies for help, aiming his remarks at the U.S. Congress, among others. ”The Sandinista army is helped by all communist countries, like Russia, Cuba and Czechoslovakia,” he says. ”The objective of our fight is not only so Nicaragua will be free but also Central America and all of Latin America.”

Interior Minister Tomas Borge, one of the nine comandantes and the only surviving founder of the Sandinista Front, once said rivers would reverse their course before contra officials would be allowed to walk Managua`s streets.

Nonetheless, the Arias peace plan did produce some undeniable changes in Sandinista Nicaragua. The opposition newspaper La Prensa was allowed to renew publication. A national dialogue with internal opposition political parties began. Some 1,000 political prisoners were released. A wartime state of emergency, imposed off and on for five years, was lifted. Some street demonstrations were permitted. A few exiled Catholic priests were allowed to return. Negotiations opened with dissident Indian groups. Most important, the peace plan spurred the Sandinistas to reverse their longstanding refusal to negotiate with the contras, and last December they opened indirect cease-fire talks with contra leaders.

In January the five Central American presidents met in Costa Rica to assess the progress of their plan, which had initially called for cease-fires in all the civil wars in the region and restoration of democracy throughout the area by November. But in Nicaragua the war raged on, and Ortega had yet to keep his promises to restore democracy. But after being pressured to do so by his fellow presidents, Ortega emerged from the San Jose summit promising to hold the direct talks, the first ever, with the contras, grant a fuller amnesty and hold municipal and regional elections soon. The Sandinistas then invited the rebels to Nicaragua for talks.

The result was a pact that the Sandinistas and the contras reached last March 23 at the tiny village of Sapoa near the Costa Rican border establishing a tentative truce while the two sides worked to hammer out a permanent cease- fire agreement. The Sapoa pact called for the Sandinistas to grant increased political openings and guaranteed freedom of expression, as they had agreed to do under the Arias plan, as well as a gradual amnesty for political prisoners, including those who were members of Somoza`s old National Guard. In return, the contras agreed to discuss moving their fighters into designated cease-fire zones, where they could receive only humanitarian aid through neutral organizations and would eventually lay down their arms and be incorporated back into civilian life.

But as summer arrived, a series of subsequent talks held by the Sandinistas and the contras in Managua ended in stalemate, and the peace process stalled, with each side accusing the other of bad faith and intransigence and both parties arguing over who will make the first move to carry out their proposed agreements. The Sandinistas continued to insist that the contras must lay down their weapons and join the nation`s internal political process as civilians working to win power democratically before further reforms could be introduced. The contras charged the Sandinistas merely wished to negotiate the terms of their surrender, and they continued to demand a broad restructuring of Nicaraguan society.

Reagan administration officials and contra leaders insist that recent Sandinista concessions are easily reversible once the contras are disarmed, and they point to a long record of broken Sandinista promises. The rebels, before agreeing to go into cease-fire zones and lay down their arms, are demanding guarantees for democratic reforms ranging from a restructuring of the courts and election systems to assured press freedom and the separation of the police and the army from the Sandinista party apparatus. The Sandinistas have agreed to discuss almost all the demands, but deep mistrust pervades both camps.

With the peace talks at a stalemate, American involvement in an unpopular war rests once again on election-year public opinion in the United States and, more important, on Capitol Hill. ”Congress probably would not want to vote to renew the war but would support an initiative that would lead to peace,” said House Speaker Wright earlier this summer. Although the Reagan administration sees more contra aid as a necessary cudgel to force the Sandinistas to make more concessions at the bargaining table, the Sandinista comandantes are lobbying strongly against more U.S. aid for the contras, saying it could destroy the peace process.

”It`s apparent that the Sandinistas are not going to democratize,”

Reagan told a group of journalists after the contra-Sandinista talks stalled last June, and he reiterated his support for more contra assistance to put pressure on the Managua regime to bargain more seriously.

Later, in his weekly radio address, Reagan again condemned his opponents in the Congress for trying to give peace a chance ”by unilaterally disarming the freedom fighters.” To the Sandinistas, he said, peace talks ”are just political theater-a way to weaken the democratic resistance while

consolidating their militant communist regime.”

In an apparent attempt to salvage his policy in the region, Reagan dispatched Secretary of State George Shultz to Guatemala, El Salvador, Honduras and Costa Rica twice this summer to confer with U.S. allies. Snubbing Nicaragua, Shultz handed out aid money generously to his hosts, but he found no unified support among them for renewing military aid to the contras. Still, he said he found ”unanimous agreement that the massive and continuing Soviet and Soviet-client military shipments to Nicaragua threaten every country in Central America. Those shipments should stop immediately.

”I want to make it absolutely clear that the United States will not tolerate the subversion or destabilization of the democratic governments of Central America,” he insisted. ”Such an act, direct or indirect, is a threat to the security interests of the United States of America. It will be resisted by all appropriate means, including military cooperation in the collective self-defense of the democracies.”

The saber-rattling drew sharp criticism from Manuel Espinoza, the Sandinista minister of communications. ”Secretary Shultz sees us as the problem, and if he wants to solve the problem, he`s got to come to us to talk,” said Espinoza, suggesting a resumption of long-recessed bilateral talks. ”But that`s not what he wants. What he wants is to finish us, destroy us,” charged Espinoza in a recent interview. ”So much that happens with the contras is an expression of President Reagan and his administration, which wants to overthrow the Sandinista government.” he said. ”The ideal thing would be if President Reagan on Jan. 21, 1989, when he leaves the White House, would leave with a mood of peace and tranquility, not only for the people of Central America but also for the people of the United States, recognizing our right to independence.”

Still, it`s what Nicaragua has continued to do with that independence that worries its neighbors and bothers the administration. Last month Sandinista riot police clashed with thousands of demonstrators protesting against the leftist regime. The next day Ortega cracked down on the opposition, blaming the demonstrations on U.S. plans to undermine his government and revoking some of the freedoms restored by the peace plan. The Sandinistas ordered U.S. Ambassador Richard Melton and seven other U.S. Embassy officials to leave the country, closed the opposition newspaper La Prensa for at least 15 days and shut down the Roman Catholic Church`s radio station, Radio Catolica. The Reagan administration retaliated by ousting the Nicaraguan ambassador in Washington, D.C., along with seven Nicaraguan diplomats there.