Nicaragua to End Truce With Rebels : Latin America: Hemispheric summit is stunned by Ortega’s move to renew war with U.S.-backed Contras.

SAN JOSE, Costa Rica — A hemispheric summit meeting that Costa Rican President Oscar Arias Sanchez had billed as a celebration of democracy convened here Friday but was quickly overshadowed by the likelihood of renewed warfare in neighboring Nicaragua.

President Daniel Ortega of Nicaragua announced after the session had ended that his government will resume offensive actions against the U.S.-backed Contras next week because the rebels have ignored a 19-month cease-fire and are stepping up attacks.

“We have our hands tied with this cease-fire. We have no other option but to suspend it,” Ortega told 600 Costa Rican law students in an auditorium across town from the summit site. “We will hit the Contras hard. The people in Nicaragua are angry. We can’t go on like this.”

One of Arias’ principal advisers described the announcement as “disastrous to Oscar” and added that it “undoes part of what he has accomplished in Nicaragua.”

Arias, who won the 1987 Nobel Peace Prize for his plan to pacify Central America, organized the summit to tackle the economic and security issues that threaten a decade-old trend toward democratic rule throughout Latin America.

But within hours of the arrival in this peaceful capital city of nearly a score of hemisphere presidents and prime ministers, including President Bush, the region’s continued strife had once more marred Arias’ plans.

Ortega made the decision to resume fighting before he arrived here for the two-day summit, hisspokesman said. Ortega did not mention the decision during the meeting with other government leaders.

“Maybe he was too ashamed to bring it up with the other government leaders in attendance,” Secretary of State James A. Baker III said when he was asked about the announcement. Refusing to discuss such a step with “the assembled leaders of Latin America” would be “less than honest,” Baker said.

An end to the cease-fire would be “a step backwards,” Baker added, noting that the United States had no official confirmation of such a decision.

The United States, Baker said, is “concerned” that renewed fighting might be “seized upon” by Ortega as an “excuse” to cancel Nicaragua’s elections, scheduled for next Feb. 25.

The informal truce, which has sharply reduced the level of fighting in Nicaragua, began March 23, 1988, during unsuccessful talks to bring an end to the eight-year-old insurgency. Negotiations for a final armistice broke down 11 weeks later, and most of the Contras retreated to camps in Honduras. But the opposing sides have each renewed the truce periodically since then.

Ortega said the Contras had launched a campaign to disrupt the scheduled elections. He said the government’s response was decided after a rebel ambush last Saturday near the central Nicaraguan town of Rio Blanco killed 19 Sandinista soldiers being trucked by the army to register to vote. Two Sandinista mayoral candidates were killed in other attacks this week, he said.

Rebel leaders have denied responsibility for the killings.

“This action is against Nicaraguan life,” Ortega said. “This action is against the Nicaraguan electoral process. We have a right to protect the elections.”

A South American participant in the summit said he was stunned by the announcement. He said the decision to resume the war was “totally contradictory” to the tone of Ortega’s remarks during the closed-door afternoon-long meeting.

“He really sounded like a statesman, talking about peaceful solutions, understandings with the United States,” the official said. “How could he do that after his speech today? He’s going to be totally isolated now. I thought Daniel was more clever than that.”

Bush and Ortega avoided each other during most of the day’s meetings. At a welcoming ceremony for the heads of state, the United States and Nicaraguan flags were placed at opposite ends of the room.

And, similarly, during the ceremonial luncheon that opened the meeting, Ortega and Bush were seated at opposite ends of a long head table. Ortega, wearing military fatigues and a red bandanna, contrasted sharply with the other leaders, dressed in sober business suits.

But in spite of such precautions, the two men did exchange brief remarks while waiting for the summit’s opening session to begin.

Ortega, speaking later to reporters, said that he told Bush: “It’s been a long time” since their last meeting--in Brazil in 1985. “Don’t you think, Mr. President, that we should see each other again and talk in depth,” he said he asked.

Ortega said he also told Bush, “I hope the United States will support the election process in Nicaragua.”

Bush, he said, responded that he would “support the will of the Nicaraguan people.”

“It was not what you would refer to as a serious, substantive discussion,” Baker said of the exchange.

The U.S. government has supplied several million dollars in aid to Ortega’s chief opponent in the elections, Violeta Barrios de Chamorro, the publisher of La Prensa, Nicaragua’s chief opposition newspaper. Bush warmly greeted Chamorro with a kiss when she arrived at Friday’s meeting and plans to meet with her again this morning.

Ortega, by contrast, said he was “not satisfied” with his encounter with Bush, because the contact was brief.” But he added: “The dialogue has opened.”

Nicaraguan Foreign Minister Miguel D’Escoto said he told Bush: “Look, you’re holding talks with the Soviet Union. Why not with us?”

U.S. officials have said they oppose talks between the United States and the Sandinistas until Ortega and his colleagues agree to negotiate with their opponents in the Contra movement. The Nicaraguans, in turn, have refused to negotiate with the Contras, saying that they are U.S. puppets.

Despite the focus on U.S.-Nicaraguan tensions, participants described the closed meeting as relaxed, congenial and far more wide-ranging than Central America.

It was the largest such gathering in the Americas in 22 years, bringing together the prime ministers or presidents of Argentina, Belize, Brazil, Canada, Colombia, Costa Rica, Ecuador, El Salvador, Guayana, Honduras, Jamaica, Nicaragua, Trinidad and Tobago, the United States, Uruguay and Venezuela.

“It was a very friendly meeting,” said an adviser to Arias who attended. “It would have been very disappointing for anyone was looking for a confrontation. There was none whatsoever.”

For example, he said, Salvadoran President Alfredo Cristiani urged Ortega to make greater efforts to cut the flow of weapons to leftist guerrillas in his country, but did not directly accuse him of fostering subversion.

In fact, the meeting reportedly consisted of a series of monologues on the problems of democracy, debt, drugs, deforestation, development and disarmament, with no real interchanges or debate.

Bush spoke off the cuff for about 10 minutes, giving what was described as “very colloquial” and well-informed survey of the hemisphere’s problems but offering no new initiatives.

“He spoke with a lot of authority about what was going on with Poland and the rest of Socialist world,” one participant said. “He said nobody wants Communism any more; its finished. Nobody wants dictatorship any more; its finished.”

The summit’s first payoff came when Canadian Prime Minister Brian Mulroney, signaling a more active role in Latin America, announced that his country is ready to join the Organization of American States. Arias has been campaigning to strengthen the OAS, which has long been seen in the region as ineffective and dominated by Washington.

Mulroney praised the organization, saying “the OAS is the one regional organization that can bring all the governments of the hemisphere together to deal with . . . problems that we have in common.”

And Arias expressed “great joy” over Mulroney’s announcement, calling it “a symbol of new times we live in.” Costa Rican officials said that Canada’s presence is expected to moderate friction between the United States and Latin America within the organization.

Canada’s entry coincides with an appeal by Latin America’s so-called Group of Seven nations for Cuba to rejoin the OAS. The organization expelled Fidel Castro’s regime in 1962 but offered to readmit it in 1974. While ostracizing Castro as a dictator, Arias believes having Havana in the OAS will have the effect of moderating Cuban policies.

Facing his colleagues at a long table in the ballroom of the Cariari Country Club, Arias opened the summit with a blistering attack on the hemisphere’s few remaining dictatorships.

He urged the elected leaders present to use “every possible diplomatic means to ensure that not a single tyrant remains in power in the Americas.”

“As long as even one (dictatorship) lives on there can be no peace among us,” he declared.

Ortega, conspicuously, did not join in the applause with which the other leaders greeted those statements.

Arias appeared to criticize Ortega directly, saying, “We have often seen how those who led struggles against dictators themselves use the name of freedom to establish dictatorships of a different ideological hue.”

He also attacked Panama’s Gen. Manuel A. Noriega. “The ruler whose hands are stained with blood or tainted with drugs and corruption has no right to govern any people,” he said.

Arias also issued indirect but unmistakable condemnations of Castro and Chile’s Gen. Augusto Pinochet--dictators whom Arias did not invite to the summit meeting here. Also not invited was Noriega’s puppet civilian president.

At the same time, the Costa Rican leader warned the United States that Latin America’s democracies cannot survive without economic justice. To reverse a seven-year-old recession in Latin America, he said, developed countries must lower trade barriers, share technology and ease the burden of $410 billion in foreign debts.

“It is nothing less than a betrayal of the new freedom,” he said, “for us to accept economic rules of the game so flagrantly biased toward the rich and powerful.”

Arias hailed the so-called Brady Plan, which has been applied to reduce Mexico’s foreign debt as well as that of Costa Rica, calling it “an important step forward.”

Before the summit began, Arias announced a successful end to negotiations to reduce his own nation’s debts. Under prodding from the Bush Administration, 250 private banks rushed on the eve of the summit to reschedule $1.8 billion of Costa Rica’s foreign debt under a formula devised by Treasury Secretary Nicholas F. Brady for broad application in Latin America.

Arias hailed the debt agreement as “the best way we can celebrate our 100 years of democracy.” He said that it will reduce his country’s annual interest payments from $150 million to $50 million.

But other Latin American leaders said that growing resistance to the Brady Plan from other industrialized nations and from creditor banks will make it hard to apply to their countries.

“It is a good concept, but it is operating too slowly,” President Jose Sarney of Brazil told reporters Thursday night.

“If this frustration continues, the debtor nations will have no choice but to get together and demand joint negotiations with the banks,” Sarney said.

BACKGROUND

The last large gathering of Western Hemisphere heads of government took place in Punta del Este, Uruguay, April 12-14, 1967. Then-President Lyndon B. Johnson met with 17 Latin American presidents and the prime minister of Trinidad and Tobago to give a firm push to an old dream: the creation in Latin America of a common market similar to that of the European Community. The leaders signed a ringing declaration, embracing an ambitious plan for economic integration. But ever since then, regional rivalries and conflicts not only have blocked all progress toward the dream, but also made it seem even more remote today than it was 22 years ago.