The scars from Hurricane Mitch, which ripped apart much of Nicaragua, have started to heal.

Vegetation is creeping over the huge gash left on the side of the Casitas volcano, when its rain-filled crater collapsed, unleashing an avalanche that buried more than 3,000 people.

The highway nearby and all the bridges that were washed away nearly two years ago also have been rebuilt to far better than their original condition, thanks to massive amounts of international aid.

Foreign donors ought be pleased with the pace of the reconstruction.

They are not. A spiraling dispute is pitting donors, particularly European countries, against Nicaragua, over charges of corruption.

"Donors expected to transform Central America ... but you can't transform a country in two years," said Mary J. Conway, director of CARE Nicaragua.

In May 1999, seven months after Mitch, the donors, led by Germany, Canada, U.S., Spain and Sweden, had met in Stockholm and set lofty goals for the transformation of Central America. They pledged about $1 billion in aid and outlined a list of expectations, among them reducing poverty and inequality.

But the toughest challenge for Nicaragua was to replace its traditional politicking with transparent and well-run governance.

For the United States, the overriding worry was a repetition of the debacle following the 1972 Managua earthquake. There was rampant theft of American aid by then dictator Anastasio Somoza and his cronies, including even blood donations.

"In 1972, most aid money was stolen and neither us nor the Congress was going to let that happen again," a State Department official said.

At a follow-up meeting in Washington, D.C. last May, the Stockholm group slammed Nicaraguan President Arnoldo Aleman for his scandal-ridden administration.

Aleman's reply on July 14 was a terse "buzz off."

"(We) are grateful for the aid the international community is bringing to the government and people of Nicaragua, but at the same time we reject the notion that such aid allows it to become involved in the internal politics of Nicaragua," said an official communique.

The dispute also may jeopardize Nicaragua's participation in the Highly Indebted Poor Countries initiative, which could help slash the country's $6.3-billion foreign debt.

The billboard at a refugee camp near the Casitas volcano, by the dirt-poor town of Posoltega, hints at the extent of international aid.

The donors list is so long -- at least 15 countries and organizations, including the U.S. Agency for International Development, CARE, France, Luxembourg, Spain, Austria, Switzerland, Taiwan and the city of Madrid -- that it looks like the credits after a horror movie.

Elsewhere, a myriad plaques and signs acknowledge other donors: Bridges built by Japan and Chile, roads by Sweden, ambulances from the American Red Cross, a truck from Korea, a water tank from a provincial government in Spain.

Hurricane Mitch hit on Oct. 26, 1998 with winds of up to 180 mph, mostly in the northwestern part of the country. But it was the torrential rains -- several feet in some places over a four-day period -- that did most of the damage.

They destroyed most agricultural production in the affected areas, and turned lazy streams into raging torrents that wiped out or badly damaged 86 bridges and about 1,100 miles of roads.