Lugar Urges U.S. to End Ties With Managua, Recognize Rebel Regime

The conservative chairman of the Senate Foreign Relations Committee urged the Reagan Administration on Friday to break diplomatic relations with Nicaragua’s leftist Sandinista regime and to consider recognizing a government-in-exile of anti-Sandinista rebels.

“We’re saying we no longer see redemption in that particular regime, and we’re saying that we think another one should be there,” Sen. Richard G. Lugar (R-Ind.) told reporters at a breakfast meeting.

Lugar, urging the Administration to take more overt actions against Nicaragua, complained that the trade embargo ordered by President Reagan this week was “a piecemeal policy” that is unlikely to have any lasting impact on the Sandinistas.

An aide said that Lugar’s comments were directed in part at Secretary of State George P. Shultz, who had resisted the idea of economic sanctions against Nicaragua.

Shultz Opposes Break

But Shultz, attending the Western economic summit in Bonn, said he opposes breaking diplomatic relations now and suggested that the Sandinistas be given another chance to negotiate with the rebels, known as contras.

“Let’s see what happens in the Contadora process,” Shultz said, referring to the Central American peace talks sponsored by Mexico, Panama, Colombia and Venezuela.

Lugar’s remarks and Shultz’s response opened a public breach between the secretary of state and Senate conservatives on the issue of whether the Reagan Administration should continue trying to pressure Nicaraguan President Daniel Ortega into talks with the contras, or simply seek his government’s overthrow.

“The last message the President gave is that Ortega could continue on while they opened up” to negotiations, Lugar said. “If we break diplomatic relations, we take a step substantially beyond that.”

‘A Logical Step’

Asked if he is advocating the overthrow of the Sandinistas, Lugar said: “Yes. In that case, it seems we do say we’re no longer in the business of power-sharing or that kind of negotiation.”

He said he believes that recognizing a government-in-exile “is a logical step if you break diplomatic relations and are supporting the contras. . . . We’d be saying, in essence, that we think you are the government that we’d like to have.”

A senior State Department official who refused to be identified said Lugar’s proposal “would embark us on a different course . . . and no decision has been made to do that.”

The official said Shultz favors maintaining diplomatic relations both to keep possible negotiating channels open between the two countries and because the U.S. Embassy’s reports on the situation in Nicaragua are helpful.

State Department spokesman Edward P. Djerejian said the Administration’s policy remains one of putting pressure on the Sandinistas--like the trade embargo--to push them toward direct talks with the contras, and he noted that the embargo could be lifted if the Sandinistas change their behavior.

Ambassador to Consult

Meanwhile, the Nicaraguan Embassy said late Friday that Ambassador Carlos Tunnermann plans to return to Nicaragua today for consultations. “They will decide down there if he is going to be formally recalled, which would be a more serious step,” Sarali Porta of the embassy staff said.

Lugar’s call for “a full-court press” against Nicaragua suggested that Shultz faces increasing pressure from the right on his more cautious policy. Officials said some Administration hard-liners have been calling for a break in relations for months but that the idea has been blocked by Shultz and national security adviser Robert C. McFarlane.

At the same time, the Administration faces resistance from Democrats in Congress to any hardening of policy against Nicaragua, including its renewed requests for aid to the contras. House Democrats blocked a request for $14 million in such aid last week and Lugar acknowledged Friday that there is no consensus in Congress for a break in diplomatic relations.

O’Neill Stand Clarified

House Speaker Thomas P. (Tip) O’Neill Jr. (D-Mass.), reacting to reports that the Democrats are preparing a measure to provide humanitarian aid to Nicaraguan refugees, issued a statement saying that such a proposal would be offered only if House Republicans attempt to win funding for the contras.

“Yesterday (Thursday) the House Democratic leadership discussed possible responses to anticipated Republican attempts to fund the contras in upcoming foreign aid and State Department legislation,” O’Neill said. “We did not discuss reversing our position on financing the contras.”

On Friday, The Times reported that the Democratic leadership had agreed to bring up the issue again next week, in part to defend themselves against Administration charges that they have done nothing to pressure the Sandinistas.

A spokesman for O’Neill, Christopher J. Mathews, denied that account. “At this time, there is no legislative agenda on Nicaragua whatsoever,” he said. “Yesterday’s meeting was entirely focused on developing contingency strategy for dealing with any such measure that might come to the floor.”