Reagan Renews Call for Military Aid to Contras

The Reagan Administration moved Wednesday to turn the expulsion of the U.S. ambassador from Nicaragua to its advantage in a new drive for military aid for the Contras, charging that the Sandinista regime has been the main obstacle to a negotiated peace.

President Reagan met in the Oval Office with Richard Melton, the U.S. ambassador who was expelled from Managua on Monday, and later announced that he supports a request by conservative senators for about $30 million in new funding for the anti-Sandinista forces.

“Isn’t it time we give the freedom fighters in our own hemisphere the same consistent support we give to others in distant lands?” Reagan asked in a Rose Garden speech.

Supports Contra Aid

Later, when a reporter asked whether Reagan was supporting the Senate proposal, the President replied, “You bet I am.”

Asked if the peace process failed, Reagan said: “If it has, it failed right in Managua, where the Sandinistas are centered.”

Elliott Abrams, the State Department’s chief Latin American strategist, said the expulsion of Melton and seven other U.S. officials, along with a Sandinista crackdown on the domestic political opposition, makes it more likely that the Administration will win a vote in Congress on funding for the Contras.

Aid Called ‘Certain’

“I would say that more aid to the Nicaraguan resistance is certain,” he said in a satellite-link news conference with reporters in Central America.

A senior State Department official added, however, that it still appears unlikely that Congress will approve military aid for the Contras before the November election.

“There’s a consensus in Congress for sustaining the resistance, but none for getting them to start fighting again,” he said. “But the Contras will still be around after Election Day. The question is, if the Sandinistas continue to behave worse and worse, what will the Democrats do?”

Company Nationalized

In Managua, the Sandinista government, in another show of renewed militancy, Wednesday nationalized the country’s largest private company. Officials said the Sandinista regime was taking over the San Antonio sugar mill north of Managua because production was falling.

Opposition businessmen immediately condemned the move, saying the government is trying to squeeze the private sector.

The mill is a major component of a business empire belonging to Nicaragua’s Pellas family, which also owns car dealerships and beer and rum factories. The family is also the major shareholder in two banks in Miami and the Cayman Islands that were used to channel money to the Contras.

However, the Pellas family had walked a delicate political line inside Nicaragua and, unlike most private-sector businessmen, had not actually joined the political opposition.

Other Steps Considered

Melton, at a White House news conference after his meeting with Reagan, said the President told him that “other things are being considered” as additional retaliation against the Managua government. He refused to elaborate.

Melton and seven other U.S. diplomats were expelled after the Sandinista government charged them with organizing opposition activities. In retaliation, Reagan on Tuesday ordered the expulsion of Nicaragua’s ambassador in Washington, Carlos Tunnermann, and seven members of his staff.

Other U.S. officials have said the Administration is considering breaking diplomatic relations with Nicaragua, but Deputy Secretary of State John C. Whitehead said that option has been ruled out, at least for now.

Resolutions in Congress

On Capitol Hill, Democrats joined with Republicans to draft resolutions condemning the Sandinista regime for expelling the U.S. diplomats and for its moves against the internal opposition. Those moves included the recent arrest of dissidents, the closure on Monday of the Roman Catholic Radio Station, Radio Catolica, and the 15-day publication ban on the newspaper, La Prensa.

The Senate late Wednesday passed a resolution denouncing the Sandinista government for “dramatic new steps in brutality” and said that U.S. military aid to the Contras might be renewed if the human rights abuses continue.

The Senate also said that it was ready to provide economic aid to Nicaragua if the Sandinistas fully comply with commitments made a year ago and “proceed to permit the establishment of a democratic system.” The resolution, which was approved 91-4, is not binding and is intended as a stern warning to the Sandinista regime.

But the Contra cause took an unexpected blow when the brother of rebel leader Adolfo Calero was indicted for violating the U.S. Neutrality Act.

7 Indicted in Miami

Mario Calero and six other individuals were accused by a federal grand jury in Miami of recruiting men in Florida for military operations against the Nicaraguan government.

The indictment, returned June 28 in Ft. Lauderdale, Fla., and unsealed Wednesday, also charged some of the defendants with violations of firearms laws and misuse of a passport.

In addition to Calero, those indicted included Joe Adams, a former bodyguard of Adolfo Calero; Jack Terrell, an adventurer also known as “Col. Flaco”; Thomas Posey, the leader of a group called Civilian Material Assistance; Maco Stewart; Jose Coutin, and Alex Martinez.

Times staff writers William J. Eaton and Ronald J. Ostrow contributed to this story from Washington and staff writer Tracy Wilkinson contributed from Managua.