U.S. Shifts to Kinder, Gentler Nicaragua Policy : Peaceful Coexistence Is New Goal as Bush Drops Hard Line of Reagan Years : NEWS ANALYSIS

When Secretary of State James A. Baker III visited Congress last week to lobby for the Bush Administration’s policy toward Nicaragua, some of the toughest questions came not from liberal Democrats but from conservative Republicans.

What happens, they wanted to know, if Nicaragua’s leftist Sandinistas win next year’s presidential election fair and square?

“If it’s a fair election, I guess we’d have to deal with them,” Baker replied, according to several people who were present. “Besides, even if the opposition loses, they will be a more viable opposition than they were before.”

U.S. policy on Nicaragua, which once sought bluntly to overthrow the Sandinista regime, has shifted quietly but dramatically to a less ambitious goal: peaceful coexistence with the country that President Ronald Reagan once denounced as a threat to America’s security.

“We don’t have an ideological position on this regime,” a senior official asserted. “How we deal with the Sandinistas depends on their behavior.”

He described the Bush Administration’s approach to Nicaragua as “a containment strategy”--a definition that was anathema during the Reagan years, when “containment” was held to mean accepting the Sandinistas’ hold on power.

“This is very different from the Reagan Administration,” noted Alfredo Cesar, a leading figure in Nicaragua’s U.S.-backed anti-Sandinista opposition. “The Bush Administration is committed to a peaceful solution in Nicaragua, and the commitment is genuine.”

Under Reagan, the United States spent eight years seeking to topple the leftist Sandinistas by organizing and arming a rebel guerrilla army, the Contras. But Congress cut off the Contras’ funds, and the rebels were only sporadically effective in the field. Last month, the presidents of five Central American countries, meeting in Tela, Honduras, agreed on a plan to dismantle the rebel force.

The Bush Administration, seeking to salvage as much as possible from the Reagan Administration’s defeat, has shifted the focus of U.S. policy from the Contras to the presidential election that the Sandinistas have scheduled for Feb. 25, 1990.

“(Nicaraguan President Daniel) Ortega says he wants to have fair and free elections; so be it,” Vice President Dan Quayle said in a recent interview with The Times. “Let’s have fair and free elections.”

But some officials, conceding that the Sandinistas may well defeat the apparently disorganized opposition in a fair election, are already considering what one called “our strategy for a post-election Nicaragua.”

“We are going to have to live with the Sandinistas,” another official predicted gloomily. “That means we’re shifting from aggressive containment to a more conventional kind of containment.”

Over the long run, he suggested, the Administration will be saddled with a policy that requires continued military aid to Nicaragua’s pro-American neighbors, continued U.S. economic pressure on the Sandinistas and continued diplomatic friction between the two countries.

Some officials have even suggested that the Sandinistas could win points in Washington, after they win the election, by forming a government of national unity that would include members of the opposition.

“Their real problem is economic recovery,” said one, “and if they want help from the United States, then (a coalition government) would be their only chance.”

For the moment, however, the Administration’s policy is based on the assumption that opposition presidential candidate Violeta Barrios de Chamorro can win--if the Sandinistas allow a relatively fair campaign and free election.

“If you hold a clean election and asked the Nicaraguan people whether they’re better off now than they were 10 years ago (when the Sandinistas took over), an overwhelming majority would say, ‘Hell, no,’ ” a senior official said.

“There is a historical pattern of dictators calling elections because they think they can manipulate votes, but there is a dynamic in an election campaign that sometimes escapes a dictator’s attempts to manipulate the process,” he said. “Let’s try and make it a level playing field and see what happens.”

The obstacles facing the opposition remain large. U.S. intelligence analysts estimate that almost half of Nicaragua’s voters are government employees, troops in the army or members of pro-Sandinista organizations--groups that will presumably vote heavily in favor of the regime.

The Sandinistas control the country’s major television and radio outlets and most of its newspapers. Their party has well-trained local representatives all over the country; the opposition is only beginning to reach beyond a few major cities.

Also, officials note, opposition candidate Chamorro, the aristocratic widow of an assassinated opposition leader, is still untested. “But she’s no Cory Aquino,” said one, referring to the Philippine president who led a mass movement that ousted dictator Ferdinand E. Marcos.

To create a “level playing field,” the Administration has launched an unusual campaign of its own, on several fronts. President Bush and other officials have called publicly on the Sandinistas to alter their election and media laws and to stop local harassment of opposition organizers. They have called on members of Congress, private organizations and the U.S. news media to “flood the nation with observers” to scrutinize both the campaign and the voting.

In its most controversial idea, the Administration says it wants to contribute to Chamorro’s opposition campaign with open, public funding that some officials estimate might reach as high as $15 million.

The United States has frequently sought to influence elections in Central America and elsewhere in the past with secret campaign aid funneled through the CIA. But Democrats in Congress said they would block any such plan in Nicaragua, and so the Administration is proposing, for the first time, an overt aid fund.

The plan has been criticized not only by liberal Democrats but also by Sen. Jesse Helms (R-N.C.) and other conservative Republicans, who argue that it could lend legitimacy to an election process that the Sandinistas seem likely to win. To quell any backlash from the right, Bush has dispatched Quayle to assure conservatives that he is not walking away from any commitments in Central America.

Quayle Still Skeptical

“Many of my conservative friends on Capitol Hill are disturbed,” Quayle acknowledged. But the coming campaign, he said, “should be taken as an opportunity to see whether we can in fact have fair and free elections in Nicaragua. I’m a skeptic, and I remain a skeptic, but I hope I’m proven wrong.”

Noticeably absent from the Administration’s plans is a major role for the Contras, who still have about 12,000 soldiers camped in Honduras along Nicaragua’s northern border. Congress has approved “humanitarian aid” to keep the rebels housed and fed through next March, about a month after the election, and Democratic leaders told Baker last week that they do not plan to cut the aid off in November, as the law allows.

Under the Central American peace plan, the Contras should disband “voluntarily” and either return to Nicaragua or move to another country, but little has been done to implement that decision. The Contras’ leaders say they have no intention of dismantling their force, and the Sandinistas have done little to attract former rebels home.

But once their American aid runs out, the rebels and their families will face an unpalatable choice: return home in defeat, seek new homes as refugees or try to survive as guerrillas without outside help.