Salvador Cuts Ties to Nicaragua Over Arms : Central America: President Cristiani also rules out attending next month's regional summit.

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President Alfredo Cristiani suspended diplomatic relations with Nicaragua's Sandinista government Sunday over alleged Sandinista support for Salvadoran guerrillas during a major rebel military offensive.

Flanked by his defense minister and army chief, the U.S.-backed leader said he would not go to Nicaragua next month for a scheduled meeting of the five Central American presidents.

Cristiani said that a Cessna 310 airplane, which crashed in eastern El Salvador on Saturday while allegedly delivering anti-aircraft missiles to the leftist rebels, had taken off from Montelimar, a resort on the Pacific coast of Nicaragua that was to be the site of the Central American summit.

"(Nicaraguan President) Daniel Ortega can no longer hide the fact that he is behind this aggression," Cristiani told reporters after announcing the break in a nationally televised speech. "With this attitude, Ortega is putting in danger the entire Central American peace process."

The rupture makes it unlikely that the summit will be held or that the Central American peace process, begun in 1987, will resume before the middle of next year, after new governments take office in Costa Rica, Nicaragua and Honduras.

Cristiani's announcement followed the 2 a.m. arrest of an American woman who police charge was harboring weapons for the guerrillas in her back yard. Jennifer Jean Casolo, 28, who coordinates American congressional and church delegations to El Salvador, was detained by National Police in the presence of a U.S. Embassy consular officer. Two Salvadorans were also arrested at her home.

At police headquarters, officials displayed grenades, ammunition and dynamite allegedly seized at Casolo's home. They brought her from jail briefly for reporters to see but would not allow her to be interviewed.

The arrests are part of a crackdown on church groups that the government has accused of aiding guerrillas of the Farabundo Marti National Liberation Front (FMLN) in an offensive that began Nov. 11. During the offensive, the rebels took over large sections of the capital for several days and at one point occupied a luxury hotel, trapping a dozen U.S. military advisers.

The spectacular attacks were a political boon for the guerrillas and a blow to the government, which had claimed that the rebels were weak. Even more of a setback were the murders of six Jesuit priests, a crime that church officials have blamed on right-wing extremists tied to the military.

But the Cristiani administration has rebounded in the political war with the discoveries of the missile-laden plane and the arms cache.

Both sides acknowledge the importance of the propaganda war and appear to be aiming their assaults at an international audience.

"The wars of the world are won and lost in Washington," said Col. Carlos Armando Aviles, head of the Salvadoran army's psychological operations. "You win the battle on the ground, but you win the war in Washington."

This week, the government is sending eight teams of conservative businessmen and rightist political leaders to the United States, Europe and Latin America to lobby on its behalf.

The political confrontation with Nicaragua came to a head Saturday after the missiles were found in the wrecked twin-engine plane.

Cristiani and the armed forces charged that the missiles were being sent from Nicaragua to the rebels. They say the advanced weapons are an escalation of the decade-old war.

U.S.-supplied helicopters and fixed-wing aircraft have been key to the armed forces' success in preventing a rebel victory.

Cristiani said he was suspending diplomatic and commercial relations immediately and withdrawing his staff from the Salvadoran Embassy in Nicaragua. Nicaragua had already withdrawn its staff from El Salvador after the killings of the priests Nov. 16.

Asked how long the suspension would last, Cristiani said: "Until Daniel Ortega's intervention in El Salvador ends or until Mrs. Chamorro is president of Nicaragua."

He was referring to Violeta Barrios de Chamorro, the U.S.-backed presidential candidate running against Ortega in Nicaragua's presidential election next February.

Cristiani also said he was asking for an emergency meeting of the U.N. Security Council and the Organization of American States to protest Nicaragua's support for the FMLN.

Ortega has denied that the missiles came from his government. On Sunday he said he welcomed the diplomatic rupture.

"I feel proud as a Nicaraguan that this murderous government is breaking relations with Nicaragua," Ortega said in a speech in the northern Nicaraguan town of Somotillo.

He called on other countries to join in a diplomatic boycott of El Salvador until the murderers of the priests are found and punished.

In a communique late Sunday, the rebels accused Cristiani of trying to regionalize the war and to divert public attention from the killings of the priests.

The Salvadoran military is now operating on the assumption that the rebels have missiles.

While Cristiani said he had not decided whether to request additional U.S. military aid, the head of his right-wing Nationalist Republican Alliance, Armando Calderon Sol, called for radar planes and devices that would deflect missiles from helicopters. Calderon Sol also requested that U.S. ships be stationed off the Pacific Coast to collect intelligence.

"Obviously, (the discovery of missiles) means there is another step (in the offensive)," said a U.S. official. "Obviously, the FMLN has not decided to end this, and the army either. . . . It seems to be coming down to a military solution."

On Sunday, the air force began bombing suspected rebel concentrations on the San Salvador volcano to stave off new guerrilla attacks that the army is expecting in the capital.

The arrest of Casolo followed two days of raids in which four alleged guerrilla safehouses were uncovered and in which a total of 10 people were arrested and more than 40,000 rounds of ammunition, machine guns and other armaments were seized. Col. Alejandro Sanchez Paredes, the assistant police director, said authorities learned about the arms cache at Casolo's house from a captured rebel.

Americas Watch, the New York-based human rights organization, condemned Casolo's arrest and called on the U.S. Embassy to guarantee her safety. A U.S. consular official reportedly appeared at Casolo's house about an hour after police arrived. It was not clear whether Casolo or the police summoned the official.

Under a state of siege imposed by the government in response to the guerrilla offensive, Casolo can be held for 15 days without formal charges.

When she was presented to the press, one reporter asked if she was being treated well. She nodded nervously.

The Connecticut native had moved into the house where the arms were allegedly found two months ago, friends said. Two Salvadorans arrested with her used the house occasionally, according to friends.

Casolo works for an organization called the Christian Education Seminar, which is supported by a consortium of American churches. She has arranged tours for scores of visiting U.S. congressmen and others. The tours normally include both government, army and opposition officials.

"This is an attempt to discredit churches here," said one of the members of her organization, who declined to be identified.

Casolo's white stucco house in the Miralvalle neighborhood was under heavy guard Sunday. The back yard had been dug up, and police said that weapons were pulled from about a dozen pits in the ground. The ammunition, including 21,620 automatic rifle cartridges and 103 grenades, had been wrapped in grease-soaked rags to protect it from rust, police officers stationed at the house said.

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