Standoff at Embassy in Costa Rica Fans Coals of Nicaragua’s Civil War : Terrorism: Gunmen release nine hostages. Ordeal shows that lingering hostilities still threaten regional peace.

The smoldering embers of Nicaragua’s decade-long civil war have reignited in neighboring Costa Rica, as gunmen who seized 25 hostages inside the Nicaraguan Embassy here pressed their demands Thursday for changes in the Managua government.

With the embassy siege entering its fourth day, Nicaraguan officials who flew to San Jose said late Thursday that they are ready to negotiate after the hostage-takers met a deadline and released nine of their captives. Those freed, seven women and two Costa Rican policemen, appeared tired but in good condition.

“We want to get this over with as soon as possible,” Nicaraguan Interior Minister Alfredo Mendieta said. “This is a tragedy that involves two countries (and) people whose lives are in danger.”

The gunmen, thought to number four, are also demanding a $6-million ransom.

The standoff at the embassy shows that lingering hostilities in Nicaragua, a country bitterly polarized after 10 years of war between U.S.-backed Contra rebels and the leftist Sandinista Front, can still pose a threat to regional peace.

The hostage-takers, thought to number four and led by an anti-Sandinista militant and heavily armed with assault rifles and explosives, stormed the small, two-story embassy building in a neighborhood called California near downtown San Jose on Monday afternoon.

They captured 25 people, including Nicaraguan Ambassador Alfonso Robelo--himself a former Contra leader--and vowed to emerge “victorious or dead.”

Echoing the complaints of the Nicaraguan right and of former Contras, the gunmen demanded that President Violeta Barrios de Chamorro fire her Sandinista defense minister, Gen. Humberto Ortega, and her chief adviser and son-in-law, Antonio Lacayo.

Lacayo is considered the architect of Chamorro’s policy of reconciliation with the Sandinistas, after a conservative coalition led by Chamorro defeated them in a presidential election three years ago.

That election ended the Contra war, in which about 30,000 people had been killed. But many of Chamorro’s former supporters are moving into an increasingly alienated and acrimonious opposition, accusing her of sharing power with the Sandinistas. Some former Contras have rearmed to fight the government.

The hostages-takers, who may belong to such a rearmed rebel group, also asked for $6 million--$5 million for social projects in Nicaragua and $1 million for their own outfit.

As dozens of Costa Rican police--there is no army here--keep the embassy encircled, Nicaragua’s Roman Catholic cardinal, Miguel Obando y Bravo, rushed to San Jose to serve as a mediator. He failed to dissuade the hostage-takers in the first 36 hours of the siege, but on the third day they agreed to release non-Nicaraguan and female hostages.

In response to the release, Mendieta said he would talk with the gunmen. But he reiterated that their political demands--the firing of key government figures--were not negotiable.

The kidnapers said they would not harm their captives but would fight any effort by authorities to retake the embassy. In addition to rifles, the gunmen are armed with grenades and tanks of gasoline, Obando y Bravo said.

The leader of the group has been identified as Jose Manuel Urbina Lara, a 30-year-old lawyer and journalism student who in 1984 sought refuge in the Costa Rican Embassy in Managua. He claimed then he was being persecuted by the Sandinistas, but officials said he was attempting to escape the draft.

Eventually, Sandinista guards removed him from the embassy, triggering a Costa Rican protest that imperiled delicate regional peace talks under way at the time. Urbina finally gained asylum in Costa Rica, where he recently became a citizen.

In a sign of the schisms that are fragmenting Nicaragua, Ambassador Robelo expressed solidarity with his kidnaper and criticized the government he represents.

Robelo, an ally of the Sandinistas in the 1979 revolution who later left Nicaragua and led anti-Sandinista Contra rebel groups, said that while he did not enjoy being a victim, he shares Urbina’s views.

“This must be seen as a reflection of what is happening in Nicaragua,” he said from inside the embassy, speaking by cellular phone with a local television station. “The government of Nicaragua has to rectify its path. . . .”

The comments led local newspapers to speculate that Robelo might be an accomplice to his own detention. In Managua, government officials denied such speculation and dismissed his comments as statements made under duress. In San Jose, law enforcement officials were not so sure.

“Technically, this is a run-of-the-mill kidnaping,” said Civil Guard Director Col. Guillermo Saenz. “But there seems to be quite a bit of empathy between the kidnapers and the kidnaped.”

The embassy siege has filled Costa Rican television, radio and newspapers since it started. Commentators and citizens calling in to radio shows complain that their traditionally stable country is being dragged into a Nicaraguan conflict. Some demand that Nicaraguans be deported.

Despite raging warfare and civil unrest throughout Central America in the 1980s, Costa Rica remained largely peaceful, although some rebel groups used it for logistic support and as a sanctuary.