Until recently the streets of this capital were deserted after dark except for heavily armed men -- left-wing guerrillas, right-wing militias, government paramilitary forces or one of the private armies in the service of the wealthy.

All that changed abruptly when a group of young officers overthrew Guatemala's military government.

"The night of the coup, cars suddenly appeared on the streets for the first time in a long time," said Mayor Abundio Maldanado. "The next night there were a large number of cars. The third night (and ever since) the streets after dark were full of cars and people." Restaurants and discos have reopened. Fear is slowly receding. "It has given security to the people -- from the 'security' forces," said a prominent Guatemalan with irony.

This large and important Central American country -- six times as big as El Salvador, twice as wealthy, almost half again as populous, and strategically located next to Mexico -- has been heading into deepening political, economic and military crisis while the United States stood by, unable to act.

Suddenly late last month the young officers' coup -- an expected move from an unexpected source -- provided a chance to halt the slide toward disaster.

While U.S. official as well as public attention has been concentrated on El Salvador, the dramatic and possibly far-reaching changes next door have received less notice. In part this is because Washington's involvement here has been minimal in recent months, despite the high stakes. In some respects the situation was so abhorrent that even the Reagan administration was unable to find a way to justify a U.S. role.

Sitting in a large corner office of the National Palace, which is still guarded by troops inside and out, a senior Guatemalan military officer tried to explain why the coup had been necessary.

"It is obvious that we had to defuse the situation in the country, which was becoming more and more explosive," said the high- ranking soldier, who asked not to be named. The country's dominant political forces were up in arms against the results of the March 7 election, which they charged was fraudulent. The economic elite was on the edge of panic because ample foreign exchange reserves had shrunk to nothing and foreign bankers were refusing to renew outstanding loans.

Perhaps worst of all, in the military view, the war against leftist guerrillas was going badly. Fifty-seven officers, nearly all lieutenants and captains, had been killed in combat within a year, the equivalent of two graduating classes of the country's military academy.

"The young officers felt abused. The generals were doing whatever they wanted to do," said the military leader. Another figure close to the young plotters put it simply: "The lieutenants and captains were dying in combat, and they saw the colonels getting fatter and fatter off the country, pigging out."

There is every indication that the March 23 coup caught the U.S. embassy by suprise, as it did the ruling government of Gen. Romeo Lucas Garcia and his hand-picked successor and president-elect, Gen. Angel Anibal Guevara. According to U.S. sources, the first that Ambassador Frederic L. Chapin heard of it was a cryptic message at 10:30 a.m. that Guevara had to cancel their scheduled meeting at 11 because of unexpected developments. By the time of Guevara's call, the artillery and tanks of the coup makers were already drawn up around the National Palace.

A case can be made that this imposition of guns for ballots, under the circumstances, served U.S. national interest as well as the interest of most of this country's civilian and even military elite. Yet the U.S. embassy, far from encouraging the coup, sought vainly in the weeks before to shore up Guevara, the elected representative of the old order, and since the coup the embassy has been correct but After the Killing Stops: Guatemala's New Leaders Still Face Vast Problems

By Don Oberdorfer

GUATEMALA CITY -- Until recently the streets of this capital were deserted after dark except for heavily armed men -- left-wing guerrillas, right-wing militias, government paramilitary forces or one of the private armies in the service of the wealthy.

All that changed abruptly when a group of young officers overthrew Guatemala's military government.

"The night of the coup, cars suddenly appeared on the streets for the first time in a long time," said Mayor Abundio Maldanado. "The next night there were a large number of cars. The third night (and ever since) the streets after dark were full of cars and people." Restaurants and discos have reopened. Fear is slowly receding. "It has given security to the people -- from the 'security' forces," said a prominent Guatemalan with irony.

This large and important Central American country -- six times as big as El Salvador, twice as wealthy, almost half again as populous, and strategically located next to Mexico -- has been heading into deepening political, economic and military crisis while the United States stood by, unable to act.

Suddenly late last month the young officers' coup -- an expected move from an unexpected source -- provided a chance to halt the slide toward disaster.

While U.S. official as well as public attention has been concentrated on El Salvador, the dramatic and possibly far-reaching changes next door have received less notice. In part this is because Washington's involvement here has been minimal in recent months, despite the high stakes. In some respects the situation was so abhorrent that even the Reagan administration was unable to find a way to justify a U.S. role.

Sitting in a large corner office of the National Palace, which is still guarded by troops inside and out, a senior Guatemalan military officer tried to explain why the coup had been necessary.

"It is obvious that we had to defuse the situation in the country, which was becoming more and more explosive," said the high- ranking soldier, who asked not to be named. The country's dominant political forces were up in arms against the results of the March 7 election, which they charged was fraudulent. The economic elite was on the edge of panic because ample foreign exchange reserves had shrunk to nothing and foreign bankers were refusing to renew outstanding loans.

Perhaps worst of all, in the military view, the war against leftist guerrillas was going badly. Fifty-seven officers, nearly all lieutenants and captains, had been killed in combat within a year, the equivalent of two graduating classes of the country's military academy.

"The young officers felt abused. The generals were doing whatever they wanted to do," said the military leader. Another figure close to the young plotters put it simply: "The lieutenants and captains were dying in combat, and they saw the colonels getting fatter and fatter off the country, pigging out."

There is every indication that the March 23 coup caught the U.S. embassy by suprise, as it did the ruling government of Gen. Romeo Lucas Garcia and his hand-picked successor and president-elect, Gen. Angel Anibal Guevara. According to U.S. sources, the first that Ambassador Frederic L. Chapin heard of it was a cryptic message at 10:30 a.m. that Guevara had to cancel their scheduled meeting at 11 because of unexpected developments. By the time of Guevara's call, the artillery and tanks of the coup makers were already drawn up around the National Palace.

A case can be made that this imposition of guns for ballots, under the circumstances, served U.S. national interest as well as the interest of most of this country's civilian and even military elite. Yet the U.S. embassy, far from encouraging the coup, sought vainly in the weeks before to shore up Guevara, the elected representative of the old order, and since the coup the embassy has been correct but very cautious toward the new leadership.

The painful contrast between the importance of Guatemala and the impotence of the United States in the face of deepening trouble has long been evident to Secretary of State Alexander Haig and other high U.S. officials. A few weeks before the coup, Haig called Guatemala "strategically the most important Central American republic because of its size, population and raw materials, oil included." While going on to say that Guatemala is "clearly the next target" of revolutionary forces, Haig added with dismay that nothing could be done by the United States without a clearcut change in Guatemalan internal policy, especially on human rights.

A six-day visit to Guatemala -- my first to any Central American country -- has left me convinced there is a new spirit here and new potential for positive change. But it is one thing to move against the most glaring excesses, thereby winning national popularity and restoring international acceptance, and it is another and more imposing task to deal effectively with the underlying problems that threaten to drag the country into growing civil war or worse.

Of a shift in spirit since March 23, there seems little doubt, for one overwhelming reason: Officially sanctioned murder and terror by police and plainclothes goon squads has stopped. "Weapons are only for the army; weapons are only for the army," declared the chief of the new junta, Gen. Efrain Rios Montt, in his first address to the nation on the day of the coup. "There will be no more murdered people on the roadsides. Anyone who acts against the law shall be executed. Let's not have any more murders. We want to respect human rights and defend them."

According to U.S. embassy reports, political murders were running 250 to 300 monthly in 1981, rising to over 500 in January 1982 and over 400 in February. Church sources put the political body count, which was attributed more to the government than to the guerrillas, much higher. Figures are not yet compiled for the weeks since the coup, but there is no doubt among all those queried that the carnage has been sharply reduced.

A second boost to the national spirit has been an attack on corruption, which is now believed to have taken a heavy toll on the economy. Several of the largest government projects, including construction of a new port, a peripheral highway system, hydroelectric projects and land distribution to farmers, are suspected of providing big rakeoffs. Officials of the new junta have informally asked the U.S. embassy to provide American experts to appraise the legitimate costs of some of these projects with an eye toward the cancellation or renegotiation of contracts.

Nearly every day, additional arrests of former civilian officials are announced. But so far no former top military officers have been arrested, despite the widespread view that they were the biggest offenders. "A tiger doesn't eat a tiger," explained a person close to the junta.

Another factor in the change is the unusual character of the junta leader. The 55-year-old Rios Montt was picked by the junior officers as their senior leader and spokesman largely because he is a former professor and superintendent of the Guatemalan Military Academy with a reputation for honesty.

Rios Montt had left the army to run for president with reformist Christian Democratic support in 1974; it is popularly supposed that he was defrauded of the prize by the military leadership's official candidate. Less understood was that he had spent the past four years as an evangelist for the Church of the Christian Word, a California- based sect.

The political and economic elite finds the new leader a figure of fun, calling him "Dios Montt" ("Mt. God") and predicting that his evangelism will not wear well with the tradition-bound Roman Catholic majority. An impression of emerging weirdness, in sophisticated eyes, was heightened by an all-channels television address last Sunday, Easter night, when the junta leader gave up his camouflage suit for a sport coat and slacks in a moralistic pep talk filmed beside the country's best known lake. As he talked to the people without notes for 13 minutes, he was backed up by the canned music of a marimba band.

"You can never be sure when a coup has really stopped," remarked a fascinated foreign observer, who reported persistent rumors of a shakeup that would replace Rios Montt with someone who is less a drastic change for such a conservative country. However, the young officers are reported to like him, and his messianic appeals via television may strike the right note with the common man. A source close to the Guatemalan military gives Rios Montt at least six months to perform in the job, and added that he is more likely to resign than be ousted if disappointed.

Performance is a big question, in view of a sea of difficulty:

Politically, there is a wide consensus against terror and corruption, but not much of a consensus about what the country should do or who should lead it. Increasingly common talk is that the junta will be in charge two or three years before national elections, but this is hotly contested, not surprisingly, by established political leaders and parties with a shot at power.

The political argument is only beginning, because the junta's major programs and intentions still are unclear. It recently announced a 14-point program emphasizing "reform" and "efficiency" but gave no details. There is no suggestion of a drive to alter basic institutions, and a leaked document attributed to the junta suggested that changes in the state structure "will be minimal."

Economically, Guatemala is traditionally the most prosperous Central American nation, but it is in the most serious straits in many years. Economic output declined last year, according to a private expert, after years of steady growth. Only a big public works program, which created a large budget deficit, kept unemployment within bounds.

A symptom and symbol of the trouble was the decline of Guatemala's foreign exchange reserves from about $830 million three years ago to just about nothing usable now. When a Panama-based banking consortium demanded to be repaid in full two months ago rather than renew a $75 million loan for six months, the wolf was at the door.

Militarily, the government has been losing the battle against the guerrillas, slowly but surely, according to an unpublicized U.S. assessment. Full-time guerrilla combatants have increased from about 1,500 less than two years ago to an estimated 3,000 today. More ominous is that at least 80 percent of the guerrillas in the Indian highlands, the main area of military conflict, are reported to be Indians. In decades past, leftist guerrillas are reported to have had little success with appeals to the Indians, who comprise a disadvantaged half of Guatemala's population.

The 17,000-man Guatemalan army lacks the manpower and mobility to turn the tide. The junta's best developed ideas, it seems, are for political and economic efforts to combat the guerrillas' rallying cries of corruption and abuse of human rights.

"We intend to go in and destroy the guerrillas by fire, but behind that we need bulldozers and tractors to clear the land and prefab houses for people to live in, if the gains are to be lasting," one coup leader told a U.S. official. But such efforts would be expensive. Guatemala is strapped for money, and major U.S. aid, at this point, is not in sight.

Despite its strategic importance, Guatemala under the old order was so far beyond the pale that there was little for the United States to do or say to affect events here. Now that change is afoot, the challenge to U.S. diplomacy is likely to be greater. There is little sign, so far, that Washington has come to grips with how it will address the issues.

Don Oberdorfer is a diplomatic reporter for The Washington Post. very cautious toward the new leadership.

The painful contrast between the importance of Guatemala and the impotence of the United States in the face of deepening trouble has long been evident to Secretary of State Alexander Haig and other high U.S. officials. A few weeks before the coup, Haig called Guatemala "strategically the most important Central American republic because of its size, population and raw materials, oil included." While going on to say that Guatemala is "clearly the next target" of revolutionary forces, Haig added with dismay that nothing could be done by the United States without a clearcut change in Guatemalan internal policy, especially on human rights.

A six-day visit to Guatemala -- my first to any Central American country -- has left me convinced there is a new spirit here and new potential for positive change. But it is one thing to move against the most glaring excesses, thereby winning national popularity and restoring international acceptance, and it is another and more imposing task to deal effectively with the underlying problems that threaten to drag the country into growing civil war or worse.

Of a shift in spirit since March 23, there seems little doubt, for one overwhelming reason: Officially sanctioned murder and terror by police and plainclothes goon squads has stopped. "Weapons are only for the army; weapons are only for the army," declared the chief of the new junta, Gen. Efrain Rios Montt, in his first address to the nation on the day of the coup. "There will be no more murdered people on the roadsides. Anyone who acts against the law shall be executed. Let's not have any more murders. We want to respect human rights and defend them."

According to U.S. embassy reports, political murders were running 250 to 300 monthly in 1981, rising to over 500 in January 1982 and over 400 in February. Church sources put the political body count, which was attributed more to the government than to the guerrillas, much higher. Figures are not yet compiled for the weeks since the coup, but there is no doubt among all those queried that the carnage has been sharply reduced.

A second boost to the national spirit has been an attack on corruption, which is now believed to have taken a heavy toll on the economy. Several of the largest government projects, including construction of a new port, a peripheral highway system, hydroelectric projects and land distribution to farmers, are suspected of providing big rakeoffs. Officials of the new junta have informally asked the U.S. embassy to provide American experts to appraise the legitimate costs of some of these projects with an eye toward the cancellation or renegotiation of contracts.

Nearly every day, additional arrests of former civilian officials are announced. But so far no former top military officers have been arrested, despite the widespread view that they were the biggest offenders. "A tiger doesn't eat a tiger," explained a person close to the junta.

Another factor in the change is the unusual character of the junta leader. The 55-year-old Rios Montt was picked by the junior officers as their senior leader and spokesman largely because he is a former professor and superintendent of the Guatemalan Military Academy with a reputation for honesty.

Rios Montt had left the army to run for president with reformist Christian Democratic support in 1974; it is popularly supposed that he was defrauded of the prize by the military leadership's official candidate. Less understood was that he had spent the past four years as an evangelist for the Church of the Christian Word, a California- based sect.

The political and economic elite finds the new leader a figure of fun, calling him "Dios Montt" ("Mt. God") and predicting that his evangelism will not wear well with the tradition-bound Roman Catholic majority. An impression of emerging weirdness, in sophisticated eyes, was heightened by an all-channels television address last Sunday, Easter night, when the junta leader gave up his camouflage suit for a sport coat and slacks in a moralistic pep talk filmed beside the country's best known lake. As he talked to the people without notes for 13 minutes, he was backed up by the canned music of a marimba band.

"You can never be sure when a coup has really stopped," remarked a fascinated foreign observer, who reported persistent rumors of a shakeup that would replace Rios Montt with someone who is less a drastic change for such a conservative country. However, the young officers are reported to like him, and his messianic appeals via television may strike the right note with the common man. A source close to the Guatemalan military gives Rios Montt at least six months to perform in the job, and added that he is more likely to resign than be ousted if disappointed.

Performance is a big question, in view of a sea of difficulty:

* Politically, there is a wide consensus against terror and corruption, but not much of a consensus about what the country should do or who should lead it. Increasingly common talk is that the junta will be in charge two or three years before national elections, but this is hotly contested, not surprisingly, by established political leaders and parties with a shot at power.

The political argument is only beginning, because the junta's major programs and intentions still are unclear. It recently announced a 14-point program emphasizing "reform" and "efficiency" but gave no details. There is no suggestion of a drive to alter basic institutions, and a leaked document attributed to the junta suggested that changes in the state structure "will be minimal."

* Economically, Guatemala is traditionally the most prosperous Central American nation, but it is in the most serious straits in many years. Economic output declined last year, according to a private expert, after years of steady growth. Only a big public works program, which created a large budget deficit, kept unemployment within bounds.

A symptom and symbol of the trouble was the decline of Guatemala's foreign exchange reserves from about $830 million three years ago to just about nothing usable now. When a Panama-based banking consortium demanded to be repaid in full two months ago rather than renew a $75 million loan for six months, the wolf was at the door.

* Militarily, the government has been losing the battle against the guerrillas, slowly but surely, according to an unpublicized U.S. assessment. Full-time guerrilla combatants have increased from about 1,500 less than two years ago to an estimated 3,000 today. More ominous is that at least 80 percent of the guerrillas in the Indian highlands, the main area of military conflict, are reported to be Indians. In decades past, leftist guerrillas are reported to have had little success with appeals to the Indians, who comprise a disadvantaged half of Guatemala's population.

The 17,000-man Guatemalan army lacks the manpower and mobility to turn the tide. The junta's best developed ideas, it seems, are for political and economic efforts to combat the guerrillas' rallying cries of corruption and abuse of human rights.

"We intend to go in and destroy the guerrillas by fire, but behind that we need bulldozers and tractors to clear the land and prefab houses for people to live in, if the gains are to be lasting," one coup leader told a U.S. official. But such efforts would be expensive. Guatemala is strapped for money, and major U.S. aid, at this point, is not in sight.

Despite its strategic importance, Guatemala under the old order was so far beyond the pale that there was little for the United States to do or say to affect events here. Now that change is afoot, the challenge to U.S. diplomacy is likely to be greater. There is little sign, so far, that Washington has come to grips with how it will address the issues.