El salvador vencera! (El Salvador will win) has become the new slogan of Nicaragua's Sandinista leaders. It greets new arrivals at the airport, covers the battered walls of Managua and resounds in all of the commanders' speeches.
This conspicuous sympathy for the Salvadoran guerrillas and repeated, though inconclusive, reports that Nicaragua is giving the insurgents weapons and other aid in the fight against the Washington-backed Salvadoran government threaten to provoke a cutoff of U.S. aid to the Sandinista government when it needs it most.
The Nicaraguan economy is plummeting toward disaster. Bitterness, even hatred, has grown up among what were once the unified supporters of the revolution. The massive backing Nicaragua received from abroad last year now shows signs of fading away. If nothering else had happened, Nicaragua would be in the midst of its most desperate crisis since the 1979 insurrection. w
But then, El Salvador did happen. On Jan. 10, leftist guerrillas there launched a massive push to seize power. They used sophisticated new arms, and Washington, busily rearming the Salvadoran government, strongly hinted that the guerrilla munitions came through Nicaragua.
The U.S. ambassador in El Salvador at one point claimed guerrillas had landed in boats coming from Nicaragua, but later he backed off the allegation.
The U.S. State Department has avoided direct public assusation of the Sandinistas in the face of their furious denials of official involvement in the El Salvador fighting. But various U.S. officials continue to maintain that seriously incriminating secret evidence exists.
Former secretary of state Edmund Muskie said Thursday that Cuban arms are moving through Nicaragua to El Salvador "with the knowledge and to some extent the help" of the Nicaraguan government.
A State Department spokesman yesterday said only that the United States is concerned about the reports and has the matter under "very active ongoing review." Nicaragua has firmly and repeatedly denied reports of such arms traffic.
There are allegedly incriminating documents captured from the guerrillas in El Salvador. There reportedly is evidence that light airplanes have flown clandestinely from Nicaragua to El Salvador. There are claims that the Salvadoran guerrillas' "Liberation Radio" transmits from a site near Managua.
If Sandinista involvement in the Salvadoran conflict is publicly established, Nicaragua could, at this crucial moment, face at least a partial cutoff of U.S. aid. Congress requires the U.S. president to stipulate that Nicaragua is not supporting guerrillas elsewhere in Central America before aid can be given.
Of $72 million appropriated in 1980, $15 million remains to be disbursed because of technical questions about the way the Nicaraguan government has used money already received. More than $50 million hangs in the balance for 1981.
Theoretically Nicaragua could face not only a cutoff but demands for return of aid already given and spent.
"It would be very difficult to cope with any cutoff," Arturo Cruz, an economist and a non-Sandinista member of the government junta, said earlier this week, "extremely difficult."
For the country to be reconstructed in the still lingering aftermath of its insurrection, financing is needed and the vast majority of financing comes from abroad.
"The main source, no question, is the United States," said Cruz, not only because of its direct contributions, but because of its influence with lending organizations such as the World Bank and with other nations.
"The minute the United States goes," said Cruz, "who knows what other countries would do."
The Nicaraguan government is slow in issuing comprehensive, reliable statistics, but a picture of the economy pieced together by interested foreign officials appears to justify Cruz's gloom. One foreign economist described it as something like a "Greek tragedy. You see it all falling inevitably into pieces."
There have been some positive steps. Unemployment is low and such predictable fiscal aftershocks of revolution as inflation and a rampant growth in the money supply have been held in check. Credit remains largely constant and the government has proven its ability to renegotiate foreign debts.
But foreign exchange reserves are virtually gone. The harvest now being brought in will raise them somewhat, but not nearly enough.
Last year about $750 million went for imports. Some projections indicate that this year, at best, Nicaragua willhave only about $650 million for imports when because of world inflation it would need at least $860 million just to maintain last year's already low levels.
About 60 percent of the foreign exchange goes for oil and debt servicing alone, according to Cruz.
At the same time higher wages at the lower end of the wage scale have increased consumer demand while the growth of employment in the military and the burgeoning bureaucracy, as well as a lack of confidence on the part of the private sector, have greatly cut productivity. Shortages are becoming commonplace.
Some of the Sandinistas, as they are forced to cut back on the dream they once offered the Nicaraguan people, seek to blame the situation on outside forces or internal "counterrevolutionary" threats.
So far, the most obvious scapegoat for the Sandinistas' problems -- the United States -- has been reluctant to provide a target for criticism by cutting aid.
This is part of the reason for debate within the State Department over what to do with whatever evidence exists of Nicaraguan involvement with Salvadoran guerrillas.
"What it comes right down to is not the objective facts," said one senior U.S. official, "but what you do with what you have. Nicaragua unfortunately has worked itself into a position that is very difficult for us to deal with. . . . We didn't create this mess. They did. But what we have to do is find some way of dealing with the situation without shooting ourselves in the foot."
The announcement that U.S. Ambassador Lawrence Pezzullo, who is well-respected here, will stay on for at least the immediate future was received as a token of the Reagan administration's interest in maintaining a flexible policy toward Nicaragua.
A diplomat here said he believes Secretary of State Alexander Haig will continue fighting to "keep his flexibility in this area. If the U.S. cuts the Sandinistas off they would be forced to take a very hard line in order to maintain what they can. Being able to blame the U.S. would be a gift to them. In policy terms we don't gain a thing by pulling the plug and handing them a convenient excuse to hand their own people. I think there's recognition of that in Washington."
Cruz agrees that economic sanctions by the United States will only lead to a hardening of the Sandinista line and a forced relianced on "other areas of support."
These are not promising. There is little expectation that the Soviets would subsidize Nicaragua's economy as they have Cuba's and aid from hitherto generous Western nations could be dried up under pressure from the Reagan administration.
One high-level Nicaraguan official said he believed the vital support of West Germany and the Socialist International would disappear if Reagan chose to make an issue of it with West German Chancellor Helmut Schmidt.
Costa Rica and Venezuela have already begun to back away from their once enthusiastic support for the Sandinistas.
Internally, since business leader Jorge Salazar was killed by government security forces under mysterious circumstances two months ago, relations between the Sandinistas and the businessmen who still control 60 percent of the economy have become so bad that some entrepreneurs say they would actually like to see aid cut off just to watch the Sandinistas suffer.
In the face of such hostility from people who once supported the revolution, Cruz, who often finds himself caught in the middle, said the government is increasingly interested in a dialogue with the Superior Council of Private Enterprise, a federation of the major business groups here.
The results of the dialogue might help soften increasingly hard-time stands on both sides and restore some of the confidence of the United States. If talks do not succeed, Cruz said, Nicaragua faces "a very perilous journey." If they are successful, "It will be a very stormy sea. But at least the crew will be ready for it."