The Reagan administration announced yesterday that it is withholding further economic aid to Nicaragua but held out the possibility that aid will be resumed if Nicaragua continues its freeze on arms shipments to insurgent forces in El Salvador and reduces its other support for the guerrillas.
The decision, announced late yesterday by State Department spokesman William Dyess, means that the last $15 million of a $75 million aid package for Nicaragua that was approved by the Carter administration will remain suspended indefinitely.
At the same time, the adminstration announced that it would not invoke a law requiring immediate repayment of $40 million in loans to Nicaragua.
In making the announcement, Dyess acknowledged that the United States has "no hard evidence of arms movements through Nicaragua during the past few weeks" and said the Nicaraguan response to U.S. demands for a halt to military support to the left-wing insurgents in El Salvador has been "positive."
Dyess said Nicaragua is providing nonmilitary support to the Salvadoran forces. He characterized this other support as "political and logistical" and said the United States will watch what happens to this kind of support as well as the flow of arms in Central America before deciding whether to resume aid.
Dyess said Nicaragua has no new deadlines to meet for eventual receipt of the $15 million and additional aid. "What we are going to do is watch the situation very carefully and see how it develops," he said.
The administration's decision, which officials said President Reagan approved before he was wounded Monday, was widely regarded as an attempt to strike a compromise between pressure from conservative Republicans in Congress to halt all support to Nicaragua and the desire, in Dyess' words, not to "slam the door" on that country and its leftist government.
Under pressure from Sen. Jesse Helms (R-N.C.) and other conservatives in Congress, the administration announced in February that it was withholding the $15 million while it reviewed its policy and prodded Nicaragua to halt the flow of arms into El Salvador.
A short time later, Secretary of State Alexander M. Haig Jr. said Nicaragua had been given 30 days to halt the arms shipments or lose the aid.
According to the State Department announcement, Nicaragua met the condition on halting the arms shipments, although that proved to be insufficient, at least in the short run, in terms of getting the remaining aid. i
In voting the original $75 million aid package, Congress stipulated that the president certify that Nicaragua is not assisting guerrilla or terrorist movements in other Central American countries. According to the State Department announcement, Reagan found that Nicaragua was assisting guerrilla forces in El Salvador, resulting in the continued withholding of the $15 million.
However, in what one official called a "carrot-and-stick" approach to the Nicaraguan government, the president also waived a provision of the same aid law empowering him to call for immediate repayment of the $40 million in loans that were part of the $75 million aid package.
Moreover, Dyess announced that the administration is "considering a resumption of [Food for Peace] and later development assistance if the favorable trends" in Nicaragua continue. Sources said food aid to Nicaragua could resume soon, possibly within two or three weeks.
The administration's compromise effort appeared to meet at least some initial success. The Nicaraguans, relieved at not being faced with a demand for immediate repayment of the loans, were described as considering the outcome fairly positive, although the government-controlled Voice of Nicaragua denounced the aid cutoff as "economic aggression."
John Carbaugh, an aide to Helms, said he was also pleased. "The president is making a determination that aid should be cut off," he said. "This is a victory for us. They're cutting it off."
Criticism of the decision came from the liberal Americans for Democratic Action, which said the aid cutoff would weaken democratic forces both inside and outside the Nicaraguan government.
Yesterdays announcement by the State Department does not materially change the situation that has existed since mid-February, in which the United States has continued to hold up the $15 million payment but suggested that a continued positive response by Nicaragua would mean an end to the aid ban.