Shadows of repression lie across Nicaragua, falling on the mock-legislative council of state, on the factory and the country store. They appear in the mechanical intolerance of the party's true believers, and in their attempts to regiment and even militarize society.

But the shadows, while felt and resented by the people here, are not yet the substance. Dissent is discouraged and increasingly persecuted; but it is still quite alive and it runs through the whole fabric of Nicaraguan society.

While opposition politicians and businessmen lambast the government on broad questions of political freedom, private enterprise and Soviet Bloc influence, people in Managua's barrios and in rural towns like this one focus on smaller, but to them more basic problems.

"There is a lot of hate, a lot of jealousy, that's what's hurting us," said the owner of a little grocery here as she fed her pet parrot. "And we're being hurt by the bums, the followers who do no work any more but interfere with everyone else's business."

The most common sentiments here are frustration that life has changed so little after so many hopes were raised by the insurrection more than two years ago and irritation with the trials of daily existence in a country that is poorer than ever because of the war, the depredations of the dictatorship before it and the mismanagement since.

Real fear -- the kind that existed under former dictator Anastasio Somoza and still exists under many brutal Latin dictatorships -- or the deep suspicion and reserve that permeates Communist countries where the state controls every aspect of life with a ration card and an iron hand, is not yet firmly established in Nicaragua.

But, then, many people were surprised last month when an open letter from the Superior Council of Private Enterprise criticizing militant remarks by junta coordinator Daniel Ortega, Soviet Bloc influence and economic chaos resulted in the jailing of those who signed it.

"We are not used to living in this kind of country," said business leader William Baez.

The arrests further depleted much-needed support for the Sandinistas in Western Europe and the democratic countries of Latin America. Now, there is a sense among critics of the government here that the future of the nation may depend on discussions about the release of the businessmen as well as a parallel effort to begin a dialogue among political parties.

"The Sandinista front is in a difficult situation with the church, a very difficult situation with the private sector and then they are in conflict with the political party," said Baez. "Then you add to that the relations with the United States at their lowest point ever and if you look at it this way this is the worst crisis since the revolution."

Several of the minority political parties -- which do still exist here -- are trying to foster a national consensus through dialogue. But the Sandinistas are reluctant to participate because "they think they can't come out of the encounter positively," opposition leader Edgard Macias said. Major opposition parties such as the Conservative Democrats have also refused to join.

The business leaders are threatening a showdown, but as one put it, "The private sector is upset, it's mad, but we are not taking crazy or emotional steps." Not the least of the motives for restraint is fear of U.S. or other intervention here if the internal turmoil gets out of hand.

"These are problems we have to solve as Nicaraguans, otherwise somebody is going to solve them for us," Baez concluded.

But it is this same fear of outside intervention, added to increasing worries that powerful forces within the country are beyond their control, that contributes to the Sandinistas' increasingly stern measures against opposition.

In an attempt to explain why the house of former junta member Alfonso Robelo, now one of the government's sharpest critics, was attacked by a mob, Nicaraguan Foreign Minister Miguel D'Escoto said, "When you play with revolution and when for all practical purposes you supply the propaganda weapons that the declared enemies of the revolution abroad are looking for in order to attack the revolution, you cannot be surprised that you raise the same type of ire that we recently witnessed against Somoza and his lackeys .... Our people can be provoked. We're trying to keep the people in line but there is a point at which things get out of hand."

Some Sandinista officials say privately it is just such erratic and only partially controlled forces on the fringes of their own rank that most disturb the Sandinista leadership.

Even the progovernment newspaper Nuevo Diario has begun denouncing the excesses of the Sandinista defense committees, which, modeled on similar institutions in Cuba, have begun turning "vigilance" into vigilante action, gossip into political denunciation and organization into petty tyranny.

Such talk is usually couched in terms of CIA destabilization plots. Both Nuevo Diario and the official newspaper Barricada denounced recently what they called a conspiracy to assassinate Archbishop Miguel Obando y Bravo, a frequent and tremendously influential critic of the Sandinistas. Although the archbishop is the focus of vehement denunciations by the Sandinistas radical fringe and even of attacks against his property by them, the plot was described as the work of counterrevolutionaries.

After several alleged CIA operatives at the U.S. Embassy here were named in the press earlier this month, the families of several of them left the country to avoid the risk of mob violence, according to officials here.

The denunciations came within a week after a visit to Nicaragua by former CIA operative Phillip Agee, known for his efforts to expose U.S. intelligence agents, and included biographical information about the alleged agents that U.S. officials believe must have been supplied by the Nicaraguan government.

Meanwhile, however, the Sandinistas are openly cracking down on the ultra-radical left. Even as the business leaders were being jailed last month, the Sandinistas were rounding up members of the Communist Party, including its head, Eli Altamirano.

"We are in permanent confrontation with Altamirano's group," said Ortega. Asked at a "face the people" meeting about Communist strikes that shut down even government-owned factories, Ortega went so far as to say that now, because of the Sandinistas' good intentions, "strikes have no reason to be in our country."

At the foundation of much of the discontent here -- and the open motive for many of the Sandinistas' sternest actions to stifle it -- is the disastrous condition of the economy.

According to various analysts, Nicaragua will need to find $500 million over and above its currently predicted export earnings and foreign aid receipts just to maintain the nation at its current near-subsistence level of economic activity next year.

Nicaragua faced a similar crisis last December, only to be bailed out by Mexico and Libya. But with all U.S. aid now cut off, increasing pressure by Washington to curtail assistance from multilateral lending organizations, and both Mexico and Libya unlikely for internal reasons to repeat this year's rescue, the situation is desperate.

Most Nicaraguans appear to agree that national unity is needed to confront the crisis. But there is a strong tendency among the Sandinistas to try for unity through regimentation rather than democratic consensus. In addition to the phenomenal buildup in the regular Army and militias, there are defense committees, Sandinista youth, party unions, syndicates and guilds reaching into every walk of life.

Nicaraguans are not easily regimented, and voluntary membership in these organizations falls far short of Sandinista hopes. But the government keeps pushing.

The model is mostly drawn from Cuba's example and, as such, the direction is totalitarian.

As one middle-level Sandinista official presented the situation, the hope of many revolutionaries here was to model their nation on the dreams of Augusto Cesar Sandino, who fought the U.S. occupation force here in the 1920s. But Sandino's dream only went as far as the removal of the Marines, and provided little guidance on how to maintain such a "anti-imperialist" rule in modern Latin America.

The only example that exists is Fidel Castro's government, and Castro was always ready to provide the Nicaraguans with guidance.

"Every day," said the official, "it becomes more clear that the Nicaraguan revolution is not the child of Sandino, but the child of the Cuban revolution."

"Every day," said Macias, a leader of the Popular Social Christian Party, "the front is losing more of its allies. The moderate, the more capable people keep leaving the government. Really these people are not even in politics, but as they leave, the front finds itself in an evermore difficult situation. It is not only losing allies, but risks being eaten away from within."