"There is a wild region on the Colombia-Venezuela border where men still ride around with pistols strapped to their waists, and they are famous for gambling for nearly any stakes," the Latin American diplomat was saying over his beer. "They bet their weapons, they bet their ranches, even their wives and daughters. But they would never bet their manhood."

The envoy was assessing chances for a negotiated settlement to the increasing tension in Central America, particularly between the Sandinista government here on one side and the Reagan administration and its official and unofficial allies in Honduras on the other.

Even with Managua's balmy evening, a cold drink and the cheer of a good dinner, the diplomat's prognosis was gloomy. The outlook for fruitful diplomacy is similarly bleak in other Central American capitals these days. Talk of conflict and the preparation for it increasingly seem to drown out the promise of more peace-making by the four-nation Contadora Group, of talks between U.S. envoy Richard Stone and the Salvadoran rebel movement or of last month's Nicaraguan proposals for peace talks.

The main reason, the diplomat was suggesting, is that despite declared support for the various diplomatic tracks, the White House and the Sandinista leadership appear to be set on inevitably hostile courses that neither could abandon without a bet whose stakes would be so high that even the woolly border cowboys would refuse to chance it.

The nine comandantes who rule Nicaragua repeatedly have insisted that opposition from the United States will never force them to betray their revolution. Drivers in Managua can see their determination every day, written in giant letters on a traffic overpass: "The Sandinista National Liberation Front is immortal."

Even if the Sandinista leaders did not repeat the message over and over, it would be difficult to imagine them making drastic changes four years into a revolution in which most have invested the better part of their adult lives, often at the cost of jail, hardships and friends' deaths.

So when President Reagan declares, as he did recently, that peace would be difficult in Central America as long as the Sandinistas remain in power; as a U.S.-financed guerrilla movement approaches its second year of attacks on Nicaragua from headquarters in Honduras, and as U.S. warships steam in exercises on both sides of the country, the mood hardens and the Sandinista leadership coils into a fighting crouch.

The two progovernment newspapers in Managua are full of reports detailing advantages of a recently proposed conscription law, under which all youths between 17 and 21 would have to register beginning in October for two-year stints in the Popular Sandinista Army. In addition, Defense Minister Humberto Ortega last month announced plans for expanding Nicaragua's already extensive armed militia.

Internally, the Sandinista leadership has for at least a year been debating an election law that, when it is issued, should go a long way toward indicating the extent to which the revolutionary government is prepared to admit opposition politics and a peaceful change of mind by the Nicaraguan people in elections still promised for 1985.

As the U.S. threat has intensified, reports have begun to filter out of differences among the long-united nine members of the Sandinista Front's national directorate on how to confront it.

But, in the meantime, the atmosphere here increasingly indicates that Nicaraguans who oppose the Sandinista revolution as it stands now will have little place in national life. The drift has been accelerated by a need to marshal public support for the border war, which may only be sporadic but has taken 1,000 lives on both sides this year according to Sandinista calculations.

The Sandinista Front newspaper, Barricada, reported Tuesday that five workers were fired from the Telecommunications Ministry for criticizing the revolution. One, a woman identified as Maritza Montes, appeared in a photograph walking down a hallway on her way out of a ministry building. Her fellow workers were lined up as a gantlet on either side, applauding her explusion.

"The dismissal was demanded by all the organized workers who, through their union leadership, said it is not possible to have elements who directly attack the revolutionary process while heroic reservists offer their lives in defense of the fatherland," the newspaper said.

In such an atmosphere, revolutionary fervor on occasion can be abused. For instance, a Sandinista Defense Committee in Managua's Bello Horizonte neighborhood this week took sneak photographs of Construction Ministry pickups parked at night in front of a local dive called La Gaviota. On hearing that her customers might be denounced for misusing vehicles, the bar owner went to the Sandinista Police and said drunks were slinking around her establishment taking pictures, and they looked counterrevolutionary.

Not to be fooled, the police decided to suspend her liquor license until the local Sandinista Defense Committee decides if it should be renewed. The photographs were published in Barricada and the Construction Ministry union announced an investigation into why employes found it necessary to spend evenings at La Gaviota with ministry vehicles.

One experienced diplomat here expressed hope the Contadora discussions still could eventually lead to at least a temporary solution. As he explained it, the Contadora four--Venezuela, Mexico, Panama and Colombia--could patch together an agreement including international border patrols "that would force the governments in question to make some hard choices."

In his perspective, this meant the Sandinista leadership would have to decide whether it was willing to end what the Reagan administration charges is cross-border support of Salvadoran guerrillas in exchange for a pledge to halt U.S. and Honduran sponsorship of the counterrevolutionary forces attacking Nicaragua. Although the diplomat did not say so, the Reagan administration and its Honduran allies presumably also would have to decide whether they were willing to accept a Cuban-allied Marxist revolution in Nicaragua in exchange for a promise that neighboring revolutionary movements would get no more help.

So far, there is little to indicate that either side is willing to bet on such promises without reliable international supervisory mechanisms. In practice this probably would mean an international force along the Honduras-Nicaragua border under auspices of the Organization of American States or the Contadora Group. But reports from diplomats who follow the Contadora efforts say the Mexican government has ruled out participation in such a force, making participation by other governments unlikely.

Despite this, Nicaraguan chief of state Daniel Ortega said for the first time July 19 that Nicaragua is willing to enter regional negotiations dealing with, among other things, material support for neighboring revolutions including El Salvador. The Reagan administration the next day called his six-point proposal "a positive step." But so far, six weeks later, nothing is known to have been done about it by either side.

In a broader sense, such an accord would have to restrict itself to symptoms of the conflict rather than the conflict itself. As the Sandinistas themselves took encouragement at their birth in the early 1960s from the then-new Cuban revolution, the Sandinista revolution in some ways seems by its nature bound to seep into neighboring countries, if only by example. For leaders who themselves receive help from a number of Latin American countries, particularly Cuba, the temptation also must be great to accelerate this seepage with support.

"We do not export our revolution," Sandinista officials are fond of saying, "but we cannot help it if others imitate our example."

In that perspective, negotiations seem extremely difficult without what the notorious South American gamblers, along with the Reagan administration, the Sandinista leadership and Gen. Gustavo Alvarez Martinez of Honduras, would consider betting their manhood.