Stephen S. Rosenfeld's column, "Moment of Truth in Nicaragua" (op- ed, Sept. 21), seriously mischaracterizes the electoral process now under way in Nicaragua. In fact, Rosenfeld's comments contradict what The Post's own reporters in Nicaragua have been writing and what The Post itself has been publishing.

The main theme of Rosenfeld's article is that "the one test that counts" in determining whether the elections in Nicaragua this November are fair is whether opposition candidate Arturo Cruz "takes part." This is a surprising and disturbing comment from an editor of the same newspaper that reported, on the front page of its July 30 edition, that the "decision by Nicaragua's main opposition alliance to boycott elections scheduled for November represented a deliberate effort to embarrass the ruling Sandinistas, even at the cost of sabotaging the opposition's own goal of encouraging the growth of democratic pluralism here."

This report, written by correspondent Robert McCartney in Managua, continued: "Opposition leaders admitted in interviews that they never seriously considered running in the Nov. 4 election but debated only whether to campaign for two months and then withdraw from the race on grounds that the Sandinistas had stacked the electoral deck against them. In the end, the Democratic Coordinator (Cruz's coalition) decided not even to register its candidates for the race, thereby attempting to deny the Sandinistas the opportunity to claim that the election was valid."

McCartney further reported: "It remains unclear how well the Democratic Coordinator would have fared in the election, as virtually all political observers predicted that the Sandinistas would win easily, even without the boycott." Among those who predicted a Sandinista victory in an open and honest election was then U.S. ambassador, Anthony Quainton, as Post editor Robert Kaiser had reported previously.

Cruz himself has lived and worked outside Nicaragua (in Washington, D.C.) for almost all of the last 15 years. He has almost no following in Nicaragua. His real constituency, if any, is in Washington, not Managua.

Yet Rosenfeld opines that "the Sandinistas are scared of Cruz" and suggests that the government does not want him to run. Rosenfeld, with all due respect, has it backward.

The government is most anxious that Cruz and his coalition participate in the Nov. 4 elections for president, vice president and National Assembly, along with the other six opposition parties that are already participating. As any visitor to Managua can plainly see, a vigorous and hotly contested campaign is under way. An election contested by all of the political forces in the country would provide the victorious party with the broadest possible support both domestically and internationally.

Thus, as The Post itself reported, the government has offered substantial "concessions" to Cruz's group in an effort to obtain its participation, including (according to Post correspondent John Lantigua on Sept. 22): "more free radio and television time for opposition candidates, a clearance that would allow them to import any campaign materials they wanted and a guarantee of freedom of the press regarding all but military issues."

Previously, the government had guaranteed each political party 9 million cordobas (the Nicaraguan currency) plus sufficient foreign exchange -- all from public funds -- to run its campaign. Now the government has even reopened the registration period from Sept. 24 to Oct. 1, to give Cruz another opportunity to join the process and demonstrate whether his commitment is to democratic principles or to Reagan's obvious efforts to undermine the electoral process.

Cruz and his coalition, confirming The Post's July 30 report, have refused to participate in the elections. Their demands are ever-shifting. No sooner does the government move to accommodate them than new ones appear.

After years of criticizing the government for not holding elections earlier, Cruz now complains that the elections are too soon. He wants the entire electoral process to be postponed to allow him sufficient time to make up the ground he allegedly lost when he chose not to enter the campaign when it began seven weeks ago. He also demands that the elections be not only monitored by foreign governments (to which the government has agreed) but controlled by them -- something which no sovereign state would accept.

Democracy demands that a government allow its opposition a fair opportunity to obtain power through open and honest elections. This commitment, which my government pledged to honor when it came to power in 1979, is being fulfilled. But a "loyal opposition" is also a vital component of democracy. Do Cruz and his group merit such a title, when, in The Post's own words, they are "sabotaging the opposition's own goal of encouraging the growth of democratic pluralism" in Nicaragua?

The true test of the fairness of Nicaragua's elections is whether opposition parties are offered the opportunity to compete openly and honestly for political power. This, I submit, is the reality, as The Post's own reports confirm. The true test of the opposition's commitment to democratic principles is whether, upon being given such an opportunity, it accepts the challenge. Instead of accepting the challenge of democracy, Cruz and his group have chosen to portray themselves as victims -- for the deliberate purpose of "embarrass(ing) the ruling Sandinistas." The government cannot force them to participate in the elections.

It is distressing that Rosenfeld suggests that Congress should continue to finance the administration's "covert war" against Nicaragua because "with the terms of the Nicaraguan elections still unsettled, this may not be the right moment to take the heat off Nicaragua."

Does Rosenfeld really believe that it is legal or moral for the United States to use military force against Nicaragua to influence "the terms of the Nicaraguan elections," a purely internal matter within Nicaragua? The International Court of Justice in The Hague has already ordered the United States to stop such interference in Nicaragua's internal affairs. Intervention of this sort violates the most fundamental principles of international law. It has no place among law-abiding nations.

As a final matter, we Nicaraguans have reason to mistrust some of the sanctimonious concern for the fairness of our elections that we hear in the United States. The United States fully supported the Somoza family during its 45-year dictatorship and never once protested against the phony elections that were staged from time to time. Even now, there is a long list of countries with which the United States has the most cordial relations in spite of their not having had elections for many years. Democracy clearly is not the issue with which the Reagan administration is concerned.

The elections Nov. 4 will be the first open and honest elections in Nicaragua's history. We invite Rosenfeld to come and see for himself.