The opposition boycott of Sunday's elections here represents a "terrible missed opportunity" for Reagan administration policy in Nicaragua because the elections are not promoting the democratic pluralism the U.S. government says it supports, according to high-ranking diplomatic sources.
The sources also said that the boycott movement had been led primarily by the country's main business organization, with backing from "hard right" administration officials in Washington.
The sources blamed the ruling Sandinista Front for most of the problems leading to the electoral boycott. But, they said the business group's position has frustrated the desires of the alliance's proposed presidential candidate and of some other politicians in the alliance to attempt to reach an accommodation with the government that would allow them to run.
Moreover, according a diplomat familiar with U.S. policy, the boycott has prevented the election from serving as a vehicle to encourage democratization inside Nicaragua.
"It's a terrible missed opportunity," the diplomat said. If all of the opposition had participated in the "watershed" elections, he said, there would have been political pluralism here as Washington says it would like. The United States then could concentrate on resolving disputes with Nicaragua over such issues as the Sandinistas' arms buildup or support for Salvadoran guerrillas.
"This whole issue of democratization is so crucial to the Reagan administration," the diplomat said. "If the Sandinistas had been able to keep the opposition in the election, even if there had been some problems in the election, the Reagan administration would have been in a box. That would have taken the issue of democratization off the table and left just the security issues, which frankly are more tractable."
The business group -- called the Superior Council of Private Enterprise and known by its Spanish abbreviation COSEP -- is a member of the opposition alliance, which is called the Democratic Coordinator Alliance. The Coordinator also includes four political parties and two labor unions.
Diplomats here said the Sandinistas were largely responsible for the boycott because of the government's refusal to ease restrictions on political liberties sufficiently. This lack of political freedom, along with the government's refusal to begin talks with the entire opposition including U.S.-backed antigovernment guerrillas, was cited by presidential candidate Arturo Cruz in July when he announced the Coordinator's decision to sit out the election.
But the diplomats were eager to emphasize that COSEP, and what they said were rightist elements within the Reagan administration, also shared the blame for the opposition boycott. The United States "will completely blame the Sandinistas for the boycott , but I think that's unfair," a diplomat said.
"I give 60 percent of the blame to the Sandinistas and the rest to COSEP," he said.
The State Department and the embassy here have told the Coordinator that the United States would be perfectly happy to see it participate in the elections, but more conservative elements in the U.S. administration have urged the Coordinator and particularly COSEP to stay out of the race and thus detract from the legitimacy of the elections, diplomats and opposition sources said.
The diplomats declined to name those they referred to as the "hard right." But an opposition business leader said, "There is the State Department view and the view of the CIA and the Pentagon. The State Department tells us to run and the Pentagon view was the other one. Both sides are trying to use us."
A knowledgeable diplomat here said that senior State Department officials had told leaders of the Democratic Coordinator on trips to Washington that the Coordinator should feel free to participate if it believed it had adequate guarantees of a fair election. But he also suggested that the Nicaraguans had heard the opposite view from what he called "different voices" in the administration.
"There is a hard right up there. It's no secret that there are people in the administration that don't approve of the Manzanillo talks," he said. Representatives of the U.S. and Nicaraguan governments have held talks in the Mexican resort of Manzanillo.
William Baez, a COSEP official, and Agustin Jarquin, a leader of one of the political parties in the Coordinator, denied that COSEP had a different position from Cruz or other politicians in the Coordinator on whether to participate. They echoed the public position of the Coordinator, also espoused publicly by Cruz, that there have been differences of opinion typical of any alliance but that the various parties had arrived at a consensus.
While Cruz and other opposition politicians have publicly blamed the Sandinistas for the boycott, they also have emphasized the importance of maintaining unity within the Coordinator even at the cost of losing room for maneuver in dealing with the Sandinistas. Late last summer, an opposition leader close to Cruz said that he was afraid that COSEP and other hard-liners would frustrate any chances of participating in the vote.
Although Cruz, a former member of the ruling junta here, said in July that the Coordinator would boycott the election, there have been sporadic efforts since then by the opposition to come to an agreement with the Sandinistas to permit full participation. Even today, in the third day of a "national dialogue" between the opposition and the Sandinistas, the Coordinator proposed postponing Sunday's vote to discuss anew the issue of political freedoms here in hope of arranging for the Coordinator's participation in a future election.
In a separate development, the president of the Supreme Electoral Council said that the council had rejected the withdrawal from the election of the Independent Liberal Party. Although the party's national assembly voted Oct. 21 to boycott the election, the vice presidential candidate said this week he intended to remain in the race.