House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) yesterday attacked President Reagan for saying the United States will continue to back rebels in Nicaragua unless the leftist Sandinista government there cries "uncle," and predicted that Congress will reject attempts to restore funding for the rebels.
"The United States has played 'uncle' in Latin America for far too long," O'Neill said. "It is time to play brother . . . . The way to peace in Central America is through nonaggression and through . . . regional negotiations . . . . I don't believe he Reagan has the votes in either the House or the Senate for either overt or covert aid" to the rebels, known as "contras."
Reagan and Secretary of State George P. Shultz last week launched a new administration drive to induce Congress to free $14 million in funds it blocked last year for the covert-aid program. They called the contras "freedom fighters" and argued that they are the only force capable of forcing the Sandinistas to change their behavior.
But, after GOP congressional leaders met with Reagan yesterday, House Minority Leader Robert H. Michel (R-Ill.) told reporters that he is "frustrated" and "confused" by administration refusal to heed pleas by congressional Republicans that Reagan propose ways of helping the contras other than through covert-action programs.
"There may be some new approach that we might want to take," Michel said. "I don't want to close out any option there because I think it's absolutely imperative that no matter what, that we continue assistance to those who are, in effect, fighting our battles by striving to get a more pluralistic government down there in Nicaragua."
Michel echoed the complaint of many Republicans that the administration has ignored their calls for new approaches and appears determined to continue insisting on renewed covert action, despite increasing signs that Congress will not permit it.
"It's very frustrating for a person like myself," Michel said. "You like to be able to put your hands on it and say, 'This is the policy, clearly defined, absolutely no doubt about it in my own mind or in the people's mind' . . . . But I'm not altogether sure I do understand administration strategy ."
Congressional sources have suggested several options, including withdrawing U.S. diplomatic recognition and overtly aiding the contras, providing "humanitarian" aid to dependents of contra rebels and other Nicaraguan refugees in neighboring countries or encouraging private organizations to raise money for the contras.
These ideas are being studied by policy planners. But U.S. officials stress privately that the administration feels that all have serious drawbacks and wants to be certain first that renewed covert action has no chance.
However, the administration yesterday strongly denied a report that one idea under consideration involves channeling part of the $147 million in economic aid appropriated by Congress for Honduras to the contras through a secret agreement with the Hondurans.
Asked about the report, White House spokesman Larry Speakes said: "No, it's not so. Whatever funding is provided down there in the economic area will be spent in the economic area . . . . Economic aid to Honduras will be economic aid to Honduras. There is no change in that."