This is where the polemics stop and the pain begins. Here, in the jagged hills on the Honduran border, bewildered campesinos, who really don't know what the fighting is about and have never heard of the Central Intelligence Agency, are paying the price for President Reagan's "covert war" against the Sandinista government.

In a large cinder block house, some 40 families who have been removed from the war zone huddle together, guarded by government soldiers.

They are the vanguard of some 140,000 people in the border area the government proposes to resettle, for strategic and humanitarian reasons. With them out of the way, the Nicaraguan army would have a clear shot at the "contras" lurking in the hills and could proceed against them without heavy civilian casualties.

The resettlement program is subject to a more ominous interpretation. Anti-Sandinistas claim it is the first step in a massive collectivization effort.

"Nobody is forced to leave," said Alejandro Bernheim, director of the program, when he briefed visiting anti-contra congressmen, Edward J. Markey (D-Mass.) and Frederick C. Boucher (D-Va.), in Matagalpa.

The inhabitants of the camp seemed resigned to being there.

It is hard to imagine that they had been uprooted from any comforts.

For mile after bumpy mile on the wretched roads, the congressmen had seen nothing but hovels, mere shelters made of planks nailed together.

"Ronald Reagan has added to the misery in this God-forsaken country," Markey said into one of the several television cameras that accompanied the caravan. But misery is a comparative thing in this small, ragged place -- the size of Iowa, with an average yearly income of $780 -- which Reagan sees as a focal point in the struggle between East and West.

The campesinos seemed afraid: afraid of contras who might come back and kidnap them; afraid of the Sandinistas, who want to draft them. And they were possibly intimidated by the horde that swarmed over their new dwelling, some of them carrying menacing-looking television cameras, to record them, their crying babies and mangy dogs.

They seemed fearful of the Sandinista supervisor, Maria Teresa Blandon, an efficient blond who made hand signals while a wisp of a woman was telling Markey how her three sons had been kidnaped by the contras.

She kneaded her hands anxiously when Markey asked who she thought was responsible for her situation. She glanced over at the supervisor, then said slowly, "Those who are wandering around the mountains."

Did she blame Reagan?

A long silence followed, and then a toothless man spoke up. "We don't even know him."

A humble young man in a wide-brimmed hat was brought forward. He had been captured by the contras and had fled. Kidnaping apparently is the preferred recruitment method of the contras who remind Reagan of our Founding Fathers.

"Nobody wanted to go with them," he said. They are well supplied, he said -- by the United States, they had told him.

What do they tell the captives, whose hearts and minds they are obviously not winning? "They say they want Nicaragua to be free again, but I don't know," said the hangdog young man.

"If the contras catch me again," he said, looking up for once, "they would kill me."

Boucher observed quietly that "the contras don't have much of a base."

The woman who had lost her three sons eyed the pig that was rooting on the slope outside her new home. Out of range of the supervisor and the cameras, she spoke of her dilemma: "When the contras come, they grab your son and try to make him fight. Or the Sandinistas come and draft him. Our sons are the ones who give us our daily bread, what can we do?"

She doesn't know much about the government that was supposed to make her life so much better than it had been under the Somozas. She sees no television or newspapers that might give her some of the hope that bubbles among the young people still high on revolution, clumsily trying to run the country. But like every other Nicaraguan, she had an opinion.

"I don't know what to tell you. Everything is very expensive."

Reagan's war is aimed at the Sandinista government. But here on the hillside are the victims, who, as the small woman said, "only want peace."