President Reagan, seeking a compromise to avoid serious defeat in Congress, agreed yesterday to drop his request for military aid to antigovernment rebels in Nicaragua for this fiscal year, which ends Sept. 30.
The shift, confirmed by administration officials, makes it likely that Congress next week will approve as much as $14 million in humanitarian aid for the embattled region, but major decisions must still be made on conditions for the funding, including who is to receive it and through what channels.
The eventual outcome could be anything from $5 million handled by the Red Cross or the U.N. High Commission on Refugees for refugee assistance to $14 million in unspecified humanitarian aid funneled through the Central Intelligence Agency to the rebels.
Reagan still faces the prospect of a resounding defeat of his military aid request in the House on Tuesday before either of two competing Republican or Democratic compromise proposals can be considered. Senate leaders indicated that procedural bars to taking up a compromise could be overcome on their side of Capitol Hill.
Reagan made it clear to several legislators he saw yesterday that he is not dropping his request for military aid altogether and noted that he has asked for fiscal 1986 funding in the budget now before the House and Senate intelligence committees. Legislative sources said the request was for $28 million.
House Republican Whip Trent Lott of Mississippi said the president's shift ensures that "we don't let the 'contras' go down the drain. It was an effort to get some indication of support for the contras."
Bosco Matamoros, a spokesman for the largest rebel group, the Nicaraguan Democratic Front, indicated that the compromise would be acceptable.
"The nature of the aid is a decision of the United States. We will accept a political statement in support of the process to bring freedom and peace to Nicaragua," he said.
Senate sources said the proposal that won Reagan's assent was drafted by Majority Leader Robert J. Dole (R-Kan.), Foreign Relations Committee Chairman Richard G. Lugar (R-Ind.) and Select Committee on Intelligence Chairman David F. Durenberger (R-Minn.).
Word that it had been accepted came just after members of the Senate Appropriations Committee, expressing misgivings, voted 15 to 13 to approve Reagan's original proposal. Several senators said they were hoping fervently for a compromise and would be unable to support the original approach in the full Senate.
Reagan initially asked for unspecified funding for the Central Intelligence Agency "for the support, directly or indirectly, of military and paramilitary operations in Nicaragua." He promised, in an attempt to muster support, that he would use the $14 million only for food, medicine and clothing during a 60-day cease-fire for negotiations with the leftist Sandinista government toward elections. If talks failed to make progress, the aid could be converted to military uses.
But House Democrats remained firm in their refusal to grant any military aid. They argued that the rebel forces are fighting a brutal, immoral and illegal war to overthrow the government of Nicaragua, and they maintained what vote-counters on both sides said yesterday was a margin of support of more than 30 votes.
As a result, none of the compromise efforts involve military aid, although only the Democratic version specifically bans it, directly or indirectly. Democrats have charged that unfettered humanitarian aid has been used in the past to free other funding for military use.
House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.), who has suffered many defeats at Reagan's hands, was firm yesterday on the need to vote on, and presumably defeat, the president's proposal for military aid next week before proceeding to the compromise approaches. He also was instrumental in a bitterly fought House Rules Committee decision yesterday that set the vote for Tuesday.
Republicans had sought to delay a vote for another week or so to campaign for Reagan's plan, and Reagan yesterday said, "I think it's immoral to demand a vote that quickly." O'Neill said that the Senate vote is also Tuesday.
At a lunch with regional news news editors, Reagan said he would accept a compromise "that basically leaves the goal that what we're trying to get . . . [is] what the contras themselves asked for several weeks ago: the laying down of arms, a cease-fire and then the coming together in a peaceful negotiation as to how they can restore the original goals of the [1979 Sandinista] revolution."
He added that he wants the Roman Catholic Church to mediate the talks but is "very willing" to discuss conditions on the nature of the aid and the timing of its delivery.
The House is to vote three times, beginning Tuesday, on variations of those conditions. The first will be on the administration's original request. The second vote will be on the Democratic alternative worked out by Permanent Select Committee on Intelligence Chairman Lee H. Hamilton (D-Ind.) and Reps. Michael D. Barnes (D-Md.) and James R. Jones (D-Okla.).
This compromise would ban direct or indirect military aid and provide $5 million for humanitarian assistance to refugees "outside Nicaragua" -- meaning to people other than the rebels -- through the Red Cross and the U.N. High Commission on Refugees.
An additional $9 million would be made available to the four nations who organized the Contadora regional peace process (Mexico, Venezuela, Colombia and Panama) in the event that a peace treaty is signed, to help implement the pact and monitor compliance with it.
Hamilton said the proposal also would include "language deploring Sandinista activity, calling "for a cease-fire, expressing support for the Contadora [peace treaty] process and the Organization of American States" and "incentives" to Nicaragua.
These would include a promise to consider U.S. trade benefits if Nicaragua moved to oust Cuban and Soviet military advisers, open up its political system and curb its support for revolutions elsewhere in the hemisphere, Hamilton said.
Barnes said it is "very possible" that a sufficient number of Republicans would back the package to win passage. "We tried to come up with a positive approach that could rally a range of views and I think we've found it," he said.
The third House vote, to be taken whether or not the Democratic proposal passes, would come on an approach still being drafted last night by House Minority Leader Robert H. Michel (R-Ill.) that would provide $14 million in humanitarian aid. But House Republicans said they were trying to reverse White House insistence that the aid be funneled through the CIA, which has been directing the contras since 1982.
"They want to maintain the status quo as much as they can," one source said. "It's a real sticking point." Other Republican officials said it was possible the final proposal would funnel the aid through the State Department or the Agency for International Development.
In a related development, a 20-page report from the staff of the Arms Control and Foreign Policy Caucus of Congress said that the Rev. Sun Myung Moon's Unification Church and other groups have contributed more than $5 million to the contra forces in the last year. The 125-member group of moderate to liberal lawmakers also said that 46 of the top 48 contra leaders are former members of ousted Nicaraguan dictator Anastasio Somoza's National Guard.
Contra spokesman Matamoros said the report was "fundamentally false and inaccurate" and contained the names of many people who are no longer part of the contra leadership.
Elsewhere, veterans of the Abraham Lincoln Brigade -- American volunteers who fought against Benito Mussolini and Francisco Franco in the Spanish Civil War -- gave seven ambulances worth more than $100,000 to the Nicaraguan government. "If [Adolf] Hitler and Mussolini were alive today," New York veteran William Susman said, "they would be supporting the contras."
At the Pentagon, spokesman Michael I. Burch refused to comment on a report in The Washington Times that Soviet military officers have been spotted operating with Nicaraguan combat troops fighting rebel forces near the Nicaragua-Honduran border.
"Because of sensitive matters, I can't comment," Burch told reporters in response to queries about the report. "I'm not denying it. I'm just saying I can't supply you with any information."
NBC News reported that the State Department plans to issue a report today detailing administration charges that Soviet advisers in Nicaragua constitute a growing threat to U.S. security. At least a dozen advisers are now present and are involved in apparent preparations for a major Sandinista initiative against contra forces in northern Nicaragua, the network said.