Two weekends ago in Panama, the would-be mediators of the Contadora group

struggled to find a way to ease the gathering confrontation between the United States and Nicaragua. The Sandinistas defiantly rejected all steps the would-be mediators urged on them. Last weekend, however, they edged back a bit, agreeing to accept a deadline of June 6 for the signing of a regional peace treaty, with two conditions: that the points of the treaty still in dispute be resolved, and that the United States halt "aggression" against Managua. Presumably this was done at least in part to assure members of the House, who are about to vote on contra aid, that there is a valid diplomatic alternative to the Reagan administration's course.

The eight Latin governments supportig the Contadora initiative believe there is. If Washington cut off the contras, they argue, a workable regional security treaty could be put in place, and in the resulting calm, Nicaragua could be induced to slow and reverse its totalitarian progress. For its part, the Reagan administration says it has no confidence in a treaty entered into by a Sandinista regime. It further insists that the Latin way of political envelopment, far from mellowing Managua, would merely let the regime consolidate power. Its call for contra aid follows.

The moral argument for contra aid -- that it keeps faith with the democrats of Nicaragua -- is powerful. They are worthy people, and they deserve better than to be identified, as some identify them, with that part of the Nicaraguan opposition consisting of Somoza holdovers.

The difficulty is the lack of a plausible way to help. The administration offers the contras. But in four years these forces have yet to demonstrate either military effectiveness -- they have not held a town overnight -- or political appeal -- most leaders of the contra groups supported by Washington are Somoza holdovers and act the part. Senior retired American military officers attest to the inadequacy of the administration's military program to accomplish any realistic military objectives. The prospect that American forces might have to bail out a failing contra expedition is real. The hostility to the United States that would grow elsewhere in Latin America is a serious consideration.

Four years of pursuit of democracy in Nicaragua by military means has spurred the Sandinistas to move faster toward police rule and has helped them gather wider Latin sympathy for being targets of American power. A more zealous application of this policy, as the administration urges, would not alter these unhappy basic facts.

Rather than contra aid, the Latins propose quickly to complete a treaty limiting Nicaragua's military reach and its Soviet-Cuban ties, and then to start trying to press the Sandinistas along a better internal path. It is argued that the security talks won't work without the pressure of the contras. The record suggests to us that those talks won't work with the pressure of the contras. The Sandinistas are in the eighth year of a communist revolution. Yet Nicaragua is contiguous to its Latin neighbors and connected to them in ways that Cuba never was. Its economy is in desperate straits.

The United States, moreover, would -- should -- remain ready to do what is necessary, in security policy, political support and development aid, to prevent Nicaragua from undermining the security of its Central American neighbors. It must also be ready to ensure, by its own military acts if necessary, that Nicaragua does not become a strategic threat to the United States.

Finally, the United States must not stop demanding that the Contadora Latins keep pressing the Sandinistas to open to the democrats in Nicaragua. The very least Americans can do for these Nicaraguans is to stay alert to ways of salvaging what can be salvaged by acceptable means.