At deadline, peace pact behind schedule but still has momentum. Legacy of militarization hard to shed. CENTRAL AMERICA

Nestled in the cradle of two volcanoes, Antigua seems nothing more than a peaceful town of ruins and tourist bargains. But when soldiers bundled unwilling youths into an Army bus recently, tourists were reminded of a darker side of Guatemalan life: forced military recruitment.

Throughout Central America, where 10 years of war have put hundreds of thousands of young men into olive-green drab, such scenes are common.

Central America, with the exception of Costa Rica, has become thoroughly militarized. And this militarization greatly inhibits bringing peace and democracy to the region.

The latest reminder of the militarization trend comes from the defection of a Nicaraguan Army officer, Maj. Roger Miranda, to the United States with top secret documents. Trying to play down the importance of those documents, Sandinista Defense Minister Humberto Ortega said Nicaragua's goal is to arm a total of 600,000 Nicaraguans - one-fifth of the population - to fend off any US invasion.

A decade of fighting has left a deep imprint of violence on Central American life that will be hard to erase even if there is peace by Christmas, as the regional peace plan envisions.

The generals have left the presidential palaces they occupied for decades, and civilians have been elected to take their places. But the political transitions have not eradicated the root causes of the region's armed conflicts, because they have not fully supplanted the entrenched interests - such as the military - that in the past resisted social change, critics argue.

``There are three armies here: the private sector, the corrupt bureaucracy, and the Army,'' a Central American development activist says. ``The bureaucracy doesn't attack with weapons; it destroys with indifference.''

Meanwhile, the continuation of the wars in Nicaragua, El Salvador, and Guatemala has bolstered the military's political influence behind the scenes. And everywhere but Nicaragua, powerful business classes can still make their presence felt.

Guatemalan President Marco Vinicio Cerezo Ar'evalo acknowledged the limits on his freedom of action in his 1986 inaugural address: ``I remind you that I have received the government but not the power.'' That lesson was driven home by a business strike last month, which forced him to renegotiate tax reforms pushed through Congress.

Even as democratic rule has begun to sink tentative roots in the region, the wars have only encouraged an unprecedented process of militarization. Never have armies been so large: El Salvador and Nicaragua each have more than 50,000 regular troops, backed by tens of thousands more reserves and militiamen; and Guatemala has enlisted every able-bodied man in the countryside into ragtag civil defense forces as a key tactic in its counterinsurgency campaign.

Governments funnel millions of dollars into the nonproductive military sector. More than 40 percent of El Salvador's total budget goes to Army-related expenses; in Nicaragua, the portion is nearly 60 percent.

As in any nation at war, the Army's priorities have become national priorities. ``Everything for the war front,'' read banners in Managua. El Salvador's leader sought a tax increase earlier this year, not to meet social needs but to fund the war. In Honduras, the President's policymaking national-security council includes all key military chiefs.

When the head of El Salvador's independent human rights commission was gunned down last month, his murder was seen as a bid to upset the peace process by right-wing death squads. It was a harsh reminder that even today, when some groups want to send a political message, they write it in blood.

Such fear has more than personal costs; it also impedes the growth of grass-roots democratic organizations. ``There's too much fear lingering from the memory of what has happened to group leaders over the past decade,'' says a frustrated relief worker in rural El Salvador. ``If you could remove the fear, development possibilities would naturally start to open up.''

In the Guatemalan lakeside hamlet of Santiago Atitl'an, ``we live like prisoners in our own village,'' says one resident, explaining that more than 300 men have been killed here since Guatemala's counterinsurgency campaign began eight years ago.

The young man wishes to remain unnamed for a simple reason: His brother was the village's latest casualty; and he feels he might be next. ``The pressure is unbearable,'' he says, denying Army accusations that the town helps feed and supply the rebels. ``We can't leave for fear of being killed.''

This type of atmosphere has disturbing implications for a whole generation of Central American children, say psychologists and teachers. ``The idea that problems can be solved by violence is dominant,'' says Honduran psychologist Daniel Herrera, and young people growing up in such an environment are bound to draw their own conclusions.

Such damage of war is matched by the trail of physical destruction obvious to any regional traveler. Coffee growers have abandoned farms in southern Honduras, afraid of the contras. Bullet-scarred ruins remain strewn about Managua. Felled electricity poles line roads in El Salvador - testimony of rebel sabotage.

The damage adds up to billions of dollars, an amount that even optimistic observers say will take years to repair. It would also take renewed confidence in the region to attract back both the people and money that have fled to safer havens.

Nearly 2 million Central Americans have chosen political or economic exile. It's an exodus that has proved particularly costly to Nicaragua, which has been drained of tens of thousands of professionals it can ill afford to do without, and to El Salvador, where 20 percent of the people are either refugees or displaced within the country.

Few experts hazard a guess at how much capital has left the region, but it's thought to be in the billions of dollars.

As Central American leaders inch their way toward peace, lasting solutions to the region's crises look like distant fancies. But the very signing of the peace accord on Aug. 7 has revived hopes that once were all but dead. The Presidents' pledge ``to make dialogue prevail over violence, reason over rancor'' might yet prove to be more than an idle dream.

Last in a series. Previous articles ran Nov. 2 and 3.