Seize the moment in Nicaragua

CENTRAL AMERICA could be added to the list of regions - Afghanistan, Angola, Cambodia - where progress toward peace is being made. But will the Reagan administration rise to the occasion? The opportunity stems from a confluence of events now taking place.

In Nicaragua, antigovernment demonstrations have led to renewed repression. Those demonstrations starkly confront the government with the failures of an economy it has handled incompetently. The protests also belie the legitimacy of the Sandinista party itself; the party is under fire from some of the people it purports to speak for.

In Washington, both parties in Congress are fed up with the repression. But they are also tired of the endless haggling over aid to the contras. Still, efforts to write contra-aid legislation continue to simmer. The Democratic leadership in the Senate backs $27 million in humanitarian aid; the Republicans would add $20 million in military aid, to be released only by a separate vote from Congress. A compromise is unlikely to emerge until September. It will probably look more like the GOP version, but will still, despite election-year posturing, be a bipartisan bill.

In Costa Rica, President Oscar Arias is scheduled to report this weekend on compliance with the regional peace plan that bears his name.

Finally, Secretary of State George Shultz is traveling in the region, to arrive next week in Ecuador for the inauguration of that country's new president - an event that most of the region's leaders will attend.

That gives all parties an opportunity for some on-the-spot diplomacy. One approach might go something like this: If the Sandinistas address compliance problems outlined in the Arias report card during the lag while Congress works on its legislation, the United States would stop using humanitarian and military aid to the contras to leverage change in Nicaragua. Instead, contra aid would be confined to humanitarian uses and be parceled out only if the contras remained at the negotiating table. Economic aid to the entire region, including Nicaragua, would be put in escrow and released as compliance with the Arias peace plan improved.

The much-heralded and quickly shelved Kissinger Commission recommendations on aid to Central America, announced in 1984, would be a good starting point for aid.

Such a shift would deprive the Sandinistas of a battlefield enemy, dissolving about the only glue left that holds factions in the regime together. Without the contra war, Sandinista repression would stand exposed. The US position would have a stronger moral footing. This would allow Washington to work more closely with other Central American governments to encourage democratic reforms in Nicaragua. It would also put the US in a better position to encourage other industrial democracies to channel more economic aid to the region.

In the long run, a US position that supports the region's self-help efforts will be more productive than browbeating Central American leaders into endorsing what amount to US condemnations of the Sandinistas.