THE JACKAL FLASHED A WICKED smile as he ushered 38 invited guests into the red brick schoolhouse. Before the Nicaraguan government delegates could take in their surroundings in the muddy mountain town of El Zungano, the Jackal's band of former contra guerrillas closed around them in a tight cordon. Training automatic weapons on the hostages, the rightist rebels announced the price for freedom: dismissal of Sandinista army chief Humberto Ortega and top presidential aide Antonio Lacayo, viewed as too easy on the country's ousted Marxist rulers.
Within 24 hours, Comandante 31 and his band of ex-Sandinista officials responded by storming the Managua headquarters of the conservative National Opposition Union (U.N.O.). Seizing 34 people including Vice President Virgilio Godoy Reyes, they demanded the release of the El Zungano hostages and U.S. war reparations of $17 billion. For six days, Nicaraguans feared the worst as mediators sought a compromise between the outlaw bands. Finally, both sides agreed to free all hostages, and the government and former contras signed an eight-point plan aimed at alleviating tensions.
While relief was evident when the standoff ended without spilled blood, most Nicaraguans saw little cause to celebrate. The conditions that provoked the confrontation -- governmental disarray, unpopular political appointments, unsettled land grievances and shattered economic hopes -- remain unaffected. Though few citizens are girding for a resumption of the civil war that despoiled Nicaragua throughout the 1980s, there is a palpable fear that if the two sides do not continue a dialogue, the country will sink from political polarization into chaos. "Our tradition has been to divide in times of crisis," says Jose Pallais, the Deputy Foreign Minister. "The solution has always been for one group to get on top and squash the other."
The spectacle was hardly edifying to Washington. For most of a decade, the U.S. made Nicaragua a prime ideological battleground, spending hundreds of millions of dollars, enduring bitter domestic debate and engaging in illegal- arms deals to face down Managua's Soviet-backed rulers. Only the end of the cold war prompted the two superpowers to bow out. Americans thought Nicaragua's problems were solved when Violeta Barrios de Chamorro was elected President in early 1990.
But she has done little to pull the country out of its mire. When the government faltered on its promise to deliver land and reparations, former contras and ex-Sandinista troops took up guns again to grab territory and settle scores. In Managua the leader who pledged national reconciliation could not even reconcile the players within her own government. Last January the 12- party U.N.O. broke with her, along with Vice President Godoy. That has left Chamorro politically dependent on the Sandinistas, who were allowed to retain de facto control of the army and police forces. Now they too are pulling away as the economy worsens. The legislature is in virtual paralysis, with nearly half the Deputies refusing to attend sessions.