BLUEFIELDS, Nicaragua - At first glance, this coastal town looks like any other rum-soaked, Rastafarian-packed, hammock-infested Caribbean city. But Bluefields has a secret: Most people here don't have to work because every week - sometimes, every day - sacks of floating cocaine between 75 and 100 pounds each drift in from the sea.

The economy of this town of 50,000 is addicted to cocaine. While local authorities have no official figures, former Mayor Moises Arana says when the drugs float in, "everyone is happy, the stores are happy, the bars are happy, everyone has money. I remember one month when (Bluefields) bought 28,000 cases of beer."

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SANDY BAY, Nicaragua -- Eduardo Rayos, two cousins and a few other senior Miskito men spoke animatedly in their 1,000-year-old tongue while a team of international visitors waited in a corner.

It was an unscheduled meeting of the Council of Elders of Sandy Bay, some four hours by boat up the Caribbean from the nearest Nicaraguan town. The meeting was called because of the unexpected presence of a group of foreign reporters.

The men looked serious and spoke solemnly.

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(MANAGUA) -- When officials here announced last week that they hope to sign a treaty within the next few months giving U.S. military ships the right to pursue suspected narcotics traffickers into Nicaraguan coastal waters, the surprise was the reaction: Instead of the usual cries of American intervention, there was dead quiet.

"Things have changed," said Oliver Garza, U.S. ambassador to Nicaragua, who made a maritime treaty on narcotics enforcement a top priority when he arrived here last September. "People have recognized that an international counternarcotics effort is not only not bad, it's actually good politics."

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Linked To Narcotics Barons In Colombia

GUATEMALA CITY -- Signaling a link between drug trafficking and the arms deals of Colombian death squads, a Nicaraguan ex-cop-turned-arms-dealer has been convicted in Managua for possession of narcotics and illegal weapons.

Colombian authorities have long accused the right-wing "self-defense forces" that fight the country's Marxist rebels of ties to narcotics barons who supply three-fourths of the cocaine and a growing share of the heroin used in the United States.

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Courts: Trial ending in conviction of ex-policeman illustrates long-contended ties between South American nation's right-wing private armies and narcotics barons.

GUATEMALA CITY--Signaling a link between drug trafficking and the arms deals of Colombian death squads, a court in Managua on Thursday convicted a former Nicaraguan policeman turned arms dealer of possession of narcotics and illegal weapons.

Colombian authorities have long accused the right-wing "self-defense forces" that fight the country's Marxist guerrillas of ties to narcotics barons who supply three-fourths of the cocaine and a growing share of the heroin consumed in the United States.

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MANAGUA, - Panamanian President Ernesto Perez Balladares and Nicaraguan President Arnoldo Aleman signed a declaration on Tuesday to promote trade and democracy in Central America and fight drug trafficking.

The declaration, signed at a ceremony in Managua, called for a free trade agreement among Panama, Nicaragua and other Central American nations to help develop the commercial interests of the region.

It also expressed Nicaragua's support for the democratic process in Panama, which holds a presidential election on May 2. It also supported Panamanian authorities as they prepare to take control of the Panama Canal from the United States on Dec. 31.

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MANAGUA, Jan 7 (Reuters) - Nicaragua has jailed a Canadian man on charges that he used his commercial hemp business as a front for an illegal marijuana farm, a prosecutor said on Thursday.

Paul Thomas Wylie, 45, of Burlington, Ontario, was awaiting trial in Managua on charges of planting 100 hectares of marijuana, said Maria Alicia Duarte, a prosecutor working for Nicaragua's attorney general.

Criminal Judge Orieta Benavides also issued warrants for six other Canadian shareholders in the business, Hemp Agro International, who live outside Nicaragua, as well as a Nicaraguan who lives in the United States.

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DEA helped him while the FBI looked for him

While the FBI searched in vain for a shadowy Nicaraguan cocaine baron, the DEA helped him get travel visas and paid him to be an informant, a U.S. Department of Justice report says.

Miscommunication between federal agents - along with other missteps, limited resources and alleged sexism against a female DEA agent - contributed to the ruthless dope dealer's evasion of justice, said the study by the department's inspector general.

Between 1963 and 1992, Norwin Meneses, a former Bay Area resident, allegedly killed two men, sold stolen cars, traded guns, smuggled "massive" quantities of cocaine and boasted that he had ties to the CIA and was supporting contras trying to topple Nicaragua's Sandinista government.

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The strange career of Norwin Meneses.

* 1963-1964: Meneses is convicted in San Francisco for shoplifting, misuse of slot machines and statutory rape.

* 1976-1980: DEA hears that Meneses is smuggling cocaine from Nicaragua to the United States.

* 1980-1985: San Francisco DEA office opens several probes of Meneses' cocaine ring. Nine people are arrested, but Meneses flees to Costa Rica. JULY 1986: Meneses offers to cooperate with Costa Rica DEA against other dealers, including Sandinista government officials.

* FALL 1986: San Francisco FBI office begins separate probe of Meneses, not knowing he is a DEA source.

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President says he was innocent victim

Managua -- Maybe Arnoldo Aleman's mother never warned him against accepting rides from strangers.

Aleman, the president of Nicaragua, allowed himself to be flown around earlier this year in a plane allegedly owned by a silver-haired Cuban American named Jose Francisco Guasch.

But now Aleman probably wishes he hadn't done that. The jet was stolen from a Florida airport days before Guasch brought it to Managua last December to offer free rides.

In addition to carting around the president, his wife .and several other unsuspecting dignitaries, the plane was also used to transport large quantities of cocaine, according to Nicaraguan Police. Authorities say they don't know whether the jet ever transported cocaine at the same time that it transported Aleman and his associates.

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There are magicians within the U.S. government. Last week, they played a dirty trick, causing two official reports on allegations of a Contracrack cocaine connection to vanish into bureaucratic thin air.

These reports one by the Department of Justice, and one by the Central Intelligence Agency are the result of more than a year of internal investigation into allegations of government complicity in the crack cocaine trade.

Yielding to public outcry sparked by the ``Dark Alliance'' series that appeared in the Mercury News in August 1996, the government agreed to conduct a fullfledged inquiry into what U.S. officials know, when they knew it, and what they did about drug smuggling during the CIAsponsored Contra war in Nicaragua.

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MANAGUA (Reuters) A Nicaraguan drug trafficker with reported links to a U.S. Contradrugs scandal was recaptured over the weekend in Nicaragua after his release from prison 10 days ago, officials said Monday.

Omar Meneses was arrested Sunday morning at his mother's home in northern Nicaragua, Commissioner Arnaldo Pastran of the National Police told Reuters.

Criminal court Judge Eduardo Boza ordered the capture, reversing another judge's decision to parole Meneses, who was sentenced in 1991 to 12 years in prison for smuggling cocaine.

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By Lorraine Orlandi

MANAGUA, Oct 21 (Reuters) The U.S. government opened a Drug Enforcement Administration office in Nicaragua on Tuesday promising not to trample on the country's sovereignty in its fight against drugs bound for the United States.

``We're not talking about James Bond or Robocop,'' U.S. Ambassador to Nicaragua Lino Gutierrez told a news conference.

``Nothing will be done without the support and cooperation of the National Police and Nicaraguan authorities.''

Gutierrez introduced Joseph A. Petrauskas, a pilot whose DEA resume includes six years in Colombia, as the embassy's newest member in charge of its antidrug effort.

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Last August, the San Jose Mercury News reported that Nicaraguan dealers connected to the CIAbacked contra rebels has sold tons of cocaine in Los Angeles' street gangs during the mid1980s, sparking an explosive controversy over CIA links to drug lords. The product of a year's work by investigative reporter Gary Webb, the threepart "Dark Alliance" series stated that one contraconnected dealer was "the Johnny Appleseed of crack in California"the man who introduced cheap crack cocaine to the poor black neighborhoods of South Central Los Angeles.

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When the San Jose Mercury News apologized for Gary Webb's VY threepart series on the CIA, contras, and crack cocaine, it earned a pat on the head and a doggie biscuit. "Courageous gesture," said The New York Times. "Commendable," said The Washington Post.

These were the same papers, along with the Los Angeles Times, that did all they could to undermine the series when it first appeared. "We're going to take away that guy's Pulitzer," one L.A. Times reporter said, according to an article by Peter Kornbluh in CJR (formerly Columbia Journalism Review). Kornbluh quoted another staffer saying he was "assigned to the 'get Gary Webb team.'"

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From the mountains of Portugal to Nicaragua's Bluefields, crack cocaine is destroying paradise

I catch a plane for my own ShangriLa today: a village of 12 houses in pine and eucalyptus forests, up against the mountains seperating Portugal and Spain, with a white chapel, four days of annual 'festos', neon roses everywhere, good red wine and curious saints.

We need the saints. Every quiet, decent place needs saints for as long as northern America and northern Europe maintain their prodigious appetite for illegal drugs.

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WASHINGTON A federal investigator said he will continue to examine whether a California drug ring sold cocaine to aid a CIArun guerrilla army, even though the San Jose Mercury News has backed away from some aspects of the stories that sparked the inquiry

"We have our own investigative agenda, and the item ... printed this weekend won't affect our investigation," said Michael Bromwich, Justice Department inspector general.

"Did I expect to see this when I woke up this morning? No. But I think all of us can use selfscrutiny. I think our institutions are stronger when you do that."

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SAN JOSE, Calif. (AP) The executive editor of the San Jose Mercury News admitted to shortcomings in the newspaper's controversial series on the crack cocaine explosion in Los Angeles in the 1980s.

In an open letter to readers in the newspaper's editorial section Sunday, Jerry Ceppos said the newspaper solidly documented that a drug ring associated with the Contra rebels in Nicaragua sold large quantities of cocaine in innercity Los Angeles, and that some of the profits from those sales went to the Contras.

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