I want to announce today a proposal for peace in Central America that can enable liberty and democracy to prevail in this troubled region and that can protect the security of our own borders, economy, and people.

On March 1st in San Jose, Costa Rica, the leaders of the Nicaraguan democratic resistance met with a broad coalition of other exiled Nicaraguan democrats. They agreed upon and signed an historic proposal to restore peace and democracy in their country. The members of the democractic resistance offered a cease-fire in return for an agreement by the Nicaraguan regime to begin a dialog, mediated by the Bishops Conference of the Roman Catholic Church, with the goal of restoring democracy through honest elections. To date the Nicaraguan regime has refused this offer.

The Central American countries, including Nicaragua, have agreed that internal reconciliation is indispensable to regional peace. But we know that, unlike President Duarte of El Salvador, who seeks a dialog with his opponents, the Communists in Nicaragua have turned, at least up until now, a cold shoulder to appeals for national reconciliation from the Pope and the Nicaraguan bishops. And we know that without incentives, none of this will change.

For these reasons, great numbers of Nicaraguans are demanding change and taking up arms to fight for the stolen promise of freedom and democracy. Over 15,000 farmers, small merchants, whites, blacks, and Miskito Indians have united to struggle for a true democracy.

We supported democracy in Nicaragua before, and we support democracy today. We supported national reconciliation before, and we support it today. We believe that democracy deserves as much support in Nicaragua as it has received in El Salvador. And we're proud of the help that we've given to El Salvador.

You may recall that in 1981 we were told that the Communist guerrillas were mounting a final offensive, the government had no chance, and our approach would lead to greater American involvement. Well, our critics were wrong; democracy and freedom are winning in El Salvador. President Duarte is pulling his country together and enjoys wide support from the people. And all of this with America's help kept strictly limited.

The formula that worked in El Salvador -- support for democracy, self-defense, economic development, and dialog -- will work for the entire region. And we couldn't have accomplished this without bipartisan support in Congress, backed up by the National Bipartisan Commission on Central America, headed by Henry Kissinger. And that's why, after months of consulting with congressional leaders and listening carefully to their concerns, I am making the following proposal: I'm calling upon both sides to lay down their arms and accept the offer of church-mediated talks on internationally supervised elections and an end to the repression now in place against the church, the press, and individual rights.

To the members of the democratic resistance, I ask them to extend their offer of a cease-fire until June 1st.

To the Congress, I ask for immediate release of the $14 million already appropriated. While the cease-fire offer is on the table, I pledge these funds will not be used for arms or munitions. These funds will be use for food, clothing, and medicine and other support for survival. The democratic opposition cannot be a partner in negotiations without these basic necessities.

If the Sandinistas accept this peace offer, I will keep my funding restrictions in effect. But peace negotiations must not become a cover for deception and delay. If there is no agreement after 60 days of negotiations, I will lift these restrictions, unless both sides ask me not to.

I want to emphasize that consistent with the 21 goals of the Contadoran process, the United States continues to seek: One, Nicaragua's implementation of its commitment to democracy made to the Organization of American States; two, an end to Nicaragua's aggression against its neighbors; three, a removal of the thousands of Soviet bloc, Cuban, PLO, Libyan, and other military and security personnel; and four, a return of the Nicaraguan military to a level of parity with their neighbors.

Now, later today I will be meeting with Arturo Cruz, Adolpho Calero, and Alfonso Robelo to discuss my proposal.

Democracy is the road to peace. But if we abandon the brave members of the democratic resistance, we will also remove all constraints on the Communists.

Democracy can succeed in Central America. But Congress must release the funds that can create incentives for dialog and peace. If we provide too little help, our choice will be a Communist Central America with Communist subversion spreading southward and northward. We face the risk that a hundred million people, from Panama to our open southern border, could come under the control of pro-Soviet regimes and threaten the United States with violence, economic chaos, and a human tidal wave of refugees.

Central America is not condemned to that dark future of endless violence. If the United States meets its obligations to help those now striving for democracy, they can create a bright future in which peace for all Americans will be secure.

So, in the spirit of Easter, let us make this so. I look forward to working with the Congress on this important matter in the coming weeks.

Q. What's the incentive for the Nicaraguan Government, Mr. President?

The President. Well, to end the bloodshed that is going on, to end the great economic crisis that is growing ever more worse in their country because of what they've done.

Q. Mr. President, [House Speaker] Tip O'Neill says that this is a dirty trick, that you're trying to hoodwink the American public into thinking that it is humanitarian aid, but it really is a secret plan to proceed militarily.

The President. Well, I don't think he's heard this particular plan yet. There's been consultations, but if he's calling this a dirty trick, he's got a funny definition of dirty tricks.

Q. Mr. President, if Congress should turn you down -- --

Q. What makes you think that this will make Congress more likely -- --

Q. Go ahead, Andrea [Andrea Mitchell, NBC News].

Q. -- -- to accept your aid?

The President. Well, because Congress, in all of their efforts to hinder our continued aid to the contras and to democracy down there, have emphasized the need for a peaceful and political solution and a solution of the kind we've talked about here that would result from discussion between the parties.

Q. Mr. President, would you ask -- --

Q. Mr. President, you've made it plain that the $14 million, you think, is essential. But if Congress should turn you down, will you look for some other avenue to help the contras, some other way to continue your desire to see a restructuring of the Nicaraguan Government?

The President. Well, we're not going to quit and walk away from them no matter what happens.

Q. Would you contemplate any military action against Nicaragua? You seem to be offering either/or, and the threat is the $14 million. Is that really enough to overthrow the Nicaraguan Government?

The President. It isn't a case of overthrowing, it is a case of returning to the goals of the revolution that both the contras and the Sandinistas fought for. And as far as our making war or anything, that has never been our intention. And we've repeated that over and over again.

Q. Mr. President, if there is a cease-fire and there are talks but they don't produce anything, what does the $14 million go for, then? Is that to purchase weapons for the contras?

The President. I said after 60 days, if no agreement can be reached and unless both sides ask us to continue the same process, then, I would think that we could use that $14 million to help the contras in any way.

Q. Mr. President -- --

Q. Mr. President -- --

Q. [Inaudible] -- was operated on today for the fifth time -- --

The President. What's that?

Q. President Neves of Brazil was operated on today for the fifth time. And the reports of his health are not very hopeful. Do you have any comment on that?

The President. I'm having a little trouble because I ran out of a battery. [Laughter]

Q. The President of Brazil is -- --

The President. Oh, the President of Brazil.

Q. He's been operated on for the fifth time.

The President. Oh, oh, I'm sorry I -- --

Q. Do you have any comment about that?

The President. -- -- I certainly don't want to -- yes, I do. I think that this was a great forward step for Brazil. And all we can do is hope and pray for his well-being.

Q. Mr. President, in what way will consist the help that you're going to give to the Colombian Government to proceed the fight against the narco traffic?

The President. Oh, we're in great agreement. And we're greatly admiring of what has been accomplished there and what the President has done. And in our talks today we made agreement. In fact, there will be a statement released on the subject of narcotics alone that we discussed today.

Q. Mr. President -- --

Q. You have been agreed with him about that narco traffic? Are you going to take some new action with the Contadora group?

The President. We agree with him, and he agrees with us. Well, we both are together on the fact that not only must we continue the program that he has started with regard to intercepting and preventing the shipment of drugs but also here where the largest market is, that we continue our efforts to take the customers away from the drugs, which must complement the efforts to take the drugs away from the customers.

Q. Mr. President, in your peace offer, is it conditioned on withdrawal of Soviet-Cuban-PLO advisers from Nicaragua or only talks and the end of repression?

The President. No. We think that this is part of the agreement that must be reached. We said these are the points that were made also by the contras, that they must stop being a threat to their neighbors, get the foreign forces out, and return to the democratic goals which they, themselves, told the Organization of American States was what they were fighting the revolution for.

Q. Mr. President, are the contras aware of this proposal of yours? Have you gone over this with them or with their leaders before -- --

The President. We are just in the process of notifying people of this. You're among the first to hear.

Q. Mr. President, the Sandinistas have already turned down the San Jose offer from the contras. What makes you think that they would accept this?

The President. Because I think there are other things that are involved here. I don't think that they want to be alone completely in the Americas with all of their neighbors on the other side. And we believe that we'll have the support of the Contadoras on this. And we think, as I say, they are having great problems as these hostilities go on.

Now, no, you.

Q. Mr. President, even though -- --

Principal Deputy Press Secretary Speakes. Let's let this be the last question, please.

Q. -- -- you will stipulate that the $14 million will not go for weapons and ammunition, but will go for humanitarian aid -- --

The President. That's right.

Q. -- -- will not that money then free the contras to use the money that they have been using for food to buy weapons? And then isn't the bottom line still the same?

The President. Well, I have a feeling that they are not well-fixed enough to provide any of these things for themselves. And this, again, is one of the things that we have offered, that this will be used for that purpose for as long as they're negotiating to try and have a peaceful settlement.

Q. But they are now somehow managing to survive; I mean, they're getting food and that sort of thing. So, If you give the money for food, can they not then use the money they're now using for food and buy weapons?

The President. Well, let me say I think that they are close to desperate straits. But I'm going to leave here now because I'm going to be seeing you later in the day -- --

Q. Got a budget?

Q. Have you got a budget agreement?

The President. Wait a minute. And is Bud here? I'm going to -- --

Mr. Speakes. Bud's here and ready.

The President. There's -- --

Q. No, not Bud, budget.

Q. You got a budget agreement? Budget agreement.

Q. Budget.

Q. One more question, if you get this would you agree to bring home all of our troops from all of the countries in Central America?

The President. Well, the only troops that we have down there now are troops that are on various maneuvers and training exercises.

Q. That's right. That's right. But they are in danger, especially some that have just gone down there to Honduras -- --

The President. No.

Q. -- -- with their flack jackets and ammunition. And they know they're in danger.

The President. No, they're -- --

Q. There are men and women down there, sir, who are in danger. Will you promise to bring them all home?

The President. If you'll look back through history, you'll find out that we traditionally have used among our neighbors for jungle training exercises of this kind. And they're not -- as some loud voices up on the Hill have said -- they're not down there as a threat to anyone. They're down there as we're training new enlistees in our Army, to have a well-trained military that can fight any place that might be required. And this has been done in Honduras repeatedly before. And that's all it is. So, we don't have any occupying forces down there. We've got 55 advisers -- I think the number still remains -- in El Salvador.

Q. When they left the other day to go down there -- another contingent of them, especially from Texas -- they said on the way they knew there was recent events that made it much more dangerous, and their lives were at stake. And they took their ammunition and their -- other preparations.

The President. Well, that sounds like the kind of scuttlebutt you hear when enlisted men start talking among themselves.

Q. Well, these were officers -- --

The President. Officers do it.

Q. Have you got a -- --

Q. How about the budget, sir?

Q. Got a budget agreement?

The President. What?

Q. What about the budget?

Q. You've given -- --

The President. Later on today someone will be talking to you about that.

Q. You've given on defense, haven't you, sir?

The President. What?

Q. You've given a little bit on defense.

The President. You'll hear all about it later this afternoon.

Q. You're going to cut the Social Security COLA's down a little bit, too, aren't you, sir?

The President. But right now -- Bud, will you get up there -- [laughter] -- and put them back in line? You were a marine once.

Q. You're going to cut the Social Security COLA's a little bit, aren't you, sir?

The President. You'll hear everything at 4 o'clock.

Q. Do you think the Sandinistas will cry ``Uncle''?

Note: The President spoke to reporters at 3:07 p.m. in the Briefing Room at the White House. Following the President's remarks, Assistant to the President for National Security Affairs Robert C. McFarlane continued to answer reporters' questions.