12 August 1998
                  Nicaragua cancels border
             agreement with Costa Rica


                  MANAGUA (Reuters) -- Nicaragua has canceled a controversial
                  agreement allowing armed Costa Rica vessels to navigate the San Juan River
                  in Nicaraguan territory, less than two weeks after signing it to ease border
                  tensions, government officials said on Wednesday.

                  The July 30 agreement had unleashed criticism within Nicaragua, as the
                  press, lawmakers and even the Catholic Church complained it eroded
                  Nicaragua's sovereignty over its territory.

                  Vice President Enrique Bolanos and other top officials called a news
                  conference on Wednesday to announce the administration's change of heart.

                  "Maybe we made a mistake," Defense Minister Jaime Cuadra said.

                  Nicaragua's Foreign Ministry sent a letter to its Costa Rican counterpart late
                  on Tuesday nullifying the agreement.

                  "Based on our political constitution, we find the agreement lacks legal power
                  and cannot be enforced, obligating the government to consider it legally null
                  and void," said the letter to Costa Rican Foreign Minister Roberto Rojas.

                  Nicaraguan President Arnoldo Aleman, on a state trip to Argentina and
                  Uruguay, approved the letter, officials said.

                  Costa Rican officials acknowledged its receipt but had offered no further
                  response, Bolanos said.

                  Tensions flared last month over the Costa Rican National Guard's patrolling
                  of the river in armed vessels. A 1858 treaty gives Costa Rica the right to
                  navigate the river for commercial ends only and without arms.

                  The July 30 agreement, which Nicaraguan officials had called unofficial and
                  "experimental," gave Costa Rica the "privilege" of navigating in armed
                  vehicles if authorized by Nicaraguan officials. It was an effort to calm
                  escalating tensions, officials said.

                  Nicaraguan officials said they would continue to work toward a resolution of
                  border problems, prompted partly by the illegal flow of Nicaraguans into
                  Costa Rica for work.

                  Territorial skirmishes date from Costa Rica's annexation of the Guanacaste
                  peninsula 174 years ago.