RECENT DEVELOPMENTS in Latin America have not been ideal for the Reagan Administration. All of Washington's efforts against Nicaragua--from verbal reprimands to rumored invasions--have resulted in continued embarrassment for the State Department. And then Argentina--the nation the Administration has grown closest to in Latin America--launched an unprovoked invasion of Britain's Falkland Islands. Events, hope may have led us to believe, would succeed where liberal intellectuals, Democratic politicians and the the New York Times had failed. But Reagan and Company have managed to ignore reality as completely as they ignore criticism. In spite of everything, he Administration obviously still sees Latin America as nothing more than an ideological battleground between the Soviet Union and the United States.

The first glimmer of hope came two weeks ago, when the State Department proposed a plan designed to serve as a basis of discussion between the U.S. and Nicaragua. It was a welcome departure from previous policy towards the Central American country. Since the Marxist-oriented Sandinist government replaced Anastasio Somoza's strong-arm dictatorship, Reagan has viewed Nicaragua as the exemplary victim of a new domino theory. Because the Sandinistas proposed Marxist reforms, the Administration reasoned, they were automatically part of the mysterious and sinister Soviet-Cuban network of international terrorism and revolution. The moment a Marxist government gained control of Nicaragua, the analysis continued, the Soviets had successfully stirred up a new whirlpool of undemocratic instability, slowly but steadily pulling neighboring countries into an ever-growing chasm. Once Reagan saw Nicaragua as a member of the global communist monolith. U.S. policy became little more than our attempt to prevent Fidel Castro and Leonid Brezhnev from getting the maniacal last laugh.

The Administration has repeatedly accused the Sandinistas of transporting and supplying arms to leftist rebels in El Salvador, though the evidence is scanty at best and manufactured at worst. Last month the State Department introduced to the world a young Nicaraguan--whom they claimed they had found fighting with the Salvadoran rebels--as proof of the Communist network. The hardened revolutionary turned out to be a student returning home to Nicaragua from Mexico City. The paranoia about Nicaragua, which keeps telling Washington it is a "poor country that does not represent a threat to the United States," would be comical if grown men in the Administration did not take matters so gravely.

But the State Department's eight-point proposal for discussion with Managua marked, it seemed a milestone, a signal that the U.S. realized what others had noticed long ago--that 15 months of diatribes and threats had, if anything, turned our fears about a Soviet-Nicaraguan alliance into a self-fulfilling prophecy. Cut off from all Western aid. Nicaragua had been forced to look East for badly needed international recognition and foreign exchange Under the new State Department plan, the U.S. agreed to end efforts to weaken the Sandinista government, promised to oppose any Bay-of-Pigs-like invasion of angry exiles, and opened up the prospect of renewed trade, investment, and cultural ties between the two nations

In return, Nicaragua agreed to limit military forces in the region, to let outside observers from the Organization of American States and the United Nations verify these limits, and most importantly, to end "support for insurgencies in neighboring countries." The Administration's call for such terms hinted it had finally learned that Latin American relations entail a great deal more than "us versus them" rhetoric, and that a Marxist government does not instantly cast a country as a bit player in the Soviet drama of world domination.

EVENTS IN ARGENTINA, too, seemed destined to shake the Administration from its simplistic vision of Latin America. The Argentine invasion of the Falkland Islands and the U.S. vote for a U.N. resolution condemning Argentina's actions indicated that Washington might revise its rose-colored view of Leopolde Galtieri's military dictatorship. Argentina is the exemplar of the Administration's "totalitarian" but not "authoritarian" nation. Though Galtieri's junta never won popular support through open elections, though the government is notorious for its brutal treatment of guiltless political prisoners, and despite the regime's denial of free speech, free press, and open assembly, Reagan has preserved close ties with Buenos Aires. In exchange for U.S. support, Argentina has declared its open hostility to the Marxist forces on the continent, posing as an integral part of the U.S.-led "strategic frontier" against Moscow in the Western Hemisphere.

But how does this comfortable status shape Argentina's own foreign policy? The Falkland invasion offers some partial answers. Apparently, along with the shadowy forces of the communist monolith, the British presence in the South Atlantic--a menacing 1800 inhabitants of a string of islands not worth the attention of even most trivia buffs--presents a dangerous threat to Argentina' influence in the Southern Hemisphere, a perfect opportunity for muscle flexing. Pretending to be victims of imperialism, the Argentine government ordered a reckless violation of international law, insulting Britain and all her allies. Argentine Foreign Minister Nicanor Costa Mendez managed somehow to keep a straight face when he carefully explained that his country's claims to the islands are rooted in 150-year-old territorial rights. The military junta professes to believe that Argentina's demand for be islands and the army's right to take them by force are legitimate. To top it off, the Argentine disgust for all things communist quietly disappeared as the prospect of war with Britain grew. Mendez admitted last week that his nation "might be forced" to turn to the Soviet Union for arms to battle Britain's navy.

THE FALKLAND CRISIS should have added to the momentum initiated by the Nicaraguan proposal. The Administration should have seen that not only do Latin American leftists behave reasonably when given a chance, but that Latin American rightists can commit actions just as onerous as the Soviet invasion of Afghanistan. But instead, the Reagan administration bungled both the Argentine and Nicaraguan situations, returning to its naive East-West explanation of the world. Despite Nicaragua's acceptance of the U.S. proposal for talks, which probably surprised Washington, a government "source" in the Washington Post recently declared the government's conviction that the Sandinistas' desire for improved relations is insincere, and that pressure and fear--not negotiations--are the most effective methods for improving Washington-Managua relations. As the Post source put it, "Nicaraguan fears about U.S. efforts to encourage internal dissidence will soften the Sandinistas up and make them more inclined to negotiate sincerely on the terms we've proposed." Such bravado sounds hauntingly like the rhetoric used to justify the terrific bombing of North Vietnam over a decade ago. U.S. foot-dragging on talks with Nicaragua proves how little the present Administration has learned from the mistakes of past U S foreign policy.

Washington's position of neutrality in the Falklands issue reeks equally of error. The administration has become so accustomed to excusing the vicious Argentine injustices--so adept at defending Argentine's vicious "road to democracy"--that it finds itself unable to criticize the Falkland takeover. Britain may not be faultless in its reactions to the crisis. But if we had immediately condemned Argentina's actions, and vowed to support Britain at all costs, the military junta might now display a great deal more willingness to return the islands to their previous status and resolve the issues of sovereignty and administration of the Falklands by negotiation, not war fleets. Our neutrality has conferred an aura of legitimacy to Argentina's claim to the islands, and has bolstered its appetite for defending them by force.

The myopia rampant in recent Latin American policy indicates the emptiness of the Reagan Administration's entire anti-Soviet approach. Like Reagan, past presidents have invoked the name of democracy in pursuing their foreign policies across the globe. But with Wilson, Roosevelt, and Kennedy, something was different. We could honestly say that the nations the U.S. supported were more just and free than those it opposed. Now, we call the brutal dictators in Argentina our friends, and slap in the face a Nicaraguan government seeking to end U.S. hostility and ease the violent tensions in all of Central America Reagan and his policy-makers are so determined to preserve democratic ideals from the Soviet peril that they have forgotten what those ideals are. If the U.S. wants to give the world a choice between democracy and communism, our blurring of the distinction in Latin America does nothing to make that choice any easier.