U.S. questioned on distribution, amount of gulf aid

September 27, 1990|By Stephen E. Nordlinger | Stephen E. Nordlinger,Washington Bureau of The Sun

WASHINGTON -- Treasury Secretary Nicholas F. Brady called yesterday for a "united economic front" internationally against Iraq as U.S. allies expressed concern about the scope of President Bush's economic aid package for dealing with the Persian Gulf crisis.

While the United States has won firm international support to enforce an economic embargo against Iraq, questions surfaced during the day from Japan, West Germany, Saudi Arabia and other countries about the amount of money to be disbursed, the method of allocating the funds and the list of recipients.

Saudi and Kuwaiti officials reportedly were adamant in opposing any use of their multibillion-dollar pledge to benefit Jordan, a country considered more severely hurt by the crisis than any other because of its past close trade relations with Iraq.

The Saudis, who have gained an enormous windfall from the skyrocketing oil prices, have become scathing in their criticism of Jordan for being sympathetic to Iraq.

The funding mechanism and the amount of aid are being worked out by more than 20 nations that are members of a Persian Gulf task force attempting to coordinate economic aid to the nations most severely hurt by the crisis. They include Jordan, Egypt and Turkey.

The coordinating group, announced Tuesday by President Bush, held its first session yesterday at the Treasury in the midst of the annual meeting of the International Monetary Fund and the World Bank.

Urging cooperation to speed aid to the countries in need, Mr. Brady said in an address to the finance leaders that their economic strength "must be mobilized to demonstrate collective resolve and make clear our intention not to yield to aggression."

He met later with finance ministers from Saudi Arabia and other oil-producing countries in the Persian Gulf in a further effort to raise funds for military and economic aid.

Administration officials estimated yesterday that $13 billion to $15 billion in economic aid would be needed to shore up the countries' economies so the economic embargo of Iraq would be maintained.

The United States already has secured pledges of $20 billion in aid, but as the need for economic help escalates, the amount available for military assistance will be squeezed, officials said, probably necessitating additional funds beyond the $20 billion already committed.

But representatives from the 12-nation European Community said yesterday they did not think that more than $9 billion in economic aid was needed, and a West German official said his government had specifically questioned the need for a $13 billion to $15 billion package.

The West German also said the list of contributing nations should be widened to include Switzerland, Sweden and others.

Officials from Japan, which has committed $4 billion in economic and military aid to the effort -- more than any nation outside the Persian Gulf -- indicated they were not entirely satisfied with the Bush plan for creating a task force to oversee the raising and distribution of funds, with the United States holding the top two spots. Mr. Brady was named chairman, and the State Department was to name his deputy.

"President Bush gave one idea," said Japanese Finance Minister Ryutaro Hashimoto. "Whether it will go ahead will depend on the response of the countries involved."

Japan and West Germany had wanted much of the aid channeled through the IMF and the World Bank so strict controls would be imposed on its use. But the administration favored creating a task force, to bypass the bureaucratic hurdles at the two lending agencies and get the funds provided more quickly.

Mr. Brady also proposed yesterday a vast expansion of the role of the IMF and the World Bank in coping with the needs of these nations.

Under his proposal, about 50 countries involved in loan programs with the IMF could reopen their financial packages to obtain more aid quickly, IMF officials said.

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