Bush outlines plans to aid new republics U.S. would put up about $5 billion of West's package

April 02, 1992|By Karen Hosler and Mark Matthews | Karen Hosler and Mark Matthews,WASHINGTON BUREAUWashington Bureau

WASHINGTON -- President Bush, heeding warnings that he is flirting with catastrophe by delaying financial help for the former Soviet republics, pledged support yesterday for a new international aid package that would cost the United States about $5 billion.

Separately, he boosted loan guarantees to the newly independent states, extending $1.1 billion in credits that can be used immediately to buy more grain from U.S. farmers and also declared that he would go to battle for controversial legislation to give $12 billion more to the International Monetary Fund for its own aid program.

Most of the $5 billion plan is a repackaging of old proposals, but administration officials could not give an exact breakdown of the funding for various programs.

Secretary of State James A. Baker III said that it included about $3 billion in "new" money from U.S. taxpayers, although half of this already had been approved to support the value of the Russian ruble, a critical element to the success of free-market economies in the former Communist empire.

The $5 billion represents the United States' share of a $24 billion aid package produced by the Group of Seven (G-7), the major industrialized democracies -- Germany, Japan, France, Britain, Italy, Canada and the United States. Of this, about $18 billion will be in the form of loans and credits and $6 billion will be for ruble stabilization.

The G-7 plan was announced yesterday by German Chancellor Helmut Kohl, who repeatedly has pressed the Western allies, particularly the United States and Japan, to assume a greater role in shoring up the former Soviet states.

Much of the aid will be channeled through the IMF. The former republics, now members of the Commonwealth of Independent States, are expected to be offered membership in the IMF and World Bank this month, and the IMF is drafting conditions for Western aid.

To qualify for aid from the IMF and G-7, the former Soviet republics must tighten their belts and perform a major restructuring of their beleaguered economies.

The president said he had become convinced that it is vital to U.S. security for the changes in the former Soviet republics to succeed and that the time to help them is now.

"If this democratic revolution is defeated, it could plunge us into a world more dangerous in some respects than the dark years of the Cold War," Mr. Bush said at a press conference yesterday. "The stakes are as high for us now as any that we have faced in this century."

In an appeal to the Democratic leaders of Congress, with whom he has been embroiled in a nasty feud over domestic issues, Mr. Bush said he hoped the United States could complete action on its part of the aid program by the end of this month.

The Democrats were quick to note that they have been pressing Mr. Bush to take such action for months, but many promised their support to the concept, if not all the details.

"There is a feeling in the Congress that something should be done, that we may have an opportunity to contribute to world peace," said Sen. Paul S. Sarbanes, the Maryland Democrat who serves on the Foreign Relations Committee.

But there are bitter memories of what Democrats considered a double-cross on foreign aid under President Reagan. He enlisted the Democrats' support for a previous increase in the U.S. contribution to the IMF and then allowed the Republican party to use their support as a campaign issue against them.

But House Majority Leader Richard A. Gephardt, D-Mo., said he believed the political resistance to foreign aid could be overcome if Mr. Bush is willing to put the full weight of his administration behind it.

"We're prepared to keep a high profile on this," an administration official said.

The White House will work first in the Senate, where a number of influential members already have pushed for a big aid package, hoping momentum there will carry over to the House.

The timing of Mr. Bush's announcement raised eyebrows because it came more than two months after his last major foreign policy statements on the Soviet Union. It also took place just minutes before Democratic presidential nominee Bill Clinton gave a major foreign policy speech on the same topic.

Mr. Clinton said of Mr. Bush's proposal, "I hope his statement represents not only a declaration of intent, but a commitment to lead." If the president follows through, Mr. Clinton told his audience, he would provide his "full support in convincing the American people and the Congress that this is the necessary course for our country."

But Mr. Bush bristled at the suggestion that his plan was prompted by any political forces, including the ones unleashed by former President Nixon, who called earlier U.S. aid efforts "pathetic."

"This isn't any Johnny-come-lately thing," the president insisted. "And this isn't driven by election-year pressures. It's what's right for the United States."

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