Clinton suffers setbacks on aid plans for Russia

June 24, 1993|By Doyle McManus | Doyle McManus,Los Angeles Times

WASHINGTON -- President Clinton's proudest foreign policy achievement, his program for large-scale multinational aid for Russia, has suffered a pair of embarrassing and unexpected setbacks, leaving U.S. officials scrambling to recover.

An ambitious Clinton plan to raise $4 billion to reform Russia's giant state-owned enterprises and turn into private companies abruptly shrunk to an initial $500 million after Japan and other allies balked at the president's price tag, U.S. officials said yesterday. Japan's foreign minister, in a statement that stunned American officials, publicly dismissed Mr. Clinton's proposal as "preposterous."

At the same time, Russia bit the American hand that wants to feed it, rejecting U.S. pleas to cancel sales of Soviet missile technology to Libya and India. The dispute produced an unusual volley of public rebukes between Washington and Moscow, and administration officials said it would delay plans for U.S.-Russian cooperation in space technology.

"We don't want to talk about this very much," said a senior U.S. official.

As recently as last Friday, senior officials told reporters that they had a good chance of getting the pledges they sought for the privatization fund. But at a meeting in New York over the weekend, finance officials from several of the countries that the administration was soliciting dug in their heels and said the figure was too big, officials said.

Instead, the world's industrial powers will pledge an initial $500 million for a scaled-down privatization effort, and will later seek another $1 billion or more from the World Bank and other international financial institutions, they said.

The rebuff to the United States first came to light in Japan, whose government had never been enthusiastic. In a speech, Foreign Minister Kabun Muto said Tuesday that the original Clinton proposal had been "a preposterous suggestion," and said the United States had finally accepted Japan's advice, according to the Kyodo news service.

A State Department spokesman, Michael McCurry, called Mr. Muto's statement "mystifying" and said the United States was seeking a formal explanation.

Administration officials tried to put the best face on the situation yesterday, saying that the setback was only temporary.

"We'll have a Phase One, at least, of the privatization program, which will be a very substantial start," Secretary of State Warren M. Christopher told reporters.

"There was some resistance to the entire concept," another State Department official said. "At least now these guys have bought into it at some level."

The United States and Russia were also locked in a series of disputes over Moscow's drive to sell missile technology -- one of the former Soviet Union's few high-technology exports -- and the administration's desire to block the spread of hardware that could be used for weapons of mass destruction.

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