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Clinton Links Economic Aid to Russia with U.S. Prosperity

By David Lauter
and Doyle McManus

Los Angeles Times


Calling for a "strategic alliance with Russian reform," President Clinton Thursday urged Americans to support additional economic aid to the countries of the former Soviet Union, warning that "our ability to put people first at home requires that we put Russia and its neighbors first on our agenda abroad."

Aid to the Russians "is not an act of charity," Clinton said, "it is an investment in our own future."

Clinton aides designed the speech, given to the annual meeting of the American Society of Newspaper Editors, as the launch of the president's campaign to sell U.S. citizens the politically difficult idea of expanding foreign aid programs to the Russians and their neighbors.

That campaign will be somewhat eased, at least in the short term, because Clinton plans to fund the first phase of his Russia aid plan by using roughly $400 million the Bush administration obtained but never spent, a point confirmed Thursday by Secretary of State Warren Christopher.

"Only a relatively small fraction of the money that's been appropriated has yet been spent," Christopher told a House Appropriations panel. "We are determined that that situation be brought to an end."

At this weekend's summit meeting, "you will find the concentration on making the best use of existing funds rather than seeking vast amounts of new funds," Christopher said.

U.S. officials say the aid package Clinton plans to offer Russian President Boris Yeltsin at their summit meeting in Vancouver, British Columbia, this weekend includes as main elements:

--A new program to provide housing for Russian Army officers withdrawn from the Baltic states and Belarus, based partly on proposals by Sens. Sam Nunn, D-Ga., and Richard G. Lugar, R-Ind. Lugar has proposed providing pre-fabricated housing for officers, and likened the effort to the reconstruction of Florida after Hurricane Andrew last year.

--An "enterprise fund" of $300 million over the next three years to provide "seed loans" to small businesses and working capital to private banks in the former Soviet Union. The Bush administration established such funds in Poland and Hungary, and had already begun work on a $65 million fund for the former Soviet republics.

--Several small programs aimed at reviving the Russian oil and gas industry, including teams of U.S. technicians to advise the Russians on better extraction techniques, an energy conservation advisory program, and loans to finance U.S. oil field equipment.

"Just the leakage from Russia's natural gas pipelines could supply the entire state of Connecticut," Clinton said in his speech. Helping fix the energy industry would provide Russia a stable source of hard currency and moderate world energy prices, Clinton said.

--New agricultural credits coupled with a plan for rescheduling Russia's outstanding debt to U.S. grain exporters, which amounts to hundreds of millions of dollars.

--More humanitarian aid, including infant formula, pharmaceuticals and medical equipment.

--Expanded "people to people" exchange programs designed to bring Russian students to the United States and send Americans with needed skills, retired executives, for example, to Russia.

In return, Clinton plans to press Yeltsin to control the Russian central bank, which has been printing rubles with abandon, fueling inflation that now runs at nearly 1 percent a day. "That clearly has to be brought under control. The central bank is a principal problem," Christopher said.

Clinton has notified congressional leaders of his intent to seek at least $700 million in aid for Russia in fiscal 1994, and officials have said the figure may be closer to $1 billion. But the president will limit his discussions with Yeltsin on direct U.S aid to uses for the $400 million in unspent funds, officials said.

While those programs initially can be financed from existing funds, Clinton eventually will have to ask Congress for new money, and aides say he plans to make a concerted effort to convince Americans that at least in this case, foreign aid is a worthy investment.

The biggest potential economic aid boost for Russia would come from a multilateral package organized by the Group of 7 industrialized nations -- the United States, Japan, Germany, Great Britian, France, Canada, Italy.

Officials of the G7 nations are to meet in Tokyo later this month to discuss a massive package of loans credits and backup funds to help Yeltsin stabilize the economy as a whole. That assistance would dwarf the unilateral U.S. assistance and could approach the $24 billion proposed by former President Bush a year ago but never authorized.

Clinton also sought to use the speech to reassure Russians, many of whom have grown resentful of the idea that their nation has slipped from superpower to world supplicant. At several points in his speech, Clinton praised the Russian people for "courage" and described their country as an inherently rich land only temporarily in difficulties.

The Russians, Clinton said, "are good people sitting on a rich land. They have been victimized by a system which has failed them."

Clinton also admonished Americans that they have a large stake in the success of Russian reform, warning that "if Russia were to revert to imperialism or plunge into chaos, we would need to reassess all our plans for defense savings" -- potentially costing billions of dollars in new spending.