Armed with ideas on debt and peace, Mubarak seeks US support. EGYPTIAN LEADER VISITS WASHINGTON
Cairo — Buoyed by warm receptions in West Germany and Britain, as well as a recent triumphal tour of Gulf Arab states, Egyptian leader Hosni Mubarak now prepares to meet with President Reagan tomorrow. As a diplomatic offering, President Mubarak brings with him proposals that are aimed first, at easing Palestinian unrest in the Israeli-occupied territories and, eventually, at setting up an international conference on Mideast peace.
In return for his demonstrated commitment to Arab-Israeli peace, as well as his recent support of Arab Gulf countries against Iranian threats, Mubarak is hoping for American support for Egypt's beleaguered economy.
In interviews with the foreign press on the eve of his departure, Mubarak called on the International Monetary Fund to be lenient in its request for economic reform in return for a $325 million stand-by credit to Egypt.
The idea, Egyptian officials and Western diplomats say, is to gain European and American help in persuading the fund to ease off.
In addition, Mubarak is expected to ask the Reagan administration to partially forgive a $4.5 billion debt on purchases of military hardware. Egypt has rejected suggestions that the debt be refinanced on easier terms.
Mubarak, who was to arrive in Washington last night, earlier told an interviewer the US had a ``political obligation'' to offer partial forgiveness. ``Otherwise,'' he said, ``it will weaken our economy and America needs a strong friend [in the region].''
``Mubarak is trying to use foreign policy to solve domestic problems,'' a well-informed European diplomat says.
In Washington, this diplomat says, ``[Mubarak will] say not only that he's a man of the region, the leader of the Arab moderates, but that he's a man of peace. So don't let these men of the IMF force us to raise prices.''
After having trouble meeting payments on its estimated $44-billion foreign debt, Egypt came to an agreement with the IMF last May that allowed it to reschedule payments. The required reforms included: increasing energy prices and interest rates, and moving toward one, unified exchange rate.
Soon after the agreement, the government quietly raised energy prices and interest rates. In other cases, prices were not raised outright. But some of the most heavily subsidized food products - such as the cheapest cooking oil and cheapest bread - became scarce on the markets, in effect raising the prices.
Since November, according to diplomatic sources, the IMF has been leaning on Egypt to step up the pace of reform, suspending two scheduled payments worth $60 million. But Egyptian officials fear that further or quicker price rises could provoke popular unrest, as they have in the past.
``I can't do more than I'm already doing,'' Mubarak told the Los Angeles Times in a recent interview. ``I know my people ... I'm not going to put more pressure on them than they can bear.''
According to one Western diplomat, recent public demonstrations which began as solidarity protests with Palestinians in the Israeli-occupied territories, ended up turning into protests against Mubarak's policy of raising prices.
According to analysts here, another factor that might bolster Mubarak's case with the US is evidence that Egypt is assuming some of the burden of protecting the fragile oil sheikhdoms in the Gulf from Iran's threat to expand the Iran-Iraq war.
In an interview with the Washington Post, Mubarak said that Egypt had agreed to help Kuwait with its air defenses against Iranian missile attacks. According to diplomatic sources here, Egyptian experts are already installing Egyptian-made radar-guided anti-aircraft batteries in Kuwait City and its harbor.
The move comes in the wake of last November's Arab summit in Amman, Jordan. The meeting led the way to nine Arab states restoring full ambassadorial ties with Cairo, ending the isolation it suffered since signing the Camp David peace treaty with Israel in 1979.