Freedom Support Act Expected to Boost US, Former Soviet Economies

PRESIDENT Bush is approaching another foreign-policy triumph, and this one may well advance the domestic economic agenda he has long been criticized for ignoring.

Final congressional approval of his so-called Freedom Support Act (aid to former Soviet republics) is expected soon, providing new opportunities for the United States economy. Agricultural commodity and trade credits will provide American farmers and manufacturers more outlets for their goods; US technical-assistance funds will help pave the way for US corporations to explore vast new markets.

The White House package includes a $12 billion increase in funding for the International Monetary Fund (IMF) and roughly $1.2 billion in direct aid.

US Ambassador to Russia Robert Strauss was among the stream of high-ranking US officials and big-business leaders who lobbied on Capitol Hill for the Freedom Support Act.

The businessman/diplomat pushed hard for the package, stressing the importance of securing a foothold in the huge consumer market of the former Soviet Union, lest US firms lose out to competitors.

"Many of our competitors, especially from Europe, are already ahead of us in developing economic relations, and may be able to do more in terms of general economic aid," says Harry Hammerly, executive vice president of the 3M Company and chairman of the National Association of Manufacturers' international investment and finance committee.

Politicians have been leery about voter backlash this election year because of strong "America first" and anti-foreign aid sentiment among the electorate.

US lawmakers have been reluctant to extend help to the former foe before enacting legislation to address urban ills and help put America's jobless back to work.

While the Senate version passed in early July, House Democrats held up consideration of the Bush bill until the White House gave way on domestic spending programs.

Last week the Bush administration agreed to fast-forward $370 million in US public works programs and to provide credits to communities.

Richard Darman, Bush's budget director, pledged to speed up US transportation outlays and to work toward an expansion of federal loan guarantees for housing, roads, and other infrastructure.

Bush will probably sign the bill later this month, after the House and Senate legislators work out details and jointly sign off on the bill.

US Rep. Lee Hamilton (D) of Indiana, chairman of the Foreign Affairs Subcommittee on Europe and the Middle East, says helping fund the ex-Soviet republics' transformation to a democratic and free-market society is a crucial step toward removing both a security threat and enormous costs of arming against it.

The bill is not without its detractors. Aside from those who resent foreign aid and clamor for more resources to be spent on US problems, others' concerns range from the former Soviets' questionable creditworthiness to the remaining Soviet troops in the Baltic states.

Conservative security analyst Roger Robinson warns that developments in Russia are working against US priorities: "There are abundant signs that the Yeltsin government is - willingly or unwillingly - adopting positions, appointing personnel, and making changes in the direction of economic and political programs that will prove quite inconsistent with the interests of democracy and free-market reform in Russia and with vital US interests."

As Russia's economy worsens, hard-liners lash out at reformers and Western donors who place exacting conditions on financial help.

The Russian deficit swells with the government's continued bailout of failing industries. Yeltsin's ranking ministers insist on postponing, if not canceling reforms. But Acting Prime Minister Yegor Gaidar, architect of Russia's free-market reforms, insists that his work is still on track "despite the immense resistance, the difficulties, and pressure."

According to the Moscow State University Public Opinion Service, 61 percent of 563 economists, analysts, and financial officers polled say they think that the economic situation in Russia is worsening; 15 percent believe it will improve, and 11 percent expect it to stabilize.

Meanwhile, the International Monetary Fund (IMF) and the World Bank recently approved credits for Russia. The IMF freed $1.04 billion, the first portion of $4 billion Russia is scheduled to draw on from the fund. The World Bank released $600 million to Russia.

Both institutions extended loans for the purchase of necessary imports.

IMF managing director Michel Camdessus says more money will only be forthcoming if the Russians honor their pledge to slash government spending, control the printing presses turning out rubles, and end reckless financing of failing enterprises.

US and international assistance is marginal compared to the republics' vast capital needs.

But it helps to blunt the impact of tough reforms and signals Western support for the reformers as they face increasing pressure - from the hard-line right wing to the skeptical man on the street.

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