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Washington Insight

September 30, 1991|The Times Washington Bureau

ECONOMY BLUES: The Bush Administration is becoming increasingly concerned about the slow pace of the economic recovery.

Continuing weakness almost five months after President Bush declared the recession over prompts an agonizing reappraisal among the President and his top economic advisers. After months of insisting that the recovery was on track, White House lieutenants now fear that unless the economy begins to show some strength soon, Democrats will have a handle to use when the 1992 political campaign gets under way.

But the Administration is failing to come up with any new solutions. Senior Bush economic advisers are pushing Federal Reserve Board Chairman Alan Greenspan to ease pressures on bank lending, but are running into resistance because he does not want to encourage a revival of questionable lending practices. The economy still has not responded to the Fed's latest round of interest-rate cuts.

Many analysts believe the recovery's biggest problem is widespread lack of confidence in the Administration's economic and financial management. New polls show both voters and businessmen are increasingly disenchanted with Bush on the pocketbook issue--and fearful that the nation could plunge into a recession again. A recent Wall Street Journal/NBC News survey finds that 62% of voters are concerned about the soundness of the banking system. And 11% have withdrawn money because of worries about the safety of their deposits.

RED CZAR? The Administration is considering naming a new high-profile czar to head U.S. efforts to provide economic aid for the Soviet Union and its breakaway republics.

The idea was proposed by U.S. Ambassador Robert S. Strauss, who--not surprisingly, to some--would be a prime candidate for the job. Strauss believes the new post will be needed now that the Administration has shifted its stance on economic aid and is preparing to join Europeans in considering longer-term financial assistance if the Soviets lay the groundwork for economic reforms.

Insiders say Strauss, the former Democratic National Committee chairman, also is getting bored with the diplomatic functions of his present job--and depressed by the relatively Spartan living conditions in the ambassador's residence. Appointed just last summer, Strauss already has been back to the United States for "consultations" three times since taking office in August. As Strauss envisions it, Bush would appoint someone else to fill the ambassador's slot.

GREEN LIGHT? The Pentagon is moving to use the current tensions with Iraq--over United Nations' inspections of Iraqi nuclear facilities--to speed negotiations with Persian Gulf nations aimed at winning permanent bases for U.S. forces in the region.

Since the end of the Gulf War in March, U.S. officials have been pressing members of the six-nation Gulf Cooperation Council--Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman--to sign agreements allowing U.S. naval and air forces to store equipment on their soil, train with local troops and use their facilities for repair and maintenance. Until now, however, only Kuwait has initialed such a pact.

But Pentagon negotiators have stepped up their pressure in hopes that Iraqi President Saddam Hussein's recent muscle-flexing will persuade the Gulf allies to accept a permanent U.S. military presence in the area. The Gulf nations' intransigence on the issue so far has been a major source of frustration, American military leaders say.

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