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Administration Reworks Russia Aid to Promote U.S. Business : Commerce: Executives had asked for more support. Exports will be subsidized and investment assisted.

June 03, 1993|DOYLE McMANUS | TIMES STAFF WRITER

WASHINGTON — The Clinton Administration, reacting to pleas from Congress and private industry, has redesigned part of its Russian aid program to direct more money toward promoting American business in the former Soviet Union, officials said Wednesday.

The Administration's proposed new aid fund of $1.8 billion will include as much as $700 million for subsidizing U.S. exports, promoting U.S. investments and introducing U.S. products into Russia, they said.

"We want to underscore our interest in promoting American exports and American investment in Russia . . ," said one official involved in designing the plan. "That's important to us in building support for it in the country."

Business groups had urged that the aid program include more support for American exports and investments, and several delegations of business leaders met with Vice President Al Gore last month to press their case, officials said.

Eugene K. Lawson, president of the U.S.-Russia Business Council, which includes most major firms doing business in Russia, said he is "delighted" with the outcome. "If we're going to rely on private trade and investment to help the Russians transform their economy, there's going to have to be some government help, because there's no commercial funding available for doing business in Russia," he said.

Hard-line Communists in Moscow have charged that Western aid is aimed more at extracting profits than helping Russia rebuild; Russian Parliament Speaker Ruslan I. Khasbulatov last week accused "powerful international financial-industrial groups" of seeking to "colonize" the country.

But U.S. officials dismissed that charge. "The problem isn't too much Western investment in Russia, it's too little," said one.

The $1.8-billion fund is only one part of the Administration's overall Russian aid effort, which will total at least $4.5 billion in direct funding over the next two years plus billions more through the International Monetary Fund and World Bank.

But the U.S. fund was the focus of considerable interest--and a lengthy design effort by policy-makers--because it gave officials a chance to propose new programs.

"This package is the first that is entirely a Clinton Administration effort," one official said. "The earlier packages were based on programs that had been started in the Bush Administration."

Under an agreement struck with House leaders last week, the money for the fund will be drawn from other foreign aid and Defense Department accounts, and thus will not affect the federal budget.

Major parts of the program, outlined in detail for the first time on Wednesday, include:

* A $500-million fund to help turn Russia's huge state-owned enterprises into private firms, including loans to help newly private companies restructure and grants to local governments to launch employee retraining programs. The fund is intended as part of a multinational effort that would ultimately total $4 billion.

* As much as $250 million in subsidies for U.S. exports and investments, provided in the form of credit through the Export-Import Bank and guarantees through the Overseas Private Investment Corp. "This should stimulate more than $1 billion in additional exports," an official said.

* About $125 million in credits to promote sales of U.S. environmental technology, including equipment for Russia's giant oil and gas industries.

* About $150 million for other programs to help Russia's fledgling private sector, including a new "enterprise fund" of about $50 million to help launch private firms in Russia's Far East.

* About $150 million to build 5,000 housing units for Russian army officers as their forces are withdrawn from the three Baltic republics--an expansion of a pilot program of only $6 million.

* An expanded program of up to $200 million to bring 30,000 Russians to the United States over the next two years, from high school students to business people.

* About $100 million for programs to make Russia's nuclear energy plants safer.

* At least $50 million in medical and pharmaceutical supplies for Russia's ramshackle hospitals and health clinics.

* About $300 million in similar aid to other ex-Soviet republics.

Several of the programs, officials said, respond to personal requests Russian President Boris N. Yeltsin has made to President Clinton to stress his own priorities: private ownership, exchange programs and housing for army officers.

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