Bush Vows to Seek Agreement on Mexico Debt

President Bush, responding to an appeal from Mexican President Carlos Salinas de Gortari on the eve of the annual seven-nation economic summit, promised Friday to try to break the impasse between Mexico and its creditor banks over a new debt-financing package.

The pledge came after Salinas complained in a private meeting with Bush that the banks were proving intractable on several key issues. Senior officials of Mexico and the commercial banks have been negotiating in New York for several weeks on the terms for reducing Mexico’s $56-billion debt to commercial banks and extending new loans, and both sides have said for almost two weeks that they are on the verge of an agreement in principle.

At the same time, the United States appeared to be successful in squelching a proposal by French President Francois Mitterrand to call a conference of leaders of rich and poor countries to discuss ways to provide more relief on the foreign debt issue.

Mitterrand, eager to portray France as the Third World’s champion on economic matters, had proposed a full-scale “north-south” conference to deal with the Third World debt question. But the plan is being opposed by leaders of the six other major industrial democracies attending the economic summit--the United States, West Germany, Japan, Britain, Italy and Canada.

The flurry of activity on the Third World debt issue came as top officials of the seven nations gathered for the opening session preceding their two-day meeting, a largely ceremonial affair that was followed by a private dinner attended by the seven heads of government.

The summit, which will last until late Sunday, is expected to deal primarily with environmental and political issues. Salinas is here for a separate session to which Mitterrand invited Third World leaders in celebration of the 200th anniversary of the French Revolution.

There was no immediate indication of the precise issues over which Salinas felt the banks were dragging their feet. However, U.S. officials said that the differences were significant and could take several more days to resolve.

Brady Prodding Both Sides

Aides said that Treasury Secretary Nicholas F. Brady, who is also here for the summit, spent much of the afternoon in telephone conversations with officials of the banks involved in an effort to clarify the situation. Brady has been prodding both sides on the issue for the past 2 1/2 weeks.

In New York, a spokesman for the Bank Advisory Committee, a 15-member panel that represents the international group of commercial banks in the talks with Mexico, declined to comment on Salinas’ complaints. The spokesman said only that negotiations were continuing late into the evening and that an agreement could come as early as today or Sunday.

On Thursday, the United States said that it is prepared to let Mexico have a temporary “bridge” loan of $1 billion to $2 billion as soon as the New York talks are successfully concluded.

The Bush Administration had hoped to have an agreement in hand by the beginning of the economic summit to help deflect criticism of the Third World debt strategy that Brady unveiled last March 10.

Brady asserted again Friday that the Administration “hasn’t set any deadline” for completion of the Mexican accord with the banks and would rather have the talks continue a few days beyond the summit if that would solidify the pact.

Agreement on Communique

Nevertheless, officials said that the United States won agreement in preliminary meetings of finance ministers Friday that if the Mexicans and the banks do not reach an accord by Sunday, the communique to be issued at the end of the summit may well publicly exhort both sides to press harder to come to terms on an accord.

Some senior U.S. officials fear that continuation of the impasse between Mexico and the banks may delay further progress in putting the Brady plan into effect. Mexico, the first country whose debt is being refinanced under Brady plan rules, was to have been the initial test case for the new strategy.

The Brady plan marked a major departure from previous U.S. debt strategy by seeking both to reduce the debtor countries’ outstanding debt and to provide additional money to pay for economic reforms and growth. It asks debtor countries to offer to provide their creditor banks with new government securities, guaranteed by the International Monetary Fund and the World Bank, in exchange for partial forgiveness of their debt.

Early drafts of the end-of-summit communique being circulated among top officials indicate that the summit’s agenda is relatively modest.

Although current drafts exhort the summit nations to cooperate to clean the environment, there are no sweeping new proposals in sight. And the communique’s language about the dollar, the Third World debt situation and global trade liberalization talks is expected to essentially endorse existing policies.

U.S., Japanese Acceptance

In Friday’s preliminary action, the United States and Japan announced formal acceptance by both sides of broad talks that Washington proposed in May aimed at dealing with structural economic problems in both countries that inhibit trade. The issues include the low savings rate in the United States, which impedes investment by U.S. companies in the plant and equipment they need to produce goods for export, and Japan’s archaic product-distribution system, which discriminates against sales of foreign-made goods.

Japan agreed in principle in early June to go ahead with the talks, but only Friday did it make a formal commitment to take part in them. The talks are being conducted separately from the so-called “unfair trade practices” complaints against Japan that the United States launched in May.

BUSH’S SCHEDULE 9:50 a.m. today--Arrives at Arche de la Defense office complex for several meetings with leaders of major industrialized democracies.

5:25 p.m.--Arrives at U.S. ambassador’s residence. No events.

6:25 p.m.--Arrives at Louvre for reception for national leaders. Meeting with French President Francois Mitterrand. Also dinner hosted by Mitterrand.

8 p.m.--Dinner at Louvre.

10 p.m.--President returns to U.S. ambassador’s residence for the night.