U.S. Charting New Guidelines for East Europe : Foreign policy: The Administration seeks criteria on promoting democracy and economic reform.

WASHINGTON--The Bush Administration, criticized for its tentative approach toward the changes sweeping the Communist world, is striving to develop a new policy framework for dealing with Eastern Europe that can be unveiled in the President’s State of the Union message on Jan. 31, according to senior officials.

The previous U.S. policy of “differentiation,” under which the six East European nations were punished or rewarded according to their relative foreign policy independence from Moscow, has been overtaken by the ongoing revolutions in those countries.

U.S. government agencies now are seeking to hammer out “a framework, four or six criteria,” to help judge future events in Eastern Europe and to guide American efforts to promote democracy and economic reform in the region, a senior U.S. official said.

The framework would influence the future of the region in several significant ways. The standards are likely to help shape the policies of allied nations toward Eastern Europe, as well as the actions of private firms considering investments in the area. They also will influence Eastern European nations seeking U.S. aid and “encourage the recalcitrants among them to push on with reforms,” the official said.

Officials said the framework would build on President Bush’s statement to the North Atlantic Treaty Organization in December, after his Malta summit with Soviet President Mikhail S. Gorbachev, that the task ahead was “to consolidate the fruits of this peaceful revolution and provide the architecture for continued peaceful change.

“Great choices are being made,” the President said then, “and greater opportunities beckon.”

In formulating a new approach, however, Washington is aware of dangers both large and small, officials said.

The United States probably cannot avoid responsibility for helping to reshape the political, economic and security future of Eastern Europe, as it tried to do between World War I and World War II, with disastrous results.

U.S. leaders also do not want to appear to be helping Moscow, in the name of stability, to dilute and divert the democratic revolts in Eastern Europe toward another type of communism, albeit a reformed one.

In broad terms, White House officials have said the United States wants stable, multi-party democracies, based on free elections, to emerge in East Europe. It wants the region to develop free-market economies. And it wants the nations to become integrated, politically and economically, into Western Europe and the rest of the world.

However, “the political opposition is weak, sometimes almost a vacuum, in those countries now,” another senior official said. “There’s no parliament to absorb the ethnic hostilities and other tensions.

“If elections are held too soon,” he said, “the discredited Communist parties are best organized to fight them. But if postponed, you run the risk of more demonstrations that could really turn nasty.”

And as a general principle, he noted, the United States does not want to be in the position of urging that elections be postponed.

“So we can state a principle like multi-party democracy, but I can’t see us trying to provide a formula for getting there,” the official said, “particularly one that could be applied to all of those countries.”

Similarly, rapid movement toward free-market economies easily could worsen rather than improve conditions in some nations. And mechanisms for integrating those nations into Western institutions are far from clear.

A major consideration affecting Administration policy deliberations, one official said, is the question: “Where is the money coming from?”

Budgetary constraints are a very serious problem, and most of the foreign aid funds appropriated by Congress are earmarked for specific countries, leaving the Administration little flexibility in their distribution.

For example, only $500,000 could be provided to Romania after its bloody revolution last month, plus another $20,000 in discretionary funds available to the American ambassador there.

Senate Minority Leader Bob Dole (R-Kan.) has proposed shifting to East Europe and Latin America about 5%, or $330 million, of the foreign aid funds now earmarked for Israel, Egypt and three other key recipients. The idea has drawn protests from Israel’s supporters but has been applauded by the State Department.

Of the six members of the Soviet Bloc, three are considered relatively healthy--East Germany, Czechoslovakia, and Hungary, with the Czechoslovaks perhaps best off. Poland, Romania and Bulgaria are “seriously troubled,” an official said, although Poland has shown recent signs of improvement.

Poland and Hungary now enjoy most-favored-nation trading status, which eliminates tariffs on most of their exports to the United States. The other countries are considered eligible for the same treatment, following their adoption of new human rights and immigration policies.

Czechoslovakia is expected to be granted most-favored-nation status soon, perhaps when Secretary of State James A. Baker III visits Prague in early February on his return from Moscow. “The others can’t be far behind,” said a senior U.S. economic official.

Poland and Hungary already have received more than $1 billion in U.S. and Western European aid, but the U.S. largesse “won’t be replicated for the other countries,” the official said. Poland enjoys an influential political constituency on Capitol Hill, he noted, adding: “Hungary was just lucky that it came along at the same time.”

As for the other nations, Romania is expected to get significant aid from France, in part because of a large Romanian community in that nation. East Germany has been promised considerable help from West Germany following new elections. Bulgaria, which has huge economic problems, is “an orphan,” another official remarked.

In formulating the new policy toward Eastern Europe, differences on security issues have surfaced between the White House and the State Department.

State Department officials tend to dismiss the Warsaw Pact as a hollow alliance, but one that should be preserved temporarily to manage arms reductions in the region.

Presidential aides, on the other hand, are concerned about the continuing Soviet military presence in East Europe.

But there is sentiment within the Administration for finessing the matter of European security for now.”I don’t think we should be sure of what we want there now,” said a senior official, in view of the many crosscurrents and uncertainties still affecting the area.