Congress Indicates Fast Approval of Panama Aid

Congress indicated Thursday that it will act promptly to approve the $1.1-billion package of aid to Panama that President Bush has proposed, providing what the President called “as close to instant relief as we can hope” for Panama’s battered economy.

In conversations with senior Bush Administration officials, Democratic and Republican leaders pledged to act as early as next week on preliminary legislation designed to permit restoration of trade benefits that were cut off in 1988 when Washington imposed sanctions on Panama.

They said they hope to have the bulk of the aid program approved within five or six weeks.

Reaction in Panama was mixed. Although newly installed Panamanian President Guillermo Endara said the package “does not reach the total amount we desire,” he termed the proposal “generous.” Panama had sought an estimated $1.5 billion in total U.S. aid.

The announcement of the plan by Bush was timed for the eve of a fence-mending visit to Latin America by Vice President Dan Quayle--a trip that had to be cut back because of resentment by some Latin leaders to the U.S. invasion of Panama last December.

Quayle now is slated to visit Panama, Honduras and Jamaica.

There was no immediate breakdown on precisely how the new U.S. aid package would be spent. As expected, the program was outlined in three parts:

$42 million in emergency humanitarian aid to help persons whose homes or businesses were destroyed or damaged during the invasion and the looting that followed.

$500 million in direct cash assistance, first to inject new cash into Panama’s once-flourishing banking system, which was strangled by the U.S. economic sanctions, and second, to finance major public works projects designed to create jobs, rebuild the infrastructure and jump-start the economy.

Just over $500 million worth of medium-term help designed to get Panama’s economy moving again. This ranges from credits for agricultural goods to loans and guarantees for trade and investment, and restoration of trade benefits.

The trade benefits include duty-free status for Panamanian exports, revival of Panama’s allocation under the U.S. sugar-import program and renewed participation in the Caribbean Basin Initiative, which grants tariff cuts for basic imports here.

In addition, the two countries will begin negotiations designed to quickly devise a bilateral investment treaty that could prompt increased investment in Panama by American-based firms.

About $125 million of direct cash assistance will go to help bring Panama up to date in its payments to the World Bank and the Inter-American Development Bank--a prerequisite to the country’s obtaining further loans from those institutions.

Washington also will try to get other industrialized countries to contribute to the effort, and may end up providing Panama with a temporary “bridge” loan to tide it over. Panama is $540 million in arrears on payments to the World Bank and the inter-American bank.

In a news conference Thursday during which he formally unveiled the aid package, Bush called for quick action by Congress.

He also confirmed that the $500 million in cash aid he proposed will not be included in the fiscal 1991 budget that he plans to present to Congress on Monday. Instead, the money will be requested in a “supplemental” budget proposal, he said, along with recommendations for making offsetting spending cuts elsewhere.