Baker Would Transfer Aid to New Democracies : Foreign policy: Nicaragua, Panama and Eastern Europe could use funds, he tells Congress.

To find funds for the emerging democracies of Nicaragua, Panama and the former Communist countries of Eastern Europe, the Bush Administration would support cuts in foreign aid to other nations, Secretary of State James A. Baker III said Thursday.

Baker said he would prefer to “increase the pie” by boosting the overall $15-billion foreign aid program. But he acknowledged that he does not know how that could be done short of raising taxes--an action that the Administration has long rejected.

Members of the foreign aid subcommittee of the House Appropriations Committee generally agreed with Baker that it would be better to increase the total. But there was no consensus on how that could be accomplished.

Baker rejected a proposal by Senate Republican leader Bob Dole of Kansas for a 5% cut in aid to the five nations receiving the largest appropriations. Such a reduction would hit hardest at Israel and Egypt, which together account for a third of the total budget.

Israel receives combined military and economic aid of $3 billion annually, while Egypt receives slightly more than $2 billion.

“There is not a significant lessening of the threat to peace in the Middle East,” Baker said.

Baker said his first choice would be for Congress to stop allocating specific amounts of money to each country and, instead, allow the Administration to shift funds as priorities change.

But he conceded that it is unlikely that Congress will relinquish that much power. Therefore, he said, the only reasonable way to provide funds for the emerging democracies is to cut all countries, not just some of them.

Several subcommittee members urged the Administration to look for other sources of funds.

“Any increased foreign assistance--and there certainly needs to be some--will need to come from reductions in other portions of this bill or reductions in military spending,” said subcommittee Chairman David R. Obey (D-Wis.).

Obey complained that the Administration has proposed an increase of $317 million in military assistance to other nations, a figure he said is inconsistent with “dramatically reduced military threats.”

Rep. Silvio O. Conte of Massachusetts, the senior Republican on the parent House Appropriations Committee, attended the hearing even though he is not a member of the subcommittee.

“Everyone fights so hard to get more of the pie . . . that we forget about the size of the pie,” Conte said. “We need to work together right now to get high enough ceilings to do at least some of the things that have to be done in Eastern Europe and Central America. We will pay dearly for inaction.

“Where are we going to get those resources?” he asked. “Well, we can start by shooting down the B-2 boomerang boondoggle,” a reference to the Stealth bomber.

Baker said he was not at the hearing to discuss defense cuts. But, he acknowledged: “We must find a way to respond to changes in Eastern Europe, in Panama and in Nicaragua.

“If these leaders are not able to produce for their people, we will rue the day” that the United States fell short in providing aid, he said. “We are talking about supporting an extraordinary outbreak of freedom and democracy.”