Bush Lifts Nicaragua Sanctions : 'Peace Dividend' Seen as Source for $300-Million Aid

From Times Wire Services

President Bush lifted U.S. economic sanctions against Nicaragua today and asked Congress to adopt a $300-million emergency aid package aimed at supporting the newly elected pro-American government.

"Americans are determined to help the people of Nicaragua," Bush said in announcing that he had signed an executive order revoking sanctions imposed in 1985 to pressure the pro-Soviet Sandinista government. The Sandinistas were defeated in democratic elections last month.

Bush said he will ask Congress to approve by April 5 an $800-million "fund for democracy" consisting of the Nicaragua aid and $500 million in aid for Panama the Administration requested earlier.

He proposed that the aid for both countries be taken from defense programs. The Panama aid has been held up by a dispute between Congress and the Administration over which defense programs should be cut.

Bush said today that Defense Secretary Dick Cheney and Budget Director Richard G. Darman are ready to negotiate a mutually acceptable plan.

It was the President's first acknowledgement that the rapid changes in East-West relations have produced a so-called "peace dividend" in which money can be diverted away from military expenditures.

Bush said the removal of the economic embargo and the aid proposal are a "demonstration of our resolve to be part of the process of reconciliation" in Nicaragua.

He also said he will seek an additional $200 million in economic assistance for Nicaragua in fiscal year 1991, which begins Oct. 1. The $300 million would be for immediate use.

The White House said $21 million left over from programs to assist the Contras and monitor the Nicaraguan elections will be used for emergency aid to Nicaragua while the larger package goes through Congress.

Violeta Chamorro, who will be sworn in as president April 25, has requested $300 million in emergency U.S. aid to revive her country's battered economy.

The announcement follows a meeting in Chile between Vice President Dan Quayle and Nicaraguan leader Daniel Ortega, who promised there would be a smooth transfer of power.

Bush afterward briefed Republican congressional leaders on his aid package.

Defense Department spokesman Pete Williams said $81 million of the money for Nicaragua would come from deferral of construction at bases being considered for closing, $83 million from a freeze of civilian personnel of the department, $11 million from cancellation of repair work on the turret of the USS Iowa, $69 million from savings due to improvements in the engines of KC-135 airplanes, $30 million from delay in submitting an anti-submarine warfare package, $18 million from not going ahead immediately with a proposed mobile armored reconnaissance vehicle and $9 million from an abandoned plan for replacement of NATO frigates.

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