Bush Demands U.S. Aid for Nicaragua : Wants to Give $300 Million to ‘Absolutely Bankrupt’ Government

President Bush said today that the Nicaraguan government is “absolutely bankrupt” and demanded that Congress act quickly on pending legislation providing $300 million in aid to the government of newly elected President Violeta Barrios de Chamorro.

“We must not let the procedural gridlock in Congress destroy the hopes of freedom,” the President said at a news conference in the White House briefing room.

Calling the situation in Nicaragua “a matter of dire urgency,” the President chided Congress for its failure to act more promptly on aid to the Central American country.

“The American people are frustrated by the inability of Congress to do business in a prompt and orderly fashion,” Bush said.

The President said he had urged Congress repeatedly since January to provide aid for Nicaragua and Panama and had asked that the legislation not be loaded down with “extraneous” provisions.

But, he said, the bill has since tripled in size and now contains, among other provisions, one that would permit federal funding of abortions in the District of Columbia.

Bush said he would refuse to sign the bill with “that mischievous language.”

“The situation in Nicaragua is critical,” Bush said. “Mrs. Chamorro’s government is absolutely bankrupt.”

Chamorro had asked the Administration for a $40-million bridge loan to enable her to get through the immediate financial crisis.

“I can’t provide that,” Bush said of the loan, “because the Nicaraguans have no assured means of repayment.”

Administration officials said that without assurances of repayment, it would be illegal for the United States to provide such a loan.

In an urgent cable to Bush, Chamorro said her country is bankrupt and its reserves “are insufficient to fulfill our obligations coming due in the next 30 days.”

Bush’s decision came as a pro-Sandinista strike by supporters of the left-wing government that preceded Chamorro’s three-week old government paralyzed the country.

Striking public employees spent their second day occupying government buildings, but the capital was quiet this morning. Talks between the government and the strikers broke off around midnight, a Sandinista newspaper reported.

Nicaraguan and U.S. government officials accused the once-ruling Sandinista National Liberation Front of trying to undermine the conservative administration, a charge no Sandinista official has denied publicly so far.

Officially, the strikers want a 200% pay increase, a subsidized food package, rehiring of a labor leader fired Monday and the demobilization of the Contra rebels.

Bush has placed high priority on providing assistance to both Panama and Nicaragua, contending that the democratic processes in both countries could be set back without U.S. help.

Of particular concern is Nicaragua, for which the Administration is asking $300 million. Of that total, $30 million would be earmarked for humanitarian aid and resettlement of thousands of Nicaraguan Contras who are based in five “security zones,” which are off limits to Sandinista forces.

Organization of American States officials, who are distributing food to the Contras, say there is only about three days’ supply left. The Administration is worried that the Contras, once the food runs out, will leave the security zones and perhaps come in contact with Sandinista soldiers.

This, in turn, could lead to a resumption of hostilities between the Contras and the Sandinistas.