West Germany to Guarantee $3 Billion Credit for Soviets

From Times Wire Services

West Germany announced Friday that it will guarantee a bank credit of about $3 billion to the Soviet Union to help President Mikhail S. Gorbachev's economic reform program.

Government spokesman Hans Klein said the government decided to guarantee a credit of a consortium of German banks after Gorbachev met with Chancellor Helmut Kohl.

"The credit guaranteed by the federal government is designed to help the Soviet economic reform program steer through a difficult transitional period," Klein said.

Kohl decided to support the $2.9-billion credit after talks with Gorbachev about the Soviet program to introduce free-market economy measures, Klein said.

Klein said Kohl, in view of the tremendous task facing the Soviet Union in carrying out the economic reform program, believes Western countries should give aid to the Soviets and, if possible, devise a joint plan of assistance.

Kohl advocates that the West give a clear signal that it is ready for economic and financial cooperation at a meeting next week in Dublin of European Community leaders, and at a meeting in Houston next month of the seven leading industrial nations, Klein said.

To raise support, Kohl wrote Monday to the leaders of the 11 other European Community members and to the leaders of the seven top industrial nations, Klein said.

Washington has taken the position that large-scale economic assistance to the Soviet Union would only be money down the drain until Gorbachev's restructuring, or perestroika, gets the necessary economic reforms into place.

However, Kohl and French President Francois Mitterrand, after a meeting in Assmannshausen, West Germany, appealed jointly Friday for speedy organization of a large-scale Western aid program to help Gorbachev.

Both men stressed the need for a quick response to requests for aid, particularly as a means of speeding progress toward the goal of European economic and political union.

The German loan, with a grace period of six years, should give Moscow enough breathing space to move ahead with its reforms for the time being, Klein said.

In Frankfurt, Deutsche Bank and Dresdner Bank said they were acting as joint leaders of a consortium being formed for the loan.

The announcement was made as the foreign ministers of the two Germanys and the four World War II victors--the United States, Britain, France and the Soviet Union--held their second meeting on German unification in East Berlin.

The main issue blocking agreement has been the Soviet rejection of the proposal of the other five countries that a unified Germany be a member of NATO.

Some observers contend the Soviet Union eventually will accept NATO membership if it gets security guarantees and massive German economic aid.

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