Bush to Propose Global Aid for Latin America : Diplomacy: The effort involving billions would be designed to promote free-market economies.

The Bush Administration, in another major effort to help Latin America, is preparing a proposal to establish a multibillion-dollar international aid program for the region similar to the one the Western powers set up last year for Eastern Europe.

Although President Bush has not given final approval to the plan, U.S. officials say he is likely to unveil it at next week’s seven-nation economic summit in Houston. The aid program for Eastern Europe was launched at last year’s economic summit in Paris.

The proposal would mark the second major economic aid package for Latin America that Bush has proposed in two weeks. On June 27, he announced a sweeping offer to negotiate free-trade agreements with the Latins and forgive much of their debt to the United States.

The new aid fund, to which leaders of the six other countries would be asked to contribute, would be used to provide both emergency food and cash and to finance needed economic reforms designed to move Latin countries to free-market systems.

As in the case of the aid program for East European countries, the money would go only to those countries that take the necessary steps to embrace democracy and convert their state-owned industries to private corporations.

It was not immediately clear how much Bush might be able to persuade leaders of the other summit nations to contribute. The so-called Group of 24 aid plan for Eastern Europe has been pledged about $14 billion in aid, loans and technical advice, initially for Poland and Hungary but extended on Wednesday to Czechoslovakia, Bulgaria, Yugoslavia and East Germany.

Unlike the plan for Eastern Europe, which is being coordinated by the European Community, the new Latin proposal would be administered by the United States. Officials said the package would include money already voted for Panama and Nicaragua.

Sources close to the Administration said Bush may also announce that he will step up his efforts to help Bolivia, Peru and Jamaica qualify for reduction of their debts to commercial banks under the Brady Plan, the United States’ Third World debt plan.

Mexico, Costa Rica and the Philippines already have qualified under the plan, but the proposal has bogged down. The plan is designed to help Latin governments buy back their debt from banks in exchange for guaranteed bonds.

Bolivia, Peru and Jamaica are natural beneficiaries. Bolivia and Jamaica both have moved toward free-market economies, and Peru, which has been a pariah on the debt issue for the past four years, has a new pro-Western president-elect, Alberto Fujimori.

Fujimori just completed preliminary negotiations for re-establishing relations with the International Monetary Fund and the World Bank, from which his predecessor, Alan Garcia, was estranged. Fujimori also has said he intends to resume payments to commercial banks.

U.S. officials said Wednesday that the proposal to establish a new Group of 24 to help Latin America is the brainchild of Secretary of State James A. Baker III, who also was instrumental in winning U.S. backing for the Eastern Europe aid program.

Senior Administration officials say Bush has become personally involved in trying to improve U.S. relations with Latin America on grounds that it is in U.S. interests to help the region economically to bolster its fledgling democracies.

Over the past several months, Bush has gone out of his way to build relationships with key Latin American leaders, telephoning several of them frequently to discuss issues of interest to the region.

Three weeks ago, he and Mexican President Carlos Salinas de Gortari agreed to begin preliminary work on negotiating a U.S.-Mexico free-trade agreement that would be similar to the one that Washington has signed with Canada.

U.S. officials said that work on the new aid initiative, and the trade proposal that Bush unveiled June 27, has been rushed in preparation for the economic summit, which this year will be held in Houston, where interest in Latin America is high.

Bush is scheduled to visit Brazil, Argentina and a third Latin American country still undecided in September, and U.S. strategists say he has tentatively planned to take three more trips to the region over the succeeding 12 months.

The trade initiative that Bush announced June 27 was designed to reinforce moves by these and other Latin governments toward more market-oriented economic systems and encourage them to shed the centralized, state-controlled policies that have retarded their economies for decades.

It also is aimed at countering fears by some leaders in the region that the growing focus of the Western powers on the emerging East European democracies will leave little or nothing in the international aid pot to help Latin America.

However, U.S. analysts contend that if the Latin governments follow through, the trade plan could prove the most sweeping U.S. economic aid proposal for the region since President John F. Kennedy’s “Alliance for Progress,” designed to offset Cuba’s growing influence in the early 1960s.

Bush told the region’s leaders June 27 that he wants to forge a “new economic partnership” with Latin America that would help its fledgling democratic governments bolster the middle class and bring new prosperity to the region.

The plan for Bush to propose a new international aid package for the region has not won unanimous endorsement inside the Administration. Officials say the Treasury Department opposes the scheme on grounds that it could undermine efforts to focus on trade ties.

Besides President Bush, the participants at the Houston summit will include the leaders of West Germany, Japan, Britain, France, Italy and Canada and the president of the European Commission, the policy-setting body of the European Community.