Bush Seeks Monetary Aid for Eastern Europe During Crisis

President Bush said today that the United States will ask the International Monetary Fund to increase lending to Eastern Europe by up to $5 billion to cushion economic shocks to the region from the Persian Gulf crisis.

At a White House welcoming ceremony for Hungarian Prime Minister Jozsef Antall, Bush said he will also ask the World Bank to step up assistance to the region to help it cope with rising energy costs.

“Like all of us, Hungary and the other new democracies of Central Europe are paying a high price for resolutely supporting the United Nations sanctions against Iraq,” Bush said, citing a loss of export markets and rising energy costs.

“To help ease this burden, I’m announcing today that the United States is asking the International Monetary Fund to increase its lending to the region by as much as $5 billion, modifying its lending policies where appropriate,” he added.

The President said Washington will also ask the World Bank “to accelerate its assistance in the energy field, drawing on the $9 billion now committed to Central and Eastern Europe.”

Bush’s initiative followed his call at a recent IMF/World Bank meeting in Washington for international efforts to cushion the effects of the gulf crisis on emerging democracies in what was once the Soviet Bloc.

Hungary and its Eastern European neighbors have been hurt by the sharp rise in oil prices since Iraq’s Aug. 2 invasion of Kuwait and the U.N. ban on trade with Baghdad imposed in retaliation.

Antall said the aid proposed by Bush “will help us survive this very severe crisis.” He said it will be more difficult for Hungary to overhaul its economy than it was to transform its political structure.

However, he said Hungary has laid the groundwork for a free-market economy.