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Bush Promises Soviet Food Aid : Diplomacy: Loan guarantees for buying U.S. products will total as much as $1 billion. The President also announces plans for a Feb. 11-13 summit in Moscow.

TIMES STAFF WRITER

President Bush announced Wednesday that as much as $1 billion in loan guarantees to buy U.S. agricultural products will be given to Moscow as his Administration seeks to strengthen Mikhail S. Gorbachev’s government by breaking a cycle of panic within the Soviet Union over wintertime food shortages.

“Instability in the Soviet Union is very definitely not, in my view, in the interests of the United States,” Secretary of State James A. Baker III told reporters at a joint Rose Garden press conference with Soviet Foreign Minister Eduard A. Shevardnadze after Bush’s announcement.

The new moves, Baker said, are “very much in the national interest of the United States.”

Bush also announced plans for a Feb. 11-13 summit with Gorbachev in Moscow during which the two presidents are “hopeful” of signing a treaty cutting nuclear arsenals on both sides. Several complicated issues remain to be resolved before the treaty is finished, but both U.S. and Soviet officials believe that it can be completed in time for the summit, which had been tentatively announced last month.

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“I want perestroika to succeed,” Bush said, referring to Gorbachev’s reform movement. “The Soviet Union is facing tough times, difficult times, but I believe that this is a good reason to act now in order to help the Soviet Union stay the course of democratization and to undertake market reforms.”

Although many of the Soviet Union’s food problems are caused by the collapse of the nation’s system for transporting and distributing food, U.S. officials who briefed reporters after the announcement insisted that the new U.S. help is not doomed to rot on the docks.

“Clearly, we are worried about the distribution problems,” one official said. But, another official noted, much of the Soviet problem appears to be that those in control of food in agricultural regions are simply unwilling to send it to the major cities and are hoarding supplies in anticipation of price increases.

“If you can supply major cities” by importing food from the West, then hoarding in the countryside can be bypassed, the official said. Doing that, the official added, would “give some confidence to the Soviet person on the street that there’s going to be something to eat.”

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But because control over food has become a major element in the struggle for power between Gorbachev and leaders of the Soviet Union’s 15 republics, the U.S. aid package marks a clear intervention by Bush on Gorbachev’s side. How to accomplish that without getting stuck in the “minefield” of Soviet internal politics was a major consideration that delayed Bush’s decision on aid for several weeks, one senior U.S. official said.

The new agricultural aid will not involve direct spending by the United States. Instead, under a program currently used by 25 other countries, the Soviets will get up to $1 billion in U.S. loan guarantees that will allow them to buy grain and other commodities from American farmers. U.S. officials estimated that American food could begin arriving in Soviet markets under the new program by early February.

Bush also announced an emergency package of medical aid to be distributed by private U.S. organizations such as the Red Cross and several measures designed to help longer-term reforms in the Soviet economy, including U.S. support for Soviet “association” with the World Bank and International Monetary Fund.

Six months ago, Bush and leaders of the major industrial nations of Europe and Japan met in Houston and asked the World Bank and the IMF to study Soviet economic needs. But the rapidly deteriorating food situation in Moscow and other major Soviet cities now has led each of those countries to announce aid packages without waiting for the study, which is expected to be finished later this month.

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To provide the aid, Bush waived one of the landmark laws of the Cold War era, the so-called Jackson-Vanik amendment of 1974, which forbade U.S. trade concessions until the Soviets allowed free emigration. Provisions of the law require that the waiver be reviewed each June, although the Administration is not likely to restore the restrictions unless there is a drastic change for the worse in Soviet behavior.

Other U.S. laws that limit Soviet access to trade assistance remain on the books and are not affected by Bush’s action Wednesday.

Although the Soviets have not yet passed a law guaranteeing emigration rights, which Bush had insisted on in the past, White House officials noted that Moscow is allowing roughly 360,000 people to leave the country this year and said that Soviet officials have provided “assurances” that the emigration will continue. Further trade liberalization will wait until after the emigration law is actually passed, officials said.

Officials also said that in talks with Shevardnadze this week, Baker had emphasized the need to continue progress toward democracy as the Soviets seek to restore order in the country. “One of the things we’ve seen is that economic reform works best when there is a legitimate political set of institutions and leadership putting it forward,” one official said.

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Bush’s moves drew praise from leading Democrats and are likely to be popular in Congress, especially because the agricultural credits will boost Soviet purchases of grain and other commodities from U.S. farmers. In addition, Jewish groups that had long been the main backers of the Jackson-Vanik amendment announced several weeks ago that they would support a waiver of the law in recognition of the existing changes in Soviet emigration policies.

But conservatives within Bush’s party, many already angry with the President on other grounds, have opposed granting Gorbachev any additional help. Bush’s aid will only “encourage, directly or indirectly, Gorbachev’s efforts to use military power to force the central Communist dogma upon the people of Russia,” Sen. Jesse Helms (R-N.C.) said in a statement.

“The people of the Soviet republics are yearning to be free. The U.S. government should not stand in their way,” Helms said.

In fact, Bush’s decision to grant the aid was a significant change in position. In Houston, for example, Bush resisted suggestions that he join in aiding the Soviets, saying that--while other Western nations should be free to do so--political considerations within the United States would make any such proposal impossible.

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“Certain things have to happen before I, as President, will make recommendations for direct financial aid,” Bush said at that time. He cited “the fact that a lot of missiles are aimed at the United States,” as well as continuing Soviet aid to Cuba.

While neither of those things have changed, two other factors changed Bush’s mind, U.S. officials said. The first was Soviet support for U.S. efforts against Iraq--the first time since World War II that the Soviets and the United States have been on the same side in a major international confrontation.

Baker and Shevardnadze both denied that the aid package was a “payoff” for Soviet assistance in the Persian Gulf crisis. At the same time, Bush and his aides repeatedly have expressed gratitude for Soviet support in the area.

The second major factor, officials said, was the sharp deterioration of the situation inside the Soviet Union.

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“With winter approaching,” one official said, “this was probably the time to try to break some of the social-psychological cycle” of panic.

BACKGROUND

The amendment to the 1974 U.S. Trade Act, sponsored by the late Sen. Henry M. Jackson (D-Wash.) and former Rep. Charles A. Vanik (D-Ohio), prohibits preferential tariffs or access to U.S. credits to any nation that denies its citizens the right to emigrate. The law allows a waiver of the amendment if the President believes the emigration restrictions have been eased. Any waiver must be reviewed every June and renewed each July 1, when Congress could restore the restrictions.


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