Bush Greets Walesa With 70% Debt Cut : Foreign aid: The decrease goes 20 percentage points beyond that of the other allies.

President Bush said Wednesday that the United States will reduce Poland’s outstanding debt to the United States by 70%.

The decrease, which goes beyond an agreement by Western allies to cut Poland’s international debt in half, will lop more than $2.6 billion from the amount Poland owes the U.S. Treasury, leaving the longstanding debt at approximately $1.2 billion, U.S. government officials said.

The sharp reduction in the burdensome debt is intended to demonstrate a vote of confidence in Poland’s struggle to overcome the economic impact of more than four decades of Communist rule, while making Poland more attractive as a home for U.S. private investment.

Welcoming Lech Walesa to his first visit to the United States as Poland’s president, Bush said: “We want your economic transformation to succeed, your new democracy to flourish. And we call on other nations to follow our example.”

Walesa said that the lifting of the debt burden “gives us new, great possibilities.”

“The changes in Poland are not completed yet. The political victory of Solidarity should be reflected in economic success,” Walesa said. Solidarity is the trade union movement that evolved into the political organization that helped unseat the Communist government in a bloodless revolution.

U.S.-Polish relations, he said, have “reached their peak in the whole of history.”

“Free Poland is becoming a country of new economic opportunities,” Walesa added.

Later, after meeting with Secretary of State James A. Baker III, Walesa pledged that “a grateful Poland will support the actions of the United States.”

The initial 50% cut in Poland’s $33-billion debt to Western governments was announced Friday by U.S. and European officials. The dramatic move was intended to help the Poles move beyond the radical reform measures they have introduced.

In other measures announced during the visit, Bush unveiled two economic initiatives for Central and Eastern Europe.

The American Business Initiative is a $45-million, two-year project intended to help small- and medium-sized U.S. firms seeking to enter the Eastern European market. The Trade Enhancement Initiative involves a series of measures, including expansion of duty-free benefits.

“The real engine of progress is not aid, but trade,” Bush said.

Bush said that Poland will use 10% of the savings from the forgiven debt to pay the high costs of environmental protection.

POLAND’S DEBT

Amounts owed to each nation by Poland (in billions of dollars).

Germany: $5.8 France: $5.1 U.S.: $3.8 Austria: $3.7 Brazil: $3.3 Canada: $2.7 Britain: $2.6 Italy: $1.7 Japan: $1.2 Others: $3.1 Total debt to U.S. and other Western nations: $33.0 billion Source: U.S Treasury Dept.