Economic Summit May Include Soviets : Diplomacy: Bush hints he might OK an invitation. Baker says Washington will weigh direct aid.

President Bush said Wednesday that he might agree to invite Soviet President Mikhail S. Gorbachev to the annual economic summit meeting of the United States and its major allies, and Secretary of State James A. Baker III said the Administration will consider direct aid to Moscow if it enacts real economic reforms.

Responding to a series of appeals from Gorbachev for Western economic aid--and newspaper reports that the White House opposed inviting the Soviet leader to the July economic summit in London--Bush told reporters that he is willing to do whatever will “genuinely help” the Soviet Union reform its hidebound Communist economy.

“No decisions have been taken on that,” the President said on Air Force One en route to St. Paul, Minn. “If his coming there can help with the reform . . . why, that would be a very, very important matter.”

Baker, testifying before a House subcommittee, added that any decision on inviting Gorbachev to London would depend on the Soviet leader’s actions over the next few weeks. Gorbachev has asked to attend the economic summit so that he can press his case for aid to the participants--the United States, Japan, Germany, France, Italy, Britain and Canada.

The prime ministers of Italy and Canada already have said they favor inviting Gorbachev.

Asked if the Administration is willing to provide economic aid to Moscow, Baker replied, “Certainly it is something that should be looked at.” But he added that any aid would depend on both serious economic reforms and continued political cooperation by the Soviet Union.

“Even with the tentative steps toward political accommodation, Soviet economic reform still has a long way to go . . ,” he said. “We believe the Soviet leadership urgently needs to embrace fundamental market economic reform.”

Both Bush’s and Baker’s comments reflected a new focus of attention in U.S.-Soviet relations: Moscow’s increasing pleas for economic help to stave off the country’s collapse.

Until now, the Administration has turned aside all proposals for direct economic aid to the Soviet Union on grounds that Gorbachev has not attempted any far-reaching reform of his economy. But the Soviet leader recently authorized several aides to approach Western governments with plans for major economic reform that call for large-scale infusions of aid.

One Soviet team of economists is working with U.S. scholars at Harvard University on a reform proposal. Another, led by Gorbachev adviser Yevgeny M. Primakov, is scheduled to visit the White House next week.

Meanwhile, U.S. and Soviet negotiators failed to reach agreement on disputed issues in an East-West treaty on conventional armed forces, making it unlikely that Bush and Gorbachev will meet on schedule next month, Administration officials said.

But Bush and other officials said they believe the issues will be resolved, allowing the summit to take place later.

The chief of staff of the Soviet armed forces, Gen. Mikhail A. Moiseyev, offered a compromise proposal on the thorniest dispute, but the United States turned it down, officials said.

The argument is over the treaty on conventional forces in Europe, signed by the United States, the Soviet Union and most European countries in 1990. It requires the Continent’s major military powers to reduce their tanks, artillery and other weaponry to equal East-West levels.

Last year, after the pact was signed, the Soviet Union announced that its “naval infantry” forces--units comparable to U.S. Marines--are exempt from the treaty’s limits. The United States and the other signatories disagreed, saying that naval infantry units deployed on the ground are covered by the treaty.

In a negotiating session Tuesday, officials said, Moiseyev presented a compromise proposal: The Soviet Union would agree that ground-based naval infantry and its equipment comes under the treaty limits, but only if Moscow was allowed to take more equipment out of storage than the pact permits.

“The ceiling for the Soviet Union which is envisaged by the treaty signed in Paris will remain the same for the Soviet Union. It will not be exceeded,” Moiseyev told reporters on Wednesday. “The naval infantry armaments and the armaments of the coast defense will be counted against those overall ceilings. These armaments will be removed from storage.”

But U.S. officials said the proposal is unacceptable.

“To us, the issue remains one of abiding by the treaty limits and that means all the treaty limits,” a State Department official said. “That includes the sub-limits on equipment with active units and equipment that is stored.”

The treaty limits each side to 20,000 tanks, but only 16,500 of those can be deployed with active units. Moiseyev appeared to be proposing an increase in the lower number.

U.S. officials said they are optimistic that Gorbachev eventually will persuade his military officers to back down on the issue, lest it become an obstacle to his drive for economic aid.

“Gorbachev wants a summit meeting as much as we do, maybe more,” said one. “He can’t expect to get much economic help from the West while this problem hangs over us.”