WASHINGTON INSIGHT

By The Times' Washington staff

SUMMIT STALEMATE: President Bush still faces a difficult challenge in persuading some U.S. allies to cool their enthusiasm for providing massive Western aid to the Soviet Union at next month's annual seven-nation economic summit in London.

Despite efforts at Sunday's meeting of Western finance ministers to hammer out a common stance on the issue, U.S. officials say that they still expect German Chancellor Helmut Kohl to push hard at the summit for a much larger Soviet aid package than Washington wants.

The United States remains adamant against "shoveling out money" before Moscow agrees to make massive economic reforms. France and Italy are backing Germany in advocating $30 billion in aid. Britain, Japan and Canada are siding with Bush.

With Western money limited, "we might as well hang on to it and spend it selectively where it will do the most good," one U.S. strategist said. He describes the U.S. goal for the summit as "saving the Germans," who are eager to win Soviet cooperation, "from themselves."

GRAY DAYS: Black lawmakers bristle over the decision by House Majority Whip William H. Gray III to resign his congressional seat early in August to become president of the United Negro College Fund.

Although Gray was not known as a powerhouse on Capitol Hill, he was decidedly the most powerful black in Congress--and could well have become the nation's first black Speaker of the House.

Now, all that is lost, one member of the congressional Black Caucus grouses.

Some black legislators also are miffed that Gray did not tip fellow members of the Black Caucus before word of his new job assignment leaked out. Like others, they were caught "flatfooted" when the news came, one member says. "We are very chagrined."

TWISTING SLOWLY?: The Bush Administration is quietly holding up its formal decision on whether to reappoint Alan Greenspan in order to keep pressure on the Federal Reserve Board chairman to keep pushing interest rates lower in hopes of spurring the economic recovery.

Although Greenspan's term does not expire until August, the White House was expected to have announced his reappointment by now. Only a few weeks ago, Bush made a show of renominating Gen. Colin L. Powell as chairman of the Joint Chiefs of Staff--four months before he needed to.

The move has brought delight to the Treasury, where Secretary Nicholas F. Brady has been pushing for lower interest rates. But there is little evidence that it is having any impact: Fed governors have made clear in recent days that the central bank plans no such move.

NEW U.S.-JAPAN FLAP?: The United States and Japan may be heading for another clash--this time over whether large Japanese corporations are trying to avoid paying U.S. income taxes.

The Internal Revenue Service has been studying the question as part of a wide-ranging probe of Japanese business practices here, including a recent Customs Service allegation that Honda Inc. avoided millions of dollars in import duties by shipping cars duty-free through Canada.

IRS investigators who have questioned executives from at least a dozen Japanese subsidiaries in the United States say they have found broad patterns of tax evasion in which the Japanese firms use sophisticated bookkeeping techniques that help conceal profits.

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