Bush to Take $1.25-Billion Aid Plan for Soviets to Madrid

President Bush is expected to sign off on a new, $1.25-billion package of humanitarian assistance for the Soviet Union, which he plans to announce next week during talks with Soviet President Mikhail S. Gorbachev in Madrid, according to senior officials.

But the Administration has not decided how to respond to a Gorbachev request for a further $3.5 billion in direct economic aid and continues to debate whether U.S. assistance should be targeted to the individual republics or the central government.

“We’re in a real quandary,” an Administration official said Thursday. “The next step is either to go ahead and tie ourselves to the center or cut the umbilical cord and go with the republics.”

The agreement on the amount of humanitarian aid the United States should provide was reached after more than two months of tussling between Washington and Moscow about the seriousness of the problems the Soviet Union faces as winter approaches.

The $1.25 billion is less than Moscow initially requested and was settled upon after senior Administration officials made visits to the region and concluded that the Soviet Union is likely to face shortages, but not famine, this winter.

The loan guarantees for grain purchases will represent the bulk of the U.S. package of food and humanitarian assistance for the winter. Almost all of the new aid is to be in the form of loan guarantees and credits to allow the Soviets to purchase American grain.

The Soviets plan to use most of the grain to feed their livestock so accelerated slaughter of cattle and hogs early in the winter can be avoided--which might prevent a meat shortage at the end of the cold season. Some of the grain also will be used to make bread.

Officials said the other major aspect of the American package will be a relatively low-cost but highly visible program to provide technical assistance, principally through the creation of a model American farm.

The farm, most likely to be located outside St. Petersburg, is to be staffed with agricultural experts from the U.S. government and American universities and may be run by an American.

Administration officials said the $1.25-billion figure for humanitarian aid was included in a final recommendation to Bush and is expected to please Gorbachev, who in a letter to Bush received at the White House late Tuesday indicated that he could be satisfied with as little as $1 billion.

The task of providing assistance to the Soviet Union has been complicated by the emerging power of the republics, and there has been sharp disagreement in the Administration over whether to provide all the aid to the central government or to give it directly to the various republics.

On the immediate question of the humanitarian aid package, senior Administration officials said Thursday that they have worked out what amounts to a compromise in which the grain purchases will be handled by central government agencies--but on condition that they pledge to operate in some cases on behalf of independent republics.

But with the Administration still wrestling with the question of how and whether to answer the Soviet request for more direct economic assistance, officials said it is far from certain how such aid would be distributed.

The officials reiterated that the continuing chaotic nature of Soviet economic planning means that a U.S. decision about such a direct aid package remains weeks away.

And to cushion the blow of the U.S. decision to provide the aid through the central government, officials indicated that the Administration could expand a medical assistance program that already has sent about $18.5 million in drugs and supplies directly to the Ukraine and the newly independent Baltic states.

Nearly all of the costs are covered by private donations, and President Bush is expected to call for another $5 million to $10 million in federal funding to cover distribution costs through 1992.

The conclusion that the Soviet Union faces shortages rather than a famine was said by knowledgeable officials to have been supported by U.S. satellite photographs of Soviet crops, which supported American estimates about the size of the Soviet grain harvest.

Those estimates contend that the Soviet harvest will total 185 million tons of grain this year, while Soviet officials had told the Administration that they believe the harvest will be only 170 million tons.

After studying the satellite data, however, U.S. officials decided that the extra grain is being hidden or kept out of government hands by collective and state farms.