PARIS, MAY 29 -- The United States, faced with huge budget deficits, will channel its main financial help for Eastern Europe and Latin America through international lending institutions, Treasury Secretary Nicholas F. Brady said today.
In what administration officials billed as a major foreign economic policy speech, Brady acknowledged before the American Chamber of Commerce in London that Europe and Latin America's needs confront a "resource-short world."
Brady arrived here this afternoon following his London speech for the signing of accords for the new European Bank for Reconstruction and Development, in which the United States will be the largest single contributor.
He will meet with the 23 other finance ministers of the Organization of Economic Cooperation and Development in an annual two-day session beginning Wednesday.
This meeting is seen as a run-up to the economic summit in Houston early in July. For both the OECD and the summit, a main agenda item will be how to reach an accord between conflicting U.S. and European views on managing global agricultural surpluses.
Brady's London speech was seen as an effort to evolve a workable foreign economic policy approach for President Bush. American efforts to support market-oriented reforms are frustrated by a shortage of cash.
In addition, Brady made three other points in an effort to refine basic American approaches to international economic problems.
First, in recognition of recent criticism that the Group of Seven process had failed to control fluctuations of the dollar in foreign exchange markets, Brady said "the G-7 policy process is not fundamentally about exchange rates," but is concerned with coordination of a whole range of policies.
Second, he assured investors in Europe and Asia that the Exon-Florio provision of the trade law, under which foreign purchases of U.S. companies can be barred for national security reasons, "has not been and will not be used as a barrier to direct investment in the United States."
And third, he rebutted rumors that the Treasury is lukewarm about including financial services in the current round of multilateral trade negotiations under the General Agreement on Tariffs and Trade.
Brady's embrace of multilateral lending agencies such as the World Bank and International Monetary Fund reflects one more step in the reversal of the hostile attitude to these organizations initially displayed by the Reagan administration.
"These institutions provide perhaps the most essential ingredient beyond finance, and that is the economic policy advice so necessary to reform," Brady said.
At today's signing session for the European Bank for Reconstruction and Development, 40 nations, including the United States, Japan and the Soviet Union, initialed the articles of agreement for the bank, which will be located in London.
The 12 European Community states plus the European Investment Bank and European Commission hold a majority stake of 51 percent in the bank, which has initial capitalization of $12 billion.