A Senate subcommittee, heeding a plea from President Carter, yesterday stripped from the $7.1 billion foreign aid funding bill a provision under which in emotional development banks could not use U.S. money to make loans to seven specified countries.
The restriction had been approved by the House. It specified that none of the funds in the aid bill could be used either for direct bilateral aid by the United States or for loans by the World Bank. Asia Development Fund, International Development Association or Inter-American Development Bank to Vietnam, Laos, Cambodia, Uganda, Angola, Mozambique or Cuba.
The House had also voted to ban loans by the four international banks to promote projects involving plam oil, sugar or citrus - the production of which by foreign countries competes with U.S. product.
The Appropriations Subcommittee on Foreign Operations killed all these restrictions on lending by the four multi-national agencies after Treasury Secretary W. Michael Blumenthal, in a letter to the committee, said the international agencies couldn't legally accept U.S. contributions to which conditions were tied or where aid was earmarked in any way.
Blumenthal said the banks would have to reject the money, and as a result would the be in financial difficulties. President Carter in his news conference earlier this week asked that the restrictions be dropped. The subcommittee left in the bill, however, the prohibition against direct U.S. bilateral aid to the seven countries.
The bill carries $400 million for the World Bank, $264 million for the Asian Development Bank, $523 million for the Inter-American Development Association and $950 million for the International Development Association.
Also dropped from the bill was a blanket prohibition against U.S. foreign military credits for Brazil, El Salvador, Guatemala and Argentina, although those nations probably won't get any money anyhow. The administration had objected to specifying them by name.
In another small victory for the White House, the subcommittee boosted the final total in the bill to $7.1 billion, compared with a $5.7 billion House figure. The carter administration had sought $7.6 billion.
The subcommittee included in the bill a provision designed to force the World Bank. Inter-American Development Bank and Asian Development Bank to reduce the salaries of some U.S. officials at those institutions to the equivalent of what they'd make in similar U.S. jobs.
The provision didn't involve the salary of World Bank President Robert S. McNamara ($111,570, according to subcommittee documents), but of six lower officials in the World Bank and other agencies making salaries equivalent to $83,830, $78, 320, $61,739 and the like. Under the subcommittee provision, the officials would be limited to $50,000 or $47,500, depending on their job.
Of the total funds in the bill, a large portion - $1.8 billion - would go to Israel for military credits or economic aid. About $90 million is for development assistance to low-income nations, $84.3 million for the Peace Corps, and $251 million for international organizations.
The full Senate Appropriations Committed is to take up the bill Monday. Subcommittee Chairman Daniel K. Inouye (D-Hawaii) said.