It seems almost like a petty-cash item in President Carter's $896 million request to Congress for foreign military assistance in fiscal 1981. But a proposal to provide $5 million in military sales credits to Barbados could confront the Reagan administration with one of its first major foreign policy decisions.
At issue is whether Ronald Reagan, as president, will want to continue the Carter administration's efforts to strengthen friendly Caribbean countries against possible communist threats and, if so, whether he will be willing to pay for the program by allowing these countries to buy U.S. military equipment at bargain credit rates.
These questions are being forced to a head by increasing signs that Barbados, perhaps the United States' closest ally in the Caribbean, is likely to reject the proposed $5 million -- intended to provide equipment for its fledgling coast guard -- on the grounds that the interest payments on the loan are beyond the tiny island republic's financial means.
In a Nov. 4 radio interview, Prime Minister Tom Adams said his government would turn down the money and suggested that it could be better used to address some of the island's more pressing nonmilitary needs, such as housing. However, reliable sources said recently, Adams privately has advised the U.S. government that, despite his public statements, he has not yet made a final decision about the military credits.
The sources said Adams' behavior was dictated partly by domestic political considerations. Barbados faces elections next spring, and Adams, anticipating opposition criticism that he is spending too much of his country's scant resources for defense, probably would like to defer a decision until after the elections.
But, the sources continued, the major reason for Adams' hesitation stems from unhappiness at what he and other government leaders in similar positions regard as the overly steep interest rates attached to U.S. military credit loans. As a result, the sources said, Adams appears to be hoping that a Reagan administration, with its avowedly hawkish attitude toward threats of Soviet and Cuban expansionism in the Caribbean, will give a high priority to pushing through Congress a so-called "concessional military aid" program of easier credit terms for poorer countries such as Barbados.
That question poses a potentially major obstacle to continuation of Carter's policy, established after last year's confrontation over a Soviet "brigade" in Cuba, of encouraging a stronger prowestern military presence in the Caribbean.
The policy has specifically called for bolstering the ability of island governments to counter internal subversion by helping their coastal patrol forces and, to a limited degree, their police.
In launching that effort, Carter administration officials envisioned a special role for Barbados, which little more than a year ago wasn't even eligible for military sales credits. Testifying before Congress last April, William G. Bowdler, assistant secretary of state for inter-American affairs, said the proposed $5 million to help Barbados buy communications and navigational equipment "will strengthen the security of the entire eastern Caribbean," and he added the hope that it would lead Barbados into cooperative maritime patrol ventures with such neighboring islands as St. Lucia, St. Vincent and Dominica.
However, Barbados, while it has welcomed the military training that the United States provides without cost, has balked at the terms of the proposed military sales credits. Under U.S. law, these loans must be repaid over a seven-year period at interest equal to the Treasury Department's short-term rate for borrowing plus a service charge of roughly 1 percent.
That translates into a current interest rate of 11 to 12 percent for countries availing themselves of the credits. While the formula was intended to meet the needs of lesser developed countries, State Department officials concede that the rate imposes a heavy burden on the financial capacities of such nations as the ministates of the eastern Caribbean.
Matthew Nimetz, undersecretary of state for security assistance, has warned publicly that the current formula is increasingly likely to price the United States out of a military-supply relationship with the world's smaller and poorer countries, and he has cited the Caribbean as the prime area where aid policy is at cross purposes with U.S. military aims.
Despite opposition from austerity-minded forces in Treasury and the Office of Management and Budget, Nimetz has pushed hard for a concessional aid program that would give such countries some relief either through a lower interest rate or by forgiving some portion of the amount to be repaid.
The possibility of including this approach in the fiscal 1982 budget is under study at the White House. But the real decision about whether to adopt concessional military aid as a long-range policy and to plead its cause in Congress will fall to the Reagan administration.
The idea undoubtedly will encounter opposition from those in the Reagan camp who want to slash the budget ruthlessly and those who advocate putting increases in military spending into strengthening U.S. conventional and nuclear forces. However, State Department officials note that Reagan has long been in the forefront of those citing the "threat" posed by Cuba, and that Carter's advocacy of stronger anticommunist forces in the Caribbean is the only element of his hemispheric policy to find an approving echo in the Reagan camp.
For that reason, many of these officials believe the Reagan administration will find the idea of concessional aid very congenial to its own instincts and promote it as a small price to pay for the chance to strengthen forces opposing communist expansion, in the Caribbean or elsewhere.