Bush Arrives in Egypt, Facing Thorny Agenda : Talks May Focus on Peace Process and Cairo’s Bid for More U.S. Economic Aid

CAIRO — Vice President George Bush arrived in Egypt on Saturday to confer with President Hosni Mubarak and other officials on the stalled Middle East peace process and on Cairo’s requests for more U.S. aid to help its nearly bankrupt economy meet $3.5 billion in foreign debt payments this year.

Bush flew from the Jordanian port Aqaba to Luxor, site of the ancient capital of Thebes in upper Egypt, for a day of sightseeing before his official visit begins when he flies today to Cairo for a series of meetings and dinners with Mubarak, Prime Minister Ali Lutfi and Defense Minister Abdel-Halim abu Ghazala.

Before traveling to Luxor, Bush wound up a four-day visit to Jordan, saying he felt after talks with King Hussein that there has been an “improvement in the overall atmosphere” but no specific progress on Mideast peace.

Bush said earlier that he had brought to Jordan some “positive ideas” from Prime Minister Shimon Peres of Israel, but he told a news conference Saturday that there were no written or specific proposals.

Ideas Dismissed

Jordan’s prime minister, Zaid Rifai, indicated at a separate news conference that the ideas brought by Bush were “nothing new” in the Amman government’s view.

“The vice president did not bring anything from the prime minister of Israel,” Rafai said. “I don’t know what the next step (in the peace process) is.”

Bush, who met twice with Hussein at his summer home in Aqaba, said he was convinced that “there will be no true and lasting peace in the Middle East until the Palestinian question is resolved and all countries in the region are assured of their security.”

The vice president said he agreed with King Hussein that economic development of the Israeli-occupied West Bank of the Jordan River and Gaza Strip is essential to giving Palestinians hope for the future.

“Without that hope, the radical rejectionists will flourish and the atmosphere so necessary for producing a Palestinian partner for the peace negotiations will be beyond our reach,” Bush said.

The government of Jordan is seeking $150 million in aid from the United States to help finance an ambitious development plan for the West Bank.

So far, the United States has made available $4.5 million in assistance through October, and Congress has proposed $15 million for the next fiscal year. Bush said he gave Hussein no specific commitments for aid because the federal budget was still in doubt.

“I don’t want to over-promise,” Bush told his news conference.

In answer to a question, Bush said he is “very concerned” about the possibility of an Iranian victory in its war with Iraq that could result in a destabilization of Arab nations in the Persian Gulf.

“We do not want to see a radicalization of the Gulf states that could result from a radical end to the brutal, bloody war between Iran and Iraq,” he said.

Talks on Taba, Debt

Here in Egypt, in addition to an exchange of views on the peace process and recent events in the Middle East, Bush’s talks are expected to focus on this country’s debt problems and on the long, hard and now nearly complete negotiations between Egypt and Israel over the disputed Sinai beachfront resort of Taba.

The United States, which has been mediating the Taba negotiations for the past 15 months, had hoped to have an agreement ready in time for Bush to witness its signing.

State Department legal adviser Abraham Sofaer has been traveling between Egypt and Israel in recent weeks in an effort to work out the language of an accord under which the two countries will submit the Taba dispute to binding arbitration.

Evidently hoping Bush’s visit could be used as a lever to vault the two sides over the remaining hurdles, Assistant Secretary of State Richard W. Murphy left the vice president’s party in Jordan a day early to meet in Cairo on Saturday with Egyptian Foreign Minister Esmat Abdel Meguid.

But it became clear after their meeting that, barring an unforeseen breakthrough, a Taba accord will not be initialed during Bush’s visit, which ends Tuesday.

“I think there still remain issues that need more discussion,” Murphy said after his meeting with Meguid.

Israel retained Taba when it withdrew from the rest of the Sinai in 1982. An Israeli-built hotel and an unspoiled stretch of coastline serve as draws for tourists visiting the neighboring Israeli resort of Eilat. Egypt has demanded Taba back and has made agreement on an arbitration accord a condition for normalizing relations with Israel, frozen in 1982 when the Egyptian ambassador to Israel was withdrawn to protest the Israeli invasion of Lebanon.

Egypt, for its part, is expected to ask Bush to lobby for a more sympathetic American response to its urgent requests for economic help to service its $36-billion foreign debt, more than a quarter of which is owed to the United States.

Servicing that debt this year will cost Egypt substantially more than it receives in foreign aid and, with oil prices plummeting, the country faces an estimated hard currency shortfall of between $1.5 billion and $5 billion.

To ease the squeeze, the Egyptians are seeking to refinance, at today’s lower interest rates, $4.5 billion in military debts incurred in the 1970s. They have also asked Washington to convert $500 million in U.S. aid tied to specific projects into a cash grant.

The Reagan Administration, however, has been reluctant to do this until Cairo agrees to implement comprehensive economic austerity reforms.

While these and related thorny issues are expected to dominate Bush’s talks, U.S. and Egyptian officials caution that no agreements are expected.

The visit, they say, is largely ceremonial, a fact reflected by the vice president’s itinerary, which began with sightseeing in Luxor.

The vice president and Barbara Bush braved Luxor’s 108-degree heat to visit the temple of Karnak and a local museum housing Pharonic and Roman treasures.

Michael Ross reported from Egypt and Charles P. Wallace reported from Jordan.