Budget row throws US embassies into chaos



Drinking water deliveries to US diplomats in Havana have been stopped because last month's bill went unpaid. The US embassy in Hanoi has been warned to pay up pounds 1,000 in overdue electricity payments or the power will be cut off.

Because of the government cash freeze resulting from the inability of Congress and the White House to agree on a national budget, American diplomatic missions are in turmoil, unable to come up with the cash to pay for local services and locally-hired staff. In Mexico, where people carry resentment against the United States in their bones, newspaper commentators have been chortling at the embarrassment of Uncle Sam, prompting a huffy response from the US embassy.

"The embassy wishes to make it clear," a statement said, "that this situation arises from the constitutional definitions of how the United States budget is passed into law, and does not represent any fundamental inability of the United States of America to pay its bill."

A senior official at the State Department suggested, however, that the caricature of the US as a giant "banana republic" is not all that far off the mark. Richard Moose, under-secretary of state for management, told the Washington Post: "My threshold of believing what can't happen is getting lower all the time." President Bill Clinton saw fit to comment yesterday that "this is not how a great country behaves".

The point has been reached where American embassies are unable to pay for the meals of their Marine guards. In Colombia, consular officials deployed to deal with the families of the victims of last week's American Airlines plane crash worked officially as volunteers, as there was no cash to pay their wages.

If the US is becoming a laughing stock overseas, at home there is growing outrage, not least because the congressmen responsible for the government shut-down (yesterday into its 19th day) continue to receive their wages on time and, in some cases, to venture off on foreign trips. Few are more outraged than the government workers,760,000 of whom have not been paid since 16 December. The Department of Labor reported yesterday that 96,000 government employees had applied for unemployment benefits. Many more have been beseeching their banks for interest-free credit to tide them over so they can pay their mortgages and other bills.

The fall-out of the wrangling in Washington is affecting a growing number of people every day. Meals-on-wheels for the elderly are expected to shut down in a dozen states; shortages of food and supplies are being reported in veterans' hospitals and in federal prisons; tourism is suffering, because museums and national parks have been closed and because of the incapacity of foreign embassies to supply visas - US airlines are reporting that their inbound international flights are carrying half the normal load of passengers.

Mr Clinton and the leaders of the Republican majorities in the House and Senate, Newt Gingrich and Bob Dole, concluded three hours of talks on Tuesday night. They reported "constructive progress".

A concern uppermost in the minds of politicians of all sides is that they should not be identified as being to blame for the mess. Yesterday it became clear that the greatest stumbling block is the House of Representatives. The Senate voted on Tuesday night for the government to be immediately reopened and for unpaid staff immediately to receive their overdue cheques, but the House is refusing to go along.

Mr Dole, Mr Clinton's probable presidential rival this year, said enough was enough: "I don't see any sense in what we've been doing." He disagreed with Mr Gingrich and his zealous Republican foot soldiers in the House. Mr Gingrich insisted yesterday he would continue to play the shut-down card as a means of pressuring Mr Clinton to accept Republican proposals for balancing the federal budget by the year 2002.

The President rejects the proposals because they would cut social welfare while providing tax breaks for the rich.

Mike McCurry, the White House spokesman, yesterdaysaid Mr Gingrich belonged to "a gruesome group" of obstructionist Congressional Republicans, a description which may not have aided the talks Mr Clinton held yesterday with the House Speaker and Mr Dole.

Markets, page 18

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