US President George W. Bush's economic team, which had been scathing of previous administrations for dishing out US taxpayer money to countries hit by financial crisis, appears to have done exactly that with a bilateral loan for struggling Uruguay.
"After a good start, they (the administration) seem to be making the same mistakes over and over again," said Allan Meltzer, an economics professor at Carnegie Mellon University and a fierce critic of bailouts and IMF policies.
The US Treasury said on Sunday it would be providing a bridge loan of up to $1.5 billion for the tiny Latin American nation sandwiched between Brazil and Argentina as the nation tries to claw its way back from the brink of economic collapse. The money is to be paid back as soon as Uruguay reaches a deal, expected shortly, on new funding with the International Monetary Fund.
Since coming to office last year, the administration has already raised some eyebrows by supporting multibillion dollar bailouts for Argentina and Turkey even after criticising others for doing the same. But on bilateral help, members of the economic team made it clear it was not a policy they favoured.
"One of the lines they laid out is that they weren't going to use bilateral money," said Lewis Alexander head of emerging market research at Salmon Smith Barney. "It is hard for them to argue they haven't violated their own principle."
Treasury Secretary Paul O'Neill, who is touring Brazil, Argentina and Uruguay - all countries plagued by financial crisis - said on Monday if a country needed help, the IMF would remain his instrument of choice to provide it.
He also denied there had been a change of direction in policy, saying the loan "seems to us very consistent" with earlier comments on the role of international financial institutions.
On Sunday, Treasury Undersecretary John Taylor said it was different from previous bailouts because it was only short-term financing until the IMF, World Bank and Inter-American Development Bank could come up with the funds.
"All of the longer-term financing has been done by the international institutions," Taylor said. It is "not large-scale long- or medium-term bilateral support", he added.
The Treasury will use cash from the Exchange Stabilisation Fund, a fund that can be tapped quickly without approval from Congress. It is the same fund that Clinton Treasury Secretary Robert Rubin used to find some $20 billion for Mexico in 1995 - a move that drew criticism from both Democrats and, particularly, Republicans in Congress.
The Treasury said members of the current Congress were notified of the Uruguay money before it was announced but declined to say what the reaction was.
What analysts are looking for now is whether the Treasury's decision on Uruguay will have any impact on how the United States and the international community decides to help Uruguay's neighbors, Brazil and Argentina. Both countries are also seeking financial support.
"It was a technical move to bring some confidence back into the market," said Gerhard Herrera, emerging market strategist at IDEA Global in New York. "The next question is: Would they lend money to Brazil?"
The Brazilian real tumbled to new lows last week, partly fuelled by comments from O'Neill suggesting the United States would not support new funding for the country, which is facing political uncertainty ahead of the October presidential elections.
Speaking in Brasilia on Monday after a meeting with President Fernando Cardoso, O'Neill said Brazil has the full support of the United States at the IMF, but he declined to say whether he would back new money.
"What could come is a simple message to give markets some signal they are willing to give money when the election results are known," said Herrera.
At any rate, analysts say, the Bush administration's policy on aid packages needs to be clarified. The confusion and lack of consistency could actually make it more expensive for countries in trouble to borrow money, they suggest.
"It makes the world less predictable and, all things being equal, raises the risk premium," said Alexander.