S. Africa Shifts Reform Focus to Economy : Tries for Faster Growth as It Seeks Ways to Satisfy Black Aims

Far-reaching economic initiatives are supplanting political reforms in President Pieter W. Botha’s efforts to deal with South Africa’s prolonged crisis.

In a strategic policy shift, the country’s white-led minority government plans to concentrate on faster economic growth as its first priority, while it explores ways to satisfy the demands of the country’s black majority for full political rights.

The rationale, as explained by Cabinet ministers and other senior government officials, is that only with a sound, expanding economy can it finance the broad political and social reforms that South Africa needs.

‘Imperative to Restructure’

“It has become imperative to restructure the whole economy,” Stoffel van der Merwe, deputy minister for information and constitutional planning, said the other day. “It is useless to proceed, or even to try to proceed, with reform on a constitutional, political or social level if the economy is not in good shape, and this economy hasn’t been in good shape for years. . . .

“Reform costs money, and some reform measures have come to very little . . . because there was not a sufficient economic basis for them. A major economic restructuring is absolutely necessary if we are to proceed with reform.”

The government is faced, for example, with tens of billions of dollars in expenditures to redeem its pledges to improve the education of 6 million black schoolchildren so that it matches that of whites within a decade, to help house more than 500,000 black families without adequate shelter and to assist in creating jobs for an estimated 3 million unemployed blacks.

The boldest element in Botha’s new economic program calls for the sale of such government assets as the railways, the national airline, the telecommunications system, the country’s largest steel company and its electric utility in order to “redeploy” capital accumulated in those enterprises during decades of state investment and growth.

Could Free $30 Billion

As much as $30 billion in capital will be freed as government enterprises are either sold to private entrepreneurs or turned into publicly held companies, according to initial estimates.

Other measures proposed by Botha to Parliament include a new central planning system to set government spending priorities, stricter budget controls to curb the current 15% inflation rate, replacement of the present 12% sales tax with a value-added tax likely to raise more money more equitably, and further deregulation of the economy to encourage competition and allow black businessmen, now barred from many sectors of the economy by scores of laws, to participate more widely.

“Although obviously they cannot be applied overnight, the new principles constitute nothing less than a watershed switch to a new economic era for South Africa,” Gerhard de Kock, governor of the South African Reserve Bank, said, describing them as “basic steps to make the economy healthier and stronger and to improve the productivity and welfare of the people.”

And Fred du Plessis, chairman of the giant Sanlam finance, insurance and industrial conglomerate here and a longtime proponent of the new policies, declared, “I am for economic reform even before political reform.

First Create More Wealth

“Unless we have an economic upswing, an economic revival to make it possible to look at political reforms, it won’t be possible to solve either our economic or our political problems,” Du Plessis commented. “The only way to have a more equitable distribution of wealth is to create more wealth so you can give without taking from others. Trying to improve a person’s material position through political freedom is putting the cart before the horse.”

Behind this thinking, however, lies a belief--acknowledged by Du Plessis and others--that if blacks’ economic needs were met, their insistent demand for a political system based on the principle of one person, one vote will diminish and that some, if not all, will be persuaded that the government is solving their most pressing problems and that a socialist revolution thus would be a mistake.

“People need political power to achieve what they cannot otherwise achieve,” Du Plessis said, making the point as plainly as possible without suggesting that the whole issue of majority rule could be postponed indefinitely.

‘Power Sharing’ Stalled

But another reason for the government’s decision has been its inability over the last two years to sell its concept of “power sharing” to most blacks and to draw key black leaders into proposed negotiations on a new political system for the country.

Van der Merwe, the government’s chief negotiator, acknowledged that Botha would not proceed with legislation on a proposed “national council,” intended as the primary negotiating forum, without black acceptance of the proposal.

“There is no use finalizing legislation if there is no prospect of getting that institution off the ground,” Van der Merwe said. “Further progress will be directly proportionate to black enthusiasm.”

Even conservative black leaders have said their participation depends on the ending of the current state of emergency, the legalization of the African National Congress, the freeing of political prisoners, including ANC leader Nelson R. Mandela, and on other steps to create what they call “the climate for negotiations.” Without the “talks about talks” that the government had hoped only a few months ago might now be under way, prospects for early political reform have diminished significantly.

“Things like this run with an ebb and flow,” Van der Merwe said, noting that he and other government officials continue to discuss political reforms with a broad cross-section of blacks. “The process has not come to a complete standstill.”

May Quiet Controversy

But one senior minister, who like Van der Merwe is one of the Cabinet’s liberal advocates of faster, broader change, said he thinks the shift in the government’s emphasis from politics to economics will be good simply because “political reform has been drawing too much attention and causing too much controversy.”

“Frankly, we stand a better chance of making progress at this point by pretending to do nothing,” he commented, speaking on condition that he not be identified. “Political reform had developed a bad name--among blacks, among whites, overseas, wherever--and this inhibited progress. . . . If perhaps we let people think we are doing nothing, then maybe the blacks will welcome a small step or two forward and the whites won’t be panicked by it.”

Confident of its ability to contain any protests from opposition groups, including the ANC’s low-level campaign of guerrilla attacks and urban terrorism, the government appears to feel that it has more space, more time to maneuver than seemed possible two years ago.

“We whites are well aware that this political system cannot continue forever,” Du Plessis said--and then suggested that a decade or more might be necessary to work out a new system.

Effort to Regain Initiative

For the reformers, in fact, the economic program constitutes a government attempt to regain the political initiative here. The government’s tough crackdown under the state of emergency on anti-apartheid protests took the initiative away from opposition groups, but until now it has been unable to translate that advantage into its own initiative.

Yet, the dimensions of South Africa’s economic problems in recent years have approached those of its political crisis.

Domestic economic growth rose to 2.6% last year, an increase from 1% in 1986 and a negative 1.5% the year before. Although a 3% growth is projected for next year, the government says that it needs a sustained 5% rate to create jobs for the unemployed. And the higher growth cannot be achieved without a 10% to 15% foreign component of fixed private investment each year.

Inflation has dropped to about 14.7% a year from rates of 21% to 26% in 1986, and the government has hopes of cutting it to less than 10% by 1990. But expansion of the economy, particularly on the scale envisioned by the government program, could quickly increase the rate of inflation.