U.S. Aid Plan for S. Africa Criticized as Shifting Funds : Assistance: Some lawmakers say it would hurt other African nations by diverting money from them.

The glow of goodwill that the Clinton Administration hoped would follow the unveiling of its South African aid package has been dimmed by complaints that it apparently will rely in part on money diverted from other struggling African nations.

At a White House meeting Tuesday to discuss the all-race elections in South Africa and plans for U.S. aid, some lawmakers and pro-African groups told President Clinton of their concerns that the diversion of funds would set back other sub-Saharan countries.

Senior members of African affairs subcommittees of both the House and Senate also have voiced unhappiness over such a shift.

“We can and should find funding sources for South Africa that will not jeopardize the already underfunded assistance given the rest of Africa,” Rep. Donald M. Payne (D-N.J.) said in recent testimony.

The aid package, expected to total between $160 million and $200 million, has offered Administration officials hope of improving strained relations with the Congressional Black Caucus over the Administration policy on Haiti. Generally, caucus members and other lawmakers interested in Africa policy are pleased with the South African aid plan, which some sources said will be announced Monday.

Yet the caucus already has written to the White House registering its formal objection to the plan, largely because it will rechannel about $70 million in aid from other African nations.

“Overall, the plan is quite thoughtful,” one congressional aide said. “It’s just this idea that the extra money would have to come out of the hide of other African countries.”

Some Africa advocates contend that because the Administration has hailed the dismantling of apartheid as a historic event, like the demise of communism in Eastern Europe, the aid should have the same magnitude as assistance to the former Communist states. South Africa itself should merit the $2 billion in regional aid earmarked for the former Soviet republics, they have argued.

But they have acknowledged that they are fighting a tough battle at a moment when the foreign aid budget is stretched thin and powerful interests would fight to block any shift of aid earmarked for the former Soviet republics and the Middle East.

Aid to South Africa in the current fiscal year totals $80 million, all of which has been funneled through non-governmental groups to avoid subsidizing the apartheid system.

A large part of the new money will take the form of housing guarantees, in hopes of helping finance a rapid expansion of badly needed shelter for the poor.

The use of housing guarantees tends to exaggerate the size of the aid package, since a modest amount of capital can generate a far larger amount in guarantees. Only $5 million in U.S. aid, for example, might generate $50 million in guarantees from South African lenders.

Administration officials declined to discuss details of the plan, which they said remains incomplete. They noted that aid to East Asia and Latin America was cut sharply in the current fiscal year while African aid was not decreased.

American aid to South Africa is expected to remain at the same level for two years, beginning with the fiscal year that starts Oct. 1. U.S. officials hope to be able to reduce the level of aid in subsequent years, once the country begins meeting long-neglected needs for housing and electricity and education infrastructure. Aid to all other sub-Saharan countries totaled $704 million this year.