Lesotho comes to grips with reality of its dependence on S. Africa

``I think our former prime minister began to lose touch with reality,'' remarks one Lesothan official and then sighs in relief over last week's military coup. ``Reality'' is local political shorthand for this nation's economic interdependence on a South African regime whose racial policies many Lesothans abhor.

The paradox also applies, to some extent, to other, more powerful black states in the region -- such as Mozambique and Zimbabwe.

But Lesotho is the extreme case -- a fact made joltingly clear by the South African economic squeeze that preceded the Lesotho military's ouster of Prime Minister Leabua Jonathan last Monday.

The South African pressure, which diplomats here see as one catalyst in the coup, was a case of economic carrot-and-stick.

The stick was a near-total embargo on truck and train traffic entering Lesotho, which is surrounded on all sides by South African territory. Lesothans must get everything -- from corn meal and fuel oil to the expresso-coffee beans for Maseru's one posh Italian restaurant -- via South Africa.

The economic carrot is what is known as the Highlands Water Project -- a $1 billion plan to divert water from Lesotho's rivers to South Africa via 120 kilometers of tunnels and five dams. South Africa needs water to foster growth in its main industrial and population center -- around Pretoria and Johannesburg. Proposed by South Africa, the project would net Lesotho millions of dollars in annual royalties by the end of the century.

Of several proposed water-diversion options to meet South Africa's increasing need for water, the Lesothan-water option is the cheapest.

For Lesotho, the project means some new jobs. In the long run, it would also allow, via domestic hydroelectric spinoffs, greater energy independence from South Africa. Above all, says one Lesothan official frankly, ``We get cold cash.''

At the project's completion some 30 years from now, officials here say, the water royalties would be Lesotho's largest source of income. One banking expert explained, ``It is going to be the heart of our economy in the future.''

As South Africa soured on the increasingly hostile and pro-Soviet statements of Prime Minister Jonathan last year, it suspended movement on the water project. After an eight-month hiatus, the South Africans returned to the table, saying they'd decided after all to keep political considerations out of the water scheme. South Africa, explained a Lesothan official, ``wants the project, too.''

Lesothans, however, did not take the no-politics pledge as foolproof. And, not all officials were calmed even when South Africa repeated the promise privately during this month's border restrictions.

``Relations between the past [Jonathan] government and South Africa had obviously deteriorated to the point of no-talking,'' says a senior Lesothan economic official. ``One foresaw, of course, that this would stall the water project.''

Another official says that, with the ouster of Mr. Jonathan, such concerns are fading. He still thinks, however, that it is possible the signing of a first-stage water treaty between South Africa and Lesotho will be delayed beyond ``our original timetable of February or March.''

In the days before the coup, South African pressure prompted more immediate economic concerns.

``I do believe,'' says a Lesothan banking official, ``that within a very short time the [border] measures could have damaged our economy.'' It was also feared that the pressure might escalate -- ``that the South Africans might have cut off our electricity,'' he added.

In the longer-run, a rupture might have affected the estimated 150,000 Lesothans who work in the gold mines of South Africa as migrant laborers, returning to Lesotho for a few weeks each year to see their families.

The workers send home roughly 250 million South African rands -- about $115 million at present exchange rates -- each year. This is by far Lesotho's largest source of foreign currency.

Some additional concern arose before the coup when large depositors in Maseru banks started withdrawing deposits in South African currency -- which, alongside the Lesothan loti, is legal tender here -- and transferring them to banks inside South Africa.

One of the first moves made by the military council that ousted Jonathan was to freeze foreign-currency transactions. But two days after the takeover, a banking source said that the new leaders' public emphasis on continuity seemed to be reassuring despositors, and the freeze was seen as ``very temporary.''

Some Lesothan economic officials seemed to hope that, in similar spirit, the new government would address Pretoria's charges that black South Africans living in Lesotho were involved in cross-border ``terrorism.''

One top official remarked: ``Our dependence -- or interdependence -- on South Africa calls, I think, for total stability within our borders.''