Botha's recipe for reform faces test with foreign bankers

For the government of South African President Pieter Botha, it might be called the London primary. A meeting of Western bankers in the British capital Feb. 20 should provide an important sign as to how the foreign financial community views Mr. Botha's latest recipe for reform.

Initially, it seemed Botha's keynote address to Parliament Jan. 31, in which he declared apartheid ``outdated,'' would help end a costly feud with foreign bankers, dating from a less conciliatory address by the President last summer.

At that time, the bankers suddenly refused to roll over some $24 billion in South African debts, helping drive the value of the South African rand to record lows on foreign exchange markets. Pretoria responded by freezing capital repayments on $14 billion of the tab.

Efforts by a Swiss mediator, Fritz Leutwiler, requested by Pretoria to arrange a compromise repayment schedule, have so far failed. South Africa is asking for a repayment moratorium until 1990, but the bankers are rejecting this out of hand.

Local business leaders were all smiles after Botha's latest speech, hopeful that the coming London talks would produce a compromise rescheduling agreement.

This may still happen. Mr. Leutwiler seems to favor a compromise coming closer to the bankers' position than to South Africa's. He is proposing, say press reports from Switzerland, a repayment moratorium until sometime next year -- not 1990.

Also working in favor of an agreement is the fact that, in purely economic terms, South Africa's hefty gold and other mineral stocks make it at least as good a risk as many other debtor nations.

But the original credit crisis was more political than economic. Finding a way out, foreign diplomats and other analysts suggest, will be a similarly political task.

An important, related issue is also political in nature:

Will the bankers, even after resolving the present rescheduling dispute, be prepared to return to a position of lending-as-usual to South Africa?

The political violence of the past 18 months continues here. Even optimistic government officials say it is too early to say whether it will abate in the months ahead.

The worry among some South Africans, meanwhile, is that the sheen seems quickly to have worn off Botha's Jan. 31 policy package. Black leaders and white opposition politicians have charged that the speech differed much more in tone than substance from earlier prescriptions, and that Botha still has not moved meaningfully toward sharing power with the nation's voteless black majority.

Irking the skeptics further was the President's rebuke of his foreign minister last Friday for suggesting there might some day be a black president in South Africa.

After this statement, several of the country's most conciliatory black leaders rolled back on initial praise for the Botha parliamentary address. By Wednesday, these included at least three leaders of government-sponsored tribal ``homelands.'' Their changed view seemed to dim prospects for activating a centerpiece in the Botha address: a new Statutory Council in which blacks, for the first time, would have an advisory role on some legislation.

Johannesburg's main business newspaper asked in an analysis on the domestic economy ``whether or not foreign bankers will accept the rescheduling proposals in the light of the bruised perceptions of Botha's address'' in recent days.