Economic austerity remains a divisive issue in Senegal. Post-election talks stumble over ways to combat rising prices

The movement toward national reconciliation in politically troubled Senegal appears to have run aground on a shoal of political and economic issues - including the course of this West African country's economic liberalization program. Agreements reached between the government and the opposition following unrest during presidential elections in February have largely broken down, and a wait-and-see atmosphere has settled over Dakar, the capital.

Rioting plagued Senegal's cities following the disputed elections and during the subsequent trial of the main opposition leader, Abdoulaye Wade, for inciting the violence. Mr. Wade has charged Socialist Party incumbent Abdou Diouf with stealing the election through fraud in a campaign that focused on tough economic conditions and bitter personal attacks.

In May, President Diouf, saying that no one has a ``monopoly on the truth,'' called for amnesty for Wade and other convicted members of his Senegalese Democratic Party (PDS) and for talks between himself and the opposition. Wade met with the President and the two agreed to form commissions to discuss the political, economic, and social issues facing the country.

The apparent reconciliation and Mr. Diouf's move to slightly reduce food prices combined to restore calm to the streets.

Now, however, only the political commission is expected to meet - with its agenda limited to anti-fraud reforms in the voting law and increased access to state-run media for the opposition. Wade's earlier requests, to fill a newly created position of vice president under some power-sharing pact, now seem dim.

The economic adjustment program - a source of the post-electoral violence - is no longer on the agenda for the talks.

Diouf, like the leaders of about 25 of 46 sub-Saharan African countries, has, for the last few years, carried out an austere economic adjustment program to free the economy from socialist policies and unleash greater private investment.

While most observers - including opposition leaders - agree that adjustment is necessary to avert government bankruptcy and economic disaster, the question has become how to handle the rise in unemployment and prices and the fall in wages that are often blamed on the austerity plan. The International Monetary Fund and its affiliate, the World Bank, designed the plan.

During the election, Wade attacked the government's policy of keeping the price of imported rice artificially high to replenish government coffers and encourage local production of millet and other foods. Wade promised to reduce rice prices some 75 percent, and make up for the lost revenue with improved tax collection.

Most government and foreign aid officials say that Wade's proposals would leave the government short of money and make the country more dependent on imported rice. ``You would completely destroy all cereal production in Senegal,'' says an aid official who supports the current plan.

During Wade's trial, Diouf backed away from his program by slightly lowering prices on rice, sugar, and cooking oil. But he stopped well short of adopting Wade's version of adjustment.

There is a widespread perception, but no proof, that exposing local companies to foreign competition, weakening laws that protect workers from lay-offs, and cutting government spending is contributing to joblessness. And public employees have felt the pinch of tight government budgets. Prosper Youm, Senegal's liaison with the IMF, says his last pay raise was in 1985: it amounted to $6 a month, enough to buy two cold drinks and a cab ride home.

Most supporters of the IMF-World Bank approach admit that adjustment inevitably imposes some hardships until private investment can spur greater growth. They say foreign aid can help bridge the gap, and donors have learned to be flexible in demanding quick reforms from third world countries. In Senegal, austerity enthusiasts say that good rains and higher farm prices have pushed economic growth to more than four percent each year since 1985. ``Some industries will diminish,'' says the aid official. ``Others will have a chance to grow.''

Plan supporters also say that some of the hardships that contributed to election unrest were the result of Senegal's deviations from the World Bank's ideal liberalization plan. And they point out that adjustment is less painful than economic collapse. ``The idea is to have an orderly adjustment so you won't have a social revolution,'' explains another aid official.

The problem of implementing austerity measures without causing social upheaval requires at least two conditions, most officials agree. First, the government must share the sacrifices of the populace; and second, the government and opposition must agree on adjustment measures to prevent the process from becoming a hot political issue as it did during the February elections.