South Africa is seeking a $1.1 billion loan from the International Monetary Fund, and at first sight it might appear as a routine international financial transaction. But the fact is that IMF approval of this loan -- and United States acquiescence -- holds a twofold danger.
First, it would would dramatize the Reagan administration's refusal to push for changes in the immoral apartheid system in South Africa. Second, it would give South Africa the economic means to carry on its military adventures against neighboring states. Meanwhile, the IMF lacks sufficient funds to address the real social and economic needs of Third World nations.
Forty members of Congress have written Treasury Secretary Donald T. Regan to oppose this loan. The secretary's response, that the United States should not "introduce political considerations into the IMF," mocks credibility. This administration has already politicized the IMF and other international funding institutions by opposing loans to Nicaragua, Vietnam and Grenada, and by insisting on a loan to El Salvador in spite of opposition from West European nations and IMF staff.
More important, the loan would be yet another instance of the administration's failure to come to terms with the moral, political and economic consequences of racial domination in South Africa.
This would be the largest loan South Africa ever has received. Roughly $200 million would come from the United States' 20 percent share in the IMF, and the loan would feature the largest amount of funds ever awarded from the IMF's Compensatory Financing Facility -- the arm that makes loans with minimal conditions.
The loan would undercut the United States' intense diplomatic efforts to end the conflict in Namibia, where South African intransigence has dashed hopes for an early settlement. By covering the entire 30 percent increase in Pretoria's defense spending over the past two years, the loan would enable the South African regime to persist painlessly in its illegal occupation of Namibia and its escalating raids on Angola and Mozambique. Such ventures disrupt the economy of the entire southern African region.
An IMF loan to South Africa would subsidize apartheid policies that seriously distort the country's economy and hamper development of its vast resources. Rigid "influx control" measures prevent free movement of labor. A black must secure government permission to live and work in the 87 percent of the country that has been officially assigned to whites. Newly proposed laws will make such permission far more difficult to obtain, artificially limiting the pool of labor at a time when many blacks in rural areas have no other means of survival.
A second major cost of apartheid is a serious shortage of skilled labor and educated manpower. Black unemployment is estimated at 20 to 30 percent, yet hundreds of thousands of jobs go unfilled. A South African government commission recently reported that in order to keep the economy functioning, the country needs to produce six times the number of skilled workers and professionals that now joins the labor force every year.
This distorted labor picture results from separate educational systems for the different racial groups. The government spends 10 times as much on a white child's education as on a black child's. Education is free and compulsory for whites. For blacks, it is neither.
Third, there is the high cost of administering an all-pervasive system of racial domination. For example, laws must be enforced that require every black in "white areas" to carry documentation at all times, and that prevent many black families from living together. Hundreds of thousands of blacks are jiled every year for violating these laws. The system has grown so costly that the government is exploring means to streamline it.
For the IMF to make this loan to South African without taking into account its economically disastrous domestic and foreign policies would be an outrageous abuse of the international monetary system. The conditionality of an IMF loan to South Africa should reflect the need for fundamental reform.
The IMF often requires Third World countries to implement measures that carry profound political risks -- such as raising food prices and reducing wages. By these standards, it would be reasonable for IMF member countries to demand that, before a loan to South Africa can go forward, Pretoria must end its economically repressive apartheid policies and cease its military occupation of Namibia and its attacks on neighboring countries.