President Reagan yesterday dropped his unyielding opposition to sanctions against South Africa's system of racial segregation, imposing a series of limited economic sanctions against the Pretoria government, including restrictions on U.S. bank loans and technology exports.
The sanctions are similar to some proposed congressional measures Reagan had threatened to veto. They appeared to give the administration at least a temporary edge in the fight with Congress over how tough the action should be.
The Senate yesterday refused to shut off a filibuster against a more restrictive sanctions bill -- effectively delaying action on the measure -- but another attempt to halt debate and pass the bill is expected Wednesday.
Reagan rejected a congressional proposal that would automatically trigger further sanctions in a year unless South Africa adopts reforms. He also rejected those steps in pending legislation that he said would "damage the economic well-being of millions of people in South and southern Africa," an action that drew a harsh denunciation from congressional Democrats.
"This package will play in Pretoria," House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) said. "It will be seen for what it is by the people suffering under the yoke of that government."
In his executive order, Reagan approved measures that:
*Limit U.S. bank loans and sales of computer and nuclear technology to the Pretoria government.
*Initiate steps that could lead to a ban on U.S. imports of krugerrand gold coins.
*Urge U.S. firms operating in South Africa to abide by the "Sullivan principles" of voluntarily practicing fair-employment policies.
Although the measures are likely to have little economic impact in South Africa, administration officials say they think that the psychological repercussions of Reagan endorsing formal sanctions will be considerable.
In nationally televised remarks, Reagan called apartheid "deliberate, systematic, institutionalized racial discrimination denying the black majority their God-given rights. America's view of apartheid is simple and straightforward: We believe it is wrong. We condemn it.
"The problems of South Africa were not created overnight and will not be solved overnight, but there is no time to waste," Reagan added. "To withdraw from this drama -- or to fan its flames -- will serve neither our interests nor those of the South African people."
However, the president insisted that he was not retreating from his controversial, five-year-old policy of "constructive engagement," which seeks to foster change in South Africa through dialogue and friendly persuasion. When a reporter asked if constructive engagement is still U.S. policy, Reagan replied:
"Yes. You might add the word 'active' to 'constructive.' But I think it still is [the policy]. It is consistent with what we've been doing."
He reiterated past administration arguments that "South Africa is not a totalitarian society" but one at the "beginning of a process of change." Therefore, Reagan continued, U.S. policy "does not mean quitting, but reaching out . . . calling for political dialogue, urging South Africans of all races to seize the opportunity for peaceful accommodation before it's too late."
In economic terms, the sanctions are likely to have little effect. The limits announced yesterday on nuclear sales only codified measures already in place, while the computer ban reinstituted a previous policy.
Similarly, the new steps are expected to be have marginal impact because bank loans to the South African government and purchases in this country of krugerrands have plummeted as ferment has gripped South Africa.
However, while Reagan and other administration officials have emphasized those facts as an argument against sanctions, others have argued that the impact must be measured in psychological terms.
Blacks in South Africa are likely to see sanctions as a signal of encouragement for their struggle. And white South Africans, who have regarded Reagan as perhaps their strongest ally in the outside world, are likely to view his actions as a sign of their growing isolation.
The sanctions also underscored the degree to which South African ferment, and the reaction to it in the United States, have vaulted the apartheid controversy to the forefront of the administration's foreign policy concerns.
Reagan said U.S. Ambassador Herman Nickel, who was recalled three months ago, was sent back to Pretoria yesterday with a message for President Pieter W. Botha "underlining our grave view of the current crisis and our assessment of what is needed to restore confidence abroad and move from confrontation to negotiation at home."
In addition, Reagan said he was directing Secretary of State George P. Shultz "to increase substantially" funds used to provide scholarships for South African blacks and to promote human-rights programs there. He also told Shultz to establish "an advisory committee of distinguished Americans" to provide recommendations within 12 months "on measures to encourage peaceful change."
Shultz, who spoke with reporters following Reagan's address, denied that the administration was trying to water down the congressional bill by ignoring a provision that could impose further sanctions, such as a ban on U.S. investment, if progress is not made in the next 12 months.
"These are actions that are designed to register our view against apartheid, as distinct from actions designed to have an effect by depriving people in South Africa of economic livelihood, especially blacks," Shultz said. "The president has tried consistently to make that distinction . . . . The president has been true to his purpose."
A senior administration official, who spoke with reporters on condition he not be identified, argued that legislative sanctions would send "an inflexible message that is not subject to change." Executive action affords greater flexibility, he continued, and the administration sought "to take the intent of the Congress and put it into an instrument that you can use effectively."
"It is basically moral suasion," the official said. "In economic terms, the total effect of the U.S. business investment in that country, if it were all to come out tomorrow afternoon, would be about 1 percent of the GNP."
Overall U.S. exports to South Africa have been falling significantly. The figure for the first six months of this year was $675 million compared with $1.28 billion for the same period last year.
Despite the easing of a computer ban imposed by the Carter administration, the U.S. share of the computer market in South Africa has dropped from 70 percent to 48 percent in the past four years.
Commerce Department figures show a far more dramatic fall in krugerrand sales, which peaked in 1984 at $484 million, then began dropping. Only $87.8 million worth of the gold coins was sold here in the first six months this year. Sales now appear to have almost completely dried up.
Reagan's executive order did not ban the purchase of krugerrands but said the United States would discuss the legality of such a move with the General Agreement on Tariffs and Trade (GATT), the 90-nation organization that monitors international trade agreements.
Shultz described this as a requirement of U.S. treaty obligations.
But the senior official hinted that the ban might not be put into effect.