After Secretary of State George P. Shultz testified Wednesday at a hearing of the Senate Foreign Relations Committee about U.S. policy on South Africa, he and Sen. Joseph R. Biden Jr. (D-Del.) had the following exchange.

This transcript is based on reports of the hearing from the Associated Press and United Press International and is slightly abridged. An official transcript from the Foreign Relations Committee is not available until five working days after a public hearing.

Biden's first reference is to South African Bishop Desmond Tutu, who responded with bitter anger to President Reagan's Tuesday speech on South Africa. Tutu characterized the speech as "nauseating."

Biden: Mr. Secretary, I'm amazed Bishop Tutu was as restrained as he was. People are being mugged and shot, imprisoned, killed, smothered. I admire his restraint, not his assertion . . . .

Shultz: I'd have to disagree with you, senator. I think to say that President Reagan's statement yesterday was nauseating is nuts and not anything I could agree with under any circumstances.

Biden: I'm referring, not whether you agree with it or not, to the frustration he Bishop Tutu must feel. I'm surprised that he hasn't said more.

Shultz: Of course he feels frustration. We all feel frustration. That's what's coming through here.

Biden: But these people are dying. His people are dying. You feel frustration, they're dying. They are being shot . . . . Children are -- they are lining up and shooting children.

Shultz: It's a terrible situation and what we need to be thinking about . . .

Biden: Is what to do about it.

Shultz: . . . is what to do about it.

Biden: What disturbs me, and I'll try not to be disturbed, is not merely . . .

Shultz: Remember, I'm a taxpayer. Just because I'm secretary of state, you can't kick me around, I'm a taxpayer.

Biden: I understand that, Mr. Secretary. But I want to tell you something. What disturbs me more than the policy that you call a policy is the rationale for the policy. You set out four principles that you adhere to and I will go over them in a moment. Then you say on page 14 of prepared statement , "We must not become part of South Africa's problem. We must remain part of their solution. We must not aim to impose ourselves, our solutions, or our favorites in South Africa."

Damn it, we have favorites in South Africa. The favorites in South Africa are the people who are being repressed by that ugly white regime. We have favorites. Our loyalty is not to South Africa, it's to South Africans. And the South Africans are majority black, and they are being excoriated. It's not to some stupid puppet government over there. It is not to the Afrikaner regime. We have no loyalty to them. We have no loyality to South Africa. It's to South Africans.

And the fact of the matter is . . . it is the leaders of South Africa and their people, black and white, who have the majority responsibility. They must rise to it. Well, they are rising to it. They are rising to it with the only thing left available to deal with that repulsive, repugnant regime of Afrikaners there. They have begged; they have borrowed; they have crawled, and now they're taking up arms.

Second thing, progress toward peace requires a timetable . . . . What is our timetable? What are we saying to that repugnant regime? Are we saying you've got 20 days, 20 months, 20 years? We ask them to put up a timetable. What is our timetable? Where do we stand morally?

Thirdly Biden quotes Shultz's testimony , "The choices before black South Africans are equally clear: To avoid an easy descent into violence, terrorism and extremism; to demonstrate by their action they understand the need for compromise." Hell, they've tried to compromise for 20 years. They tried everything, everything in their power. And look what's happened to them. They are being crushed.

And then you say, "The fourth principle is that our policies and those of our allies should ensure that expanded political liberties in a postapartheid South Africa are accompanied by an expansion of economic opportunities for all -- all -- South Africans."

Mr. Secretary, maybe it's because I come from the civil rights movement in this country. We sat there and we heard the same kind of arguments. The same exact arguments: "We cannot impose from the North a solution on the South. They must work out their problems, black and white together. We cannot as a nation expose them to the economic ravages that will come. We must consider what will happen after segregation before we eliminate segregation.' My Lord, and finally . . .

Shultz: That is not an accurate parallel . . .

Biden: Let me read it.

Shultz: . . . because we don't say we have to consider what happens after apartheid before we end it. We have said again and again and again that it's an abhorrent system. And I can be just as emotional as you can about that. And it needs to end.

Biden: You cite four principles. I assume they're all equally important. You say, fourth, "Our policy and those of our allies should ensure that expanded political liberties in a postapartheid South Africa are accompanied by an expansion of economic opportunities." My God, worry about that when it comes. These people are being crushed and we're sitting here with the same kind of rhetoric, the same thing, we heard. We heard, "Go slow." We heard, "We have to take care of the problem afterward." We heard, "We can't oppose . . . "

Shultz: You are totally misconstruing the testimony that I gave. Furthermore, senator, let me say that I hate to hear a senator of the United States calling for violence.

Biden: I'm not calling for violence.

Shultz: That's what you're doing. That's exactly what you're doing.

Biden: I hate to hear an administration and a secretary of state refusing to act on a morally abhorrent point. I hate to hear this country -- I'm ashamed of this country that puts out a policy like this that says nothing. Nothing. It says, "Continue the same." We put no timetable on. We make no specific demand. We don't set it down. I'm ashamed that's our policy. That's what I'm ashamed of. I'm ashamed of the lack of moral backbone to this policy.

Shultz: I resent that. I resent that deeply because there is tremendous moral backbone in that policy on a bipartisan basis and has been for many, many years.

Biden: There's no bipartisan basis for this.

Shultz: There is. I doubt very much if there is any real disagreement with the objectives set out there, with the steps that have to be taken if there is going to be the kind of change you want. There is no other way but to get those things to happen. Now the question is, what can we do to get those things to happen, and I think I outlined a course that is there and also have tried to point up to you and the South African government the terrible situation they are creating for themselves.

Biden: Obviously the action has caused violence or at least has not stopped the violence. There is violence, overwhelming violence in South Africa today. If you want to avoid more, the former prime minister of Australia Malcolm Fraser is correct: let the South African blacks know that we stand with them foursquare.

Shultz: We do, we have let them know.

Biden: They don't believe it. And neither do I.

Shultz: Well, believe it or not, I must say I read my testimony a different way than you did.

Biden: That's exactly what you said.

Shultz: I'm surprised it could be read with those inflections . . . .

Sen. Richard G. Lugar (R-Ind.), chairman of the committee, then gave Shultz a chance to respond further to Biden.

Shultz: I said in my statement, and you picked it up and criticized it, that we shouldn't have favorites. What I meant by that was that we shouldn't be trying to pick out who should be the government of South Africa, who are the right blacks to be the ones to meet with. We'll meet with all comers, and there are lots of them. And it's a complicated situation. We shouldn't be trying to designate who the leaders are. We have to take them as they come . . . .

Biden: Let's be for the oppressed, whatever they happen to be.

Lugar then recognized Sen. Charles McC. Mathias Jr. (R-Md.)

Mathias: If I can dig my way out of the lava . . . .