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Cape Verde: staying afloat. Known at home and abroad as honest and efficient, nation's people survive with the help of many donors

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A spontaneous demonstration earlier this year sparked by an interisland dispute over the composition of the national soccer team quickly took on political overtones hostile to the central government.

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And at Cidade Velha, near the capital, residents speak resentfully about indifferent bureaucrats and arrogant party officials.

Some government ministers favor the introduction of multiparty democracy along European lines; more do not want to cede the party's comfortable monopoly on political power.

Many, however, are clearly concerned that the contentious nature of democratic politics will destabilize the nation's fragile economy, frightening away precious capital from abroad. The equivalent of about two-thirds of Cape Verde's gross domestic product comes from foreign aid and emigrant remittances, both of which could stop flowing if donors or investors felt their funds might be in jeopardy.

After 17 consecutive years of drought, Cape Verde cannot afford to lose these funds. In 1968, the last year of plentiful rain, the country produced 80 percent of its food needs. Today it produces less than 10 percent.

Despite the dispiriting agricultural statistics of 1985, however, one sees no victims of famine, no refugee camps, and no obvious black market. The shop windows are full of goods, and neither rationing nor any of the shortages associated with the hardship of drought are evident. Through an efficiently run program of emergency food aid, soil and water conservation, and economic diversification, Cape Verde has survived.

Instead of being handed out free of charge, food aid from a United States Agency for International Development (USAID) program is used to pay otherwise unemployed peasants to work on public works projects. The workers then use their income to purchase the US food aid.

The most needy do receive free assistance, says Minister of Rural Development Joao Pereira da Silva, but as a rule ``we've refused to distribute free food. . . . Jobs keep the normal economic circuits functioning, and people have the feeling they're earning by their own labor.''

The public-works project include mostly programs to improve infrastructure, and agricultural and environmental conditions. Under the former colonial government, for example, there was no active reforestation program and the landscape was gradually denuded. Since independence, however, more than 9 million trees have been planted.

Cape Verde's widely dispersed emigrant community has gained a reputation as being pragmatic and hardworking, according to one foreign businessman.

This has helped raise the nation's economic profile abroad, and new efforts are under way to use Cape Verde as a springboard for trade with the western African nations. Most sources interviewed agreed that, despite isolated cases of abuse of privilege, the nation's public servants are honest and industrious.

Much of Cape Verde's esteem abroad is a result of good management at home. According to Tom Ball, director of a very successful USAID program here, foreign donors are attracted to Cape Verde because ``few countries make the good use of their aid that the Cape Verdeans do.''

In an era when many foreign aid programs are under fire for inefficiency, waste, and inappropriateness to local circumstances, USAID's Watershed Development Project provides a welcome contrast.

The project will cost $5.6 million over the course of four years.

Under the direction of four US specialists and four Cape Verdeans, the project employs more than 6,000 workers who would otherwise have no means of livelihood.

The project has begun to bear fruit. Formerly irrigated lands that succumbed to the drought have been replaced with newly watered areas at the bottoms of the dammed-up ravines.

Most important, the project has kept thousands of rural families on the land. Otherwise the rural economy on Santiago would long since have collapsed, and the government would be facing masses of starving shanty dwellers in the cities.

Success such as this keeps Cape Verde's list of donor nations unusually long and broad for so small a recipient country -- including everyone from the superpowers to Iceland and Egypt.