Pacific Nation Aims for Self-Reliance. KIRIBATI: PRESERVING INDEPENDENCE

ON a sultry equatorial afternoon, Ieremia Tabai welcomes guests to his presidential office. He is dressed in a pin-striped shirt, shorts, and bare feet. He exudes quiet confidence and a down-to-earth pragmatism. In a decade of leadership, such traits have made Kiribati's President one of the most respected of the Pacific Island leaders.

Where many resource-poor island nations have become dependent on infusions of foreign-aid money, Mr. Tabai still bangs the drum of self-reliance. ``It is better to subsist on your own than to rely on someone. It is hard for the people. But I am convinced we can do it,'' the bearded leader says.

Many might consider President Tabai's optimism unrealistic. In addition to typical problems of crowded, typhoon-prone island nations lying thousands of miles from major markets, the Republic of Kiribati (pronounced Kiribass) has its share of unique development hurdles:

The size of Kiribati poses challenges for transportation, communication, and government management. The micro-state consists of 65,000 people living on 33 coral island specks strewn across an ocean area as wide as the continental United States.

In 1979, when it gained independence from Britain, Kiribati lost its largest revenue source, when mining of phosphate ore from Banaba Island ceased because of a dispute with landowners. Government income was halved, and export earnings fell 80 percent. The nation was left with coconuts and fish as exports.

Scientists are now warning that rising sea levels, due to the so-called greenhouse effect, could flood low-lying atolls. Kiribati could become a nation of ``environmental refugees.''

Yet Mr. Tabai insists Kiribati will overcome these hurdles. His attitude is typified by his now legendary refusal of certain aid.

In 1985, he canceled a multi-million dollar British aid agreement. He decided to curb spending rather than to continue reliance on foreign handouts to subsidize the government's recurring operational costs.

Recently, Tabai gave a polite ``no, thank you'' to Australia's offer to give 20 cars for chauffeuring regional leaders when they gather in Tarawa for this year's South Pacific Forum meeting in July. ``It's embarrassing for me to receive [Australian Prime Minister] Bob Hawke in my country in his car. I prefer to receive them in a car I've bought myself.''

Tabai has a commerce degree from Victoria University in Wellington, New Zealand, and keeps a tight hold on his nation's purse strings. Government spending has been slashed, in real terms, by 5 percent per year since 1979. But spending is still more than the revenue from the nation's limited sources. Budgetary shortfalls are covered by interest from the $185 million (Australian; US$148 million) in the Revenue Equalization Reserve Fund. The fund, an accumulation of phosphate royalties, has been praised as a model for developing countries.

But the loss of the phosphate exports has meant Kiribati runs a trade deficit of $10-20 million (US$8-16 million) annually. To boost exports, Kiribati is developing small businesses, such as garment-making - something other island states have done successfully. And efforts are underway to curb food imports, as sweet aromas from the new Tarawa Biscuit factory attest. ``Already, it's producing 60 percent of local requirements,'' boasts Tabai.

But economic growth since independence has been sluggish, at best. A government-funded fishing company has struggled to break even. Yet, Tabai remains confident. He's excited about an Italian developer's plans to build a $200 million (US$160 million) resort complex on Fanning Island - possibly breaking ground next year. Apart from a few sports fishermen, not many tourists visit Kiribati. The Fanning Island project could put this out-of-the-way nation on travelers' maps.

And Tabai hopes to restart the phosphate mines. He recently reached a verbal agreement with landowners on Banaba. ``If all goes well, we will start mining again next year,'' he says.

In recent years, royalty payments from foreign boats fishing in Kiribati waters have generated some funds - and controversy. In 1985, Tabai shocked Washington and Canberra by giving the Soviet Union fishing access rights. It was the Soviets' first island toehold in a region long dominated by Western interests. The agreement lapsed after a year, when Tabai refused to lower access fees. But for the right price, he says, the Soviets would be welcome back.

Critics say Tabai is not as self-reliant as his rhetoric suggests. Development aid has tripled since independence. He argues that none of the money goes into running the government. It all goes into capital improvements (roads, water, sewage) and business development. ``If aid stops tomorrow will the country collapse? No,'' says Tabai. ``We will go on. Most aid we get now increases our capacity to earn our own living.''

And the greenhouse effect? It's not Tabai's style to be making evacuation plans. ``We're still working on the assumption we'll be here 200 years to come.''

On July 12, Kiribati will mark its 10th anniversary of independence. Experts will note Kiribati lags the region in development and health care. Western values, cars, concrete and tin-roof homes now abound in Pacific island states; on Kiribati local music, motorbikes, and palm-thatched huts still predominate.

Tobai shrugs. ``I have traveled around a bit and, sure, we are poor in terms of per capita. But we haven't lost our self-respect because we can still feed ourselves, eat, and drink from our own resources. That's a good feeling,'' he says.