IN a step toward establishing interim rule, the South African government says it is prepared to make fundamental amendments - and even alter the status of Parliament - to create a transitional authority.This could mean a national referendum to sanction decisions reached by a proposed all-party conference expected to convene before the end of the year. The government has also softened its position on an elected constituent assembly that would sanction a constitutional draft based on a set of principles adopted by the all-party congress. In the past, President Frederik de Klerk resisted the idea of incremental changes to the Constitution and portrayed the referendum as something that would take place before a new constitution was implemented in two or three years. In terms of the new thinking, a referendum - the first to include blacks - could be held next year once the all-party conference has reached agreement on transitional arrangements. It represents the culmination of a shift that has been taking place since the government admitted in July it had secretly funded the Zulu-based Inkatha Freedom Party. In the wake of the scandal, the government faced increasing pressure to relinquish some power during the transition. Since then, statements by government officials have hinted at what President De Klerk calls a "phased or gradual approach" to constitutional change. The shift in the government's position emerged in a Monitor interview Oct. 28 with De Klerk and in subsequent remarks by Constitutional Development Minister Gerrit Viljoen in an interview with the Johannesburg daily, Business Day, published on Oct. 29. The interviews with both officials followed a weekend anti-apartheid conference that established a "Patriotic Front consisting of some 90 anti-apartheid groups - and demanded a "sovereign interim government or transitional authority" that at least controlled the security forces, the electoral process, aspects of the budget, and broadcasting. The unity conference drew the two main liberation movements, the African National Congress (ANC) and the Pan Africanist Congress, into a closer relationship. The PAC for the first time backed negotiations and agreed to preliminary talks on the Constitution. De Klerk said the government was prepared to give up some power, but it would have to be the result of a constitutional process and not through suspending the Constitution and creating an interim government to rule by decree in a constitutional vacuum. "Inasmuch as agreed transitional arrangements would ask the government to give up powers - that would have to be preceded by a constitutional process," De Klerk said. "It is not impossible that one might, through a process of negotiations, reach a conclusion that certain amendments to the Constitution may be necessary and that those amendments may be implemented." Both De Klerk and Dr. Viljoen appeared to favor minor constitutional amendments combined with an undertaking to consult a multiracial forum or super-Cabinet rather than legislative changes that would alter the status of Parliament and create new instruments of government. Viljoen said the government would be prepared to negotiate specific areas that could be jointly controlled if the ANC agreed that no drastic changes to the Constitution were necessary to achieve interim arrangements. But neither Viljoen nor De Klerk ruled out more fundamental changes. "It could be changes with respect to the composition and functioning of the executive," Viljoen said. "It could even be changes with regard to Parliament, but it could also be a firm understanding - a gentleman's agreement - that while the government continues to take decisions, the state president specifically binds himself morally - and in law he can do that - to consider recommendations made to him by a forum that has been agreed upon," he said. De Klerk made it clear in his interview that a change to either the executive or the status of Parliament would require a referendum. But an ANC official, speaking on condition of anonymity, said that the ANC would not be prepared to leave such a crucial issue as the division of political power to informal verbal arrangements. "Our bottom line is that sovereignty must be transferred from the present government to an interim government and that this must be enshrined in law," the ANC official said. "We don't want to become embroiled in a debate with the government over how this can be done and what the alternatives are. If we can agree in principle that this is what must happen then we will be able to agree on mechanisms to bring it about." A Western diplomat said the ruling National Party is not opposed to an elected constituent assembly that would give ultimate legitimacy to a draft constitution. The government's bottom line is that there should be constitutional continuity.