The Multinational Monitor

AUGUST 1980 - VOLUME 1 - NUMBER 7


R E S O U R C E S

Book Reviews

South Africa's Corporate Allies

U.S. Business in South Africa
by Desaix Myers III (with Kenneth Propp,
David Hauck, and David M. Lift)
Indiana University Press
375 pages, U.S.$17.50.

Decoding Corporate Camouflage:
U.S. Business Support for Apartheid

by Elizabeth Schmidt
Institute for Policy Studies
126 pages, U.S.$4.95.

Ronald Reagan's chief foreign policy adviser, Richard Allen, has made a fortune consulting international investors. One country Allen likes to promote is South Africa, and his enthusiasm for the white-ruled state has not diminished during the Presidential campaign. On returning from a recent trip there, Allen advocated closer ties with South Africa and suggested that the U.S. government lift the arms embargo.

The possibility that Richard Allen will conduct the foreign policy of the United States invites a close examination of U.S. investment in South Africa. Two new books, Decoding Corporate Camouflage: U.S. Business Support for Apartheid by Elizabeth Schmidt and U. S. Business in South Africa, by Desaix Myers et al., give detailed treatment to what may continue to be the most hotly debated issue concerning multinational corporations.

U.S. firms have direct investments of about $2 billion or approximately 17 percent of all foreign investment in South Africa. U.S. banks hold about $2.2 billion, or one-third, of South Africa's international debt. These figures, however, misrepresent the importance of American business. U.S. investment is concentrated in vital areas of the economy, and American credit has enabled South Africa to withstand shortages of foreign exchange during an intense period of industrial development.

Whether a withdrawal of American firms would help end apartheid is a question that has taken on increasing importance in recent years as activists began to pressure church leaders, pension trustees, and university administrations that are shareholders in such companies. Desaix Myers is the Deputy Director of the Investor Research Responsibility Center (IRRC), an organization that provides "more than 170 institutional investors . . . with impartial research on controversial issues." Myers (and three contributors) conducted the research for the book as part of IRRC's regular efforts to inform investors about stockholder resolutions on South Africa. Their research included interviews with company officials and four trips to South Africa.

U.S. Business in South Africa is composed of three sections: Business and Labor, Four Case Studies of Foreign Investment, and the [U.S.] Domestic Debate. The detail is impressive, but the writing is dry and some information is repeated throughout, making for tedious reading. The difficulty is compounded because the "impartial" nature of the book precludes the development of central themes and arguments.

Myers' study demonstrates how South Africa is dominated by the apartheid regime. Myriad rules control the movement, advancement, and living conditions of black workers. The white government also limits foreign investment near the white urban areas, for fear that further job opportunities will lead to a growth in black squatter settlements near cities.

The book contains a good treatment of how U.S. corporations support the cornerstone of apartheid's future. The South African government is attempting to make all 18 million black people citizens of "independent" homelands, tiny areas practically devoid of natural resources or good farmland. The South African economy, of course, depends on black labor, so the white regime has encouraged foreign companies to invest in or around the homelands. U.S. Steel, Union Carbide, and Kennecott Copper have taken advantage of this opportunity. ,

Far from discouraging foreign companies, the economic policies of the apartheid government have generated extraordinary profits for the apartheid government. During the early seventies, the profitability of U.S. investment in South Africa was 50 percent higher than investment in the rest of the world.

Some Americans, however, will not allow U.S. multinationals to continue to support apartheid. Faced with demands from stockholders to withdraw their operations, 135 of the 350 U.S. companies in South Africa have endorsed the so-called Sullivan Principles,. a set of guidelines to eliminate discrimination in pay, advancement, training, and working conditions. A General Motors director, the Rev. Leon Sullivan, introduced the code in 1977 after consultations with several major companies and the South African government.

In Decoding Corporate Camouflage, Elizabeth Schmidt delivers a seething indictment of the Sullivan Principles. This set of guidelines, she writes, has "benefited the South African supporters of the apartheid system. It has allowed them to appear tolerant because they have not opposed the code's implementation. It has ensured the safety of American capital and technology, investments that strengthen and perpetuate the apartheid system."

Schmidt first considers the performance of corporations that responded to questionnaires sent out by Sullivan's monitoring service, the Arthur D. Little Company. She found that some companies Little described as "making good progress" had only added one or two black employees to training programs. In fact, only .7 percent of the black workers in the responding companies had received professional or managerial training. One-half of the companies had no blacks in supervisory positions. Some of the companies' much-heralded contributions to employee housing and scholarships pale when compared with amounts spent on whites.

For those who might suggest that it is too early to judge the principles, Schmidst argues that the Sullivan code "misses the point of apartheid." It's difficult to see how these companies could be a force for progressive change in South Africa when Control Data computers, Mobil gasoline, General Motors trucks, and Fluor technology serve directly to entrench the white regime.

Already, there is some evidence that criticism of the Sullivan Principles is having some effect. Rev. Sullivan in September announced that he may alter the code--or even call for corporate withdrawal if the poor performance of the companies continues.

Time is running out for South Africa. The next decade promises an escalation in civil and labor unrest-June's black student protests and July's auto strike may be the harbinger--as the white government finds itself increasingly isolated from the rest of the world.

Myers and Schmidt have done much to sharpen and clarify the debate over what role U.S. corporations should play during these crucial years. Their work deserves careful and immediate attention from stockholders, activists, and government officials.

- George Riley


Foreign Companies and International Investment in Zimbabwe
by Duncan G. Clarke, Catholic Institute for
International Relations, 275 pages, 4o

An awesomely detailed, sector-by-sector study of multinationals in one of the world's newest and most externally dependent states. Zimbabwe's capital stock is 70 percent foreign owned. This wealth of data on 250 foreign companies will help global analysts of multinationals, but overall analysis and the scenarios for change are a bit skimpy. .


Food Aid and the Developing World
by Christopher Stevens, St. Martins
224 pages, U.S.$25.00.

A relatively academic treatment of the uses and impact of food aid based on case studies in Upper Volta, Tunisia, Botswana, and Lesotho. The claims of donors are greatly overstated and so are those of the critics. Despite difficulties of measurement and a limited number of case studies, Stephens finds value in food aid in specific situations. One wishes for more recognition of a world food system, corporate needs, and the use of food as a weapon by global elites.


The Growth of Hunger: A New Politics of Agriculture
by Rene Dumont and Nicholas Cohen
Marion Boyars Publishers, 229 pages, U.S.$7.95

One of the world's greatest scholar-activists of agriculture and a British colleague demonstrate in a light, readable way the essentially political origins of hunger in modern history. They chronicle the sad history of uneven development from colonialism to the present. With good use of country studies, Dumont and Cohen illuminate the stunning waste and misuse of scarce resources the world over. In so doing, they counter commonly held notions concerning the benefits of food aid and the Green Revolution. As he has done for 40 years Dumont ends with a coherent and human alternative strategy: less conventional foods, appropriate agriculture, fair exchange, and the peasants in command. There is simply no better short introduction to world hunger available and it should be an ideal teaching tool for all kinds of audiences.


Reports

Who Owns Whom in Saskatchewan Uranium

This recently released 16-page report by the One Sky Saskatchewan Cross Cultural Centre provides a comprehensive listing of companies involved in uranium exploration in Saskatchewan, Canada. For anti-nuclear activists or others interested in the nuclear industry, the report should be of particular value.

Surveying over 150 companies either operating in the province or with equity holdings in companies that operate there, this report condenses a vast amount of material and presents it in a I clear and cogent way. The study contains information on each company's operations, interlocking ownerships, and chief officers, thus affording a rare look into the structure of the nuclear industry, not only in Saskatchewan, but also internationally.

For a copy, write:

One Sky Saskatchewan Cross
Cultural Centre
134 Avenue South South
Saskatoon, Saskatchewan
S7M 1S8
Canada


Organizations

Pacific-Asia Resources Center

Founded in 1973, this Tokyo-based group strives to supply materials and participate in activities that highlight the role of multinational corporations in East Asia. Focusing primarily on Japanese companies, PARC aims to educate activists and academics in the United States and Europe, and to spread information on a grass-roots level to East Asian people.

PARC publishes a number of periodicals. Its monthly New Asia News covers Japanese economic expansion. Asian military developments, and social protest movements in the region. AMPO, a PARC quarterly, analyzes the prospects . for democratically controlling business and government in Asia.

PARC also offers monographs on such issues as the Japanese fishing industry, women workers, in East Asia and nuclear power.

Over the past few years, PARC has widened its services to include an audiovisual center with documentaries on popular protests against multinationals, a language and researching school and a PARC "action group" to participate in pickets, boycotts and demonstrations.

Costs for PARC materials vary according to one's ability to pay, and the group encourages exchanges of materials.

For more information, write:

Pacific-Asia Resources Center
P.O. Box 5250
Tokyo International
Japan


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