The Multinational Monitor


N E W S   M O N I T O R

Anti-Apartheid Movement

Growing Pressure on Pretoria

The South African economy faces serious disruption as a result of the fast spreading support in the United States for action to restrict investment and trade with Pretoria.

Anger at the Reagan Administration's cosy relations with South Africa and black voting power at the American ballot box have combined to give antiapartheid forces their best hope to date of placing curbs on US corporations with investments in the country.

Legislatures and local authorities across the country are voting in increasing numbers to pull their pension funds out of companies with investments in South Africa. And in spite of US Treasury opposition Congress has placed restrictions on future dealings between the International Monetary Fund and South Africa.

Most importantly, however, four measures now passed by the Democratic controlled House of Representatives and awaiting final determination in a House-Senate conference would place sweeping economic, trading, security, and financial controls on Pretoria.

The tide of public opinion against American investment in South Africa is gathering strength in a similar way to that which swept the nuclear freeze movement to the forefront of national affairs in 1982. For the first time it has featured regularly on national television as a result of the series of Democratic presidential debates where the US's policy towards an apartheid regime has been widely discussed. All three remaining Democrats in the race, Mr. Walter Mondale, Senator Gary Hart, and the Rev. Jesse Jackson, with a keen eye on the most important "black" foreign policy issue, support all the measures currently coming to a head in Congress.

In a speech last month the Secretary of State, Mr. George Shultz, acknowledged that the administration faced an "uphill struggle" in reversing the moves at the state and federal level, and conceded that there was a "real chance" that some of the anti-apartheid legislation would pass. State Department officials are worried that it will slow up recent progress' made in ending the deadlock over Namibia.

Mr. Shultz was mainly referring to four specific South African amendments which have been attached to the Export Administration Act in the House. The first sponsored by Rep. Stephen Solarz (Democrat, New York), would require US companies to live up to the so-called "Sullivan principles" which include equal pay and conditions and special opportunities for blacks; a complete cut-off in commercial bank loans to the South African government and a ban on the import of gold coins, including the Krugerrand.

The second measure, sponsored by Rep William Gray (Democrat, Pennsylvania) would flatly ban all new American corporate investment in South Africa. This was passed easily by a voice vote on the floor of the House and drew support from some Republicans.

A third measure, sponsored by Rep Howard Berman (Democrat, California) would put back in place export controls on goods for the South African military and police. These restrictions were removed by the Reagan Administration soon after it took office as part of its policy of "constructive engagement" -under which it believes political progress in southern Africa as a whole will best be achieved by offering the carrot of cooperation rather than the stick of sanctions.

The fourth provision which has been added to the Export Administration Act by Rep Howard Wolpe (Democrat, Michigan), chairman of the House Africa sub committee, would expand the reach of controls on nuclear technology. In particular it would end the shipping of reactors and nuclear fuel to South Africa if it refuses to accept the full scope of the safeguards required by the International Atomic Energy Agency.

The Solarz and Gray provisions would strike at the heart of the South African economy. According to figures provided by the South African embassy in Washington, some 320 American companies have some $3 billion invested in the country and directly employ some 120,000 people, blacks and whites.

Although Britain's Barclays Bank remains the biggest financial organisation in the country it is American banks which have been the leaders in arranging commercial loans to South Africa and the US's gold bugs have been large-scale consumers of the Kruggerrand gold coin.

The Sullivan principles, which have already been adopted by almost half the American companies operating in South Africa, directly challenge the Apartheid laws and in some respects go further than America's own civil rights legislation. Officials at the embassy in Washington say they are a matter of deep concern in Pretoria although formal protests have not been made.

The principles were first put forward by the Rev. Leon Sullivan, like Jesse Jackson, a black Baptist minister, who believes that America's civil right movement has an international dimension. His rules require US companies operating in South Africa to de-segregate dining rooms and toilets; pay equally for equal and comparable work; increase the number of non-white in management and supervisory jobs; develop training programmes for the advancement of black workers and improve nonwhite workers' housing, transport, health care, and recreation facilities.

They have been criticised by some blacks in the United States for failing to challenge the basic structures of the South African economy. The companies, it is noted, still pay taxes to the apartheid regime in Pretoria, put money into South African bonds and would fall under the control of the government if there were civil unrest. With US companies controlling some 33 per cent of the car market, 44 per cent of the oil industry, and 70 per cent of computer technology, Sullivan - with its emphasis on reform from within-is not seen as a radical enough step on its own.

Whether or not the measures before Congress get passed this session, moves to outlaw the South African economy at the state and local levels have become a brush fire fanning through legislatures. Earlier this month Nebraska, a Democratic mid-Western state, passed laws which would restrict public pension funds from investing in companies with interests in South Africa. It is a major decision for the state since some $276 million of investments will have to be divested.

It joins the largely black District of Columbia, which has taken similar steps, plus such important industrial and service states and cities as Connecticut, Massachusetts, and the city of Philadelphia. In Massachusetts, for instance, the teachers and state employees' pension funds was forced to divest some $90 million in bonds and shares and took an $11 million loss-to fulfill a political principle.

Significantly, however, in spite of the potential for financial loss by state funds, another 13 states are now seriously considering some form of divestiture. These include the two most populous and richest states in Union (almost countries in their own right), New York and California.

There are problems for the states and pension funds involved. "The risk level goes up considerably," when divestiture of South African connected investments takes place, Mr. Howard Bicker, an executive director of the Minnesota Board of Investment which manages some $7 billion in funds, said recently. The effects of the large-scale disinvestment taking place are still unknown. It does mean, however, that South African money instruments and companies with interests in South Africa will increasingly become pariahs in the financial community.

The economic retaliation against South Africa is not simply a political fad. Black power in elections, as demonstrated in big cities like Los Angeles, Chicago, Atlanta, Philadelphia, and New York, means that it is becoming a permanent feature of America's international political landscape.

It has been given a new spur this presidential election year by the Rev Jesse Jackson. His strident calls for isolating Pretoria have enhanced the prospects for the Congressional legislation. Senator Hart has joined him in calling for a total embargo on trade while Mr. Mondale, ever more cautious, has endorsed the Congressional hills but is holding his fire on the embargo.

He may, of course, not be able to hold it much longer. It is certain to be one of the conditions set by the Rev Jackson in San Francisco when he will be asked by the party to deliver the black vote against President Reagan in November. It is certain to become part of the partly platform and could be one of the first major actions taken by a new Democratic Administration next year or in 1988 if this turns out to be Mr Reagan's year.

South African diplomats in Washington acknowledge that the moves now gaining momentum could have "serious repercussions" for the South African economy. If the US, regarded as one of South Africa's closest friends, is willing to turn up the heat, then other countries may follow suit, isolating Pretoria from the Western values to which it still aspires. ..

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