The Multinational Monitor

September 1988 - VOLUME 9 - NUMBER 9



AS A RESULT OF public outcry over apartheid, many nations have imposed economic sanctions on South Africa's white minority government, restricting, to varying degrees, export/import trade, bank loans and sales of computer and other high-tech equipment to South African police and military forces. In 1986 Congress enacted, over President Reagan's veto, sanctions that prohibit most imports from South Africa, the export of strategically valuable items such as computers and new bank loans. Now, two years later, the United States is reassessing the impact of the sanctions. While the administration and many corporate executives insist that sanctions have undermined U.S. influence in promoting change in South Africa, anti-apartheid activists and others maintain the 1986 law does not go far enough.

The proponents of sanctions are on the right side of this debate. The U.S. policy of "constructive engagement" was a sham. The idea that U.S. corporations operating in South Africa can be a "positive force for change" is similarly farcical. These companies have yet to dent South Africa's commitment to apartheid. Sanctions, on the other hand, have had a measurable impact, at least economically.

Imports from South Africa have fallen by $417 million since the U.S. sanctions were imposed. As a result, South Africa has suffered a net loss of $468.6 million in export revenues for products prohibited by sanctions between the first three quarters of 1986 and the same period in 1987, 90 percent of which is accounted for by losses in exports to the United States. This loss of export revenue, and its concurrent impact on South Africa's ability to generate foreign exchange, have clearly taken an economic toll. The dollar value of U.S. exports to South Africa, meanwhile, has actually increased and, measured as a share of total U.S. exports, decreased a mere 2/100ths of 1 percent. This undercuts arguments that sanctions have hurt U.S. producers, a common assertion of sanction opponents.

This is a far cry, however, from saying sanctions have moved South Africa toward the abolition of apartheid. Before that will happen, several flaws in the current sanctions law need to be addressed. First, the title of the Comprehensive Anti-Apartheid Act of 1986 belies its content--the sanctions are anything but comprehensive. New U.S. loans are, technically, prohibited. But conversion of existing short-term loans to long-term status is allowed, and banks have used South Africa's 1985 declaration of a moratorium on debt servicing to implement an accord effectively rolling-over current debts. New investment, too, is prohibited, but allowing U.S. corporations to reinvest profits generated by current investments has left U.S. direct foreign investment above 1984 levels and a mere $110 million below its 1986 value of $2.23 billion.

In addition, U.S. sanctions and other restrictions are flouted by governments and corporations alike. Some tactics are blatant- -the sewing of "Made in Swaziland" labels on South African- manufactured garments, for example--while others generate complex global paperwork trails that obscure the South African connection. U.S. sanctions, as they now stand, are an important moral statement on America's collective abhorrence of racism, but they cannot by themselves topple apartheid. Apartheid can be further weakened, however, if we are willing to increase the economic consequences of the South Africa regime maintaining its current policies. What is needed, first and foremost, is coordination among the international community in implementing and enforcing sanctions. Taiwan, Finland and Israel have each increased their imports of South African products by over 50 percent since U.S. sanctions became law, Taiwan more than doubling its imports. In addition, international sanctions need to be comprehensive. A complete ban on imports from South Africa, exports to South Africa and the presence of foreign corporations in South Africa- -nothing less than the severing of all economic relations--is vital. Allowances should be made, of course, for humanitarian aid for the majority population, channelled through internationally-recognized relief agencies. International credibility for the apartheid regime must also be denied. The United States should sever diplomatic relations with South Africa and simultaneously recognize a government-in-exile composed of representatives of the African National Congress (ANC) and other black political and religious leaders. By acting in concert, opponents of apartheid can help the people of South Africa achieve the freedom that has long been denied them.