The Multinational Monitor

September 1988 - VOLUME 9 - NUMBER 9

T H E    F R O N T

Senators' Investments Linked to South Africa

ALTHOUGH THE United States Senate voted to impose sanctions against South Africa in 1986, 15 U.S. senators continue to hold investments in companies doing business in or with South Africa or Namibia, a survey of senators' financial disclosure reports shows. Two of these senators voted against the sanctions legislation passed by Congress in 1986. The survey reveals millionaire Sen. John Danforth, a Missouri Republican, as the leading investor, with at least $1 million invested in companies with ties in either country. Senate Foreign Relations Committee chairman Claiborne Pell, D-R.I., was second with investments valued at no less than $476,020 and income of at least $290,000 in dividends and capital gains generated from those investments. Ironically, Pell, the leading recipient of income from South Africa-tainted investments in the survey, voted for the 1986 sanctions legislation and supports the strengthened sanctions legislation pending in the Senate, which would ban new U.S. investment in South Africa. In a similar survey conducted by Essential Information in 1986, Danforth, who voted for the 1986 sanctions bill that became law over President Reagan's veto, placed third in investments, with at least $600,000 in holdings in companies that do business in or with South Africa. Danforth is not likely to support the current sanctions bill in the Senate, his spokesperson said, because he "do[es] not feel the investment provisions [of the bill] are efficient."

The spokesperson claimed that the current bill was brought to the Senate by Democrats seeking political capital for presidential candidate Massachusetts Governor Michael Dukakis. The new sanctions legislation was passed by the House of Representatives in August, and is significantly stronger than current law. It includes a provision requiring all U.S. companies to completely disinvest from South Africa.

The survey of senators' financial statements, however, raises questions about the sincerity of senators in promoting effective change for the people of South Africa. Multinational corporations have wrung millions of dollars in profits from apartheid's low-wage work force. Fifteen U.S. senators, nonetheless, pocket significant dividends and other payments from these companies. Other senators in the top 10 investment column include 1984 Democratic presidential candidates John Glenn of Ohio at number three and Ernest Hollings of South Carolina at number eight. Kansas Republican Nancy Kassebaum falls in fifth place, with William Armstrong, a Colorado Republican, in sixth. Except for Hollings, with a minimum of $180,000 in South African-tied investments, each of these senators has more than $200,000 invested in such companies. Each voted in favor of the Anti- Apartheid Act of 1986 and each, with the exception of Kassebaum, is supporting the current bill. Kassebaum "doesn't support total disinvestment," a spokesperson in her Senate office said. Collectively, the top five Senate investors had at least $2.4 million invested in companies doing business in or with South Africa in 1987. Senators receiving at least $1,000 in honoraria from corporations with ties to South Africa totalled $73,000 for the top 13 senators. Richard Shelby, an Alabama Democrat, received $11,000 in honoraria, and Pennsylvania Republican Arlen Spector received $10,000, leading the list of nine Republicans and four Democrats. The survey was conducted by comparing senators' financial disclosure reports for 1987 with a list of companies doing business in or with South Africa or Namibia published by the New York-based anti-apartheid organization The Africa Fund.

-Jim Donahue Jessica Cowan and Elizabeth Hax contributed to this report.

Guyana's Economic Woes

GEORGETOWN, Guyana--The trappings of democracy are here, British-style, because this was a colony, British Guiana, for more than 150 years. There is a parliament and a high court, both housed in handsome buildings, and a president, Desmond Hoyte, 59, and his prime minister, Hamilton Green, 53. Green is number two in Hoyte's ruling party, the People's National Congress. There is a major opposition party, the People's Progressive Party, with nine members in the 54-member parliament. Georgetown is a hot, humid city of 200,000 built in a swamp below sea level at the junction of the Atlantic Ocean and the Demerara River on South America's northeast coast. The Idaho-sized nation, 83,000 square miles in size, is rich in natural resources. It has rice, sugarcane, timber, bauxite, gold, diamonds and probably oil, which three American companies are seeking on and offshore. But democratic forms and natural riches have not helped Guyana in the 22 years since it became independent.

Today, South America's only English-speaking nation typifies the failings of the Third World and its president is begging for handouts from Washington, London and any multinational lending agency that will listen to him. This country of big rivers, fertile uplands and mountains seemed to have everything going for it in 1966. That was the year Forbes Burnham, founder and leader of the People's National Congress, became president, a post he held until his death in 1985.

As late as 1975 Guyana's per capita income was around $1,500, according to the Inter-American Development Bank. This year it will be $557, says the July 1988 "Economic Trends Report" of the U.S. Embassy. Cartons of eggs are stacked in a corner at Geddes Grant Supermarket on Main Street here. Above is a sign saying: "Eggs, $2.40 each." A loaf of whole wheat bread is $10, a small bar of Ivory soap also $10. At Guyana Stores, Ltd., the nationalized department store a block away, a pair of sweat socks sells for $49.95, a man's shirt $195.95. Those prices are in Guyanese dollars. The nation's minimum wage is about $25 daily--again in Guyanese dollars and $50 a day is a good salary. A competent Guyanese secretary at the U.S. Embassy earns $20,000 a year--or less than $1,000 yearly in U.S. dollars at the so-called "bank rate" of 21 Guyanese dollars to each U.S. dollar.

The "parallel" or black market economy, composed of goods openly smuggled here from neighboring Brazil or Venezuela, is larger than the formal economy, as a visitor finds by walking across the street from Guyana Stores, Ltd. to the bar of the Tower Hotel. There, a can of CocaCola or Pepsi costs 15 Guyanese dollars and each can says, in Spanish, "made in Venezuela." There are three currency rates. The "official" rate is 10 to $1 U.S., though no one pays attention to it. The bank rate is 21 to $1 U.S. at the remaining banks, but Chase Manhattan, Barclay's and the Royal Bank of Canada all have departed, each selling its assets to the government for $1. The real currency rate can be found on two-block long America Street, near the big Stabroek Market, the parliament and the high court. America Street's common name is "Wall Street." Hundreds of young men lounge on the sidewalk, laden with gold chains and bags stuffed with Guyanese dollars. They shout at passersby, "Want to do business?" I ask a young man: "How's it going?" He eyes me coolly and says, "Thirty-six." That is the going currency rate, 36 to $1 U.S. "What if the government devalues the currency further?" I ask. He says nothing but raises his right hand up-up-up, to indicate the black market rate will exceed whatever the government rate is. The gesture is a vote of "no confidence" in the government and Guyana's future. The money-changers set the pace for the whole Guyanese economy and the country's 755,000 people. The Guyanese dollar is worth less than three U.S. cents.

Unemployment and underemployment are estimated at 25 to 35 percent of the labor force, but the East Indian owners of rice and sugarcane fields cannot get workers. Clement Rohee, secretary for international affairs of the Marxist People's Progressive Party, says, "There is a serious shortage of cane-cutters. People are leaving the field because the government won't give them boots, water, transport or annual production incentives. Most are East Indians--the government discriminates." He adds, "There's a similar problem in rice. More than 40 percent of the rice lands have been abandoned by [East Indian] farmers. They can't get twine, bags, fertilizer. Production costs are exorbitant. The government's making it easy for the big rice millers to buy lands." And the city and the easy money of "Wall Street" draw young men off the land and into the underground economy.

Rohee's party is headed by Gheddi Jagan, now 70, and retains the allegiance of most East Indians, descendants of indentured workers brought here by the British after Britain abolished slavery in 1838. Today, East Indians comprise a slight majority of the population; descendants of African blacks are a minority, though they have controlled Guyana's government since 1964, the year of the last fair, free election. In the 1950s and up to 1964 Jagan was the colony's chief minister. Burnham split with him in 1957 to form his People's National Congress, taking along such Afro leaders as Hoyte and Green. In late 1961 Jagan visited Washington and frightened the Kennedy administration with his Marxist talk. The United States convinced Britain to change British Guiana's electoral system to proportional representation. In the 1964 election, Jagan's party received 46.5 percent of the vote, Burnham's 42.5 percent and a third, conservative business party 10 percent. Others received one percent. Burnham and the conservatives formed a coalition with Burnham as chief minister. Two years later, after independence, Burnham no longer needed the conservatives. He ruled alone.

The ethnic split is part of the reason for Guyana's brain drain. Today, about 320,000 Guyanese--the skilled, talented and educated--live in Barbados, Trinidad, Canada, England, the United States and other English-speaking Caribbean islands, sending remittances home. That allows people to make the 353- mile flight from Georgetown to Port-of-Spain, Trinidad. The main airline serving Timheri Airport, an old World War II base 26 miles from Georgetown, is British West Indies Airways, and it will not accept Guyanese currency to buy a ticket out of Georgetown. Naturally, Prime Minister Green, in his huge office at parliament, puts the situation in a different light. "Race doesn't matter to us," Green insists. "Jagan is a spent political force, failing to attract young people. He's beating the ethnic drum--again. But the average Indian and average black knows we've got to live together or we'll all die." He adds, "Minorities for years have been trying to meddle here with allegations of electoral fraud ... but we are democratic and the People's National Congress is the only political grouping capable of dealing with our problems. We are a serious, uncommitted, non-aligned nation. We'll do business with any nation--except South Africa. We'll do business with the Americans, the Soviets, the Vietnamese, but we'll not compromise our independence, won through sweat and blood." There's nothing new about the brain drain, he says. "My mother, a talented woman, spent 19 years in the U.S.

The pull to the north is real." Green says Hoyte has been barnstorming the industrialized world seeking "agreements consistent with the needs of our people." "We need to recognize the world as it is, not as we'd like it to be. It's important, necessary, that we receive assistance up- front for our economy," he adds. But, "we'll not compromise our independence" in the search for aid, Green asserts. "[W]e know how much our people can bear.... We'll never accept an International Monetary Fund prescription putting undue pressure on our poor and children." The Guyanese government owes $1.7 billion to foreign lenders and has paid nothing on principal since 1981. Output in rice, sugar, bauxite and diamonds has been falling for years but 26 percent of the labor force is in the "public sector."

Under Burnham, described as a "pragmatic Marxist," 80 percent of Guyana's business was nationalized. There is little "privatization" talk yet, but Hoyte seeks a three-year moratorium on Guyana's debts and at least $550 million in new loans. Hoyte has loosened the government's grip a bit and even allowed publication of an independent, twice-weekly newspaper, though government controls virtually all the rest of the media. Georgetown experiences almost daily power outages of six to eight hours, yet hundreds of millions of U.S. dollars went into a hydroelectric scheme in the uplands. The old bulldozers are still there but no power has ever been produced at the site. Old Victorian buildings on Georgetown's main streets are deteriorating and horse- and donkey-drawn carts are common. A Canadian timber broker wants to buy a shipment of greenheart, stout wood resistant to termite and water damage. He sends his money and six months later, having received nothing, inquires in person here. He is told that the timber has not yet been cut. A Belgian diamond merchant, licensed here, has just bought stones. But he keeps offices across the borders in Brazil and Venezuela "because 60 to 70 percent of diamonds are smuggled out." He buys those, too. He has approached a government minister with a proposal for a diamond polishing plant in Georgetown, which would employ 200 to 240 workers. The minister's first question: "What's in it for government?" Green talks about "mobilizing our human resources, creating a haven to strike into the 21st century." He says, "We're seeking to pass on optimism to our young people." The goal is praiseworthy, no doubt. But after 22 years of mismanagement, the question here is, can the Guyanese eat optimism, any more than they can eat a $2.40 egg?

-William Steif

A Road Around Apartheid

MAPUTO--The Southern African Development Coordination Conference (SADCC) was established in 1980 to reduce the dependence of southern Africa states on South Africa, foster regional integration and develop the economies of the member nations. In July 1988 heads and representatives of the SADCC member countries--Angola, Botswana, Lesotho, Malawi, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe--met here for their eighth annual summit. Few deny the importance of SADCC, particularly in the face of South African aggression in the region. But SADCC's chairman and Botswana president Quett Masire, in his opening address to the summit, echoed a now widely held view that the organization has reached a crossroads in its development.

While SADCC has made some impressive gains, particularly in the rehabilitation of railways and ports, the organization is nowhere near realizing its three main objectives: freedom from dependence on South Africa, increased regional trade and development. SADCC's annual progress report, adopted by the summit, shows that of the nine countries, only Botswana achieved gross domestic product (GDP) per capita growth in 1987. Population growth in Lesotho, Malawi and Zimbabwe outpaced growth in GDP, resulting in net per capita declines, while Zambia's GDP fell 3.3 percent. The economies of Tanzania and Mozambique remained virtually stagnant. Figures are not available for Angola. Low commodity prices, debt, high rates of population growth, drought, technological underdevelopment and South African destabilization are reasons cited for the downward trend in the region. But SADCC has also been criticized for an over-emphasis on projects based on external funding and too little attention to boosting production within the region. "The fundamental cause of our problems," said Masire in his opening speech, "is our inability to produce the goods and services for our own consumption and export."

This recognition led SADCC to choose as its theme for next January's consultative conference in Luanda, Angola "The Productive Sector--Engines of Growth and Development." Masire also called for greater emphasis on investment--three seminars for business leaders have been held in the region over the past year. But investment seems unlikely to reach significant proportions in the near future. Potential investors mention the shortage of foreign currency, small national markets, bureaucratic inefficiencies and the insecurity in the region as a result of Pretoria's actions as major constraints. Some of these problems are difficult to control, but others are being examined. Studies are underway on the establishment of export pre-financing revolving funds and a regional export credit and guarantee facility. Masire cautioned, however, that measures such as these will achieve very little unless they are developed within a regional production and marketing framework. Such a framework, he said, must provide for appropriate support services such as research and development, standardization and quality control and the training of workers to enhance productivity. He also stressed the need to coordinate policies. "Otherwise there is a real danger," Masire said, "that we will duplicate uncompetitive units all over the region which will become a drain on the rest of the economy, failing even to meet domestic demand, let alone exporting."

These policies and plans, if implemented, are likely to bear fruit in the longer term. But the key to recovery and development, in the short or long term, is peace and stability in the region--a theme touched on by every speaker at the summit. South African destabilization is estimated to have cost the SADCC states some $30 billion and thousands of lives in the past eight years. Mozambique and Angola, which possess five of the six ports in SADCC countries, are most seriously affected. South Africa's destabilization policies are designed to keep the SADCC states weak and dependent, making it difficult for them to support the liberation struggle against apartheid. Yet, as a matter of principle, six of the SADCC states which constitute a political front against apartheid are committed to supporting the struggle for majority rule in South Africa.

At a meeting of the "frontline states" (which exclude Malawi, Lesotho and Swaziland) immediately after the SADCC summit, Zambian president Kenneth Kuanda made it clear that "the fight for freedom will continue and we are undeterred by South African destabilization." Given the apartheid regime's determination to maintain its grip on power in South Africa, the developing scenario is one of intensifying regional conflict which will make it increasingly difficult for SADCC to fulfil its objectives. But the nine states, although they reflect a variety of economic and political systems, have shown a remarkable degree of determination, pragmatism and unity. Inevitably, national interests periodically override regional considerations, but they rarely hamper the spirit that prevails at all SADCC gatherings, from small technical meetings to the annual summit. Mozambican president Joaquim Chissano captured this spirit when he told delegates to the summit that despite South Africa's actions, the SADCC states were "advancing with determination and perseverance, guided by a unity of thought and action." Notwithstanding the enormous odds and the difficult road ahead, such an approach will enable the organization to at least partially fulfil its objectives.

-Govin Reddy Third World Network Features/IPS