New Internationalist

Selling out Apartheid

Issue 87

Our money is buying time for Apartheid. More than 2,000 North American and European companies have holdings in South Africa. One quarter of all investment is financed by the West. During the mid-seventies slump foreign banks lent South Africa nearly five and a half billion dollars. Without this endless stream of cash the Pretoria government could not afford the military and industrial growth needed to protect white minority rule. Wayne Ellwood puts the case for forcing Western business to sell its share in apartheid.

Apart from self-confessed racists it’s difficult to find anyone outside South Africa who will defend apartheid. The case against ‘separate development’ as carried out by the South African government is not at issue. More to the point is what can be done?

How can we as individuals, isolated thousands of miles away, hope to change a system which is so manifestly unjust? Some people give vent by writing outraged letters to Prime Minister P.W. Botha. Others stop buying Outspan oranges or Paarl wine as a gesture of support for the 20-million black South Africans. But principled and right-minded though personal protest may be, it’s not going to persuade the South African government to change its policy of official racism.

The sensitive pressure points are buried much deeper in the country’s economy: in the coal mines, steel mills, manufacturing plants and electrical generating stations that are the bedrock of South Africa’s power. The Republic’s success as a resource-rich industrial nation has enabled it to refine its apartheid policy while strengthening both the police and military.

But South Africa would not have been able to forge ahead without outside help. Loans and foreign investment have streamed into the country over the last 20 years, providing continuous nourishment in its drive to become a modern industrial state.

The fight for majority rule and democratic government is best left to black Africans themselves. However, on the issue of financial support for apartheid by Western corporations and banks, we have more elbow room and more responsibility. Led by church activists and anti-apartheid groups, major corporations and banks in Holland, Switzerland, Canada, the U.S. and the U.K. have been under constant pressure for a decade to end their dealings with South Africa.

Their rationale is disarmingly simple, based on the belief that mere words are never enough, that change involves action. Moral arguments and sympathetic rhetoric have little net impact in the dollars-and­cents world of international finance. As long as money from the West continues to end up in South Africa, the nation will remain wedded to apartheid. Each mark, guilder, pound or eurodollar invested in South Africa’s economy is a vote of confidence in a society built on a foundation of racial discrimination and exploitation.

After innumerable meetings with businessmen and scores of public demonstrations, efforts to end investment and loans to apartheid are beginning to pay off. In Holland two major banks agreed to negotiate no further loans with South African government agencies. In the U.S., Continental Illinois Bank, Citibank and the Chemical Bank have done the same. Brandeis University sold its stock in Ford and General Motors, two of the biggest American companies in South Africa. Britain’s Barclay’s Bank, one of the chief backers of apartheid,has been boycotted by student and labour groups - including the University of Warwick, the All-African Council of Churches and the Caribbean Council of Churches. In Canada, action by anti-apartheid groups and the Canadian churches has prompted colleges, trade unions and some voluntary overseas aid agencies to withdraw their accounts from banks that refuse to end loans to South Africa.

Some governments have also reacted favourably to the disinvestment campaign. Finland and Japan have clamped down on their banks lending to South Africa and Sweden has legislation pending.

All these campaigns to sever financial connections to South Africa have run into the same objections from bankers and corporate executives. The primary one is that business is by definition apolitical, so investment and loan decisions must be based solely on commercial criteria. Unfortunately, that reasoning just doesn’t hold water any more - if it ever did. In the wake of ITT, Lockheed and other corporate scandals, to dismiss business as ,apolitical’ is nothing short of ludicrous. But even where investment and loan decisions are not motivated by political considerations, the outcome of a decision to invest or not to invest is certainly political. Jobs,incomes and living standards are all affected.

Western business also claims that continued loans and investment are the best way to liberalization and that their hiring practises and ‘civilized’ management can quicken the pace of change. They add that a withdrawal of investment will hit hardest those least able to defend themselves - the blacks.

This implies that apartheid is only a temporary and annoying detour on the road to economic prosperity and equality, rather than part of the fabric of South African history. While foreign investment has risen dramatically over the last 20 years, apartheid has become even more rigid and institutionalized. Blacks still earn on average only a twentieth of whites, Though they may introduce reform to break down racial barriers, Western corporations can do nothing to alter the structural source of discrimination - the fact that 80 per cent of the population is restricted to 13 per cent of the land.

Western loans and investment have been essential to the industrialization of South Africa. Foreign investment has enabled the Republic to expand its iron and steel manufacturing, boost the development of nuclear power and create a strong armaments industry. By transferring skilled personnel, technology and expertise to South Africa, Western corporations have helped to build a modern economy which owes its survival, competitiveness and profitability to cheap, black labour.

Diverting the stream of Western capital from South Africa can weaken the government’s economic foundations and make it easier for blacks to topple the apartheid system.

The recent leap in the price of gold to nearly 600 an ounce has helped lessen South Africa’s immediate dependence on external financing. But the nation will still rely heavily on outside capital in the coming decade to achieve its goal of energy self-sufficiency. Building nuclear reactors and coal-fired electrical plants and financing South Africa’s own SASOL project (extracting oil from coal) will require massive injections of Western funds, whether through bank loans or government-backed export credits.

Investment in South Africa is profitable because of apartheid. One reinforces the other. And the relationship will continue as long as the two societies exist side-by­side. One white, rich, secure and powerful and the other black, poor, insecure and powerless.

That is why the disinvestment campaign is important. Because it cuts through the denunciations, outrage, indignation and dialogue, it’s a way of telling private enterprise that the public should have a say in deciding what their money is used for. And public accountability is a political question that effects our economic development in the West as much as it does the struggle against a white-run state in the midst of a black continent.


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