Sanctions go but US cash won’t flood in

New York activist Jennifer Davis worked for many years to encourage the US government, state and city legislatures to implement sanctions against apartheid South Africa.

Now she is preparing for a new campaign: the long, hard struggle to get rid of these measures and promote investment. It will not be an easy task — mainly because of the success of the earlier work of her American Committee on Africa and its allies, such as TransAfrica, the churches and the US labour movement.

So strong was the anti-apartheid feeling in the mid-1980s, and so extensive the network of activists who made it their cause, that sanctions legislation was implemented not just at the federal level, but at every possible stratum of a very decentralised society.

So although the Bush administration repealed the Comprehensive Anti-Apartheid Act (CAAA) in 1991, there are scores of state, city, county and regional authorities that still have their own restrictive and punitive sanctions laws. This web is so complex that nobody seems to know exactly how many laws have to be changed or where they are.

Davis refers to 100 cities and 27 states. The US Embassy and The Washington Post put it vaguely at “more than 150”. The Investor Responsibility Research Centre (IRRC) in Washington lists 179 local entities — 30 states, 109 cities, 39 counties, uncounted regional authorities and the Virgin Islands. Federal law should be the easiest to deal with.

On standby already is the Simon Bill, drawn up by Senator Paul Simon to get rid of the Gramm Amendment that prevents International Monetary Fund and World Bank loans to South Africa.

If African National Congress president Nelson Mandela gives the word, this should pass quickly into law. It is different at a regional and local level. Each legislature will have to draft a new Bill, lobby support and meet to pass it.

Most of the state legislatures are not even due to meet again until January 1994 and one large one, Texas, does not meet again until 1995. Many of them are bound by waiting and commentary periods. Even within a city, there is a labyrinth.

Apart from what New York’s city hall does, the City Health and Hospitals corporation and the local Board of Education have, for example, their own internal restrictions that must be changed. Many will be tempted to let the matter lie dormant. Namibian sanctions remained largely untouched for years after independence and there are still at least two local statute books that ban trade with that country because nobody has bothered to change them. There could also be opposition.

Some of the congressional black caucus members argued against the lifting of the CAAA, saying sanctions should be lifted when democracy is delivered rather than when it is promised. The Pan Africanist Congress is mobilising to argue that it is too early to lift anti-apartheid measures.

The slightest whiff of controversy and many politicians are likely to avoid the issue rather than risk political capital on a complex foreign policy matter. “Many local officials worry that lifting sanctions may open up acrimonious old political wounds,” the IRRC says in a special study released this week.”

Davis says, however, that Mandela’s word will hold sway. The major organisations that fought for sanctions are ready to support him when he calls for investment influential figure, such as New York mayor David Dinkins and Governor Mario Cuomo and Virginia’s governor, L Douglas Wilder, will get the ball rolling with strong statements and phone calls to legislators around the country. She and her allies are gearing up to promote “socially responsible investment”.

The Namibia parallel may also not hold ground. A huge number of Americans who have never heard of Namibia know and care about South Africa. Davis says that at least two states — New Jersey and California — are already drafting new Bills. But changing the law is a complex and time consuming task that will ensure there is no immediate rush of US investors back to South Africa.

Weighing heavily on their minds will be the unfortunate experience of the Boston-based Digital Equipment Corporation. When Digital announced in May that it was opening a subsidiary in South Africa, it emphasised its political correctness. It had worked with the ANC on the deal, and with the ANC-linked Thebe Investments would set up a black-owned partner.

It was also starting a branch of a youth leadership programme called Project Reach. They even released a statement from Mandela saying the move was muse for “celebration”. That did not help them deal with the law.

Massachusetts has a 1990 executive order that says the state must add a 10 percent penalty to any bid submitted by a company that operates in South Africa, and the large state pension funds have to immediately dump stock in any such company.

Digital asked the state to waive the rules, but there was no provision to do so. That case resonated in many corporate headquarters. Who is going to break the mould to invest in South Africa when the pile of state and city law, that they will have to deal with could fill the average boardroom and tie up whole teams of lawyers for months?

It did not help that US aid worker and Fulbright Scholar Amy Biehl was brutally murdered in Cape Town last month. That was a story that dominated the front pages of all the major US newspapers and brought home to Americans the arbitrary nature and horrifying extent of South Africa’s violence in away that huge local death tolls could not. All of this adds up to a cautious approach.

“South Africans should not expect a major inflow of direct investment,” says the IRRC. Those that are coming in are setting up marketing and sales arms. “They are holding off investing large amounts of capital in new capacity and job creation while they keep a wary eye on South Africa’s political situation.”

The IRRC, however, outlines some positive developments. South Africa has lost less investment to Eastern Europe and the former Soviet Union than expected. “In South Africa, the highly developed economy counterbalances the instability risk.” they quote one executive as saying. Secondly many US executives have met ANC leaders and “are impressed with the ANC’s progress”.