DIVESTMENT IS MORE THAN SYMBOLIC

Presentation by Gay W. Seidman

Public Hearing on University of California Divestment Wednesday, April 24, 1985

The South African economy is in the grips of its deepest recession since the 1930's. The national debt has topped $20 billion, inflation is in double digits, unemployment-­especially among blacks--has soared, and twelve bankruptcies are filed every day. Most of this crisis comes as the direct result of South Africa's own apartheid policies: the government spends over $1 million daily on its war in Namibia and Angola, on top of what it was already spending to control and repress its black majority.

But the recession has also been caused by a decline in foreign investment, on which South Africa has relied for so much of its growth. In January, government officials met with businessmen around South Africa, warning them that the divestment move­ment in the United States will strike telling blows on their economy. Between 1950 and 1970, the years of South Africa's manufacturing boom, 67 percent of all investment capital came from overseas. A significant proportion of that invest­ment--certainly well over 20 percent--comes from America. Estimates of total U.S. holdings in South Africa vary from $2.6 to $14 billion, in direct holdings, bank loans and portfolio holdings; whatever the true figure, American investment is undoubtedly crucial to running South Africa. It is concentrated in several strategic sectors: American firms control nearly half South Africa's oil, 70 percent of its computers, and a third of its auto industry. At least 350 American companies own South African subsidiaries; another 6000 engage in significant amounts of trade. In the past few years, American finance has become even more important to South Africa, both through loans directly to the government and to South African banks that then loan to the government. With an annual operating deficit of over 30,000 million rand, the South African government could not continue without these loans--just as most of the country's strategic industries could not continue to function without American tech­nology, American equipment and American personnel. According to the managing director of Burroughs South Africa, "We're entirely dependent on the U.S. The econ­omy would grind to a halt without access to the computer technology of the West." And if anyone doubted the importance of American investments before, recent govern­ment descriptions of the current divestment movement here as Communist-inspired riffraff leave little doubt that Pretoria is terrified of losing the American contri-bution to the apartheid regime.

But what exactly is this contribution going toward? There is little point in detailing here the horrors of apartheid; I am sure we all agree that a nation which uses racial classification to determine where people may live, what kind of education they may get, or what kind of jobs they may hold--which enshrines white supremacy in its constitution, a,nd which has disenfranchised the vast majority of its people--is morally abhorrent. · Instead, I'd like to look specifically at what American companies do, or can li6, in the South African context.

To start with, you have to remember that the South African economy is skewed in a way that shapes the markets open to American companies. Bernardus Fourie, the South African ambassador to the U.S., has said, "Why is U.S. industry I in South Africa · I? Not because we ever persuaded them. The private sector is always looking for more lucrative markets." Who are those markets in South Africa?

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Clearly they are not made up of the black majority. In 1977, blacks, who compose about 75 percent of the population, earned 26 percent of the country's total income. Whites, who are about 17 percent of the population, earned 64 percent. Ford Motor Company estimated that blacks purchase about two percent of new automobiles sold. With an economy so skewed along racial lines, you have to ask who it is that buys IBM's or Hewlett-Packard's computers, or Caterpillar's tractors, or Eastman Kodak's film. Probably, it is not black South Africans--certainly not the 3.5 million who have been forcibly removed in the last 20 years to the bantustans, the 13 percent of the land area reserved for blacks.

A much more likely bet would be the South African state itself, which in 1984 con­sumed 29 percent of South Africa's total gross domestic product. The South African state has played an ever-larger role in the economy since the l 950's, both through direct spending and through the government-owned parastatals which control the country's basic industry. The state's share of gross domestic fixed investment rose from 35 percent in 1950 to 53 percent in 1970, and has undoubtedly risen still higher since then. In 1970, more than a quarter of white workers were directly employed by the state--many administering the pass laws--and another ten percent worked for government parastatals. The South African state looms large in the economy; it is almost impossible to imagine how companies that produce high-technology, capital­intensive goods could avoid selling to the government, either directly or indirectly through third-party transactions.

And this is a state that not only legally enforces the superexploitation of black South Africans, but one which is increasingly militarized, geared for a war effort against the black majority's demands for a meaningful political voice. Last year, the defense budget--which has risen over 1000 percent since 1970--was up to 3. 75 billion rand, nearly half a billion more than the combined total of th~ budgets for health, welfare, tertiary education and all black education. Military advisors sit on every decision­making body, from the municipal level up; military advisors help American companies plan what they will do in the event of "civil unrest." White South African males are subject to up to ten years of compulsory military service. This is a country gearing up for a total onslaught, and American companies are helping. Computers sold by IBM and Hewlett-Packard help run the pass system, the army and the air force; technology from American firms helps run the coal-into-gas and nuclear power plants that may make South Africa self-sufficient in fuel; and companies like General Motors provide vehicles that may carry troops into townships to crush resistance. Without American products, ARMSCOR (the South African parastatal that has enabled South Africa to bypass the international embargo on arms sales) could not function. At this point, it is hard to see how any investment in South Africa could be char­acterized as benign.

But what about the argument that American companies increase employment for blacks, and can raise their levels of training and skill? A recent survey of black factory workers, though badly designed and with misleading questions, found them clear on this point at least: foreign investment helps the state more than it helps black workers. American companies hire very few blacks; again, estimates vary, but everyone agrees it is less than one percent of the total black labor force. Black education_ has been designed, to quote former South African prime minister Hendrik Verwoerd, to ensure that "Natives will be taught from childhood to realize that equality with Europeans is not for them." Few blacks inside the country have been allowed to get the technical skills required for jobs in capital-intensive, high-technology industries; in the late 1970's, blacks made up 34 percent of the workforce at Caltex 63 percent at General Electric, and less than five percent at IBM. In fact, one could argue that American investments reduce rather than increase black employment, by providing capital-intensive equipment for employers who want to get rid of an

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increasingly organized and militant black labor force.

There are, of course, the Sullivan Principles, which were drawn up in 1977 when American companies faced an earlier wave of the divestment movement in the United States. Only about a third of American companies operating in South Africa have signed the Principles, which call for desegregation in the workplace, equal pay, affir­mative action in training and hiring, and financial aid to black communities. Another 20 companies have signed on in the last few weeks, under pressure, for a total of about 140 signatories out of 350 companies operating in South Africa. Even so, only about 22,000 t)lack workers are covered by the Principles--partly because the workforces of most Sullivan signatories remain largely white. And the Principles in no way cover bank loans to South Africa, which is increasingly the form taken by American investments.

Still, a few of the Sullivan signatories have made well-publicized efforts to desegre­gate their workplaces and to set up training programs for blacks. In 1983, about 19 percent of black employees of Sullivan signatories were said to have moved into some sort of supervisory role. But that category is left rather vague: it appears to include shop stewards on the factory floor as well as public relations personnel. And it certainly does not mean that the Sullivan signatories have tried to end the racial structure of the occupational hierarchy: less than one-tenth of one percent of black employees of Sullivan signatories held jobs that involved supervising whites. Providing loans to upper-income black families to build houses, as Ford has done, does not alter the government's restrictions on where those houses may be built; nor does IBM's effort to provide video cassette players to segregated Soweto high schools alter the fact that today, 400,000 black South African students refuse to attend classes while their leaders remain in detention and the government controls the curriculum.

The monitoring process for the voluntary Sullivan Principles is worse than inadequate. It relies on management reports for its evidence, and the monitors have no power to enforce change or even compliance with their requests for information. In 1983, when they thought no one was watching, nearly half the signatories failed to report or received a failing grade on their progress.

Recently the Sullivan Principles have been expanded to include lobbying the South African government to dismantle the migrant labor system and influx control--under the threat that without such lobbying, the U.S. Congress will pass one of several bills restricting investment in South Africa. Let there be no doubt about why that change has been made: last year, before the divestment movement gathered momen­tum, the Financial Times reported that "even the most enthusiastic signatories are concerned at the steady broadening of the code to include monitoring of companies' assistance to black businesses and their efforts to overcome influx controls." Without pressure from the U.S., no American companies operating in South Africa would ever comply with the Sullivan Principles, minimal as they are.

But the Sullivan Principles are not enough. As all the black South African groups that call for divestment argue, you have to weigh the possible benefits of a few relativel¥-enlightened employers of a very few black workers against the way those employers' presence strengthens the regime. And you have to remember that that support is not merely economic; it also includes an immeasurable psychological prop to the white minority government, which draws strength from its faith that the West will not . abandon its economic and strategic interests. So long as they continue to supply goods needed to reinforce apartheid, so long as they behave as if the present government will be in power forever, American companies' efforts to train black

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employees or even to lobby the government will ring rather hollow. A Dow Chemical Corporation official said recently, "Every time the South African government does something good, it turns around and does something bad to remind people they aren't going to become weak." Much the same sort of thing could be said about American companies operating in South Africa: whatever reforms they undertake in the work­place, whatever statements they make about apartheid, they continue to prop up the regime--if only by assuring white South Africa that it does not stand alone.

But I want to return to the question of what black South Africans think about divest­ment--which is probably the most important argument in its favor. In a country where blacks cannot vote, there are no elected representatives to tell us what people think; nor can we learn from public opinion polls, since advocating divestment is defined as economic terrorism, punishable by a minimum five year sentence. Gatsha Buthelezi, chief minister of the KwaZulu bantustan, says blacks want more American investment, not less; but Buthelezi--who is not the traditional Zulu king, but was appointed and is paid by the Pretoria regime--is hardly representative. The leaders of the United Democratic Front (UDF), the non-racial organization that has spear­headed the current wave of resistance, call for divestment; so do the leaders of the African National Congress, the Pan-Africanist Congress and the Black Conscious­ness Movement. Even more remarkable, perhaps, is the call for increased economic pressure by the independent black trade unions; a few weeks ago, Cyril Ramaphosa, the widely-respected leader of the black National Union of Mineworkers, said on national television that the American divestment movement is playing a vital role in the current struggle. American companies argue that they can help create a space for legal black opposition in South Africa; surely, the UDF and the black trade unions, which operate in what little space exists, know better than we what it is that keeps that space open. Joe Foster, general secretary of FOSATU, the largest and perhaps one of the more moderate of the independent trade union groupings, put it like this: "We don't need other people to tell us how to survive. We know what we need, and we'll fight for it."

American companies are clearly feeling the heat from the divestment campaign here, just as the South African government is. Political pressure here--along with the intensified struggle inside South Africa itself--is making South Africa a less attractive site for investment than it has ever been. Divestment efforts and domestic resistance have already reduced the flow of foreign capital, and placed South Africa in the highest category of risk for investors. If American companies withdrew or reduced their holdings, no one else would rush in to fill the vacum--until there is majority rule. Of the three major American companies that have significantly reduced their holdings in the last three years, none was bought by an outside investor. In each case--General Electric, Ford and Chrysler--they were sold to South African concerns, possibly with American financial backing. Everyone agrees that time is running out for the white minority regime; if American companies did not provide strategic inputs for the economy and the military, time would run out faster still.

And to those who fear that an American withdrawal would be followed by chaos which would hurt blacks most, one can only ask what they think is going on in South Africa now. in the past few months, more than 300 black South Africans have been killed; the police have announced they will no longer report where such incidents occur, so we may no longer have any independent check on casualty rates. The army has swept through townships; the police have fired on funerals. Yesterday, three more UDF leaders were detained, in addition to the 16 now facing treason charges. It may be that the time to worry about an impending bloodbath is over. That bloodbath may have already begun, as two or three blacks are being killed daily for demanding one person, one vote. Responding to the argument that disinvestment might

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might bring violence, Nobel Peace Laureate Bishop Desmond Tutu said recently, "Can whites tell us which methods are left to black people to change the system? We don't have the vote, and now they say we must not call for international intervention. What alternative would be left except violence?" The violence in South Africa is institutionalized, systemic. It ranges from the war in Namibia to forced removals, from the pass raids in Crossroads to starvation at Onverwacht. American companies-­including those in the University of California's portfolio--are all, either directly or indirectly, contributing to that violence. It is time for that contribution to end.

[For more information regarding conditions in South Africa and the divestment move­ment in the United States and Europe, please contact the Africa Resource Center, 464 19th Street, Oakland, CA 94612, (415) 763-8011. For specific information on University of California divestment actions, contact the UC-Berkeley Graduate Assembly, Anthony Hall, University of California, Berkeley, CA 94720, (415) 642-2175.]