The government, faced with a deepening political and economic crisis, suspended repayments for four months on the principal of most of South Africa’s $16.5-billion foreign debt Sunday and introduced exchange-control regulations that will heavily penalize foreign investors withdrawing their money.
Finance Minister Barend J. du Plessis told a news conference in Pretoria that negotiations will begin soon on rescheduling the debt and hinted that South Africa’s creditors may be given the hard choice of accepting repayment over a much longer period or having their money virtually frozen here.
Continue to Pay Interest
During the next four months, he said, interest will continue to be paid on outstanding loans, but with a few exceptions such as government bonds, there will be no capital repayment. Local borrowers will make their payments into special “financial rand” accounts, which will in effect give lenders the choice of reinvesting that money here or taking it out at a steep discount.
7 Coal and Gold Mines
In other Sunday developments, 77,500 black miners went on strike at seven gold and coal mines, and police reported that two white men were killed by blacks returning from a funeral for 18 victims of last month’s violence near New London.
Although he denied that South Africa is bankrupt, Du Plessis admitted that it does not have the money to pay $12 billion in short-term debt coming due in the next year because international banks have concluded after a year of sustained civil unrest that the country is increasingly a bad risk, economically as well as politically, and are refusing to extend loans as usual.
Foreign investors who sell off their South African assets--full-scale manufacturing operations or stock holdings--will now be paid in “financial rand,” which may not be converted freely into dollars or other hard currencies but will have to be sold through brokers to other foreigners wishing to invest here at a discount that could run as high as 40%.
Although Du Plessis presented the program with calm assurance, he was clearly concerned about the program’s reception by the financial community abroad as well as by businessmen here. “We are in a high-wire act,” a top aide remarked, “and with one misstep the rand (South Africa’s currency) will fall and with it perhaps the whole economy.”
As the government announced its economic measures Sunday evening, gold and coal miners, members of the all-black National Union of Mineworkers, went on strike in a wage dispute.
Violence was reported almost immediately at four mines, including one not involved in the strike, as police and mine security forces clashed with the miners. Nine miners were reported injured, and 21 were arrested within the first two hours of the strike.
Although settlements have been reached at most of the country’s gold and coal mines, this strike has been widely feared because of its potential to ignite labor unrest and increase the already high level of violence in the country.
“From the initial reports of early clashes, violence . . . seems inevitable,” said a top labor relations officer with one of the mining companies that settled. “Tomorrow night, we may be counting the bodies.”
Police reported Sunday that two white men were killed and two others were seriously injured outside New London when they were pulled from their car and beaten by blacks returning from Saturday’s funeral for 18 people killed by police last month in Duncan Village, one of New London’s black ghettoes.
The four men, all construction workers, had apparently panicked after becoming trapped in the large crowd and tried to drive through at a high speed, witnesses told police. The blacks turned on them, pulling three of them from their car, beating and stabbing them, and then setting the car afire with one of the men inside.
Although two whites have previously been killed by blacks during the last year of unrest, the weekend deaths of the two men were regarded as the first to result from a deliberate attack by blacks on whites. And they followed a speech at the funeral warning that a black revolution is coming to get rid of apartheid and that whites will become its victims.
The deaths will add to the growing sense of crisis here, and two senior Cabinet ministers--Finance Minister Du Plessis and Foreign Minister Roelof F. (Pik) Botha--gave no indication in separate Sunday press conferences that the government has any new solutions for it.
Botha, speaking on the departure of a European Community ministerial fact-finding team, restated the minority white government’s intention to follow a course of gradual reforms to eliminate racial discrimination and ensure blacks a voice in the country’s policies and in the administration of their own affairs. But there was no specific agenda or timetable for the reforms.
“We intend to proceed actively with the process of reform,” Botha said, “but we made it clear that it would be fatal to . . . give a time scale to South Africa.”
The three European foreign ministers, representing Italy, Luxembourg and the Netherlands, indicated that they will not advocate immediate sanctions by the European Community as a way of bringing an end to apartheid, South Africa’s system of racial separation and minority white rule.
Europe wants to see apartheid dismantled quickly but is not ready to tell Pretoria how to do it, they said.
Jacques Poos, the Luxembourg foreign minister, suggested that the first steps should include the release of political prisoners, including Nelson Mandela, leader of the outlawed African National Congress, an end to all racial discrimination, an end to the present state of emergency and an open-ended dialogue with all black leaders on the country’s future.
“We hope something will happen in a reasonable time,” Poos said, but if it does not, the European Community will probably review the issue of imposing sanctions.
South Africa’s freeze on foreign loan repayments follows the government’s suspension of trading on the Johannesburg Stock Exchange and on the foreign currency market in an effort to save the rand, the monetary unit, after its value had fallen more than 30% in 10 days.
Du Plessis said Sunday that the money markets and stock exchange will reopen today and that the South African Reserve Bank will play an active role in efforts to stabilize trading, particularly in the rand.