South Africa Feels Impact of Sanctions : Export Contracts Canceled, Painful Reappraisal Starts

The new U.S. economic sanctions hit South Africa on Friday as coal and steel exporters reported cancellations of multimillion-dollar export contracts, fruit growers predicted “zero sales” next year to the American market and the national airline moved to cancel its four-times-a-week flights to New York.

But the true impact of the U.S. legislation, enacted over President Reagan’s veto, was largely political and psychological--a warning to white South Africans that they stand increasingly isolated in clinging to apartheid--racial separation and minority white rule.

Party Blamed

Critics of President Pieter W. Botha’s government blamed the sanctions on the ruling National Party, particularly the slow pace of its political, economic and social reforms, and called for faster and broader changes, “not so much to meet the demands of the foreigners,” as one editorial put it, “but to meet the needs of the country.”

Across South Africa, a painful political reappraisal was under way as a result of the U.S. congressional action. “It is apartheid, not some mindless and irrational hatred of South Africa, that has brought sanctions upon the country,” the Argus newspaper said in a typical editorial in Cape Town. “It must go.”

And black leaders, including Anglican Archbishop Desmond Tutu, hailed the congressional action as a declaration that the United States, long perceived as the principal protector of the white-led minority government, had now taken up the demand of the country’s black majority for equal rights.

“The (U.S.) Senate has taken a moral decision,” Tutu said in Cape Town on Friday, a day after the senators voted, 78 to 21, to override Reagan’s veto. “This is not an anti-South Africa action. It is anti-injustice, anti-apartheid. It is pro-South Africa and for justice, freedom and democracy.”

Positive Response Urged

Similar statements came from the two major black labor union federations, the Congress of South African Trade Unions and the Council of Unions of South Africa, which had both backed international sanctions despite government assertions that black jobs were at stake.

“P.W. Botha can still avert sanctions by meeting the reasonable and realistic demands of the people,” the Congress of South African Trade Unions said, noting that the new U.S. law calls for the punitive measures to be lifted in response to certain South African actions. “This means dismantling apartheid, lifting the state of emergency, releasing Nelson Mandela and other prisoners and detainees and unbanning the African National Congress.”

The Rev. Allan Boesak, a founder of the United Democratic Front of anti-apartheid groups and president of the World Alliance of Reformed Churches, said that Pretoria can no longer count on American backing for its policies and must urgently tackle South Africa’s problems.

“The Senate action is a very clear sign that President Reagan does not have the support of Congress or the people of the United States in his support of P.W. Botha and apartheid,” Boesak said. “And that should tell Botha that time has run out for him.”

Archbishop Denis E. Hurley, chairman of the Southern Africa Catholic Bishops Conference, which had earlier stopped short of calling for sanctions, commented Friday: “As far as one can judge, the American decision aims at giving South Africa a real jolt without doing too much harm to the economy. Clearly, there could be tougher jolts in the future if South Africa does not make more serious attempts to dismantle apartheid.”

The new American legislation prohibits imports of South African agricultural products, textiles, steel, iron, coal and uranium. It bans all new U.S. investment and bank loans except to black-run businesses, restricts high-technology American exports to South Africa and ends direct air links between the two countries.

Reagan had vetoed the bill, two years in preparation, but first the House of Representatives and then the Senate overrode the veto by large margins in a defeat that stunned Pretoria, which had believed almost to the end that Congress would bow to the President.

Rallying Call to Whites

The South African government’s immediate response, reflected in the Friday morning commentary on state-run Radio South Africa, was a call to whites to rally to the country’s defense and preserve South Africans’ right to determine their own future without foreign interference.

One weapon might be South Africa’s great mineral resources, the commentary suggested, warning the United States that, with the imposition of its sanctions, it might now be impossible “to control the flight and direction of the football” of greater sanctions and counter-sanctions.

Bans by Pretoria on sales of platinum, manganese and other strategic minerals to the United States might follow, the commentary hinted, picking up earlier proposals that the government had publicly rejected. The Herstigte Nasionale Party, on the far right, urged an immediate ban, but the Durban Daily News, reflecting moderate opinion, said it would be a serious mistake to do so.

Foreign Minister Roelof F. (Pik) Botha threatened Wednesday that his country might halt all purchases of U.S. grain if the sanctions bill were enacted over Reagan’s veto, but there was no indication Friday that the government intended to follow through on that threat. South Africa has been expected to buy 400,000 tons of grain from the United States in the coming year.

Only 5% Affected

When South African businessmen assessed the economic effects of the new U.S. legislation, however, they concluded that, at worst, only 5% of the country’s overall exports of $18 billion might be lost and that markets could be found elsewhere for them.

“With a really dramatic program of export promotion, we should be able to make good the losses,” said Pat Corbin, president of the Johannesburg Chamber of Commerce. “The sanctions will hit hard--we are talking about losses of several hundred million dollars a year--but they should not be devastating.”

Last year, the United States was South Africa’s top trading partner, buying about $1.35 billion worth of South African goods and selling an estimated $1.42 billion worth of American products.

Fred du Plessis, a leading Afrikaner businessman, went further to describe the U.S. sanctions as “a positive challenge to stimulate economic activity” and, through South African purchase of American companies, to pull the country out of its prolonged recession and promote industrial growth.

Stocks, Gold Rise

This common business judgment that South Africa could survive not only the American but also similar European and Japanese sanctions as well was underlined on the stock and foreign exchange markets Friday: Share prices rose on the Johannesburg Stock Exchange, the price of gold went up and the South African rand remained firm.

South African businessmen had long regarded sanctions as inevitable, analysts explained, and they had undertaken their own measures to counter them months ago by finding alternative markets, sources of finance and even clandestine ways of shipment.

The measures were “less fierce than they sound,” the Pretoria News said in an editorial, but they nevertheless would “insidiously add to our perception of ourselves as global outcasts.”

Other commentators added that they could also have a long-term impact on certain export-oriented industries, such as coal mining and fruit-growing, which would be deprived of important markets not only in the United States but also Western Europe, the Commonwealth and Japan.

Industries requiring foreign investment to finance modernization and new technology could also be affected over the long run. “Cut off from the trailblazers, our technology will begin to stagnate,” the Pretoria News commented. “That, unhappily, is true of any nation under siege.”