Are U.S. Firms Really Leaving S. Africa?
The argument for and against the withdrawal of U.S. companies from South Africa continues, despite sanctions legislation and the recent sale of several U.S. subsidiaries in this country. The essence of the argument against withdrawal is that “blacks will suffer most” and that with the exception of a few radicals, the majority of black workers are against both disinvestment and sanctions.
Polls among urban blacks, invariably conducted by liberal academics in South Africa and quoted ad nauseam by spokesmen for U.S. firms, are purported to “verify” this. Armed with these surveys, multinationals have vowed to stay put for the sake of black workers and the promotion of black management.
It is difficult not to be suspicious of the motives of managements that suddenly begin to advocate the cause of their deprived workers. And suspicion turns to cynicism when these altruistic firms, such as Coca-Cola Co., General Electric, General Motors Corp., International Business Machines Corp. and Honeywell Inc. begin to withdraw.
South African sociologist Mark Orkin, in his 1986 book, “Disinvestment, the Struggle and the Future,” reveals the simplistic and ideological bias of the opinion surveys and suggests that 73% of urban black workers favor total or conditional disinvestment.
Archbishop Desmond M. Tutu insists that neither he nor any other black leader specifically wants sanctions. They believe, however, that it is one of the few options left. “There is no guarantee that sanctions will topple apartheid,” Tutu said, “but it is the last nonviolent option left.” This perception clearly has broad-based community support, with an increasing number of trade unions, churches and other groups supporting some form of disinvestment.
But what is the projected effect of these withdrawals? IBM has announced that it will continue its social-responsibility programs, contending in a full-page newspaper ad that its South African operation has been sold to a new company “for the benefit of employees of IBM South Africa.” GM, in turn, assures its customers that the future South African-operated company will be “run in a manner suited to South African markets.”
Have U.S. companies suddenly developed social consciences? Who is to benefit from the proposed withdrawals? Has the anti-apartheid lobby convinced these companies that the hassle factor is no longer worth it? More important, are these withdrawals for real?
American companies for some time now have been operating under the restraints of the Sullivan Principles and U.S. legislation prohibiting the sale of products to the South African government police and military. IBM chairman John Akers is quoted as saying the local subsidiary is being sold “before our freedom of action is further limited.” GM reports that it has not made a profit in South Africa since 1981.
In this situation it makes sense for these companies to sell off their South African subsidiaries. With fewer restrictions facing local companies and the increasing possibility of a lucrative market (albeit a covert one) in the government and military sector, U.S. companies will be able to concentrate on collecting royalties and profits from the sale of technology and equipment. Thus by “pulling out” of South Africa, these U.S. companies can increase their profits and avoid the anti-apartheid hassles. Rather than withdrawing in any real sense, these companies simply are changing their form of involvement.
Rumors abound concerning the bargain-basement prices paid to IBM, GM and others for their subsidiaries by local firms, with the short-term effect benefiting the coffers of South African white entrepreneurs, while black employees are left dependent on their good will. All political strategies have a payoff and blacks seem to be saying this is a price they are prepared to pay or, as is often stated, “at least we will be suffering with a specific goal in mind.”
But what is the loss factor for South Africa? The sale of U.S.-owned companies means an important loss of foreign exchange; Western vested interest in the country is diminished. The sanctions-disinvestment package also is an important part of a strategy to isolate this country.
The kind of U.S. withdrawal presently being practiced could further elicit an intensification of the sanctions lobby if there is any hint of these newly acquired South African companies supplying equipment and technology of U.S. origin to either the government or the military. Should sanctions be extended to preclude all these possibilities, they would come close to being total.
Because South Africa is so dependent on computer technology from the United States and other countries, total sanctions would have a devastating effect--not only on the economy but also on the technological well-being of the country. So while the immediate effect of the U.S. companies’ actions on the South African economy is not extensive, it does represent a further turn of a screw that is likely to be tightened a lot more before this country submits to the inevitable.
