12 European Nations End S. Africa Investment Ban : Community: The leaders also take giant strides toward political and economic unity.

Europe’s leaders took giant strides toward political as well as economic unity Saturday and, as if to underscore their determination, jointly lifted a ban on investment in South Africa, demanded Iraq’s withdrawal from Kuwait and provided $1 billion in food aid to the Soviet Union.

The heads of the 12 European Community nations struck only one sour note, on international trade. Although they approved a resolution calling for resurrecting the negotiations that broke down last week, several of them individually blamed the United States for the deadlock and insisted that America make the next move.

Otherwise, the leaders set in motion a process designed ultimately to enable their nations to speak with one voice on foreign policy and to blend their individual economies into what could become the most potent economic force in the world.

Disagreements remained on how to move toward a common currency for all 12 EC nations. And the leaders stepped gingerly around the highly charged question of whether they should somehow combine their military forces.

Yet for a continent divided by two world wars in the first half of the century, the progress seemed extraordinary. German Chancellor Helmut Kohl, whose embrace of European unity has allayed fears that the newly reunited Germany would seek to dominate the Continent, said Saturday’s actions inaugurated “a decisive phase for European union, one of the great dreams of our century.”

South African policy served to demonstrate Europe’s desire to stand together on controversies of global scope. In recognition of “the movement under way aimed at the complete abolition of apartheid,” the 12 European leaders lifted a four-year-old ban on European investment in South Africa.

Pending further reforms, the EC maintained other economic sanctions, including an embargo of arms sales to South Africa and a boycott of South African steel and gold.

As the European leaders acknowledged, South African President Frederik W. de Klerk has reversed the racial policies of some of his predecessors and freed anti-apartheid leader Nelson Mandela, leader of the African National Congress, who had been imprisoned for 27 years.

Yet the ANC quickly condemned Europe’s lifting of the investment ban as premature. Spokeswoman Gil Marcus, charging that white-led security forces are still killing ANC members, demanded: “How many lives do you want it still to cost?”

On the more abstract question of whether Europe should conduct a forced march toward political and economic union, only British Prime Minister John Major refrained from a wholehearted commitment. But his mild and measured tone, in stark contrast to the sarcasm that his predecessor, Margaret Thatcher, displayed at the last such meeting in October, encouraged the European Community’s other 11 heads of government.

In a phrase that Thatcher would never have used, Major declared it “perfectly legitimate” for the 12 EC nations to press toward unity even though disagreements remain.

“We have a menu,” Major said. “Our favorite dishes are on that menu, so are others’ favorite dishes, but the Community has not yet determined what orders to place.”

Italian Prime Minister Giulio Andreotti, the host of the two days of meetings that ended Saturday, replied at a separate press conference: “The important thing is that all 12 guests have sat down to table.”

Both were discussing the prospect of political union. Among the relatively easy issues for a committee of European officials to thrash out are whether to establish “European citizenship” and how a central European government should deal with environmental, energy and health policy.

The committee will also tackle the more sensitive questions of a common foreign and security policy. The European heads of government acknowledged the difficulty of putting a single umbrella over the military policies of nations as diverse as France, which has long insisted on maintaining its own nuclear force, and Ireland, which is neutral and not a member of the North Atlantic Treaty Organization.

Major, despite his disarming style, emphasized that the plan for political union would require the unanimous consent of the 12 countries.

Yet Italian Foreign Minister Gianni De Michelis, for one, was optimistic. “A few weeks ago,” he said, “it appeared impossible for defense policy even to be mentioned.”

The committee on political union is to finish its work by next fall, to give the 12 national parliaments time to adopt its product by the end of 1992.

A similar timetable faces a separate committee on economic and monetary union. At their last conference in October, 11 of the heads of government decided to march toward a common currency, with Thatcher the odd leader out.

Major served notice that he too objected, on grounds that to adopt a common currency would be to leap into the unknown. He promised to prepare by early next month his own, more modest plan for economic union, including a common currency only if money markets demonstrated they preferred that to today’s 12 national currencies.

Italian Finance Minister Guido Carli, criticizing Major’s approach to what he called an essentially political issue, said, “This matter cannot be left entirely to market forces.”

The 12 leaders found themselves split over one pressing issue of current economic policy.

In the wake of last week’s collapse of international trade talks over American demands that Europe dismantle its costly farm subsidy system, the 12 managed to approve language in support of negotiating “a balanced political signal that we actually want and expect those talks to succeed.”

Other signals from Rome were not so clear. Even though his election was two weeks behind him, German Chancellor Kohl showed no sign of abandoning German farmers, who vehemently oppose cuts in farm subsidies.

“I cannot at all accept the idea that Germany should untie the . . . knot,” Kohl said. “Everyone will have to help find a solution.”

Spanish and Portuguese leaders struck similar themes. And Jacques Delors, president of the European Commission, the EC’s executive branch, castigated the Americans for meddling in Europe’s efforts to preserve its rural countryside.

“American negotiators must stop insulting us around the world and isolating us. . . ,” he declared. “They asked for too much too soon. They are mainly responsible for the failure.”

On many of the other major issues of the day, the 12 European leaders had little difficulty reaching unanimity.

On the Persian Gulf crisis, they expressed “relief” at Iraqi President Saddam Hussein’s decision to release all foreign hostages but emphasized their “deep concern at Iraq’s failure to withdraw, at its oppressive and inhuman occupation of Kuwait and its attempt to destroy the fabric of the country.”

Expressing support for “a dialogue of the sort President Bush has offered,” they also expressed their own interest in a meeting between Andreotti and Iraqi Foreign Minister Tarik Aziz. Shortly afterwards, Iraq canceled Aziz’s scheduled meeting with Bush on Monday.

In a conscious effort not to link Iraq’s invasion of Kuwait to the longstanding Arab-Israeli conflict, the 12 European leaders issued a separate declaration condemning recent Israeli reprisals against Palestinians. In a split with the United States, they said they would support a Mideast peace conference under U.N. sponsorship.

The $1 billion in food for the Soviet Union, which the 12 European leaders had tentatively approved Friday, is to be divided into one part gifts and two parts loan guarantees. To improve the Soviets’ primitive and corrupt food distribution system, the EC promised about $550 million in technical assistance next year and an undetermined sum in 1992.