S. Africa Hails Move as Big Step to Acceptance : Economics: Officials hope the U.S. action will lead to end of other global sanctions. ANC calls it premature.

President Bush’s decision to lift U.S. sanctions was heralded Wednesday by government officials and business people across South Africa as the most important step toward international acceptance for Pretoria in more than four decades.

The Johannesburg Stock Exchange soared to a new high, the special exchange rate that lures foreign investors to ignore sanctions sank to new lows and business leaders predicted that the beginning of the country’s economic recovery is near.

“This is a very, very great day,” exulted Roelof F. (Pik) Botha, the South African foreign minister. “This momentous decision brings to an end an era, started in 1986, (that had a) tremendously harmful effect on the South African economy.”

President Frederik W. de Klerk, accepting the American reward for his bold 17-month-old reform program, said he hopes the momentum will lead to the removal of other U.S. and world sanctions.

“I’d like to express my sincere appreciation to President Bush for the steps he has taken, especially in the face of pressure to shift the goal post,” De Klerk said, referring to anti-apartheid leaders who want sanctions maintained against Pretoria until blacks have a vote in South Africa.

“By his resistance, President Bush has shown himself to be a man of his word and a man of courage,” De Klerk added.

The African National Congress, the primary black opposition group, said the removal of sanctions is premature because two conditions of the U.S. law have not been met--the creation of a climate of free political activity and the release of all political prisoners.

The ANC said violence inside South Africa, which it blames on the government, had made free political activity impossible. And it said more than 800 prisoners remain jailed for political offenses.

“The process of change can only be deemed irreversible when the people can defend their gains through that most democratic of means--one person, one vote,” the ANC said in a statement.

In his announcement, however, President Bush said that all conditions set by the 1986 U.S. sanctions law have now been met, including the release of political prisoners, as Washington defines the term.

The ANC, which has been under pressure from some of its own members to soften its sanctions stand, repeated its support for sanctions as a weapon “to maintain pressure on the South African government to ensure rapid movement forward.”

But ANC officials played down the effect of Bush’s decision by noting that many of the more onerous American sanctions remain in place.

Among those are prohibitions on International Monetary Fund and World Bank loans, which South African economists say have severely hampered the country’s economic growth, and sanctions imposed by 28 states, 25 counties and 92 cities, including Los Angeles, on companies doing business in South Africa.

“The view of the U.S. Administration is that we’ve still got a fair way to go before we arrive at a democratic constitution, and therefore the United States will continue to apply pressure until that goal is achieved,” said Thabo Mbeki, the ANC’s foreign affairs chief. Mbeki said that message was relayed by Bush in a telephone call to ANC President Nelson Mandela on Wednesday.

Nevertheless, the removal of congressional sanctions is likely to persuade other world governments to reward De Klerk by restoring their trade links. And it will give De Klerk a substantial boost at home among whites who oppose his government’s reform program.

The right-wing Conservative Party, which advocates a return to apartheid, grudgingly welcomed the American move, but its leaders complained that De Klerk had paid too high a price for international acceptance.

Most South African economists viewed the action as of great symbolic--rather than practical--importance.

“We’re delighted that this step has been taken, but I don’t think anyone should expect any immediate or dramatic consequence,” said Ronald Bethlehem, an economist for the Johannesburg Consolidated Investment mining house. “American companies can be expected to move cautiously.”

Of the 300 American firms doing business in South Africa in 1986, only about 100 remain. About half of those that departed, however, have retained licensing, distribution, franchise or buy-back agreements.

State and local sanctions laws still discourage many firms from returning, and escalating black violence also is frightening away potential investors.

“You can do away with every bit of sanctions legislation, but unless there is political stability, it will be difficult to attract investors here,” said Wayne Mitchell, executive director of the American Chamber of Commerce in Johannesburg.

Sanctions against South Africa prevented the import of an array of goods and also halted landing rights for South African Airways, which at the time flew scheduled flights between Johannesburg and New York.

The airline said Wednesday that it will not be able to resume flights until a new agreement is negotiated with the U.S. government. The company has continued to pay rent at John F. Kennedy International Airport in New York.

Despite sanctions, many American products--from Ford cars to Kodak film to Coca-Cola--are available in South Africa, either through licensing agreements or imports through American manufacturing plants outside the United States. (Most, though, are sold at prices three or four times higher than in the United States.)

U.S. exports to South Africa since 1985 have increased, on average, 30% per year, and South Africa’s exports to all countries have increased 14% annually, on average, for the same period.

Economists say the international isolation has, in some respects, helped the country by forcing local firms to become more efficient and self-contained. But they admit that South African companies have suffered from restrictions on the exchange of technology.

Local and state ordinances, including a Los Angeles ban on contracts to firms doing business in South Africa, persuaded 10 U.S. companies to divest themselves of their South African operations in the past year, despite De Klerk’s reforms and the expectation that Bush would remove sanctions.

The ban on IMF loans to South Africa has had a broader effect on the country. Many of the world’s banks have followed the IMF lead and refused to lend to South Africa, a move that has stunted the country’s economic growth. The economy shrank by 1% last year.

The government contends that the slow economic growth has resulted in widespread black unemployment. Nearly 40% of the potential labor force lacks formal employment, and economists say only 10% of newcomers can find work.

The ANC and other anti-apartheid groups doubt that De Klerk is sincere about handing over power to a democratically elected government, and they say the pressure of sanctions must be maintained to keep the reform process moving.

“The struggle is not over yet,” said the Rev. Frank Chikane, of the South African Council of Churches. “We fear that the premature lifting of sanctions will mean that one of the major incentives for the South African government to change will be lost.”