S. Africa unbowed by divestment. US firms' retreat may harden Pretoria's go-it-alone mood
Johannesburg — Top US companies have sounded a jolting vote of no confidence in the South African government's bid to negotiate an alternative to white-minority rule. But at least in the short term, the sudden decisions by General Motors, IBM, and others to divest South African holdings seem unlikely to prod Pretoria to increase the pace or range of concessions to its black political opponents. If there is such an effect, it is likely to be the gradual, indirect result of a further erosion of South Africa's political middle ground.
Along with the US's economic sanctions against South Africa, the retreat by US business could well reinforce the government's ``go-it-alone'' mood of recent months. Since imposing a state of emergency June 12, President Pieter W. Botha has been increasingly forceful in his rejection of foreign pressure for changes in South Africa.
The move by US firms comes as the pro-reform leverage of private business here -- foreign and South African -- seems on the wane. Mr. Botha recently announced a major conference with local business leaders. But officials and local newspaper reports suggest that the agenda will focus only on economic and trade issues. The wider questions of unrest and black political participation seem increasingly to be the sole province of a self-confident government.
The message from the retreating US corporations is that they feel this self-confidence is misplaced. In the past few days, General Motors, IBM, Honeywell, and Warner Communications have all announced they will sell their South African holdings to local executives or employees. One reason in all cases was economic; once-profitable subsidiaries were no longer sufficiently so.
But the slumping figures are the result of a variety of factors, not all of them economic, including:
South Africa is in the grips of its worst recession on record, a slowdown that predates the last two years of political unrest.
Prospects for reinvigorated economic growth are undermined by the virtual absence of major new foreign credit or investment. This is a political problem. It began in earnest with the sudden refusal last year by major foriegn banks to roll over South African debt payments. That move followed a policy address by President Botha that defiantly rejected black nationalist demands.
The collapse in the value of South Africa's currency, the rand, makes imported components more expensive, local consumers sluggish, and repatriated earnings less valuable. The rand's downturn is ``political,'' in the sense that it is linked to last year's debt jolt and the lack of foreign-business confidence here.
There has been a gradual stream of departures or sell-offs by US companies here in the past two years. Some 40 companies left last year, according to the Washington-based Investor Responsibility Research Center. And, this year's total is now roughly 25. But more important than the numbers, is the effect of the back-to-back announcements by companies as large as GM and IBM. General Motors has been one of the largest US employers here; IBM is the world leader in a computer industry.
South African businessmen -- especially those employed by the latest US divestors -- argue that American companies are wrong to retreat. ``We feel totally betrayed,'' one IBM executive said yesterday. He said that the company's 1,500 local employees, nearly one-quarter of them nonwhite, could not help but feel ``a sense that they [US companies] keep you when they need you, but drop you when they don't.'' He stressed, however, that IBM's sellout would result in no lost jobs.
``The fact that these companies are not truly disinvesting, closing down, is positive,'' says Ken Mason, head of the American Chamber of Commerce here. ``But the negative aspect is that the individual [political] leverage of American companies is reduced.''
This report was filed under South Africa's emergency regulations, which prohibit reporters from being ``within sight'' of any unrest, ``restricted gathering,'' or ``police actions''; from reporting on arrests made under the emergency regulations; and from relaying information deemed subversive.