THE international community has forgiven South Africa's state arms company for its apartheid sins of the past when it was embroiled in sanctions-busting, selling weapons to dictatorships, and general skulduggery.
But the United States maintains its weapons embargo against South Africa, standing apart from the decision by the United Nations to drop its last sanctions after the April 1994 democratic elections that ended white minority rule.
President Nelson Mandela has appealed to President Clinton to use his executive powers to override the ban. But it appears there will be no quick fix to the dispute, which centers around a 1991 arms indictment against South Africa's weapons-selling state company Armscor for providing equipment to Iraq.
"It is crazy," says a South African official who requests anonymity. "There is tighter control of the arms industry like never before here and greater commitment to US-South African relations. But the legal aspect seems to have a life of its own."
Pretoria argues that the new black-led government should not be unfairly penalized for the misdeeds of the prior regime, noting that Armscor has been revamped and restructured with a new morally acceptable image.
South African officials say the state-run company should be immune from criminal prosecution - citing a precedent in 1991 when the US government decided against confiscating certain Iraqi central bank assets on the grounds that it constituted a challenge to a sovereign nation.
American officials deny they are pursuing a vendetta against Armscor. They call for a legal solution to a criminal case in Philadelphia in which an American company and agents of Armscor have been accused of contravening US arms-export laws that forbade providing arms to Iraq.
The American ban is hurting the business of Armscor's Denel division, one of the world's top arms manufacturers renowned for high-quality weapons. One such product is the Rooivalk attack helicopter, which it failed to sell to Britain last year, partially because of residual effect of the US embargo. Armscor complains that the US embargo hurts exports, which are unlikely to grow this year from the $250 million of 1994-95.
American resistance continues despite South Africa's new rulers cleaning up Armscor's murky ways with greater accountability. The government is pushing greater public disclosure of arms buying and selling policies, thanks to two watchdog bodies.
Last month, the National Conventional Arms Control Committee moved to rein in the arms industry, passing on information about allegedly illegal exports to the attorney general.
In July, the independent Cameron Commission detailed a litany of covert deals involving front companies, foreign intermediaries, busting of UN embargoes, and illegal sales abroad as late as September 1994.
The revelations shocked some South Africans. Armscor sold to Haiti's dictatorship, to Sudan and Yugoslavia, and, despite the regime's vehement anticommunism, to Warsaw Pact countries.
But the fact that they were made public was a step toward creating an ethical arms industry, defense analysts say.
"I think you can have an ethical arms industry here, such as in Germany and Britain. It comes down to whether it is seen as transparent and if the final decision rests with the government," says William Sass, deputy director of the Institute for Defense Policy in Johannesburg.
The Armscor quandary was discussed at length between Vice President Al Gore and his counterpart Thabo Mbeki when Mr. Gore visited South Africa last month.
South African officials say one proposal being discussed is for Mr. Clinton to override the ban in return for Pretoria allowing US officials to inspect any defense-related factory or documents to ensure South Africa did not export arms to hostile third countries.