South African sanctions stand, despite Bush's call

THE BALTIMORE SUN

WASHINGTON -- The removal of core U.S. trade and investment sanctions against South Africa still leaves a maze of anti-apartheid measures at state, city and local levels that may well obstruct dealings with that country long after apartheid's demise.

From Baltimore to Los Angeles, Vermont to Louisiana, cities and states generally have spurned President Bush's urgings last week to follow his lead in lifting the strictures.

It is too early, they say. Full equality for black South Africans still is not in place.

Until that occurs, said Baltimore state Delegate Howard P. Rawlings, "there will be no effort to remove South Africa from the sanctions book in this state. We would fight any effort to do that tooth and nail."

It may yet come to that.

Administration officials have told The Sun that they are "actively reviewing" state and local sanctions to see if they amount to interference in U.S. foreign policy.

"The Justice Department is looking into the matter," said a senior government official who did not want to be identified. The administration, he said, is "not excluding the possibility of initiating such a challenge ourselves."

"Should such [an independent] challenge present itself," he said, "we would readily support it."

Such action would confirm the contention of independent analysts, such as the Washington-based Investor Responsibility Research Center, who believe that sanctions generated over the years from grass-roots pressure in the states, cities and counties may have had more impact than the federal restrictions in forcing U.S. companies to withdraw from South Africa.

Unlike the federal law, local government measures have tended to target the domestic markets of companies by refusing to do business with companies that did business with South Africa.

Anne Griffin of TransAfrica, a leading sanctions proponent, admits ruefully that the momentum for sanctions appears to have dissipated in the face of consistently positive publicity for the reforms of South African President F. W. de Klerk.

"It's going to be hard to reinvigorate public enthusiasm to the levels of the mid-1980s," she said. She said Mr. Bush's action had undermined the sanctions movement, but, she added, "I think we have the capacity to rev it up again."

Like most pro-sanctions lobbyists, she maintains that trade and diplomatic pressures should be maintained until full democracy is achieved in South Africa.

Maryland was one of the first states to act, slapping restrictions on banks that did business with the white government back in 1984. Since then it has written two companion measures: the elimination of pension fund investments from South African-linked companies and a conditional ban on state purchases of products from that country.

Many other states and cities -- 140 by last count -- set even tougher conditions, which the Investor Responsibility Research Center says has been a major factor in the number of U.S. companies in South Africa dropping from about 300 in 1984 to 104 today.

In April, Dean Witter Reynolds brokerage cited municipal divestiture pressures for its decision to end financial dealings with South Africa. In the same month, J. P. Morgan Guaranty announced it would stop handling shares in South African companies after Massachusetts warned that the bank was violating the state's selective purchasing policy. In June, Xerox Corp., under pressure from city governments across the country for selling in South Africa, allowed its distribution agreement in that country to lapse.

IRRC analyst Stephen Davis estimates that South Africa spent $15 billion to $27 billion on efforts to withstand sanctions. The money paid for: premiums to intermediaries in sanctions-busting operations, as, for example, in routing exports of fruit and other embargoed commodities through neighboring countries such as Swaziland; constructing gigantic petroleum-from-coal plants to lessen the blow of the international oil embargo; and a costly armaments industry to negate the U.N. ban on weapons to South Africa.

It was a heavy load for a country whose gross national product is little more than $100 billion -- scarcely larger than Maryland's.

Coinciding with a general recession, mounting labor unrest and civil strife, sanctions played a major part in the 25 percent decline in the South African economy since 1981, said Herman Cohen, assistant secretary of state for African affairs.

He backs the administration's case for increasing, rather than reducing, investment in South Africa with the calculation that 250,000 people have reached working age in the last 10 years, while not a single new job has been created.

However, Mr. Davis maintains that the success or failure of sanctions should not hinge on the amount of harm they do.

"They were not meant to inflict damage. They were meant to effect political change, and they should be judged in those terms," he said.

Since it became known a few months ago that the administration was moving toward lifting the 5-year-old Comprehensive Anti-Apartheid Act, the U.S. Commerce Department has noted "a steady interest" from companies wanting to return to South Africa or open shop there for the first time.

"I think you will see an initial spurt of interest. Companies will go down there and look around, but I don't expect to see anyone rushing in as if it was some sort of Kuwait or Pacific Basin," Mr. Davis said.

The major constraints, he said, would be the continued uncertainty of South Africa's future and the more than 300 state and local laws that continue to oppose investments there.

"I think a lot of companies will find the costs of doing business there far outweigh the benefits," he said.

Some companies that sold their interests in South Africa at the height of the U.S. disinvestment drive -- such as IBM and Mobil -- say they aren't interested in going back. IBM says it is happy with its current sales arrangement with the South African trust that bought its operation there, while Mobil says it would be too costly to start from scratch or buy back the business it sold so cheaply in 1989.

An important question for many companies approaching the issue for the first time is how long the state and local sanctions are likely to be around. Public opinion against South Africa these days is not as heated as it was three to six years ago, when embargoes and restrictions were raining down on South Africa and all associated with it.

Brookings Institution analyst Stephen Hess predicts that they will gradually diminish in importance as they are repealed or ignored.

"Berkeley and the Commonwealth of Massachusetts have never set foreign policy for the United States of America, and that's not about to change now," he said.

But apathy and ignorance can be almost as much of a hindrance, it seems, as public approval.

For example, Namibia, the former South African colony, is still punished under sanctions in 31 states and localities -- including Maryland -- even though it has been fully independent for almost 16 months and eliminated its apartheid rulers amid much publicity and international applause.

"Most people [in the state and local governments] didn't seem to know that we'd become independent," said Christa Flucks of the Namibian Embassy, which has taken up the problem with the State Department.

"Some were suspicious and wouldn't believe us at first. They thought we were trying to trick them," said a U.S. administration official assigned in February to notify legislatures that the cause for the sanctions no longer existed.

"A lot of councilmen didn't know the details of what they were doing when they put the laws up in the first place. They were just acting for people, for activists fired up by the moment," &r; commented a U.S. executive whose company was forced by sanctions pressure to pull out of South Africa. "Now the moment's passed. The people have moved on to other things, and the legislators don't even know what they've got on their books."

Current sanctions against Pretoria

Jurisdictions having laws or policies restricting their business or investment ties with South Africa include:

* 27 states

* U.S. Virgin Islands

* 88 cities

* 24 counties

STATES

Arkansas

California

Colorado

Connecticut

Florida

Hawaii

Illinois

Iowa

Kansas

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Missouri

Nebraska

New Jersey

North Carolina

North Dakota

Oklahoma

Oregon

Rhode Island

Tennessee

Vermont

Virginia

West Virginia

Virgin Islands

MAJOR CITIES (ranked by population) 1. New York

Los Angeles

3. Chicago

4. Houston

5. Philadelphia

6. San Diego

7. Detroit

8. Dallas

9. Baltimore

MARYLAND COUNTIES * Howard

Montgomery

* Prince George's

Source: Investor Responsibility Research Center

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