The Senate and South Africa

MANY COLLEGES around the country are being forced by student concern to confront the issue of investments in firms operating in South Africa. Protests, teach-ins, demands for divestiture of stock in these companies and national media attention all arise from tension between administrative profit-oriented stock decisions and student demands for strong action against firms helping support apartheid. Often the debate focuses on the possible benefits of U.S. corporations remaining in South Africa and pursuing progressive racial policies under apartheid. Other questions that loom large in the student-administration "dialogue" concern the role of U.S. banks in financing apartheid and the policies the U.S. government could pursue to help correct the South African government's outrageous abuses, if not to abolish apartheid altogether.

The two-month-old report of the subcommittee on African affairs of the Senate Foreign Relations Committee helps provide much-needed answers to these complex problems. The subcommittee, chaired by Sen.Dick Clark (D-Iowa) and staffed by the late Sen. Hubert Humphrey (D-Minn.) and Sen. James Pearson (R-Kans.), spent more than a year researching the topic. The subcommittee interviewed representatives of corporations and banks operating in South Africa as well as members of anti-apartheid groups. It investigated corporate labor and management policies in South Africa and analyzed the ways in which U.S. banks affect the finances of the Vorster government.

The conclusions of this research effort hardly support the popular business theory that American firms are a positive force in South Africa. These firms failed to take major steps to initiate progressive racial employment policies, the report says; in fact they have done less than South African law allows in the areas of equal employment opportunities and the education and training of non-whites.

But the report's conclusions provide even less encouragement for the people who would like to believe that U.S. banks, by helping foster prosperity in the South African economy, are indirectly improving the conditions of South African non-whites.

To finance its strategy of building up a defense, energy and industrial infrastructure, the government arranged so many bank loans that by 1976 it owed $7.6 billion. In recent years U.S. banks have supplied an every-increasing proportion of these loans as the Vorster government's international credit rating declined. Without American support, South Africa could not have financed the development program it adopted which now makes it much easier to keep down black unrest and resistance.

The subcommittee's research reveals the inadequacy of the notion of American corporations effecting reform while remaining in South Africa. In 1976, Clark sent questionnaires to 260 firms operating in South Africa, asking for details of their labor, promotion, training and wage policies. One might expect that firms with especially poor records on racial policies would not reply to these queries. In fact, only about 30 per cent of the firms responded. Of that 30 per cent, some gave very incomplete and sketchy answers, and even among the companies that supplied sufficient documentation and detail, the report states there is "little evidence that U.S. firms adopted a socially conscious policy of avoiding support of the South African government or its apartheid policies," adding, "American business support of African trade unions appears to be little more than lip service."

As long as they can make profits, American firms will remain in South Africa, making concessions to non-white political and economic rights only when the U.S. government and the stockholders begin to complain too loudly for comfort.

A further complication is that many of these firms show little or no desire to operate in the full light of day. Despite its efforts, the Clark subcommittee was unable to decide which were the largest U.S. firms in South Africa. This lack of even very basic knowledge of U.S. corporate activities in South Africa hampers any attempts to monitor the relationship between the companies and the Vorster government. Employing the same criteria used in United Nations estimates, the Clark subcommittee decided that the 13 largest American firms in South Africa are General Motors, Mobil Oil, Exxon, Standard Oil of California, Ford Motor Co., ITT, General Electric, Chrysler, Firestone, Goodyear, 3-M, IBM and Caterpillar. Harvard owns stock in nine of these 13 firms, with a total value of over $200 million as of June, 1977, out of a $1.5 billion investment portfolio.

The Clark report recommends the adoption of a policy "to actively discourage American foreign investment in South Africa," and to work within the apartheid system to bring about changes in racial policies. It urges the denial of tax credits to U.S. firms in South Africa not actively striving to improve the lot of its non-white workers, the end of export-import bank guarantees of U.S. bank loans to the South African government, and the curtailment of Commerce Department activities directly or indirectly helping American firms choosing to operate in South Africa.

IN THE END the Clark subcommittee recommendations, which are self-consciously moderate and "pragmatic," seem too willing to give the South African minority government another chance to make good, considering its past record. While the Senate may be content to wait to observe the effects of this half-way measure before taking another insufficient step, South African non-whites continue to live each day under the most systematically repressive and racist government on earth.

By destroying most of the remaining justifications for the presence of U.S. corporations in South Africa, the Clark subcommittee further substantiates the need for a significant change in America's economic policy towards South Africa. While the subcommittee itself stopped short of recommending such changes in its report, it provided an invaluable aid to the anti-apartheid cause. When the Harvard Corporation decides on its own policy towards investments in firms operating in South Africa, it should keep in mind that the Clark subcommittee has already debunked many of the traditional myths surrounding the beneficial role of U.S. companies under apartheid. The Corporation may very well decide to retain those investments, but at least it will have to admit that profits are taking precedence over people.