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Full text of "The Anti-Apartheid Act of 1985 : hearings before the Committee on Banking, Housing, and Urban Affairs, United States Senate and the Subcommittee on International Finance and Monetary Policy, Ninety-ninth Congress, first session on S. 635, to express the opposition of the United States to the system of apartheid in South Africa, and for other purposes, April 16, May 24, and June 13, 1985"

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HEARINGS 

^\l^  «!•*  BKTOKE  THE 

COMMITTEE  ON 
m.  HOUSING,  AND  UEBAN  AFFA 
UNITED  STATES  SENATE 

AWDTHI 

SUBCOMMITTEE  ON  INTERNATIONAL  FmANOE 
AND  MONETARY  POUOY 

NINETY-NINTH  CONGRESS 
FDtST  SESSION 


S.  635 


1PKES3  Trre  opposirroN  of  the  onitkd  states  to  the  system 

[OF  APABTHBTO  IN  SOUTH  AFRICA.  AND  FOR  OTHER  PURPOSES 


APRIL  10.  MAY  U.  AND  JUNE  13.  1BB5 


1  Ibr  the  uae  nt  the  Committee  on  Banking,  Iloiuing.  uiil  Urb«a  AfTatra 


8.  Hio.  W-148 

THE  ANTI-APARTHEID  ACT  OF  1985 


HEARINGS 

BCrORITHK 

COMMITTEE  ON 

BANKING,  HOUSING,  AND  UEBAN  AFFAIRS 

UNITED  STATES  SENATE 

ANDTHI 

SUBCOMMITTEE  ON  INTERNATIONAL  FINANCE 

AND  MONETAET  FOUCT 

NINETY-NINTH  CONGRESS 

FIRST  SESSION 


S.  635 


3  THE  OPPOSITION  OF  THE  UNITED  STATES  TO  THE  SYSTEM 
OF  AFABTHEID  IN  SOUTH  AFRICA,  AND  FOR  OTHER  PURPOSES 


APRIL  16,  HAY  24,  AND  JUNE  13,  1986 


Printed  for  dte  use  of  the  Committee  on  Banking,  Housing,  and  Urban  AffairB 


WASKINOTON  :  198S 


W-rao    0-86 1 


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COHMITTEE  ON  BANKING,  HOUSING,  AND  UKBAN  AFFAIRS 
JAKE  GARN,  Utah,  Chairman 
JOHN  HEINZ.  Pennsylvania  WILLIAM  PROXMIRE,  WiaconBm 

WILLIAM  L.  ARMSTRONG.  Colorado  ALAN  C3RANST0N,  California 

ALPONSE  M.  EfAMATO,  New  York  DONALD  W.  RIEGLE,  Ji.,  Michigao 

SLADE  GORTON,  Washington  PAUL  S.  SARBANES.  Maryland 

HACK  MATTINGLY,  Georgia  CHRISTOPHER  J.  DODD,  Connecticut 

CHIC  HECHT,  Nevada  ALAN  J.  DIXON,  minoU 

PHIL  GRAMM,  Texas  JIM  SASSER,  Tennenee 

M.  Dahnv  Waix,  Staff  Director 
KlNNBIH  A  McLean,  Minority  Staff  Director 


SUBCOMMTTTKB  ON  INTBSNATIONAL  FlNANCB  AND  MONBTARV  POUCT 
JOHN  HEINZ.  Pennsylvania,  Chairman 
JAKE  GARN,  Utah  WILLUM  PROXMIRE.  WisconaiD 

WILLIAM  L.  ARMSTRONG,  Colorado  ALAN  J.  DIXON,  QlinoU 

SLADE  GORTON,  Waafaington  JIM  SASSER,  Tenneasee 

HACK  MATTINGLY.  Geoi^  DONALD  W-  RIEGLE,  Jr.,  Michigan 

CmC  HECHT,  Nevada  PAUL  S.  SARBANES,  Maiyland 

Paul  FBERnENBBRO,  Economist 
Waynk  a.  Abirnathy,  Eamomiat 
Patrick  A.  Hulloy.  Minority  General  Counael 


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CONTENTS 


TUESDAY,  APRIL  16,  19SG 


Senator  Hecht 

Senator  Cnmsbm.... 


Senator  Proxnim-... 


Senate  bill  S.  635.... 


Edward  M.  Kennedy,  U.S.  Senator  from  the  State  of  Mas8achutetta 

ConditdtHiB  in  South  Africa 

Hostility  to  the  United  States  increasing ,. ~ 

Whip  and  laah  of  apartheid 

Pre[mred  st^ement „.„ „._._.,..»._..».—..,.».«- 

Summary  of  S.  685 _ 

Fact  sheet  on  the  impact  of  the  Anti-Apartheid  Act  <f  19S6 

Remarks  of  Jamee  Mndaweni.  prceident  of  the  Council  of  Unim  of 
South  Airica.... 


[esponae  to  written  questions  of  Senator  Mattingly ... 
llP.Weicl       ""  "^      ■      -        ■'     " 


Lowell  F.  Weicker,  U.S.  Senator  from  the  State  of  Connecticut _ 

bnorance  of  the  history  of  South  Africa ^ ^....^.^ « 

Apartheid  is  a  creature  of  law „.„....„ ,. „.„.„.„.„........ 

L^al  foundations  of  apartheid  similar  to  ni^zjinn  ~.~,...^.-.~ ._...._ 

Impact  of  economic  sanctions ,.„ _... ~. 

Prepared  statement „ 

Re^Kinse  to  written  questions  of  Senator  Hattingly 

Panel  discussion: 

Sanctions  ending  apartheid  without  violence 

Fear  of  divestiture 

African  students  being  educated  in  Cuba „ 

"Bring  more  American  investment" ,. 

Block  future  imports  of  the  krugerrand 

The  Sullivan  prmdplee — ,. 

Kenneth  Dam,  Dnnity  Secretary  of  State,  Deparbnent  of  Sttate,  accommnied 
by  Chester  A.  Qxiclwr,  Assistant  Secretary  for  African  AfTairsi  and  Frank 
Wisner,  Deputy  Assistant  Secretary  for  African  AfTairs,  Department  of 
State 

Sanctions  would  be  counterproductive 

Prohibition  on  bank  loans  would  create  a  dangerous  precedent 

New  job  opportunities  denied 

Prepared  statement 

"Rededication  to  the  Cause  of  Human  Rights,"  remarica  o(  President 

Reagan 

Panel  discussion: 

Problems  are  getting  worse,  not  better — ..~ 

Not  operating  on  a  basis  of  conditionality „ ..... 

Soviet  interest  In  southern  Africa  increases ~ 

South  African  blacks  oppose  economic  sEmctions 

S.  635  is  not  a  diunvestment  bill 

UJJ.  Security  Resolution  435 


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Quiet  diplomacy  mas  communicate  wrong  : 
Preaent  policy  may  nave  to  be  rcaxaminaa. 
TBTgeting  bank  loans. 


FRIDAY,  HAY  24,  1986 


Opening  statement  of  Senator  Heinz 

Owning  statement  of  Sonator  Proxmire.... 


Sheldon  Hackney,  president,  Univerai^  of  Pennsylvania,  Philadelphia  PA 120 

United  in  oppceition  to  apartheid ~ ...~....  120 

Need  for  further  action „ 121 

Prepared  statement „^ „...„...._.„.„.„..._.„.„..„.„..„...„,  128 

Besponse  to  written  questions  of  SenabnB  Heiiu  and  Pmmire  ^ _..„.......  S36 

Derek  Bok,  preeident.  Harvard  Universi^,  Cambridce,  HA 127 

Rising  tension  in  South  Africa _....„ .„ ^.. 127 

Additional  measuree  to  explore ^.^.^ „»....—...«» _.,..,..»...—.  128 

Prepared  statement -.„. ._. ._ „ . .  12S 

Response  to  written  questions  of  Senator  Kennedy 829 

"A  Personal  Perspective  on  the  Second  Came^  Inquiry  Into  Poverty 

and  Development  in  Southern  Africa,"  report  submitted  for  the  record..  297 

Roy  Schotland,  Georgetown  Law  School,  Georgetown  University 187 

bsue  of  divestitive  is  complex 137 

Advocacy  is  hypocritical 189 

Prepared  statement ~ 141 

I.  Views  on  divestment  summarized »....» »..  142 

II.  Five  comments  on  spedflc  pnndsioiis  of  S.  68S ^..~...~~ ~~..  146 

"Disinvestment,"  an  article  submitted  l^  Jiriin  Langbcan,  Btqr  Sdiot* 

land,  and  Albert  Blaustein 149 

Response  to  written  questions  of  Senator  Hrins 318 

Robert  D'Agoetino,  National  L^al  Center  tor  the  Pablk  Interest,  Washing- 
ton, DC _ „ 270 

Apartheid  is  a  totalitarian  system 270 

Change  will  come  slowly 272 

Prepared  statement 273 

The  United  Methodist  Church,  letter  frtnn  Abel  Huzorewa  to  Albert 

Blaustein  with  accompanying  article - ~ 288 

Response  to  written  questions  ot  Senator  Prtomire „..„.„ _._ 860 

Panel  discussion: 

Results  of  Swedish  ban 290 

Time  is  running  out 292 

Loan  portion  of  S,  635 - 298 

Signal  to  the  black  communis „.„._.,„....„.„...._ . 296 

Sullivan  principles  have  been  lielpfiil „ ,. ^.^.^ 818 

I^ck  of  urgency ^,„ „ „ „„..„....„,.. _._.„._._.  816 

Chan^  are  occurring ...,. _....-....».  819 

Conditions  are  terrible  for  blacki  in  SouUi  Afrtca — ..  821 

Number  of  destitute ._... _ ».^ «„._.  822 

Could  give  wrong  impression ......_ — _._ _ 824 

Bill  would  be  a  strong  signal ^. » ».,. _.._..,.._.«._..  826 

Distinction  of  involvement ....„ „ 827 

Donald  F.  McHenry,  former  Ambassador  to  the  United  Nations;  Georgetown 

Univeisity,  School  of  Foreign  Service 363 

Divide  U.S.  policy  two  ways SM 

Bill  is  an  at^ropriate  first  step 366 

Some  improvements  in  urban  living 367 

Hope  to  avoid  further  violence 368 


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Donald  F.  McHenry,  former  Ambaasador  to  the  United  Nations;  Georgetown 
Univeraity,  School  of  Foreign  Service — Continued 

Need  new  Constitution 

Deterioration  of  respect 

DegnidatioD  because  (^  racial  origin 

Change  will  come  slowly..., 
Reid  Weedon,  Jr.,  seni 
Tor  Sullivan  principles... 

Prepared  statement 367 

Sal  Mannillo.  chairman  of  the  Industry  Support  Unit  for  Sullivan  principleo, 

Mobil  Oil  Corp.,  spokesman  for  Sullivan  Companies 374 

Some  erosion  through  economic  growth 3T4 

Prerared  statement 378 

George  J.  Schroll,  chairnian,  education  task  group  of  the  Sullivan  Signatory 

Companies 382 

Prepared  statement 382 

Patrick   O'Farrell,    executive   director,   AFL-CIO,    African-American   I^bor 

Center 385 

American  labor  movement  involvement 886 

Workers  resolution 387 

Prenared  statement 889 

1  Fdnuary  19,  1985, 

894 

396 

Statement  ^^FL<Sidcm  South  Afiiica.  May  7, 1^ ... 


Sullivan  principles 409 

Help  provide  better  education 410 

Quick  change  or  revolution...  '''" 


Commitment  of  business  to  effect  change... 


THURSDAY,  JUNE  13,  1985 


Opening  statement  of  Senator  Heinz... 


Opening  remarks  of  Senator  Prozmire..., 


Philip  A.  Lacovara,  member,  House  of  Delegates.  American  Bar  Association 
Prepared -'-■ ' 


statement ... 

Printdplee  governing  economic  sanctions 

"      ■      proposals  for  sanctions 

"\tlining  the  Byatematic  misuse  of  the  law,  prepared  by  Goler 


Printnples 
specific  pi 


Rev.  Leon  H.  Sullivan,  miniater,  Zion  Baptist  Churdi,  Philadelphia,  PA, 

author  of  the  Sullivan  principles 459 

Effect  of  multinational  companies  in  South  AfHca 460 

American  companies  should  set  the  example 460 

Moratorium  on  American  economic  expansion 462 

Prepared  statement 462 

Panel  discussion: 

Impact  of  Sullivan  principles  by  law 465 

Reaction  of  South  African  Government  to  the  principles 466 

High  risk  of  black  unemployment 468 

Economic  sanctions  advocated  by  ABA 469 


Apathy  in  Europe..., 

Reprehensible  apartheid  laws 

Window  of  freedom  is  open 

Mandate  double  standard 

Principles  adhered  to  in  United  States... 
Family  of  people 


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VI 

Panel  discuBsion — Continued 

Oil  supply  situation 481 

No  new  investments 483 

Effects  of  U.S.  policy 484 

Additional  Matebial  Supplied  ros  the  Rbcobd 

G«orge  P.  Shultz,   Secretary  of  State,  paper  entitled,  "Southern  Africa: 

Toward  an  American  Consensus" 486 

tntemational  Inveeton  Inc.,  letter  in  opposition  to  S.  635  from  John  van  Eck, 

chairman  and  president 610 

Chamber  of  Commerce  of  the  United  States,  statement  on  United  States 

C'.cy  toward  South  Africa  by  Michael  A.  Samuels 613 
n,  Dunn  &  Crutcher,  statement  in  opposition  to  S,  635  from  Theodore  B. 

Olson,  former  Assistant  U.S.  Attorney  Ueneral 526 

Philadelphia  Lawyers  Against  Apartheid,  petition  to  the  Congress 65S 

Wellesley  Collie,  letter  in  support  of  the  Anti-Apartheid  Act  tnm  Nannerl 

O.  Keohane,  president 578 

The  Freedom  Foundation,  Committee  on  International  Trade,  testimony  sub- 
mitted for  the  record  by  Magnus  Krynski,  chairman 579 

United  Services  Advisors,  Inc.  letter  in  opposition  to  S.  635  from  Clark  Alys- 

worth,  president 582 

Open  letter  from  Members  of  President's  Council  ^m  South  Africa 684 

The  Washington  Post,  June  5,  1985,  editorial  entitled  "Hie  South  African 

Sanctions 686 

The  Heritage  Foundation: 

Institution  Analysis,  September  12,  1984,  article  entitled  "For  U.S.  Firms 
in  South  Africa,  the  Ilireat  of  Coercive  Sullivan  E>rinciples"  by  Mark 

Huber 587 

Backgrounder,  April  30,  1985,  article  entitled  "An  Investment  Strata^  to 
Undermine  Apartheid  in  South  Africa"  by  Stuart  M.  Butler  and  ludi- 

ardD.  Fisher 597 

Control  Date,  letter  and  paper  in  support  of  legislation  S.  635  from  William  C. 

Norris,  chairaian  and  chief  executive  ofTicer 60S 

Articles  from  the  magazine  "ERA,"  April  1985: 

"The  Americsji  National  Interest  in  a  Stable  South  Africa,"  by  Herman 

Nickel,  U.S.  Ambassador  to  South  Africa 613 

"American  Companies  in  South  Africa,"  by  Tony  Koenderman 616 

"The  Other  Face  of  American  Business,"  by  Ian  Wakefield 616 

The  Voice  of  Indochina.  July  1985,  editorial  entitled.  "Apartheid — Crime 

Against  Humanity  or  Western  Anomaly,"  by  Tran  Binh  Nam 617 

European  Community  News,  August  8,  1985.  article  entitled.  "ESuropean 
Community  Condemns  South  African  Apartheid  and  Summons  12  Am- 
bassadors''       629 

Urban  Foundation: 

"Some  Prtaect  Highlighta  of  1984  and  1985" 686 

Foundation  Forum: 

"Crossroads— a  Decade  In  Perspective" _ _ „ _ - 646 

"Protea  North:  20,000  WiU  Be  Accommodated" _ 647 

"CEP  Grows  With  Urban  Foundation  Boost" 648 

"Management  Training  for  Headmssters" „.„ _ ._. 649 

"Some  Major  Achievementa  of  the  Past  Financial  Year" ,. 660 

"Acceptance  of  Black  Building  Industry" 661 

"Sullivan  Responds  to  UF  Initiatives" 652 

The  American  Chamber  of  Commerce  in  South  Africa: 

Aims  and  objectives 658 

"U.S.  Business  Involvement  in  South  Africa" 654 

Investor  Responsibility  Research  Center.  Inc.,  April  1985,  Update  of  South 

Africa  Review  Service,  by  Dresser  Industries,  Inc 665 

IRRC  article,  "Progress  in  Implementing  the  Sullivan  Principles" 678 

South  Africa  International: 

"Impressions  of  Southern  Africa,"  article  by  Suzanne  (rannent 684 

"Managing  the  Security  Power  Base  in  South  Africa,"  by  James  M. 

Roherty 693 

"The  Indian  and  Coloured  Elections:  Co-Optation  Rejected?" 703 

Articles  submitted  by  Mangosuthu  G.  Butheled,  Chief  Minister  of  Kwazulu: 
Address  at  the  unveiling  of  the  foundation  stone  at  Nanundlela,  South 
Africa,  July  19, 1986 727 


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Plff. 

Articlee  submitted  by  Mangosuthu  G.  Buthelezi.  Chief  Minister  of  Kwazulu— 
Continued 

Hemorandum  presented  at  Lambeth  Palace,  England,  July  30, 19S6 739 

Memorandum  submitted  to  Sir  Geoffrey  Howe,  Foreign  and  Conunon- 

wealth  Secretary.  Great  Britain,  cm  August  2,  1985,  at  London 746 

"The  Real  Challengee  Black  South  Africans  Pace,"  article  addressed  to 

Israeli  Government  at  Tel  Aviv,  August  1986 763 

Memorandum  presented  to  Shimon  Perea,  Prime  Minister  of  Israel  at  Tel 

Aviv,  August  1985 760 

Memorandum  presented  to  Yitzhak  Shamir.  Foreign  Minister  of  Israel  at 

Tel  Aviv,  August  1985 774 

Address  at  the  Symposium  entitled,  "Natal/Rwazulu — 2000,"  held  on 

August  17, 1985 786 

"BriefingB  on  the  Current  South  African  Situation,"  article  submitted  to 

Israel  on  August  1986 792 

Clarion  Call: 

"Disinvestment— As  the  Numbers  of  Unemployed  Grow,  What  Do  Black 

Workers  Want?"  volume  1, 1986 800 

"The  Buthelezi  Commission."  volume  2, 1986 812 


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THE  ANTI-APARTHEID  ACT  OF  1985 


TUESDAY,  APRIL  16,  1985 

U.S.  Senate, 
CoHMirrEE  ON  Banking,  Housing,  and  Urban  Aftairs, 

WashiTigton,  DC. 
The  committee  met  at  11  a.m.,  in  room  SD-538,  Dirksen  Senate 
Office  Building,  Senator  John  Heinz  presiding. 

Present:  Senators  Heinz,  Gorton,  Mattingly,  Hecht,  Proxmire, 
Cranston,  Sarbanes,  Dodd,  and  Dixon. 
Also  present:  Senators  Kennedy  and  Weicker. 

OPENING  STATEMENT  OF  SENATOR  HEINZ 

Senator  Heinz.  Ladies  and  gentlemen,  this  hearing  of  the  Senate 
Banking  Committee  will  come  to  order. 

This  hefiring  inaugurates  the  Senate  Banking  Committee's 
review  of  the  problem  of  South  Africa  euid  also  stands  as  a  reflec- 
tion of  our  determination  that  some  action  by  the  U.S.  Gtovemment 
to  bring  an  end  to  the  policy  of  apartheid  is  both  necessary  and  ap- 
propriate. 

Eioth  Congress  and  the  executive  branch  have  over  several  ad- 
ministrations spent  considerable  time  attacking  and  condemning 
the  moral  outrage  that  we  call  apartheid.  For  the  past  4  years  the 
United  States  has  practiced  the  policy  of  constructive  engagement 
attempting  to  persuade  the  South  African  Government  to  end  its 
racist  practices  and  bring  justice  to  its  people. 

The  results  of  our  efforts,  in  my  judgment,  have  been  negligible 
at  best.  The  failure  of  the  South  Africeui  Government  to  make 
more  than  token  gestures  in  response  to  pressure  has  perpetuated 
an  intolerable  situation. 

Blacks  in  South  Africa  continue  to  be  denied  any  meaningful 
role  in  the  political  life  of  their  country;  the  forced  relocation  of 
blacks  to  artificially  defined  homelands  continues  unabated.  The 
recent  violence  and  tragic  death  of  19  black  South  Africans  was 
condemned  by  the  Senate  by  its  overwhel^iing  passage  of  Senate 
Joint  Resolution  96  which  indicates  a  deteriorating  domestic  situa- 
tion. 

■Hie  frustration  of  the  black  community  can  only  lead  to  more  vi- 
olence which  in  turn  can  only  elicit  more  repression  from  a  govern- 
ment struggling  to  maintain  a  stranglehold  on  the  vast  majority  of 
its  people. 

South  Africa  is  the  only  country  that  has  legalized  and  institu-- 
tionalized  racism  as  an  element  of  public  policy  and  that  fact  alone  I 
imposes  a  burden  upon  us  to  respond  in  legal  terms,  not  just  in  rhe-r 
toned  terms. 

(1) 


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As  a  result,  it's  become  clear  that  the  United  States  can  no 
longer  accept  improvement  in  the  conditions  in  South  Africa  on  a 
timetable  to  be  proposed  by  the  South  African  Government.  The 
question  we  must  come  to  terms  with  is  how  to  proceed  beyond  con- 
structive engagement  without  sacrificing  our  leverage  to  bring 
about  the  final  outcome  we  all  desire — an  end  to  apartheid. 

Having  stated  the  need  to  move  beyond  constructive  enge^ement, 
let  me  be  clear  about  the  fact  that  I  have  reservations  about  the 
legislation  that  is  the  subject  of  today's  hearings.  I  have  supported 
parts  of  S.  635  in  the  past,  including  immediate  sanctions,  emd  plan 
to  do  so  again  in  the  future. 

I  regret,  however,  that  amidst  the  strong  Sullivan  principle  that 
passed  the  Senate  last  year  I  am  concerned  that  the  bill  in  its 
present  form  may  deny  the  United  States  the  ability  to  play  a  long- 
term  meaningful  role  in  bringing  an  end  to  apartheid,  but  I  can 
however  surest  some  criteria  we  ought  to  keep  in  mind  while  re- 
viewing proposals  for  action. 

First,  we  should  remember  that  it  is  the  South  African  Govern- 
ment that  is  the  originator  and  the  sustainer  of  apartheid.  Our  ac- 
tions therefore  should  focus  on  that  Government. 

Second,  as  a  corollary  to  that,  we  should  avoid  actions  that  have 
;  an  adverse  impact  on  South  Africa's  black  majority.  While  our 
long-term  objective  must  be  the  abolition  of  apartheid,  we  must  not 
forget  that  the  short-term  economic  problems  of  South  Africa's 
blacks  are  reai  and  we  should  seek  to  avoid  actions  that  contribute 
to  those  problems. 

Third,  our  objective  is  to  change  policy  and  practice  in  South 
Africa.  Sanctions  are  an  appropriate  means  to  that  end  but  we 
should  avoid  any  punitive  approach  which,  though  in  the  near 
term  makes  us  feel  better,  in  practice  leads  to  a  premature  abdica- 
tion of  U.S.  influence  and  responsibility  for  ending  apartheid. 

Fourth  and  finally,  American  business  has  made  a  positive 
impact  in  attempting  to  undermine  the  ability  of  the  South  African 
Government  to  deny  economic  opportunity  to  its  black  population. 
To  reinforce  that,  we  should  insist  that  Americans  doing  business 
in  South  Africa  uphold  and  maintain  American  standards  in  their 
own  practices  and  that  they  make  clear  their  own  objection  to 
apartheid.  We  can  impose  limitations  on  those  that  do  not  cooper- 
ate. It  is  therefore  legitimate  to  ask  Americem  businesses  to  be  an 
aggressive  agent  against  apartheid  in  South  Africa.  However,  it  is 
not,  in  my  judgment,  legitimate  to  ask  them  to  bear  the  full  brunt 
of  implementing  our  policy  and  to  pay  the  full  cost  of  South  Africa 
failure  to  change. 

The  purpose  of  today's  hearings  and  of  those  which  follow  is  to 
examine  various  proposals  for  actions  against  South  Africa,  par- 
ticularly those  contained  in  S.  635  which  has  been  referred  to  this 
committee.  My  own  study  and  conclusions  will  be  conducted  in  the 
light  of  the  criteria  which  I  have  just  listed  and  the  testimony  we 
receive. 

At  the  conclusion  of  our  deliberations  I  hope  we  will  be  in  a  posi- 
tion to  move  forward  on  l^islation  that  can  obtain  broad  support 
from  both  parties,  from  both  Houses  of  Ck>ngre8s,  and  the  Presi- 
dent. 


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As  I  said  last  year,  we  have  had  more  than  enoi^h  rhetoric  on 
the  subject  of  South  Africa.  Our  goal  at  this  point  is  to  change 
South  African  policy  in  a  timely  manner.  That  is  best  achieved 
through  solid,  carefully  drafted  legislation  that  the  vast  mf^ority  of 
Americans  can  support  and  which  the  President  will  sign  into  law. 
The  alternative  is  emother  pointless  political  exercise  that  will 
leave  volumes  of  empty  words  and  little  else.  That's  what  I  hope 
we  certainly  avoid. 

Senator  Hecht 

OPENING  STATEMENT  OP  SENATOR  HECHT 

Senator  Hecht.  Thank  you,  Mr.  Chairman. 

I  want  to  take  this  opportunity  to  compliment  you  on  holding 
this  hearing  today,  the  first  in  a  series  of  hearings  on  proposed  leg- 
islation to  implement  sanctions  against  the  Government  and  the 
people  of  South  Africa. 

Let  me  begin  by  saying  that  I  am  opposed  to  the  type  of  l^sla- 
tion  before  us  today  which  seeks  to  impose  economic  sanctions 
against  South  Africa.  This  is  not  to  say  that  I  support  the  apart- . 
heid  policies  of  the  South  Africa  Government  because  that  is  far 
from  the  truth.  These  policies  are  indeed  imperfect  and  as  Presi- 
dent Reagan  has  stated,  repugnant. 

Where  my  position  differs  with  the  advocates  of  such  legislation 
is  the  methods  and  policies  the  United  States  should  adopt  to  foster 
change  in  this  system. 

Mr.  Chfurman,  it  is  a  beisic  fact  that  the  majority  of  South  Afri- 
cans remain  without  the  fundamental  human  right  of  citizenship 
in  their  own  country.  This  fact  cannot  be  denied.  However,  it  is  im- 
portant to  point  out  the  dramatic  prc^ess  that  has  been  made  over 
the  past  decade.  Positive  changes  are  occurring  in  black  education 
and  housing,  in  labor  law  and  trade  unionism,  in  black  urban  resi- 
dency rights,  the  extension  of  political  r^hts  to  the  colored  and 
AsiEin  community. 

There  is  also  the  basic  fact  that  South  Africa's  wide  electorate 
has  given  solid  backing  to  a  government  that  is  committed  to 
peaceful  evolutionary  change.  We  should  not  be  imposing  broad- 
based  economic  sanctions  against  South  Africa.  We  should  be  work- 
ing to  encourage  the  types  of  positive  changes  that  are  occurring 
there. 

Elconomic  seuictions  do  not  work.  They  never  have  and,  in  my 
opinion,  never  will.  The  types  of  actions  suggested  by  this  legisla- 
tion would  only  serve  to  hurt  the  very  people  they  are  designed  to 
assist.  By  condemning  South  Africa  by  withdrawing  American  in- 
vestment, the  United  States  would  only  spawn  an  armed  conflict. 
We  didn't  like  the  Shah  of  Iran  and  we  ended  up  with  Khomeni. 
We  didn't  like  Diem  and  we  ended  up  with  a  war  in  Vietnam. 
South  Africa  has  been  our  friend.  If  we  reject  them,  then  we  could 
possibly  end  up  with  a  Communist  government. 

Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Senator  Hecht,  thank  you  very  much. 

Senator  Cranston. 


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OPENING  STATEMENT  OF  SENATOR  CRANSTON 

Senator  Cranston.  Thank  you  very  much,  Mr.  Chairman. 
It's  a  pleasure  to  join  in  welcoming  my  friends  and  colleagues, 
Ted  Kennedy  and  Lowell  Weicker,  before  this  committee.  I  am 

E leased  to  join  with  them  as  cosponsor  of  S.  635  and  I  applaud  their 
ipartisan  leadership  on  the  issue  of  South  Africa's  apartheid. 

As  we  consider  the  measure  before  us  today  I  believe  it  is  essen- 
tial for  us  to  remember  exactly  what  has  brought  us  here.  We  are 
here  today  because  an  unspeakable  wrong  is  being  committed  to 
millions  of  human  beings  each  day  in  South  Africa.  We  are  here 
today  because  we  have  a  moral  obligation  to  speak  and  to  use  such 
power  as  we  have  to  act  against  this  wrong. 

We  are  here  today  to  help  translate  the  deep  concern  expressed 
by  millions  of  Americans  into  action  and  we  are  here  today  to  ad- 
vance the  national  interest  of  our  own  country  which  require  us  to 
distance  the  U.S.  Government  from  the  repugnant  apar^eid 
regime  of  South  Africa. 

I  feel  very  strongly  that  the  time  has  come  for  us  to  move  beyond 
_  strong  words  and  to  enact  strong  legislation.  As  one  who  worked 
*  for  nearly  2  years  in  that  marathon  Export  Administration  Act 
conference  to  try  to  achieve  such  legislation,  I  want  to  express  my 
admiration  to  John  Heinz  for  calling  these  hearings  and  bringing 
us  to  focus  on  this  issue  once  again.  I  know  he  shares  my  belief 
that  it  is  time  to  act. 

This  need  not  be  a  partisan  issue  and  it  is  not.  The  Republicans 
and  Democrats  alike  have  come  to  the  conclusion  that  it  is  time  to 
enact  legislation.  The  principal  purpose  of  this  legislation  must  be 
to  apply  pressure  to  end  apartheid  where  pressure  is  most 
needed — on  the  white  minority  of  South  Africa — to  monopolize  the 
political  and  economic  power  to  oppress  23  million  native  South  Af- 
rican blacks. 

We  have  already  made  some  important  progress  on  this  issue  in 
the  Senate  Foreign  Relations  Committee.  Acting  under  bipartisan 
pressures  from  Senator  Mathias,  Senator  Sarbanes,  and  myself,  the 
Foreign  Relations  Committee  last  month  became  the  first  Senate 
body  to  adopt  a  package  of  economic  sanctions  against  the  apart- 
heid regime. 

We  adopted  by  an  overwhelming  16-to-l  vote  what  in  essence  is 
the  Kennedy-Weicker  measure  before  us,  except  the  Foreign  Rela- 
tions Committee  bill  has  a  24-month  delay  in  the  application  of 
those  sanctions.  This  was  an  historic  vote  and  a  good  beginning.  I 
hope  the  Banking  Committee  can  try  to  better  this  effort  with 
stronger  legislation  to  take  effect  even  more  swiftly. 

Thank  you  very  much. 

Senator  Heinz.  Thank  you.  Senator  Cranston. 

Senator  Mattingly. 

OPENING  STATEMENT  OF  SENATOR  MATTINGLY 

Senator  Mattingly.  Thank  you,  Mr.  Chairman. 

I  appreciate  the  opportunity  that  you  and  the  distinguished 
ranking  member  of  the  committee  have  provided  to  comment  on 
one  of  the  truly  central  issues  of  human  rights  and  human  dignity 
that  confront  us  in  today's  world.  I  applaud  the  initiative  of  my 


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Senate  colleagues  in  introducing  S.  635  and  although  I  have  signifi- 
cant reservations  about  several  of  the  bill's  m^or  provisions,  I 
have  no  reservation  in  standing  with  its  sponsors  in  recognizing 
that  the  United  States  is  morEdly  bound  to  play  a  central  role  in 
the  effort  to  bring  peaceful  change  in  South  Africa. 

In  fact,  those  of  us  who  have  often  condemned  human  rights  vio- 
lations by  the  Soviet  Union  perpetrated  by  the  Government  against 
Soviet  Jewry  and  against  those  who  languish  in  the  Gulag  should 
be  at  the  front  of  the  efforts  being  made  to  draw  attention  to  the 
plight  of  South  Africa's  blacks  and  should  play  a  key  role  in  struc- 
turing the  U.S.  response  to  recent  events. 

Indeed,  it  is  my  hope  that  such  a  united,  coordinated  effort  would 
be  applied  to  the  redress  of  human  rights  violations  no  matter 
where  they  occur  whether  it  be  the  Soviet  Union,  Afghanistan, 
South  Africa,  or  any  other  place  where  such  crimes  occur. 

It  goes  without  saying  that  the  involvement  of  the  President  is 
central  to  the  success  of  such  an  effort. 

Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Senator  Mattingly,  thank  you  very  much. 

I'd  like  to  ask  our  first  two  witnesses.  Senators  Kennedy  and 
Weicker,  to  come  up  to  the  witness  table.  Gentlemen,  we  welcome 
you  both.  We  commend  you  on  your  legislative  initiative,  S.  635. 
We  welcome  you  to  this  committee.  We  don't  often  see  you  here.  I 

ress  perhaps  we  will  not  only  see  more  but  hear  more  of  you  and 
635  in  the  weeks  to  come.  'This  is  probably  going  to  be  just  one  of 
several  hearings. 

We  are  somewhat  limited  today  by  time  constraints.  Senator 
Weicker,  I  think  you  or  Senator  Kennedy  can  go  first. 

Senator  Weicker.  Mr.  Chairman,  the  initiative  came  from  Sena- 
tor Kennedy  and  I  would  like  him  to  go  ahead  and  testify  first. 
Senator  Heinz.  All  right.  Senator  Kennedy. 

STATEMENT  OF  EDWARD  M.  KENNEDY,  U.S.  SENATOR  FROM  THE 
STATE  OF  MASSACHUSETTS 

Senator  Kennedy.  Thank  you  very  much,  Mr.  Chairman. 

I  first  of  all  want  to  express  my  very  deep  sense  of  appreciation 
to  you  and  to  the  members  of  this  committee  for  holding  these 
hearings  and  for  giving  an  opportunity  to  Members  of  the  Senate 
and  to  others  to  express  themselves  on  this  extremely  important 
issue  that  so  many  millions  of  Americans  care  very  deeply  about.  I 
feel,  having  heard  you,  Mr.  Chairman,  and  other  members  of  the 
committee,  that  it  is  the  sense  of  this  committee  that  the  time  for 
talk  has  passed  and  that  now  is  the  time  for  action.  The  proposal 
that  Senator  Weicker  and  I  have  introduced,  we  believe,  is  a  signif- 
icant but  measured  legislative  proposal  to  respond  to  some  of  the 
actions  that  have  been  taken  by  the  South  African  Government 
and  to  express  the  concern  and  real  outrage  of  the  Members  of 
Congress  and  the  American  people  at  the  continuation  of  a  policy 
which  we  find  so  hostile  and  alien  to  every  value  that  we  believe 
in. 

I  would  like,  Mr.  Cheurman,  to  summarize  my  statement  but  in- 
clude it  in  its  entirety  in  the  record. 


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In  my  statement,  I  outline  in  some  detail  what  this  particular 
proposal  is.  First,  it  prohibits  new  U.S.  hank  loans  to  the  Govern- 
ment of  South  Africa  and  government  entities  in  that  country. 
Second,  it  restricts  the  new  investment  by  U.S.  firms  in  South 
Africa,  including  new  bank  loans  to  the  private  sector  of  that  coun- 
try. Third,  it  prohibits  the  importation  of  the  South  African  gold 
coin,  the  krugerrand,  into  the  United  States;  and  Anally,  it  forbids 
the  future  sales  of  computers  to  the  Government  of  South  Africa. 

In  an  addendum,  we  have  outlined  in  some  detail  what  the  eco- 
nomic impact  will  be  on  the  Government  of  South  AJfrica,  and  I 
would  request  that  it  also  be  made  part  of  the  record. 

CONDITIONS  IN  SOUTH  AFRICA 

Now,  Mr.  Chairman,  I  had  the  opportunity  of  spending  9  days  in 
South  Africa,  and  I'd  like  to  make  just  a  few  general  observations 
about  the  conditions  that  I  saw  there. 

First,  Mr.  Chairman,  there  is  an  extraordinary  increase  in  polar- 
ization, polarization  between  the  blacks  and  the  whites,  polariza- 
tion between  the  various  groups  in  that  society.  That's  No.  1. 

Two,  the  active  groups  in  South  Africa  have  become  much  more 
radicalized.  The  concept  of  using  traditional  tools  of  nonviolence  to 
try  and  achieve  political  objectives  is  rapidly  disappearing,  and 
there  is  an  increasing  reliance  on  radical  solutions  in  South  Africa, 
That  is  something  that  I  think  is  extraordinarily  important. 

Third,  Mr.  Chairman,  is  the  increasing  hostility  toward  the 
United  States.  My  brother,  Robert  Kennedy,  visited  South  Africa  in 
1966.  At  that  time  the  United  States  was  looked  on  as  a  model,  a 
way  in  which  those  that  had  been  oppressed  by  apartheid  in  South 
Africa  could  achieve  equal  opportunity  even  in  South  Africa  be- 
cause of  the  success  of  the  civil  rights  movement  here  in  the 
United  States  where  we  had  courageous  church  leaders,  such  as 
Martin  Luther  King  and  many  others,  who  believed  in  nonviolence. 
We  had  courageous  business  and  labor  representatives  who  be- 
lieved in  nonviolence  and  progress.  We  had  courageous  fifth  circuit 
judges  appointed  by  a  Republican  President  who  understood  the 
threat  to  individual  rights,  and  liberties,  and  were  prepared  to  rule 
to  protect  individuals  when  these  rights  and  liberties  were  threat- 
ened and  we  had  the  Constitution  of  the  United  States  with  the 
14th  amendment  to  guarantee  those  rights. 

When  Robert  Kennedy  visited  South  Africa,  the  United  States 
was  recognized  as  a  role  model  for  millions  of  whites  and  blacks 
alike  for  being  able  to  achieve  some  of  the  most  basic  and  funda- 
mental rights.  The  United  States  had  faced  this  issue,  and  we  had 
really  set  an  example  for  the  world. 

HOSTILITY  TO  THE  UNITED  STATES  INCREASING 

That  concept  and  model  has  been  crushed,  dashed,  and  de- 
stroyed, Mr.  Chairman.  The  United  States  now  is  thoroughly  and 
completely  identified  with  the  policy  of  constructive  engagement 
which  is,  as  Bishop  Tutu  has  stated,  an  unmitigated  disaster. 
Winnie  Mendela,  the  wife  of  Nelson  Mendela,  said  to  me,  "Go  back 
and  tell  the  Americans  that  the  policy  of  constructive  engagement 
is  a  shoulder  to  the  wheel  of  apartheid."  The  hostility  to  the 


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United  States  is  increasing  dramatically.  And  the  United  States,  I 
fear,  Mr.  Chairman,  is  in  a  dangerous  position.  We  have  not  only 
lost  the  rightful  position  as  a  moral  leader  on  the  questions  of 
rights  and  liberties,  but  also  we  endanger  our  position  in  South 
Africa  for  the  future.  South  Africa  will  be  free  some  day  and,  make 
no  mistake  about  it,  those  in  that  government  when  it  is  free  are 
going  to  ask  whether  the  United  States  was  the  last  country  to  go 
down  with  apartheid.  And  it  certainly  appears  to  blacks  in  South 
Africa  today  that  this  is  the  case. 

During  my  trip,  I  saw  the  faces  of  apartheid  in  a  number  of  dif- 
ferent ways,  and  I'll  just  describe  them  very  briefly. 

In  Soweto,  in  the  single  sex  barracks,  there  are  individuals  who 
have  lived  in  those  barracks  for  20  years,  separated  from  their  fam- 
ilies with  the  exception  of  3  weeks  out  of  every  year,  by  rule  of  law 
because  of  the  color  of  his  skin. 

In  Mathopostad,  citizens  whose  families  have  lived  in  that  rural 
community  for  over  140  years  go  to  bed  every  night  fearing  that 
the  trucks  are  going  to  come,  and  that  they  are  going  to  be  forcibly 
removed  and  resettled  in  places  like  Onverwacht,  where  over 
250,000  people  have  been  settled,  where  the  unemployment  is  often 
in  excess  of  50  percent,  and  which  has  the  highest  infant  mortality 
rate  not  only  in  Africa  but  in  the  world,  in  the  shadow  of  some  of 
the  finest  medical  facilities  in  the  world. 

I  met  with  black  students  who  are  denied  equality — or  even  close 
to  equality — in  terms  of  education.  I  met  individuals  who  had  been 
forcibly  detained  with  no  right  to  trial. 

The  faces  of  apartheid,  Mr.  Chairman,  are  reflected  in  the  pass 
laws  and  the  influx  control  laws,  the  Group  Areas  Act  and  the 
whole  range  of  different  legal  mechanisms  which  operate  in  every 
aspect  of  their  lives,  in  social,  political,  economic  ways  and  in  the 
judicial  process  in  South  Africa.  This  face  of  apartheid,  Mr.  Chair- 
man, has  not  been  improved  in  the  period  of  the  last  40  years  but 
actually  gotten  uglier. 

I  read  this  morning  about  the  change  in  the  laws  permitting 
interracial  marriage.  It  is  a  step  in  the  right  direction  but  it  is  too 
little,  too  late,  Mr.  Chairman.  And  for  those  who  talk  about  con- 
structive engagement  as  being  something  which  has  moved  the 
process,  I  ask  them,  has  South  Africa  started  to  dismantle  the 
policy  of  denationalization?  They  have  not.  Ask  them,  have  they 
started  to  dismantle  the  pass  laws?  They  have  not.  Have  they  start- 
ed to  dismantle  the  influx  control  laws?  They  have  not.  And,  Mr. 
Chairman,  in  asking  whether  there  has  been  progress,  I  don't  be- 
lieve that  there  is  any  individual  in  that  country  who  believes  that 
there's  been  progress  until  you  stop  this  process  of  dehumanization. 

The  final  point  I  would  just  like  to  make,  Mr.  Chairman,  has  to 
do  with  the  question  about  economic  progress  in  South  Africa,  and 
what  we  have  seen  during  recent  times. 

The  fact  is  that  South  Africa  has  had  a  relative  d^ree  of  pros- 
perity during  recent  years,  and  yet  there  has  been  no  change  in  the 
essential  aspects  of  apartheid — none — virtually  none. 


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WHIP  AND  LASH  OF  APARTHEID 

For  those  that  are  concerned  about  what  poasible  implications 
there  would  be  about  this  legislation,  I  found  to  an  extraordinary 
degree  that  the  citizens  who  are  being  denied,  which  is  close  to  90 
percent  of  the  people  in  that  country,  when  they  hear  about  the 
fact  that  potentially  they  may  lose  some  emplojonent  opportunity, 
they  say: 

Our  children  are  Buffering  today  because  they  are  dying  before  they  reach  child- 
hood. We  are  suffering  today  because  we  are  serarated  from  our  families.  We  are 
Buffering  toda^  because  we  fear  being  uprooted.  We  are  aufFering  today  because  we 
have  no  political  rights  and  we're  sent  to  the  homelands.  We  are  suffering  today 
because  we  still  have  high  unetoployment  in  these  various  areas.  We  just  hope,  Sen- 
ator, that  you  will  tell  the  Americans  that  we  hope  our  children  will  not  nave  to 
fear  the  whip  and  the  lash  of  apartheid.  And  we  would  hope  that  the  United  States 
will  take  the  steps  to  try  and  permit  us  to  resolve  our  own  problems. 

They  are  going  to  have  to  solve  their  own  problems,  but  there  is 
absolutely  no  reason  why  the  United  States  ought  to  have  a  contin- 
ued policy  of  helping  and  assisting  apartheid.  This  legislation  is 
aimed  at  the  Government  of  South  Africa,  which  is  the  entity  that 
defends  and  administrates  the  policy  of  apartheid.  It  does  not  deal 
with  some  of  the  other  issues  that  are  in  the  public  dialog  and  dis- 
cussion, such  as  disinvestment. 

In  my  statement  I  comment  on  the  Sullivan  principles  £ind  their 
impact  on  American  industry,  and  I'll  be  glad  to  respond  to  any 
other  questions  on  that. 

I  would  hope  this  committee  would  see  an  early  consideration  of 
this  legislation  and  a  successful  passage  of  it,  Emd  I  would  ask  that 
my  full  statement  be  included  in  the  record. 

Senator  Heinz.  Without  objection.  Senator  Kennedy,  thank  you 
for  your  statement. 

[The  complete  prepared  statement  and  copy  of  proposed  bill  S. 
635  follow:] 

Statement  op  Senator  Edwakd  M.  Kennedy 

Mr.  Chairman,  I  want  to  thank  you  for  the  opportunity  to  appear  before  you 
today  to  testify  in  support  of  the  Anti-ApariJieid  Act  of  1985,  S.  635.  I  also  want  to 
compliment  you— ana  your  distinguished  ranking  member,  Senator  Proxmire — on 
the  speed  with  which  you  have  turned  your  attention  to  this  important  legislation.  I 
know  that  you  share  our  strong  feelings  about  the  system  of  apartheid,  and  I  hope 
you  will  agree  with  me  that  today  it  is  not  enoi^h  to  have  strong  feelings  or  to 
make  strong  statements.  It  is  time  for  the  United  States  of  America  to  match  our 
words  with  deeds. 

Your  decision  to  hold  these  hearings  today— and  to  hold  further  hearings  on  this 
legislation  at  a  later  date — sends  a  signal  to  the  Government  of  South  Africa  that 
apartheid  is  not  a  partisan  issue  in  this  country,  that  the  people  of  the  Unit«d 
States  are  in  fact  united  and  determined  in  their  commitment  to  do  what  they  can 
to  assist  in  the  effort  to  achieve  peaceful  change  and  an  end  to  apartheid  in  South 

The  Anti-Apartheid  Act  of  1985  has  four  basic  provisions: 

First,  it  prohibits  new  United  Steles  bank  loans  to  the  Government  of  South 
Africa  and  to  Government  entities  in  that  country: 

Second,  it  restricts  new  investment  by  U.S.  firms  in  South  Africa,  including  new 
bank  loans  to  the  private  sector  of  that  country; 

Third,  it  prohibite  the  importation  of  South  African  gold  coins,  krugerrands,  into 
the  United  Stetes;  and 

Finally,  it  forbids  the  future  sale  of  computers  to  the  Government  of  South  Africa. 

We  have  prepared  fact  sheets  on  the  impact  of  these  measures  on  American  fi- 
nancial institutions  as  well  as  their  effect  on  the  South  African  economy,  and  I 
would  like  to  submit  this  material  for  the  record  for  future  reference. 


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As  you  know,  I  spent  9  days  inside  South  Africa  last  January  at  the  invitation  of 
Bishop  Desmond  Tutu  and  Rev.  Allan  Boesak.  The  purpose  of  my  trip  was  to  exam- 
ine the  conditions  of  life  for  black  people  living  under  apartheid  inside  South  Africa, 
and  to  see  how  the  United  States  can  beet  use  its  influence  in  the  effort  to  achieve 
peaceful  change  and  racial  harmony  within  that  country.  My  experience  there,  after 
traveling  through  South  Africa  and  talking  to  a  wide  spectrum  of  black  and  white 
South  Africans,  convinces  me  that  this  legislation  is  necessary,  and  that  it  is  the 
minimum  that  Congresa  should  do  in  moving  the  United  States  toward  a  more 
active  and  effective  policy  to  end  apartheid  in  South  Africa. 

During  ray  trip,  I  found  that  the  polarization  between  the  racial  groups  in  South 
Africa  has  reached  dangerous  proportions.  The  fear  and  insecurity  among  whites  Is 
pervasive;  the  suspicion  and  distrust  among  blacks  is  deep  and  now  almost  impossi- 
ble to  overcome.  The  situation  is  deteriorating,  and  the  escalating  level  of  violence 
in  that  society,  which  in  the  past  year  has  taken  the  lives  of  250  hlack  people,  may 
now  be  reaching  the  point  of  no  return.  The  General  Secretary  of  the  South  African 
Council  of  Churches,  Rev.  Beyers  Naude,  predicted  last  week  that,  "This  year  will 
bring  more  polarization  between  the  white  ruling  classes  and  the  mfyority  of  the 
people,  more  clashes  between  the  police  and  striking  students  and  workers,  more 
injuries  and  deaths." 

In  addition  to  this  increasing  polarization,  there  is  also  a  much  greater  willing- 
ness in  the  black  community  to  embrace  radical  solutions,  to  reject  nonviolence,  to 
reject  coalitions  with  whites,  to  reject  democratic  ideals  and  Western  economic 
models — and  worst  of  all  for  the  future  of  American  policy  in  Africa,  to  reject  the 
United  States. 

It  is  no  secret  that  the  United  States  is  now  despised  by  large  numbers  of  blacks 
inside  South  Africa.  Twenty  years  ago,  when  Robert  Kennedy  traveled  to  South 
Africa,  the  United  States  was  welcomed  as  an  ally  in  the  struggle  for  racial  justice 
in  that  country,  but  we  are  now  perceived  to  l>e  participants  in  the  oppression  of  the 
black  majority.  The  United  States  is  seen  by  black  South  Africans  as  the  South  Afri- 
can Government's  closest  friend  in  the  international  community,  and  the  policy  of 
"constructive  engagement"  is  seen  as  providing  aid  and  comfort  to  the  architects  of 

aiartheid.  As  Winnie  Mandela  said  to  me  during  our  visit,  'Tell  the  people  of  the 
nited  States  that  constructive  engagement  is  just  another  shoulder  to  the  wheel  of 
apartheid."  And  as  Beyere  Naude  has  warned;  "Do  not  be  surprised  if  the  anger  of 
black  South  Africans  eventually  turns  to  hatred  or  rejection  of  an  American  pres- 
ence in  Africa." 

In  proposing  this  l^pslation,  we  have  been  guided  by  a  number  of  judgments. 

First,  the  policy  of  "constructive  engagement"  and  quiet  diplomacy  has  been,  to 
use  Bishop  Tutu's  words,  "an  unmitigated  disaster."  That  policy  must  be  ended.  As 
the  President  of  Harvard  University.  Derek  Bok,  recently  wrote:  "Our  current  poli- 
cies are  easily  mistaken  for  tacit  acquiescence  in  a  status  quo  that  offends  our  most 
precious  ideals  and  threatens  to  deteriorate  in  growing  violence  and  instability." 
This  le^lation  is  designed  to  provide  the  United  States  with  an  active,  not  a  pas- 
sive, policy  against  apartheid. 

Second,  to  implement  this  policy,  the  United  States  should  take  immediate,  con- 
crete steps  to  demonstrate  this  country's  vigorous  opposition  to  apartheid.  Those 
steps  must  be  practical,  not  just  rhetorical,  and  they  must  be  strong  enough  to  com- 
municate the  depth  of  our  Nation's  commitment.  This  legislation  contains  such 


Third,  the  United  States  should  direct  its  energies  and  actions  primarily  toward 
changing  the  policies  of  the  Government  of  South  Africa.  While  there  is  much  to  be 
said  for  efforts  to  improve  the  conduct  of  American  corporations  doing  business 
inside  South  Africa  and  to  use  those  corporations  as  instruments  of  change  inside 
that  country,  such  efforts  are  inevitably  limited  in  their  scope,  indirect  in  their  ef- 
fects and  slow  in  achieving  broad  results.  I  admire  thq.£x}:raord)nary  work  that  Rev. 
Leon  Sullivan  and  his  signatory  companies  have  done  over  the  past  7  years.  But 
it  is  the  Government  of  South  Africa  that  is  the  primary  enforcer  of  apariheid; 
without  fundamental  change  in  that  Government's  approach,  there  can  be  little 
hope  for  peaceful  change. 

Pourth.lwe  must  recognize  that  the  United  States  cannot  dictate  to  the  people  of 
South  Africa,  and  we  cannot  impose  a  solution  to  South  Africa's  problems  from  the 
outside.  South  Africans — black  and  white — will  make  the  decisions  that  determine 
that  nation's  future.  If  the  United  States  wants  to  encourage  reform  there,  it  must 
b^n  to  distance  itself  more  clearly  from  apartheid,  and  to  align  itself  more  closely 
with  the  initiatives  of  the  black  majority. \We  should  also  support  the  pressures  for 

Cceful  change  coming  from  the  business  community  and  opposition  leaders  in  Par- 
nent.  Our  Nation's  policies  should  signal  our  Nation's  support  for  the  churches. 


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10 

the  independent  labor  unions,  the  UDF,  and  community  oi^anizations  committed  to 
peaceful  change.  Our  legialation  is  consistent  with  this  approach. 

Fifth,  we  should  pursue  policies  that  do  not  inflict  significant  hardships  on  inno- 
cent persons.  We  recognize  that  there  are  those  who  oppose  any  economic  sanctions 
because  of  the  potentially  adverse  effect  on  the  black  population  of  South  Africa. 
This  legislation  has  been  carefully  designed  t^i  avoid  any  such  impact.  This  legisla- 
tion does  not  call  for  divestment;  it  will  not  throw  any  blacks  out  of  work  or  impede 
the  progress  of  independent  black  trade  unions. 

Finally,  the  United  States  should  take  steps  to  reduce  the  active  complicity  of 
Americans  in  the  apartheid  system.  While  we  can  debate  whether  the  presence  of 
American  corporations  inside  South  Africa  has  been  helpful  in  the  effort  to  end 
apartheid,  the  United  States  should  not  permit  further  direct  funding  of  the  apart- 
heid system — either  through  loans  to  the  Government  of  South  Africa,  or  through 
.  the  purchase  of  South  African  kruggerands  in  the  United  States.  Every  bank  loan 
,  to  the  Government,  every  purchase  of  a  krugerrand,  is  a  symbolic— and  economic — 
gesture  of  American  support  for  apartheid,  and  the  time  has  come  to  halt  such  sup- 
port. 

'  Moreover,  the  history  of  South  Africa  refutes  the  argument  that  an  ever  expand- 
ing South  African  economy  is  the  surest  path  to  peaceful  change  and  political 
reform.  As  Prof.  Stanley  Greenberg  of  Yale  nas  written:  "This  easy  association  be- 
tween economic  growth  and  political  reform  lacks  an  historic  foundation  in  South 
Africa;  more  than  a  century  of  industrial  development  has  been  accompanied  by 
more,  not  less,  racial  discrimination." 

Contrary  to  official  pronouncements  by  the  South  African  Government,  the 
United  States  has  substantial  leverage  inside  South  Africa.  While  I  was  in  South 
Africa,  I  heard  a  universal  refrain  from  Govemment  Ministers,  "We  do  not  care 
what  the  United  States  does  or  says.  We  will  decide  for  ourselves,  and  we  will  pro- 
ceed at  our  own  pace."  But  their  extreme  interest  in  and  concern  about  events 
inside  the  United  States,  with  the  demonstrations  at  the  South  African  Embassy, 
and  with  the  divestment  campaign,  was  evidence  that  most  South  Africans  care 
very  deeply  about  what  Americans  think,  do  and  say  about  apartheid.  Sadly,  we  are 
perceived  as  the  last  friend  they  have,  their  last  chance  to  hold  the  line  against  sub- 
stantial change. 

The  United  States  cannot  have  it  both  ways.  We  cannot  remain  a  friend  of  apart- 
heid, and  also  remain  true  to  our  founding  principles.  The  Anti-Apartheid  Act  of 
1985  will  send  an  important  message,  not  only  to  the  23  million  black  people  of 
South  Africa,  but  to  oppressed  people  tiiroughout  the  world  that  America  is  truly  on 
•.the  side  of  human  rights,  liberty  and  justice  for  all. 
'  Before  concluding,  1  would  like  to  address  the  arguments  of  some  apolt^ists  for 
the  South  African  Government  that  there  has  in  fact  been  change  inside  South 
Africa,  and  that  the  white  leadership  of  that  country  is  committed  to  fundamental 
reform.  My  experience  in  South  Africa  suggests  otherwise.  The  conditions  of  life  for 
most  black  people  in  South  Africa  are  appalling  and  have  become  worse,  not  better, 
in  recent  years,  and  the  system  of  apartheid  has  become  more  pervasive  and  perni- 
cious than  ever  before. 

Black  people  in  South  Africa  are  still  barred  from  any  significant  role  in  the  eco- 
nomic, political,  or  social  life  of  the  country  for  no  reason  other  than  that  the^  are 
black.  For  black  South  Africans,  color  is  still  the  single  most  powerful  determinant 
of  their  lives.  Where  they  live,  where  and  how  they  travel,  what  they  read  or  see  or 
hear,  who  they  meet,  how  they  are  educated,  what  they  do  for  a  living,  how  much 
money  they  earn,  what  property  they  own.  what  kind  of  medical  care  is  available, 
where  they  worship,  what  they  can  hope  to  achieve  for  themselves  and  for  the  mem- 
bers of  their  families — all  of  these  fundamental  issues  in  the  life  of  any  human 
being  are.  for  black  South  Africans,  still  sharply  curtailed  and  carefully  controlled 
by  the  system  of  apartheid,  gajism  is  the  overwhelming  fact  of  life  for  every  black 
person  in  South  Africa  today.  In  this  respect,  there  has  been  no  change,  and  certain- 
ly there  has  been  no  improvement,  in  the  lives  of  most  black  people  in  South  Africa 
over  the  past  40  years.  And  in  recent  years,  the  structures  and  the  strictures  of 
apartheid  have  increased,  not  declined.  The  policies  and  institutions  of  apartheid 
have  become  more  sophisticated,  more  effective  and  more  entrenched.  Few  blacks  in 
South  Africa  today  would  dispute  the  notion  that  apartheid  as  a  political  and  social 
system  of  institutionalized  racism  is  now  worse  than  it  ever  was,  and  that  the  mech- 
anisms of  control  are  more  comprehensive  and  more  effective  than  ever  before. 

The  system  of  migratory  labor  now  operates  with  computerized  efficiency  toguar- 
antee  a  large  pool  of  poor,  unskilled,  low-qbst  black  workers  for  the  large,  affluent 
white  communities  in  the  major  cities.  Black  families  are  forced  to  live  in  inhospita- 
ble, economically  unproductive  homelands,  while  the  male  workers  live  for  49  weeks 


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11 

of  the  year  in  eingle^ex,  barrack-style  hoetcls,  like  the  Nancefield  hostel  that  t  vis- 
ited in  Soweto.  These  hostels  are  located  in  black  townships  just  outside  the  urtmn 
centers  of  the  nation,  and  the  workers  are  transported  each  day  into  the  city  to  per- 
form menial  tasks.  This  sophisticated  and  technologically  well-ordered  system  of 
state-run  labor  divides  families,  depresses  wages  and  guarantees  an  ever-ready,  trou- 
ble-free supply  of  plentiful  and  cheap  manual  labor  to  service  the  needs  of  the  white 
society.  Individual  records  of  all  roistered  black  South  African  workers  have  been 
Ic^fged  into  computers,  thereby  guaranteeing  a  high  degree  of  political  and  economic 
reliability  for  potential  employers. 

I  visited  a  man  who  had  lived  for  20  years  in  the  Nancefield  Hostel,  where  the 
living  conditions  are  a  disgrace.  He  was  able  to  see  his  family  in  the  Ciskei  once  a 
year,  and  in  his  20  years  of  labor,  he  had  been  able  to  save  only  $265,  Neither  the 
policy  of  "constructive  engagement"  nor  the  Government's  s(>oalled  program  of 
reform  has  changed  this  system  of  migratory  labor. 

In  addition,  the  resettlement  camps  continue  to  grow,  with  entire  areas  like  the 
Ciskei  being  transformed  into  one  immense  resettlement  camp.  In  these  camps,  such 
as  the  one  I  visited  in  Onverwacht.  unemployment  hovers  around  50  percent,  and 
the  conditions  of  daily  life  are  inhuman.  In  some  camps,  the  climate  is  bo  haish,  the 
people  so  poor,  the  shelter  so  sparse  and  the  basic  human  services  so  meager  that 
the  infant  mortality  rate  for  children  during  their  first  year  of  life  frequently  ex- 
ceeds 40  percent. 

The  pass  laws  still  operate  and  are  still  enforced  with  fmes  and  jail  terms,  but 
these  laws  are  now  applied  with  an  unprecedented  efficiency  achieved  only  by  com- 
puters. The  number  of  arrests  for  violations  of  pass  laws  doubled  from  1980  to  more 
than  200,000  annually  in  1982  and  1983.  Scores  of  black  people  are  sentenced  every 
morning  in  the  courte  of  Johannesburg  to  "10  rands  or  10  days." 

Until  recently,  forced  relocations  of  black  communities  continued  to  occur,  so  that 
many  families  that  had  lived  in  their  towns  for  four  generations  or  more — like  those 
I  met  in  Mathopostad — face  the  daily  possibility  that  the  soldiers  will  arrive  with 
trucks  and  bulldozers,  and  the  entire  community  will  be  uprooted  and  moved  to  a 
strange  and  distant  place.  Since  1960,  under  this  policy,  3f^  million  blacks  have 
been  forcibly  removed  from  "white  areas." 

The  homelands  policy  and  the  pernicious  practice  of  "denationalizing"  black 
South  Africans  continues.  Since  1976,  more  than  8  million  Africans  have  been  de- 
prived of  their  South  African  citizenship  because  of  this  policy,  and  between  1960 
and  1980,  the  proportion  of  the  African  population  afTicially  residing  in  the  home- 
lands increased  from  40  to  53  percent. 

Politically,  apartheid  is  now  part  of  the  constitutional  structure  of  the  South  Afri- 
can state.  Before  the  new  constitution  was  adopted,  the  exclusion  of  blacks  from 
participation  in  the  political  life  of  the  country  was  a  matter  of  legislation  that 
could  be  modified  or  repealed  by  Parliament;  but  blacks  are  now  excluded  constitu- 
tionally from  playii^  any  role  in  the  national  government.  For  blacks,  the  new  con- 
stitution was  a  m^or  step  backward,  a  further  entrenchment  of  apartheid. 

The  South  African  Government  argues  that  the  conditions  of  life  for  black  South 
Africans  are  better  than  for  black  people  in  other  African  nations.  Even  if  this  were 
true — and  in  health  care,  employment,  and  poverty  levels  among  rural  blacks,  it  is 
demonstrably  untrue — it  is  irrelevant  for  black  South  Africans.  They  regard  them- 
selves as  South  African  citizens  entitled  to  have  a  fair  share  in  the  economic  bene- 
dte  that  accrue  to  the  nation  as  a  whole.  They  justifiably  compare  themselves  to 
other  South  African  citizens — and  in  that  comparison  there  is  no  real  dispute.  In 
contrast  to  the  comfortable  lives  of  whites  in  South  Africa,  blacks  live  in  squalor 
and  misery. 

In  fact,  the  economic  conditions  for  most  black  people  have  become  worse,  not 
better  in  recent  years.  According  to  the  Carnegie  Foundation's  Second  Inquiry  on 
Poverty  in  South  Africa,  there  has  been  an  increase  in  poverty  among  South  Afri- 
ca's rural  black  population  since  1960.  According  to  this  study  the  dimensions  of 
poverty  inside  South  Africa  have  been  "decisively  affected  by  apartheid,"  particular- 
ly the  land  laws,  the  pass  laws,  and  the  housing  policies  of  the  Government.  For 
example,  the  number  of  people  made  destitute  by  landlessness  and  unemployment 
rose  from  250,000  in  1960  to  1.43  million  in  1980,  and  the  number  of  people  living 
below  the  poverty  line  increased  from  4,9  million  to  8.9  million.  The  proportion  of 
the  population  receiving  no  visible  income  at  all  rose  from  5  to  13  percent  between 
1960  and  1980.  According  to  the  Director  of  the  Carnegie  Inquiry,  Prof.  Francis 
Wilson  of  the  University  of  Capetown,  "The  people  who  are  poor  in  this  country  are 
poor  because  they  are  on  the  wrong  side  of  apartheid." 


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Summary  or  S,  635— The  Anti-Apartheid  Actt  op  1985 

First,  it  prohibits  new  United  States  bank  loans  to  the  Government  of  South 

Africa  or  to  any  other  governmental  entities  in  South  Africa,  such  as  the  so<a]led 

homelands  or  any  Government-controlled  corporations.  This  prohibition  does  not 
apply  to  loans  for  educational,  housing  or  health  facilities  available  to  all  South  Af- 
ricans on  a  nondiscriminatory  basis. 

Second,  it  prohibits  new  investment  by  U.S.  firms  in  South  Africa.  Under  this  pro- 
vision, the  establishment  of  new  enterprises  or  the  expansion  of  existing  enterprises 
in  South  Africa  would  be  prohibited.  New  loans  from  United  States  banks  to  pri- 
vate, nongovernmental  entities  in  South  Africa  would  also  be  prohibited.  Reinvest- 
ment of  earnings  from  existing  business  operations  in  South  Africa  would  not  be 
affected.  These  provisions  are  subject  to  a  waiver,  as  described  below,  based  on 
progress  toward  ending  apartheid. 

Third,  it  prohibits  the  importation  of  South  African  gold  coins,  called  "kruger- 
rands,"  into  the  United  States.  Krugerrands  already  in  circulation  in  this  country 
would  not  be  affected.  This  restriction  is  also  subject  to  a  waiver,  as  described  below, 
based  on  progress  toward  ending  apartheid. 

Fourth,  it  prohibits  United  States  computer  soles  ta  the  Government  of  South 
Africa  or  to  any  governmental  entities;  the  prohibition  also  covers  spare  paris  and 
services  for  computers. 

Waiver:  The  President,  with  the  consent  of  Congress,  may  waive  the  second  and 


third  prohibitions,  relatii^  to  new  investment  and  the  importation  of  South  African 
krugerrands  into  the  United  States,  if  any  one  of  the  following  eight  steps  toward 
ending  apartheid  is  met: 

(1)  South  Africa  ends  its  discriminatory  migratory  labor  system,  and  permits  the 
families  of  black  employees  to  live  near  their  place  of  employment. 

(2)  South  Africa  en(^  its  restrictive  employment  system,  and  permits  blacks  to 
seek  jobs  in  any  part  of  South  Africa  and  to  live  wherever  they  find  jobs, 

(3)  South  Africa  eliminates  its  denationalization  policy,  by  which  blacks  are 
denied  citizenship  in  South  Africa,  and  are  made  involuntary  citizens  of  the  "home- 

(4)  South  Africa  ends  its  forced  relocation  policy,  under  which  blacks  are  forcibly 
uprooted  from  areas  designated  for  whites. 

(5)  S^uth   Africa  eliminates  all   residence  restrictions  based  on   race  or  ethnic 

(61  South  Africa  enters  negotiations  with  black  leaders  to  end  apartheid  and 
achieve  full  participation  of  blacks  in  the  social,  political,  and  economic  life  of  that 
country. 

(71  An  internationally  recognized  settlement  for  Namibia  is  achieved. 

(S)  South  Africa  frees  all  political  prisoners. 

International  Cooperation:  Finally,  the  legislation  directs  the  President  to  work 
through  the  United  Nations  and  with  other  countries  to  persuade  the  world  commu- 
nity to  adopt  similar  economic  sanctions  against  South  Airica. 

House  Bill:  Identical  legislation  (H.R.  1460)  has  been  introduced  in  the  House  of 
Representatives  by  Congressman  Bill  Gray  (D.,  PA). 

Fact-  Sheet  on  the  Impact  of  the  Anti-Apaktheto  Act  of  1985 


.  The  total  value  of  all  United  States  loans  to  all  South  African  borrowers  for  1984 
is  roughly  $4.6  billion.  The  top  nine  U.S.  banks  account  for  $2.9  billion. 

Loans  outstanding  in  1984  to  the  South  African  public  sector  by  all  United  States 
banks  totaled  $374  million.  United  States  bank  Tmancing  for  the  South  African 
public  sector  has  declined  by  more  than  50  percent  since  1978. 

United  States  lending  to  the  South  African  public  sector  represents  only  5  percent 
of  South  African  public  debt  to  foreign  lenders. 

At  least  two  other  countries — Japan  and  Sweden — have  adopted  policies  prohibit- 
ing their  financial  institutions  from  extending  credit  to  South  African  Government 
entities. 

Many  U.S.  educational  institutions,  e.g.,  Harvard,  Yale,  Columbia  and  Stanford, 
have  divested  holdings  in  banks  that  extend  credit  to  the  South  African  Govern- 
ment. 

And  26  U.S.  banks  have  independently  adopted  a  policyprohibiting  bank  loans  to 
the  South  African  public  sector.  Among  those  banks  are:  Chase  Manhattan,  Bank  of 
America,  Chemical  Bank,  Bankers  Trust,  First  National  Bank  of  Boston,  Mellon, 


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COUPUTER  SALES  TO  THE  SOUTH  AFRICAN 

The  total  sales  of  United  States  computers  to  South  African  entities  in  1984 — 
public  and  private — was  S184.6  million.  United  States  companies  dominate  the 
South  African  computer  market,  supplying  TO  percent  of  all  computers  to  that  coun- 

IBM  is  the  single  largest  U.S.  computer  company  doing  business  in  South  Africa, 
and  it  has  the  largest  share  of  the  South  African  computer  market  IBM  has  stated 
that,  of  all  their  computer  sales  in  South  Africa,  less  than  one-sixth  of  thoee  sales 
'  are  to  the  South  African  Government, 

If  other  companies  adhere  to  the  IBM  pattern,  total  United  States  sales  to  the 
South  African  Government  would  be  approximately  $30.8  million  annually. 

Note. — The  United  States  currently  reviews  computer  sales  to  South  African  Gov- 
ernment departments  that  administer  apartheid  to  determine  whether  the  comput- 
ers in  question  will  be  used  to  enforce  apartheid,  and  the  U.S.  Government  also  re- 
'views  computer  sales  to  South  Africa's  military  and  police  to  determine  whether 
they  will  contribute  to  military  and  police  functions. 

But  these  controls  are  not  sufficient. 

In  1982,  the  administration  terminated  all  controls  on  sales  of  a  wide  range  of 
persona]  computers  to  South  African  military,  police,  and  other  agencies  that  en- 
force apartheid.  And,  under  these  current  controls,  a  number  of  highly  controversial 
computer  licenses  have  been  granted.  For  example,  the  U.S.  licensed  sale  of  two 
computers  useful  for  nuclear  weapons  development  to  a  South  African  Government 
controlled  research  institute  and  the  sale  of  a  sophisticated  computer  to  an  arms 
manufacturer.  South  Africa  has  also  become  a  channel  for  illegal  computer  sales  to 
the  Soviet  Union.  A  Defense  Department  official  recently  commented  that  a  sophis- 
ticated computer  transhipped  from  South  Africa  to  Germany  destined  for  the 
U,S.S.R.  should  never  have  been  sold  to  South  Africa  in  the  first  place. 

This  lesislation,  if  enacted,  is  only  slightly  stronger  than  the  provision  that  exist- 
ed in  19^. 


Krugerrands  are  named  after  the  "father"  of  apartheid,  Paul  Kniger,  and  are  the 
best  known  coin  in  the  worid. 

Kn^errands  were  first  minted  in  196T  and  were  the  first  gold  coin  to  contain  ex- 
actly one  ounce  of  gold.  They  are  the  most  widely  held  gold  coin  in  the  world.  The 
availability  of  krugerrands  makes  gold  ownership  more  accessible  to  more  investors 
and  thereby  increases  demand  for  one  of  South  Africa's  major  exports. 

The  coin  is  a  Joint  effort  of  the  South  African  Chamber  of  Mines— a  consortium  of 
mining  companies— and  the  South  African  Government.  They  sell  at  a  3-  to  4-per- 
cent premium  over  the  price  of  an  equivalent  amount  of  gold.  The  Government 
taxes  the  production  and  sale  of  gold,  through  which  it  obtains  a  significant  propor- 
tion of  its  revenue.  In  1981,  the  South  African  Government  received  24  percent  of 
its  revenue  from  gold  sales,  15  percent  in  19S2.  The  variation  is  due  to  the  volatile 
nature  of  gold  prices. 

The  South  African  Government  earns  40-50  percent  of  its  foreign  exchange 
through  gold  sales. 

The  coins  are  distributed  worldwide  through  14  "primary"  distributors.  Three  of 
those  distributors  are  in  the  United  States.  According  to  the  U.S.  Treasury,  for  the 
5-year  period  1978  through  1983,  the  United  States  accounted  for  an  average  87  per- 
cent of  all  South  African  coin  exports  with  an  average  value  of  $558,8  million. 

Many  U.S.  banks,  such  as  Citibank,  have  already  halted  trading  in  krugerrands. 

In  1983,  the  sale  of  krugerrands  inside  the  United  States  amounted  to  {450  mil- 
lion. In  1984,  the  sale  of  krugerrands  inside  the  United  States  Jumped  to  approxi- 
mately $600  million. 

In  1983,  direct  United  States  investment  in  South  Africa — measured  in  the  cur- 
rent value  of  present  and  past  investment  in  plants  and  et^uipment — amounted  to 
$2.3  billion,  second  only  to  direct  investment  by  Great  Britam.  This  was  down  from 
$2.6  billion  in  1982,  probably  because  of  the  ongoing  recession  in  South  Africa  and, 
at  least  in  part,  due  to  anti-apartheid  activity  in  the  United  States.  (In  1970,  United 
States  investment  in  South  Africa  was  $864  million.) 


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14 

The  current  level  of  direct  United  States  investment  in  South  Africa  represents 
approximately  1  percent  of  all  American  foreign  investment. 

There  are  284  U.S.  compantea  operating  in  South  Africa;  57  are  among  the  top 
100  largest  tirms  in  the  United  States,  according  to  Fortune  magazine,  123  are  sig- 
natoriee  to  the  Sullivan  principles. 

United  States  firms  reportedly  control  70  percent  of  the  South  African  computer 
industry,  45  percent  of  the  oil  industry,  and  33  percent  of  the  auto  industry. 

Last  year,  American  companies  took  out  more  money  from  South  Africa  than 
they  invested.  In  1984,  there  was  a  net  flow  of  $49  million  from  South  Africa  to  the 
United  States.  This  was  in  the  form  of  profits  and  dividends  to  U.S.  companies  doing 
business  in  South  Africa. 

The  manufacturing  sector  accounts  for  45  percent  of  U,S,  investment. 

North  and  South  American  nations  account  for  approximately  25  percent  of  all 
foreign  investment  in  South  Africa,  The  EEC  accounts  for  63  percent. 

The  ultimate  impact  of  a  freeze  on  new  investment  can  only  be  measured  on 
company-by-company  basis.  Many  U.S.  companies  operating  inside  South  Africa- 
such  as  G.M.,  Ford,  Kodak,  Kimberly  Clark,  and  Control  Data— have  already  adopt-j 
ed  policies  of  no  new  investment  in  South  Africa.  V 

Japan,  Norway,  and  Sweden  have  adopted  policies  prohibiting  new  investment  in 
South  Africa. 


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S.635 


To  eipreM  the  opposition  of  tix  United  States  to  the  aystem  ol  apartheid  in  South 
Africa,  and  For  other  purpoiei. 


IN  THE  SENATE  OF  THE  UNITED  STATES 

Mabch  7  flegialalive  day,  Febbuaby  18),  19B5 
Hr.  Kbhnedv  (for  himself,  Mr.  Weickeb,  Mr.  Pboxhibe,  Ur.  Sabbakbs,  Hr, 
Levin,  Mr.  Kebbv,  Hr.  Moynihan,  Hr,  Habt.  and  Hr,  KtEOLE)  intro- 
duced the  following  bill;  which  was  read  twice  and  referred  to  the  Committee 
on  Banking,  Housing,  and  Urban  Affairs 


A  BILL 

To  express  the  opposition  of  the  United  States  to  the  system  of 
apartheid  in  South  Africa,  and  for  other  purposes. 

1  Be  it  enacted  by  the  Senate  and  House  of  Represenla- 

2  lives  of  the  United  States  of  America  in  Congress  assembled, 

3  SECTION  I.  SHORT  TITLE. 

4  This  Act  may  be  cited  as  the  "Anti-Apartheid  Act  of 

5  1985". 

6  SEC  i.  POUCY  DECLARATIONS. 

7  The  Congress  makes  the  following  declarations: 

8  (1)  It  is  the  policy  of  the  United  Stales  to  encour- 

9  age  all  nations  to  adopt  political,  economic,  and  social 


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16 


2 

1  policies  which  guar&ntee  broad  human  rights,  civil  lib- 

2  ertiea,  and  individual  economic  opportunities. 

3  (2)  It  is  the  policy  of  the  United  States  to  con- 

4  demn  and  seek  the  eradication  of  the  policy  of  apart- 

5  heid  in  South  Africa,  a  doctrine  of  racial  separation 

6  under  which  rights  and  obligations  of  individuals  are 

7  defined  according  to  their  racial  or  ethnic  ori^. 

8  SEC  '3.   PROHIBITION   ON  LOANS   TO  THE   SOUTH   AFRICAN 

9  GOVERNMENT. 

10  (a)  In  General. — No  United  States  person  may  niake 

11  any  loan  or  other  extension  of  credit,  directly  or  through  a 

12  foreign  affiliate  of  that  United  States  person,  to  the  Govem- 

13  ment  of  South  Africa  or  to  any  corporation,  partnership,  or 

14  other  organization  which  is  owned  or  controlled  by  the  Gov- 

15  emment  of  South  Africa,  as  determined  under  regulations 

16  which  the  President  shall  issue. 

17  (b)  Exception  fob  Nondisceiminatory  Facili- 

18  TIES. — The  prohibition  cont^ed  in  subsection  (a)  shall  not 

19  apply  to  a  loan  or  extension  of  credit  for  any  educational, 

20  housing,  or  health  facility  which — 

21  (1)  is  available  to  all  persons  on  a  totally  nondis- 

22  criminatory  basis,  and 

23  (2)  is  located  in  a  geographic  area  accessible  to  all 

24  population  groups  without  any  legal  or  administrative 

25  restriction. 


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17 

3 

1  (c)  Exception  fob  Peiob  Agreements. — The  prohi- 

2  bition  contuned  in  aubsection  (a)  shall  not  apply  to  any  loan 

3  or  extension  of  credit  for  which  an  agreement  is  entered  into 

4  before  the  date  of  the  enactment  of  this  Act. 

5  (d)  Issuance  of  Regulations. — The  President  shall 

6  issue  the  regulations  referred  to  in  subsection  (a)  not  later 

7  than  ninety  days  after  the  date  of  the  enactment  of  this  Act. 

8  SBC.  4.  RESTRICTIONS  ON  NEW  INVESTMENTS  (INCLUDING 

9  BANK  LOANS). 

10  (a)  President  To  Issue  Regulations. — The  Presi- 

11  dent  shall,  not  later  than  ninety  days  after  the  date  of  the 

12  enactment  of  this  Act,  issue  regulations  prohibiting  any 

13  United  States  person  from  maJdng,  directly  or  through  a  for- 

14  eign  affiliate  of  that  United  States  person,  any  investment 

15  (including  bank  loans)  in  South  Africa. 

16  (b)  Exceptions  Fbom  Pbohibition. — The  prohibi- 

17  tion  contained  in  subsection  (a)  shall  not  apply  to — 

18  (1)  an  investment  which  consists  of  earnings  de- 

19  rived  from  a  business  enterprise  in  South  Africa  estab- 

20  Ushed  before  the  date  of  the  enactment  of  this  Act  and 

21  which  is  made  in  that  business  enterprise;  or 

22  (2)  the  purchase,  on  a  securities  exchange  regis- 

23  tered  as  a  national  securities  exchange  under  section  6 

24  of  the  Securities  Exchange  Act  of  1934,  of  securities 

25  in  a  business  enterprise  described  in  paragraph  (1). 


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1  SEC.  5.  GOLD  COINS. 

2  (a)  Pbohibition. — No  person,  including  a  bank  operat- 

3  ing  under  the  laws  of  the  United  States,  may  import  into  the 

4  United  States  any  South  African  krugerrand  or  any  other 

5  gold  coin  minted  in  South  Africa  or  offered  for  sale  hy  the 

6  Government  of  South  Africa. 

7  (b)  United  States  Defined. — For  purposes  of  this 

8  section,  the  term  "United  States"  includes  the  States  of  the 

9  United  States,  the  District  of  Columbia,  the  Commonwealth 

10  of  Puerto  Rico,  and  any  territory  or  possession  of  the  United 

11  States. 

12  SEC.  6.  WAIVERS. 

13  (a)  AUTHOEITY  OF  THE  FeESIDBNT. — 

14  (1)  Initial  waivbe. — The  President  may  waive 

15  the  prohibitions  contained  in  sections  4  and  5  for  a 

16  period  of  not  more  than  twelve  months  if — 

17  (A)   the   President   determines   that   one   or 

18  more  of  the  conditions  set  forth  in  subsection  (b) 

19  are  met, 

20  (B)  the  President  submits  that  determination 

21  to  the  Congress,  and 

22  (C)  a  joint  resolution  is  enacted  approving 

23  the  President's  determination. 

24  (2)  Additional  waivebs, — The  President  may 

25  w^ve  the  prohibitions  contained  in  sections  4  and  5  for 


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19 

5 

1  additional    aiz^month    perioda    if,    before    each    such 

2  waiver — 

3  (A)  the  President  determinea  that  an  addi- 

4  tional  condition  set  forth  in  subsection  (b)  has 

5  been  met  smce  the  preceding  waiver  under  this 

6  subsection  became  effective, 

7  (B)  the  President  submits  that  detennination 

8  to  the  Congreaa,  and 

9  (C)  a  joint  resolution  is  enacted  approving 

10  the  President's  detennination. 

11  (b)  Statebient  op  Conditions. — The  conditions  re- 

12  ferred  to  in  subsection  (a)  are  the  following: 

13  (1)  FAMn.Y  H0U8INQ  NBAB  PLACE  OF  BMPLOT- 

14  HBNT. — The  Government  of  South  Africa  has  elimi- 

15  nated  the  system  which  makes  it  impossible  for  black 

16  employees  and  their  families  to  be  housed  in  family  ac- 

17  commodations  near  the  place  of  employment. 

18  (2)   BlOHT   TO    8BBK   EMPLOYMENT. — The   Gov- 

19  emment  of  South  Africa  \aa  eliminated  all  poUcies  that 

20  restrict  the  rights  of  black  people  to  seek  employment 

21  in  South  Africa  and  to  live  wherever  they  find  employ- 

22  ment  in  South  Africa. 

23  (3)     Eliminating     denationalization. — The 

24  Government  of  South  Africa  has  eliminated  all  policies 


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6 

1  that  make  distinctions  between  the  South  African  na- 

2  tionality  of  blacks  and  whites. 

3  (4)  Eliminating  bemovals. — The  Government 

4  of  South  Africa  has  eUmuiated  removals  of  black  popu- 

5  lations  from  cert^  geographic  areas  on  account  of 

6  race  or  ethnic  origin. 

7  (5)  Eliminating  ebsidbncb  ebstbictions. — 

8  The  Government  of  South  Africa  has  eliminated  all 

9  residence  restrictions  based  on  race  or  ethnic  ori^n. 

10  (6)      Negotiations      foe      new     political 

11  system. — The  Government  of  South  Africa  has  en- 

12  tercd  into  meaningful  negotiations  with  truly  represent- 

13  ative  leaders  of  the  black  population  for  a  new  political 

14  system  providing  for  the  full  national  participation  of 

15  all  the  people  of  South  Africa  ui  the  social,  poUtical, 

16  and  economic  life  in  that  country  and  an  end  to  dis- 

17  crimination  based  on  race  or  ethnic  origin. 

18  (7)  Settlement  on  Namibia. — An  intemation- 

19  ally    recognized    settlement    for    Namibia    has    been 

20  achieved. 

21  (8)  Febbing  political  peisonees. — The  Gov- 

22  emment  of  South  Africa  has  freed  all  political  prison- 

23  era. 

24  (c)  Pbocbduebs  fob  Considbbation  op  Joint  Res- 

25  OLUTIONS. — 


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7 

1  (1)    Bbfbbbal   of   joint    BBSOLUTIONS.— All 

2  joint  resolutions  introduced  in  the  House  of  Represent- 

3  atives  and  the  Senate  shall  be  referred  immediately  to 

4  the  appropriate  committees. 

5  (2)  CoHUiTTEE  DISCHABOB. — If  the  committee 

6  of  either  House  to  which  a  joint  resolution  has  been 

7  referred  has  not  reported  it  at  the  end  of  thirty  days 

8  after  ita  introduction,  the  committee  shall  be  discharged 

9  from  further  consideration  of  the  joint  resolution  or  of 

10  any  other  joint  resolution  introduced  with  respect  to 

1 1  the  same  matter. 

12  (3)   CONSIDBBATION   OF   BBSOLUTIONS. — A  joint 

13  resolution  under  this  subsection  shall  be  considered  in 

14  the  Senate  in  accordance  with  the  provisions  of  section 

15  601{bK4)  of  the  International  Security  Assistance  and 

16  Arms  Export  Control  Act  of  1976.  For  the  purpose  of 

17  expediting  the  consideration  and  passa^  of  joint  reao- 

18  lutions  unter  this  subsection,  it  shall  be  in  order  for  the 

19  Committee  on  Rules  of  the  House  of  Representatives 

20  (notwithstanding  the  provisions  of  clause  4(b)  of  rule 

21  XI  of  the  Rules  of  the  House  of  Representatives)  to 

22  present  for  immediate  consideration,  on  the  day  report- 

23  ed,  a  resolution  of  the  House  of  Representatives  pro- 

24  viding  procedures  for  the  consideration  of  a  joint  reso- 

25  lution  under  this  subsection  similar  to  the  procedures 


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1  set  forth  in  section  601(bK4)  of  the  International  Secu- 

2  rity  Assistance  and  Anns  Export  Control  Act  of  1976. 

3  (4)  Receipt  of  besolutions  fboh  the  otheb 

4  HOUSE. — If  before  the  passage  by  one  House  of  a  joint 

5  resolution  of  that  House,  Uiat  House  receives  a  joint 

6  resolution  with  respect  to  the  same  matter  from  the 

7  other  House,  then — 

8  (A)  the  procedure  in  that  House  shall  be  the 

9  same  as  if  no  joint  resolution  had  been  received 

10  from  the  other  House;  but 

11  (B)  the  vote  on  final  passage  shall  be  on  the 

12  joint  resolution  of  the  other  House. 

13  (5)  Computation  op  legislative  days. — In 

14  the  computation  of  the  period  of  thirty  days  referred  to 

15  in  paragraph  (2)  of  this  subsection,  there  shall  be  ex- 

16  eluded  the  days  on  which  either  House  of  Congress  is 

17  not  in  session  because  of  an  adjournment  of  more  than 

18  three  days  to  a  day  certm  or  because  of  an  adjoum- 

19  ment  of  the  Congress  sine  die. 

20  (6)  Joint  bbsolution  defined. — For  purposes 

21  of  this  subsection,  the  term  "joint  resolution"  means  a 

22  joint  resolution  the  matter  after  the  resolving  clause  of 

23  which  is  as  follows:  "That  the  Congress,  having  re- 

24  ceived  on  a  determination  of  the  President 

25  under  section  6(a)  of  the  Anti-Apartheid  Act  of  1986, 


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9 

1  approves  the  President's  detenninAtion.",  with  the  d&te 

2  of  the  receipt  of  the  detennination  inserted  in  the 

3  hl&nk. 

4  SEC  7.  EXPORTS  TO  SOtlTH  AFRICAN  GOVEItNHEa4T. 

5  Section  6  of  the  Export  AdnunistratioD  Act  of  1979  (50 

6  U.S.C.  App.  2405)  is  amended  by  adding  at  khe  end  the 

7  following: 

8  "fl)  ExpOBTB  TO  South  Africa. — (1)  No  computers, 

9  computer  software,  or  goods  or  technology  intended  to  serv- 

10  ice  computers  may  be  exported,  directly  or  indirectly,  to  or 

11  for  use  by  the  Oovenunent  of  South  Africa  or  any  corporar 

12  lion,  partnership,  or  other  organization  which  is  owned  or 

13  controlled  by  the  Government  of  Soudi  Africa. 

14  "(2)  For  purposes  of  paragrq>h  (1),  the  term  'computer' 

15  includes  any  computer  that  is  the  direct  product  of  technolo- 

16  gy  of  United  States  origin. 

17  "(3)  The  prohibition  contfuned  in  paragraph  (1)  shall  not 

18  apply  to  domitions  of  computers  to  primary  and  secondary 

19  schools. 

20  "(4)  The  termination  provisions  contained  in  section  20 

21  of  this  Act  shall  not  apply  to  this  section,  or  to  sections  11 
32  and  12  of  this  Act  to  the  extent  such  sections  apply  to  viola- 
23  tions  (rf,  and  Uie  enforcement  of,  this  subsection.". 


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10 

1  SEC.  8.  REGULATORY  AUTHORITY. 

2  The  President  shall  issue  such  regulations,  licenses,  and 

3  orders  as  are  necessary  to  cany  out  this  Act. 

4  SEC.  9.  ENFORCEMENT  AND  PENALTIES. 

5  (a)  AuTHOEiTY  OP  THE  Pbbbidbkt.— The  President 

6  shall  take  the  necessary  steps  to  ensure  compliance  witfi  the 

7  provisions  of  this  Act  and  any  regulations,  licenses,  and 
6  orders  issued  to  carry  out  this  Act,  including  establishing 
9  mechanisms  to  monitor  compliance  with  this  Act  and  such 

10  regulations,  licenses,  and  orders.  In  ensuring  such  compH- 

11  fuice,  the  President  may  conduct  investigations,  hold  hear- 

12  ings,  administer  oaths,  examine  witnesses,  receive  evidence, 

13  take  depositions,  and  require  by  subpoena  the  attendance  and 

14  testimony  of  witnesses  and  the  production  of  all  books, 

15  papers,  and  documents  relating  to  any  matter  under  invest}- 

16  gation. 

17  (b)  Penalties. — 

18  (1)  Foe  persons  other  than  individualb. — 

19  Any  person,  other  Uian  an  individual,  that  violates  the 

20  provisions  of  this  Act  or  any  regulation,  license,  or 

21  order  issued  to  carry  out  this  Act  shall  be  fined  not 

22  more  than  $1,000,000. 

23  (2)  Fob  individuals. — 

24  (A)  In  oenbbal. — Any  individual  who  vio- 

25  lates  the  provisions  of  this  Act  or  sjiy  regulation, 

26  license,  or  order  issued  to  carry  out  this  Act  shall 


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11 

1  be  fined  not  more  than  $50,000,  or  imprisoned 

2  not  more  than  five  years,  or  both. 

3  (B)  Pbnaltt  fob  section  a. — Any  individ- 

4  u&l  who  violates  section  5  of  this  Act  or  any  reg- 

5  ulation  issued  to  carry  out  that  section  shall,  in 

6  lieu  of  the  penalty  set  forth  in  subpu-agraph  (A), 

7  be  fined  not  more  than  five  times  the  value  of  the 

8  krugerrands  or  gold  coins  involved. 

9  (c)  Additional  Pbnaltibs  fob  Cbbtab*  Inmvid- 

10  tJALS. — 

11  (1)  In  general. — Whenever  a  person  commits  a 

12  violation  under  subsection  (b) — 

13  (A)  any  officer,  director,  or  employee  of  such 

14  person,  or  any  natural  person  in  control  of  such 

15  person  who  knowingly  and  willfully  ordered,  au- 

16  thorized,  acquiesced  in,  or  carried  out  the  act  or 

17  practice  constituting  the  violation,  and 

18  (B)  any  agent  of  such  person  who  knowingly 

19  and  willfully  carried  out  such  act  or  practice,  shall 

20  be  fined  not  more  than  $10,000,  or  imprisoned 

21  not  more  than  five  years,  or  both 

22  (2)  Exception   foe   cebtain   violations. — 

23  Paragraph  (1)  shall  not  apply  m  the  case  of  a  violation 

24  by  an  individual  of  section  5  of  this  Act  or  of  any  regu- 

25  lation  issued  to  carry  out  that  section. 


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1  (3)  Restriction  on  payment  of  pines. — A 

2  fine  imposed  under  paragraph  {1)  on  an  individual  for 

3  an  act  or  practice  constituting  a  violation  may  not  be 

4  naid,  directly  or  indirectly,  by  the  person  committing 

5  tke  violation  itself. 

6  SEC  ll|.  NEGOTIATIONS. 

7  The  President  shall,  by  means  of  both  bilateral  and  mul- 

8  tilateral  negotiations,  including  through  the  United  Nations, 

9  attempt  to  persuade  the  governments  of  other  countries  to 

10  adopt  restrictions  on  new  investment  (including  bank  loans) 

11  in  South  Africa,  on  bank  loans  and  computer  salea  to  the 

12  South  AMcan  Government,  and  on  the  importation  of  kru- 

13  gerranda.  The  President  shall  submit  annual  reports  to  the 

14  Congress  on  the  status  of  negotiations  under  this  section. 

15  SEC  11.  TERMINATION  OF  PROVISIONS  OF  ACT. 

16  (a)    Dbtbemination    of    Abolition    of    Apabt- 

17  HBID. — If  the  President  determines  that  the  system  of  apart- 

18  held  in  South  Africa  has  been  abolished,  the  President  may 

19  submit  that  determination,  and  the  basis  for  the  determina- 

20  tion,  to  the  Congress. 

21  (b)   Joint   Resolution   Apphovino    Detbbmina- 

22  TION. — Upon  the  enactment  of  a  joint  resolution  approving  a 

23  determination  of  the  President  submitted  to  the  Congress 

24  under  subsection  (a),  the  provisions  of  this  Act,  and  all  regu- 


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27 

13 

1  latiom,  licenses,  and  orders  issued  to  carry  out  this  Act,  shall 

2  terminate. 

3  (c)  Dbfinition. — For  purposes  of  subsection  (a),  the 

4  "abolition  of  apartheid"  shall  include — 

5  (1)  the  repeal  of  all  laws  and  regulations  that  dis- 

6  criminate  on  the  basis  of  race;  and 

7  (2)  the  establishment  of  a  body  of  laws  th&t  as- 

8  sures  the  full  national  participation  of  all  the  people  of 

9  South  Africa  in  the  social,  political,  and  economic  life 

10  in  that  country. 

1 1  SEC.  12.  DEFINITIONS 

12  For  purposes  of  this  Act — 

13  (I)  Investment  in  south  afbica. — The  term 

14  "investment  in  SoutJi  Africa"  means  establishing,  or 

15  otherwise  investing  funds  or  other  asseats  in,  a  busi- 

16  ness  enterprise  in  South  Africa,   including  making  a 

17  loan  or  other  extension  of  credit  to  such  a  business 

18  enterprise. 

19  (2)  United  states  pebson. — The  term  "United 

20  States  person"  means  any  United  States  resident  or 

21  national  and  any  domestic  concern  including  any  per- 

22  manent  domestic  establishment  of  any  foreign  concern), 

23  and  such  term  includes  a  bank  organized  under  the 

24  laws  of  the  United  States: 


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14 

1  (3)  South  AFEiCA.^The  term  "South  Africa" 

2  includes — 

3  (A)  the  Republic  of  South  Africa, 

4  (B)  any  territory  under  the  administratioD, 

5  legal  or  illegal,  of  South  Africa,  and 

6  (C)  the   "bantustans"   or   "homelands",   to 

7  which  South  African  blacks  are  assigned  on  the 

8  basis  of  ethnic  origin,  including  the  Transkei,  Bo- 

9  phuthatswana,  Ciskei,  and  Venda. 

10  (4)  FoBBiON  AFEUJATB. — A  "foreign  afGliate"  of 

11  a  United  States  person  is  a  business  enterprise  located 

12  in  a  foreign  country,  including  a  branch,  which  is  con- 

13  trolled  by  that  United  States  person. 

14  (5)  Control. — A  United  States  person  shall  be 

15  presumed  to  control  a  business  enterprise  if — 

16  (A)   the   United   States   person   beneficially 

17  owns  or  controls  (whether  directly  or  indirectly) 

18  more  than  50  per  centum  of  the  outstanding 

19  voting  securities  of  the  business  enterprise; 

20  (B)  the   United  States   person   beneBcially 

21  owns  or  controls  (whether  directly  or  indirectly) 

22  25  per  centum  or  more  of  the  voting  securities  of 
28  the  business  enterprise,  if  no  other  person  owns  or 
24  controls  (whether  directly  or  indirectly)  an  equal 
20  or  larger  percentage; 


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15 

1  (C)  the  business  enterprise  is  operated  b;  the 

'2  United  States  person  pursuant  to  the  provisions  of 

3  an  exclusive  numagement  contract; 

4  (D)  a  majority  of  the  members  of  the  board 

5  of  directors  of  the  business  enterprise  are  also 

6  members  of  the  comparable  governing  body  of  the 

7  United  States  person; 

8  (E)  Ae  United  States  person  has  authority  to 

9  appoint  a  majority  of  the  members  of  the  board  of 

10  directors  of  the  business  enterprise;  or 

11  (F)  the  United  States  person  has  authority  to 

12  appoint  the  chief  operating  officer  of  the  business 

13  enterprise. 

14  (6)  Loan, — The  term  "loan"  includes  an  exten- 

15  sion  of  credit  as  defined  in  section  201(h)  of  the  Credit 

16  Control  Act  (12  U.S.C.  1901(h)). 

17  (7)  Bank.— The  term  "bank"  means— 

18  (A)  any  depository  institution  as  defined  m 

19  section  19(b)(lKA)  of  the  Federal  Reserve  Act  (12 

20  U.S.C.  461{bKl)(A)), 

21  (6)  any  corporation  organized  under  section 

22  25(a)  of  the  Federal  Reserve  Act  (12  U.S.C.  611 

23  et  seq.), 

24  (C)  any  corporation  having  an  agreement  or 

25  undertaking    with    the    Federal    Reserve    Board 


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16 

1  under  section  25  of  the  Federal  Reserve  Act  (12 

2  U.S.C.  601  et  seq.),  and 

3  (D)  any  bank  holding  company  as  defined  in 

4  section  2(a)  of  the  Bank  Holding  Company  Act  of 
-  5  1956  (12  U.S.C.  1843(a)). 

6  (8)  Business  bntebpbibb. — The  term  "business 

7  enterprise"     means     any     organization,     association, 

8  branch,  or  venture  which  exists  for  profitmaking  pur- 

9  poses  or  to  otherwise  secure  economic  advantage. 

10  (9)  Bbanch. — The  term  "branch"  means  Uie  op- 

11  erations  or  activities  conducted  by  a  person  in  a  differ- 

12  ent  location  in  its  own  name  rather  than  through  an 

13  incorporated  entity. 

14  (10)  Political  peiboneb. — The  term  "political 

15  prisoner"  means  any  person  in  South  Africa  who  is  in- 

16  carcerated  or  persecuted  on  account  of  race,  religion, 

17  nationality,  membership  in  a  particular  social  group,  or 

18  political  opinion,  but  the  term  "political  prisoner"  does 

19  not  include  any  person  who  ordered,  incited,  assisted, 

20  or  otherwise  participated  in   the   persecution   of  any 

21  person  on  account  of  race,  religion,  nationality,  mem- 

22  bership  in  a  particular  social  group,  or  political  opinion. 

23  SEC  13.  APPLICABILITY  TO  EVASIONS  OP  ACT. 

24  This  Act  and  the  regulations  issued  to  carry  out  this  Act 

25  shall  apply  to  any  person  who  undertakes  or  causes  to  be 


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81 


17 

1  undertaken  any  transactions  or  activity  with  the  intent  to 

2  evade  this  Act  or  such  relations. 

3  SEC.  14.  CONSTRUCTION  OF  ACT. 

4  Nothing  in  this  Act  shall  be  construed  as  constituting 

5  any  recognitioD  by  the  United  States  of  the  homelands  re- 

6  feired  to  in  section  12(3KC)  of  this  Act. 


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Senator  Heinz.  There  will  undoubtedly  be  a  lot  of  questions  both 
for  you  and  Senator  Weicker  but  I'd  like  to  call  on  Senator 
Weicker  first  for  his  comments  and  testimony. 

STATEMENT  OF  LOWELL  P.  WEICKER,  U.S.  SENATOR  FROM  THE 
STATE  OF  CONNECnCUT 

Senator  Weicker.  Mr.  Chairman,  thank  you  very  much,  one,  for 
granting  the  hearing  and,  two,  for  your  comments  and  the  com- 
ments of  the  other  members  of  the  committee. 

I'd  also  like  to  express  appreciation  to  Senator  Kennedy  not  just 
for  the  legislation  before  you  but,  very  frankly,  for  having  the  cour- 
age to  take  the  trip  he  did.  Some  people  have  said  that  on  more 
than  one  occasion  that  trip  could  not  be  termed  a  political  success 
for  Senator  Kennedy.  I  would  point  out  to  you  that  it  made  the 
very  point  that  had  to  be  made,  that  unless  we  do  act  that  indeed 
moderation  will  not  be  the  resolution  of  this  problem  because  the 
difHculties  that  he  encountered  were  those  difHculties  engendered 
by  people  who  don't  want  a  moderate  solution. 

So  the  fact  that  he  had  his  presence  there  tested  out — the  cli- 
mate, and  believe  me,  that  climate,  due  in  large  measure  to  our  in- 
action, has  changed  drastically  in  the  last  several  decades.  I  am 
very  admiring  of  that  trip  and  I  think  the  trip  itself  teaches  us  just 
how  urgent  our  mission  is. 

I  would  like  to  use  my  brief  time  this  morning  to  provide  an  his- 
torical and  factual  bacl^ound  for  the  committee  wluch  establishes 
the  context  in  which  we  should  act. 

IGNORANCE  OF  THE  HISTORY  OF  SOUTH  AFRICA 

It  is  the  opinion  of  this  Senator  that  ignorance  of  the  history  of 
South  Africa  and  misconceptions  about  it  have  prevented  the 
American  people  from  taking  a  firm  and  unequivoc£il  stand  against 
the  system  of  apartheid  which  relegates  23  million  South  African 
blacks  to  subhuman  status.  There  are  too  many  people  walking  the 
streets  of  our  Nation  today  that  indicate: 


Well,  there's  a  big  difference  and  I'd  like  to  highlight  that  differ- 
ence today  because  at  least  let's  act  within  the  context  of  historical 
fact. 

In  a  recent  opinion  editoried  piece  in  the  New  York  Times,  Elie 
Wiesel,  who  has  written  so  powerfully  and  eloquently  of  the  Nazi 
holocaust,  described  his  reactions  after  a  visit  to  South  Africa: 

What  I  understood  in  Soweto  is  that  racial  laws  are  wrong,  not  only  because  they 
rcBult  in  collective  and  individual  oppresBion,  but  also,  and  especially  because  they 
are  laws.  BaciBm  ilaelf  is  dreadful,  but  when  it  pretends  to  be  legal,  and  therefore 
just,  it  becomes  altogether  repugnant.  Without  comparing  apartheid  and  naziam  and 
to  its  "final  solution" — for  that  defies  all  comparison— one  cannot  but  assign  the 
two  systems  in  their  supposed  legality  to  the  same  camp. 

APARTHEID  IS  A  CREATURE  OF  LAW 

Apartheid  is  a  creature  of  law  in  South  Africa.  It  is  a  series  of 
statutes  enacted  by  the  South  African  Government  to  impose  a 


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racial  standard  on  every  aspect  of  South  African  society.  Where  a 
person  may  work  or  live,  what  kind  of  education  or  health  care 
they  are  entitled  to,  where  they  may  travel  or  with  whom  they 
may  associate — all  subject  to  the  arbitrary  distinction  of  color.  As  a 
nation  whose  existence  depends  on  the  rule  of  law  and  which  seeks 
to  build  respect  for  law  worldwide,  the  United  States  can  ill  afford 
to  remain  silent  in  the  face  of  a  system  which  attempts  to  legeilize 
injustice.  As  Abraham  Lincoln  said,  "What  is  morally  wrong 
cannot  be  made  politically  right." 

It  is  a  common  misapprehension  that  in  South  Africa  we  are 
dealing  with  a  vestige  of  the  colonial  period  which  has  somehow 
survived  into  the  1980's.  While  there  has  been  de  facto  segregation 
of  blacks  throughout  this  century,  the  legal  system  of  apartheid 
has  been  built  up  incrementally  since  the  coming  to  power  of  the 
National  Party  in  1948.  Most  of  the  major  apartheid  statutes  were 
enacted  in  the  1950's  and  early  1960's.  For  those  who  argue  for  loy- 
alty to  our  World  War  II  ally  as  a  reason  for  letting  South  Africa 
be,  1  would  point  out  that  the  National  Party  wanted  South  Africa 
to  remain  neutral  in  World  War  II — that  is  neutral  in  favor  of  the 
Nazis — and  had  they  been  in  power  at  the  time,  they  would  have 
been.  Thanks  to  the  bravery  of  Jon  Christian  Smuts,  they  weren't. 

LEGAL  FOUNnATIONS  OF  APARTHEID  SIMILAR  TO  NAZISM 

The  peu-allels  between  the  legal  freunework  of  South  African 
apartheid  and  Nazi  antisemitism  in  the  1930's  are  inescapable. 
What  b^an  in  both  cases  as  a  political  appeeil  to  racist  elements  in 
the  two  societies,  became  the  law  of  the  land. 

The  Nazis  came  to  power  in  Germany  in  1932  on  a  platform  of 
economic  revival  and  decisive  leadership.  Soon  after  coming  to 
power,  they  began  an  anti-Communist  campaign.  In  1933,  a  law 
was  passed  excluding  non-Aryans  from  the  civil  service  and  requir- 
ing clEtssification  of  citizens  by  race.  Then  a  "National  Press  Law" 
excluded  Jews  from  the  press.  Educational  opportunity  of  Jews  was 
then  limited.  Finally  in  1935,  Jews  were  declared  noncitizens,  for- 
bidden to  marry  non-Jews,  and  denied  protection  of  German  law, 
under  the  "Reich  Citizenship  Law"  and  the  "Law  for  the  Protec- 
tion of  German  Blood  and  German  Honor." 

The  legal  foundations  of  apartheid  are  strikingly  similar.  Laws 
entitled  "The  Prohibition  of  Mixed  Marriages  Act,"  the  "Popula- 
tion R^istration  Act,"  and  the  "Suppression  of  Communism  Act" 
were  passed  in  1951.  Finally,  the  "B£mtu  Authorities  Act"  attempt- 
ed to  force  blacks  into  tribalism  and  deny  them  political  rights. 
And  since  that  time  the  legal  grip  of  apartheid  has  steadily  tight- 
ened. 

As  it  was  built  brick  by  brick,  law  by  law,  apartheid  can  be  dis- 
mantled in  the  same  way.  The  United  States  must  do  everything  it 
can  to  encourage  that  process.  Change  will  come  in  South  Africa, 
one  way  or  the  other;  as  a  matter  of  law  or  through  violent  con- 
flict. Time  is  running  out  for  a  process  of  peaceful  change.  As 
Bishop  Tutu,  Allan  Boesak,  Beyers  Naude,  £md  others  have 
warned,  the  cycle  of  violence  may  soon  become  uncontrollable. 
That's  why  we're  here,  not  as  a  matter  of  philosophy  or  a  political 


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34 

statement,  but  to  avoid  that  final  act  of  violence  which  invariably 
will  draw  the  United  States  into  it. 

As  leader  of  the  black  opposition  in  South  Africa  for  decades, 
Nobel  Prize  winner  Chief  Albert  Luthuli  urged  peaceful  protest  in 
order  to  win  concessions.  It  did  not  happen.  Leadership  passed  to 
Nelson  Mandela,  who  advocated  violence  against  inanimate  objects, 
such  as  Government  buildings,  in  order  to  win  concessions.  They 
have  not  been  forthcoming  and  Mandela  is  in  jail.  What  will  be  the 
methods  advocated  by  tomorrow's  leaders  as  they  seek  justice  after 
years  of  increasing  repression?  We  must  act  to  support  those  who 
seek  peaceful  change  and  work  to  hold  back  the  destruction  of  a 
race  war  in  South  Africa. 

I  remember  very  well,  Mr.  Chfiirman,  people  queried  before  we 
did  our  full  research  on  the  matter  of  the  equivalency  of  these  two 
sets  of  laws.  They'd  say,  "Well,  this  really  isn't  the  same  compari- 
son between  Nazi  Germany  and  South  Africa."  I  would  use  as  one 
of  my  examples — and  I  do  here  again  today — I'd  say,  "Well,  do  you 
remember  the  movie  'Judgment  at  Nureraburg'?"  "Sure,  That  was 
the  trial  of  Nazi  war  criminals."  I  said,  "Oh,  really?"  They'd  say, 
"Well,  sure,  Goebbels,  Himmler,  Goering,  and  all  the  rest.'  I  said, 
"No,  it  wasn't.  It  was  a  trial  of  the  German  judiciary  which  had 
legalized  Hitler's  policy  of  national  socialism,  "rhat's  what  the  trial 
was  about."  That's  what  you've  got  on  the  books  in  South  Africa 
today.  There  is  no  difference  insofar  as  legality.  A  body  count?  Of 
course,  there's  a  difference.  But  as  to  making  racism  and  repres- 
sion of  humanity  legal,  they  are  identical. 

This  isn't  a  disinvestment  bill,  I  might  add,  that  we  are  talking 
about.  What  we  are  trying  to  do  is  to  use  our  position — it  doesn't 
come  from  a  disinterested  party.  This  is  the  No.  1  trading  partner 
of  South  Africa  that  is  saying: 

If  you  do  or  if  you  continue  on  the  course  that  you've  eet  upon,  then  do  so  at  your 
own  peril  and  your  own  risk,  not  with  either  the  moral  or  the  dollar  sanction  of  this 
Nation,  the  United  States  of  America. 

IMPACT  OF  ECONOMIC  SANCnONS 

One  last  word  about  this  business  of  economic  sanctions  and  they 
never  work.  Let's  just  review  that  for  1  second. 

Economic  sanctions  have  been  used  and  they  are  being  used  by 
the  United  States  in  many  situations.  We  have  trade  embargoes 
against  Cuba,  Vietnam,  and  North  Korea.  We  have  outlawed  U.S. 
importation  of  Libyan  oil.  Through  the  Jackson-Vanik  amendment, 
we  have  made  most-favored-nation  status  conditional  on  free  emi- 
gration. One  of  the  last  times  I  was  before  this  committee  was  to 
support  an  embai^o  against  Uganda,  and  you  had  one  of  the  prime 
movers  in  that.  Senator  Cranston.  That  passed  the  Senate  and 
within  months  Idi  Amin  was  gone.  Again,  we  were  their  No.  1  trad- 
ing partner.  I  believe  the  South  African  Government  will  only 
trust  the  sincerity  of  our  opposition  to  apartheid  when  we  back  it 
up  with  economic  sanctions.  To  do  less  would  call  into  question  our 
commitment  to  the  ideals  of  equality  and  the  rule  of  law  and  risk  a 
new  holocaust  in  Africa. 

I  came  to  Washington  16  years  ago  and  everybody  told  me  the 
situation  would  take  CEU'e  of  itself  Well,  it  has.  It's  taken  care  of 


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35 

hundreds  and  thousands  of  blacks  in  South  Africa  who  are  no 
longer  alive.  You  worry  about  the  few  that  you  saw  shot  in  Uiten- 
hage,  you  worry  about  the  one  out  of  every  two  children  under  5 
years  of  age  that  dies,  one  out  of  every  two  under  5  dies  in  the 
homelands  of  South  Africa.  We  don't  hear  that  here.  They're  too 
small  to  have  their  cry  heard.  No  more. 

I  don't  care,  Mr.  Chairman,  what  it  is  that  you  pass — obviously  I 
do  in  terms  of  quality — as  much  as  I  care  that  the  Senate  of  the 
United  States,  the  Government  of  the  United  States,  has  something 
and  take  this  out  of  the  de  facto  let  it  resolve  itself  area  and  place 
us  on  record  as  a  matter  of  law  internationally  in  favor  of  the 
ideals  of  the  Constitution  of  the  United  States,  and  that  is  why 
South  Africa's  problems  and  our  problems  are  not  the  same,  be- 
cause we  have  a  Constitution.  Its  ideals  are  in  the  stars.  These  laws 
are  in  the  gutter. 

Thank  you. 

[The  complete  prepared  statement  follows:] 

Teshmony  op  Sbnator  Lowell  Weicker 

Mr.  Chairman  and  raembera  of  the  committee,  I  appreciate  this  opportunity  to 
appear  before  you  as  you  consider  S.  635,  the  Anti-Apartheid  Act  of  1985,  which 
Senator  Kennedy  and  I  introduced  with  several  of  our  colleagues  last  month.  This 
hearing  today  is  an  important  step  toward  a  United  States  policy  with  regard  to 
South  Africa  which  has  us  standing  up  for  our  ideals  and  protecting  our  basic  inter- 
ests in  that  part  of  the  world. 

I  would  like  to  use  my  brief  time  this  morning  to  provide  historical  and  factual 
background  for  the  committee  which  establishes  the  context  in  which  we  should  act. 
It  is  the  opinion  of  this  Senator  that  ignorance  of  the  history  of  South  Africa  and 
misconceptions  about  it  have  prevented  the  American  people  from  taking  a  firm 
and  unequivocal  stand  against  the  system  of  apartheid,  which  relegates  23  million 
South  African  blacks  to  subhuman  status. 

In  a  recent  OpEd  piece  in  the  New  York  Times,  Elie  Wiesel,  who  has  written  so 
powerfully  and  eloquently  of  the  Nazi  holocaust,  described  his  reactions  after  a  visit 
to  South  Africa.  "What  I  understood  in  Soweto  is  that  racial  laws  are  wrong,  not 
only  because  they  result  in  collective  and  individual  oppression,  but  also,  and  espe- 
cially because  they  are  laws.  Racism  itself  is  dreadful,  but  when  it  pretends  to  be 
legal,  and  therefore  just,  it  becomes  alti^ether  repugnant.  Without  comparing 
apartheid  and  nazism  and  to  its  "Final  Solution"— for  that  defies  all  comparison — 
one  cannot  but  assign  the  two  systems,  in  their  supposed  legality,  to  the  same 

Apartheid  is  a  creature  of  law  in  South  Africa.  It  is  a  series  of  statutes  enacted  by 
the  South  African  Government  to  impose  a  racial  standard  on  every  aspect  of  South 
African  society.  Where  a  person  may  work  or  live,  what  kind  of  education  or  health 
care  they  are  entitled  to,  where  they  may  travel  or  with  whom  they  may  associate — 
all  subject  to  the  arbitrary  distinction  of  color.  As  a  nation  whose  existence  depends 
on  the  rule  of  law  and  which  seeks  to  build  respect  for  law  worldwide,  we  can  ill 
afibrd  to  remain  silent  in  the  face  of  a  system  which  attempts  to  "legalize"  injus- 
tice. As  Abraham  Lincoln  said,  "what  is  morally  wrong  cannot  be  made  politically 
right." 

It  is  a  common  misapprehension  that  in  South  Africa  we  are  dealing  with  a  ves- 
tige of  the  colonial  penod  which  has  somehow  survived  into  the  1980'8,  While  there 
has  been  de  facto  segregation  of  blacks  throughout  this  century,  the  legal  system  of 
apartheid  has  been  built  up  incrementally  since  the  coming  to  power  c^  the  Nation- 
al Party  in  1948.  Most  of  the  major  apartheid  statutes  were  enacted  in  the  fifties 
and  the  early  sixties.  For  those  who  argue  for  loyalty  to  our  World  War  II  ally  as  a 
reason  for  letting  South  Africa  be,  I  would  point  out  that  the  National  Party  wanted 
South  Africa  to  remain  "neutral"  in  World  War  II  (i.e.  "neutral"  in  favor  of  the 
Nazis)  and  had  they  been  in  power  at  the  time,  they  would  have  been. 

The  parallels  between  the  legal  framework  of  South  African  apartheid  and  Nazi 
antiflemitism  in  the  1930's  are  inescapable.  What  began  in  both  cases  as  a  political 
appeal  to  racist  elements  in  the  two  societies,  eventually  became  the  law  of  the 


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The  Nazifi  came  to  power  in  Germany  in  1932  on  a  platform  of  economic  revival 
and  decisive  leadership.  Soon  aiter  coming  to  power,  they  began  an  anti-Communist 
campaiirn-  In  1933,  a  law  was  passed  excluding  "non-Aryans  '  from  the  civil  service 
and  requiring  classification  of  citizens  by  race.  Then  a  "National  Press  Law"  ex- 
cluded Jews  from  the  press.  Educational  opportunity  of  Jews  was  then  limited.  Fi- 
nally in  1934,  Jews  were  declared  non-citizens,  forbidden  to  marry  non-Jews,  and 
denied  protection  of  Glerman  law,  under  the  Reich  Citizenship  Law  and  the  Law  for 
the  Protection  of  German  Blood  and  German  Honor. 

The  legal  foundations  of  apartheid  are  strikingly  similar.  Laws  entitled  the  Pro- 
hibition of  Mixed  Marriages  Act,  the  Population  Registration  Act,  and  the  Suppres- 
sion of  Communism  Act  were  passed  in  1951.  Finally  the  Bantu  Authorities  Act  at- 
tempted to  force  blacks  into  tribalism  and  deny  them  political  rights.  And  since  that 
time  the  le^al  grip  of  apartheid  has  steadily  tightened. 

As  it  was  built  brick  by  brick,  law  by  law,  apardieid  can  be  dismantled  in  the 
same  way.  The  United  States  must  do  everything  it  can  to  encourage  that  process. 
Change  will  come  in  South  Africa,  one  way  or  the  other:  as  a  matter  of  law  or 
through  violent  conflict.  Time  is  running  out  for  a  process  of  peaceful  change.  As 
Bishop  Tutu,  Allan  Boesak,  Beyers  Naude  and  others  have  warned,  the  cycle  of  vio- 
lence may  soon  become  uncontrollable. 

As  leader  of  the  black  opposition  in  South  Africa  for  decades,  Nobel  Prize  winner 
Chief  Albert  Luthuli  urged  peaceful  protest  in  order  to  win  concessions.  It  did  not 
happen.  Leadership  passed  to  Nelson  Mandela,  who  advocated  violence  against  inan- 
imate objects,  such  as  Government  buildings  property  in  order  to  win  concessions. 
Thev  have  not  been  forthcoming.  Whet  will  be  the  methods  advocated  by  tomor- 
rows leaders  as  they  seek  justice  after  years  of  increasing  repression?  We  must  act 
to  support  those  who  seek  peaceful  change  and  work  to  hold  back  the  destruction  of 
a  race  war  in  South  Africa.  In  such  a  war  millions  would  die  and  the  United  States 
would  suffer  greatly. 

1  believe  the  measure  before  this  committee  provides  the  tools  for  encouraging  a 
peaceful  process.  The  strength  of  the  bill  which  Senator  Kennedy  and  I  introduced 
is  its  conditionality:  it  provides  incentives  to  the  South  African  Government  to  insti- 
tute reforms.  The  most  damaging  sanctions  from  the  Government's  point  of  view, 
the  no  new  investment  restriction  and  the  kruggerand  import  ban,  are  subject  to  a 
waiver  by  the  President  and  the  Coneress  for  1  year  if  South  Africa  undertakes  any 
one  of  the  specified  reforms  in  the  bill. 

This  is  not  a  "disinvestment"  bill,  in  which  the  United  States  cuts  and  runs.  It  is 
a  measure  designed  to  maximize  the  leverage  the  United  States  ei;)oys  because  of  its 
economic  involvement  in  that  country. 

Finally  a  word  about  economic  sanction  as  a  matter  of  national  policy.  Economic 
sanctions  have  been  used  and  are  being  used  by  the  United  States  in  many  situa- 
tions. We  have  trade  embargos  against  Cuba,  Vietnam,  and  North  Korea.  We  have 
outlawed  United  States  importation  of  Libyan  oil.  Through  the  Jackson-Vanik 
amendment  we  made  most  favored  nation  status  conditional  on  free  emigration.  The 


last  time  I  was  before  this  committee  was  to  support  an  embargo  BKainst  Uganda, 
which  passed  the  Senate  and  within  months  Idi  Amin  was  gone.  1  believe  the  South 
African  Government  will  only  trust  the  sincerity  of  our  opposition  to  apartheid 
when  we  back  it  up  with  economic  sanctions.  To  do  less  would  call  into  question  our 
commitment  to  the  ideals  of  equality  and  the  rule  of  law  and  risk  a  new  holocaust 

Pastor  Martin  Niemoller  who  lived  in  Germany  during  World  War  II  wrote:  "The 
Nazis  came  for  the  Communists  and  I  didn't  speak  up  because  1  was  not  a  Commu- 
nist. Then  they  came  for  the  Jews  and  I  did  not  speak  up  because  I  was  not  a  Jew. 
Then  they  came  for  the  trade  unionists  and  I  didn't  speak  up  because  1  wasn't  a 
trade  unionist.  Then  they  came  for  the  Catholics  and  I  was  a  Protestant,  so  1  didn't 
speak  up.  Then  they  came  for  me.  By  that  time  there  was  no  one  left  to  speak  up 
for  anyone."  It  is  time  for  us  to  speak  up. 

Senator  Heinz.  Senator  Weicker,  thank  you  very  much. 

Senator  Proxmire,  I  know  you  were  detained  by  another  engage- 
ment and  appointment.  Do  you  have  eui  opening  statement  you 
would  like  to  make? 

Senator  Proxmire.  I  have  an  opening  statement,  yes,  indeed,  but 
I'm  not  going  to  make  it.  It  would  be  an  anticlimax  after  these 
most  compelling  and  persuasive  presentations  by  Senators  Kenne- 
dy and  Weicker, 


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37 

I  do  want  to  say  something  very  briefly,  however.  I  think  we  get 
the  impression  here  because  both  Senator  Kennedy  and  Senator 
Weicker  are  so  eloquent  and  feel  so  passionately  about  this,  that 
we  are  proposing  radical  l^islation.  We  are  not.  I  am  a  coeponsor 
of  this  bill  and  I  think  we  ought  to  keep  that  in  mind. 

This  is  a  bill,  most  of  the  provisions  of  which  are  identical  to  the 
bill  that  passed  the  House  in  October  1983  without  objection  and 
with  a  number  of  conservative  Republicans  standing  up  and  plead- 
ing for  it  very  eloquently.  It  does  not  require  American  companies 
to  withdraw  the  billions  of  dollars  they  have  invested  in  South 
Africa  nor  does  it  prohibit  our  Firms  from  reinvesting  profits  they 
make  there  or  cut  off  trade  with  South  Africa. 

It  does  prohibit  new  U.S.  investment  in  and  bank  loans  to  South 
Africa.  It  also  bans  further  importation  of  the  South  African  gold 
coin,  the  krugerrand,  which  is  a  major  source  of  foreign  exchange 
for  the  white  government. 

It  also  bans  further  sales  of  computers  to  South  Africa  because 
they  are  used  by  that  Government  to  help  implement  these  police- 
state  controls  needed  to  enforce  its  unjust  policies. 

These  economic  sanctions  are  far  less  stringent  than  those  our 
Government  now  has  in  place  against  the  Soviet  Union,  against 
Vietnam,  against  Cuba,  against  North  Korea,  against  Cambodia, 
against  Libya,  against  Poland,  and  other  human  rights  violators. 
T^ey  are  modest.  Some  people  might  even  say  they're  soft. 

They  will,  however,  send  a  strong  signal  to  South  Africa's  white 
regime  that  unless  Its  benighted  racial  policies  are  changed  the 
country's  economic  isolation  will  worsen. 

And  I  might  just  ask,  Mr.  Chairman,  if  the  remainder  of  my 
statement — it's  really  a  terrific  statement — could  be  put  in  the 
record. 

Senator  Heinz.  On  that  representation,  I'm  sure  there  will  be 
only  modest  objection,  but  we  will  do  it  anyway.  Without  objection, 
so  ordered. 

OPENING  STATEMENT  OF  SENATOR  PROXMIRE 

Senator  Proxmire.  We  begin  today  the  first  of  what  I  hope  will 
be  a  series  of  hearings  on  S.  635,  the  Anti-Apartheid  Act  of  1985.  I 
emi  consponsoring  that  bill  because  I  want  our  country  to  make 
very  clear  to  the  South  African  Government  that  its  unjust  and  im- 
moral policy  of  apartheid  is  unacceptable  and  must  be  changed  if 
American  corporations  are  to  continue  to  play  a  growing  role  in 
that  country's  economy. 

Exactly  what  is  apartheid  and  why  should  it  concern  our  coun- 
try? Apartheid  is  the  system  in  South  Africa  designed  by  the  white 
community  in  1948  to  ensure  their  absolute  rule  over  the  black  ma- 

{'ority.  The  4y2  million  whites  maintain  their  rule  over  21  million 
dacks  by  denying  blacks  the  right  to  vote,  denying  them  education- 
al opportunities,  denying  them  economic  and  social  opportunities, 
and  by  requiring  them  to  live  in  separate,  segregated  areas.  In 
many  instances  black  males  are  permitted  to  take  jobs  in  urban 
areas  but  must  leave  their  wives  and  children  behind  in  rural 
homelands,  while  the  males  live  in  barracks-type  all  male  housing. 
In  effect,  the  whites  have  adopted  a  system  of  dehumanizing  the 


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black  population  in  order  to  maintain  their  own  privileged  rule. 
The  minority  whites  enforce  their  system  through  reliance  on  a 
harsh  and  repressive  police  rule  backed  up  by  the  strongest  mili- 
tary force  on  the  African  Continent.  That  force  very  possibly  has  a 
nuclear  capability. 

Why  is  it  any  business  of  the  United  States  to  try  to  change  this 
abhorrent  system  in  South  Africa?  First,  our  history,  values,  and 
institutions  place  Americans  in  basic  sympathy  with  people  seek- 
ing political  freedom  and  civil  liberties  throughout  the  world.  Such 
a  policy  is  not  only  right  but  it  helps  strengthen  our  own  national 
security  by  ensuring  that  our  relations  with  other  countries  are  not 
based  solely  on  accommodating  values  of  repressive  regimens  but 
rather  on  the  enhancement  of  democratic  values.  American  partici- 
pation in  both  World  War  I  and  II  was  to  help  ensure  the  survival 
of  such  values  in  this  world.  After  World  War  II  our  country,  in 
framing  and  urging  adoption  of  the  U.N.  Charter  and  the  Declara- 
tion of  Human  Rights,  formally  committed  itself  to  the  advance- 
ment of  political  freedom  and  human  rights  beyond  its  shores.  Sec- 
retary of  State  Shultz  reemphasized  this  administration's  continu- 
ing belief  in  this  policy  when  he  stated  in  a  recent  speech  that: 

Throughout  our  own  history  we  have  always  beheved  that  freedom  is  the  birth- , 
right  of  all  peoples  and  that  we  could  not  be  true  to  ourselves  or  our  principles  ^ 
unless  we  stand  for  freedoin  and  democracy,  not  only  for  ourselves  but  for  others. 
And  so,  time  and  again  in  the  last  200  years,  we  have  lent  our  support—moral  and 
Otherwise — to  those  around  the  world  struggling  for  freedom  and  independence. 

Second,  it  is  in  America's  national  interest  to  promote  peaceful 
change  in  South  Africa.  Presently  political  rights  in  that  country 
are  based  solely  on  race  and  black  people,  no  matter  how  accom- 
plished they  are  they  have  none.  Since  blacks  have  no  political 
rights,  it  makes  it  dinicult  for  them  to  achieve  a  gradual,  peaceful 
change  in  that  country's  race  policies  and  Soviet  preached  violent 
change  becomes  an  attractive  alternative.  President  Kennedy  once 
said  "those  who  make  peaceful  change  impossible  make  violent 
change  inevitable."  Violence  would  not  benefit  white  or  black 
South  Africans  or  U.S.  interests  in  Africa. 

Over  a  quarter  of  a  century  ago,  after  the  true  nature  of  South 
Africa's  ugly  apartheid  policy  became  clear,  President  Eisenhower 
denounced  it  and  his  administration  voted  in  the  U.N.  for  a  resolu- 
tion condemning  that  policy. 

All  American  Presidents  since  President  Eisenhower  have 
spoken  against  South  Africa's  repugnant  racial  policies.  Our  Gov- 
ernment has  attempted  time  after  time  to  encourage  dialog  be- 
tween the  races  and  changes  that  will  result  in  government  by  the 
consent  of  the  governed.  Yet  that  regime  has  persisted  in  making 
its  immoral  system  even  more  impervious  to  peaceful  change  de- 
spite cajoling  by  us  and  international  condemnation  by  others. 

Neither  President  Eisenhower  nor  any  subsequent  President  has 
sought  the  cooperation  of  Congress  in  adopting  measures  that 
make  clear  to  South  Africa  our  abhorrence  of  its  benighted  policies. 
What  could  we  do?  We  could  bring  strong  economic  pressures  to 
bear  on  South  Africa.  After  all,  we  are  South  Africa's  orgeat  trad- 
ing partner.  Our  exports  to  South  Africa  and  our  imports  from 
South  Africa  exceed  that  of  any  other  country  and  they  are  in- 
creasing. Also,  with  the  exception  of  the  United  Kingdom,  the 


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United  States  has  the  bluest  investment  in  South  Africa  of  einy 
country  in  the  world.  That  investment,  too,  is  growing  rapidly.  In 
1950  before  President  Eisenhower  expressed  his  disapproval  of 
South  Africa  apartheid,  America's  total  investment  in  South  Afri- 
can was  only  about  $140  million.  Today  it  is  nearly  20  times  as 
high.  It  is  in  excess  of  $2.3  billion.  Loans  by  American  banks  to 
South  Africa  have  risen  rapidly  in  recent  years  and  reached  $4.5 
billion  in  1984.  And  almost  $400  million  of  those  loans  are  to  the 
racist  promulgators  of  apartheid  itself,  the  South  African  Govern- 
ment. These  actions,  while  taken  in  good  faith,  have  strengthened 
the  South  African  economy  and  the  position  of  its  ruling  elite. 

So  what  have  we  done  about  this  apartheid  system  our  Presi- 
dents have  deplored  as  an  affront  to  human  dignity.  We  have  in- 
creased our  investment  there  by  more  than  twentyftild.  Our  banks 
have  used  the  deposits  of  U.S.  citizens,  to  make  huge  loans  to  that 
racist  Government.  We  have  become  South  Africa's  most  important 
trading  partner  emd  our  citizens  last  year  imported  600  million  dol- 
lare'  worth  of  gold  coins  minted  by  that  Government  to  help  its  for- 
eign exchange  earnings.  These  actions  speak  louder  than  any 
words  of  condemnation  our  Presidents  may  utter.  Since  this  admin- 
istration like  others  before  it,  will  not  act;  it  is  time  for  Congress  to 
take  the  lead  and  move  beyond  rhetoric  in  dealing  with  the  white 
minority. 

That  is  why  I  introduced  my  own  bill  S.  147  on  January  3,  the 
first  day  of  this  new  session  of  Congress  and  joined  Senators  Ken- 
nedy and  Weicker  in  sponsoring  S.  635,  the  legislation  before  us 
today. 

S.  635  is  not  a  radical  bill.  It  does  not  require  American  compa- 
nies to  withdraw  the  billions  of  dollars  they  have  invested  in  South 
Africa.  Nor  does  it  prohibit  our  firms  from  reinvesting  profits  they 
make  there  or  cut  off  trade  with  South  Africa.  It  does  prohibit  new 
U.S.  investment  in  and  bank  loans  to  South  Africa  and  also  bans 
further  importation  of  the  South  African  gold  coin,  the  krugerrand, 
which  is  a  major  source  of  foreign  exchange  for  the  white  Govern- 
ment. It  also  bans  further  sales  of  computers  to  South  Africa  be- 
cause they  are  used  by  that  Government  to  help  implement  the 
police-state  controls  needed  to  enforce  its  unjust  policies.  These  eco- 
nomic sanctions  are  far  less  stringent  than  those  our  Government 
now  has  in  place  against  the  Soviet  Union,  Viet  Nam,  Cuba,  North 
Korea,  Cambodia,  Libya,  Poland,  and  other  human  rights  violators. 
They  will,  however,  send  a  strong  signal  to  South  Africa's  white 
regime  that  unless  its  benighted  racial  policies  are  changed,  the 
country's  economic  isolation  will  worsen. 

Some  will  argue  that  such  economic  pressures  will  not  work  and 
it's  best  to  work  with  the  existing  regime  and  persuade  it  by  words 
to  change  its  unjust  policies.  We  heard  these  same  "go  slow  and  try 
and  coax  the  whites  to  change"  arguments  prior  to  our  own  civil 
rights  revolution.  That  revolution  was  won,  however,  only  after 
laws  were  enacted  making  fair  treatment  of  all  our  citizens  com- 
pulsory. In  the  same  way  we,  and  other  Western  nations,  have 
tried  a  moderate,  coaxing  effort  with  South  Africa  for  over  a  quar- 
ter of  a  centuiy.  This  administration  in  particular  has  totally  em- 
phasized friendship  and  winning  the  confidence  of  the  white  elite 
through  a  policy  it  calls  constructive  engagement — with  no  success. 


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Repression  of  blacks  has  gotten  worse.  S.  635  lets  the  South  African 
Government  know  that  change  must  begin.  It  does  not  require  us 
to  end  all  economic  or  trade  relations  but  there  is  a  clear,  implied 
threat  that  further  action  can  and  will  be  taken  if  true  reform  does 
not  begin.  These  moderate  measures  will  strengthen  the  hand  of 
those  white  South  Africans  who  are  arguing  for  change  and  there 
are  many  of  them. 

I  also  want  to  point  out  that  S.  635  directs  the  President  to  un- 
dertake international  negotiations  to  persuade  other  nations  to 
adopt  restrictions  on  new  investment  in  and  bank  loans  to  South 
Africa.  Sweden  and  Japan  already  restrict  investment  there,  and  a 
growing  number  of  European  legislators  favor  such  restrictions. 

S.  635  also  provides  that  the  President  may,  with  Congress' 
assent  waive  its  restrictions  for  periods  of  not  more  than  12  months 
if  the  South  African  Government  takes  certain  specified  steps  to 
ameliorate  its  repressive  rule.  All  restrictions  in  the  proposed  bill 
may  be  removed  altogether  if  the  President  determines  and  Con- 
gress agrees  that  South  Africa  has  abolished  its  apartheid  system. 

This  legislation  is  the  right  thit^  to  do  and  will  serve  our  long- 
term  national  interest.  I  hope  we  can  move  it  through  the  Congress 
this  year  and  that  the  President  will  sign  it  into  law. 

Senator  Heinz.  And  also.  Senator  Dixon  has  a  statement  to 
appear  in  the  record  and,  without  objection,  it  will  so  appear. 

STATEMENT  OF  SENATOR  DIXON 

Senator  Dixon.  Mr.  Chairman,  I  doubt  there  is  any  issue  facing 
the  Congress  this  year  more  important  than  the  question  of  apart- 
heid and  how  America  should  respond. 

Apartheid  is  a  repugnant  concept.  There  is  no  justification  or 
this  institutionalized  system  of  racial  discrimination  and  subjuga- 
tion. It  is  simply  wrong — morally  wrong. 

Acknowledging  the  evil  that  apartheid  represents,  however,  is 
not  enough.  What  the  committee  has  before  it  today  is  the  question 
of  what  is  the  appropriate  policy  response  from  the  United  States. 
In  short,  what  actions  should  we  take  to  influence  the  South  Afri- 
can Government  to  begin  the  process  of  dismantling  this  abhorrent 
system. 

Currently  pending  before  the  Banking  Committee  is  the  subject 
of  today's  hearing,  S.635.  As  I  understand  it,  this  bill  would  prohib- 
it: 

One,  new  U.S.  bank  loans  to  the  Government  of  South  Africa; 

Two,  new  investment  by  American  firms  in  the  country; 

Three,  importation  of  the  krugerrand;  and 

Four,  U.S.  firms  from  selling  computers  to  the  Government  of 
South  Africa. 

I  generally  believe  that  the  United  States  should  minimize  the 
use  of  trade  as  a  foreign  policy  weapon.  I  have  been  particularly 
opposed  to  the  quick-changing,  on  again  off  Eigain  trade  policy  that 
has  been  practiced  in  the  executive  branch  for  some  years  now. 

South  Africa,  however,  represents  a  very  unique  case  and  there 
has  been  considerable  interest  in  Congress  in  legislatively  changing 
our  trade  policy  toward  that  country.  There  are  a  number  of  legis- 
lative options  available,  ranging  from  legislating  the  Sullivein  prin- 


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ciples  to  steps  which  would  have  the  result  of  shrinking  our  trade 
with  South  Africa  to  a  fraction  of  its  current  size. 

This  hearing  is  one  of  the  first  steps  in  determining  whether  and 
how  our  trade  policies  toward  South  Africa  need  to  be  modified.  I 
want  to  congratulate  the  sponsors  of  S.  635  for  bringing  this  matter 
before  the  Bsmking  Committee.  I  look  forward  to  the  testimony  to 
be  presented  this  morning,  and  to  working  with  my  Senate  col- 
leagues in  fashioning  a  bill  that  expresses  our  repugnance  of  apart- 
heid and  helps  maximize  the  chances  for  early  and  peaceful  change 
of  that  tragic,  misguided  policy. 

Senator  Heinz.  Senators  Kennedy  and  Weicker,  you  have  been 
extraordinarily  eloquent  in  your  presentations  here  today  and  I 
susi>ect  what  we  are  really  doing  is  banning  a  profound  national 
debate  about  how  this  country  changes  its  policy  toward  South 
Africa. 

You  have  both  identified  from  your  experiences  and  your  travels 
that  which  are  perceived  to  be  real  shortcomings  in  constructive 
engagement.  Indeed,  the  Senate  itself  went  on  record  last  fait  by 
passing  one  of  the  provisions,  among  other  provisions,  in  the  l^is- 
lation  that  you  propose.  The  Senate  passed  without  objection  a  bill 
containing  the  cutoff  of  all  bank  loans  to  the  South  African  Gov- 
ernment or  any  other  government  entity  in  South  Africa.  It's  the 
first  time  to  my  knowle^e  that  the  Senate  has  ever  so  spoken. 

There  were  other  provisions  in  that  l^islation,  including 
strengthening  of  the  Sullivan  principles,  and  other  measures  that 
the  Senate  adopted  unemimously. 

It  is  my  view  that  action  will  be  taken  in  this  session  of  Congress 
on  this  issue.  But  havii^  said  that,  because  1  don't  want  what  I  am 
about  to  say  to  be  misinterpreted,  we  would  be  missing  an  opportu- 
nity— indeed,  I  fear  abdicating  our  responsibility — if  we  didn't  get 
to  the  heart  of  the  very  serious  issue. 

SANCTIONS  ENDING  APARTHEID  WFTHOUT  VIOLENCE 

I  don't  know  how  many  of  you  saw  an  article  that  appeared  in 
the  Washington  Post  2  or  3  weeks  ago  written  by  Hobart  Rowan. 
He  commented  that  both  Bill  Gray,  author  of  the  Gray  amend- 
ment, the  fortunes  of  which  are  part  of  the  bill  before  us,  and  Ches- 
ter Crocker  really  had  a  great  deal  in  common.  They  really  be- 
lieved that  a  policy  by  the  United  States,  whether  it  was  construc- 
tive engagement  or  it  was  a  more  activist  policy  in  terms  of  sanc- 
tions or  sanctions  that  might  be  triggered,  would  indeed  have  an 
affirmative,  positive  impact  on  conditions  in  South  Africa  and  on, 
therefore,  presumably  not  only  diminishing  and  ultimately  ending 
apsirtheid  but  doing  so  without  violence  through  peaceful  change. 

So  my  question,  I  suppose  to  either  of  you,  but  let  me  start  with 
my  good  friend,  Senator  Kennedy,  is  to  what  extent  do  we  have 
reason  to  believe  that  any  action  we  take  is  going  to  bring  about  a 
positive,  affirmative,  peaceful  change? 

Senator  Kennedy.  Well,  first  of  all,  Mr.  Chairman,  I  think  it's 
important  to  consider  why  we  should  take  any  action.  One  reason 
for  taking  action  is  to  be  consistent  with  our  own  value  system  and 
to  have  a  foreign  policy  that  reflects  our  own  best  values.  I  think 
that  it  is  important  that  we  be  able  to  live  with  a  policy  that  re- 


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fleets  our  basic  and  fundamental  values  and  beliefs.  That  isn't 
always  the  case,  and  all  of  us  look  at  the  past  and  find  examples 
where  that  has  not  been  the  case.  But  certainly  that's  a  fair  objec- 
tive, and  that  is  not  what's  happening  in  the  policy  of  constructive 
eng£igement,  No.  1.  So  we  should  adopt  a  policy  that  is  consistent 
with  our  values. 

I  very  firmly  believe,  Mr.  Chairman,  that  by  taking  this  action  it 
will  be  a  very  important  signal,  not  just  to  the  South  African  Gov- 
ernment which  is  very  important,  but  it  will  also  be  a  very  impor- 
tant signal  to  the  23  million  blacks  in  South  Africa.  That  signal 
should  be  that  the  United  States  is  serious  about  its  own  value 
system  and  serious  about  its  concern  about  their  conditions.  I  think 
that's  very  important. 

Last,  let  me  get  back  to  the  point  that  I  made  earlier,  and  that  is 
how  serious  the  South  African  Government  is.  When  I  was  in 
South  Africa  I  had  not  intended  to  speak  about  divestiture.  I  went 
there  to  have  an  opportunity  to  talk  to  businessmen,  to  workers,  to 
leaders  in  that  country,  as  well  as  to  talk  to  others. 

Some  in  this  room — Senator  Proxmire,  Senator  Cranston,  your- 
self, and  others.  Senator  Weicker — have  been  involved  with  this 
issue  for  a  long  period  of  time — and  to  have  the  opportunity  to  ex- 
change views  with  them. 

Every  day  that  I  was  in  South  Africa,  on  the  front  page  of  the 
paper  there  would  be  some  reference,  "We  don't  really  care — the 
South  African  Government  does  not  really  care  what  the  United 
States  does  on  the  issue  of  divestiture."  I  saw  that  the  first  day  and 
I  wondered  why  a  statement  was  being  made  by  a  Government  offi- 
cial the  first  day  since  I  had  made  no  reference  to  that  and  had  no 
intention  of  doing  so. 

The  second  day  was  the  same  thing.  The  third  day  was  the  same 
thing.  Every  single  day  the  papers  carried  headlines  about  disin- 
vestment. And  you  can't  come  out  of  South  Africa  without  the  con- 
clusion that  it's  just  the  opposite — they  care  very  much  about  what 
we  do.  They  protest  too  much. 

And  I  think  that  many  experts  would  say,  "What  happens  in 
terms  of  the  Congress  of  the  United  States,  what  happens  in  terms 
of  the  Executive,  what  happens  in  these  local  communities  and  uni- 
versities has  a  very,  very  important  impact  on  the  South  African 
Government." 

FEAR  OF  DIVESTITURE 

Senator  Heinz.  I  have  no  doubt  at  all  that  the  South  Africem 
Government  dislikes  the  notion  of  our  even  sitting  here  talking 
about  any  of  these  sanctions.  I'm  sure  that  they  have  an  intense 
fear  of  being  singled  out  for  divestiture.  We  have  never  done  that, 
to  my  knowledge,  in  this  country.  There  may  be  some  where  we've 
done  it. 

But  it  seems  to  me  that  the  fact  that  they  don't  like  it,  that  they 
are  afraid  of  it,  is  not  quite  the  ix>int. 

What  I  really  would  like  to  try  and  get  a  sense  of — and  we  are 
fortunate  that  you  have  so  recently  traveled  there — is  whether  we 
should  attempt  to  predict  the  kind  of  future  our  sanctions  will 
achieve  in  South  Africa.  Will  it  cause  the  South  African  Govem- 


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ment  to  be  more  repressive?  Will  it  cause  the  South  African  Gov* 
emment  to  begin  to  end  apartheid  or  shouldn't  we  care? 

Senator  Weicker.  Can  I  respond  to  your  initial  question  and  also 
to  your  comment?  As  much  as  we  are  involved  with  20  million 
blacks  in  South  Africa,  we  are  involved  with  an  entire  continent  on 
this  issue,  indeed  a  black  population  throughout  the  world,  and  a 
black  population  that  I  might  add  is  looking  around  and  making  its 
choices  and  making  its  decisions  as  to  what  roads  it  philosophicEilly 
and  politically  wants  to  follow. 

AFRICAN  STUDENTS  BEING  EDUCATED  IN  CUBA 

Several  years  ago  on  one  of  my  visits  to  Cuba,  I  visited  what  is 
now  called  the  Isle  of  Youth.  It  used  to  be  the  Isle  of  Pines.  It  has 
about  60  senior  high  school  complexes  on  it;  15  of  them  are  indige- 
nous to  the  populations  of  countries  other  than  Cuba.  The  one  I  vis- 
ited had  600  students  from  Namibia  getting  their  education  courte- 
sy of  the  Soviet  Union  in  Cuba. 

Now  everybody  talks  about  the  Cuban  troops  in  Ethiopia  and 
Angola — don't  worry  about  it;  Africa  will  swallow  them  up  as  it 
swallowed  up  every  other  colonial  power.  But  do  you  know  what 
we  ought  to  worry  about — or  rather,  what  our  children  ought  to 
worry  about?  The  600  Namibians  getting  their  education  courtesy 
of  the  Soviet  Union  in  Cuba,  and  going  back  to  Namibia,  and  be- 
coming the  leaders  of  that  nation,  and  setting  its  course  for  decades 
to  come. 

Now  you  say  to  yourself,  "We  don't  have  the  institutions  to  teach 
in  this  Nation,"  we  are  the  greatest  of  all  in  terms  of  its  teaming 
institutions.  The  final  irony,  do  you  know  what  their  native  lan- 
guage is?  It  sure  as  hell  isn't  Spanish.  It's  English. 

So  as  we  don't  take  advantage  of  the  opportunity  to  stand  up  for 
what  we  believe  in  as  a  matter  of  our  law,  and  our  Constitution, 
and  our  ideals,  so  believe  me,  it  also  acts  to  our  detriment  when 
there  are  those  that  reach  out  and  slap  the  hand  away  and  go  with 
the  status  quo  for  our  own  convenience,  and  we  set  the  course  of 
history  for  our  children  for  decades  to  come. 

So  believe  me,  what  we  do  here,  whatever  impact  it  has  on  that 
nation  and  those  particular  people,  it  has  an  even  more  far-reach- 
ing impact  on  how  the  United  States  is  viewed  among  those  who 
right  now  are  in  the  process  of  choosing.  If  we  take  the  action 
that's  called  for  here  or  something  akin  to  it,  believe  me,  all  the 
propaganda,  and  all  the  Radio  Free  Europe,  and  the  U.S.  Informa- 
tion Agency,  and  all  the  propaganda  on  our  side,  nothing  can  hold 
a  candle  to  doing  something  right  here.  That's  the  United  States 
manifesting  its  ideals  in  this  troubled  world.  That's  why  it's  impor- 
tant. 

Senator  Heinz.  What  do  we  expect  to  see  in  South  Africa  itself 
or  shouldn't  we  care? 

Senator  Weicker.  I'm  sorry? 

Senator  Heinz.  My  question  was  directed  at  South  Africa.  What 
do  either  of  you  anticipate  is  going  to  be  the  result?  I  don't  think 
anybody  here  w£ints  a  scenario,  certainly  one  of  many  possible 
ones,  where  you  have  a  vastly  more  repressive  South  African 
r^ime.  Repression  is  met  with  more  of  the  radicalization  that  Sen- 


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ator  Kennedy  referred  to  in  his  statement,  and  you  get  a  blood- 
bath. 

Senator  Weicker.  That's  exactly  why  we  are  here.  We  don't 
want  a  bloodbath. 

Senator  Kennedy.  Mr.  Chairman,  my  statement  meikes  very 
clear,  and  I  believe  very  strongly  and  very  deeply,  that  the  future 
of  South  Africa  is  going  to  be  decided  by  the  South  Africsms.  It's 
going  to  be  decided  by  the  South  Africans. 

We,  as  those  who  support  and  sponsor  this  propo8£d,  don't  sug- 
gest that  we  impose  solutions  to  the  problems  in  South  Africa  from 
the  outside.  We  don't  do  that.  Senator  Weicker  and  I  have  said  why 
we  believe  this  is  essential  in  terms  of  the  United  States'  expres- 
sion of  a  value  system,  but  we  acknowledge  in  our  testimony  that 
this  problem  is  going  to  be  decided  by  the  South  Africans.  We  un- 
derstand that. 

But  we  also  believe  that  our  ability  to  have  some  influence  over 
that  process,  whatever  that  process,  and  whether  it  is  going  to  be 
nonviolent,  will  be  increased  if  we  have  some  degree  of  credibility 
with  some  of  the  different  forces  there.  And  we  do  suggest  that  we 
are  losing,  if  not  already  lost,  credibility  with  the  major  player, 
with  90  percent  of  the  population  there,  the  black  people  of  South 
Africa. 

Senator  Weicker.  There  are  those  that  say  that  this  type  of 
action  can  only  result  in  increased  unemployment  for  blacks  and 
they  use  it  for  saying  that's  why  you've  got  to  go  slow  because 
you're  going  to  hurt  the  blacks.  I  would  suspect  when  the  Civil 
War  was  over  and  slavery  in  the  South  was  eliminated  there  was 
increased  unemployment. 

Senator  Heinz.  I  want  to  ask  you.  Senator  Kennedy,  something 
about  a  specific  of  your  bill  and  then  I  will  yield  to  Senator  Hecht 
and  Senator  Proxmire  for  their  questions. 

What  is  the  approach  of  S.  635  with  regard  to  investment?  I 
know  it  would  prohibit  new  direct  investment,  but  is  it  the  premise 
of  the  bill  that  U.S.  investment  in  South  Africa  is  per  se  bad  or  are 
there  conditions  under  which  U.S.  investment  can  have  a  positive 
effect  toward  eliminating  apartheid? 

Senator  Kennedy.  Well,  it's  self-evident  what  we  are  doing  in 
terms  of  the  new  investment  from  the  United  States.  It  doesn't  pro- 
hibit reinvestment  by  companies  in  that  country  of  earnings  taken 
in  in  that  country.  I  suspect  that  those  that  support  this  legislation 
may  have  some  differences  on  the  questions  of  the  divestiture 
issue.  We  stay  clear  of  that  in  this  legislation  and  try  to  target  the 
Government  of  South  Africa  because  it  is  the  Government  of  South 
Africa  that  is  perpetrating  the  policy  of  apartheid. 

So  we  believe  that  this  mechemism  we  are  using — in  terms  of  the 
bank  loans  to  the  Government  and  the  krugerrands  and  the  com- 
puters— is  targeted  on  governmental  activities.  That  was  the 
premise  on  which  we  started  this,  and  we  welcome  recommenda- 
tions from  members  of  the  committee  and  from  other  Members  of 
the  Congress  how  that  can  be  made  most  effective.  These  are  not 
new  concepts,  but  they  are  measured  and  they  are  intended  to 
change  the  policies  of  the  South  African  Government. 


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I'd  be  glad  to  give  you  my  own  views  about  the  role  of  the  impact 
of  the  Sullivan  principles  but  that  really  is  a  different  issue  from 
what  we  are  talking  about  here  today. 

Senator  Heinz.  My  time  has  expired.  Senator  Hecht. 

Senator  Hecht.  Senator  Kennedy,  in  December  my  wife  and  I 
also  went  to  South  Africa.  We  spent  20  days  down  there  and  cer- 
tainly no  way  in  20  days  can  one  have  any  expertise,  so  rather 
than  form  my  own  conclusions  I  talked  to  a  lot  of  people  in  South 
Africa.  The  Jewish  issue  has  been  raised  by  you  and  by  Senator 
Weicker  and  in  the  same  context  as  Nazi  Germany.  I  don't  buy 
that  concept  at  all. 

I  spent  a  tremendous  amoimt  of  time  with  Jewish  people  in 
South  Africa.  In  Capetown  I  went  to  the  orthodox  synagogue  be- 
cause I  am  orthodox.  I  spent  a  lot  of  time  with  a  reformed  rabbi  in 
South  Africa.  I  met  with  Jewish  business  people. 

"bring  more  AMERICAN  INVESTMENT" 

The  one  story  which  they  said  to  take  back  if  you  want  to  help 
the  blacks  in  South  Africa^  "Bring  more  American  investment,  not 
less  American  investment."  It  was  only  when  America  went  down 
to  South  Africa  and  started  investing  that  the  blacks  then  began  to 
get  equal  pay  for  equal  work  and  better  economic  conditions.  There 
was  a  reformed  rabbi  who's  been  in  Capetown  for  37  years  and  I 
spent  a  lot  of  time  with  him  and  no  one  has  been  more  dedicated  to 
social  change  than  he  has  been.  This  was  the  message  he  sent  back. 
He  said,  '"This  is  the  way  you  can  help  the  people  of  South  Africa," 
and  he  said,  "I  have  seen  changes  in  the  last  5  years  that  I  never 
expected  my  grandchildren  to  see."  He  SEiid,  "Bring  more  American 
investment  down  here." 

You  know,  in  South  Africa  the  working  conditions  are  such 
that — they're  not  the  greatest  and  in  no  way  do  I  condone  the  poli- 
cies, but  I  do  believe  in  evolutionary  changes.  But  one  man  work- 
ing in  South  Africa  sometimes  goes  back  to  his  homeland  and  feeds 
15  to  20  mouths.  Senator  Kennedy,  also  my  wife  and  I  spent  time 
in  Zimbabwe,  formerly  Rhodesia.  We  have  seen  what  has  happened 
when  a  government  has  crumbled  and  only  because  of  the  South 
African  Government  is  Zimbabwe  somewhat  of  a  friend  of  South 
Africa  and  has  not  gone  altogether  Communist. 

I  don't  want  to  go  on  and  on  because  time  is  very  short,  but  I 
asked  this  rabbi  in  South  Africa,  "Why  is  it  that  many  people  of 
the  Jewish  faith  in  America  and  others  are  getting  up  in  arms  on 
this?"  He  looked  at  me  and  he's  a  great  scholar  and  he  will  never 
criticize  anyone,  but  he  said,  "Perhaps  they  are  not  as  informed  as 
they  should  be."  And  I  say,  "Let's  listen  to  the  people.  Let's  not 
have  these  economic  sanctions."  I  am  worried  that  the  Government 
would  fall  and  an  unfriendly  government  would  come  in.  Vietnam 
is  still  in  my  memory.  The  Shah  of  Iran  when  we  went  against  him 
is  still  in  my  memory.  Let's  go  along  with  the  people  of  South 
Africa  and  they  are  trying  to  make  changes  and  let's  not  have  eco- 
nomic sanctions. 

Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Senator  Hecht,  thank  you  very  much. 

Senator  Proxmire. 


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46 

Senator  Kennedy.  May  I  just  make  a  brief  comment  on  that? 

Senator  Heinz.  By  all  means. 

Senator  Kennedy.  First  of  all,  I  have  respect  for  your  view  and 
for  your  opinion.  Obviously  you  spent  a  good  deal  of  time  in  South 
Africa  and  you  talked  to  many  of  those  who  have  been  workii^ 
long  and  hard  to  try  and  relieve  a  good  deal  of  the  injustice  which 
exists  there. 

I  draw  the  SEime  conclusion  about  apartheid  2is  I  do  about  the 
holocaust  of  nazism,  and  if  I'm  wrong.  Senator,  correct  me.  When 
you  were  bom  a  Jew  in  Germany  you  went  to  the  gas  chamber. 
When  you're  bom  black  in  South  Africa,  you  go  to  the  homelands. 
It's  the  color  of  your  skin  that  determines  your  fate  from  the 
moment  you're  bom. 

Now  I  find  that  to  be  fm  objectionable  policy  and  it  is  intolerable 
for  the  United  States  in  any  form  or  shape  to  compromise  with  or 
to  support  that  policy. 

Senator  Hecht.  Well,  I  think  that  in  South  Africa 

Senator  Kennedy.  That's  the  comparison  I  make.  Others  may 
draw  different  conclusions,  but  that  to  me  was  the  appropriate 
comparison. 

1  would  just  say  finally,  that  the  positions  that  have  been  ex- 
pressed here  are  not  just  those  of  Senator  Weicker  and  myself,  but 
are  edso  those  of  Bishop  Tutu,  Nobel  Laureate,  of  Rev.  Allan 
Boesak,  a  distinguished  leader  of  the  church,  and  of  Rev.  Beyers 
Naude  who  was  a  member  of  the  Broederband,  the  ultimate  white 
preserve  in  South  Africa.  Reverend  Naude  is  also  a  distinguished 
church  leader  who  had  an  excellent  article  in  the  New  York  Times 
last  week  in  which  he  reached  these  same  conclusions. 

So  I  would  hope  that  our  comments  and  testimony  would  be  con- 
sidered as  being  more  than  just  a  reflection  of  our  own  views  but 
also  as  reflecting  those  who  live  there  and  who  face  this  problem 
every  day.  I  don't  take  anything  away  from  those  in  South  Africa 
who  have  been  trying  to  work — and  to  work  very  effectively — to 
reduce  the  injustices.  They  are  enormously  courageous,  and  they 
have  done  an  extraordinary  job. 

Senator  Hecht.  Well,  I  did  not  meet  with  heads  of  stote.  I  met 
with  working  people,  business  people,  and  blacks  who  have  elevat- 
ed themselves  in  South  Africa  and  your  position  and  my  position  is 
absolutely  at  an  opposite  end.  I  think  that  by  going  on  with  Ameri- 
can investment  we  will  do  more  to  help  the  black  people  than 
hinder  them  and  to  say  they  are  not  elevating  themselves — I  think 
the  Government  of  South  Africa  will  make  these  chaises  that  we 
want.  They  have  brought  the  colored  into  the  Parliament,  the  Indi- 
ans, and  I  think  it's  just  a  very  short  time  before  the  black  people 
are.  Everyone  down  there  I  spoke  to  wants  to  do  that.  There's  been 
tremendous  evolutionary  change  down  there.  Let's  work  with 
them.  To  say  a  black  man  in  South  Africa  has  no  opportunities, 
that's  entirely  different,  and  if  you  would  want  to  equate  the 
Jewish  situation  here,  I  wish  the  Jews  inside  Soviet  Russia  would 
have  the  same  religious  opportunities  that  the  blacks  in  South 
Africa  have. 

Senator  Heinz.  Senator,  thank  you.  Senator  Proxmire. 

Senator  Proxmire.  Thsmk  you  very  much,  Mr.  Chairman. 


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47 

I  want  to  once  again  commend  our  two  witnesses.  I'm  very,  very 
deeply  impressed  and  moved  by  what  you  gentlemen  have  told  us 
and  I  think  the  overwhelming  fact  that  we  can't  get  away  from  is 
that  for  27  years,  ever  since  President  Eisenhower  spoke  out  on 
this  in  1957,  our  Presidents  have  been  speaking  out  and  deploring 
apartheid  and  there's  been  no  basic  cheinge  in  that  policy  in  South 
Africa. 

The  fact  is  that  the  blacks  in  South  Africa  stilt  cannot  vote.  They 
cannot  live  where  they  want  to  live.  They  can't  get  the  job  they 
should  have.  They  can't  get  the  education  they  should  have.  It's 
not  a  gas  chamber,  but  it's  a  living  death,  and  I  just  cannot  under- 
stand how  we  can  simply  say,  "Well,  we'll  continue  to  go  along 
with  the  same  thing  we  have  done  in  the  past  and  somehow  we'll 
get  an  evolution."  We  haven't  got  an  evolution.  We  have  had  that 
response  given  to  us  again  and  again  to  satisfy  our  doing  nothing. 

I  just  have  two  very  quick  technical  questions,  one  for  Senator 
Kennedy  and  one  for  Senator  Weicker. 

Senator  Kennedy,  the  bill  that  you  have  introduced  and  I'm  co- 
sponsoring  h£is  a  provision  banning  future  imports  of  the  South  Af- 
ricEUi  gold  coin,  the  krugerrand.  That  provision  does  not  make  it 
illegal  for  Americans  to  hold  their  existing  krugerrands  nor  does  it 
prevent  Americans  from  acquiring  other  gold  coins  such  as  the  Ca- 
nadian maple  leaf  or  the  Mexican  Aztec  or,  if  Senator  Cranston 
has  his  way,  the  Cranston  bald  eagle.  [Laughter.] 

Will  you  comment  on  why  you  want  to  block  future  imports  of 
the  krugerrand? 

BLOCK  FUTURE  IMPORTS  OF  THE  KRUGERRAND 

Senator  Kennedy.  Senator,  this  legislation  only  deals  with  new 
imports  of  the  krugerrand  into  the  United  States.  It  would  have  no 
effect  on  the  current  ownership  or  the  disposal  of  kn^errands  al- 
ready owned  by  people  here  in  the  United  States.  Nor  would  this 
legislation  affect  the  purchase  of  gold  coins  from  Canada  or 
Mexico,  or  Senator  Cranston's  proposal  for  developing  a  gold  me- 
dallion in  this  country. 

Senator  Proxmire.  Isn't  it  true  that  while  there  are  some  im- 
ports from  South  Africa  that  are  very  important  to  us  that  have 
military  implications — there  are  minerals  that  we  have  to  have — 
that  the  krugerrand  is  something  that  has  absolutely  no  import  for 
our  national  security  or  for  any  other  significant  economic  pur- 
pose? It's  simply  a  coin  that  people  can  hold  and,  as  you  say,  they 
can  hold  what  they've  got  now.  In  fact,  krugerrands  already  in  thm 
country  will  probably  go  up  in  value. 

Senator  Kennedy.  'The  Senator  is  quite  correct. 

Senator  Proxmire.  Senator  Weicker,  this  bill  also  bans  sales  of 
computers  to  the  South  African  Government.  Why  do  we  single  out 
computers? 

Senator  Weicker.  When  you're  keeping  track  of  23  million 
blac£&,  don't  do  it  manually.  Obviously,  that  particular  instrumen- 
tality is  key  to  the  entire  system.  That's  the  answer. 

If  I  might,  I  want  to  say  two  things.  First  of  all,  everybody  ought 
to  know  that  Senator  Proxmire  has  been  on  the  point  on  this  issue 
for  the  last  couple  years,  not  only  now  when  the  issue  is  hot,  and 


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as  Senator  Kennedy  pointed  out,  much  of  what's  in  this  bill  is  what 
he's  set  before  us  for  the  last  several  years.  And  I  think  he  should 
be  given  credit  for  it. 

Senator  Hecht,  I  can  only  make  one  point  as  far  as  a  similarity 
in  law  between  Nazi  Germany  and  South  Africa. 

In  Nazi  Germany,  you  wore  a  yellow  Star  of  David.  You  wore  it 
and  maybe  you  had  chalked  on  you,  "Juden."  In  South  Africa,  you 
carry  your  papers  just  as  that  Jew  in  Germany  carried  his  papers, 
a  noncitizen  within  his  own  country,  and  so  is  the  South  African 
black  a  noncitizen  within  his  own  country  with  his  passport  and 
his  papers. 

Now,  yes,  you're  right,  in  the  1930's  we  were  making  our  invest- 
ments in  Germany  and  what  a  price  we  paid  for  it.  And  we  are 
here  to  make  sure  that  a  similar  price  is  not  paid  in  this  decade. 

Senator  Kennedy.  Mr.  Chairman,  if  I  could 

Senator  Hecht.  Senator  Weicker,  we  just  do  not  agree,  but  I 
want  you  to  know  that  no  one  is  more  mindful  of  the  atrocities  in 
Germany  than  I  am.  My  mother  was  an  emigremt  and  but  for  the 
grace  of  God,  she  fled  and  arrived  in  America.  If  it  wasn't  for  the 
grace  of  God  I  wouldn't  be  here  today.  So  I  am  very  mindful  of 
that. 

Senator  Kennedy.  Mr.  Chairman,  if  I  could  just  put  in  the  record 
a  statement  given  to  me  by  the  president  of  the  Council  of  Unions 
in  South  Africa  at  our  meeting  in  South  Africa  last  January. 

Senator  Heinz.  Without  objection. 

[The  following  information  was  subsequently  submitted  for  the 
record:] 


In  agreeing  to  meet  with  you  we  experience  certain  pressures  and  see  clearly  cer- 
tain opportunities  to  advance  the  cause  of  liberation  in  our  country,  of  the  working 
class. 

It  is  our  firm  belief  that  in  meeting  with  you  today  we  wish  to  put  the  point  of 
view  of  our  federation  concerning:  1.  Our  aspirations;  and  2.  our  expectations  of 
your  visit. 

Our  aspiration  ia  to  ensure  that  all  the  people  in  our  country  have  the  political 
right  to  vote  and  determine  their  future.  We  wish  to  enjoy  the  franchise  in  an  undi- 
vided nonracial  country  free  from  race  or  ethnic  discrimination .  We  desire  that  all 
the  instruments  of  apartheid — legislative,  racial  and  otherwise — be  destroyed.  We 
see  the  elimination  of  apartheid.  Not  the  amelioration  of  apartheid.  We  therefore 
expect  that  influx  control  be  eliminated;  that  the  migrant  labour  system  be  phased 
out.  We  want  immediate  equal  education  and  training  and  university  entrance 
based  on  merit  and  not  quotas.  We  seek  an  end  to  race  classification  and  the  prohi- 
bition of  mixed  marriages.  We  seek  an  end  to  the  Group  Areas  Act  and  the  end  to 
race  ghettoes.  Nor  do  we  see  room  in  such  a  society  for  the  undemocratic  security 
l^islation  which  exists  presently.  We  want  the  withdrawal  of  the  army  from  our 
townships  and  an  end  to  the  homeland  system. 

We  desire  that  this  transition  be  brought  about  as  quickly  as  possible  as  painless- 
ly as  possible,  without  violence  and  loss  of  life  of  our  brothers  and  sistere. 

We  know  as  a  reality  that  this  transition  cannot  be  achieved  unless  and  until  all 
those  organizations  representing  the  political  aspirations  of  the  people  are  able  to 
communicate  their  desires  and  aims,  within  the  country  in  a  free  and  open  way. 
Our  expectations  of  your  visit  are  quite  clear  as  well.  We  wish  you  to  see  and  hear 
for  yourself  the  plight  of  the  black  m^ority  of  South  Africa.  But  more  than  that  we 
expect  that  you  will  commit  yourself  to  our  aspirations  and  go  back  to  your  country 
and  work  unwaveringly  for  the  cause  of  a  free  South  Africa. 

We  meet  with  you  as  both  an  owner  of  capital  and  a  legislator  in  the  United 
States  Federal  C!ovemment. 


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49 

We  request  therefore  that  you  use  your  personal  capital  to  djveet  from  companies 

Do  not  adhere  to  just  and  equitable  labour  practice. 

Do  not  endorse  that  all  South  Africans  should  enjoy  all  the  freedoms  that  United 
States  investors  enjoy. 

Do  not  commit  tliemaelves  to  working  towards  a  just  and  free  and  undivided 
South  Africa. 

We  expect  also  that  on  ^our  return  to  the  United  States  you  will  press  immediate- 
ly and  ut^ntly,  and  achieve  before  the  end  of  this  year  Federal  l^ialation  which 
will  clearly: 

Stop  new  investment  in  South  Africa,  whilst  apartheid  still  exists  in  South  Africa; 

Restrict  the  sale  of  krugerrands; 

Withdraw  all  investment  which  supports  the  apartheid  syBlem.  and 

Terminate  U.S.  involvement  in  so  called  homelands; 

Cease  all  supplies  of  whatever  nature  which  assist  tiie  apartheid  machinery. 

We  expect  also  that  you  will  pursue  a  vigorous  campaign  of  constructive  disen- 
gagement and  ensure  that  nuclear,  computer  and  defence  technology  is  not  sold,  or 
licensed  or  franchised  in  South  Africa. 


that  memory  we  urge  you  to  press  for  pc 

amongst  the  citizens  of  the  United  States  not  onlv  fi  .  ..    _ 

sessed  in  South  Africa,  but  for  all  humanltind  wherever  there  is  suffering  and  op- 


i  for  the  deprived  and  the  dispoe- 


pression. 

We  call  for  an  end  to  United  States  imperialism  in  South  America,  in  .^ia,  in  the 
Middle  East,  in  Africa. 

We  urge  that  you  accept  the  Third  World  and  its  people,  whatever  their  political 
persuasion  as  equals  and  work  toward  world  peace. 

Senator  Kennedy.  I  had  a  meeting  with  the  CUSA  leadership  at 
that  time  and  this  memorandum,  which  their  President  gave  to 
me,  indicates  their  position  on  matters  which  are  very  closely  relat- 
ed to  the  legislation. 

THE  SULLIVAN  PRINCIPLES 

Senator  Heinz.  Senator,  I  have  one  last  question  for  you  and  it 
has  to  do  with  the  fact  that  S.  635  omitted  a  provision  that  passed 
both  the  House  and  the  Senate  last  year,  and  that  was  on  the  so- 
called  strengthening  of  the  Sullivan  principles. 

Is  that  omitted  because  the  authors  object  to  that  or  is  it  omitted 
for  other  reasons? 

Senator  Kennedy.  As  I  mentioned,  Mr.  Chairman,  it  was  the  de- 
cision of  the  sponsors,  both  in  the  Senate  and  also  in  the  House,  to 
target  this  legislation  on  the  policies  of  the  South  African  Govern- 
ment as  much  as  possible.  The  Sullivan  principles  relate  to  the  per- 
formance of  U.S.  corporations  that  are  operating  in  South  Africa 
and  only  affect  Government  policies  indirectly.  I  have  views  on  the 
enhanced  Sullivan  principles,  but — I'm  just  speaking  personally  on 
this — I  think  it  would  be  unwise  to  confuse  these  two  issues.  There 
will  clearly  be  opportunities  for  debate  about  the  effect  of  the  Sulli- 
van principles  on  apartheid. 

Senator  Heinz.  I'm  a  little  confused  by  the  application  of  that 
principle.  If  I  understand  you  correctly,  what  you  re  saying  is  the 
Sullivan  principles  aren't  here  because  they  deal  with  American 
companies  and  you  want  to  focus  on  the  South  African  Govern- 
ment. Yet  we  do  have  a  provision  of  S.  635  that  deals  with  invest- 
ment by  American  companies  in  American  companies.  To  me,  that 
seems  inconsistent  with  what  you  said  your  purpose  was,  which  is 
only  to  affect  the  South  African  Government,  but  maybe  I  don't 
understand.  Can  you  explain  that? 


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Senator  Kennedy.  Well,  this  legislation  is  also  intended  to  dis- 
tance the  United  States  from  the  apartheid  system,  to  ceill  a  halt  to 
£iny  additional  U.S.  complicity  in  that  system,  to  prevent  any  more 
funding  or  financing  or  support  of  apartheid  by  U.S.  persons  in  the 
future.  This  is  in  addition  to  our  focus,  on  the  Government  of 
South  Africa  and  our  efforts  to  influence  its  policies. 

Senator  Heinz.  You  don't  have  an  objection  in  principle  to 
strengthening  the  Sullivan  principles? 

Senator  Kennedy.  No,  I  don't.  There  have  been  four  different 
changes  in  the  Sullivan  principles  over  the  years.  The  most  recent 
one,  which  was  the  fourth  amplification  of  the  Sullivan  principles, 
was  put  forward  by  Reverend  Sullivan  last  November.  I  believe 
that  this  is  the  absolute  minimum  that  U.S.  companies  must  do  to 
continue  in  South  Africa.  That's  my  view. 

Senator  Heinz.  Thank  you  very  much,  both  of  you.  You  have 
been  very  helpful  and  I  commend  you  both  on  your  legislation  and 
you  have  initiated  a  major  national  debate. 

Senator  Dodd.  Mr.  Chairman. 

Senator  Heinz.  Excuse  me.  Senator  Dodd. 

Senator  Dodd.  Not  at  all,  Mr.  Chairman.  I  know  you  have  a  hard 
time  seeing  to  your  left.  [Laughter.] 

Senator  Heinz.  I'm  glad  to  see  you  glance  right  once  in  a  while. 

Senator  Dodd.  I  have  no  choice  but  to  do  that. 

First  of  all,  let  me  just  commend  our  two  collea^es.  I've  often 
said  to  my  good  friend  from  Connecticut,  my  Senator,  that  I'm 
proud  of  my  Senator,  he's  done  so  much  on  several  other  issues  as 
he's  done  on  this  one,  as  well  as  the  historic  response  of  Senator 
Kennedy  on  this  issue  and  others. 

Let  me  just  raise  one  point  to  the  two  of  you  that  I've  been 
thinking  about  during  this  discussion.  By  the  way,  we've  had  con- 
sideration of  your  proposal  in  the  Foreign  Relations  Committee. 
Senator  Cranston  proposed  something  similar,  if  not  identical,  to 
what  you're  suggesting.  We're  going  to  have  some  additional  hear- 
ings on  that  in  the  Foreign  Relations  Committee. 

It  occurred  to  me — and  Senator  Kennedy,  maybe  you  would  like 
to  respond  as  well  as  Senator  Weicker — in  the  civil  rights  move- 
ment in  this  country  many  have  suggested  that  there  were  many 
whites  in  the  South  as  well  as  many  blacks  who  understood  what 
should  be  done  during  the  terrible  times  leading  up  to  the  Supreme 
Court  decisions  and  acts  of  legislation  by  this  Congress,  but  that  for 
white  politicians  in  the  South  to  propose  the  things  that  they  knew 
had  to  be  done  would  have  been  lethal  to  them  politically.  In  the 
privacy  of  discussions  they  would  admit  what  was  wrong  and  what 
should  be  done.  Many  black  leaders  knew  as  well  that  there  were 
certain  compromises  that  probably  had  to  be  made  but  for  them  to 
say  it  out  in  public  would  have  been  detrimental  to  their  position 
as  well. 

Ultimately,  the  only  way  we  were  able  to  achieve  the  successes 
we  were  came  about  as  a  result  of  outside  pressures  from  the  Su- 
preme Court  of  this  country  and  from  the  Congress  of  the  United 
States.  That  made  it  possible  then  for  responsible  elements  to  take 
affirmative  action  to  begin  to  address  some  of  the  problems. 

It  occurred  to  me  that  in  South  Africa  we  are  dealing  with  much 
the  same  kind  of  question,  that  there  are  responsible  white  leadp- j 


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51 

in  that  country  who  don't  take  any  solace  at  all  in  continuing  the 
policies  that  deprive  the  m^ority  of  that  country  from  participat- 
ing fuUy  in  their  own  Government,  and  obviously  meuiy  black  lead- 
ers as  well  understand  this  is  not  going  to  be  something  that  hap- 
pens overnight  but  we  must  begin  that  constructive  process. 

The  issue  of  outside  interference  is  one  that  we  are  confronted 
with  all  the  time. 

Do  you  think  that  comparison  is  Intimate,  the  one  of  our  civil 
rights  movement  in  our  own  country,  and  the  ultimate  effect  of  the 
outside  influence  in  what  we  have  seen  at  least  achieved  up  to 
now? 

Senator  Kennedy.  Senator,  it  is  certainly  my  view,  but  my  view 
is  less  important  than  that  of  those  who  are  experiencing  the  real 
whip  and  lash  of  apartheid  in  South  Africa.  Those  who  are  the 
moral  leaders,  the  outstanding  church  leaders  of  South  Africa, 
whether  Tutu,  or  Boesak,  or  Beyers  Naude,  or  Hurley,  view  the 
condition  very  much  the  way  you  expressed  it.  Senator.  The  actual 
influence  of  the  United  States  far  exceeds  the  few  hundred  million 
dollars  that  is  at  issue  in  this  legislation.  The  U.S.  position  as  a 
moral  leader  in  the  world  and  our  willingness  to  take  this  kind  of 
action  will  have  an  extremely  important  impact — not  only  in  assur- 
ing blacks  and  whites  in  that  country  that  we  are  true  to  our  own 
V£dues  and  principles,  but  also  that  we  want  to  contribute  to  a 
peaceful  and  constructive  resolution  of  the  difTerences  which  exist 
in  tiiat  extraordinary  country.  I  think  you  have  expressed  it  well, 
and  I  think  outstanding,  thoughtful  men  and  women  in  South 
Africa  are  very  hopeful  that  with  outside  pressure,  the  differences 
that  exist  in  that  society  can  be  worked  out  in  a  constructive  and 
[tositive  w^. 

Senator  Dodo.  Thank  you. 

Mr.  Chairman,  thank  you  very  much  and  thanks  to  both  of  you. 

Senator  Heinz.  Are  there  any  other  questions? 

[No  response.] 

Senator  Heinz.  If  not.  Senator  Mattingly  has  some  questions  he 
wants  to  submit  to  you  for  the  record.  Without  objection. 

[Response  to  written  questions  of  Senator  Mattingly  follow:] 

Response  to  Wkitten  Questions  o 

Question  1.  Mr.  Mai^MUtho  Buthelezi,  the  heredity  leader  of  South  Africa's  Zulu 
people  has  been  quoted  ae  saying  that  "'  *  '  If  we  are  to  avoid  a  destructive  confla- 
gration in  South  Africa,  the  process  of  change  in  the  country  must  be  speeded  up." 
The  quote  continues,  "1  fail  to  see  how  those  who  agree  with  this  statement  can  poe- 
gibly  talk  of  our  effective  economic  isolation.  Isolation  will  bring  stagnation  to  the 
economy  and  perhaps  even  destroy  its  growth  base.  Yet  it  is  in  the  circumstances  of 
a  rapidly  expanding  economy,  where  the  interdependence  of  black  and  white  is 
vasUy  increased,  that  the  propensity  of  the  country  to  change  is  enhanced.  Black 


vertical  niobility  is  a  concomitant  of  economic  growth."  Do  you  have  any  comments 
on  this  position? 

Answer.  The  modest  sanctions  that  we  have  proposed  will  not  result  in  "effective 
economic  isolation"  of  South  Africa  nor  will  they  "bring  stagnation  to  the  economy" 
or  "destroy  its  growth  base,"  These  measures  are  carefully  designed  to  send  a  strong 
and  visible  signal  to  the  people  of  South  Africa  that  the  United  States  will  use 
whatever  influence  it  has  at  its  disposal  to  assist  in  the  effort  to  dismantle  apart- 
heid. This  legislation  is  intended  to  make  clear  the  American  people's  revulsion 
with  apartheid  and  to  put  pressure  on  the  South  African  Glovemment  to  undertake 
meaningful  reform. 


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52 

accept  the  theoiy  that  South  Africa  can  grow  its  way  out  of  apartheid, 
Ic  expansion  will  necessarily  be  accompanied  by  political  reform.  The 

substantial  Erowth  of  the  South  African  economy  over  the  past  20  years  has  been 
accompanied  by  an  increase  in  the  strictures  of  apartheid,  and  according  to  the  Car- 


s  Second  Study  on  Poverty  in  South  Africa,  this  economic  expan- 
sion has  been  accompanied  by  an  increase  in  poverty  for  most  black  people. 

We  believe  that  sweeping  changes  must  be  made  in  the.  legal  structure  that  sup- 
ports apartheid  if  a  conflagration  is  to  be  avoided,  and  we  believe  that  only  a  combi- 
nation of  external  and  internal  pressure  on  the  South  African  Government  will 
produce  meaningful  change  in  that  structure.  To  that  end,  the  United  States  should 
use  its  diplomatic  and  economic  influence  to  encourage  such  change. 

Question  S.  Your  l^islation  essentially  proposes  capital  contrms  for  the  purpose 
of  achieving  certain,  specific  political  and  moral  goals.  Would  you  support  an  exten- 
sion of  this  concept  to  those  other  nations  around  the  globe  whose  internal  policies 
are  repugnant  to  American  concepts  of  individual  freedom  and  democratic  institu- 
tions? 

Answer.  Economic  pressure  is  a  common  feature  of  U.S.  policy  today.  Sanctions 
against  Cuba,  Uganda,  North  Korea,  Vietnam,  Poland,  and  the  Soviet  Union  have 
been  approved  by  Congress  in  the  past  and  have  been  implemented  by  past  adminis- 
trations. Republican  and  Democratic  alike.  The  goal  of  these  efforts  has  been  to 
tailor  economic  pressures  to  the  apeciflc  situation  at  hand.  This  is  what  we  have 
attempted  here. 

We  believe  that  economic  sanctions  should  be  evaluated  on  a  case-by-case  basis, 
that  the  United  States  must  examine  the  circumstance  of  each  case  before  deter- 
mining whether  such  measures  are  appropriate. 

Question  3.  How  would  we  prevent  South  Africa  from  obtaining  bank  loans  and 
investment  funds  from  other  countries  and  how  would  we  prevent  third  party  na- 
tions from  increasing  their  borrowing  from  the  U.S.  for  the  purpose  of  lending  the 
capital  to  South  Africa? 

Answer.  Our  legislation  encourages  the  President  to  seek  international  coopera- 
tion and  participation  in  adapting  similar  measures  against  the  government  of 
South  Africa,  Only  through  such  international  cooperation  can  "third  party"  lend- 
ing and  borrowing  be  controlled.  We  are  hopeful  that  with  leadership  by  the  United 
States  and  with  a  clear  example  by  our  government  and  as  a  result  of  urging  from 
our  representatives,  our  friends  and  allies  will  follow  suit. 

Senator  Heinz.  We  want  to  thank  both  of  you  for  your  time.  It's 
been  a  very  lengthy  discussion  but  I  think  it's  been  very  worth- 
while and  we  commend  you  both. 

Senator  Weicker.  What  time  today,  Mr.  Chairman,  is  markup? 
[Laughter.] 

Senator  Heinz.  Our  next  witness  is  Deputy  Secretary  of  State, 
Ken  Dam,  accompemied  by  Chester  Crocker,  wno  is  Assistant  Secre- 
tary for  African  Affairs. 

Gentlemen,  welcome.  We're  glad  you're  here.  Please  proceed. 

STATEMENT  OF  KENNETH  DAM,  DEPUTY  SECRETARY  OF  STATE. 

DEPARTMENT    OF    STATE.    ACCOMPANIED    BY    CHESTER    A. 

CROCKER,   ASSISTANT   SECRETARY    FOR   AFRICAN   AFFAIRS; 

AND  FRANK  WISNER,  DEPUTY  ASSISTANT  SECRETARY  FOR  AF- 
RICAN AFFAIRS,  DEPARTMENT  OF  STATE 

Mr.  Dam.  Thank  you,  Mr.  Chairman. 

Mr.  Chairman,  thank  you  for  the  opportunity  to  speak  today  on 
U.S,  policy  toward  South  Africa. 

I  believe  that  all  Americans  find  repugnant  the  system  of  racial 
discrimination  called  apartheid  that  is  practiced  there.  We  are 
united  in  our  belief  that  apartheid  is  morally  abhorrent,  politicfdly 
unsustainable  and  economically  wasteful.  But  morEil  indignation, 
no  matter  how  natural  and  justifiable,  is  not  a  substitute  for  an  ef- 
fective foreign  policy — certainly  not  for  an  activist  world  power 
that  seeks  change  in  a  manner  that  will  benefit  all  South  Africans. 


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53 

The  issue,  then,  is  what  we  as  a  nation  can  do  to  promote  posi- 
tive and  nonviolent  change  toward  a  more  just  order— an  order 
that  recognizes  fundamental  human  rights  and  political  liberties  in 
South  Africa. 

SANCTIONS  WOULD  BE  COUNTERPRODUCTIVE 

It  is  the  position  of  this  administration  that  sanctions,  such  as 
those  in  the  legislation  before  you  today,  would  be  counterpn)duc- 
tive:  They  are  more  likely  to  strengthen  resistance  to  change  than 
to  strengthen  the  forces  of  reform.  Moreover,  they  do  not  even  put 
us,  as  some  say,  "on  the  side  of  right."  If  our  moreil  imperative  as 
Americans  is  to  encourage  freedom  and  reform,  we  must  reject 
sanctions:  We  do  not  enhance  our  ability  to  influence  change  by 
eliminating  ourselves  as  an  actor. 

Mr.  Chairman,  I  should  like  to  briefly  review  the  situation  in 
South  Africa,  the  extent  of  U.S.  influence  there  and  the  current 
United  States-South  African  relationship,  which  is  based  on  any- 
thing but  business  as  usual.  Then,  I  should  like  to  briefly  analyze 
some  of  the  principal  sanctions  that  have  been  proposed  in  S.  635— 
and  other  legislation  as  well. 

The  policy  of  this  administration  has  been  to  foment  chemge 
away  from  apartheid: 

By  unambiguous  public  statements  condemning  apartheid's  evils; 

By  reinforcing  these  views  with  quiet  diplomacy; 

By  working  with  elements  within  South  Africa  that  share  a 
vision  of  peace  and  equity; 

By  encouraging  laudable  fair  employment  practices  of  U.S.  com- 
panies, and 

By  involving  ourselves  as  a  government  in  financii^  programs — 
some  $30  million  in  3  years — to  give  South  African  blacks  better 
training  and  educational  opportunities. 

In  part  because  of  U.S.  encouragement,  chaise  in  South  Africa 
has  begun — barely,  but  it  has  begun.  More  progress  toward  justice 
in  that  society  has  been  made  in  the  last  few  years  them  in  the  pre- 
ceding three  decades.  The  concept  that  South  Africa's  blacks  have 
no  citizenship  rights  outeide  the  tribal  homelands  has  been  aban- 
doned and  blacks  today  have  certain  urban  residency  rights  in 
areas  that  were  unavailable  a  few  years  ago.  Black  trade  unions 
have  become  a  powerful  force  in  industry.  The  Government  has 
suspended  the  forced  removal  of  settled  black  communities.  It  has 
just  announced  that  it  will  support  repeal  of  two  of  the  more 
odious  aspects  of  apartheid,  the  Mixed  Marriages  Act  and  that  por- 
tion of  the  Immorality  Act  which  proscribes  sexual  relations  be- 
tween the  races.  Central  business  districts  are  being  opened  to 
black  businessmen.  Cities  throughout  South  Africa  have  abolished 
the  trappings  of  petty  apartheid  such  as  segregated  parks  and 
swimming  pools.  'The  Government  has  acknowledged  the  need  to 
consult  and  negotiate  with  representative  blacks  outside  the  tribal 
homelands. 

Tragically,  of  course,  much  remains  to  be  done.  South  Africa  still 
cannot  be  considered  a  just  society  whose  system  derives  its  author- 
i^  from  the  consent  of  the  governed.  Black  leaders  continue  to  be 
detained  without  trial  or  charged  with  treason.  Violence  has  in- 


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i  in  recent  months  with  tragic  results.  The  Government  has 
yet  to  repeal  the  hated  pass  laws  or  to  devise  mutually  acceptable 
mechanisms  for  negotiations  with  black  leaders. 

We  must  use  our  influence  to  promote  further  peaceful  change 
but  we  must  not  overestimate  the  degree  of  our  influence.  South 
Africa  has  traditionally  pursued  a  course  it  believes  to  be  in  its 
own  best  interest  and  has  been  open  only  to  those  who  bear  what  it 
believes  is  a  constructive  message  based  on  an  intelligent  appraisal 
of  the  complex  realities  it  faces.  In  addition,  South  Africa  looks  to 
us  as  perhaps  the  only  non-African  nation  capable  of  playing  a  con- 
structive role  with  all  the  nations  of  southern  Africa  in  the  search 
for  regional  peace. 

We  must  not  overlook  this  regional  aspect  in  assessing  the  South 
African  issue.  The  region  has  seen  almost  continuous  conflict  with 
armed  clashes  taking  place  in  South  Africa,  Zimbabwe,  Mozam- 
bique, Namibia,  Lesotho,  and  Angola.  Guerrilla  attacks  launched 
against  South  Africa  from  neighboring  black  states  have  provoked 
cross-border  retaliation  by  South  Africa.  One  of  the  primary  goals 
of  our  policy  has  been  to  reduce  this  violence  between  neighbors, 
and  in  this  we  believe  we  have  had  some  success. 

It  is  important  to  recognize  that  our  influence  with  South  Africa 
does  not  derive  from  a  client  relationship.  In  fact,  our  military,  po- 
litical, and  economic  relations  with  South  Africa  are  by  design  far 
less  intimate  than  with  many  other  states  of  similar  political  and 
economic  importance.  Indeed,  significant  restrictions  are  already  in 
place  that  circumscribe  our  trade  and  cooperation  in  the  military 
and  nuclear  areas,  and  impose  a  political  stance  that  results  in  our 
clearly  dissociating  ourselves  from  apEulheid. 

For  example,  in  an  effort  to  eliminate  apartheid,  U.S.  arms  sales 
to  South  Africa  have  been  embargoed  since  1963,  and  in  1977  the 
United  States  joined  the  United  Nations  in  imposing  a  further 
mandatory  arms  embargo  on  South  Africa.  Our  regulations  are  in 
fact  more  severe  than  the  U.N.  embargo  and  restrict  U.S.  exports 
to  the  South  African  military  and  police  of  items  not  covered  in  the 
U.N.  embargo.  In  December  of  last  year  the  United  States  joined 
with  other  U.N.  Security  Council  members  in  voting  for  em  embar- 
go on  imports  of  arms  and  ammunition  produced  in  South  Africa. 

Our  commercial  relationship  is  now  also  restricted.  Eximbank  is 
essentially  prohibited  from  financing  U.S.  sales  to  South  Africa 
except  under  very  restrictive  circumstances.  OPIC  does  not  provide 
guaremtees  for  South  Africa.  Our  representative  at  the  IMF  must 
"actively  oppose  any  facility  involving  use  of  fund  credit  by  any 
country  which  practices  apartheid"  unless  the  Secretary  of  Treas- 
ury makes  certain  certifications  to  Congress.  U.S.  trade  fairs  do  not 
travel  to  South  Africa.  We  carefully  review  export  license  applica- 
tions for  the  export  of,  among  other  things,  U.S.  crime  control 
equipment  to  prevent  the  use  of  such  items  in  the  enforcement  of 
apartheid. 

This,  then,  is  the  reality  of  our  relationship:  limitations  on  a  vast 
portion  of  our  military  and  commercifd  transactions.  To  argue,  as 
some  do,  that  our  relationship  is  based  on  business  as  usual — or 
that  our  Government  has  a  normed  relationship  with  South 
Africa— is  patent  nonsense. 


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Some  ai^e  that  we  should  go  further  and  ti?  to  run  South 
A&ica  out  of  the  community  of  nations  through  boycotts,  embar- 
goes, and  sanctions.  The  l^islation  before  you,  for  example,  would 
prohibit  bank  loans  to  the  South  African  Government  or  its  para- 
statal  corporations.  We  fail  to  see  how  this  would  hasten  the  end  of 
the  apartheid  system.  Indeed,  it  would  hurt  U.S.  and  allied  busi- 
ness more  than  it  would  help  reform  in  South  Africa. 

A  prohibition  on  bank  loans  would  create  a  dangerous  precedent 
undermining  the  U.S.  policy  that  international  capital  markets 
should  remain  free  of  government  interference  and  that  lending  de- 
cisions should  be  based  on  market  rather  them  pol  tical  consider- 
ations. If  bank  loans  to  South  Africa  should  be  prohibited,  then 
South  Africa  would  be  the  only  country  with  which  the  United 
States  has  diplomatic  relations  that  would  be  subject  to  a  U.S. 
bank  loan  prohibition;  this  is  an  important  precedent  for  the  Bank- 
ing Committee  to  bear  in  mind. 

The  result  of  such  a  prohibition  on  bank  loans  would  be  that  par- 
astatal  agencies  far  removed  from  the  development  of  apartheid 
policy,  such  as  the  Electricity  Supply  Commission  or  South  African 
Airways,  would  be  unable  to  get  U.S.  financing  for  the  purchase  of 
American  products.  This  would  penalize  U.S.  banks  and  firms 
doing  significant  business  with  these  entities,  without  any  real 
impact  on  South  Africa.  Almost  certainly  other  countries'  banks 
would  replace  U.S.  banks  as  a  lending  source  £ind  their  factories 
would  benefit  from  the  orders  that  would  have  gone  to  U.S.  firms. 

In  addition,  any  extension  of  an  effective  loan  prohibition  to 
cover  foreign  affiliates  or  branches  of  U.S.  banks  would  raise  seri- 
ous questions  about  the  extraterritorial  application  of  U.S.  law. 
The  result  would  be  strong  objections  from  our  allies  who  would 
consider  their  sovereignty  violated. 

The  administration  also  opposes  the  adoption  of  a  prohibition  on 
new  investment  in  South  Africa.  Our  opposition  is  based  on  three 
points.  First,  such  a  prohibition  would  limit  opportunities  for  ex- 
pansion by  precisely  those  firms  that  have  done  the  most  to  pro- 
mote social  change  in  South  Africa.  It  would  thus  freeze  the 
number  of  black  employees  benefiting  from  the  Sullivan  code  emd 
simileu-  codes  of  corporate  conduct.  Such  a  freeze  would  in  turn 
slow  the  process  of  change  inside  South  Africa  in  which  the  more 
progressive  U.S.  firms  have  been  in  the  forefront. 

^cond,  this  measure  would  discriminate  against  U.S.  firms  that 
might  desire  to  invest  in  South  Africa,  by  offering  in  effect  an  oli- 
gopolistic situation  for  firms  already  there.  To  the  extent  that  the 
absence  of  U.S.  investment  might  create  market  opportunities  in 
Soutii  Africa,  there  is  little  doubt  that  some  of  our  economic  com- 
petitors around  the  world  would  step  in  to  fill  such  a  gap. 

NEW  JOB  OPPORTUNITIES  DENIED 

Third,  and  most  important,  as  a  direct  consequence  of  a  prohibi- 
tion on  new  investment,  black  South  Africans  would  lose  new  job 
opportunities  or  be  denied  opportunities  to  be  employed  by  the 
more  progressive  U.S.  firms.  An  economy  that  must  create  250,000 


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new  jobs  for  young  blacks  each  year,  and  that  will  have  twice  as 
many  of  them  entering  the  job  market  by  the  turn  of  the  century, 
needs  more  jobs,  not  less. 

In  addition  to  a  prohibition  on  bank  loans,  another  proposal 
would  £dso  require  that  U.S.  firms  in  South  Africa  be  made  to 
comply  with  mandatory  labor  standards.  This  proposal  would  man- 
date the  adoption  by  U.S.  firms  in  South  Africa  of  employment 
standards  such  as  those  contained  in  the  Sullivan  principles,  which 
are  voluntary  in  nature.  In  our  view,  it  has  been  precisely  the  vol- 
untary nature  of  these  principles  that  has  resulted  in  their  success- 
ful application  to  date  by  U.S.  firms  operating  in  South  Africa. 
While  less  than  a  majority  of  the  U.S.  firms  in  South  Africa  have 
actually  adopted  the  Sullivan  principles,  the  largest  U.S.  firms 
have  done  so,  with  the  result  that  more  than  70  percent  of  the  non- 
white  employees  of  U.S.  firms  in  South  Africa  are  covered  by  these 
principles.  Through  continued  persuasion,  we  believe  more  firms 
will  joint  this  effort. 

Requiring  companies  to  adopt  labor  standards  and  threatening 
prosecution  for  failure  to  do  so  is  likely  to  undercut  the  positive 
achievements  of  the  U.S.  Sullivan  signatory  firms.  The  voluntary 
nature  of  the  Sullivan  code  has  served  to  set  an  example  for  Euro- 
pean and  South  African  firms  to  break  with  the  old,  racist  ways  of 
doing  business.  The  U.S.  companies,  through  Sullivan,  proved  that 
individual  efforts  could  help  move  the  system  in  a  positive  direc- 
tion. These  firms  have  spent  over  $100  million  outside  the  work- 
place to  aid  their  employees  and  others  in  the  black  community.  In 
addition,  given  the  delicate  business  climate  faced  by  firms  tlwt 
invest  in  South  Africa,  making  labor  standards  mandatory  could 
prove  to  be  the  final  straw  in  causing  some  U.S.  firms  to  reconsider 
their  presence  in  South  Africa.  Their  withdrawal  would  mean  that 
fewer,  rather  than  greater,  numbers  of  black  South  Africans  would 
come  to  enjoy  the  benefits  of  working  for  firms  that  adhere  to  en- 
lightened labor  standards. 

These  fair  labor  standards  were  originally  developed  to  be  a  vol- 
untary guide  for  firms,  not  a  legal  code.  Some  of  the  measures 
under  consideration,  however,  would  require  the  U.S.  Government 
to  make  highly  complex  legal  judgments,  bsised  on  vague  and  im- 
precise standards,  on  each  U.S.  firm  and  impose  severe  penalties 
on  firms  that  are  not  certified  as  being  in  compliance.  This  would 
not  only  be  unfair  to  the  firms  involved,  but  would  be  unworkable 
as  well. 

Finally,  other  bills  before  you  would  impose  a  blanket  prohibi- 
tion on  the  export  of  nuclear  equipment  and  technology.  Such  a 
prohibition  would  undermine  our  ability  and  leverage  to  broaden 
the  application  of  international  safeguards  in  countries  that  do  not 
presently  accept  full-scojw  sEifeguards.  Such  a  blanket  prohibition 
on  the  export  of  all  duail-use  goods  and  nuclear  equipment  or  tech- 
nology to  South  Africa,  as  well  as  all  other  nonfull  scope  safeguard 
stat^,  would  undercut  our  nonproliferation  efforts  and  would 
reduce  our  influence  in  such  countries'  nuclear  programs. 

All  applications  for  exports  of  nuclear-related  equipment  or  as- 
sistance are  already  thoroughly  reviewed  as  to  their  proliferation 
implications  and  their  effect  on  foreign  policy.  In  the  case  of  states 
that  have  not  accepted  full-scope  safeguards,  only  limited  nonsensi- 


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tive  assistance  is  permitted — and  then  only  when  it  will  advance 
our  nonprotiferation  objectives.  In  the  Cfise  of  South  Africa,  our 
dialog  with  that  Government  on  nonproliferation  matters,  coupled 
with  a  wilUngness  to  allow  extremely  limited,  noneensitive  assist- 
ance to  facilities  in  South  Africa  that  are  under  IAEA  safeguards, 
contributed  to  three  important  decisions  by  the  South  African  Gov- 
ernment last  year:  first,  to  require  lAGA  safeguards  on  al\  its  nu- 
clear exports;  second,  to  export  only  according  to  the  nuclear  sup- 
pliers group  guidelines;  and  third,  to  renew  talks  with  the  IAEA 
concerning  placement  of  its  semicommercial  uranium  enrichment 
plant  under  IAEA  safeguards. 

In  sum,  Mr.  Chairman,  this  administration  does  not  believe  that 
any  of  the  punitive  measures  in  the  bill  before  you,  or  similar  ones 
in  otlier  bills  that  have  been  proposed,  will  hasten  the  demise  of 
apartheid.  We  do  not  believe  it  is  wise  to  withdraw  the  limited 
tools  of  influence  we  do  have  and  simply  hope  the  problem  goes 
away.  To  impose  sanctions  might  express  our  grief  and  Euiger  over 
the  violence  that  has  recently  taken  the  lives  of  bo  many  in  the 
Eastern  Cape  and  elsewhere  in  South  Africa.  Such  action  would 
not,  however,  ameliorate  the  burdens  of  the  victims  of  apartheid. 
liideed,  the  likely  result  would  be  to  increase  those  burdens  and 
squander  our  influence,  thus  making  the  United  States  essentially 
irrelevant  to  the  process  of  change  in  South  Africa. 

In  short,  it  is  difficult  to  see  how  South  Africa  will  be  a  better 
place  without  United  States  influence  and  presence  there,  limited 
though  they  are.  If  what  we  seek  is  to  influence  positive  change 
within  South  Africa  and  to  encourage  regional  stability — including 
the  establishment  of  an  independent  and  internationally  recogr 
nized  Namibia — then  sanctions  must  be  rejected. 

[The  complete  prepared  statement  follows:] 


50-720    0—86 » 


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SXHhTB  OMIITTBK  ON  BMHCISO,  RODBIHS  UID  URfiUI  KTFhlKS 
April  16.  1985 

Hx-   Ch>lnwn.  th*nk  you  for  th«  opportunity  to  •p*«k  to  you 
tedky  on  V,S,   policy  toMsrds  South  Africa. 

I  baliav*  that  all  Aaaricana  find  repugnant  tha  ayataa  of 
racial  diacriHl nation  callad  aparthald  that  ia  practiced 
thara.  Wa  ara  unitad  in  our  baliaf  that  aparthaid  ia  aotally 
abhorrant,  politically  unauatainabla  and  aeonOnlcally 
Naataful.   But  >oral  indignatloni  no  natter  how  natural  and 
juatifiable>  ia  not  a  aubatitute  for  an  effective  foreign 
policy  —  certainly  not  for  an  activiat  world  power  that  eeeka 
change  in  a  Maanar  that  will  benefit  all  South  Afrlcana. 

The  iaaue>  than,  ia  what  we  aa  a  nation  can  do  to  proMota 
poaitive  and  non-violent  change  toward  a  aota  juat  order  —  an 
order  that  recognlEea  fundanental  huaan  righta  and  political 
libertiea  in  South  Africa. 


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It  i*  tlM  position  eC  tU>  Adaiitl*t»tion  that  Mnetloas. 
■neh  •■  tboa*  in  th*  l*glal,«tlon  bafor*  youtoday,  would  ba 
counter-product iv« I  tbay  ar*  nor*  Itkaly  to  strangtlMB 
r*Bl«tane«  to  cbanga  than  to  atrangtban  tba  lorcaa  ef  rafon. 
Horaovart  thay  do  not  avan  put  urn,   an  aona  aayi  'on.tlia  aida  of 
right.'   If  our  aoral  iBparatlva  aa  Anarlcana  la  to  anoonraga 
fraadon  and  eaf on.  wa  nuat  ra jaet  aanctiona  ■  wa  do  not 
anhanca  our  ability  to  Influanca  changa  hjf  vllalnatlng 
ouraalvaa  «a  an  actor* 

Hr.  Chalnan,  I  abould  Ilka  to  brlafly  ravlaw  tha  altuatlon 
in  South  Africa,  tha  axtant  of  U.S.  Inlluanea  thara  and  tha 
currant  I). 8. -South  African  ralationahip>  which  ia  baaad  on 
anything  but  bualnaaa  km   usual.  Then.  1  should. Ilka  to  brlafly 
analysa  aoaa  of  tha  principal  aanctiotts  that  hava  baan  pzopoaad 
In  S.63S  ~  and  othar  laglalation  aa  wall. 

Tha  policy  of  thla.AdnlnlatratlOQ  haa  baan  to  toaant  changa 
away  fron  aparthaldi 

~   by  unaabiguoua  public  atatanaota  coodeanlng 

■parthald'a  avilst 

by  rainforclng  thaaa  viawa  with  qulat  dlplonacyt 
—   by  working  with  alananta  within  South  Africa  that 

ahara  a  vlalon  of  paaca  and  agultyi 


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t^  •ncourcglng  laudabl*  fair  •■ployaant  practlc«*  of 

D.S.  coapanlaai  and 

ty  Involving  ouraalvaa  a«  a  govariuiant  in  financing 

prograaa  —  bom*  l30  ■lllien  in  thraa  yaara  •—  to  glv* 

South  African  blacks  battar  training  and  aducatlonal 

opportunltlea. 

In  part  bacauaa  of  U.S.  ancouragaaanti  changa  In  South 
Africa  has  bagnn  ~  baraly.  but  It  ha a  bagun.  Mora  progcaaa 
towatda  juatlca  In  that  aociaty  haa  baan  aada  In  tha  laat  faw 
yaara  than  in  tha  pracadlng  thcaa  dacadaa.  Tha  concapt  that 
South  Africa'a  black*  hava  no  citlsanahip  rlghta  outalda  tha 
tribal  hoMalanda  haa  baan  abandonad  and  blacka  today  hava 
cartaln  urban  raaldancy  rights  In  araaa  that  wata  unavailabla  a 
t»w   yaara  aga>   Black  trada  unlona  have  bacoae  a  powarful  forca 
In  Induatry.   Tha  govarnaeot  haa  ■uapended  the'  forced  ranoval 
of  aattled  black  coaaunltlaa.  It  haa  juat  announced  that  It 
will  support  repeal  of  two  of  the  aote  odious  aspsets  of 
apartheid,  tha  Mixed  Marriages  Act  and  that  portion  of  tha 
iDDorality  Act  which  proscribes  sexual  relations  between  the 
races.  Central  bualnass  districts  are  being  opaned  to  black 
buainaaa»an.   Cltlea  throughout  South  Africa  have  abolished  the 
trappings  of  pstty  apartheid  such  as  segregated  parks  and 
swlanlng  poola.   The  govarnaent  has  acknowledged  tha  liead  to 
eonault  and  negotiate  with  repreaentatlve  blacka  outside  tha 
tribal  hoaelands. 


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Tragically,  of  coura«>  auch  raaaiaa  to  Im  dona.  South 
Africa  atill  canoat  ba  eonaidacad  a  juat  aoelaty  wboaa  ayataa 
darivaa  ita  autbOEity  froa  tha  eonaant  of  tha  govarnad.  Black 
laadara  eoatlnua  to  b«  datalnad  without  trial  or  chargad  with 
traaaon*  Vlolanca  haa  incraaaad  in  racant  aoatha  with  tragic 
raaulta.  Tha  govamaant  haa  yat  to  capaal  tha  hatad  paaa  lam 
or  to  daviaa.  autually  accaptabla  aacbanlaaa  for  nagotiatlona 
with  black  laadara. 

Ha  auat  uaa  our  influanca  to  proaota  (urthar  paacaful 
-  changa.but  wa  auat  not  ovaraati*at«  tha  dagraa  of  our 

inflaanca.  South  Africa  haa  traditionally  pursnad  a  couraa  it 
baliavaa  to  ba  in  ita  own  baat  intaraat  and  haa  baan  opan  only 
to  thoae  who  baar  what  it  baliavaa  ia  a  conatructiva  naaaaga 
baaad  on  an  Intalligant  appraiaal  of  tha  coaples  raalttiaa  It 
faces.   In  addltioni  South  Africa  looka  to  ua  aa  parhapa  tha 
only  non-Afclcan.  nation  capabla  of  playing  ■  conatructiTa  rola 
with  all  tha  nations  of  southarn  Africa  in  tha  aaarch  for 
regional  paaca. 

Ha  Muat  not  overlook  thia  regional  aapect  in  asaesslng  the 
South  African  issue.   The  region  has  aean  alaoat  continuoua 
conflict  with  araed  clashaa  taking  place  In  South  Africa, 
Zlnbabwa,  Mosaabique,  Manlbia,  Leaotho  and  Angola.  Ouerrilla 
attacka  launched  against  South  Africa  froa  neighboring  black 


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•tataa  hava  provoked  croaa  bordar  ratallatlon  by  South  Africa. 
On*  of  tha  prlaary  goala  of  our  policy  haa  bean  to  raduca  thia 
vlolenea  batwaan  naighbora,  and  In  tMa  Ma  ballava  tfa  ha^  had 
Boaa  succaaa. 

It  la  Important  to  recoqnlsa  that  our  Influanca  Mlth  South 
Africa  doaa  not  daciva  from  a  client  calatlonahlp*   In  fact, 
our  ■llltaryi  political  and  econoale  ralationa  with  South 
Africa  ar«  by  daalgn  far  leaa  intimata  than  with  aany  other 
atataa  of  alnllar  political  and  aconoaic  laportanca.   Indaad. 
algnldcant  reatrlctiona  are  already  in  placa  that  clrcuaacrlba 
our  trade  and  cooperation  In  the  allltary  and  nuclear  areaa. 
and  iapoae  a  political  atanee  that  ceaulta  in  our  clearly 
dlaaoclating  ouraalvea  froa  apartheid. 

for  axa^lei  In  an  effort  to  ellalnate  apartheldi  D.S.  araa 
■alea  to  South  Africa  have  bean  embargoed  alnce  1963,  and  in 
1977  the  United  States  joined  the  United  Nation*  In  lapoalng  a 
further  aandatory  ama  eabargo  on  South  Africa.  Our 
regulationa  are  in  fact  nore  aevere  than  tha  U.N.  enbargo  and 
reatrict  U.S.  export*  to  the  South  African  allltary  and  police 
of  Itaaa  not  covered  in  the  U.S.  enbargo.   In  December  of  laet 
year  the  United  Statea  joined  with  other  a.N.  Security  Council 
■enber*  in  voting  for  an  embargo  on  Inporta  of  arms  and 
anmunltlon  produced  in  South  Africa. 


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Out  ooamarclal  ralationalilp  la  .now  alao  raatrictsd. 
Bxiabank  la  Asacntlally  prOhlbltad  fren  financing  O.I.  aalaa  to 
South  Africa  axcapt  undar  vary  raatrlctlva  clrcuaatancaa.  OPIC 
does  not  provide  guarantaaa  for  Couth  Africa.  Our 
representative  at  the  IMF  nuat  'actively  oppoaa  any  facility 
Involving  nsa  of  fund  credit  by  any  country  which  practice* 
apartheid*  ualeaa'tbe  Secretary  of  Treaanry  kakea  certain 
cartlf icatlona  to  Congreaa.  U.S.  teada  falra  do  not  travel  to 
South 'Africa.-'  Ita  cazafully  review  export  lloanaa  applicatlena 
for  tha  export  off  -aaen?.  other  thlnga,  U.S.  crisa  control 
equlpaant  to  prevent  the  uae  of  euch  Itena  In  tha  enforceaant 
of  apartheid. 

Thla.  then,  la  the  reality  of  our  relatlonahipt  llaltatlona 
on  a  vaat  portion  ot-our  ailitary  and  coaaercial  tranaactlona. 
To  argue,  as  aone  do,  that  our  relatlonahlp  la  baaad  on 
bualnasa  aa  uaual  —  or  that  our  governaent  has  a  'noraal' 
relatlonahlp  with  South  Africa  —  is  patent  nonaense. 

Sone  argue  that  we  ahould  go  further  and  try  to  run  South 
Africa  out  of  the  conaunity  of  nations  through  boycotta, 
embargoaa,  and  sancttona.   The  laglalation  before  you.  for 
example!  would  prohibit  bank  loans  to  the  South  African 
Government  or  Ita  paraatatal  corporations.   We  fall  to  see  how 
this  would  hasten  the  end  of  the  apartheid  eystea.   Indeed,  it 
would  hurt  U.S.  and  allied  business  aore  than  It  would  help 
raforB  in  South  Africa. 


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A  prohibition  on  bank  lonns  ifould  ce««t*  n  dugaroua 
pracAdant  undaralnlng  th*  U.S.  policy  that  Intarnational 
capital  aarkata  should  caaain  fra*  of  govarn>«nt  intarfaKanoa 
and  that  landing  daclalona  ahould  ba  baaad  on  aarkat  rathar 
than  political  conaidarationa.   If  bank  loana  to  South  Africa 
ahould  ba  prohlbitad,  than  Bouth  Africa  would  ba  tha  only 
country  with  which  tha  Unitad  Stataa  haa  dlploaatic  ralatlona 
that  would  ba  aubjact  to  a  U.S.  bank  loan  prohibition)  thia  la 
an  iBportaQt  pracadent  for  tha  Banking  Coaaittaa  to  baar  in 
Bind. 

Tha  raault  of  such  a  prohibition  on  bank  loana  would  ba 
that  paraatatal  aganclaa  far  raaovad  troa  tha  davalopnant  of 
Bparthald  policy,  auch  aa  tha  Blactrletty  Supply  Coulaalon  or 
South  African  Alrwaysi  would  ba  unabla  to  get  U.S.  financing 
for  tha  purchase  of  Aaerlcan  products.   This  would  penallsa 
U.S.  banks  and  flna  doing  significant  buaiaass  with  thaaa 
antitias,  without  any  raal  inpact  on  South  Afclca.   Alnost 
certainly  othar  countrlaa'  banks  would  replace  U.S.  banks  aa  a 
landing  source  and  thalr  factories  would  benefit  froa  tha 
orders  that  would  have  gone  to  U.S.  flraa. 

In  addltloni  any  extension  of  an  effective  loan  prohibition 
to  cover  foreign  affiliataa  or  branchaa  of  U.S.  banks  would 
raise  aarioua  queatlona  about  tha  extratarrltorlal  application 
of  U.S.  law.  Tha  raault  would  ba  strong  objections  froa  our 
alllaa  who  would  conaider  their  sovereignty  violated. 


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Th«  Ada  ini  strati  OB  al*o  oFp«)a«a  th*  «daptton  of  a 
prohibition  on  naw  Invaataant  In  loath  Africa.  Our  opposition 
la  baaad  on  thraa  points.  First,  aueh  a  prehibttlon  wonld 
Halt  oivortunltiaa  for  axpanaion  bjr  prseiaaly  thoaa  (tras  that 
hava  dona  tha  aoat  to  pro>ota  aoelal  Chansa  in  South  Africa. 
It  would  thna  'fraasa*  tha  nuabar  of  black  aaployaas 
banaflttlng  froa  tha  Sullivan  Cod*  and  alallar  codas  of 
corporata  conduct.  Such  a  'fraasa*  would  in  turn  slow  tha 
proccaas  of  changa  Insld*  South  Africa  In  which  tha  aora 
prograsslva  U.S.  tiras  hava  baan  In  tha  forafront. 

Sacondi  this  naaaura  would  diaerlalnats  against  O.S.  tlraa 
that  alght  daslr*  to  invast  In  South  Africa,  by  oCfsrlng  in 
effact  an  oligopolistic  situation  for  ftraa  alraady  thara.  To 
tha  extant  that  tha  abaenca  of  D.S.  Invaataant  aight  ccaata 
aarkat  opportunitlas  In  South  Africa,  thara  is  llttla  doubt 
that  BOBS  of  our  aconoaic  eonpatltora  around  tha  world  would 
Btap  in  to  fill  such  a  gap. 

Third,  and  aost  iaportant,  as  a  diract  consaquanca  of  a 
prohibition  on  naw  invaatasnt,  black  South  Africans  would  loss 
naw  job  opportunities  or  be  denied  opportunities  to  ba  aaployad 
by  tha  aora  progressiva  D.S.  firaa.  An  aconoay  that  aust 
create  250,000  naw  jobs  for  young  blacks  each  year,  and  that 
will  have  twice  as  aany  of  thea  entering  the  job  aarkat  by  the 
.  turn  of  tha  century,  needs  aore  jobs,  not  less. 


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In  addition  to  ■  prohibition  on  bank  loanar  anottaar 
propoaal  would  alao  raqulra  that  D.S.  ftraa  In  South  Africa  b« 
aada  to  coaply  with  aandatoiy  labor  standarda.  Thla  propoaal 
would  aandata  tha  adoption  by  D.S.  firms  in  South  Afeloa  of 
aBployaant  atandarda  aueb  aa  tboaa  contalnad  In  tha  Sullivan 
Prlnciplea,  which  ara  voluntary  in  nature.   In  our  view,  it  haa 
baan  praciaaly  tha  voluntary  natura  of  thaaa  prlnclplaa  that 
baa  raaultad  in  thaic  succcaaaful  application  to  data  by  U>8. 
fir>B  oparatlng  In  South  Africa.  Hhlla  laaa  than  a  Majority  of 
tha  D.S.  firaa  In  South  Africa  have  actually  adopted  tha 
Sullivan  Principlesi  the  largest  D.S.  flras  have  dona  aoi  with 
tha  result  that  aora  than  70  peccant  of  tha  non-white  eaployaes 
of  D.S.  firms  is  South  Africa  ^i^*  covered  by  these  prlnclplaa. 
Through  continued  perauasion,  wa  bslieva  more  firms  will  join 
thla  effort. 

Requiring  coapaniea  to  adopt  labor  atandarda  and 
threatening  proaacution  for  failure  to  do  so  la  likely  to 
undercut  tha  positive  achievements  of  tha  U.S.  Sullivan 
signatory  firms.   The  voluntary  nature  of  the  Sullivan  Coda  has 
served  to  set  an  example  for  European  and  South  African  firms 
to  break  with  the  old>  raclat  ways  of  doing  bualnasa.  Tha  D.S. 
coipanlasi  through  Sulllvaui  proved  that  Individual  afforta 
could  help  move  tha  ayatam  in  a  positive  direction.  Theae 
firms  have  spent  over  tlOO  million  outside  the  workplace  to  aid 


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er 


tb«lr  afvloyaaa  and  othara  In  tha  black  ooaaimlty.   In 
addition,  glvan  tha  dallcata  bualnaaa  ellnata  facad  by  flraa 
that  lavaat  In  South  Africa,  aaking  labor  atandarda  mandatory 
could  prova  to  ba  tha  final  straw  in  caualng  aona  0.8.  flraa  to 
raconaldar  thalr  praaanoa  In  South  Africa.  Thalr  wlthdraMal 
ifould  aaan  titat  fawart  eathar  than  greatai-.  nunbara  of  black 
South  Atrlcana  would  coaa  to  anjoy  tha  banaflta  of  iracklnf  Cor 
flraa  that  adtaara  to  anllghtanad  labor  atandarda. 

Thava  fair  labor ^atandarda  vara  originally  daval^ad  to  ba 
a  voluntary  guida  fo>  flraa.  not  a  lagal  coda.  Bona  of  tha 
■aaauraa  undar  conaldaration.  howavar>  would  raqulra  tlta  Dnttad 
Stataa  Oovaroaant  to  aaka  highly  coBplez  lagal  Judgnanta,  baaad 
on  vagua  and  lapraciaa  vtandarda,  on  aach  U.S.  firn  and  l^oaa 
•avara  panaltiaa  on  flraa  that  ara  not  cartiflad  aa  balng  In 
covplianca.  Thia  Mould  not  only  ba  unfair  to  tha  flraa 
Involvadi  but  would  be  unworkabla  aa  well- 
Finally,  other  bllla  before  you  would  iBpoaa  a  blanket 
prohibition  on  the  export  of  nuclear  equlpnant  and  technology. 
Such  a  prohibition  would  undemina  our  ability  and  lavaraga  to 
broaden  tha  application  of  international  aafeguarda  in 
countrlea  that  do  not  presently  accept  full-acope  aafeguarda. 
Such  a  blanket  prohibition  on  the  export  of  all  dual-uaa  gooda 
and  nuclear  equlpnant  or  technology  to  South  Africa,  aa  wall  aa 


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all  other  non-full  acop*  aafaguard'Stateai  would  undercut  our 
non-prolifaratlon  afforta  and  would  raduc*  our  Influance  In 
auch  countrlaa*  nualaar  program*. 

All  appltcationa  for  export*  of  nuclear-ralatad  «qul^«nt 
or  aaaiatanc*  are  alraady  thoroughly  revlawad  aa  to  thair 
pEollfaration  iaplicationa  and  their  effect  on  foreign  policy. 
In  the  caee  of  atatea  that  have  not  accepted  full-ecopa 
aafaguarda,  only  liaited  non-senaltlve  aaalataaca  la  pecaitted 
—  and  than  only  whan  it  will  advance  our  non-proliferation 
objectivee.   In  the  caae  of  South  Afrlcat  our  dialogue  with 
that  governaent  on  non-proliferation  aatterai  coupled  with  a 
willingnaaa  to  allow  eitraaely  lialted,  non-aanaltlva 
.  aaalatance  to  facilities  In  South  Africa  that  are  under  IAEA 
•afeguardsi  Contributed  to  three  inportant  decisiona  by  the 
South  African  Governnent  last  yeart  flrsti  to  require  IAEA 
safeguards  on  all  Ita  nuclear  exportai  aecond,  to  export  only 
according  to  the  Huciear  Suppliars  Group  Guldellneai  and  thlrdt 
to  renew  talks  with  the  lAn  concerning  plaee>ent  of  ite 
seni'coaaercial  uranium  anriahment  plant  under  IAEA  aafaguarda. 

In  SUB,  Mr.  Chairaani  this  Administration  does  not  believe 
that  any  of  the  punitive  maaaurea  in  the  bill  before  you,  or 
siailac  ones  in  other  bills  that  have  bean  propoaedi  will 
hasten  the  demise  of  apartheid.  We  do  not  baliave  it  is  wise 


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to  wltbdtaM  th«  li«it«d  .tools  of  InfluttDC*  w*  do  hav*  and 
•iaply  hop*  tbm   pEobl«a  go««  «H«y.   To  iapo**  Baiictiaiis  aight 
•xpcasa  our  grlaf  and  angar  ovat  tha  vlolanca  that  haa  racantly 
takan  tha  livaa  of  so  aany  in  th  Baataca  Cap*  and  alaawhara  In 
South  Africa.   Buch  action  would  not  howavaEi  aaaliorata  tha 
burdana  of  tha  victlna  of  apacthaid.   ladaad.  tha  likaly  raault 
would  ba  to  Incraaaa  thoaa  burdana  and  aquandar  our  influanea, 
thuB  aaking  the  D.S.  aaaantially  irralavant  to  tha  proeaaa  of 
change  in  South  Africa. 

In  abort.  It  ia  difficult  to  aee  how  South  Africa  will  ba  a 
better  place  without  U.S.   iafluanc*  and  prananea  there,  lialtad 
though  thay  are>   If  what  we  peek  is  to  influence  poaltlva 
Chang*  within  South  Africa  and  to  encourage  regional  atablllty 
(including  the  eatablishaent  of  an  indepandant  and 
internationally  recognlead  ltaalbia)i  than  aanctlons  auat  b* 


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70 

Senator  Heinz.  Secretary  Dam,  thank  you  very  much.  We  are 
glad  to  have  both  you  and  Mr.  Crocker  here. 

I  think  the  administration's  policies  in  southern  Africa  as  rela- 
tionships between  countries  are  examined  have  had  some  very  posi- 
tive effects.  You  have  managed  somehow  to  reduce  tensions  be- 
tween the  Union  of  South  Africa  and  Mozambique.  There  is,  I  sup- 
pose, BOme  progress,  although  it's  difficult  to  say  in  Namibia. 

It  is  my  understanding  that  South  African  troops  may  soon  be 
removed  from  Angola  where  I  gather  South  Africa  has  claimed 
that  they  have  never  been,  but  the  issue  that  I  think  most  mem- 
bers of  the  committee  are  focusing  on  is  not  so  much  the  success  of 
the  administration's  policies  between  countries  as  on  the  lack  of 
success  in  bringing  about  constructive  change  in  South  Africa  on 
the  policies  of  apartheid. 

PROBLEMS  ARE  GETTING  WORSE,  NOT  BETTER 

Indeed,  it  seems  that  the  problems  there  are  getting  worse,  not 
better.  In  the  last  6  months  there  have  been  all  too  memy  examples 
of  denationalization,  of  increased  repression,  of  the  arrest  of  many 
people  for  purely  political  activities,  and  you  are  as  aware  of  the 
list  as  I  am. 

So  I  guess  my  first  question  to  you  is:  Does  the  administration 
have  as  a  goal  the  elimination  of  apartheid  and,  if  so,  how  are  you 
going  about  achieving  that  goal  because  simply  waiting  and  seeing 
does  not  seem  to  be  achieving  that  result? 

Mr.  Dam.  Mr.  Chairman,  I  will  address  those  questions  and  com- 
ments. First  of  all,  I'd  like  to  introduce  Mr.  Framk  Wisner.  Mr. 
Crocker  had  to  leave  for  another  engagement.  Mr.  Wisner,  his 
deputy,  is  here  with  me. 

May  I  say  at  the  outset  in  response  to  your  first  comment  that 
while  it's  true  that  the  focus  of  these  hearings  is  on  what  is  hap- 
pening in  South  Africa,  for  those  that  care  about  an  independent 
Namibia  and  reducing  the  prospect  of  violence  and  improving  situ- 
ations in  the  southern  part  of  the  hemisphere  generally,  we  cannot 
overlook  the  fact  that  if  we  succeed  in  eliminating  our  influence 
and  presence  in  South  Africa  we  will  not  be  able  to  contribute  to  a 
more  peaceful  situation. 

So  we  can't  keep  it  out  of  the  picture,  but  I  will  go  directly  to 
your  question  about  the  situation  in  South  Africa. 

I  agree  with  you  that  there  have  been  some  very  unfortunate 
things  that  have  happened  in  South  Africa  in  the  last  few  months 
and  let  me  say  also,  lest  I  forget  it,  that  this  administration  is  une- 
quivocably  and  directly  opposed  to  apeu^heid  in  all  of  its  mtmifesta- 
tions.  There  is  absolutely  no  equivocation  on  that  subject.  The 
President  has  spoken  to  it.  The  Secretary  of  State  has  spoken  to  it, 
emd  there  has  been  no  ambiguity  on  that  subject. 

The  question  is  what  to  do  about  it,  and  that  is  the  question — 
what  to  do  about  it?  Is  the  thing  to  do  about  it  to  try  to  limit  our 
influence  there;  to  back  out  of  South  Africa  economically  and  oth- 
erwise to  make  declarations  which  make  us  feel  good  but  do  not,  as 
was  practically  admitted  directly  by  the  two  witnesses  who  preced- 
ed me,  have  any  prospect  of  having  any  real  impact  in  South 


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71 

Africa?  Or  is  it  better  to  try  to  proceed  with  the  policy  that  we 
have  had? 

Now  as  I  said,  there  has  been  some  unfortunate  violence  in  the 
last  few  months.  On  the  other  hand,  if  you  compare  the  situation 
today  with  the  situation  4  years  ago,  I  think  you  will  see  there's 
been  a  lot  of  change.  We  don't  take  credit  for  particular  changes. 
We  do  believe,  however,  that  the  policy  of  constructive  engagement 
has  set  in  motion  a  process  of  change  and  frankly  a  process  of 
change  that  would  come  to  a  stop  or  at  least  substantially  slow 
down  if  we  were  to  completely  change  that  policy  toward  one  of 
sanctions  and  reprisal. 

Let  me  give  you  a  few  examples.  There  has  been  in  the  past  few 
years  a  major  new  influence  of  legitimacy  for  black  trade  unions. 
In  fact,  today,  50  percent  of  all  trade  unions  are  black.  There  is  a 
new  constitution  and  while  it  doesn't  do  tmything  for  blacks  it  does 
take  a  step  in  the  direction  of  sharing  power  for  minority  groups 
by  giving  power  to  coloreds  and  Asians. 

It  was  mentioned  this  morning  by  the  preceding  witnesses  that 
there  has  been  the  announced  repeal  of  the  Mixed  Meuriages  and 
Immorality  Acts  as  far  as  they  affect  mixed  marriages  and  sexuEil 
relations  between  the  races. 

There  has  been  a  major  increase  in  South  Africa  in  education, 
mainly  for  black  education.  Educational  opportunities  for  blacks  in 
South  Africa  are  greater  because  of  that.  There  has  been  an  £ui- 
nounced  opening  of  some  44  central  business  districts  for  black 
businesses.  There  has  been  a  move  to  permit  blacks  to  hold  land 
through  99-year  leaseholds  roughly  equivalent  to  the  British 
system  and  moreover,  an  announcement  of  intention  to  move  in 
the  direction  of  permitting  freehold  ownership  of  land  by  blacks. 

There  has  been  a  suspension  of  the  forced  removm  of  settled 
black  communities  while  the  Government  is  going  forward  to 
review  its  urbanization  policy.  There  has  been  an  explicit  Govern- 
ment rec(^nition,  contrary  to  what  we  heard  from  the  preceding 
two  witnesses,  that  the  homelands  do  not  provide  adequate  politicm 
outlets  for  blacks.  There  has  been  a  recognition  that  there  has  to 
be  some  better  form,  higher  form  of  political  representation  for 
blacks. 

Finally,  there  has  been  a  Government  commitment  to  address — 
they  haven't  done  it  yet,  but  a  commitment  to  address  the  issue  of 
citizenship  for  all  South  Africans,  including  blacks. 

So  I  think  it's  wrong  to  say,  Mr.  Chairman,  that  there  hasn't 
been  any  change  and  we  are  just  waiting  around  hoping  that  some- 
thing will  turn  up.  It's  not  enough.  The  question  is,  will  the  propos- 
als before  you  and  in  other  bills  before  the  Congress  continue  to 
move  in  that  direction  or  will  they  have  just  the  opposite  effect. 
That's  what  we  are  talking  about. 

Senator  Heinz.  That's  an  important  question.  I  don't  wish  to 
minimize  it  by  my  question,  but  I  really  want  to  come  to  a  conclu- 
sion on  my  question  which  is,  is  there  any  kind  of  meaningful 
progress  that  the  U.S.  Government,  the  Reagan  administration,  ex- 
pects from  the  South  African  Government  when  it  comes  to  the  gut 
apartheid  issue? 

You  mentioned,  for  example,  that  there  has  been  a  suspension  of 
forced  removals,  one  of  the  most  repulsive  but  by  no  means  the 


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only  repulsive  acts  in  apfirtheid.  If  that  suspension  should  not  turn 
into  a  permanent  suspension,  what  happens.  It  means  that  that 
practice  will  be  resumed.  That's  moving  backwards. 

Now  does  our  Government  have,  does  the  President  have,  does 
our  Secretary  of  State  have  any  internal  guidelines  for  progress  in 
these  areas? 

NOT  OPERATING  ON  A  BASIS  OF  CONDITIGNAUTY 

Mr.  Dam.  We  have  been  trying  to  move  the  South  African  Gav- 
emment,  successfully  I  think,  in  the  direction  of  removing  the 
manifestations  of  apartheid  and  ultimately  eliminating  the  system 
itself.  We  are  doing  that — in  the  last  points  I  made — with  some  of 
the  main  pillars  of  apartheid.  Maybe  there  will  be  backsliding. 
There  heisn't  been  backsliding  in  any  major  degree.  We  are  not  op- 
erating on  a  basis  of  conditionality  or  setting  up  specific  things 
that  the  South  African  Government  has  to  meet  by  such  and  such 
a  date.  That  is  not  the  way  in  which  we  have  been  trying  to  work 
on  this  problem. 

It's  a  different  philosophy  than  the  bill  before  you,  which  betsiceil- 
ly  tries  to  take  U.S.  influence  out  of  the  area. 

Senator  Heinz.  What's  wrong  with  conditionality? 

Mr.  Dam.  We  don't  think  that  making  demands  for  specific  steps 
by  such  and  such  a  date  will  be  successful.  We  have  indicated  that 
we  wanted  the  manifestations  of  apartheid  and  ultimately  the 
^stem  itself  to  be  removed.  So  we  think  that  by  working  with  the 
South  African  Government  and  in  particular  also,  coming  closer  to 
the  legislation  here,  by  increasing  the  position  in  South  Africa  of 
forward  looking  American  business  which  has  through  its  adoption 
of  the  Sullivan  principles  created  not  only  in  the  workplace  but 
also  outside  the  workplace  a  fair  and  more  equitable  life  for  black 
South  Africans.  We  can  make  a  greater  impact  and  we  have  £ilso 
been  working  in  other  ways  by  increasing  the  amount  of  money  for 
black  education  and  so  forth.  We're  doing  a  number  of  things.  It's  a 
multifaceted  policy  which  we  think  is  going  to  be  more  successful- 
than  "a  hit  them  over  the  head"  kind  of  policy. 

Senator  Heinz.  You  have  no  objection  to  the  principle  of  condi- 
tioneiliW;  you  just  don't  like  it  here? 

Mr.  Dam.  No.  We  don't  think  it  will  be  effective  in  a  r^d  form 
here.  There  is  talk  about  goals  with  South  Africa,  yes,  but  the 
notion  that  somehow  or  other  by  such  and  such  a  date  they  don't 
do  X,  Y,  or  Z  that  U.S.  business  investment  will  be  cut  off  or  some- 
thing of  that  nature,  then,  no,  we  don't  think  that's  effective. 

Senator  Heinz.  My  time  is  just  about  up.  Let  me  just  finish  up 
on  this  point  of  conditionality.  Ten  days  ago  the  President  proposed 
with  respect  to  Nicaragua  a  condition  that  if  Nicaragua  would 
enter  into  certain  negotiations  to  achieve  certain  specific  goals  he 
would  not  continue  to  arm  the  country.  That's  conditionality.  As  I 
recollect  the  timeframe  for  it  was  60  days.  Is  that  correct? 

Mr.  Dam.  Yes. 

Senator  Heinz.  Now  I  don't  like  the  Sandanista  government,  but 
to  the  best  of  my  knowledge  they  don't  practice  anything  as  repul- 
sive as  apartheid.  They  have  violated  all  kinds  of  rights  of  democ- 
racy, but  as  far  as  I  know,  they  haven't  been  taking  bulldozers  and 


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73 

knocking  down  villages  of  people  who  don't  agree  with  the  central 
Government.  They  have  infiltrated  and  limited  the  activities  of 
many  organizations — the  press — but  to  my  knowledge,  they  are  a 
little  more  delicate  in  the  way  they  handle  people  who  diaagree 
than  the  South  Africans  are  who  will  prohibit  a  person  who  has 
associated  with  the  wrong  kind  of  people  from  being  iissociated 
with.  That's  the  bans  for  the  rest  of  their  life,  a  legal  creation  of 
pariahship  that  is  strictly  enforced. 

Why  do  we  think  conditionality  can  work  in  Nicaragua  to  the  ex- 
clusion of  working  anyplace  else,  like  South  Africa? 

Mr.  Dam.  Well,  in  both  countries  we  are  trying  to  get  the  govern- 
ment to  talk  to  the  opposition.  In  that  sense,  there  is  a  similarity 
in  the  two  situations.  Now  there  are  also  a  lot  of  differences.  We 
think  things  are  moving  in  the  wrong  direction  in  Nicaragua.  We 
think  things  are  moving  in  the  right  direction,  albeit  very  slowly, 
in  South  Africa,  but  nevertheless  moving  in  the  right  direction.  I 
think  we  also  have  to  recognize  that  there's  one  other  mtyor  differ- 
ence. The  situation — and  we  can  debate  this  if  you  like— but  the 
situation  in  the  view  of  the  administration  and  strongly  the  view  of 
the  President,  and  the  reason  he  made  this  peace  offer,  this  peace 
proposal,  was  that  the  situation  in  Nicaragua  was  a  m^or  national 
security  danger  to  the  United  States. 

Now  I  think  that  the  situation  in  South  Africa  is  different  in 
that  respect  too.  So  there  are  a  lot  of  differences.  We  are  not  saying 
that  under  no  circumstances  will  conditionality  ever  work.  We  are 
saying  that  the  present  policy  is  working.  The  proponents  of  these 
sanctions  don't  really  even  argue  that  they  will  work.  They  say  we 
ought  to  have  them  and  I  can  understand  that  argument,  but  they 
are  not  saying  it  will  lead  to  further  positive  results  and  I  don  t 
think  it's  reasonable  to  believe  that  they  will. 

Senator  Heinz.  I  want  to  explore  that  point  with  you  later  but 
my  time  has  expired.  Senator  Proxmire. 

Senator  Proxmire.  Mr.  Dam,  in  1981  a  prestigious  study  commit- 
tee called  the  Commission  on  U.S.  Policy  Toward  South  ^Jrica  pub- 
lished its  report  entitled  "South  Africa — Time  Running  Out."  That 
commission  was  headed  by  the  president  of  the  Ford  Foundation.  It 
included  the  chairmim  of  Xerox  Corp.;  the  president  of  the  AFL- 
CIO,  Industrial  Union  Department;  the  chancellor  of  Vanderbilt 
University;  th^  chairman  of  the  Executive  Committee  Cumminga 
Engine,  and  others. 

'That  commission  rejected  instituting  a  trade  embargo  against 
South  Africa  and  disinvestment  of  American  corporations.  Neither 
of  those  measures  incidentally  are  in  the  bill  we  are  considering 
now.  The  commission  did  recommend,  however,  that  U.S.  corpora- 
tions and  financial  institutions  operating  in  South  Africa  commit 
themselves  to  a  policy  of  nonexpansion  and  those  businesses  not  al- 
ready there  should  not  enter  the  country.  That's  precisely  what  we 
put  into  this  S.  635,  along  with  a  no  new  bank  loans  policy. 

Do  you  think  that  the  study  commission's  report  on  South  Africa 
was  balanced  and,  if  so,  why  do  you  continue  to  reject  one  of  its 
key  recommendations? 

Mr.  Dam.  I  think  that  the  reasons  that  we  do  not  favor  the  policy 
proposed  by  that  particular  commission  is  set  forward  in  my  testi- 


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74 

mony.  I  would  be  glad  to  review  those  points  with  you  if  you  would 
like. 

Senator  Proxmihe.  Would  you  agree  that  the  president  of  the 
Ford  Foundation  and  the  head  of  these  other  corporations  along 
with  the  AFL-CIO  represents  a  pretty  good  balance  of  American 
industry  and  labor? 

Mr.  Dam.  I  certainly  think  these  are  outstanding  people,  yes,  and 
I  don't  have  any  problem  about  the  composition. 
.  Senator  Proxmire.  Well,  let  me  ask  you  a  question  that  you,  par- 
ticularly aa  Assistant  Secretary  of  State,  can  give  us  excellent 
advice  on. 

We  have  a  provision  in  S.  635  directing  the  President  to  under- 
take international  negotiations  to  persuade  other  nations  to  adopt 
restrictions  on  new  investment  in  and  bank  loans  to  South  Africa. 
As  you  know,  Sweden  and  Japan  have  already  restricted  invest- 
ment there  and  a  growing  number  of  European  legislators — I've 
talked  with  some  of  them  recently — they  are  pushing  for  the  same 
kind  of  thing  and  think  they  can  get  it  through,  particularly  if  we 
set  an  example. 

If  we  pass  the  restrictions  in  S.  635  and  persuaded  other  Western 
governments  to  do  the  same,  wouldn't  that  help  those  whites  in 
South  Africa  who  want  change  and  isolate  those  who  do  not  and 
wouldn't  more  and  more  white  South  Africans  see  that  present 
policies  can  only  lead  their  country  to  economic  disaster? 

Mr.  Dam.  Well,  Senator,  you  are  asking  a  question  with  a  great 
big  condition  at  the  beginning  which  I  think  we  have  to  examine — 
the  notion  that  all  the  countries — the  Japanese,  the  Germans,  the 
other  Europeans,  are  going  to  cut  off  investment  to  South  Africa.  I 
just  find  that  totally  implausible  and  certainly  everything  that  I 
have  heard  from  those  governments 

Senator  Proxmire.  I  didn't  say  cut  off.  I  said  restricted  in  the 
way  I  suggested  and  I  point  out  that  Japan  already  does  it.  Japan 
has  done  it  for  some  time  and,  of  course,  Sweden  also  does  it.  It's 
not  as  if  none  of  these  countries  have  done  it  in  the  past.  But  this 
country  is  so  important  because  we  are  the  principal  trading  part- 
ner, as  you  know,  the  No.  1  trading  partner  and  we're  the  second 
biggest  investor  in  South  Africa. 

Mr.  Dam.  I'm  not  familiar  with  your  point  about  Japan.  It  seems 
to  me  Japan's  role  in  South  Africa  has  been  growing  very  rapidly 
and  certainly  a  number  of  European  governments 

Senator  F^oxmire.  It's  possible  and  I  would  hope  that  our  role 
would  grow  in  South  Africa  in  a  constructive  way,  but  they  do  re- 
strain investment.  That  was  one  of  the  ways  that  they  were  able  to 
get  the  so-called  colored,  which  would  include  Asiatics  as  I  under- 
stand it,  for  the  first  time  to  begin  to  get  some  influence,  because 
they  began  to  restrict  investment.  It  seems  to  me  we  can  follow 
that  s£une  precedent. 

Mr.  Dam.  If  the  world  were  perfect  and  everybody  would  go 
along  with  us,  we  would  have  a  different  situation.  I  still  ques- 
tion— let  me  put  it  this  way.  There  is  a  question  whether  this 
would  help  the  blacks  in  South  Africa,  which  I  think  is  an  impor- 
tant issue. 


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SOVIET  INTEREST  IN  SOUTHERN  AFRICA  INCREASES 

Senator  Proxmire.  Let  me  ask  you,  Mr.  Wisner,  in  March  1982, 
Mr.  Crocker— I  understand  you're  his  deputy— stated  before  the 
Sc^te  Judiciary  Committee: 

In  recent  yean  we  have  noted  a  aubetantial  increase  in  Soviet  int«reflt  in  south- 
ern Africa, 

And  noted, 

*  *  *  in  seeking  to  encourage  South  Africans  to  reeolve  their  problems  through 
peaceful  evolutionary  change,  we  stripped  the  Soviet  Union  of  justification  for  fan- 
ning tensions  within  South  Africa  into  a  racial  war. 

Now  it  doesn't  surprise  me  to  see  the  Soviet  Union  trying  to 
expand  its  influence  in  South  Africa  and  Tm  sure  inadvertently  we 
may  be  helping  them  to  do  so.  Let's  reflect  on  that  for  a  moment. 

Blacks  in  South  Africa  have  condemned  apartheid  for  over  30 
years  and  during  those  30  years  we  have  expanded  our  economic 
involvement  in  their  country.  Blacks  have  no  political  rights,  so 
how  do  they  change  the  situation  through  the  system?  In  December 
1984,  Bishop  Tutu  said. 

Blacks  deplore  comniunism  as  being  atheistic  and  materialistic,  but  would  regard 
the  Russians  as  their  saviors  were  they  to  come  to  South  Africa  because  anything, 
in  their  view,  would  be  better  than  apartheid." 

Now  I  don't  think  we  can  spend  smother  30  years  cajoling  the 
Sou^  African  Government  to  change.  Time  is  running  out,  and 
that's  why  I  favor  the  limited  economic  sanctions  in  S.  635. 

Why  do  you  think  just  continuing  with  constructive  engagement 
is  the  way  to  combat  Soviet  influence  with  the  blacks  in  South 
Africa?  Why  wouldn't  the  limited  economic  pressures  in  S.  635  help 
move  the  South  African  Government  and  let  blacks  know  that  we 
back  their  struggle  for  political  rights? 

Mr.  Wisner.  Senator,  I  don't  think  there's  any  doubt  in  the 
minds  of  black  South  Africans  about  where  the  United  States 
stands.  It's  a  very  clear  position.  It's  been  spelled  out  from  the 
highest  levels  of  this  Government  over  a  number  of  administra- 
tions. What  we  have  set  about  to  do  is  to  put  our  influence  on  the 
side  of  serious  change  and,  as  Secretary  Dam  said  this  morning, 
he's  articulated  a  pattern  of  change  inside  that  society,  obviously 
not  change  that  is  adequate  in  its  entirety,  but  change  that  indi- 
cates, or  events  that  indicate,  that  serious,  thorough  undeigoing 
change  is  taking  place  inside  South  Africa. 

Senator  Proxmire.  Let  me  just  ask  at  that  point,  Mr.  Wisner,  it 
seems  to  me  that  blacks  might  well  ask  why  don't  we  put  our 
money  where  our  mouth  is?  When  Senator  Kennedy,  who  just  testi- 
fied before  you,  was  in  South  Africa,  as  you  know,  he  got  a  rocky 
treatment  from  the  blacks  in  many  CEises  because  they  felt  he  rep- 
resented American  policy,  the  Reagan  policy.  He  was  a  U.S.  Sena- 
tor and  that  was  their  position.  I  think,  there  is  a  misunderstand- 
ing. They  feel  we  don't  really  have  a  policy  backed  up  with  any 
force.  It's  easy  to  make  speeches,  but  it's  something  else  to  show 
that  we  mean  business. 

Mr.  Wisner.  Senator,  I  think  you  will  find  that  there  are  a  great 
many  voices  of  South  African  black  opinion,  not  just  those  who  pro- 
tested during  Senator  Kennedy's  stay.  You  have  a  wide  range  of 


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76 

key  black  leaders.  Bishop  Tutu,  for  example,  who  is  not  in  favor  of 
disinvestment;  the  paramount  chief  of  the  Zulu  people  who  is  not 
in  favor  of  it;  the  key  leader  of  the  urban  blacks  who  has  come  out 
against  it.  You  have  a  -wide  range  of  articulate,  thoughtful  South 
African  black  spokesmen  who  do  not  call  for  measures  of  disinvest- 
ment. And  when  I  speak  of  disinvestment,  I  choose  my  words  care- 
fully because  there  are  measures  that  lead  inexorably  to  disinvest- 
ment. Blocking  new  investment,  for  exEunple,  is  one  of  those  meas- 
ures. 

SOUTH  AFRICAN  BLACKS  OPPOSE  ECONOMIC  SANCTIONS 

Senator  Pboxmire.  Well,  now  let  me  point  out  what  Bishop 
Tutu's  position  is  on  that  and  put  this  in  the  proper  context.  Many 
opponents  of  the  type  of  limited  economic  sanctions  in  S.  635  say 
that  South  African  blacks  oppose  economic  sanctions  and  they  rely 
on  a  survey  conducted  by  a  white  South  African  professor.  Profes- 
sor Schlemmer,  paid  for  by  our  State  Department. 

In  regard  to  this  issue,  this  is  what  Bishop  Tutu  said  in  Decem- 
ber before  the  House  Foreign  Affairs  Committee: 

You  should  be  aware  that  if  I  support  economic  sanctions  against  South  AMca, 
that  is  an  indictable  offense,  and  until  recently,  upon'  conviction  the  mandatory 
minimum  sentence  would  be  5  years  imprisonment, 

which  indicates  how  the  South  African  Government  regards  the 
importance  of  foreign  investment.  He  went  tm  to  say, 

We  have  a  society  that  is  ridden  through  and  through  with  informants  and  when 
people  are  aware  of  any  penalties  for  expressing  unpopular  views  to  authorities,  it  is 
highly  unlikely  they  will  say  precisely  what  they  really  feel. 

Do  you  think  under  those  circumstances  that  Bishop  Tutu's  posi- 
tion on  investment  isn't  necessarily  colored  by  that?  He  says  it  is. 
;  He  says  he  has  to  take  that  position  or  go  to  jail. 

Mr.  WisNER.  There  is  no  argument,.  Senator,  that  Bishop  Tutu 
had  to  take  the  stand  that  he's  taken.  Let's  be  careful  about  what 
he's  said.  He  wants  to  see  change,  only  peaceful  change,  inside  the 
society.  Second,  he's  calling  for  that  change  to  eiccelerate  over  the 
next  2  years  and  at  the  end  of  that  2-year  period  to  see  where 
South  .^rica  stands. 

Now  the  bishop  isn't  forced  to  make  that  statement.  He  made 
that  statement  because,  one  would  have  to  assume,  he  means  it. 
Other  South  Africans  who  speak  against  disinvestment  are  under 
no  legal  obligation  to  speak  against  it.  When  you  go  to  the  Schlem- 
mer report,  which  you  mentioned,  and  look  at  that  report,  the  over- 
whelming majority  of  black  South  Africans  did  not  support  disin- 
vestment and  other  South  African  polls  also  come  out  against  dis- 
investment. You  will  also  find  they  were  polled  on  their  views  on 
the  ANC  and  they  spoke  very  clearly  without  intimidation  as  to 
their  support  for  the  ANC.  So  I  think  those  observations,  those 
statements  of  views  of  South  Africans,  either  workers  or  articulate 
leaders,  are  things  they  believe  in  and  I  take  them  at  face  value. 

8.  635  IS  NOT  A  DISINVESTMENT  BILL 

Senator  Proxmire.  Well,  my  time  is  up,  but  let  me  just  say  our 
bill  is  not  a  disinvestment  bill.  It's  not  a  disinvestment  bill.  It's  a 


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77 

no  new  investment  bill,  which  is  quite  diiferent,  plus  the  fact  that 
it  permits  U£.  corporationB  to  reinvest  their  profits  that  they  have 
made  in  South  Africa. 

Mr.  Dah.  Although  you  would  agree  that  the  absence  of  new  in- 
vestment is  going  to  lead  to  a  decline  over  time  of  the  position  of 
American  fmns,  would  you  not?  Isn't  that  the  point?  What's  the 
point  of  no  new  investment  unless  that's  the  resiut? 

Senator  Psoxmibe.  Well,  it's  going  to  mean,  I  would  hope,  that 
we  could  b^in  to  make  some  real  progress  in  South  Africa  and,  of 
course,  the  bill  also  provides  that  if  the  President  sees  real 
prepress,  he  can  repeal  this,  and  if  the  House  and  Senate  decide  to 
do  BO,  we  can  repeal  any  measure  that's  here.  It's  one  that  gives 
flexibility  to  the  President  and  a  basis  for  Incentive  and  encourage- 
ment for  the  South  Africans  to  change. 

Mr.  Dam.  My  comment  would  be  that  I  doubt  very  much  that  a 
distinction  in  responses  to  these  polls  and  public  statements  by 
South  African  black  leaders  would  be  made  between  what  the  bill 
proposes  and  disinvestment.  They  both  deprive  black  South  Afri- 
cans of  opportunities  for  employment. 

Senator  Proxmire.  My  time  is  up,  Mr.  Chairman. 

Senator  Heinz.  Senator  Proxmire,  thank  you.  Senator  Sarbanes. 

Senator  Sabbanes.  Well,  thank  you,  Mr.  Chairman. 

Mr.  Secretary,  you  make  the  point  on  page  6  of  your  statement 
that  our  relationship  with  South  Africa  is  not  normal,  or  business 
as  usual;  is  that  correct? 

Mr.  Dau.  That's  correct. 

Senator  Sarbanes.  Is  it  your  view  that  our  relationship  with 
them,  in  the  present  circumstances,  should  not  be  normal? 

Mr.  Dam.  My  view  is  that  we  have  struck  approximately  the 
right  position,  tnat  is  to  say,  we  have  shown  our  distance  in  a  vari- 
ety  of  ways. 

Senator  Sarbanes.  You  think  we  should  stay  such  a  distance 

B4r.  Dam.  While  still  being  constructive  in  our  relationship. 

Senator  Sabbanes.  Do  you  think  we  should  show  some  distance 
from  South  Africa? 

Mr.  Dam.  Yes;  as  I  said  in  the  statement. 

Senator  Sabbanes.  Now  I'd  like  to  take  two  or  three  of  the  items 
you  listed  to  demonstrate  that.  One  was  the  instruction  to  our  rep- 
resentative at  the  IMF.  Did  the  administration  support  that? 

Mr.  Dam.  I  believe  not. 

Senator  Sarbanes.  That  was  congressiooally  im[>osed,  was  it  not? 

Mr.  Dam.  I  believe  you're  correct.  Senator. 

Senator  Sarbanes.  Was  the  restriction  on  the  Eximbank  coi^res- 
sionally  imposed? 

Mr.  Dam.  Yes;  I  believe  it  is  legislatively  imposed. 

Senator  Sabbanes.  I  find  it  interestii^  that  the  exeunples  that 
you  offered  in  steting  that  you  don't  think  we  ought  to  have  a 
normal  relationship  because  it  would  send  the  wrong  signal  about 
apartheid  and  in  demonstrating  the  absence  of  a  normal  relation- 
snip,  were  instances  congressionally  imposed. 

Mr.  Dam.  I  believe  that  this  occurred  during  the  Carter  adminis- 
tration. 

Senator  Sarbanes.  The  IMF  restriction? 

Mr.  Dam.  The  Eximbank. 


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78 

Senator  Sarbanes.  Do  yon  support  thafEbtimbank  restriction? 

Mr.  Dam.  What  I'm  saying  in  this  statement  is  that  our  present 
position  is  approximately  correct.  Whether  this  particular  limita- 
tion is  effective  and  constructive  and  so  forth  might  be  question- 
able. We  support  it  euid  carry  it  out. 

Senator  Sarbanes.  In  other  words,  you  think  you  were  wrong  on 
the  IMF  position? 

Mr.  Dam.  As  I  say.  Senator,  we  accept  the  legislation.  We  are  not 
quarreling  with  the  legislation.  We  say  that  the  move  from  these 
kinds  of  limited  steps  to  something  much  more  far  reaching  would 
have,  on  balance,  a  counterproductive  effect. 

Senator  Sarbanes.  I  understand  that  position,  but  at  an  earlier 
time  there  was  a  difference  in  judgment  and  I'm  now  trying  to  find 
out  what  your  judgment  is  on  those  matters,  since  there's  a  differ- 
ence in  judgment  at  the  current  time. 

I  take  it  you  now  support  the  IMF  restriction. 

Mr.  Dam.  I  believe  the  President  signed  that  bUl.  Therefore, 
unless  I'm  mistaken,  he  decided'  under  all  the  circumstances  to  sup- 
port it. 

Senator  Sarbanes.  I  think  the  bill  included  other  things,  but  you 
do  support  that  restriction? 

Mr.  Dam.  We  accept  it  as  the  law  of  the  land,  yes.  Senator. 

Senator  Sarbanes.  That's  not  my  question.  Do  you  support  it  as 
a  matter  of  policy? 

Mr.  Dam.  If  you  would  like,  I  will  go  back  and  obtain  an  adminis- 
tration position  on  that  issue. 

Senator  Sarbanes.  Why  don't  you  let  us  know  the  administra- 
tion's position? 

Mr.  Dam.  I  will  be  glad  to. 

[The  following  information  was  subsequently  submitted  for  the 
record:] 


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Curreoi  PresiSxnl  Reagan 

'<•««  Rededication  to  the 

Cause  of  Human  Rights 

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MAY  2 1  1985 

Dear  Hr .  Chaiinani 

'  This  is  in  response  to  your  reqjest  of  kpiil  16,  1985  to 
Deputy  Seccetacy  of  State  Dam  regarding  the  views  of  the 
.  Administration  on  S,  ;635,  *a  bill  to  express  the  opposition  of 
the  United  states  to  the  system  of  apartheid  in  South  Africa, 
and  for  other  purposes.* 

S.  635  contains  six  principal  .measures:  first,  a 
prohibition  on  new  U.S.  bank  loans  to  the  South  African 
Government  or  any  entity  controlled  or  owned  by  that  government 
(with  certain  exceptions];  second,  a  prohibition  on  new  U.S. 
Investment  in  South  Africa  (with  certain  exceptions);  third,  a 
prohibition  on  the  importation  of  Krugerrands  or  other  gold 
coins  minted  in  South  Africa;  fourth,  a  prohibition  on  the 
export  of  computers,  software  or  related  computer  services  to 
the  south  African  Government  or  entities  controlled  or  owned  by 
it;  fifth,  the  establishment  of  .a  procedure  for  limited  waivers 

sixth,  a  requirement  that  the  President  attempt  to  persuade 
other  countries  to  adopt  similar  policies. 

Before  outlining  some  of  the  specific  objections  which 
the  Administration  has  to  the  individual  measures  contained  in 
this  bill,  1  should  like  to  explain  the  Administration's 
differences  with  those  who  seek  to  impose  additional  punitive 
sanctions  on  South  Africa. 

we  recognize  the  strong  need  of  Americans  to  express 
disapproval  of  any  system  which  institutionalizes  racial 
discrimination.   The  U.S.  Government  and  the  people  of  this 
country  are  on  record  as  strongly  supporting  the  policies 
reflected  in  section  2  of  this  bill,  including  the  condemnation 
of  apartheid  and  the  goal  of  seeking  its  eradication.   The 
sponsors  of  s.  635  believe  that  the  United  States  can  best 
realize  the  latter  objective  by  the  punitive  measures  proposed 
In  the  bill.   We  do  not  share  this  view,  nor  does  the 
Administration  support  comparable  measures  that  have  been 
proposed  in  other  bills. 


.rman,  international  Finance  e 
Monetary  Policy  Subcommittee 
united  States  Senate. 


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in  out  via«,  S.  635  will  not  advance  the  goals  we  ahace 
with  resp«ct  to  South  Africa.   H*  wiah  to  aee  apartheid 
eradicated  and  the  establiahaent  of  a  ]uet  governBent  baaed  on 
the  conaent  of  all  th«  governed.   The  Adniniatcatlon  beliaves 
that  the  influence  of  the  Onited  States  should  be  used  in  auch 
a  auinnec  that  these  goala  can  be  advanced,  recognizing  that 
■eaningfjl  change  will  only  be  brought  about  by  the  people  of 
South  Africa  and  not  by  our  actions.   He  should  adopt  neasures 
and  policies  which  can  realistically  influence  the  people  of 
South  Africa,  and  not  i^easjr^ea  which  will  only  serve  to 
distance  the  Onited  states  fro»  the  process  of  change  that  ts 
taking  place  in  that  country. 

m  the  case  of  South  Africa,  punitive  aeasurea  such  as 
those  proposed  in  S.    63S  are  the  wrong  signal  to  send  at  this 
tlsie.   Ttiey  are  far  more  likely  to  harden  opposition  to  change 
in  South  Africa  than  to  bring  about  additional  refota.   The 
south  African  Government  haa  In  recent  years  initiated  a 
proqra*  of  refora  which  has  caused  a  serious  split  snong  the 
Afrikaner  people,   whil^  the  pace  of  change  ts  less  thsn  whst 
we  desire,  this  cojrs-e  ot   action  should  be  encouraged.   Recent 
actions  —  such  as  the  decision  to  repeal  soae  of  the  offensive 
laws  relating  to  incerraclal  aarrlages  and  the  decleon  to 
proaote  equal  education  opportunities  for  all  races  —  are 
steps  In  the  right  direction,  and  they  should  not  be  cast  aside 
as  irrelevant  or  empty  gestures.   Punitive  measures  will  only 
strengthen  those  opposed  to  fundaaental  change  in  South  Africa, 
and  could  easily  lead  to  retaliatory  trade  and  other  measures 
which  would  ultimately  daoage  the  interests  of  the  vlctlas  of 
apartheid  and  the  U.S.  business  coaaunlty. 

As  discussed  In  further  detail  below,  we  believe  that 
sanctions  will  not  cause  the  South  African  Government  to  change 
its  objectionable  policies,  nor  will  they  Improve  the  political 
and  economic  plight  of  black  South  Africans  or  further  the 
economic  or  national  security  interests  oC  the  United  States. 
in  our  view,  the  way  to  Influence  change  In  South  Africa  Is  to 
use  the  resources  available  to  the  united  States  In  a  positive 
rather  than  negative  nanner.   we  should  encourage  the  positive 
efforts  of  U.S.  firms  to  pursue  enlightened  labor  practices  and 
the  efforts  of  the  AFL-CIO  to  train  black  trade  unionists,   we 
should  make  the  most  of  the  extensive  scholarship  and  training 
programs  sponsored  by  the  U.S.  Government  and  pursue  the  use  of 
the  diplomatic  and  political  leverage  of  this  country.  These 
Influences  should  be  maintained  and  increased  to  affect  the 
rate  and  direction  of  the  change  already  underway  there. 


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Our  evaluation  of  the  apecific  provisions  of  the  bill 

1.  Prohibition  on  Loans 

The  Department  of  State  opposes  the  prohibition  on  O.S. 
bank  loana  to  the  south  African  Governnent  and  entities  owned 
or  controlled  by  that  government  (with  narrow  exceptions  for 
certain  educational,  housing,  and  health  loans).   This  measure 
would  create  a  dangerous  precedent  in  terms  of  financial 
policy.   It  would  undermine  the  Administration's  position  that, 
except  in  circumstances  involving  national  security  or  a 
national  emergency,  international  capital  markets  should  remain 
free  of  government  interference  and  lending  decisions  should  be 
based  on  laarket  rather  than  political  considerations.   If  bank 
loans  to  South  Africa  should  be  prohibited,  then  South  Africa 
would  be  the  only  country  with  which  the  U.S.  maintains  full 
diplomatic  relations  that  would  be  subject  to  a  U.S.  bank  loan 
prohibition. 

in  addition,  any  extension  of  an  effective  loan 
prohibition  to  cover  foreign  affiliates  of  U.S.  banks  would 
raise  serious  questions  about  the  extraterritorial  application 
of  U.S.  law.   It  can  be  anticipated  that  such  action  will 
result  in  objections  from  our  allies,  as  well  as  the  kind  of 
■s  that  we  have  experienced  in  past  cases  involving 
laws  in  foreign  countries. 

One  other  result  of  such  a  prohibition  would  be  that 
pataetatal  agencies  unconnected  with  the  implementation  of 
apartheid  policy,  such  as  the  Electricity  Supply  Commission, 
would  be  unable  to  obtain  U.S.  financing  for  the  purchase  of 
American  products,   in  this  way,  we  would  only  penalize  U.S. 
banks  and  firms  doing  significant  business  with  these  entities, 
without  making  any  real  impact  on  the  South  Africa  Government, 
undoubtedly,  other  foreign  banks  would  replace  U.S.  banks  as  a 
lending  source,  and  their  factories  would  benefit  from  the 
orders  that  would  have  gone  to  U.S.  firms. 

2.  Prohibition  on  New  investment 

We  oppose  the  adoption  of  a  prohibition  on  new 
.  investment  in  south  Africa  (including  bank  loans  to 
non-governmental  entities  in  that  country).   It  would  limit 
<^portunitles  for  expansion  by  precisely  those  firms  which  have 
done  the  moat  to  promote  social  change  In  South  Africa,   As  a 
direct  consequence,  black  South  Africans  would  lose  new  job 
opportunities  and  be  denied  employment  with  the  more 
ptoqresaive  U.S.  firms.   The  U.S.  firms  which  have  adopted  the 
Sullivan  Principles  employ  about  70  percent  of  the  non-whites 
working  for  all  U.S.  firms  in  South  Africa.   These  firms  are  in 


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highly  vtaible  «nd  ii^octanc  sectors  such  as  au^oMotlv* 
■aou  fact  lire,  pbaraBcmiticala,  pcttocbaaleals  aad  c««pue«cs. 
nt«y  serve  as  a  catalyst  (oi  change  thtoagh  -  - . -    -  ' 
puesuic  of  iaftEOveBents  for  thalt  non-vhit*  '  .  .  in 

the  workplace  ^--t   outside  the  workplace,  ?v'  ^*'*   area 

of  bousing  education  aod  health.   Punitive  legislation  nhich 
would  restrict  the  eipanaion  of  such  firas,  and  thereby  Itsit 
the  nuBbeis  of  new  ei^loye??.  would  •freeie*  the  nusber  of 
black  Soucr,  Af  r  .  ;  -   ----.-:-i^  fron  the  Sullivan  Code,   such  a 
'freeze*  wc^li  in  turn  slow  the  process  of  change  Inside  South 
Africa  —  a  pr:.;c33  . r.  irtiich  the  Bore  progressive  D.S.  firas 
have  been  in  tbe  forefront. 

It  is  taportant  to  e^haalte  that  this  section  of  the 
bill  would  al3D  prstiiDi-  new  D.S.  bank  lending  to  South  Africa, 
in  effect  ei\^'i.r.:    ■■  ^   bank  loan  prohibitions  of  section  4  to 
cover  all  ~l.'.5.  ing  to  South  Africa  (which  is  mot*   than 

^4  billion),  me   could  serious  financial 

iaplicatioos  foe  1  -  ;  ^  _        'Ing  and,  to  the  degree  the 
ban  is  not  offset  .         -r^.;-.  lending,  for  the  Souh 
African  econoay.   Such  ■  aeasure  would  have  serious 
repercussions  for  O.s.  exports  to  South  hfrica  and  thus  for 
esployaent  in  the  D.S.,  as  well  as  for  blacks  eaployed  In  South 
Africa  whose  positions  would  be  iaperiled  because  of  the  bill's 
econoBlc  lapact. 

AS  In  the  case  of  the  prohibition  on  bank  loans,  the 
bill's  proposed  ban  on  new  O.S.  investaent  in  South  Africa 
would  apply  to  foreign  affiliates  of  O.S.  firas.   The  resulting 
eitraterritorlal  application  of  D.S.  law  is  certain  to  give 
rise  to  frictions  with  our  allies.   It  is  noted  in  this 
connection  that  a  recent  Swedish  neasure  on  inveatnents  in 
south  Africa  which  could  have  a  Halted  extraterritorial  effect 
was  sharply  criticized  by  the  OECD  earlier  this  year. 

In  addition,  this  aeasure  would  diacrlalnate  against 
O.S.  Clrns  which  night  desire  to  invest  In  south  Africa  by 
offering  econonic  advantages  to  firns  already  there.   A 
prohibition  on  new  O.S.  Investnwnt  would  deprive  us  of  aarket 
opportunities  in  South  Africa.   There  Is  little  doubt  that  our 
economic  competitors  around  the  world  would  readily  step  in  to 
fill  such  a  gap. 

!S  would  see  this  aeasure  as  a  punitive  move 
iul<3  foster  an  unfriendly  business  climate, 
forcing  D.S.  firms  to  reconsider  trieir  existing  investnents  In 
south  Africa.   Its  tefmfi   Cor  example,  would  block  U.S.  firns 
from  providing  capital  Izow   the  u  S      for  local  subsidiaries 
caught  in  the  current  econoaic  downturn,  thus  effectively 
limiting  aanagement 's  ability  to  cope  effectively  with  the 
vagaries  of  the  marketplace.   This  is  unfair  and  unjust. 
Should  these  firms  withdraw  or  reduce  their  operations,  black 


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south  African  employees  would  be  the  fleet  to  suffer  since  they 
would  either  lose  their  jobs  or  be  taken  over  by  less 
enlightened  nanagenent.  It  1b  an  indisputable  fact  that  U.S. 
flrns  are  the  leaders  in  good  corporate  citizenship  and  fair 
employment  practices  in  South  Africa,  and  in  our  view  it  does 
not  make  sense  to  penalize  these  leading  corporate  voices  for 
change. 

It  is  very  clear  from  the  recent  Swedish  experience  with 
the  curtailment  of  investments  that  the  prohibition  on  new 
investments  leads  In  practice  to  disinvestment.   By  interfering 
with  the  normal  flow  of  capital,  firms  are  rendered  less  able 
to  compete,  it  is  likely  that  a  number  of  firms  will  decide 
that  it  is  no  longer  in  th*ir  economic  Interest  to  fight  these 
pressures  and  pull-out.  since  1979,  when  Sweden  took  rieasures 
to  block  new  investments,  the  number  of  Swedish  firms  in  south 
Africa  has  dropped  by  almost  S0%,  from  31  to  IT,  and  local 
employment  has  dropped  by  a  slnilar  percentage  —  from  5,500  ' 
to  2,800.'.  There  is  no  reason  to  believe  that  U.S.  firms  would 
react  any  differently. 

Black  south  Africans  recognize  the  implications  of  such 
threats  to  their  economic  livelihood.   Three  recent  polls  have 
shown  that  the  majority  of  black  South  Africans  oppose  efforts 
to  reduce  or  eliminate  foreign  investments  in  South  Africa.   A 
survey  conducted  in  1984  by  the  widely-respected  sociologist 
Lawrence  Schlemtner  of  the  University  of  Natal,  which  was  partly 
funded  by  the  Department  of  State,  concluded  that  while  many 
black  south  Africans  support  the  goals  of  the  banned  African 
National  Congress,  fully  75  percent  of  those  polled  were 
opposed  to  measures  that  would  result  in  the  reduction  of 
Investments  and  job  opportunities  in  South  Africa.  This 
conclusion  has  been  validated  in  two  other  recent  surveys. 

3.   Prohibition  on  Krugerrand  Imports 

The  symbolic  gesture  of  prohibiting  the  Import  of  the 
privately  minted  south  African  gold  coin,  the  Krugerrand,  is 
-not  based  on  sound  economic  principles.   Since  all  forms  of 
gold  bullion  or  coin  ace  near-perfect  substitutes,  prohibiting 
Krugerrand  imports  into  the  U.S.  would  simply  change  the 
composition  of  worldwide  flows  and  different  regional  markets 
without  affecting  the  overall  level  of  south  Africa's  gold 
exports.   Other  sources  would  replace  U.S.  imports  of  south 
African  gold.   Similarly,  South  Africa  would  fill  the  gap  in 
other  markets  created  by  the  diversion  of  those  gold  supplies 
to  the  United  States.   Even  if  we  accept,  for  a  moment,  that 
the  legislation  may  actually  succeed  in  reducing  south  African 
gold  sales,  there  would  be  an  economic  impact  on  that  country. 
But  the. proposal  would  also  harm  South  African  blacks,  hundreds 
of  thousands  of  whom  work  in  the  gold  mining  Industry,  as  well 


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aa  tens  o£  thousands  of  AfclcAns  fitm  a  half-doien  countries  as 
faT  away  aa  Kalavi  who  work  in  South  Africa's  gold  ainss.  Ns 
would  be  telling  the  black  workeia  of  South  Africa  what  la  beat 
for  tbea,  and  in  the  ptoceaa  we  would  be  punlahlng  the  very 
vlctias  of  the  apaitheid  ayatea. 

nie  propoaed  prohibition  on  the  iaport  of  Krugercand* 
alao  talaaa  serioua  iaaues  regarding  the  international  legal 
obligationa  of  the  United  States.  The  sane  iaaue  haa  ariaen 
with  respect  to  the  propoaed  ban  on  landing  rights  for  South 
Afiican  airlines  and  the  denial  of  tax  credits  for  U.S.  flr>a 
doing  busineaa  in  South  Africa,  both  of  which  are  contained  in 
billa  introduced  In  the  Rouse  of  Representatives.  The  latter 
two  prohibitions  would  be  clearly  Inconsistent  with 
international  agreenenta  currently  in  force  with  South  Africa. 

The  Krugerrand  iaaue  is  far  nore  complex,   nie  proposed 
ban  would  appear  to  violate  the  prohlbitlona  in  the  General 
Agreement  on  Tariffa  and  Trade  relating  to  quantitative 
restrictions  on  laporta  froii  countriea  that  are  partiea  to  the 
GATT  (e.g..  Article  XI  and  XIII).   The  GATT  doea  contain  a 
general  exception  in  Article  XX  for  neasures  'relating  to  the 
importation  or  exportation  of  gold  or  silver.*  such  aeaaures, 
however,  are  subject  to  the  qualification  that  they  nay  not 
'constitute  a  means  of  arbitrary  or  unjustifiable 
discrimination  between  countriea  where  the  sane  conditions 
prevail.*   This  latter  phrase  has  generally  been  interpreted  to 
■ean  trade-related  conditions  rather  than  political  ones. 
Whether  a  flat  ban  on  the  importation  of  Krugerrands  would  be 
in  violation  of  the  GATT  would  ultimately  be  decided  by  the 
GATT  Council  should  a  challenge  be  brought  by  South  Africa,  and 
it  is  not  clear  whether  the  GATT  Council  would  construe  the 
limited  qualification  In  Article  XX  as  permitting  any  selective 
import  ban  based  on  political  or  moral  grounds. 

It  is  also  difficult  to  predict  whether  south  Africa 
would  choose  to  raise  a  GATT  challenge  were  we  to  Impose  an 
import  ban  on  Krugerrands.  South  Africa  has  filed  a  GATT 
challenge  against  Canada  with  respect  to  a  provincial  sales  tax 
which  discriminates  against  imparted  gold  coins,  including  the 
Krugerrands.   if  south  Africa  was  to  challenge  any  import  ban 
on  Krugerrands  Imposed  by  the  U.S.,  the  GATT  could  authorize 
south  Africa  to  take  retaliatory  measures  against  o.s.  trade 
proportionate  to  the  effects  of  the  ban  on  South  Africa,   such 
authorization  could  be  granted  even  If  the  ban  does  not  violate 
the  GATT,  since  the  GATT  provides  relief  for  GATT-consistent 
actions  that  'nullify  or  impair*  the  benefits  of  the  gatt. 


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A  celated  GATT  lesue  Is  whether  the  'Host  Favored 
Nation*  rights  accorded  to  South  Africa  under  Article  1  of  the 
GATT  could  be  suspended  or  terminated  on  human  rights  grounds. 
The  limited  general  exceptions  provided  in  Article  XX  of  the 
GATT  relating  to  certain  products  (referred  to  above)  and  the 
security  exceptions  in  Article  xxt  do  not  provide  a  basis  to 
deny  hph  rights  based  on  human  rights  grounds.  The  denial  of 
MPN  treatment  would  accordingly  be  inconsistent  with  the  GATT. 

4.  Ban  on  Computer  BKports 

A  ban  on  the  export  of  almost  all  computers  to  or  for 
use  by  the  South  African  Government  or  its  parastatals  is 
unnecessarily  burdensome  and  restrictive.   The  United  States 
Government  already  exercises  extensive  controls  over  the  export 
of  computers  to  South  Africa.   Prospective  computer  exports  to 
south  Africa  are  examined  on  a  case-by-case  basis  to  ensure 
that  U.S.  computers  will  not  be  used  either  to  enhance  South 
Africa's  military  or  nuclear  capability  or  to  enforce 
apartheid,   we  fail  to  see  how  denying  U.S.  computers  to  south 
African  Government  agencies  such  as  the  South  African  Reserve 
Bank  or  the  Electricity  Supply  commission  would  lessen  the 
ability  of  the  south  African  Government  to  enforce  apartheid. 

The  end  result  of  the  enactment  of  such  a  bill  would  be 
that  the  Qnlted  States  will  be  harmed  more  than  South  Africa, 
south  Africa's  public  sector  owns  close  to  50  percent  of  that 
country's  gross  domestic  fixed  Investment,   A  ban  on  the  sale 
of  computers  and  software  would  eliminate  almost  one-half  o£ 
our  yearly  $200  million  computer,  parts,  and  software  sales  to 
South  Africa.   Further,  many  of  the  remaining  sales  to  South 
Africa's  private  sector  will  probably  be  lost  also,  since  U.S. 
firms  will  no  longer  be  viewed  as  reliable  suppliers.   This  is 
a  trend  we  are  already  seeing  in  South  Africa. 

One  must  recognize,  however,  that  the  economic  impact  on 
south  Africa  would  be  minimal.  South  African  import  statistics 
show  that  other  countries,  especially  Japan,  have  the 
capability  to  step  in  and  exploit  any  unilateral  withdrawal  by 
the  United  states,   japan's  average  yearly  growth  rate  In  the 
south  African  computer  market  was  206  percent  between  1976  and 
1983.  Its  share  of  the  market  has  increased  from  1.2  percent 
to  6,9  percent,  with  total  computer  sales  equaling  $24.1 
million  in  1983.   It  has  been  especially  aggressive  in  the  sale 
of  mainframe  computers.  The  surge  in  Japanese  computer  sales 
to  South  Africa  coincides  with  the  imposition  of  special  U.S. 
foceign  policy  export  controls  on  computer  sales  to  South 
Africa.   Britain  and  west  Germany,  which  together  control  27 
percent  of  the  South  African  computer  market,  would  also 
Increase  theit  sales  to  south  Africa.   Other  countries  have 
also  shown  their  willingness  and  capability  to  exploit  any 
withdrawal  on  the  part  of  the  united  States. 


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5.  waive tablllty  oC  Soni*  Ptovialons 

Two  of  the  prohibitions  contained  in  the  bill  {i.e., 
those  on  new  investments  and  the  Import  of  Krugerrande)  may  be 
waived  foi  periods  of  up  to  18  months  if  the  President  makes 
certain  determinations,  but  only  if  Joint  Resolutions  ace 
enacted  approving  the  determinations.   The  Department  of  State 
opposes  this  unrealistic  and  time  conauning  procedure  tor  such 
United  waivers. 

6.  Hegotiations  by  the  President 

S.  635  would  require  that  the  President  try  to  persuade 
the  governments  of  other  countries  to  adopt  comparable 
restrictions  of  the  kind  contained  in  the  bill  (e.g.,  on  new 
investment,  bank  loans,  computer  exports,  and  the  Import  of 
Krugerrands) .   The  Department  of  State  strongly  opposes  this 
provision.   Since  we  do  not  favor  the  adoption  of  these 
punitive  measures  by  the  United  States,  we  are  obviously  unable 
to  support  a  provision  which  would  require  negotiations  with 
other  countries  on  these  matters. 

The  Office  ot  Management  and  Budget  advises  that  from 
the  standpoint  of  the  Administration's  program,  there  is  no 
objection  to  the  Bubniasion  ot  this  report. 


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90 

Senator  Sarbanes.  If  you  don't  support  it,  I  think  you  ought  to 
drop  it  from  examples  when  you  make  your  point  about  distancing 
ourselves. 

Mr.  Dam.  It's  intended  to  be  a  factual  statement  as  to  the  fact 
that  our  commercial  relationship  is  now  also  restricted.  That's 
what  the  lead  sentence  in  the  paragraph  says. 

Senator  Sarbanes.  Is  it  your  view  ^at  the  U.S.  policy  on  South 
Africa  is  perceived,  at  least  by  many  in  South  Africa  and  elsewhere 
in  the  world,  as  indulging  the  apartheid  policy  of  the  South  African 
Government? 

Mr.  Dam.  That  our  policy  is  indulging  South  African  apartheid? 

Senator  Sarbanes.  Is  so  perceived  by  many  in  South  Africa  smd 
elsewhere  in  the  world? 

Mr.  Dam.  Oh,  I  have  no  doubt  that  there  are  many  people  who 

gerceive  it  that  way.  I  would  hesitate  to  draw  a  conclusion  as  to 
ow  the  people  in  South  Africa  look  at  it.  There  is,  of  course,  the 
survey  that  Senator  Proxmire  referred  to  on  attitudes  toward  the 
investment-disinvestment  issue.  There  have  been  other  surveys  of 
the  same  character.  In  all  of  those  cases  blacks  have  felt  that  disin- 
vestment would  be  a  mistake.  That's  also  the  situation,  since  you 
asked,  in  the  United  States,  which  the  Harris  poll  reported  in  Busi- 
ness Week. 

So  I  would  say  the  majority  of  people  don't  look  at  it  that  way. 
They  think  the  current  policy  is  the  better  part  of  good  judgment. 

Senator  Sarbanes.  As  Senator  Proxmire  pointed  out,  this  bill 
doesn't  call  for  disinvestment. 

Mr.  Dam.  Well,  I  don't  know  exactly  how  many  people  would 
follow  this  position  if  that  distinction  was  pointed  out  to  them. 
You're,  obviously,  addressing  a  large  question  and  you  can  make 
fine  print  of  great  issues,  but  in  general  they  were  opposed  to  a 
change  in  policy  on  investment.  I  don't  think  anybody  would  dis- 
agree with  that. 

Senator  Sarbanes.  How  high  a  price  do  you  think  the  United 
States  is  paying  elsewhere  in  the  world  for  our  policy  in  South 
Africa? 

Mr.  Dam.  I  think,  on  balance,  our  policy  in  the  southern  part  of 
Africa,  including  our  policy  of  constructive  engagement  with  South 
Africa,  has  won  us  a  lot  of  support  and  respect. 

Senator  Sarbanes.  Where? 

Mr.  Dam.  In  Europe. 

Senator  Sarbanes.  On  what  issue? 

Mr.  Dam.  On  our  entire  policy  in  the  southern  part  of  Africa,  in- 
cluding the  policy  of  constructive  engagement.  I  don't  think  you 
can  separate  that. 

Senator  Sarbanes.  Do  you  think  the  policy  is  working  on  Na- 
mibia? I  notice  you  made  the  reference  at  the  close  of  your  state- 
ment. Do  you  think  the  moves  the  South  Africem  Government  is 
now  making  are  inconsistent  with  the  position  of  the  contreict 
group  in  the  U.N.  framework? 

Mr.  Dam.  I'm  sorry.  Would  you  ask  the  question  again.  Senator.  I 
didn't  grasp  all  of  the  aspects  of  it. 

Senator  Sarbanes.  You  made  a  speciflc  reference  to  Namibia  at 
the  close  of  your  statement. 

Mr.  Dam.  Yes,  sir. 


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91 

Senator  Sarbanes.  Do  you  view  the  policies  or  the  steps  the 
South  African  Government  has  announced  as  pursuing  the  track  of 
the  contract  group  in  the  U.N.  framework  or  seeking  to  circumvent 
it? 

U.N.  SECURITY  RESOLUTION  435 

Mr.  Dam.  Well,  I  think  there's  been  tremendous  prepress  made 
over  the  last  few  years  in  moving  toward  the  implementation  of 
U.N.  Security  Resolution  435,  including  steps  of  withdrawing  their 
troops  from  Nfunibia,  including  their  willingness  to  talk  about  se- 
curity conditions.  You're  probably  referring  to  their  latest 

Senator  Sarbanes.  Do  you  think  the  meetings  they  are  currently 
having  in  Windhoek  are  an  effort  to  implement  U.N.  Resolution 
435? 

Mr.  Dam.  I'd  like  to  ask  Mr.  Wisner  to  respond  to  that.  That's  a 
a)mplicated  question  and  he's  been  directly  involved  in  that. 
.  Mr.  Wisner.  Senator,  concerning  the  announcement  you  referred 
to  with  respect  to  changes  in  the  internal  administration,  we  have 
informed  the  South  African  Government  very  clearly  that  we  see 
the  outcome  in  Namibia  must  continue  to  be  based  on  an  intema- 
tiooal  settlement  that  is  negotiated  along  the  lines  of  the  U.N.  Se- 
curity Resolution  435. 

The  South  African  Government  has  made  it  clear  on  its  part 
that  it  will  honor  its  commitments  to  these  international  settle- 
ments and  we  intend  to  hold  the  South  Africans  to  that  position. 

Senator  Sarbanes.  Now  you  made  that  representation  to  them,  1 
take  it,  because  you  were  concerned  that  those  moves  might  in  fact 
be  an  effort  to  go  outside  the  framework  of  U.N.  Resolution  435? 

Mr.  Wisner.  There  were  pro[>osaU  from  the  multiparty  confer- 
ence that  would  have  moved  beyond  the  freunework  of  435,  in  our 
judgment,  but  as  I  say,  at  the  moment,  we  continue  to  insist  and 
are  pursuing  a  track  that  leads  toward  U.N.  Resolution  435  at  the 
center  of  the  n^otiation  and  we  are  not  going  to  budge  from  that. 

Senator  Sarbanes.  Mr.  Secretary,  on  the  movement  in  a  positive 
direction  that  you  have  cited,  what  do  you  make  of  the  arrest  of 
the  United  Democratic  Front  [UDF]  leadership  and  the  possibility 
of  them  facing  very  serious  charges? 

First  of  all,  what's  your  view  of  the  UDF  as  sm  organization  and 
of  its  leaders? 

Mr.  Dam.  We  are  very  opposed  to  the  arrest  and  proposed  trial  of 
these  leaders  and  we  made  that  known  directly,  privately  to  the 
South  Africans,  and  we  made  it  known  publicly.  We  have  con- 
demned these  measures. 

Senator  Sarbanes.  And  what's  your  view  of  the  United  Demo- 
cratic Front? 

Mr.  Dam.  In  what  sense?  It's  a  political  party  and  we  believe  in 
political  parties.  We  believe  in  the  democratic  process.  Are  you 
asking  me  to  endorse  it? 

Senator  Sarbanes.  Do  you  think  it  should  have  the  freedom  to 
operate? 

Mr.  Dam.  Yes. 

Senator  Sarbanes.  Therefore,  you  abhor  the  arrests? 

Mr.  Dam.  Yes,  indeed. 


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92 

Senator  Sarbanes.  I'm  not  clear  from  your  statement  whel^er 
you  think  American  policy  can  or  cannot  influence  what  the  South 
AfriCEm  Government  does.  You  seem  to  ai^e  it  both  ways  in  your 
statement. 

Mr.  Dam.  We  think  a  .wise  and  patient  policy  can  have  construc- 
tive results,  yes. 

Senator  Sarbanes.  So  you  think  it  can  influence  the  South  Afri- 
can Government? 

Mr.  Dam.  Yes,  sir;  I  think  there  are  limits  to  our  influence,  but  I 
think  we  have  some  influence  by  our  presence  and  by  our  contin- 
ued dialog  with  them. 

Senator  Sarbani^.  Do  you  think  that  influence,  at  least  to  some 
degree,  has  to  be  reflected  in  our  distancing  ourselves  from  South 
Africa?  Is  that  correct?  In  other  words,  bring  pressure  to  bear? 

Mr.  Dam.  We  think  that  there  has  to  be  a  clear  statement  of  our 
position  on  apartheid  £md  the  distancing  to  a  limited  extent  has 
been  helpful. 

QUIET  DIPLOMACY  MAY  COMMUNICATE  THE  WRONG  MESSAGE 

Senator  Sarbanes.  We  have  to  make  a  judgment  here  as  to 
whether  the  policy  of  quiet  diplomacy  is  so  quiet  that  it  may  in  fact 
communicate  the  wrong  message  both  to  the  South  AfricEm  Gov- 
ernment emd  elements  within  South  African  society  and  elsewhere 
that  the  United  States,  despite  its  rhetoric,  in  effect  tolerates  or  in- 
dulges this  regime.  That  had  to  be  done  earlier  with  respect,  for 
example,  to  the  IMF  restrictions,  did  it  not? 

Mr.  Dam.  I  agree  with  you  that  it's  important  to  make  a  ju<^- 
ment  about  exactly  what  kind  of  stance  is  most  productive. 

In  other  words,  this  is  not  a  prototypical  quiet  diplomacy  situa- 
tion in  which  the  Government  does  not  say  anything  at  all.  We  are 
very  outspoken  on  the  subject  of  apartheid. 

Senator  Sarbanes.  Well,  do  something  as  well  as  say  something. 

Mr.  Dam.  Well,  the  question  is 

Senator  Sarbanes.  You  indicate  you  support  certain  instances  in 
which  restrictive  measures  were  taken;  is  that  correct? 

Mr.  Dam.  Well,  to  a  very  limited  extent.  Many  of  the  measures 
that  have  been  taken  have  been  taken  with  regard  to  a  policy.  We 
just  had  this  discussion.  Senator,  about  the  IMF  language  and  I 
promised  to  go  back  and  obtain  for  you  on  behalf  of  the  administra- 
tion our  position  on  that.  I  think  measures  that  reduce  the  pres- 
ence of  the  American  business  community  in  South  Africa  are 
counterproductive  for  the  black  population  of  South  Africa.  I  think 
anything  which  eliminates  our  diplomatic  presence  or  reduces  it  is 
bad.  So  you  have  to  look  at  this  measure  by  measure.  I  agree  that 
it  is  a  diflicult  question. 

Senator  Sarbanes.  Now,  Senator  Proxmire  asked  you  whether 
we  should  restrict  investment  if  other  nations  did  restrict  theirs, 
should  we  do  it,  and  you  emswered,  "If  the  world  were  perfect  and 
everyone  would  go  along,  we  would  have  a  different  situation."  So  I 
take  it  your  position  is  that  if  other  countries  would  join  in  the  re- 
striction, then  you  would  support  it. 

Mr.  Dam.  I  think  that's  a  totally  hypothetical  situation.  Not  only 
do  other  coimtries  not  go  along  with  the  idea;  they  are  very  active- 


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\y  opposed  to  the  notion  of  this.  This  is  a  universal  problem  with 
sanctions.  Senator.  The  United  States  imposes  sanctions  and  other 
people  do  not  go  along.  As  a  result,  the  sanctions  are  inefTective. 
That  is  the  history  of  sanctions. 

Senator  Sarbanes.  Is  the  only  beisis  to  your  opposition  to  sanc- 
tions that  they  couldn't  be  universally  applied?  If  they  could  be 
universally  applied  would  you  be  in  favor  of  them? 

Ml.  Dam.  No;  I  wouldn't  be  in  favor  of  them  because  I  think 
tiiere  are  other  reasons  why.  Many  of  the  ailments  I  have  been 
ptffking  to  you  would  not  apply,  but  the  fact  of  the  matter  is  that  I 
also  Uunk  we  should  take  measures  which  help  the  blacks  in  South 
Africa  and  I  think  that  the  elimination  of  investment  in  South 
Airica- would  be  bad  for  them.  It  would  cause  unemployment.  It 
would  cause  hardship  and  misery.  I  think  also  it  would  be  creating 
a  situation  in  which  one  could  not  hope  to  carry  out  the  demands 
of  U.N.  Resolution  435.  So  I  think  there  are  a  lot  of  other  reasons. 

Senator  Sarbanes.  How  many  blacks  work  for  U.S.  firms  in 
South  Africa? 

Mr.  Dam.  Approximately  120,000,  if  I  remember  correctly. 

Senator  Sarbanes.  And  how  many  blacks  are  there  in  South 
AAica. 

Mr.  Dam.  This  is  only  about  1  percent  of  the  labor  force.  I  think 
it  ought  to  be  expanded,  not  decreased. 

Senator  Sarbanes.  What's  the  black  population  in  South  Africa? 

Mr.  Dam.  I  don't  have  that  in  my  head. 

Senator  Sarbanes.  22  million? 

Mr.  Dam.  That  sounds  right  to  me. 

Senator  Sarbanes.  And  120,000  are  employed  by  American  firms, 
so  120,000  are  impacted  by  the  American  firms? 

Mr.  Dam.  It's  approximately  1  percent  of  the  labor  force,  Sena- 
tor. 

Senator  Sarbanes.  And  irf  the  120,000  impacted  by  Americsm 
firms,  how  many  a]%  impacted  by  firms  that  have  adopted  the  Sul- 
livan principles? 

Mr.  Dam.  It's  a^jproximately  70  percent.  I  can  provide  the  latest 
report  to  you  on  that  subject. 

Senator  Sarbanes.  You're  against  requiring  American  firms  to 
adhere  to  the  Sullivan  principles.  You're  even  against  that  kind  of 
step,  I  take  it. 

Mr.  Dam.  Yes,  for  two  basic  reasons.  Senator.  First,  we  think 
that  the  genus  of  the  SuUivan  principles  have  been  their  voluntary 
nature  and  we  think  that  their  example  can  move  other  countries 
in  the  direction  of  getting  to  follow  the  same  principles. 

Second,  we  are  very  opposed  to  trying  to  create  an  extraterritor- 
ial r^ulatory  system  in  which  we  here  in  Washington  try  to  regu- 
late labor  practices  in  another  country.  I  think  that  is  a  formula 
for  all  kinds  of  problems. 

Senator  Sarbanes.  I  gather  my  time  is  up.  You  may  at  some 
point  have  to  choose  between  trying  to  infiuence  or  simply  ending 
the  relationship.  Do  you  favor  continuing  a  relationship  indefinite- 
ly with,  a  regime  that  practices  apartheid? 

Mr.  Dam.  What  we.  favor  is  the  policy  that  I  have  given. 


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94 

Senator  Sarbanes.  Well,  what's  tiie  answer  to  my  question?  Do 
you  favor  continuing  indefinitely  the  relationship  with  a  regime 
that  practices  apartheid? 

Mr.  Dam.  We  are  opposed  to  apartheid.  We  are  in  favor  of  trying 
to  have  construction  relationship  with  them  and  I  have  gone 
through 

Senator  Sarbanes.  I  want  to — because  my  time  is  up 

Mr.  Dam.  May  I  answer,  Senator? 

Senator  Sarbanes.  My  time  is  short.  What  I'm  trying  to  get  at  is 
whether  your  reason  for  pursuit^  this  line — suppose  the  apartheid 
policy  doesn't  change.  Do  you  favor  maintaining  the  constructive 
engagement  relationship? 

PRESENT  POUCV  MAY  HAVE  TO  BE  REEXAMINED 

Mr.  Dam.  If  there  were  no  change  beyond  that  achieved  today, 
then  at  some  point  in  the  future  obviously  our  policy  would  have  to 
be  reexamined.  But  there's  been  a  tot  of  movement  which  I  have 
outlined  to  you  over  just  the  last  year  or  two,  and  I  think  that  this 
would  be  a  terrible  time — the  worst  time  to  chaise  course. 

Senator  Sarbanes.  Is  it  the  administration's  view,  in  your  opin- 
ion, that  if  apartheid  is  not  dismantled  the  American  relationship 
with  South  Africa  would  have  to  come  to  an  end? 

Mr.  Dam.  Senator,  the  apartheid  system  is  a  despicable  system. 
It's  also  very  deeply  rooted.  And  I  don't  think  there's  any  person 
from  any  political  persuasion  that  thinks  it's  going  to  disappear  in 
the  next  year  or  2  years.  What  we  have  to  do — the  executive 
branch  and  the  legislative  branch — is  to  develop  policies  that  will 
bring  it  to  an  end  as  soon  as  possible.  All  we  are  disagreeii^  about, 
if  we  do  disagree,  is  about  what  policy  is  best  calculated  to  achieve 
that  result  that  we  both  seek. 

Senator  Sarbanes.  You  and  I  differ  on  how  far  we  would  be  pre- 
pared to  go.  How  important  to  us  are  the  economic  benefits  of  the 
American  relationship  with  South  Africa?  How  heavily  should  we 
weigh  those  in  the  sceile  as  we  consider  the  despicable  apartheid 
regime?  Do  we  create  a  balance  in  which  we  weigh  the  negatives  of 
a  despicable  apartheid  regime  with  the  economic  benefits  that  flow 
to  U.S.  firms  and  to  the  United  States  from  the  economic  relation- 
ship? 

Mr.  Dam.  I  think  the  economic  benefits  are  there,  but  I  think 
they  are  a  very  small  fact  in  the  overall  situation  of  what  we  are 
trying  to  achieve.  There  lire  some  problems  involving  strategic  ma- 
terials which  I  think,  in  considering  the  policy  that  you're  now  ad- 
vocating of  turning  our  back  completely  on  South  Africa,  would 
have  to  be  we^hed  in  the  balance.  But  I  don't  think  that's  funda* 
mentally  what  we're  talking  about.  We  are  talking  about  what 
kind  of  policy  is  best  calculated  to  bring  to  an  end  a  system  of 
apartheid  and  bring  peace  to  the  southern  part  of  the  hemisphere. 

Senator  Hed^z.  Tihe  gentleman's  time  has  expired. 

Senator  Sarbanes.  "Ritrnk  you,  Mr.  Chairman. 

Senator  Heinz.  Mr.  Dam,  I've  got  one  last  question.  You  said 
that  you  oppose  anything  having  to  do  with  investment  restric- 
tions. You  have  also  said  that  you  oppose  the  provision  that  is  in 
this  legislation  and  was  in  legislation  last  year  that  prohibits 


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95 

American  banks  from  loaning  to  the  South  AfricEin  Government  or 
its  instnunentalitiea  and  at  the  same  time  you  have  made  much  of 
the  fact  that  there  are  in  the  law,  as  Senator  Sarbanes  enumerated 
at  some  length  with  you,  a  number  of  provisions  that  the  adminis- 
tration either  Bupports  or  acquiesces  in  as  appropriate  policy. 

For  example,  it  s  my  understanding  that  the  administration  does 
support  that  lengthy  list  of  prohibited  items  controlled  by  the 
Export  Administration  Act,  the  net  result  of  which  is  to  prohibit 
the  export  of  anything  that  would  enhance  the  capabilities  or  con- 
tinue the  capabilities  of  the  South  African  police  or  the  South  Afri- 
can military.  My  understandii^  is  that  the  administration  actually 
Bupports  that. 

Now  what  is  the  difference  between  the  Eidministration  opposing 
the  sale  of  arms  for  the  South  African  police  with  which  to  repress 
black  South  Africans  and  being  on  record  l^ally,  in  opposing  bank 
loans  to  the  South  AfricEm  Government  since  it  can  use  the  money 
and  go  to  somebody  else  and  buy  those  arms,  as  indeed  they  are 
doing?  Why  is  it  not  inconsistent  for  the  administration  to  sinr  we 
are  against  selling  arms,  but  it's  all  right  for  American  banks  to 
lend  money  to  the  South  African  Government  to  buy  the  same 
arms  from  somebody  else? 

.  Mr.  Dam.  I  will  answer  your  question,  but  I  would  like  to  suggest 
that  perhaps  it  would  be  useful,  since  there  are  many  questions 
like  this,  to  provide  a  more  technical  memorandum  going  throu^ 
the  specific  provisions,  in  answer  to  some  of  Senator  Sarbanes' 
questions  along  the  same  lines. 
"Senator  Heinz.  The  committee  would  love  to  have  that  if  you 
would  furnish  that  to  us. 

.[The  following  information  weis  subsequently  submitted  for  the 
record:] 

Chbck  List:  PoBmn  Developuknts  in  South  Africa 

Quettion.  What  arethe  positive  developments  taking  place  inside  South  Africa  to 
which  the  administration  refers? 

Answer.  Legalization  of  black  trade  unions. 

The  impact  of  the  Sullivan  code:  U.S.  firms  in  forefront  of  improving  conditions 
for  blacks  in  the  workplace  and  in  black  communities.  Ripple  effect — other  foreign 
firms  and  South  African  firms  implementing  similar  codes. 

The  adoption  of  the  new  Constitution  by  white  voters  in  November  1983.  The  Con- 
stitution is  flawed  because  it  does  not  address  the  question  of  political  rights  for  the 
country's  black  majority.  It  does,  however,  for  the  first  time,  share  political  power 
at  the  national  level,  albeit  in  a  limited  way,  with  non-whites. 

State  President  Botha's  speech  to  the  new  Parliament  last  month  invited  the  na- 
tion's blacks  to  engage  in  a  dialog  to  discuss  changes  in  the  laws  governing:  (1) 
urban  black  residency  rights;  (2)  black  ownerahip  of  land;  (3)  influx  control;  (4)  citi- 
zenship of  blacky  (5)  review  the  forced  removal  policy;  and  (6)  discuss  some  national 
political  role  for  urban  blacks.  In  essence,  this  implies  movement  away  from  apart- 

llie  Government's  decision  to  suspend  forced  removals  pending  a  review  of  the 
policy. 

A  Government  action  which  gives  blacks  reaidencv  rights  in  the  Eastern  Cape. 

A  Govemmoit  decision  to  permit  members  of  all  races  to  own  and  operate  busi- 
nesses in  the  central  business  districts  of  the  nation's  cities. 

Moves  to  rescind  the  Mixed  Marriages  and  Immorality  Acts  which  are  currently 
based  on  racial  separation. 

Chi  the  r^onal  ^nt  there  has  also  been  progress.  The  drive  to  bring  peace  to 
southern  Africa  is  essential  to  the  achievement  of  change  inside  South  Africa. 

All  parties  have  agreed  to  the  terms  of  UNSC  Res.  ^5,  the  UN's  plan  for  Namib- 
ian  independence.  This  includes  South  Africa. 


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Only  th«  issue  of  Cuban  troop  withdrawal  from  Angola  holds  up  implementation 
of  Namibian  independence.  Angola  and  South  Africa  are  addreaaing  this  last  re- 
maining issue  now  with  U.S.  encouragement  and  diplomatic  help. 

South  Africa's  disengagement  from  Angola  is  almost  complete. 

The  Nkomati  Accord  between  South  Africa  and  Afozambique  is  alive  and  South 
Africa  is  attempting  to  negotiate  a  ceasefire  between  tlie  government  in  Maputo 
and  the  anti-government  Renamo  guerrillaB. 

TARGETING  BANK  LOANS 

Mr.  Dam.  I  will  say,  in  response  to  your  question,  I  think  the 
problem  with  the  bank  loan  provision  is  that  it's  going  to  the  par- 
astatal  of  all  kinds.  It  means  that  loans  cannot  be  made  to  South 
African  Airways.  That  doesn't  help  the  black  population.  That 
doesn't  protect  them.  The  same  way  with  the  various  public  utili- 
ties. That  doesn't  help  the  black  population.  If  anything,  it  hurts 
them.  It's  a  line-drawing  problem  and  it's  a  difHcult  problem,  but 
there  is  a  difference  between  taking  direct  measures  with  regard  to 
the  police  and  the  militaiy  to  limit  what  they  can  do,  and  trying  to 
harm  the  South  African  Government  and  their  economy  in  gener- 
al. 

Senator  Heinz.  Just  so  we're  talking  about  the  same  bill,  as  I  un- 
derstand S.  635 — and  I'm  not  a  cosponsor  of  it — my  understanding 
of  the  bank  loan  provision  is  that  no  American  bank  can  make  a 
loan  to  Etny  government  in  the  South  African  Government  unless 
the  loan  involves  educational,  housing,  or  health  facilities  that  are 
readily  available  to  all  persons  regardless  of  race.  It  is  qualified  to 
a  considerable  extent  against  the  concern  that  you  expressed. 

Let's  assume  that  it  can  be  perfected  so  that  it  really  is  targeted. 

Mr.  Dam.  The  teu^eting  I'm  talking  about  is  different,  not  only 
targetii^  by  allowing  loans  to  certfiin  socieU  areas  like  homing  and 
so  forth.  I  am  saying  that  the  blacks  of  South  Africa  benefit  by  a 
strong  economy.  Now  it  happens  that  something  like  50  percent  of 
business  activity  in  South  Africa  is  carried  out  by  parastatal  oi^- 
nizations.  So  that  would  just  leave  the  other  half  of  the  economy. 

When  I  talk  about  targeting,  I'm  talking  about  avoiding  assisting 
in  activities  which  would  directlv  and  demonstrably  have  a  nega- 
tive effect  on  the  welfare  of  the  black  population. 

Senator  Heinz.  I  understand  that,  but  when  we  loan  $500  million 
to  the  South  African  Government  I  think  you  have  to  stretch 
pretty  far  to  say  that  that  is  job  creating  investment  which  is  the 
principal  argument  you  make. 

Mr.  Dam.  I  don't  think  you  have  to  because  these  are  not,  as  I 
understand  it — if  I'm  wrong,  I'd  like  to  be  able  to  correct  myself  for 
the  record — but  it's  my  understanding  that  most  of  these  loans  go 
to  enterprises  just  like  in  Britain  loans  are  made  to  these  state  en- 
terprises— the  coal  board  and  the  electricity  council  and  so  forth. 
The  South  Africans  have  a  very  analogous  system  and  what  we 
would  be  depriving  by  the  United  States  limiting  loans  in  the 
public  utilities  area  is  the  public  in  South  Africa. 

Senator  Heinz.  I  understand  that,  but  you  know  as  well  as  I  do 
that  as  to  the  extent  the  South  Africans  choose  to  borrow  out  of 
one  pocket  that  frees  them  to  borrow  for  military,  police,  or  other 
purposes  from  their  own. 

Mr.  Dam.  Money  is  fungible  and  it  may  be  a  problem  of  that 
character,  but  I  think  with  public  enterprises  it's  pretty  easy  to  see 


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97 

what  the  fund  flows  are  and,  again,  as  I  say,  these  are  not  absolute- 
ly unambiguous  lines,  but  the  problem  here  is  one  of  statesmanship 
of  drawing  a  line  and  I  think  that  this  bill  and  other  bills  that  I 
discussed  go  too  far  in  the  direction  of  turning  our  back  on  South 
Africa. 

Senator  Heinz.  Secretary  Dam,  I  have  some  additionetl  questions, 
nine  of  them,  that  I  would  like  to  submit  for  the  record.  I  see  no 
further  interest  in  questions  from  the  other  members  of  the  com- 
mittee. But  I  must  say,  in  all  Beriousnese,  we  have  reached  a  point 
here  in  the  Congress  where  I  think  legislation  is  going  to  pass. 
Indeed,  legislation,  if  we're  going  to  be  realistic  and  truthful  about 
it,  in  fact  passed  the  House  and  Senate  last  year.  There  was  almost 
no  substantive  objection  from  Members  of  Congress,  House  and 
Senate,  to  those  two  bills.  There  was  on  the  part  of  the  House  bill  a 
major  distinction.  There  was  an  investment  freeze  or  a  no  new  in- 
vestment limitation  in  at  least  one  version  of  the  House  bills.  That 
affected  Americem  companies  only.  I  suspect  that  particular  provi- 
sion would  have  a  less  welcome  reception  in  the  Senate  than  it  had 
in  the  House,  but  nonetheless,  we  shouldn't  fool  ourselves  into 
thinking  that  there  is  not  a  substantieil  amount  of  House  and 
Senate  bipartisan  support  for  doing  something  more  then  we  are 
doing  now  and  it  is  in  part  related  to  the  fact  that  the  perception 
of  constructive  engagement  as  an  effective  force  in  bringing  about 
peaceful  change  in  South  Africa  is  simply  not  yielding  the  results 
that  you  would  like  it  to  yield  and  this  perception  is  premised  on 
the  fact  that  we  see  things  slip  backward  in  the  last  3  to  6  months. 

It  would  seem  to  me  that  the  administration  would  be  well  ad- 
vised to  do  everything  it  can  within  its  policy  framework  to  get 
better  results  if  it  can  because  it  is  results— or  I  should  say  the 
lack  of  them — that  has  the  majority  of  the  House  and  Senate  very, 
very  concerned. 

If  you  care  to  respond  you  can,  but  I  don't  ask  you  to  respond. 

Mr.  Dam.  Well,  thank  you,  Mr.  Chairman.  I  appreciate  the  op- 
portunity to  explain  our  policy.  We  recognize  the  great  interest  in 
Congress  on  this  subject  and  we  don't  think  that  the  issue  is  easy, 
but  we  do  think  they  have  to  be  approached  carefully  so  that  a 
wise  policy  is  arrived  at. 

Senator  Heinz.  Very  well.  Secretary  Dam  and  Secretary  Wisner, 
thank  you  very  much  for  being  with  us. 

The  hearing  is  adjourned. 

[Whereupon,  at  1:30  p.m.,  the  hearing  was  adjourned.] 

[Response  to  written  questions  of  Senators  Heinz,  Hecht,  Mat- 
tingly,  Proxmire,  emd  Sarbemes  follow:] 


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June  7,  1985 


Dear  Senator  Heinit 

Thank  you  for  your  lettec  ot   April  18  transaitting 
those  questions  which  arose  fron  ny  recent  appearance 
before  the  Senate  Comnittee  on  Banking,  Housing  and  Urban 
Affairs*   I  an  pleased  to  enclose  responses  to  those 
questions  and  to  two  questions  posed  by  Senator  Sarbanea 
during  the  hearings. 

Sincerely, 


Correspondence  returned 
Answers  to  Questions  by 

Connittes  Henbers 
Check  Llsti   Positive  Developsenta 

in  South  Africa 
President  Reagan  -  Rededlcation  to 

the  Cause  of  Human  Sights 


The  Honorable 
John  Heinz, 

United  States 


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HglHZ    QUESTIOMS 


ACMDIISTRATIOH  CM   VIOLEMCE 


1.      0.      Would   you  please  enuaerate   the  apecific  steps   the 
Ad>inistrBtion  has   taken   to  respond   to   the  recent   growing  » 
1  South  Africa? 


A.  The  AdBinistration, 
consistently  spoken  out 
public  condeuiations  of 


IroB   the  President  on  down,   has 
igainst  apartheid.    Including  specific 
ilence,   killings,    forced  renovals   and 


detentions   which  have  occurred  over   the  past   several   aonth*. 


(   known   to   the  South  African  Governaent 
[ons   and  at   the  highest   level*   our 
and   It*   manifestations.      Ue  have 
1  Governaent   that   our   relationship 
'   until   there   is  significant  progress 
rtheid   toward  a  systea  based  on   the 
>verned.     He  have  called  repeatedly   for 
a  hAlt   to   the  violence  engulfing   South  Africa   and  have   urged 
that  a  meaningful   dialogue  begin  between   the  government  on  the 
one  hanii  and   the   leader*  of   the  black  coBBunity  on   the  other. 


,   we  have  Made 


inforned   the   South  Afri 


in  Boving   away   fron  apart! 
consent  of  all   of  the  gov* 


SULLIVAM   PRIBCIPLES 

2.      Q.      What   specific  steps    in  the  past  year  has   our  Oovernnent 
taken   to  pronote   implenentation  of   the   Sullivan  principles  by 
Anerlcan    coapanies    operating    In    South  Africa? 

A.      On   at   least   two   separate  occasions,    the   Secretary  of   State 

has   acted   to  encourage   U.S.    fir>8  operating   in  South  Africa   to 

adhere   to  a   fair   labor   code   in  South  Africa.      In  March,    1964, 

he  hosted  a   luncheon  at   Blair  House   for  Reverend  Sullivan   and 

30  executives  of  najor  U.6.    firas   with   investments   in   South 


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Africa,    Sullivan  slgnators   and  non-Blgnatora   alike,    to 
encourage   their  adherence   to  a  code,      Thia  year,    the  Secretary 
sent   personal   letters   to  Chief   Executive   Officers  of   soae  of 
the   largest   U.S.    flrns   located   in   South  Africa  which  are  not 
Sullivan  Code  adherents,    urging   then  to  become   subscribers   to 
the  Code.      These   efforts  have  undoubtedly  played  a   role   in   the 
adherence  of   over  20  conpanies   in   the  past  year.      Also,    all 
Department  officials   concerned  with  South  Africa  regularly  take 
the  opportunity  of   urging   U.S.    firns   to  adhere   to   the   Sullivan 
Code  or   similar   policies   in   their   dally  business   dealings   with 

U.S.    FIRMS/SOUTH  AFBICAB    LCOhOMY 

3.      0.      What   is   the  ability  of   South  Africa   to  maintain   its 
econony  without   the  participation  of   American  companies? 

A.      Clearly  the  U.S.    is   iaportant   to   South  Africa,   but  more   for 

political   and  social   than  economic   reasons.      U.S.   direct 

investment    (book   value)   at   the  end  of   19B3   (latest  nvailable 

figures)   stood  at   S2.3  billion,    or   approximately  171  of   total 

foreign   investment   in   South  Africa.      This   amount,   however, 

represented   only   3%  of   all    investnent   in  South  Africa.      U.S. 

InVGEtment    covered   a   wide    scope    of   activity  but    little,    if   any, 

is   critical   to   the   continued  existence  and  well-being   of   the 

South  African   econony.      Were  U.S.    firms   forced   to  leave  South 

Africa,    their   assets   would  likely  be  purchased  by  other   foreign 

investors   or   by   South  African   investors  at    "fire  sale"  prices. 


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In   shoct.    South  Africa  would  b«  raadlly  abla  to  sua 
econoalc  activity   in   the  abaanca  of   U.S.    fltB*. 

U.S.    BUSINESS    EFFECTS   OM   TRABSITIOM 


A.      About  half  of   thB  300-Odd   U.S.    flra*  op«ratin9   In   South 
Africa   are  <ignatorie«   to   tha  Sullivan  Code.      Theaa  Sullivan 
signntorie*   employ  approxiaately  701  of   tha   total  nuaber   of 
eoployaes   working   for   all   U.S.    firas   in  South  Africa.      It   !• 
generally  acknowledged   that   U.S.    flraa,   especially   Sullivan 
flEBs.   have  been   trend  setter*   in   iaplenentlng   fair   labor 
practices   which  go  well  beyond   the. workplace  and  which   touch 
upon   the  well-being  of   the  eaployee  and  his   faaily  outside   the 
workplace   in  areas  of   education,   health  and   training.      Other 
firas,    foreign   and  South  African   alike,   have  used   the  Sullivan 
Code   aa  a   nodel    for   their   own  sat  of   fair   labor  practices. 
Clearly,    South  African  black   eaployees  benefit   froa  the 
Sullivan  Code  and  siailar   codes.      Hence,   our   policy  of 
encouraging   all   U.S.    firns   in  South  Africa   to   inplenent   the 
Sullivan   principles   is.    we  believe,    contributory   to  those  whose 
efforts   are  alaed  at  peaceful,    positive   change  away   froa 
apartheid   toward  a  systea  of  governaent  based  on   the   consent  of 
all   the   governed.      The  ultiaate  nature  of  tha   transition   of 
political   power    in  South  Africa   fa   an   issue  which  goes   well 
beyond   the  participation  of   the  U.S.   business   conaunlty, 
especially  given   the   fact   that  all   U.S.    firms    in  South  Africa 


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account    for   about   only  one   percent  of   total   enploynent.      I 
would,   however,   suggeet   that   the  real   value  of   the   Sullivan 
Code  lies   In   Iti   influencB  aa  a   >od*l  of  what   the   total 
buainess   connunlty  can  contribute   to  a  nore  prosperous   and 
•table   South  Africa. 

PROMOTIBG  REFORM 

5.      C>      There  are   in  South  Africa  within   the  Governiient 
refornist   groups   and   those   that   reelst  reforn.      What  steps   can 
we   take   to  strengthen   the   influence   of   those   promoting   reform 
and    encourage    those   who   would    resist    to  be   more   receptive    to 
reform?     What  are   the  econoBic   vulnerabilities   of   the  groups 
that  oppose   novenent   to  majority  rule? 

A.      Our   policy   toward   South  Africa   la   specifically  designed   to 

•ncourage  reform  and   its  proponents.      We  have  rejected  punitive 

neasures   as   a  means   of  aiding   the  reforn  process:    they  would  be 

counterproductive  and  stiffen   the   reeistence  of   those   who  ore 

not  reform  minded  now.      He  have   lent  our   political   and  econo>ic 

and  moral   support   to   the  proponents  of   change   in   South  Africa 

and  have  encouraged   then   to  hasten   the  process   and  nake   it  nore 

meaningful.      Through  our   assistance   progran   to   the  black 

community   (about   tlO  million   annually),    h«  have  attenpted   to 

encourage  positive,   non-violent   change   through   the   provision  of 

expanded   educational   opportunities,    labor   and   entreprenurial 

training   and  have  encouraged   the  pronotion  of  human   rights.      We 

would   welcome    the    cooperation   of    the  Congress   both    in   enlarging  ' 

these   programs   directed  at  blacks   as  well   ae   support   for   those 

whites   who  have  recognized   the   need   for   change  away   from 

apartheid. 


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Htiat   aort  of 


DISI1IVES^MEMT  AS  A  SICMU. 

€.      C.     Miat  sort  of  aignal  Mould  dlaiovcatacE 
radical    and  -coBBuniat    forces    In    aouthcrn  Aftic 
interpretaticin   do  you    tbink    t)w   Soviet*   would   pui 
actions,   paiticulaily  regarding  whcthcr-Ne  would 
tbey  Hcie  to  begin  aiding    the  radical  foic 

A.       DiBiDveBtsent   would   signal    a   U.S.    unwilliDgDaas    to  puiau* 

tlie  only   logical   course  of  action  open   to  us,    uhicli  is 

atteapting   to  ptoaot*  paScafuL  change    in   South  Africa. 

Hittadiawol  of   U.S.   buainaaa    intaiaats  would  raaova 

f*H   toola  of   influeno*  available  to  u*   in  helping  t 

change  and  would  leave  a  aoral   void    that  would   E**i 

leBsening  of  both  regional   U.S. . influence  and  oui   i 

help   influence  Bovaaent  away    fcon  apartheid.      Diait 

would  clearly  eabolden   thaa  to   Increase  asaistanca 

forcea    to  puah   for    the  revolutionary  overthrow  of    the   South 

African  Governnent.      Besides   thia   psychological   and  political 

signal,    U.S.    diainvestaent   could  contribute   to  uneaployacnt   and 

unrest,    with  not  only  70.000  horkers    jobs  being  .jeopardised  but 

the   livelihood  of    the  approxlaately  400,000  others   who  depend 

on   then   for    support.      This   would   increase   the  great  social 

unrest   already  widespread    in   that   country.      Ne  do  not   think 

this    is  what  Anerica    ie   about. 


on*  of   the 
to  proaota 


1  radical 


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SUCCESS   OF   COMSTmiCTIVE  EHGfcGEMEtiT 

7.       Q,      As   I    noted    eailier,    constructive   engageiient   has   not   had 
any  notable   succasses   with  respect   to   the   eliminBtion  of 
apartheid    in   South  Africa.      No   aeaningful   progreas    has   been 
>ade   —  even  attenpta   to  upgrade   the   social,    econonic   and 
educational   status   of   the  blacks  has  been   spotty  at  best,   and 
the  black  najority   is   still   aenied   civil   rights.      Can   you 
recoADeiid  any   specific  policy   changes    to  help  bring   about   an 
end   to  apartheid  >ore   rapidly  and   that   would  produce  some 
tangible  progress? 

A.      I   would  respectfully  but  strongly  disagree  with   the  prenise 

of  your  question,   nasely   that   'constructive   engagenent  has  not 

had  any  notable  successes   with   respect   to  the  elinination  of 

apartheid   in  South  Africa."     Although  we  do  not  and  should  not 

take  credit   for   the  changes   which  have   taken  place  as   a   result 

of   the  reforn  effort   which  has  been   underway   in  South  Africa 

for   the  past  several   years,    there   is,   nevertheless,   iiore   than  a 

happy   coincidence  between  major   reforn   in   that  country   and   the 

advent  of   the  current   U.S.   Adninistration.      I   an  attaching 

herewith  a   partial   listing  of   the   major   changes   away   fros 

apartheid   in  South  Africa  which  have  occurred  over   the  past 

several   years.      These  reforns   are  only  a  beginning   but   should 

be  encouraged  and  built  upon,   not  miniuized.     We  accept,   based 

on   the   facts,    such  as   the   £-1   vote  among  whites   on   the   new 

constitution   in   19e3,    that   the  white   comnunity  and   the 

GovernBent  of  South  Africa  have   recognised   the  need   to  and  have 

shown  a  willingness   to  change,    to  move  away   from  apartheid  both 

in  spirit  and   in   fact,   and  have  pursued  a   course  of  action 

toward   that   end.      This  does   not   mean   to   imply  that   all  white 


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South  Africans  are   in  agraenent  with   tha  rafora  procaaa,    for 
there   ia   a   conaideEable  oppoaltion   to  the  goveinnent'a  reforn 
policy.      It   la   thia  very  opposition,   expraaaed  politically, 
which  contrlbutaa   to  the  caution   Boaetlnea   exerclaed  by  the 
goveinaent   In  announcing  and   iaplBBentlng   further   refoTB.      Were 
we   to  posture  ouraalvea   in  an  adveraarial   Banner   via-a-vis   the 
govaroBent   there.    It  uould  only  sexva   to  attengthen   the   fotcea 
opposing   refors.      Clearly,   our   position   ahould  be   to  encourage 
refora  whenever   possible  and   to  speak  out.   aa  wa  regularly  do, 
when   the  refoxM  alfort   Is  negated  or    in  other   ways   retarded. 

COOPERATIOM   OK   SMiCTIOhS 

6.      Q.      Bcononic  sanctiona  have  had  a  poor   succeas  rat*  uhen 
inposed  by  only  one  country.     What   international   cooperation 
could  we   expect    for    the   type  of   aanctlons   nandated  under 
S.6357     Mhfit   efforts   are  being  Bade   to  persuade  other   countriea 
to  participate  with   the   United   States   In   its   current   policies 
tonard   South  Africa? 

A.      Me  seriously  doubt   that  others   in   the   International 

contnunity  would  be  prepared   to  apply   Bcanlngful   econonic 

sanctions   against   the  South  African  Governsent.      Sobs  are 

prohibited  by   law   fioD  such  activity.      Indeed,   soBe  would   take 

advantage  of  our   "disengagcBent"   to   further   their   own  econonic 

ana  political  ends.      He  regularly   conault  with  out   allies   chi 

the   issue  of  apartheid  and  how   to  help  speed   Its  deslse  and 

seek  agreenent  with   the  basic   thruat  of  our   policy,   naiiely  that 

pressure   should  continue   to  be  exerted  on   the   SAG  to 

denonetrate   that   the  Nest    is   appalled  by  apartheid  and   seeks   a 


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speedy  change  away  fton  that  bysten  towaid  a  more  just 
society.  The  code  of  conduct  adopted  by  sone  European 
companies   ia   an  example  where  our   policies   work   in  tanden. 

QUIET  DIPLOKACY 

9.      Q.      In  >'our   testimony  you  refer,   and   the  Adninistratlon 
fcequently  refers   as   well,    to   "quiet   diplomacy".      Mould   you 
explain   for   the  Committee  what   the  key  elements   of   this    "quiet 
diplomacy"   are?     Nhat  specific  action  tiy   the  Adniniatration  has 
it   involved? 

A.      'Cuiet  diplomacy"   is  not  a  policy  but  a   tactic   for   carrying 

out   our   efforts   to  help  persuade   the   South  African  Government 

that   it   is   in   its  own   interest   to  abolish  apartheid  and 

establish  a   aiore   just  order   In   that  country.      He   reject   the 

approach  of   using  only  strident  public  rhetoric  against   the 

South  African  Governnent's   actions   as  being   largely  symbolic 

and   ineffective.     What  we  seek   to  do   is   to  choose   the 

appropriate   medium,   be   it  public  or   private,    to  enunciate 

clearly  our   opposition   to   the  policy  of  apartheid  while  also 

seeking   to  encoucage   the  South  African  .Government   to  pursue  a 

process   of  reform   that  has  been  underway   for.  several   years.      Me 

believe  .it   is  reasonable   to  use   the   Bost  productive   tactics 

available   to  encourage  peaceful   changes  zather    than   to  simply 

strike  out  with  rhetorical  pronouncements  which   condemn   that 

effort  and   thereby  distance   us   and  renove  our   limited   influence 

from   the  reform  effort.      I   would   add  only   that   when   the 

situation  has   called   for   strong  public  statements   we  have  not 

failed   in  our   Obligation   to  make  our   views  known   loudly  and 

clearly.      At   other   times,   however,    the  situation   called    for 

"quiet  diplomacy"   as   a   means   of  achieving  our  objectives   In  a 

more  effective  manner   than  public,    strident  rhetoric  would 

provide . 


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HECHT   tWESTIOMS 

BOW  U.S.    CAM    IHPLUEHCE   SAG 

1.  0.  Since  you  don't  agree  with  the  bill,  uhat  do  you  think 
i»  the  proper  way  for  the  United  Statea  Governnent  to  >ake  its 
influence   felt   in  South  Africa? 

A.      Ke  believe   that   the  path  we  have  embarked  upon  of 

encouraging  poaitive   change  within   South  Africa  by  ataylng 

constructively   Involved   there   ia   nore   likely   to  lead   to   the 

results   we  all  desire,   nanely  Movement  away   fron  apartheid 

toward  a   aore   just  society,    than  will   the  enactnent  of   punitive 

neasuces  directed  at   that   Governjoent,    the  South  African  people 

and  our   interests   there.      We   fully  support   the  efforts   of 

Congress   to  provide  econoalc  assistance   to  those  black   South 

Africans   disadvantaged  by  apartheid  and  would  welcome  an 

expansion  of  programs   in   the   fields  of  hunan   rights,   education, 

health,    training,    entrepreneurshlp,   etc.      Me   also  welcone   the 

expressions   of   interest  and  concern  by  the  Congress   on   Issues 

such  as  apartheid   In  general   and  specific   injustices   caused  by 

apartheid   in  particular.      All   auch   efforts   are  of   invaluable 

assistance   to  us   In  our  atteapt   to  deaonstrate   to   the  SAG   that 

its    policy  of   apartheid    is    unacceptable    to    the   Anerican    people 

and    that   cur  bilateral  relationship  cannot   flouiish  without 

neanlngful   change.      This   Bsssage   is  heard  and  well   understood 

by  the   SAG   and  contributes   to  the  prassurs   Bountlng  on   it   to 

enhance   the  ongoing  refora  progra*. 


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U.S.    REACTIOM   TO  SAG    IKITIATIVES 

3.      0.      Mhat   iaportancc  do  you  attach   to  th«   South  Afzlcan 
Governnent's   piopoBal   to  aboliah   the  nixed  Barclage  and 
.imnoEallty  lawB,    and   Its   announceaant  of   the  Hithdcawal   of 
tcoopa   froB  Angola  by  the  end  of   thi»  week? 

A,      The  SAG'b    Intention   to  support   in   the  parliasent   the  repeal 

of   the  Mixed  Harciages   and   Sec.   16  of  th«  InnocBlity  Act  are  of 

■igniflcant   aynboltc  value.      It   represents   the  dienantling  of 

an   iopoEtant   pillar   of  apartheid  and   is   further   evidence  of  a 

willingneas   on   the  part  of   8outh  African  whites   to  continue  and 

strengthen   th«   refora  process   away   froM  apartheid  and   to  put 

additional   teeth   into  that  effort.      Taken   alone  such  an  action 

nay  not   seen  terribly  significant   to  sone  Anericans  but 

conbined  with  other  efforts  on   the  part  of   the  white  connunity 

and   Governnent,    it   ahows   a  clear   wlllingnese   to  break  with  the 

apartheid  past. 


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KATTIMGLY   QOESTIOHS 

REIATI0M6HIP  OP  MWIIBIA  TO   RgFOIttI 

1.      Q.      There   Is   a  b*ll«f   that  a  aolutlon   in  MaBibla   la   central 
to   South  Aftlcan   internal   refom.      Do  you  agte*  with   thia 
aaaeaBBsnt   of  the  critical  nature  of  that  particular   issue   Id 
nakiiiQ   pro^rssa   agalnat  th*  systea  of  apartheid? 

»..       '*.<■-*   ia   undoubtedly  aoae  correlation  tetwaei     ■"-■     iir*.-- 
-he   Mds.bian   independence   Issue  and   progress   on   Internal   refom 
in  South  Africa.      This   is  particularly  true   in   the  econobtc 
area   as   the   war    in  Manibla    is  esttnated   to  cost   the   Bouth 
African  GovernBent  sone  il.2  billion  annually  at   the  sane   time 
that   South  Africa   finds   itself   in   the  >idst  of  a   severe 
econoBic  recession   coupled  with  growing  costs  assoclatsd  with 
the   nalntenance  of  apartheid.      Undoubtedly,    the  savings   that 
would  accrue   fro*  a  peaceful   settleaent  of   the  Naaibia   iasue 
could  be   applied   toward   furthering  black  education,   health, 
social   welfare,    et.   al.,    within  South  Africa,   with  a  consequent 
lessening   of    political    and    eCOnOBtc    tensions   which   such   a 
transfer   of   resources  would  entail.      However,    the   reforn 
process   in   South  Africa   Is   driven  by   its  own   internal   dynaaic, 
and   the  econoaic   reality  of  9  villion  blacks   in   the  urban  area. 
Events   in  Haalbia  will  have   little  sustained   lapact   on   thia 
process,   one  way  or   the  other. 


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PROXMIRE   QUESTIOHS 

FAILHRE  OF  U.S.    POLICT 

1.      0.      Do  you  dlaput«  any  of   the  above   facta  about   the 
■ituation   in   South  Africa?      If  not,   how  can  you  maintain  your 
policy   ia  not  a   failure  based  on   its   reaulta? 

A,      Mith  due   respect,    I   take  exception  with   the  Senatoc'e 

preDise   that   constructive  engagement   is  a   failed  policy  and  the 

BBBBEtiona  he   nakes   to   support   this  contention.      I   attach   for 

the  Senator's   infornation  a  partial  ccupilation  of   the  changes 
which  have   taken   place   in  South  Africa  over   the  past   several 
years    in   furtherance  of   the   reforn  process   away   from 
apartheid.      VThile  we  adnit   that  apartheid   still   exists   and   that 
the  pace  and  nature  of   the  changes   are  not  what  we  desire,    it 
is   equally   inportant   to  recall    that   there  have  been  historic 
decisions   taken  by  the  whites   of   South  Africa   to   change   the 
apartheid  systen.      Certain  practices   noted  by   the   Senator,    I   am 
happy   to  say,   are  no  longer   in  effect.      For   exacple,    in  January 
the   South  African  Oovernnent  announced  a  halt   to   the   forced 
removal    of   blacks   while    the  policy   is    reviewed.       In  his    speech 
of  January   35,    the   State   President   called   for   consideration   of 
national   citizenship  for   urban   blacks,    the  beginning  of  a 
genuine   dialogue  between   the  Government   and   the  black 
connunity's   leaders   and  a  higher   level   national   political   role 
for   certain  blacks,    thus   conceding   that   the  homelands   policy 
has    failed.       Also,    despite   problens ,    more    labor    unions 
flourish.      tAiile   much  remains   to  be   done   in   furtherance  of   the 
effort   to  move  away   from  apartheid,    to  maintain   that   there  has 
been   little  or  no  change   is   to   ignore  history   and   the   reality 
of    South   Africa    in    1985    compared    to    just    eight    or    ten   years    agc^ . 


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HUMS  BIGHTS    POLICY 

2.      Q.      How  do  you  account   for   th*   dlaccapancy  In  your 
trcataent  betwasn  huiian   rights   violations   in  othar   eountciea  aa 
opposed   to  South  Africa? 

A.      We  do  not  believa   that   there   is  a  diaciepancy   in  our 

.reataent  o£  husan  rlghta  violations   In   South  Africa   conpared 

•LO   other   countries;    including  countries   such  as  Cuba,    the   VBSf 

Poland,    Kicaragua,    Libya   and  Vietnaa.      Wa  have   spoken  out 

clearly  and  often  of  our  abhorrence  of   such   violations.      In   th^- 

case  of   South  Africa,    I   would   refer   the  Senator   to  ths  Husan 

Bights   Report   for   19aS  prepared  by  the   Depsrtiiant  of   State, 

which  has  been  generally  viewed  as   a  definitive  and  accurate 

description  of   the  husan  rights   situation   in   that   country.      Th« 

Adsinistratlon,    fron   ths  President  on  down,   has   condesned 

apartheid   and   South  Africa's  violation  of  hu&an  rights  on   a 

regular   basis.      On  DecenlDer   10,    1964   (Husan   Bights   Day), 

President   Beagan  spoke  out    forcefully  and  eloquently  on   this 

subject.      I   as  enclosing  a   copy  of  the  President's  resarks   for 

reference   purposes.      The  record   shows   that  other  adsinistratlon 

officials,    Including  the  Secretary  of  State,   have  nade   clear 

their  opposition   to  apartheid.      The   ease   record  also 

desonetrBtcH   that   the  State   Departsent,    through   its  press 

spokcssen   and  other   officials,   has   regularly  enuclated   Ita 

opposition   to  hunan   rights   violations   in  South  Africa  and 


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HAhDATORY  SULUVUM   CODE 

3.      g.      If  you  aie  ao  concsrnad  that  blacks   In   the  140  U.e. 
conpanieB  benefit   fron  the   Sullivan  Code,    why  don't   you   favor 
nandatory  extension  of  that   Code   to  the  other   160  coapanieB 
that   don't  adhere   to   that   Code  presently? 

A.      He  oppose  nandatory  inpleBentation  of  the   Sullivan  Code  by 

U.S.    firms   in   South  Africa   for   several   reasons.      Firstly,   we 

believe   it   ia   the   very  voluntary  aspect  of   the  Code  which  hae 

■uide   it   so  successful.      I   would   submit   that   these  adherents   to 

the   code  have  gone  well  beyond   what   is   strictly  called   for  by 

the  Code  and  have   spent   over   $100   million   since   1978  outside 

the  workplace   for   the  benefit  of   their   blaclc   enployees   and 

families.      The  money  was   utilized  on   the   furtherance  of 

education,    training,   health  and  promotion  of  black 

entrepreneur ship.      A  mandatory  U.S.   Government  enforced  code 

would   more   than   likely  have  resulted   in   these   same    firms   doing 

the   absolute    nininum  demanded    rather    than    in   having   gone   a 

considerable  distance  beyond   that   which   is   called   for.      More 

importantly,    implementation  of  a   nandatory  code   raises   serious 

questions  regarding   the  extraterritorial  application  of   U.S. 

law.      The  U.S.G,   could  not  enforce   the   implementation  of  such  a 

mandatory   code  without   the  agreement  of   the  very  Government   it 

is   designed   to   influence.      Even   if   the  South  African  Government 

"permitted*   such  an  extraterritorial   application  of   U.S.   law, 

implementation  would  require   the  establishment  of  a   complex 

regulatory  regime   and   the   diversion  of  personnel    from   their 

normal   diplomatic  and  consular    tasks,      while   it   is   true   that 

U.S.    firms   employ  only  about  1%   of   the  active   labor    force   in 

South  Africa,   nevertheless,    these  are  among  the   largest   firms 

in   the  world  and  what   they  do   is   noticed.      There  can  be  no 

doubt  but   that   these   firms  have  and  are   leading   the  way, 

through   adherence    to    the    Sullivan   Code    and   related    fair 


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enployaent   code*,    la   •atting  a  9ood  auuipl*    to  other 
buslneaaa*.      Haoy   foreign    invaators   now  adhara    to  aiallar   codai 
such   aa   the  EEC  Code  or  have  eatablished   their  ONn  eaployaant 
codes.      A  algnlficant  nuabar   of  South  African   flraa  have 
establlahed  auch  coilea   and  are  now  practicing  enlightened 
eiiploynent   atandarda.      Thua,    the  point   ia   that   the  Sullivan 
Codaa   atanda  aa   a  beacon   for  other*,    a   aodal    to  eaulate    in 
furthering  the  advancaBent  of  black   enployea  rights  and 
benefits  both    In  and  outaide  of   the  Morkplace. 


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SARBAKES   QUESTIORS 

EXIM 

1.      0.      Does   the  Administration  auppoit   the  prohibition  on  EXIM 
guarantees  oi   loam   to   the   South  African  Governnent  and   the 
certification   requlrevents   relating   to  fair   labor   atandatds 
required  by   the  Bvana  Anendnent    for   loans  oc   guacantees   to 
private   persons   in   South  Africa? 

A.      The  Ad>inlsttation  opposed   the  Evans  Anendeent  on  policy 

and   legal   grounds  while   It  was  being  considered   In   the  95th 

Congress.      The   Departnent  of   State   Indicated   that 

iBplementation  would  be  difficult   to  achieve  without   the 

cooperation  of   the   South  African  Government,   and   this  has 

proven   to  be   the   case.      The  SAG  perceived   the   law  as  being 

extraterritorial    in   scope.      It   prevented   its  nationals   from 

providing  the  kind  of   Information  necessaty   for   a  cettification 

to   the   U.S.   Government.      An  understanding  was   ultimately 

reached   with    the   SAG   which   permitted    firms    to   apply    for    EXIM 

support,      however.    It  was   only   in   late   I4b4    (six   years   after 

the    law   was    enacted)    that    the    Department   of    State   was    able    to 

certify   two  South  African   firms   as  being   eligible   for  EXIK 

support,    although  no  transactions  have  been  approved  by  the 

bank    to  date.      The  Administration   strictly  enforces   the   law, 

but    it   continues    to   have    the   same    doubts    regarding    its    iceritB. 


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2.  0.  Does  the  Adainiattatlon  auppoit  th«  instructions  to  the 
U.S.    Eiacutive  Director   of   the   IMF   "to  actively  oppose  any 

facility  involving  the  use  of  Fund  credit  by  any  country  which 
practices   apartheid'? 

A.      It    is   cleec    that   the  AdKinlstcation   supports  and  enforces 

the  law  of   the   land.      Pcesident   Reagan's   signing  of   P.L.   96-181 

in  lioveiiLer    l'Jb3    indicates  his  support   foE    the  bill.      The 

Adainistration  opposed   initial  efforts   to  rMqulrc   th«   UELD  of 

the  Fund   to  oppose  and  vote  against  drawings  by  South  Africa  on 

the  grounds   that  such  a  step  would   inject  political 

considerations   into  a  speclaliced  agency  ot  an  apolitical 

character.      The   Adalnistratlon  did  not  oppose   the  provision   as 

exbodled  in  Section  43   of   the  Bratton  Woods   Agreeaenta   Act 

because   econo>ic  criteria  siailar   to  those  eaployed  by   the   Fund 

would  be  used   to   fora  and  evaluate   the  U.S.   position.      Section 

43   requires   the   USED   to   'actively  oppose  any   facility   Involving 

the  use  of   Fund  credit  by  any  country  which  practices 

apartheid'   unless   the   Secretary  of   the  Treasury   certifies  and 

documents   and  appears.    If   reciuested,   before  Co»ittees   ot   the 

flocse  and   Senate   that   the  drawing    (I)   would  reduce   the  severe 

constraints  on  labor   and  capital   nobility,    (2}   would  reduce 

other    inefficient   labor   and  capital   supply   rigidities,    (3) 

would  benefit  econonicelly  the   najority  of   the  people,   and   (4) 

that    the    country    la    Buffering    fron  a   balance   of   payments 

imbalance   that  cannot  be  >et  by  recourse   to  private  capital 

■arkets.      On  Deceatier   22,    1S&3,    three  weeks  after   this 

provision  was  signed   into   law,    the  U.S.   Treasury  adopted  an 

inplenentation  neMorandun   for   this   provision  speclflying   the 

obligations  of   the  Secretary  of   the  Treasury  and  various 

procedures    to  be    followed. 


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ANTI-APARTHEID  ACT  OF  1985 


FRIDAY,  HAY  24,  1985 

U.S.  Senate,  Comhtttee  on  Banking,  Housing,  and 
Urban  Affairs,  Subcommittee  on  International  Fi- 
nance AND  Monetary  Poucy. 

Washington.  DC 
The  subcommittee  met  at  9:30  a.m.,  in  room  SD-538,  Dirksen 
Senate  Oflice  Building,  Senator  John  Heinz  (chairman  of  the  com- 
mittee)  presiding. 

Present:  Senators  Heinz,  Gorton,  Mattingly,  Hecht,  Proxmire, 
Sasser,  Riegle,  Sarbanes,  and  Cranston. 

OPENING  STATEMENT  OF  SENATOR  HEINZ 

Senator  Heinz.  Ladies  and  gentlemen,  today  we  will  have  the 
second  of  the  series  of  hesirings  dealing  with  the  legislative  propos- 
als to  alter  the  economic  framework  for  the  U.S.  Government's  re- 
lationship with  the  Republic  of  South  Alrica. 

At  our  last  hearing  we  heard  from  the  administration  and  from 
Senators  Kennedy  and  Weicker  who,  along  with  severzil  of  my  com- 
mittee colleagues,  have  drafted  legislation  to  deal  with  this  issue. 
Next  month  the  subcommittee  plans  a  concluding  hearing  by  re- 
ceiving testimony  from  Rev.  Leon  Sullivan  and  a  number  of  other 
former  officials  who  dealt  with  this  question  in  order  to  provide  a 
historical  context  for  the  committee's  deliberations  in  order  to 
obtain  their  views  on  the  proposals  for  future  action. 

This  morning  we  are  going  to  hear  testimony  from  academic  and 
l^al  experts  on  the  subject  and  from  those  who  directly  represent 
or  audit  U.S.  companies  that  currently  do  business  in  South  Africa. 

As  I  said  at  the  outset  of  these  hearings,  in  my  own  evaluation  of 
the  proposals  dealing  with  South  Africa  I  have  tended  to  be  guided 
by  four  criteria. 

First,  it  is  the  South  African  Government  which  is  the  agent  of 
apartheid.  The  target  of  our  actions  therefore  should  be  the  Gov- 
ernment, not  the  people  of  South  Africa. 

Second,  as  a  logical  companion  to  the  first  criteria,  we  should 
strive  to  avoid  actions  that  have  an  adverse  impact  on  South  Afri- 
ca's black  m^ority  who  are  the  victims  of  the  repugnant  system  of 
apartheid. 

Third,  our  key  objective  should  be  to  develop  policies  that  help 
change  peacefully  the  policies  and  practices  of  the  South  African 
Government.  Sanctions  are  appropriate  to  that  goal,  but  we  must 
avoid,  at  least  in  this  Senator  s  ju^ment,  sanctions  that  totally  cut 
us  off  from  any  ability  to  play  a  meaningful  role  or  influence  policy 
in  the  future. 

(117) 


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118 

As  I  have  learned  in  the  course  of  revising  and  studying  the  his- 
tory of  the  Export  Administration  Act,  economic  and  political  sanc- 
tions are  imprecise  tools  of  foreign  policy.  If  they  are  not  used 
adroitly  and  with  deliberate  care,  they  may  yield  the  opposite 
effect  from  what  is  intended. 

Fineilly,  American  business  has  made  a  positive  contribution  to 
the  betterment  of  the  economic  and  social  condition  of  blacks  in 
South  Africa. 

But  the  key  issue  before  this  committee  and  indeed  before  the 
Congress  is  whether  the  American  economic  presence  in  South 
Africa  is  helpful  in  achieving  the  political  goal  of  a  peaceful  end  to 
apartheid  or,  in  the  alternative,  whether  it  is  merely  an  agent  in 
perpetuating  that  hateful  system. 

To  better  understand  the  role  of  American  business,  today's 
hearing  will  examine  how  our  corporations  indeed  operate  in  South 
Africa  today  and  what  might  be  the  political  and  economic  conse- 
quences of  disinvestment. 

Ambassador  McHenry  will  also  be  able  to  comment  en  the 
premise  of  the  Carter  administration  policy  toward  South  Africa. 

I  must  say  our  witnesses  today  are  eminent  and  eminently  quali- 
fied to  comment  on  such  questions  and  I'd  like  to  turn  to  them 
now,  but  before  I  do  I  want  to  yield  to  my  colleagues  for  any  open- 
ing statements  they  may  care  to  make. 

Senator  Proxmire. 

OPENING  STATEMENT  OF  SENATOR  PROXMIRE 

Senator  Proxmire.  Thank  you  very  much,  Mr.  Chairman. 

Mr.  Chairmam,  today  we  have  the  second  in  what  will  be  a  series 
of  three  hearings  on  S.  635,  the  Anti-Apartheid  Act  of  1985.  Our 
final  hearing  will  be  held  on  June  13  and  I  hope  we  can  then  move 
to  mark  up  this  legislation  as  soon  as  possible,  preferably  by  June 
17.  liie  full  House  has  already  started  floor  action  on  an  identical 
bill  and  I  understand  will  complete  their  consideration  of  that  1^- 
islation  shortly  after  the  Memorial  Day  recess.  I  hope  the  full 
Senate  will  act  in  late  June  or  July  and  we  can  get  a  bill  to  the 
President  before  the  end  of  the  summer. 

Mr.  Chairman,  the  South  African  system  of  apartheid  against 
which  this  legislation  is  aimed  is  not  simply  a  system  of  racial  dis- 
crimination such  as  previously  existed  in  parts  of  this  country.  It's 
even  more  reprehensible.  Apartheid  is  a  complete  system  of  politi- 
cal, social,  and  labor  controls  adopted  in  1948  and  maintained  by 
South  Africa's  4,5  million  whites  to  ensure  their  absolute  and  ca- 
pricious rule  over  22  million  blacks. 

Under  that  system  black  workers  must  live  apart  from  their  fam- 
ilies. All  blacks  are  required  to  live  in  separate  segregated  areeis. 
They  are  denied  equal  or  even  minimum  education,  social,  and  eco- 
nomic opportunities  zmd,  most  important  of  fill,  they  are  denied  po- 
litical rights. 

Over  the  past  30  years  American  Presidents  have  condemned 
apartJieid,  but  U.S.  companies  have  invested  billions  in  South 
^rica.  We  have  become  the  country's  largest  trading  partner.  To 
black  leaders  looking  for  help  in  their  struggle  for  freedom,  it 
m^ht  appear  that  profits  are  America's  only  interest  in  South 


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119 

Africa.  This  is  not  the  case  and  our  Government  should  take  action 
to  demonstrate  that. 

The  crucial  question  is  how  to  apply  pressure  on  South  Africa 
without  putting  at  risk  the  perilous  livelihoods  of  suppressed 
blacks. 

S.  635, 1  believe,  Eiccomplishes  both  purposes.  It  is  not — I  repeat — 
it  is  not  a  disinvestment  bUl.  It  is  not  a  disinvestment  bill.  It  does 
not  require  American  companies  to  withdraw  the  billions  they 
have  invested  in  South  Africa  or  even  prohibit  them  from  reinvest- 
ing profits  made  in  that  country.  It  does  not  cut  off  our  $4  billion 
trade  with  South  Africa  except  for  banning  future  imports  of  the 
krugerrand.  The  United  States  will  continue  to  be  South  Africa's 
No.  1  trading  partner  and  their  second  biggest  creditor. 

The  bill  does  prohibit  new  investment — I  repea  — new  invest- 
ment in  and  bank  loans  to  enterprises  in  South  Africa.  It  bans 
bank  loans  to  the  South  African  Government,  under  some  circum- 
stances. 

The  bill  also  does  ban  further  sales  of  computers  to  the  South  Af- 
rican Government  because  it  uses  them  to  help  implement  the 
police  state  controls  needed  to  enforce  its  unjust  policies. 

These  measures,  while  moderate,  will  s&engthen  the  hand  of 
those  white  South  Africans  who  are  arguing  for  a  change  in  the 
apartheid  system. 

Furthermore,  what  the  bill  provides  is  that  any  time  the  Presi- 
dent of  the  United  States  feels  that  the  South  Africans  are  moving 
in  the  direction  of  ridding  themselves  of  apartheid,  then  he  can 
propose  that  the  restrainte  be  lifted  and  if  the  House  and  Senate 
agree  they  are  lifted.  So,  the  incentive  is  there. 

You  must  realize  that  since  South  African  blacks  presently  have 
no  political  rights  it  makes  it  difficult  for  them  to  achieve  a  gradu- 
al peaceful  change  in  their  country's  abhorrent  system. 

Soviet-preached  violence  is  presented  as  fm  alternative.  We  know 
that  violence  would  not  be  beneficial  to  white  or  black  South  Afri- 
cans nor  to  United  States  interests  in  Africa. 

The  adoption  of  S.  635  is  not  only  the  right  thing  to  do,  but  its 
adoption  will  serve  America's  interests  far  better  than  just  continu- 
ing ousiness  as  usual  in  South  Africa  and  hoping  for  the  best,  and  I 
will  push  for  its  enactment.  Thank  you. 

Senator  Heinz.  Senator  Proxmire,  thank  you  very  much. 

Senator  Hecht. 

Senator  Hecht.  Thank  you,  Mr.  Chairman.  Because  of  time  re- 
straints I  will  not  make  opening  remarks.  I  am  anxious  to  hear 
from  the  panel  and  perhaps  I  might  lend  a  different  voice  to  the 
voices  you  have  heard  already  on  uiis  podium.  Thank  you. 

Senator  Heinz.  Thank  you. 

Senator  Sarbanes. 

Senator  Sarbanes.  I  have  no  statement. 

Senator  Heinz.  Very  well.  GenUemen,  we  are  pleased  to  have  the 
four  of  you  with  us.  I'm  especially  pleased  to  have  Dr.  Sheldon 
Hackney  from  the  University  of  Pennsylveinia.  Senator  Proxmire 
and  I,  as  Yale  men,  have  been  consulting  regarding  Mr.  Derek  Bok 
from  the  Harvard  University  because  we  both  have  graduate  de- 
nies from  Harvard  and  we  are  deeply  honored  to  have  him.  Mr. 
Roy  Schottwid  is  from  the  Georgetown  University  Law  School,  and 


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120 

Mr.  Robert  D'Agostino  from  the  National  L^al  Center  for  the 
Public  Interest. 

Gentlemen,  we  welcome  you  all  here  and  we  will  proceed  in  the 
order  proposed  on  the  witness  list  in  terms  of  your  presentation. 
So,  let  me  at  this  point  call  on  Dr.  Hackney  from  my  home  State  of 
Pennsylvania. 

STATEMENT  OF  SHELDON  HACKNEY,  PRESIDENT,  UNIVERSITY 
OF  PENNSYLVANIA,  PHILADELPHIA,  PA 

Mr.  Hackney.  Thank  you  very  much,  Mr.  Chairman. 

Mr.  ChairmEin  and  members  of  the  committee,  it's  a  great  pleas- 
ure for  me  to  be  here  and  I  thank  you  for  the  opportunity  to  testify 
on  S.  635,  the  Anti-Apartheid  Act. 

Let  me  begin  by  saying  that  the  views  that  I  express  here  are  my 
own.  They  do  not  reflect  an  official  position  of  the  University  of 
Pennsylvania.  As  a  matter  of  policy,  the  university  does  not  take 
positions  on  Federal  legislation  that  does  not  directly  affect  higher 
education  or  the  ability  of  the  university  to  carry  out  its  purpose, 
which  is  to  serve  the  public  through  education  and  the  expansion 
of  knowledge.  Speaking  as  a  private  citizen,  I  believe  very  deeply 
that  action  by  the  U.S.  Government  to  signal  our  active  opposition 
to  apartheid  is  needed,  and  so  I  endorse  S.  635. 

UNITED  !N  OPPOSITION  TO  APARTHEID 

The  views  I  have  developed,  of  course,  do  emerge  from  a  long 
time  of  living  and  working  in  academia,  from  listening  to  the  coun- 
sel of  faculty,  students,  staff,  and  others  in  the  Penn  community  on 
the  South  African  regime  find  about  the  policy  of  apartheid.  Like 
any  great  university,  there  is  a  diversity  of  voices  at  Penn.  In  fact, 
it  is  a  very  vibreuit  place  for  exchanging  ideas,  but  on  no  interna- 
tional issue  is  the  Penn  campus  as  united  as  it  is  in  its  opposition 
to  apartheid.  I  suspect  that's  probably  true  of  most  American  cam- 
puses. Indeed,  events  of  the  past  few  months,  both  in  South  Africa 
and  on  our  campuses  make  it  incumbent  upon  us  to  think  very 
carefully  about  apartheid  and  our  national  policy  toward  the  South 
African  regime  which  has  established  and  sustained  apartheid. 

I  believe  it  is  instructive  to  mention  the  university's  experience 
over  many  years  in  grappling  with  the  issue  of  apartheid  to  illus- 
trate both  the  university  community's  deep  abhorrence  of  the  per- 
nicious policy  of  apartheid,  and  the  reasons  why  it  is  ultimately  the 
responsibility  of  the  U.S.  Government  to  act  to  combat  South  Afri- 
ca's official  system  of  racial  seCTegation  and  discrimination.  Years 
ago,  in  reaction  to  apartheid,  Penn's  trustees  decided  that,  acting 
as  responsible  investors,  the  university  should  urge  companies  in 
its  portfolio  to  adopt  and  vigorously  implement  the  Sullivan  princi- 
ples. Our  trustees  also  more  recently,  in  1982,  agreed  that  the  uni- 
versity should  urge  firms  in  which  the  university  owns  stock  to  re- 
frain from  making  new  or  expanded  investments  in  South  Africa. 
That  was  in  response  to  the  Rockefeller  Commission  report.  We 
also  have  sought  every  opportunity  to  encourage  black  South  Afri- 
cans to  study  at  Penn. 

The  university  developed  its  policies,  including  the  use  of  selec- 
tive divestment,  based,  among  other  factors,  on  the  requirement 


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121 

that  corporations  in  which  we  own  stock  adhere  to  the  Sullivan 
principles  in  the  hope  that  we  could,  in  conjunction  with  other 
shareholders,  help  those  companies  abide  by  the  very  highest 
standard  of  business  ethics  and  that  we  might  influence  those 
firms  to  improve  the  lives  and  conditions  of  the  nonwhite  majority 
in  South  Africa.  I  believe  that  the  Sullivan  principles  have  helped 
to  ameliorate  working  conditions  for  blacks  employed  in  the  signa- 
tory firms.  But  it  must  be  remembered  that  of  the  virtually  300 
American  companies  which  do  business  in  South  Africa,  only  about 
one-third  are  Sulliveui  signatories,  and  these  employ  only  a  small 
proportion  of  black  South  Africiin  workers.  It  is  also  clear  that  the 
best  efforts  of  U.S.  companies  and  their  shareholders  to  improve 
economic  conditions  for  black  South  African  workers  are  not  a  sub- 
stitute for  a  governmental  response.  Apartheid  is  a  policy  that 
transcends  the  economic  realm  and  permeates  the  entire  South  Af- 
rican society.  It  unilaterally  abrogates  the  rights  of  nonwhite  South 
Africans,  disenfranchises  millions,  limits  their  movement  except 
when  it  suits  the  Government  to  transfer  them  to  black  homelands, 
restricts  employment  opportunities,  makes  nonpersons  of  the  most 
outspoken  members  of  nonwhite  groups  through  the  bizarre  instru- 
ment known  as  bfmning. 

NEED  FOR  FURTHER  ACTION 

Recent  events  in  South  Africa  have  made  it  apparent  that  the 
pervasive  problem  of  apartheid  will  not  be  overcome  without  fur- 
ther action  by  the  U.S.  Government.  Official  violence  against  black 
South  Africans  is  all  too  commonplace,  as  we  read  in  the  papers. 
Secretary  Shultz  indicates  that  incidents  of  violent  encounter  be- 
tween blacks  and  policy  during  the  past  9  months  have  resulted  in 
more  than  300  deaths  among  blacks. 

Since  apartheid  is  the  official  policy  of^he  South  African  Gov- 
ernment, it  is  essential  that  the  United  States  respond  to  apartheid 
in  the  8£une  way,  in  a  governmented  manner.  The  administration's 
passive  policy  of  constructive  engagement  during  the  past  4  years 
has  apparently  not  been  successful  in  moving  the  South  African 
Government  to  reconsider  the  fundamental  underpinnings  of  apart- 
heid. There  have  been  some  superficial  actions  of  the  South  Afri- 
can Government,  purporting  to  bestow  full  political  participation 
upon  Asians  and  coloreds,  and  eliminating  the  state  prohibition 
against  mixed  marriages,  but  that  only  underscores  the  inherent 
venality  of  apartheid.  Assistant  Secretary  of  State  Crocker's  beliefs 
to  the  contrary,  the  South  African  Government  has  not  yet  rec(^- 
nized  in  practice  that  denying  citizenship  to  South  Africa's  blacks 
is  as  unworkable  as  it  is  ludicrous. 

Only  Government-sponsored  sanctions  by  the  United  States  and 
other  nations  are  likely  to  bring  the  South  African  Government  to 
this  realization,  and  it  is  for  this  reason  that  I  support  legislation 
to  effect  such  sanctions.  The  legislation  you  are  considering  today, 
S.  635,  appears  to  me  to  meet  two  essential  standards:  It  allows 
continued  United  States  economic  leverage  to  be  applied  because  it 
does  not  call  for  total  disinvestment,  and  it  avoids  placing  economic 
burdens  on  the  nonwhite  South  Africans  who  are  victims  of  apart- 
heid. The  bill  is  directed  appropriately  at  the  small  minority  that 


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122 

governs  South  Airica.  Loans  to  the  South  African  Government 
could  still  be  made  if  the  loans  were  to  be  used  for  educational  or 
health  facilities  or  housing  made  equally  available  to  nonwhites 
and  whites  alike.  Although  new  investments  by  American  firms  in 
South  Africa  would  be  restricted,  reinvestment  of  earnings  from  ex- 
isting business  operations  would  be  excepted  from  that  restriction. 
Finally,  the  sanctions  against  new  investments  in  South  Africa  and 
the  importation  of  krugerrands  to  the  United  States  could  be  lifted 
if  the  President  determined — and  the  Congress  approved  such  a 
finding — that  political  and  social  rights  of  nonwhite  South  Africans 
have  been  restored. 

This  bill  calls  for  an  historic  response  by  the  American  Govern- 
ment to  translate  its  condemnation  of  apartheid  into  workable  ac- 
tions. It  represents  an  important  first  step  toward  concerted  efforts 
by  the  United  States,  as  a  government,  to  promote  the  eradication 
of  a  policy  so  fundamentally  abhorrent  to  all  of  us. 

Thank  you  very  much  and  I  would  be  glad  to  respond  to  any 
questions. 

[The  complete  prepared  statement  follows:] 


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IhlTcraltr  of  TaaaaylvaBla 


Mr.  Chalnmi  and  BAibBn  of  die  CoaaltUa,  thank  70U  for  your  lAvluUoa 
*^0  teatlfy  befnie  jou  today  coacemlng  S.   63S,  tba  Aitcl-Aputhaid  Act. 

Itaa  Tlaws  iliat  I  orprvaa  Id  tbla  tastlniaj  ara  ay  rnn;  the;  do  not  Mflaet 
*«i  otflcl«l  poaltlon  of  Uie  Dnlversltj  of  Faonaylvanla,    Aa  a  aattar  of 
Pollcj,  tha  ODiveraltr  does  not  take  poaltlona  on  Padaral  laglalatltn  that 
4o«a  not  directly  affect  bi^imt  •dacstton  or  the  ability  of  tha  [hilvarslty  to 
caicy  out  Its  purpose,  which  la  to  serre  the  public  through  aducatloo  and  tii* 
expansion  of  knowlsd|S.     Speaking  aa  a  private  cltlzan,   I  believe  vltfa  a 
passion  tltat  action  by  the  Dnlted  Statea  lovemaent,   to  alpial  our  aetlva 
opposition  to  apartheid,  la  needed,  and  I  endorae  S.  633, 

Itaa  views  I  have  developed,  of  courae,  eserga  fioa  listening  to  the 
eounsal  of  faculty,  student*,  ataff  and  othaca  In  tii»  Paim  cu^ainlty  Mt  tha 
South  African  reglaa  and  Its  policy  of  apartheid.     Like  any  great  onlvsrsltyi 
Pam  chdvea  on  difference*  of  ^dgpent.     On  no  iDtematlooal  issue  Is  tha 
Penn  caapua  as  united  as  In  Its  oppoaltlon  to  spartheld.     Ind«ed,  events  of 
the  past  few  wmths,  loth  In  Soutl)  Africa  and  on  our  caapusea,  aaka  It 
Incuabent  upon  ua  to  pay  close  attention  to  the  subject  of  apartheid  and  to 
our  national  policy  toward  the  Sou^i  African  reglne  that  has  established  and 
sustained  apsrtheld. 

I  believe  It  la  Instructive  to  nentlon  ^le  University's  experience  over 
■any  years  In  grappling  wmi  the  laaue  of  apartheid,   to  llluatrata  both  the 
Italverslty  coanunlty'a  deep  abhorrence  of  the  pernicious  policy  of  apardield, 
and  the  reasons  why  It  la  ultlnately  the  responsibility  of  the  Dnlted  States 


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124 


GovanBint  to  act  to  coabat  Soatii  African'*  official  ajataB  of  racial 
aagragatlao  and  dlscrlalnatlcn.     Teara  ago.  In  raactlon  to  apartheid,  Pann'a 
troataaa  decided  that,  «•  a  ceaponalhla  InTeator,  the  Dnlvetalt;  ahould  nege 
coBpanlea  In  Ita  portfolio  to  adopt  and  vlgoroiuly  lapleaant  the  Snlllvm 
Principles.     Our  Truateea  also  agreed  that  the  OnlTerslty  ahould  urge  fltaa  In 
irtildi  the  DDiTcralty  holda  atock  to  refrain  fron  naklng  new  or  expanded 
InTaatsanta  in  Soath  Africa.    He  have  also  sou^t  erar^  opportunity  to 
aneourage  black  South  Africans  to  atudy  at  Penn. 

The  Uolvaraltj  developed  Its  polldca.  Including  the  uae  of  aelacttve 
dlvestaent  based,  aaong  other  factora,  on  the  requireneat  tliat  corporations  In 
nhidi  we  hold  atodc  adhere  to  tile  Sullivan  Principles,   In  t^  hope  lliat  Penn, 
in  conjunction  wltfa  other  shareholdera,  nl^t  ensure  that  our  conpsBles  abide 
by  the  highest  standard  of  business  etlilcs,  and  that  we  night  influence  these 
fitss  to  inprove  the  lives  end  condltims  of  the  nomriilte  najorlty  in  South 
Africa.     1  ballave  that  the  Sullivso  Principlea  have  helped  to  aneliorate 
working  conditions  for  blades  enployed  In  the  slgMtory  flma.     But  It  Mist  bn 
renenfaered  that  of  the  virtually  300  Aaerlcan  coapanles  irtilch  do  bualneaa  in 
South  Africa,  only  about  one-tblcd  arc  Sullivan  ■Ignatorles,  and  thesa  enploy 
only  a  sull  proportion  of  black  South  African  workers.     It  la  alao  clear  that 
the  beat  efforts  of  U.S.   ctnpanles  and  their  shardMldera  to  inprove  econoalc 
conditions  for  black  Soutli  African  workers  are  not  a  substitute  for  a 
governmental  response.     Apartheid  is  a  policy  that  transcends  the  econonlc 
realn  and  perMeatea  the  entire  South  African  society.     It  unilaterally 
abrogates  the  rlghti  of  nonwfalta  South  Africans,  disenfranchises  nllllans. 


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Ca  di*lr  BOW M at  aactpt  «haa  It  atilta  l3i*  anTTi— iii  to  transfer  th^  to 
[  "hotlwida*.  restrlcta  tmplojmuit  opportualtlei ,  ukaa  ncmpaxaou  of  &% 
outapokan  MBBbeEa  of  luaiililte  gioupa  tbroMiJi  the  blaarra  Initriwaiit  kacwn 


-'  Recast  avanta  la  Soath  Africa  have  aada  It  apparmt  that  dte  parvaalT* 
probleM  of  apartheid  will  not  be  orarcoae  wldiout  further  acttcm  bjr  tha  ttaStad 
Statea  gcnenuMBt.     Official  violence  agalnat  blade  South  Afrlcana  la  all  too 
coaaooplace  -  Seeretarr  Sdiulie  Indlcatea  ibat  Inddaata  of  violent  encounter 
between  bladca  and  police  during  tha  paet  nlna  aontha  have  reaulted  In  Mora 
than  300  deatha  uong  bl^i^B. 

Since  apardteld  la  die  official  policy  of  Uie  Soath  African  lowmaent.  It 
la  eaaentlal  that  daa  Itolted  Stataa'  reaponae  to  apartbald'be  to*egn»eotal  In 
nature.     The  Adolalscratloa'a  paaalve  policy  of  'constructive  eniagaaant' 
daring  the  paat  four  jvara  haa  not  been  aucceaafnl  la  ■ovlng  the  South  African 
gorenaent  to  leeonBlder  the  fandaaantal  under  plan  inga  of  apariliald. 
Superficial  actions  of  the  South  African  govamaent  -  purporting  to  beatoir 
full  political  participation  upon  Aaiana  and  "colorada"  and  ellalnatlng  die 
atata  prohibition  againat  wind  aarrlagea  -  only  undaracora  the  inhorent 
vonalltT  of  apartheid,    Aaalatant  Secretary  of  State  Ctocker'a  bellefa  to  the 
contrary,  tha  South  African  govanaent  has  not  yet  xacognlted  in  practlca  that 
'denying  cltitenshlp  to  South  Afrlca'a  blacka  la  aa  unworkable  aa  it  la 
ludicrous.* 


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Ooly  aoY«n«Mit-»pOB«or»d  •anetlon*  by  tha  Doited  States  and  othmt  natlona 
aie  likely  to  bring  the  South  African  soreniBeat  to  thie  realisation,  and  It 
la  for  tbls  reason  that  I  aupport  leglalatlon  to  effect  such  sanetlona.     The 
leglalatlon  you  are  considering  today,   S.  63S,  appeara  to  aeet  two  eaaentlal 
standards:     It  allovs  continued  U.S.  econoalc  leverage  to  be  applied  (by 
Mdtewlng  dlveataent}  and  It  avoids  placing  econoalc  burdens  oa  the  nowAlte 
Sondi  Africans  lAo  ate  the  vlctlss  of  apartheid.    The  bill  Is  directed, 
appropriately,  at  the  snail  aloorlty  that  govema  South  Africa.    Loana  to  the 
South  African  govemaent  could  still  be  «ade  If  the  loans  were  to  be  used  for 
educational  or  health  facilltlea  or  housing  nade  equally  available   to 
noniAlteB  and  whites  alike.     Although  new  InveatBenta  by  Aaerlcan  fine  In 
South  Africa  would  be  restricted,  relnveataent  of  eaminga  froa  existing 
business  operations  would  be  excepted  froa  tliat  restriction.    Finally,  the 
sanctions  against  now  inveataenta  In  South  Africa  and  the  laportstlon  of 
Kmgerrands  to  the  United  States  could  be  lifted  if  the  President  determined 
(and  the  Congress  approved  such  «  finding)  thst  polltleal  and  social  rights  of 
nomAlte  Souili  Africans  have  been  restored. 

this  bill  calls  for  an  historic  response  by  the  Aaerlcan  govemaent  to 
translate  its  condeanatlcm  of  apartheid  Into  workable  actions.     It  repreeenta 
on  laportant  first  step  toward  concerted  efforts  by  the  United  States,  aa  a 
govemaent,  to  proaote  the  eradication  of  a  policy  so  fundaaen  tally  abhorroat 
to  aU  of  us. 


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Senator  Heinz.  Dr.  Hackney,  thank  you  very  much. 
Mr.  Bok. 

STATEMENT  OF  DEREK  BOK,  PRESIDENT.  HARVARD 
UNIVERSITY.  CAMBRIDGE,  MA 

Mr.  Bok.  Thank  you. 

Mr.  Chairman  and  members  of  the  committee,  I  appreciate  the 
opportunity  to  testify  on  this  bill  and  would  like  to  make  it  clear, 
as  my  coUezigue  Mr.  Hackney  did,  that  the  views  I  express  are  my 
own.  Harvard  has  no  official  position  on  foreign  policy,  hut  I  have 
certainly  developed  a  strong  personal  interest  in  the  subject.  It  has 
been  a  lively  topic  of  discussion  on  our  campus  for  12  consecutive 
years.  I  have  also  had  the  opportunity  to  serve  for  some  years  eis 
the,  chairman  of  a  program  in  which  we  try  to  obtain  funds  from 
universities,  .from  foundations,  from  corporations,  and  from  the 
U.S.  Government  to  bring  black  studente,  nonwhite  students,  to 
study  in  this  country  and  we  have  some  225  of  them  from  South 
Africa  today.  Of  course,  we  have  also  been  deeply  involved  in  the 
votii^  of  stock  on  various  issues  involved  in  shareholder  resolu- 
tions concerning  South  Africa  over  the  last  few  years. 

RISING  TENSION  IN  SOUTH  AFRICA 

As  Sheldon  pointed  out,  we  are  here  today  against  the  back- 
ground of  a  rising  tension  in  South  Africa.  Over  3,000  arrests,  more 
than  300  police  killings,  and  over  1  million  nonwhites  participating 
in  strikes  and  school  boycotts.  We  have  heard  warnings  by  Bishop 
Tutu  and  other  moderate  leaders  in  South  Africa  of  the  danger  of 
impending  violence.  We  are  thus  constrained  to  try  to  decide  what 
is  it  that  we  can  do  to  avert  greater  violence  and  injustice. 

I  join  with  Sheldon  in  concluding  that  constructive  engagement 
as  a  policy  is  not  enough.  There  are  initiatives  that  have  been 
taken  which  are  good.  I  do  not  believe  they  are  sufficient  to  meet 
the  gravity  of  the  situation.  One  can  criticize  them  on  two  grounds. 
First,  the  current  policy  is  too  easily  misinterpreted  as  a  kind  of 
tacit  acquiescence  by  this  country  in  the  status  quo  which  is  intol- 
erable, I  believe,  to  the  American  people.  Second,  the  actual 
prepress  has  been  slight  for  the  reasons  that  Sheldon  pointed  out. 

I  do  believe,  though,  in  trying  to  figure  out  how  we  can  most  ef- 
fectively go  beyond  the  present  policy,  that  a  policy  of  totfil  disen- 
gagement from  that  country  would  also  be  unwarranted  and 
unwise.  I  am  not  at  all  sure  that  we  have  enough  leverage  to  influ- 
ence the  Government  by  that  method.  It  would  remove  whatever 
chance  we  have  of  working  constructively  within  the  country,  in 
particular  the  opportunities  for  American  firms  to  improve  work- 
ing conditions,  to  express  their  opposition  to  influx  control  laws 
Euid  forced  relocation,  and  to  provide  educational  and  social  oppor- 
tunities as  they  have  to  the  tune  of  many  millions  of  dollars  over 
the  last  few  years.  In  addition  the  economic  impact  of  such  sanc- 
tions could  end  up  harming  blacks  either  by  creating  unemploy- 
ment or  by  shifting  control  of  American  firms  into  hands  of  owners 
who  have  even  less  humane  concerns  than  the  American  entrepre- 
neurs who  now  control  those  enterprises. 


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So  looking  at  the  alternatives,  the  general  approach  taken  in  the 
Kennedy-Weicker  bill  seems  to  me  to  be  the  one  most  likely  to  cap- 
ture the  benefits  of  a  more  vigorous  response  while  also  minimizing 
the  potential  costs. 

The  bill  does  provide  meaningful  sanctions,  but  the  sanctions  fall 
directly  on  the  Government — the  point,  Mr.  Chairman,  you  made 
at  the  very  beginning — and  not  on  black  employees.  It  does  not 
remove  the  opportunities  within  South  Africa  for  American  firms 
to  work  in  positive  ways  but,  above  all,  it  delivers  a  clear  message 
of  national  concern,  a  message  that,  unlike  our  present  policies, 
cannot  be  readily  misinterpreted  as  tacit  acquiescence. 

ADDITIONAL  MEASURES  TO  EXPLORE 

I  would  not  wish  to  conclude  my  testimony  without  making  clear 
that  I  think,  consistent  with  the  approach  taken  in  this  bill,  that 
there  are  additional  measures  which  might  profitably  be  explored. 
I,  for  one,  would  hope  that  legislation  could  make  clear  that  bank 
loans  are  prohibited  to  all  entities  in  South  Africa  and  not  just  to 
the  South  African  Government.  It  is  comparatively  esisy  to  evade 
prohibitions  on  loans  to  the  South  African  Government  by  simply 
loaning  to  South  African  banks.  I  think  the  bill  should  be  clear  on 
that  point. 

I  would  hope  that  one  could  look  at  the  stockpiling  of  strat^ic 
metals,  such  as  chrome,  since  imports  of  these  metals  enhance  and 
increase  our  dependence  on  South  Africa. 

I  would  hope  we  could  examine  the  possibility  of  reviewing  at 
midterm  the  IMF  loans  to  see  whether  that  review  could  be  used  to 
encourage  relaxations  of  the  influx  control  laws. 

All  these  added  initiatives  are  consistent  with  the  general  ap- 
proach taken  in  the  Kennedy-Weicker  bill  which  I  firmly  support, 
an  approach  which  in  my  view  seems  best  calculated  to  maximize 
the  advantages  and  minimize  the  costs  of  all  of  the  alternatives 
that  we  have  before  us. 

Thank  you  very  much. 

[The  complete  prepared  statement  follows:] 


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STATEKEIIT  Of  DBIBC  lOK 
.  PRESIDBn.  HUTUD  UW7E10ITI 

Hr.  CbaliBwii  thvdc  jou  for  this  opportunity  to  appear  bofor*  jou 
on  tho  Mibjoet  of  South  African  aparthald  and  tha  Tozlng  quaatlon  of 
how  tho  Unitod  Statoa  oan  boat  work  to  brine  about  Ita  daalao. 

Lot  MO  Bako  oloar  at  tha  outaot  that  tha  folloKlng  oplniona  aro  bj 
om  and  do  not  raptoaont  tha  offlelal  vlawa  of  Harvard  Dnlvaralty. 
Llk*  othar  unlraraitlea.  Harvard  doaa  net  taka  Inatltutional  poaltlona 
on  anj  fadaral  laglalatlon  that  doaa  not  diraotly  affact  hlghar 
•ducatlon.  On  tha  othar  hand,  ny  dutlaa  orar  a  long  parlod  hava  lad 
■a  tb  paj  oleao  attantion  to  evanta  In  South  Africa  and  to  davalop 
porsonal  Tlawa  on  tha  affalro  of  that  country. 

ilaoat  nlnaty  yaara  ago,  Juatloa  Jrim  Karshall  Harlan  urota  a 
prophatlo  dlaaant  to  tha  Supraoa  Court  daclalon  In  Plaaay  v.  Farauaon 
upholding  atata-lMpoBod  sagra^tlon  In  tha  United  Stataa.  Harlan 
ecndennad  nandatad  oagregation  aa  'Inocnslatant  not  only  Hith  that 
aquallty  of  rights  which  partalna  to  citizenship,  but  with  tha 
personal  llbar^  enjoyed  by  everyone  In  the  United  Stataa. . . .Tha 
deatlnleo  of  tha  raoaa  in  thla  oountry  era  indiaeclubly  linked 
together,  and  tha  cooaon  govomamit  of  all  ahall  not  petnit  the  seada 
of  raea  hate  to  be  placed  under  the  sanction  of  law." 

Apartheid  in  South  Africa  io  totally  inconsistent  with  the  Ideals 
proclalaed  by  Justloa  Harlan.  It  Is  a  ayatas  of  law  that  aeparatas 
people  on  the  basis  of  color,  strips  neabers  of  one  race  of  their 
basic  huaan  rights,  roba  the*  of  their  citizenship,  denies  thea 
eooncalo    opportunity,    and    imposes    these    indignities    through  crlalnal 

-t-Z- 


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law  and  polio*  aatlon.  Baoauaa  af  Ita  flagrant  injuatloaa,  apartbald 
la  uniTaraally  condewiad  In  tha  ttnltad  Stataa.  Its  oruvlt;  and 
rapreaalon  provoka  Inatablll-^  that  threatana  Aoarlca'  a  lon^taca 
Intarsata  In  tha  raglon.  Ita  parvaalva  raolal  diaorlainatlon  avokea  a 
painful  raaindar  of  our  om  hlatory  and  apura  ua  to  naka  coamon  cauaa 
with  tha  oppraaaad. 

During  tha  paat  twalva  jraara.  Harvard  has  sought  to  play  a 
poaltiva  rola  aa  an.lnvaator  in  U.S.  eoapaniaa' doing  a  aaall  aaount  of 
bualnaaa  in  South  Afrioa.  Ha  hava  votad  against  naw.  South  African 
invaatoants  In  eoapanlas  in  which  wa  hold  stock,  and  »•  hava  takan 
palna  to  vota  in  an  tnfotsad,  responsibla  aannar  on  othar  shareholdar 
raaolutlons.  In  addition,  ua  hava  gon*  bajrond  voting  to  conduct  an 
aotlva  dialogua  with  ouch  fima  to  parouade  than  to  Inprova  working 
condltioAs  for  nonwhlta  aaplojaas  and  to  ekpreas  oppoaition  to  Influx 
control  and  othar  rapressivs  aparthsld  laws.  Hs  hava  conslstantly 
oppoaad  bank  loana  to  tha  South  African  govacnaant  or  ita  aubaidlary 
organizations.  Each  yaar,  tha  Univarsity  providaa  aoholarahipa  to 
•nabla  nonwhlta  South  Atricana  to  atudy  at  Harvard.  Finally,  I  hava 
sarvad  ainoa  ita  ineaption  aa  Chaiman  of  tha  National  Council  of  th« 
South  African  Educational  Frograa,  undar  which  aora  than  229  nonwhlta 
South  Africans  ara  eurrantly  anrollad  in  Anarlcan  univarsitlas. 


Harvard   will   not   invaat    in  coapanias   doing  a    najority   of    thair 
bualnasa  In  South  Africa. 


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R«o*nt  vTMita  hava  lad  iaarloaiw  to  ravlaw  our  natlooal  poller 
toMard  S«uth  Africa  aad  Its  ajataa  of  aparthaU.  Ovar  tha  laat  nlna 
Bdutlw  Bora  than  200  ncmAlta  South  Afrleana  iMva  baan  killad  bf  tha 
polloa  In  daaonatratlona  and  public  catharlnsa.  Hot*  than  3,000  havo 
baan  arraotad,  aany  of  whcM  raaaln  In  Jail  undar  uneartalu  ehargas. 
in  aatiaatad  ona  ■tllloa  nonithltaB  hava  takan  part  In  labor  atrikas 
and  aehool  bojrootta.  Tha  Praaldant  of  South  Africa  haa  bannsd  all 
political  Baatlnga  and  aaaaabllaa  by  29  oppoaltlon  groupa,  Inoludlnf 
tha  Dnltad  Dokocratlo  Front,  an  orsanliatlcn  tiith  1 .3  allllon  aanbara. 
Thla  Bontb    tha    goTarnHant  will    try   16  nOF    leadara  ,00,  ohargas  of 


Agalnat  thla  backdrop,  tha  currant  Dnltad  Stataa  policy  of  qulat 
dlploaaoy,  or  "conatruotlva  nngagaaant."  vlth  South  Africa  maa 
Inoraaalngly  lnadac}uata.  Although  tha  South  African  goremaant  haa 
aada  atatsnanta  that  It  Intanda  to  pursue  ohanga  In  ita  ralatlona  with 
tha  country' a  nonwhlt*  na jorlty,  thar*  la  llttla  avldanc*  that  auoh 
ohanga  la  actually  taking  plac*.  Tha  linltad*  Intasratlen  that  has 
oocurrad  In  athlatloo  and  publio  facllltlea — even  tha  lifting  of  tha 
ban  on  racial  intaiwarriaga — ara  but  aaall  atapa  that  do  not  attack 
tha  baaic  avila  of  aparthald. 

Black*  continua  to  hava  no  political  powar.  Tha  aapaiata  South 
African  parliaoant  oraatad  for  Indians  and  "eolorads"  haa  no 
laglalativa       authority.  Its       vary       creation       undarseoraa       tha 

disonfranchlsaaant    of    tha    oTarwhalalng    black    aajority    of    tha    South 
African  population  and  dlvidaa  tha  country  further  along  racial   llnaa. 


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182 


Th*  "ho— Iwito"  r«s*ttl«aaiit  policy,  t«Bpac«rll7  auapamlMd,  has  foread 
3.9  ■llllon  blacks  to  ■<>▼•  to  crowdwd  Bantuatuta,  iriiaro  econoilo  and 
llTlnc  oondltlona  ara  foar  and  th*  Infant  aortalltr  rata  la  th« 
hl<haat  In  tha  Afrloan  eoatlnant.  la  a  corollarj  to  th*  hoNalanda 
pelleyi  «ora  than  8  nllllon  blaeka  ha««  baan  "danationallzad"  and 
■trippad  of  thalr  South  African  oltlianahip.  "Faaa  lawa"  irtilch  sharply 
llalt  freadoa  of  oovanant  for  nonwhltaa  ara  anforcad  with  Inoreaalns 
efflclancyi  arraats  for  pass  law  vlolatiana  doublad  froB  19S0  to  nor* 
than  200,000  annually  in  1903.  Finally,  tha  Influi  oontrol  laira  whleh 
bar  noiwhlta  urban  woricara  fma  raalding  with  thalr  faailiaa  near  tha 
mrkplaoa  ara  atrlotly  anforoad. 

In  BUB,  tha  ifrlkanar  govemaant  shoHS  littla  avldmca  of  aoTing 
to  dlsttantla  tha  ayataa  of  aparthald.  Tho  fruita  of  conatructlva 
angagaaent  ar«  aaager  Indaad  whlla  tha  auffaring  and  rapraasion 
oontlnua       undlainlshad.  Bsnaath      tha       aurfaca       of       offleial 

intmnaigenca,  howavar,  daapar  tranda  In  tha  aooiaty  offar  gllaaara  of 
hopa.  In  partioular,  opinion  polla  of  South  African  vhltaa  Indloat* 
far  graatar  aupport  for  ohango  than  anything  proaotad  raoantly  by  tha 
raglaa.  A  ourray  ralaaaad  in  Dacaabar  19S4  by  tha  Hunan  Sanrleaa 
Raaaarch  Council,  an  acadeaic  body  oatabliahad  and  partially  fundad  by 
tha  South  Afrloan  (covamaant,  ravaalad  that  45  parcant  of  whita  South 
Afrleana  ara  now  In  favor  of  negotiationa  with  tha  African  National 
Congroaa  whila  44  parcant  ara  opposed. 

Such  tranda  suggaat  tha  opportunity  tor  pressing  the  Afrikaner 
ragiaa   to   take   bolder  steps   toward   rafom.      lat  tha  currant  United 


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SbrtM  pkUct  fails  tar  ^tuit  tf  afeat  tba  iiwlj  oC  «ba  altaatlM  1m 
S«tk  Africa  Amm^b.  iDna  yvt.  it  la  nsilr  atattftMi  f«r  teeit 
»«jgulji«Bici  IM  m  atetM  VM  ttat  oTfrnte  om-  M«t  pncloa  IdMla  an* 
ttr— tf  ta  dvtorient*  lA  p^liv  tIoImos  ■■«  lastablUtT.  I^«r 
laarieana  doiibt  llM  ••rlnMOBfls  of  oik'  fovan^MBt'a  aitposlUoB  ta 
■pkrttaaU  and  ballna  tlMt  tba  Atelalstzatlon  1»  Mn  oODoairwd  ta 
praaarva  Uh  aliort-nai  ailiantataa  of  alllaBoa  attb  ■  poaarful  i  nl— 
tltaa  to  allavlata  tba  aofforlns  and  lajnatlca  of  apartbald.  tt 
<jjuwlj.iictlT»  a^pigMaat  ia  not  eoavtnelns  to  aiir«al**a.  It  can  hardly 
aaoa  parawl^a  ta  AfrikaBai*. 

lo  vl*M  of  tha  aavara  Injuatleos  of  aparthald  and  tha  rlA  of 
gtcmtog  Tlolaoc*  and  lairast,  I  bslla'ra  that  qutat  dlploaacjr  bjr  our 
gojarnaaat  will  not  auffle*.  Clraaatanoaa  r«qulE«  «  aot*  povarfal 
axpraasloa  of  our  national  concam.  I  tliarafara  at^port.  lastalatl^ 
omctlooa.  At  tha  saa*  tina.  I  racosnica  hoa  difficult  It  t*  to 
pradlat  altb  eartalnty  tha  aconMic  and  political  iapact  on  SouU) 
Ifrioa  of  any  particular  poller  ar  eouraa  of  aeticn  %r  tha  Onltad 
Stataa. 

Tbaro  ara  currantly  two  acboola  of  tlMUght  about  ha«  tha  Dnltod 
Stataa  can  aoat  effactlTslj  oppoaa  aparthald.  Tha  tlrat  la  basad  on 
tha  praalaa  that  0.3.  tnvaataanta  In  South  Africa  can  provida  a 
Bubatantlal  aaana  of  influenclns  tha  South  African  raciaa.  Dlraat 
D.S.  Invaataanta  raprasent  nearly  20  parcant  of  all  direct  foral^t 
InTaataant  In  South  Afrlcat  thej  total  aora  than  t2  billion  In 
■pproxiaatelr   280   tt.S   fliaa.    Ineluding  57    of    tha   100    Urgaat  U.S. 


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1S4 

eorporatioiw.  HlMn  tha  v«lu«  of  0.3.  hald  sharaa  in  South  Afrloan 
eMtpanlas  la  included,  th*  total  anount  of  n.3>  Invaataanta  la  auoh 
hlshar  with  soaa  aatlMtaa  going  aa  high  ■•  t14  billion. 

Throusb  aotlva  participation  In  tha  South  African  acononr,  it  is 
said  that  U.S.  coapanlas  can  halp  bring  about  ohang*  through  their  own 
Induatrlal  praetlcas  and  thalr  vigorous  oppoaitlon  to  aparthsid  niloa. 
To  tha  adhai>enta  of  this  poaltion,  ths  Sullivan  prlnciplaa  repraaant 
an  Isportant  aaana  .of  anliating  and  focusing  tha  aotivltiaa  of  D.S. 
Invastora  in  South  Africa,  Expansion  of  thas*  prlnciplaa  aaong  0.3. 
ccapanl«a  la  ragardad  aa  a  way  of  inprorlng  tha  wagaa  snd  working  and 
living  conditions  of  nonwhlt«  South  Afrloana,  trsnafarrlng  technical 
and  Danagaaant  skllla  to  nonwhitas,  and  creating  aconoalc  and 
political  prassursa  for  rafom.  From  Uils  point  of  visw,  tha  propar 
role  of  tha  O.S.  govamaant  Is  to  cooplaaent  tha  activities  of  U.S. 
Invastora  bjr  saaklng  to  parsuada  the  South  African  regime  to  begin  to 
dl^untle  tha  apartheid  ayataa  In  ordar  to  foster  contlmiad  donestlo 
and  econoBlo  growth  and  better  Intamational  relatlona. 

Tha  aecond  school  of  thought  acknowlsdgea  that  U.S.  investaent  can 
Influence  South  Africa,  but  reaches  a  whollr  different  concluaion, 
calling  for  total  and  conplata  dlslnvestnent.  Proponents  of  this 
point  of  view  belle**  that  apartheid  la  ao  entrenched  and  the  South 
African  r«gl«a  bo  intranaigant  that  only  a  aajor  shook  to  tha  entire 
syatea  will  have  any  affaot.  According  to  tha  theory,  au^  a  shock 
can  b«  adnlnlatared  by  tha  Unltwl  StaUs  If  it  withdraws  all  its 
invaBteants   frca  South   Afrlos.      Frca   this   parspaotlv*   currant  U.S. 


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186 


iiiv«Bt«Mito  ar*  M*mn  as  bolstarlnc  aparthald,  not  mcourasins  rmtoim, 
and  tha  Sullivan  prinalplaa  ara  dl«al»a«d  aa  •  tokan  affort  to  juatlff 
oontlmilng  to  do  bualnaaa.  Sophtstloatad  advooataa  of  dlalnvaataaat 
do  not  r«at  thair  oaaa  on  tha  aconealo  l*paat  of  wlthdraial,  Mhloh 
thar  corwad*  la  difficult  to  pradlct,  but  argua  that  tha  Initial  ahook 
to  tha  South  African  econoaj  and  tha  draaatlo  daaonatration  of 
political  and  aoral  oondaanatlon  by  tha  (Inltad  Stataa  would  forca  tha 
South  African  raglaa  to  ehanga. 

Thara  ara  graat  uneartalntlaa  In  both  of  thaaa  points  of  via*. 
Supportara  of  Invaataant  can  offar  only  a  spaeulatlva  hopo  that  tha 
eaplornent  practieas  and  aoeial  uelfara  prograaa  of  coopaniaa 
aaploylns  auoh  a  hhiII  fraction  of  Uia  nonwhlta  Mork  forca  In  South 
Africa  will  hvlp  bring  about  tha  end  of  aparthald.  Proponenta  of 
dlslnvasteant  cannot  convlnclnsly  dlapal  tha  f«ar  that  ths  departura 
of  Aaerlcan  flma  would  oaral;  laad  althar  to  black  unenplarnient  and 
sovamovnt  rapreaalcn  or  to  a  tranafer  of  tha  abandoned  asaata  to 
other  owner*  who  might  wall  be  laaa  hmane  and  progreaBlve  than  thalr 
pradeeaaaor*. 

Hhlle  no  couraa  of  action  can  be  free  froa  uncertainty,  aanctlona 
of  tha  kind  propoaad  in  tha  Antl- Apartheid  Act  aeea  to  offer  a  way  of 
capturing  aoat  of  tha  atrengtha  of  both  opposing  polnta  of  *l«w  whila 
MlnLalilng  thalr  dlaadvantaga*.  By  lapoaing  several  si gnif leant 
econooio  aanctlona  against  the  South  African  gcvemaant,  the  bill  goas 
■ell  beyond  Bsra  verbal  disapproval  of  apartheid.  Ho  on*  fsDlliar 
with    thia    laglslatlon    can    construe    it    as    tacit    support   for    the 


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IM 


irrlkaiMr  e«giBa>  Wo  ona  out  intatprat  th*  lot  a«  anything  athar  than 
«  atrong  aoral  condaanatlon  of  aparthald  pronouncvd  br  tha  oboaan 
rapraaantatlvaa  of  tha  Anarlcan  paopla. 

At  tha  amaa  tine,  unlike  total  dlvaetnant,  tha  Antl-Aparthaid  Aat 
lapoaaa  sanctions  dlraotlj  on  tha  South  African  govemaant.  It  doaa 
not  thraatan  to  i»em  blacks  and  othsr  blansless  third  partlaa  bj 
daprlvlng  the*  of  Joba.  Hor  doaa  the  bill  dlalnlah  ths  opportunltj 
for  ABarican  coapanlea  to  plaj  a  conatructlre  role  bj  opposing  Influx 
control  lawa  and  providing  battar  working  eonditlona  and  other 
opportunities  for  their  black  enplojees.  True,  the  Isgislation  would 
bar  new  Invaatoant  bj  Anarlcan  coautanlao.  Still,  it  is  Inconceivable 
that  U.S.  flms  will  avar  control  anough  of  tha  South  African  aoonoajr 
to  change  tha  eeonoalo  systea  bj  theasalvaa.  Thay  can  hara  a  positive 
lapaot  only  by  setting  an  example  for  others  to  follow,  and  this  thay 
can  do  wall  enough  without  expanding  thalr  invasteant  bayond  asiatlng 
levals. 

In  sua,  unlike  the  nore  eitreaa  alternatives,  the  Anti-Apaethald 
Aet  does  not  rely  predominantly  on  althar  tha  carrot  or  tha  stick  to 
achieve  refora.  It  usas  both — and  In  a  way  that  lapoaes  the  least 
possible  burdan  on  tba  innocent  bystander.  By  providing  for  the  ub« 
of  posltiva  and  negative  inoantlves,  the  approach  takan  under  tha  Aot 
offers  grsstar  hope  than  any  of  tha  known  altamativaa  for  ancouraglng 
m  prooass  of  constructlva  reform  that  will  halp  to  do  away  with 
aparthsld.  In  following  this  course,  we  stand  the  beat  chance  of 
•dvanelng  tha  hi«ans  Idasls  that  are  central  to  our  national  creed  and 
sandlnc  a  aesaaga  of  support  to  nonwhlte  South  African*  atruggllng  to 


-1- 


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Senator  Heinz.  Mr.  Bok,  thank  you  very  much. 
Mr.  Schotland. 

STATEMENT  OF  ROY  SCHOTLAND,  GEORGETOWN  LAW  SCHOOL, 
GEORGETOWN  UNIVERSITY 

Mr.  Schotland.  Thank  you,  Mr.  Chairman. 

It's  a  special  privilege  to  be  back  before  the  Banking  Committee. 
Each  of  you  Senators  and  probably  each  person  in  this  room  has 
thought  a  great  deal  about  these  issues  and  I  bet  that  many  people 
here  believe  there's  a  clear  and  simple  right  answer.  I  submit  this 
is  an  example  of  H.L.  Mencken's  proposition  that  for  every  com- 
plex problem  there  is  a  clear,  simple,  and  wrong  answer. 

ISSUE  OF  DIVESTITURE  IS  COMPLEX 

My  key  point  today  is  that  the  issue  of  divestiture  is  not  as  clear 
and  simple  as  many  people  have  been  making  it  sound.  In  my  writ- 
ten statement  I  offer  also  five  comments  on  the  specific  provisions 
of  this  bill,  a  bill  which  is  described  by  its  Senate  supporters  as  if  it 
were  something  of  a  lion  or  at  least  a  leopard,  but  it  seems  to  me 
to  have  about  all  the  force  of  a  plain  old  pussycat. 

Before  I  deal  briefly  with  divestment,  may  I  give  just  two  sugges- 
tions about  the  bill,  one  echoing  a  point  just  made  by  President 
Bok.  The  bar  on  loans  to  the  South  African  Government  and  enti- 
ties but  nobody  else  in  South  Africa  is  curious.  Bank  loans  from 
American  banks  to  the  South  African  Government  were  $350  mil- 
lion in  September  1984,  down  from  1982's  over  $600  million,  but 
our  American  bank  loans  to  nonbank  borrowers  in  South  Africa  to- 
taled $1.1  billion  as  of  September  1984,  up  from  just  under  $500 
million  in  1981.  Our  bank  loans  to  banks  in  South  Africa  in  Sep- 
tember 1984  totaled  $3.5  billion,  up  from  $1  billion  as  of  1981. 
When  our  banks  lend  to  South  African  banks  it  isn't  too  hard  to 
understand  to  whom  the  South  African  banks  might  lend  in  turn. 

Contrary  to  the  claims  of  the  bill's  supporters,  I  fear  this  bill 
sends  a  signal  that  we  are  not  serious  and  we  are  not  willing  to 
pay  any  significant  price  for  our  principles. 

Only  one  other  point,  if  I  may,  about  the  bill  itself.  Why  does  the 
bill  not  mandate  the  Sullivan  principles  for  U.S.  companies  in 
South  Africa  as  does  the  Lugar-Mathias-Dole  bill?  The  Rockefeller 
Commission  report  of  1981  chaired  by  Franklin  Thomas  of  the  Ford 
Foundation,  the  fullest  study  ever  done  on  these  issues,  endorsed 
the  principles.  The  National  Association  of  State  Treasurers  has 
formally  endorsed  the  principles.  You're  going  to  hear  a  panel 
saying,  I  believe  completely  correctly,  how  constructive  the  princi- 
ples are. 

Law  in  Connecticut,  Nebraska,  New  York  City,  and  elsewhere 
has  formally  recognized  their  significance. 

Chester  Crocker  testified  before  the  Foreign  Relations  Committee 
3  weeks  ago  that  the  principles  would  be  difficult  to  apply  and 
monitor.  I  submit  that  is  a  false  hurdle. 

Since  1978,  Arthur  D.  Little,  as  Reid  Weedon  will  testify  in  a  few 
moments,  has  formally  evaluated  compliance  with  the  principles 
and  I  think  anybody  who  looks  at  the  evaluation  process  will  be 
impressed  with  how  substantive  and  substantieU  it  is. 


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138 

I  don't  see  how  the  administration  can  justify  rejection  of  Li^ar- 
Mathias-Dole,  and  I  believe  that  step  is  more  effective  than  S.  635 
as  now  written,  so  may  I  urge  consideration  of  amending  S.  635  to 
incorporate  that  step  and  perhaps  others. 

My  key  point  today,  pursuant  to  requests,  is  about  the  issue  of 
divestment.  Any  serious  consideration  of  divestment  involves  three 
questions. 

First,  the  facts— three  kinds  of  facts  have  got  to  be  gotten  out. 
What  kind  of  divestment  is  proposed;  is  it  absolute  or  is  it  selective 
in  any  way?  For  what  kinds  of  funds  is  it  proposed?  It's  vastly  dif- 
ferent if,  as  Maryland  has  done,  there  is  a  bar  on  the  cash  funds  in 
banks  involved  with  South  Africa,  in  contrast  with  Massachusetts' 
law  on  any  securities  in  the  pension  funds.  And  last,  what  size 
funds;  the  larger  the  fund,  the  greater  the  problem. 

The  second  key  question  is,  whether  the  kind  of  divestment  pro- 
posed will  be  effective  or  is  this  being  done  regardless  of  effective- 
ness? 

The  third  question  is,  is  the  kind  of  divestment  proposed  moral? 

By  starting  with  the  facts,  we  see  at  once  that  the  issue  is  not 
completely  simple  and  that  much  of  the  advocacy  of  divestment 
misrepresents  the  facts  and  so  starts  out  in  questionable  morality. 

Most  advocacy  is  for  absolute  divestment.  This  has  been  adopted, 
for  example,  by  Massachusetts  and  the  District  of  Columbia  pen- 
sion funds.  This  is  an  issue  in  many  States  right  now — Pennsylva- 
nia, Maryland,  and  the  State  of  Washington,  for  exEunple,  speciti- 
calj^. 

That  is  deeply  different  from  the  approach  adopted  by  Connecti- 
cut, or  Maryland,  or  Nebraska,  or  New  York  City.  Although  divest- 
ment advocates  always  list  them  as  examples  of  what  they  want, 
Connecticut,  Maryland,  Nebraska,  and  New  York  City  have  reject- 
ed absolute  divestment. 

Absolute  divestment,  I  submit,  is  immoral,  as  I  will  explain  in 
one  second;  ineffective;  and  for  institutional  investors  such  as  en- 
dowments or  pension  funds  seriously  expensive  and  injurious. 

Absolute  divestment  is  immoral  for  two  reasons.  First,  it  treats 
every  American  firm  involved  in  South  Africa  the  same,  regardless 
of  their  conduct  there.  Kelloggs  was  the  first  company,  not  just  the 
first  American  company,  to  recognize  and  bargain  with  a  black 
union.  Ford  was  the  first  company,  not  just  American  company,  to 
have  black  shop  stewards.  Control  Data  is  conducting  a  major  pro- 
gram of  education  in  modern  skills.  Are  those  companies  the  same 
as  Martin-Marietta  which  refuses  (as  far  as  the  latest  information  I 
have)  even  to  sign  the  Sullivan  principles;  or  Baker  International, 
a  major  oil-drilling  company,  which  will  not  even  respond  to  major 
shareholders'  requests  for  information  on  its  conduct  there? 

To  brand  different  people  the  same  because  of  one  characteristic 
is  the  very  essence  of  prejudice  and  is  the  main  reason  why  abso- 
lute divestment  is  simply  immoral,  contrary  to  representations. 

The  speaker  of  the  New  Jersey  Assembly  says  that  when  he 
hears  talk  about  selective  divestment  along  the  Sullivan  principles 
lines,  he  thinks  of  the  legend  over  the  entry  to  the  Nazi  concentra- 
tion camps.  That  is,  he  thinks  the  Sullivan  principles  are  false.  "The 
legend— i  don't  speak  German  well  enough— was  "Work  will  set 
you  free." 


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I  can  only  think  of  that  kind  of  lumping  this  way.  If  he  were 
asked  were  Eichmann  and  Ike  any  different,  they  both  were  in- 
volved in  killing  in  World  War  II,  I  don't  know  what  he  would  say. 
And  I  think  the  Sullivan  principles  are  that  different  and  that  con- 
structive. 

ADVOCACY  IS  HYPOCRITICAL 

A  second  reason  absolute  divestment  is  immoral  is  that  the  advo- 
cacy is  hypocriticftl.  It  demands  the  university  endowment  or  State 
pension  fund  to  be  free  of  all  connection  with  South  Africa,  but  I 
have  yet  to  find  any  advocate  who  imposes  any  similar  demsmd  on 
himself  Al»olute  divestment  is  an  understandable  tactic  in  a  polite 
ical  effort,  but  it  is  nothing  more.  It  is  understandable  to  brand  im- 
moral the  university  or  the  pension  fund  holding  shares  in  any 
company,  but  is  it  moral  to  go  on  using  American  and  Japanese 
cars,  using  IBM  products,  drinking  Ck>ca-Cola,  relying  on  medi- 
cines— well,  you  can  name  just  about  any  American  drug  company. 
And  how  many  individuals  who  sit  demanding  purity  of  institution* 
al  investors  look  down  at  their  gold  watch  and  see  whether  iite 
time  has  come  for  them  to  move  on  to  something  else? 

It's  unrealistic  to  expect  people  to  function  without  such  firms, 
without  Otis  Elevator,  Associated  Press.  ABC,  CBS,  New  York 
Times,  Washington  Post.  It  is  no  less  unrealistic  to  expect  institu- 
tional investors  to  function  to  carry  out  their  mission  of  education 
of  providing  secure  pensions  without  the  opportunity  to  invest  in 
such  major  natural  holdings  for  such  portfolios. 

That  is  why  an  Oregon  court  in  December  this  past  winter  held 
it  imprudent  for  the  $20  million  University  of  Oregon  endowment 
to  adopt  absolute  divestment. 

One  other  immorality  is  involved  in  most  advocacy  of  absolute  di- 
vestment. This  is  misrepresentation  about  how  much  has  been 
adopted.  Connecticut  has  not  done  what  the  advocates  claim.  It  re- 
tains and  invests  more  in  companies  that  are  Sullivan  signatories 
in  the  top  compliance  ratings.  That  prudent  course  has  been  ap- 
proved by  the  National  Association  of  State  Treasurers.  It  makes 
moral  decisions.  It  avoids  imposing  expensive,  useless  losses  on  the 
funds. 

New  York  City,  contrary  to  the  usual  advocacy,  has  not  adopted 
absolute  divestment,  not  even  at  the  end  of  its  5-year  phase-in.  Ne- 
braska, ditto.  Maryland  has  done  nothing  about  its  investment 
funds,  barring  merely  use  of  banks  involved  in  South  Africa. 

As  for  why  divestment  is  ineffective,  what  happens  if  our  univer- 
sity, or  the  University  of  Pennsylvania,  or  the  State  of  Massachu- 
setts pension  fund  sells  stock  in  a  company?  The  company  doesn't 
like  the  publicity,  but  some  other  shareholder  who  by  definition 
cares  less  simply  buys  the  stock.  There  is  less  impact  on  the  compa- 
ny than  if  Harvard,  or  the  University  of  Pennsylvania,  or  the  Mas- 
sachusetts pension  fund  is  on  the  back  of  that  company  as  active 
shareholders. 

When  Connecticut  passed  its  selective  divestment  law,  within  2 
weeks  the  major  employer  in  Connecticut,  United  Technologies, 
made  its  largest  acquisition  in  South  Africa  of  a  subsidiaiy.  Polar- 
oid did  pull  out  of  South  Africa  because  their  product  was  unique. 


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140 

Their  product  was  the  key  to  the  pass  system  years  back  when 
nobody  else  had  that  kind  of  film.  Their  puUout  had  absolutely  no 
impact.  Polaroid  film  simply  came  in  through  Italy. 

If  our  companies  pull  out  of  South  Africa,  business  done  by  them 
will  be  picked  up  by  others.  Our  computer  companies  have  the 
largest  part  of  any  South  African  economic  activity,  70  percent. 
Nobody  can  question  what's  going  to  happen  if  the  computer  com- 
panies pull  out.  The  other  30  percent  simply  pick  up  the  vacuum. 

We  need  to  put  the  multinationeils  together  along  lines  proposed, 
for  example,  by  Congressman  Solarz. 

Although  divestment  will  be  completely  ineffective,  it  is  costly. 
In  an  article  in  a  pamphlet  recently  published  and  now  out  in 
30,000  copies  in  which  I  submit  my  article  for  your  record,  I  go  in 
detail  into  the  impact  on  institutional  investors  and  into  the  ac- 
complishments of  the  Sullivan  signatories  and  if  I  may 

Senator  Heinz.  Without  objection,  that  will  be  made  part  of  the 
record. 

Mr.  ScHOTLAND.  Thank  you  very  much,  Mr.  Chairman,  and 
thank  you  for  your  consideration. 

[The  complete  prepared  statement  and  a  peunphlet  on  disinvest- 
ment follow:] 


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Swiat*  C(M*itt*«  on  Banking, 
HMwing  «  Orbm  *fUir«: 

liilii  i^lll  11  on  International 


Tbc  Anti-Aparthaid  Act  of  19BS,  S.69S 


wrT  anJ  Contantai 

Views  on  divutMcnt,  suB*arisad — why  absolut* 
di«Mt*ent  is  iaMoral,  inaftectiva,  and  for 
institutional  investors,  injuriously  espensive. 


I  S.  S35's  specific  provisic 


This  state«*nt  focuses  on  S.  fi3S,  with  five  brief  coevents 
on  the  divergence  between  what  the  bill  does  and  the  claias  nade 
about  it. 

In  addition,  as  requested,  I  submit  views  on  the  vuch 
discussed  question  of  divestaent.  Here  I  only  suamarice  my 
views;  they  are  set  forth  at  length  in  a  recently  published 
paiqihlet  CDisinvestaent — Is  it  legal?  Moral?  Productive?", 
Kat'l.  Legal  Center  for  the  Public  Interest,  Hash.  D.C.,  1985), 
and  I  request  that  a  copy  of  my  article  be  included  in  your 
Hearing  record  with  this  statenent. 

Below  is  the  outline  of  that  article,  followed  by  ny  summary 
for  your  Hearing; 

Tke  difbciduet  of  divoicB  iBoettii) 

Hurdle  I:  Whv  lodi? 

Hwdk  2:  Wbick  pwiuci? 


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I.   To  suEunarize  my  vievs  on  divestment: 
Viaws  of  divestment  must  begin  with  vhat  divestment  is  proposed. 
Most  advocacy  is  for  absolute  avoidance  of  the  securities  of  an] 
firm  involved  in  South  Africa,  as  has  been  adopted  for  the 
pension  funds  of  Massachusetts  and  the  District  of  Columbia  (anc 
no  other  state).  That  is  very  different  from  the  approach 
adopted  by,  e.g.,  Connecticut  or  Maryland  or  Nebraska,  although 
^nt  advocates  always  list  them  as  examples  of  what  they 


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Absolut*  or  blundarbuss  divcstaent  is,  contrary  to  first 
iapressions,  inwral,  in«f factiva,  and  for  tnstttutionsl 
investors,  injuriously  •apensivc. 

Absolute  divestment  is  inaoral  for  two  reasons.   First,  it 
treats  all  American  firas  involved  in  South  Africa  the  sa**, 
regardless  of  their  conduct  there.  Xellogg's  was  the  first 
coapany — not  just  the  first  U.S.  coapany — to  recognize  and 
bargain  with  a  black  union.  Pord  was  the  first  cmpany  with 
black  shop  stewards.  Control  Data  is  conducting  a  major  prograa 
of  education  in  modern  skills.   Are  such  c«apanies  the  same  as 
Martin  Marietta,  which  refuses  to  sign  the  Sullivan  Principles, 
or  Baker  International  (oil  drilling),  which  will  not  even 
respond  to  major  shareholders'  requests  for  information  on  its 
conduct  in  South  Africa? 

To  brand  different  people  the  same  because  of  one 
characteristic,  is  the  essence  of  prejudice,  and  is  the  main 
reason  that  absolute  divestnent  is  immoral. 

A  secondary  reason  that  absolute  divestment  is  immoral  is 
that  its  advocacy  is  hypocritical:   it  demands  that  a  university 
endowment  or  state  pension  fund  must  be  free  of  ell  connection 
with  South  Africa — but  I  have  yet  to  learn  of  any  advocate  who 
imposes  any  similar  demand  on  himself.   It  is  understandable 
tactics,  but  nothing  more,  to  brand  'immoral'  the  endowment  or 
pension  fund  holding  shares  in  any  coo^any  involved  in  South 
Africa,  while  the  advocates  themselves  go  on   using  American  or 
Japanese  cars,  using  IBM  and  SB  products,  drinking  Coca-Cola — or 
relying  on  medicine  fro*  Abbott  Labs,  Baxter  Trsvenol, 


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Bristol-Kyars,  Johnson  i   Johnson,  Bli  Lilly,  Merck,  Pfizer, 
RichBrdson-Vicks,  Scbaring  Plough,  SnithKllne  BecKnan,  Squibb, 
Starling,  Upjohn  and  Harner-Laatbert.   (And  how  many  individuals 
who  denand  'purity*  of  institutional  investors,  are  willing  to 
giva  up  their  gold  watches  or  jewelry  or  family  diamonds?) 

It  is  unrealistic  to  expect  people  to  function  without  such 
tints,  or  without  Otis  Elevator,  Associated  Press,  ABC,  CBS,  Haw 
York  Times  and  Washington  Post.   It  is  just  as  unrealistic  to 
expect  institutional  investors  to  function  (to  carry  out  their 
aission  of  education  or  of  providing  secure  pensions,  etc.) 
without  the  opportunity  to  invest  in  such  major  natural  holdings 
for  such  portfolios.   Individual  investors  can  easily  restrict 
themselves,  but  investors  are  very  different.   That  is  why  an 
Oregon  court  in  December  1984  held  it  imprudent  for  the  S20 
million  state  university  endowment  to  adopt  absolute  divestment. 

One  other  immorality  is  involved  in  most  advocacy  of 
absolute  divestment.  This  is  the  misrepresentation  about  how 
widely  it  has  been  adopted.   Connecticut  has  not  done  what  the 
advocates  claini   it  retains  and  will  invest  more  in  companies 
that  are  Sullivan  signatories  and  in  the  top  compliance  ratings. 
That  prudent  course,  approved  by  resolution  of  the  National 
Association  of  State  Treasurers,  has  the  advantages  of  making 
moral  distinctions,  thereby  being  more  effective  and  also 
inflicting  little  if  any  investment  injury  on  its  pension  funds. 
Similarly,  New  York  City,  contrary  to  the  usual  advocacy,  has  not 
adopted  absolute  divestment,  not  even  at  the  end  of  its  five-year 
phase-in  of  selective  divestment.  Nebraska  has  also  adopted 
-4- 


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melectiro  divcctMent;  and  Hcrfland  hai  don*  nothing  sbout  its 
inveitaent  funds,  mmrtlj   barring  ua«  of  banks  involved  with  South 
Africa. 

As  for  why  divestvant  is  inaffective,  and  why  it  will  b*  so 
injurious  to  institutional  invaatora,  full  datail  ia  aat  forth  in 
the  article  aufanitted  with  thia  stateaant. 
II.   Flva  Conaicnta  on  Spaeif ic  Provisions  of  S^  63S 

1^/  This  bill  is  dramatically  different  froai,  and  lass 
than,  what  one  would  expect  in  light  of  the  sponsors'  statet  mta 
introducing  the  bill  on  March  T  (see  Congressional  Record  pp. 
S. 2794-7).   Sen.  Kennedy  said  the  bill  'is  intended  to  aend  a 
clear  signal'  and  that  'we  cannot  continue  policies  that  actually 
encourage  Americans  to  invest  in  racism.*   Sen.  Heicker  said  that 
'Up  to  this  point  [ve  have]  adopted  a  cost-free  approach  .... 
[Tlhe  proof  of  our  sincerity  and  our  resolve  is  that  we  are 
willing  to  pay  a  price  for  the  protection  of  universal  ideals 
.  .  .  .'  Sen.  Proxnire  said  the  bill  will  'send  a  strong 

Indeed,  this  bill  has  been  characterised  as  'probably  the 
strongest  bill'  (Ottaway,  Apartheid  Opponents  Launch  Fresh 
Campaign,  Washington  Post,  May  15,  1985,  p.  A3). 

Only  Sen.  Levin  pointed  out  natters  that  must  be  considered 
in  considering  this  bill;   1)  The  1961-3  State  Department 
authorization  of  S2S  million  worth  of  military  equipment  sold  to 
South  Africa,  the  highest-level  sales  on  record.   2)  Seven 
nuclear-related  eaports  to  South  Africa  in  1901-2,  which  made  it 


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146 


our  third  largast  nuclaar  asport  rcclplantj  and  in  19B3  the 
Dapartoent  of  Energy  licensing  of  U.S.  finu'  servicing  tha 
Koeberg  reactor  in  South  Africa.  3>  The  1962  export  license 
granted  for  sale  of  Z.SOO  electric  cattle  prods  or  'shock  batons' 
for  crowd  control  by  South  African  police. 

The  bill  fails  to  touch  any  such  matters, 

2^/     The  bill  ignores  Imports  fron  South  Africa.  America's 
.purchase  of  South  African  minerals  nay  well  do  more  to  support 
■the  status  quo  in  South  Africa  than  any. other  economic 
relationship,  and  perhaps  we  need  to  or  should  continue  such 
purchase.   But  certainly  we  must  be  more  realistic  about  what 
'signal'  we  are  sending  to  South  Africa,  and  about  what  price  we 
are  willing  to  pay  for  our  principles. 

3./  The  bill  bars  loans  to  the  South  African  government  and 
government  entities,  but  not  to  others  in  South  Africa.   American 
banks  loaned  only  $343  million  to  Africa's  public  sector  as  of 
September  1984,  down  from  S623  million  in  1982.   But  our  banks' 
loans  to  non-bank  private  borrowers  in  South  Africa  totalled  $1.1 
billion  as  of  September  1981,  up  from  $495  million  in  1961;  and 
our  banks'  loans  to  banks  in  South  Africa,  who  of  course  loan  the 
money  on  to  others,  totalled  S3. 5  billion  as  of  September  1384, 
up  from  $1.08  billion  in  1981.   (HY  Times,  Apr.  29,  1985,  p.  D-e> 

Here  again,  doesn't  the  bill  send  a  signal  that  we  are  not 
serious  and  are  not  willing  to  pay  any  significant  price  for  our 

4./  The  bill  bars  new  investments  but  has  an  exception  for 
"an  investment  which  consists  of  earnings  derived  from  a  business 


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•ntcrprise  in  South  Africa  established  btfore  th«  d«t»  of  th* 
enactaent  of  this  Act  snd  which  is  nod*  in  that  businass 
•ntsrpris*,'  S  «<b>(l). 

Th«t  exception  allows  investment  for  eipansion,  contrary  to 
the  explicit  raccMnmendation  of  the  nost  significant  work  on  these 
■atters,  the  Rockefeller  Foundation  Study  Coaaission  on  U.S. 
Policy  Toward  Southern  Africa  (19S1),  chaired  by  Franklin  A. 
Thoaas.  And  many  American  finis  in  South  Africa  already  90 
beyond  this  bill,  by  barring  expansion  there — e.g..  General 
Motors,  Kodak,  Burroughs  and  Gulf  (  Western.   (See  the  Study 
Commission's  Report,  'South  Africa:  Tim*  Running  Out,*  at  pp. 
427-8.) 

In  short,  if  S.G35  is  meant  to  send  a  signal  not  merely  to 
Americans  who  are  concerned  about  apartheid  but  uninformed  about 
relevant  facts,  but  also  a  signal  to  South  Africa's  government; 
and  if  the  bill  is  meant  not  only  to  send  signals  but  also  to 
have  impacts,  then  there  is  need  to  consider  amendments  along 
lines  suggested  by  the  above  and  Senator  Levin's  approach. 

5i/  Why  does  the  bill  not  mandate  the  Sullivan  principles 
for  U.S.  companies  in  South  Africa,  as  does  the  bill  sponsored  by 
Sens.  Lugar,  Mathias  and  Dole?  The  Rockefeller  Commission  (see 
above)  endorsed  the  Principles.   The  National  Association  of 
State  Treasurers  has  fomally  endorsed  them.  Law  in  Connecticut, 
Nebraska,  New  York  City  and  elsewhere,  has  formally  recognized 
their  significance. 

Chaster  Crocker,  Assistant  Secretary  of  State  for  Africa, 
reportedly  testified  before  tba  Foreign  Relations  Committee  Hay  2 


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tbat  tha  Principles  would  be  difficult  to  apply  «nd  monitor. 
That  Is  a  falsa  hurdla.  Sine*  1976,  Arthur  D.  Littla  has 
fomally  evaluated  coaplicance  with  the  Principles,  steadily 
liq>roving  its  process.   Last  year,  the  questionnaire  to  each 
conpany  (or  aven  each  separate  subsidiary)  was  55  pages,  and  the 
closeness,  care  and  reliability  of  the  evaluation  process  will 
ingress  anyone  who  looks  into  it. 

Unable  to  see  how  the  Adninistrat ion  can  justify  its 
rejection  of  the  Lugar-Mathiaa-Pole  step,  and  believing  that  step 
to  be  nore  effective  than  S.  635  as  now  written,  I  urge  anendnent 
to  add  that  step  to  S.  635,  as  well  as  urging  consideration  of 
the  other  provisions  of  the  Lutjar-Mathias-Dole  bill. 


Thank  you  for  your  ( 


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149 


National 

Legal  Center 

for  the  Public  Interest 


DISIlSfVESTMENT 

Is  it  Legal? 
Is  it  Moral? 
Is  it  Productive? 


AN  ANALYSIS  OF  POLITICIZING  INVESTMENT  DECISIONS 


JOHN  H.  LANGBEIN,  Ph.D..  LL.B. 
ROY  A.  SCHOTLAND,  LL.B. 

and 
ALBERT  P.  BLAUSTEIN,  |.D. 


Special  Commentaries 

by 

WILLIAM  G.  MILLIKEN 

Former  Governor  of  Michigan 

and 

DEREK  C.  BOK 

President  of  Harvard  Universlfy 


Introduction 

by 

THEODORE  B.  OLSON 
Fonner  Assistant  U.S.  Attorney  General 


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150 

PREFACE 


ERNEST  B   HUETER 
PRESIDENT 


This  study,  another  in  the  Judicial  Series  of  monographs  published  by  the 
National  Legal  Center  for  the  Public  Interest,  brings  focus  upon  the  many 
ramifications  of  a  serious  national  and  international  issue:  the  politicizing  of 
investment  policy.  Currently  much  attention  is  centered  by  the  media  and 
special  interest  groups  upon  South  Africa  and  the  social  issue  of  apartheid. 
However,  the  issue  of  disinvestment  of  American  corporate  securities  as  a 
means  of  forcing  social  or  political  change  is  a  concept  that  extends  far 
beyond  a  single  country  or  a  single  political  objective. 

It  is  well  that  our  policy-makers  and  their  constituents — the  American 
citizenry — be  keenly  aware  of  the  many  considerations  raised  by  legislation 
requiring  trustees  of  public  pension  and  endowment  funds  to  divest  securi- 
ties of  corporations  doing  business  in  a  particular  geographical  area  or  in  a 
prescribed  field. 

In  keeping  with  its  mission,  the  National  Legal  Center  concentrates  its 
interests  cm  the  legal  and  Constitutional  consideraticms  of  issues  of  national 
importance.  The  scholarly  evaluations  of  law  professors  Langbein,  Schot- 
land,  and  Blaustein  address  disinvestment  from  those  aspects.  This  study  is 
further  enhanced  by  contributions  from  former  Governor  William  G.  Milli- 
ken  of  Michigan,  President  Derek  Bok  of  Harvard,  and  former  Assistant 
U.S.  Attorney  General,  Theodore  B.  Olson;  each  addressing  disinvestment 
from  a  different  perspective. 

lliis  publication  is  provided  by  the  National  Legal  Center  as  a  public 
service.  It  is  not  intended  to  advance  or  inhibit  the  passage  of  any  legislation 
before  any  governmental  entity. 


NATIONAL  LEGAL  CENTER 

FOR  THE  PUBLIC  INTEREST 

1 101 -17th  Street  NW 

Washington,  D.C.  20036 

202/296-1683 


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161 

TABLE  OF  CONTENTS 

PREFACE  by  Ernest  B.  Hueler Inside  Front  Cover 

ABOUT  THE  AUTHORS P>ge  iii 

INTRODUCTION  by  Tlieodoie  B.  Olson Page  vii 

SOCIAL  INVESTING  OF  PENSION  FUNDS 
AND  UNIVERSITY  ENDOWMENTS:  UNPRINCIPLTD. 
FUTILE  AND  ILLEGAL  by  John  H.  Langbein  Page      1 

DIVERGENT  INVESTING  OF  PENSION  FUNDS 
AND  UNIVERSITY  ENDOWMENTS:  KEY  POINTS 
ABOUT  THE  PRAGMATICS,  AND  TWO  CURRENT 
CASE  STUDIES  by  Roy  A.  Schotland Page    31 

DISINVESTMENT— THE  CONSTITUTIONAL 
QUESTION  by  Albeit  P.  Blaustein Page    75 

DIVESTMENT  IS  NOT  THE  ANSWER 
by  Governor  William  G.  Milliken Page    95 

STATEMENT  ON  INVESTMENT  POUCY 
by  President  Deiek  C.  Bok,  Haivaid  Univeisity Page    99 

CONCLUDING  SUMMARY 
by  Robert  J.  D'Agostino Page  107 

UST  OF  PUBUCATIONS Page  IIO 

LIST  OF  SERVICES Inside  Back  Cover 


^1985  National  Legal  Center  for  die  Public  Interest 

Libraiy  of  Congress  Catalog  Number  85-060208 

ISBN  Number  0^9603894-8-2 

Published  Febniary  1985 


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ABOUT  THE  AUTHORS 

I  THEODORE  B.  OLSON,  currently  a  partner  in  the 
Washington  office  of  the  Los  Angeles  law  firm  of  Gib- 
son. Dunn  &  Crutcher,  is  a  former  Assistant  U.S.  Attor- 
ney General .  He  was  ^pointed  head  of  the  Department  of 
Justice's  Office  of  Legal  Counsel  on  April  6,  1981,  a  post 
he  held  until  re-entering  private  practice  late  last  year. 
I  Olson  is  a  cum  laude  graduate  of  the  University  of  the 
1  Pacific,  Stockton,  California  where  he  majored  in  speech 
and  hisloiy,  was  editor  of  the  student  newspaper  and  was  a  member  of  the 
Vbi  Kappa  Tau  fraternity.  He  attended  the  University  of  California  (Berke- 
ley) School  of  Law  (Boalt  Hall),  receiving  his  LL.B.  Degree  in  1%S.  He 
was  named  to  the  Order  of  the  Coif  at  law  school  and  was  a  member  of  the 
California  Law  Review.  Upon  graduation  from  law  school,  be  became  an 
associate  in  Gibson,  Dunn  &  Crutcher,  joining  the  firm  as  partner  in  1972. 
He  is  a  member  of  numerous  bar  associations  and  is  admitted  to  practice 
before  many  state  and  federal  courts. 


! 


I  JOHN  H.  LANGBEIN  is  the  Max  Pam  Professor  of 
I  American  and  Foreign  Law  at  the  University  of  Chicago 
Law  School  where  he  has  taught  since  1 97 1 .  He  is  a  1 968 
I  magna  cum  laude  graduate  of  the  Harvard  Law  School 
I  where  he  served  as  articles  editor  of  the  Law  Review. 
I  Langbcin  received  a  Ph.D.  from  Cambridge  University, 
England,  in  1971.  He  is  a  member  of  the  Bar  in  the 
I  District  of  Columbia  and  Florida  and  he  is  a  barrister  of 
the  Inner  Temple  in  London.  He  is  the  author  of  three  books,  one  on  the 
subject  of  his  doctoral  thesis,  criminal  process  in  the  Renaissance,  and 
numerous  law  review  articles.  Professor  Langbein's  [mncipal  areas  of  legal 
scholarship  are  pension  law,  modem  German  law,  legal  history  and  the  law 
of  trusts,  investment  and  probate.  On  the  last  subject  he  is  the  author,  along 
with  Richard  Posner,  of  a  definitive  article  on  "Social  Investing  and  the  Law 
of  Trusts"  published  in  Volume  79  of  the  Michigan  Law  Review  (1980). 

^^H^H  ROY  A.  SCHOTLAND  has  been  a  Professor  of  Uw  at 
^^^T  ^H  Georgetown  University  Law  School  since  1972.  Educat- 
^^^^F^^H  ed  at  Columbia  College  and  Wadham  College,  Oxford, 
■  ^^^HpH  England,  he  is  a  graduate  of  Harvard  Law  School  where 
■^b^^bH  he  received  his  LL.B.  in  1960  and  was  a  member  of  the 
^^^^^^^^R  board  of  editors  of  the  Law  Review.  Upon  graduation 
'.y^^H^I  from  Harvard,  Schotland  served  as  a  research  assistant  to 
L.^^I^Bk^  the  law  school's  ProfessorPaulFniend  (1960-61)  andas  a 
Law  Clerk  to  Justice  William  Brennan,  Jr.  of  the  U.S.  Supreme  Court 
(1961-62).  Associated  in  a  teaching  c^wci^  with  law  schools  for  twenty 


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yeare.  Professor  Scbotland  has  conducted  classes  at  tfae  Univeisity  of  Vir- 
gjnia  and  Pennsylvania  Law  Schools  as  well  as  at  Georgetown  Univenity. 
One  of  his  areas  of  scholarship  and  expertise  is  the  management  of  pension 
fiinds.  He  has  written  extensively  and  has  given  numerous  talks  on  the 
subject  and  cuiTcntly  conducts  a  seminar  at  Georgetown  University  on 
pension  regulation. 

I  ALBERT  P.  BLAUSTEIN  is  a  Constitutional  authority 
of  tnilv  worid-wide  renown.  A  professor  of  law  at 
Rutgers  University,  be  has  worked  as  a  consultant  in  the 
preparation  of  the  constituIi<ms  of  several  foreign  oatioas 
including  Liberia,  Zimbabwe,  Peru  and  Bangladesh.  He 
has  been  designated  as  Ccmstitutional  Advisor  to  the  As- 
sembly of  First  Nations  in  preparing  autonomy  constitu- 
tions for  Canada's  Indian  Nations.  A  graduate  of 
Michigan  and  Columbia  Universities,  Blaustein  began  teaching  at  Rutgers 
in  19SS.  He  is  the  President  and  Chairman  of  Human  Rights  Advocates 
International,  Inc.,  and  the  Editor-in-Chief  of  "Tbe  Influence  of  the  U.S. 
Constitution  Abroad."  He  is  tbe  author  of  numerous  articles,  ccmtributions 
and  reviews  and  has  written  several  books  on  Constitutional  and  human 
rights  including:  Civil  Rights  and  the  Black  American  ( 1970)  and  tbe  multi- 
volume  text.  Constitutions  of  the  Countries  of  the  World  (1971);  19  wA- 
umes,  continuously  updated. 


■ 


I  WILUAM  G.  N41LLIKEN  retired  in  1983  as  Michigan's 
I  longest  serving  Governor.  First  elected  GovenKU-  in 
1970,  MilUken,  a  Republican,  was  moved  up  to  that 
I  officein  1969afterscrvingasLieutenantGovemor.Heis 
a  graduate  of  Yale  University  and  is  a  recipient  of  numer- 
ous honorary  degrees  including  honorary  Doctor  of  Laws 
degrees  from  the  University  of  Michigan  and  Yale.  Gov- 
I  emor  Milliken's  experience  in  politics  is  not  limited  to 
holding  his  state's  highest  office.  He  was  elected  to  the  State  Senate  in  1960 
and  1962  and  was  Senate  Majority  Floor  Leader  in  1963.  Presently  he 
serves  as  a  member  of  the  Board  of  Directors  of  Chrysler  Corporation, 
Burroughs  Corporation,  Ford  Foundation  in  New  York  and  is  Chairman  of 
The  Center  for  the  Great  Lakes  in  Chic^o.  Prior  to  his  political  career,  he 
was  president  of  J.W.  Milliken  &  Co.,  a  chain  of  Michigan  department 
stores. 


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Hi 


I  DEREK  C.  BOK  has  been  the  President  of  Harvard  Uni- 
versity since  1971 .  Previously  he  was  Dean  of  Harvard 
Law  School,  a  post  he  assumed  in  1968.  He  has  also  been 
a  Professor  of  Law  at  Harvard  since  1961 .  Bok  received 
his  undergraduate  degree  from  Stanford  University  in 
1951  and  his  J.D.  from  Harvard  Law  School  three  years 
later.  He  was  a  Fulbrighl  Scholar  at  the  University  of 
Paris'  Institute  of  Political  Science  from  1954  to  1955. 
President  Bok  has  had  numerous  professional  affiliations  including  mem- 
bership on  the  Federal  Advisory  Committee  on  Affirmative  Action  at  Insti- 
tutions of  Higher  Education  and  the  Board  of  Advisors  of  the  National 
&idowment  for  the  Humanities.  He  is  the  author  of  a  book.  Beyond  the 
Ivoiy  Tower:  Social  Responsibilities  of  the  Modem  University,  published 
by  Harvard  University  Press  in  1982. 

^^^        ROBERT  J.  D'AGOSTINO,  NLCPPs  Ugal  Advisor,  is 
^^^^^^       a  business  law  practioner  who,  in  1981-82,  served  in  the 
^^^K^^m      VS.  Department  of  Justice  as  E)eputy  Assistant  Attorney 
^^■l^^v       General  for  Civil  Rights.  He  had  policy  authority  over  the 
^^^^V        entire  division  and  frequently  spoke  for  the  Department 
^^J^^^P^^  of  Justice  on  civil  rights  issues.  Prior  to  his  govenunent 
I^H^^r  ^H  service,  and  immediately  thereafter,  D'Agostino  was  a 
^K"  ^r     ^1  Professor  of  Law  at  Delaware  Law  School  where  he  was 
the  founding  faculty  advisor  to  the  "Delaware  Journal  of  Corporate  Law" 
and  taught  courses  in  commercial  transactions,  bankruptcy,  and  contenqx)- 
rary  business  law  problems.  From  1973  to  1975,  D'Agostiiu>  was  a  manag- 
ing editor  for  Matthew  Bender  and  Co.  and  was  the  first  head  of  the 
publishing  company's  in-house  bankruptcy  division.  D'Agostino  is  the 
author  of  several  articles  and  books  dealing  with  bankruptcy  and  civil 
rights.  He  is  a  contributing  author  to  the  leading  bankruptcy  treatise.  Collier 
on  Bankruptcy. 


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INTRODUCTION 

by 

THEODORE  B.  OLSON* 

Former  Assistant  U.S.  Attorney  General 
Office  of  Legal  Counsel 
Department  of  Justice 


The  past  decade  has  seen  the  rise  of  a  political  phenomenon  that  raises 
questions  lying  squarely  at  the  crossroads  of  private  and  public,  domestic 
and  international  law.  Numerous  state  and  local  governments  have  chosen 
to  express  their  political  disapfvoval  of  the  domestic  policies  of  foreign 
governments  by  divesting  their  holdings  in  American  companies  that  do 
business  with  those  governments  or  operate  branches  or  subsidiaries  in  their 
territories.  In  the  main,  these  state  and  local  decisions  have  targeted  the 
government  of  South  Africa  with  its  system  of  apanheid.  As  of  this  writing, 
five  states,  Connecticut,  Maryland,  Massachusetts.  Michigan,  and  Nebras- 
ka, have  passed  laws  regarding  divestment  of  South  African  holdings;  about 
fifteen  municipalities,  including  Boston,  New  York,  Philadelphia,  and 
Washington,  D.C.,  have  enacted  similar  divestment  ordinances  or  adopted 
disinvestment  policies,  with  officials  in  Chicago,  Detroit,  Los  Angeles,  and 
Seattle  apparently  contemplating  comparable  moves.' 

Such  local  government  decisions  provoke  fascinating  legal  questions  that 
arise  in  ordinarily  unrelated  fields  of  private  and  public  law.  When  trustees 
of  state  or  local  government  funds  divest  holdings  for  avowedly  political, 
rather  than  economic,  reasons,  do  they  act  consistently  with  the  standards  of 
care  imposed  upon  fiduciaries  by  the  law  of  private  and  charitable  trusts, 
corporate  law.  and  local  government  law?  If  state  and  municipalities  divest 
or  disinvest  in  order  to  send  foreign  governments  a  political  message,  do 
their  decisions  constitute  "speech"  protected  by  the  First  Amendment  of  the 
United  States  Constitution?^  If  so ,  what  of  the  First  Amendment  rights  if  the 
individual  taxpayers  who  disagree  with  their  government's  "message,"  but 
must  nevertheless  help  to  pay  for  it?^ 


'See  CamfheW.MoreMurucipaliiits  Joining  Drive  loCui  South  Africa  UiAs.  N.Y.  Times, 
Sept-  25.  1984.  alAl.  Col.  6  and  A25.  Col.  1. 

^/.  M.  Yudor.  When  Govemmenl  Speaks:  Politics.  Law  and  Cioveniinenl  Expression  in 
America  (1983);  Shiffrin,  Government  Speech.  27  U-C.L.A,  L.  Rev  565  <1980);  Note,  The 
Consliiutionalily  of  Municipal  Advocacy  in  Slmewide  Referendum  Campaigns.  93  Harv.  L. 
Rev.  535  (1980). 

^See  SWiffrin^upra  note  2.  ar  588-95:  Note,  supra  note  2.  at  549-53. 

*Mr.  Olson,  a  ntember  of  the  California  and  I>istiici  of  Columbia  Bars,  is  an  atlomey  in 
private  practice  in  Washington,  D.C.  From  19S1  to  1984,  he  served  as  the  Assistant  Attorney 
General.  Office  of  Legal  Counsel,  Department  of  Justice.  TIk  views  expressed  beie  are  his 


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Even  more  tantaliziiig  questioDS  arise  when  one  considers  the  federalism 
issues  raised  by  such  local  government  decisions.  On  the  one  hand,  it  could 
be  argued  that  such  slate  and  local  regulations,  on  their  face  or  as  applied, 
impermissibly  burden  foreign  commerce^  or  violate  the  Supremacy  Clause 
of  the  Constitution.'  On  the  other  hand,  it  cmild  be  asserted  that  recent 
Supreme  Court  precedent  suggest  that  states  and  localities  who  choose  to 
invest  in  businesses  operating  in  particular  foreign  countries  do  not  offend 
the  Comerce  Clause  because  in  doing  so,  they  act  as  "market  participants," 
not  as  "market  regulators.'*  Alternatively,  it  could  be  argued  thai  the 
federal  govenmient  may  not  interfere  in  the  manner  in  which  a  state  or  local 
government  chooses  to  invest  its  own  funds,  since  such  choices  constitute 
"essential  decisions  regarding  the  conduct  of  integral  government  func- 
tions" which  the  Tenth  Amendment  to  the  Constitution  insulates  from 
federal  regulation.^ 

Yet  another  level  of  legal  complexity  is  introduced  when  one  recognizes 
that  customary  international  law,  as  reflected  in  international  conventions 
and  treaties,  advisory  opinions  of  the  International  Court  of  Justice,  aitd 
writings  of  infemalional  publicists,  has  come  to  view  systematic  racial 
discrimination  as  a  crime  of  universal  concern  against  all  humanity.^  Leav- 
ing aside  the  unanswered  question  whether  congressional  legislation  that 
purported  "extraterritorially"  to  punish  such  conduct  would  be  consistent 
with  principles  of  international  law,^  it  could  be  argued  that  state  or  local 
legislation  that  seeks  to  achieve  the  same  goal  would  be  preempted  by 

'The  Conunerce  Clause  grants  Congress,  not  stale  oi  municipal  legislatures,  the  exclusive 
power  "(l]o  regulate  Commerce  with  foreign  Nations."  U.S.  Const,  an.  I,  S  S.  cl.  3. 

'See  U.S.  Const,  art,  VI.  cl.  2.  See  also  Chettle.  The  Law  and  Policy  cfDivesimeni  of  South 
African  Slock.  15  L.  &  Pol'y  in  Infl  Bus.  445.  515-26  (1983)  (making  this  argument). 

''See.  e.g..  White  v.  Mass.  Council  c^Constr.  Employers.  103  S.cl.  1042.  1044  (1983); 
Reeves  v.  Slake,  Inc.  447  U.S.  429. 436-37  (1980);HugAej  v,  Aleiandria  Scrap  Corp..  426 
U.S.  794.  810(1976). 

''National  Uague  of  Cities  V.  Usery.  426  U.S.  833.  855  (1976).  Bui  see  Garcia  v.  San 
Antonio  Metro.  Transit  Auth..  1(M  S.O.  3582  (1984)  (setting  case  for  reargumeni  and  direct- 
ing parties  to  address  the  question  whether  the  Tenth  Amendment  principles  set  fcoth  in 
National  League  t^  Cities  should  be  reconsidered). 

'See,  e.g.,  Internationa]  Convention  on  the  Suppression  and  Punishment  of  Crime  of 
Apartheid,  adopted  November  30.  1973.  entered  imo  force.  July  18.  1976.  Annex  to  O.A. 
Res,  3068  (XXVIIl).  28  U.N.  GAOR.  Supp,  (No.  30).  166  U.N.  Doc.  A/9030  (1974); 
International  Convesntion  on  the  Elimination  of  All  Forms  of  Racial  Discrimination,  adopted 
Dec.  21.  \965.  entered  into  force,  ian.  4.  1969.  660  U.N.T.S,  195:  Case  Concerning  Legal 
Consequences  for  Stales  of  the  Continued  Presence  of  South  Africa  in  Nambia  iSoulh  West 
Africa}  nonvithsuinding  Opinion);  Reslatemeni  (Revised),  Foreign  Relations  Law  of  the  United 
Stales. 

Tent,  Draft,  No.  2.  S  404.  Reporters'  Note  I  at  117  (1982);  id.  Tent,  Draft  No,  3,  S  702(f) 
(1982)  ["Revised  Restatement"], 

*Two  unsuccessful  bills  introduced  in  the  9gth  Congress  sou^i  to  exercise  Congress' 
legislative  powers  extraterritorially  to  require  United  Slates  persons  conducting  business  or 
cmtrolling  entei^ses  in  South  Afiica  and  Northem  Ireland  to  comply  with  certain  fat 
employmenl  standards,  as  well  as  to  prohibit  new  loans  by  United  Stales  financial  institution 
to  the  South  African  government  and  its  owned  or  controlled  corporations.  See  H,R.  1693, 
9Stfa  Cong,.  1st  Sess.  (1983)  (the  "Solan-Gray  Amendments"  to  the  Export  A' 
Act);  H.R.  3465.  98th  Con..  1st  Sess.  (1983)  (Northem  Ireland), 


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Article  I,  S8,  cl.  lOoftheConstitittioD.whicheinpowersCoagress  to  enact 
legislation  to  "deflne  and  punish  Offences  against  the  law  of  Nations.""* 
Or,  one  could  argue  that,  regardless  whether  such  state  and  local  legislation 
would  interfere  with  any  legislative  power  specifically  enumerated  in  Afti- 
clc  I  of  the  Constitution,  such  laws  inevitably  would  interfere  with  eidter  the 
President's  foreign  affairs  power  or  Congress'  unenumerated  foreign  rela- 
tions authority,  or  both,  thereby  creating  an  unconstitutional  "intrusion  by 
the  State  into  the  field  of  foreign  affairs  which  the  Constitution  entrusts  to 
the  President  and  the  Congress."" 

The  complexity  and  rich  diversity  of  the  potential  legal  and  political 
issues  expands  geometrically  when  extended  to  other  nations  and  other 
controversial  social  relationships.  For  example,  what  of  state  and  local 
efforts  to  reach  religious  discrimination  in  Northern  Ireland,  the  Middle 
East,  India  or  the  Soviet  Union?  How  far  may  state  and  local  government  go 
in  refusing  to  do  business  with  citizens  who  wish  to  travel  to  Cuba,  Libya, 
Afganistan  or  Nicaragua?  May  a  state  withhold  contracts  from  persons  who 
invest  in  or  send  funds  to  Poland  or  Iran?  The  potential  list  is  endless.  An 
exhaustive  analysis  of  all  of  these  legal  questions  could  easily  fill  an  entire 
law  review  symposium.  The  articles  contained  in  this  provocative  mono- 
graph begin  the  task  by  coming  to  grips  with  some  of  the  most  difficult  of 
these  legal  questions.  Professor  John  L^angbein  of  the  University  of  Chicago 
Law  School  addresses  what  he  calls  ttie  "Unprincipled.  Futile,  and  Illegal," 
aspects  considering  whether  a  state  or  local  government's  forced  disinvest- 
ment for  political  reasons — a  phenomenon  he  dubs  "social  investing" — is 
contrary  to  established  principles  of  private  trust  law  or  its  statutory  counter- 
parts. Professor  Roy  Schotland  of  Georgetown  Law  School  attacks  the 
problem  from  a  di^erent  perspective,  reviewing  the  legal  issues  that  arise 
when  states  and  localities  engage  in  what  he  calls  "divergent  investing".  He 
includes  a  discussion  of  the  "Sullivan  Principles."'^ 

Professor  Albert  Blaustein  emphasizes  the  Constitutional  implications  of 
a  private  and  state  government  divestment  strategy.  President  Derek  Bok  of 
Harvard  and  former  Governor  William  Milliken  of  Michigan  address  trou- 

'°See  Revised  ResUlement.  supra  noce  8.  Tem,  Draft  No.  2.  S  4M,  Reporters'  No(c  I  at  1 17 
(noting  thai  the  question  has  never  been  adjudicated,  but  suggesting  thai  the  stales  of  the  United 
States  are  probably  piecmpled  from  enacting  legislation  ID  punish  offences  against  the  law  of 
nations). 

"Zschrnig  v.  Miller.  389  U.S.  429,  432  (1958|.  See  also  Untied Slales  v.  Curliis-Wrighl 
Export  Co.,  299  US.  304,  320  (1936)  (describing  Piesident's  power  "in  the  field  of  inlema- 
tional  relations"  as  "plenary  and  exclusive");  Perei  v.  Brownell.  356  U.S.  44.  57-60  (1958) 
(recognizing  that  Congress  also  has  implicit  constitutional  authority  to  regular  matlen  affect- 
ing the  foreign  relations  of  the  United  States). 

'^About  one-third  of  the  American  companies  doing  business  in  South  A&ica  have  adhered 
to  die  "Sullivan  Principles."  a  statement  of  six  principles  of  coiporaie  conduct  formulated  in 
the  mid-1970s  by  human  rights  activist  Reverend  Leon  Sullivan  in  order  to  guide  the  employ- 
ee-relations practices  of  multinational  enterprises  operating  in  South  A&ica.  See  generally 
Sullivan,  ^;enli/or  Change:  The  Mobilization  ofMuliinaiional  Companies  in  South  Africa.  I S 
L.  &  Pol'y  in  Inl'l  Business  427  (19S3|. 


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bling  issues  they  themselves  have  had  to  face  and  deal  with  some  of  the 
ccmsequenccs  of  a  pressure  group  mandated  divestment  policy. 

Together,  these  articles  provide  a  useful  overview  of  a  social  [dienom- 
enon  that  has  many  legal  facets.  I  commend  the  National  Legal  Center  for 
the  Public  Interest  for  focusing  attention  and  fostering  dialogue  on  the  legal 
and  constitutional,  as  opposed  to  purely  political,  aspects  of  this  peiplexing 
and  fascinating  social  phenomenon. 


Washington,  D.C. 
November,  1984 


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159 

TEXT  OUTLINE 

Page 

Understanding  the  Rise  of  Private  Pension  Funds 1 

How  Pension  Funds  Woric 3 

Funding 3 

Taxation 4 

The  Protective  Policy 4 

The  Tiust  Form 4 

Contribuloiy  or  Not 4 

Defined  Contribution  and  Defined  Benefit 5 

Multiemployer  Plans * 5 

ERISA 6 

Compulsory  Trusteeship 6 

Preemption 6 

State  and  Local  Plans 7 

The  Hidden  Dynamic  in  Social  Investing 7 

Principles  or  Politics? 9 

The  Economics  of  Social  Investing 12 

Substitution 12 

Diversification 14 

The  Social-Bargain  Fallacy 15 

Why  Social  Investing  is  Illegal 16 

The  Duty  of  Loyally 16 

The  New  York  Teachers'  Case 18 

The  Dwty  of  Prudent  Investing 20 

ERISA's  No-Waiver  Rule  Applied  to  Social 

Investing 21 

Corporate  Social  Responsibility 23 

Constitutional  Objections 24 

University  Endowments 25 

Charter 26 

Nonchariiable  Purposes 26 

Costs 27 

Donors 27 

Conclusion 28 


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160 

SOCIAL  INVESTING  OF  PENSION 

FUNDS  AND  UNIVERSITY 

ENDOWMENTS:  UNPRINCIPLED, 

FUTILE,  AND  ILLEGAL* 

by 
JOHN  H.  LANGBEIN*' 

Interest  groups  of  vyious  sorts  have  been  campaigning  in  recent  years  to 
politicize  the  criteria  that  govern  the  investment  of  pension  fiinds  and 
university  «idowments.  These  funds  should  not,  say  the  various  campaign- 
ers, be  invested  in  companies  that  do  business  in  South  Africa,  or  that  have 
resisted  labor  union  demands,  or  that  manufacture  munitions,  or  that  pol- 
lute. Another  strand  of  the  social  investing  movement  is  localism;  paiticu- 
lariy  as  regards  the  pension  funds  of  state  and  local  govemment  employees, 
there  is  pressure  to  invest  for  the  purpose  of  stimulating  the  local 
economies. 

This  article  is  concerned  to  explain  why  the  traditions  of  trust  law, 
pension  law,  and  the  law  of  charity  rightly  forbid  social  investing.  I  shall 
direct  primaiy  attention  to  pension  funds,  whose  enormous  size  and  impw- 
tance  has  made  them  the  main  target  of  the  various  social-investing  pressure 
groups.  In  the  final  section  of  this  paper  (Part  VII),  however,  I  point  to  legal 
factors  that  make  social  investing  objectionable  for  university  and  other 
charitable  endowments. 

I.  UNDERSTANDING  THE  RISE  OF  PRIVATE  PENSION  FUNDS 


At  year-end  1983  the  one  thousand  largest  nonfederal  pension  plans  in  the 
United  States  had  assets  of  $806  billion. '  Total  pension-fund  assets  exceed 
a  trillion  dollars.^  These  staggering  sums  reveal  that  a  very  large  fraction  of 
personal  savings  and  of  aggregate  capital  formation  in  the  United  States 
occurs  through  the  medium  of  pension  plans. 


'PeoMoos  &  Invesbnents  Age.  Jan.  23,  1984,  al  3. 
*I<1..  Apf.  18.  1983.  at  10. 

'Portions  of  ihis  aitkle,  especially  Pans  VI  and  VB.  aie  based  upon  material  previously 
published  in  John  H,  LangbeinA  Richard  A.  Posner.  Sociallnvestingand  the  Law  of  Trusts, 
79  hfichigan  Law  Review  72  (1980).  Posner  subsequently  became  a  federal  qvpellate  judge 
and  has  taken  no  part  in  ibe  prepanUion  of  the  pre^t  essay. 

"Max  Pam  nofessor  of  American  and  Foreign  Law.  University  of  Chicago  Law  School. 


1 

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Huge  demognqthic  shifts  underlie  this  phcDomenon.  People  are  living 
Icmger,  dianks  to  many  factors ,  of  which  the  twentieth-century  revolution  in 
health  care  (above  all,  the  discoveiy  and  refinement  of  antibiotics)  is  the 
most  important.  In  consequence,  the  gap  between  the  time  we  cease  to  woili 
and  the  lime  wc  die  is  widening.  For  that  interval  in  our  lives,  we  need  a 
source  of  income  other  than  cuirent  employment — we  need  what  has  come 
to  be  called  "retirement  income."  In  fonner  times  the  retirement  income  gap 
tended  for  most  people  to  be  small  or  nonexistent,  and  transfers  within  the 
family  tended  to  cover  the  gap.  The  elderly  lived  with  their  children  and 
they  did  not  live  long.  To  the  extent  that  private  savings  were  insufficient, 
children  were  expected  to  help.  But  family  structure  has  changed  under  the 
impact  of  urbanization,  population  mobility,  and  longevity.  People  have 
fewer  children.  Children  leave  their  parents  when  they  many,  and  the 
elderly  often  find  themselves  living  at  great  remove  from  their  children. 
Furthermore,  with  increased  longevity  comes  the  problem  of  decrepitude  in 
advanced  old  age.  The  increasing  need  for  care  of  the  elderly  tends  ever 
more  to  be  met  by  specialized  providers,  both  because  of  their  expertise, 
and  because  the  children  of  the  elderly,  especially  when  living  in  modem 
dual-wage-eamer  families,  are  ever  less  able  to  render  such  care  at  home. 

As  late  as  the  early  decades  of  the  twentieth  century  neither  government 
nor  private  industry  seemed  much  concerned  with  the  retirement  income 
problem.  Individuals  were  left  to  their  own  devices — private  savings  and 
intrafamilial  arrangements.  A  few  employers  began  to  sponsor  pension 
plans  as  early  as  the  last  quarter  of  the  nineteenth  century,^  but  the  great 
movement  to  organize  saving  for  retirement  through  employer-sponsored 
plans  did  not  get  underway  until  World  War  II  and  thereafter.'* 

The  Great  Depression  struck  at  a  time  when  many  of  the  demographic 
changes  that  caused  the  reliremeni  income  problem  were  as  yet  recent. 
Many  elderly  people  had  not  fully  appreciated  the  implications  of  these 
changes;  they  had  not  (and  perhaps  could  not  have)  made  adequate  provi- 
sion through  savings.  The  Social  Security  program  was  devised  in  the  1930s 
both  to  provide  itnmediate  relief  to  the  destitute  elderly  of  the  day,  and  to 
guarantee  retirement  income  to  future  retirees. 

The  defects  of  Social  Security  were  long  concealed,  although  they  are 
now  widely  understood.  Social  Security  is  a  transfer  program  rather  than  a 
savings  plan.  Present  workers  are  taxed  to  pay  retirement  benefits  to  present 
retirees.  Today's  present  woricers  pay  taxes  in  the  expectation  that  future 
workers  will  be  taxed  to  pay  benefits  when  the  present  workers  retire.  But 
because  of  changes  in  birth  rates  and  longevity,  the  workforce  is  declining 
in  proportion  to  the  number  of  retirees.  Accordingly,  the  burden  of  financ- 
ing the  transfers  has  grown  enormously.  The  prospect  looms  that  tomor- 

^See.  e.g..  WilliamC.  Greenough  &.  Francis  P.  King,  Pension  Plans  ind  Public  Policy  (New 
York,  1976)  Tiff;  William  Graebner,  A  Hislray  of  RetiiEinem:  The  Meaning  and  Function  of 
an  American  Instituticn  (New  Haven.  1980). 

*Alici  H.  Munnell,  The  Economics  of  Private  Pensions  (Washington.  D.C.  I9S2)  lOfF. 


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row's  smaller  cohort  of  woriters  cannot  be  taxed  enough  to  pay  comparable 
letiiement  benefits  to  today's  workers.  The  sense  that  Social  Security  can- 
not play  as  large  a  part  in  the  retirement  income  of  future  retirees  as  it  does 
for  those  today  is  one  of  the  most  important  factors  in  the  explosive  growth 
of  the  private  pension  system. 

The  experience  with  Social  Security  has  also  left  us  an  important  lesson 
about  the  dangers  of  exposing  the  retirement  income  system  to  the  winds  of 
electoral  politics.  Successive  Congresses  sweetened  current  benefits  and 
eligibility  requirements  with  scant  regard  to  the  implications  for  future 
retirees.  Only  the  most  recent  financial  crises  within  the  Social  Security 
system  have  slowed  that  process.  Further,  Social  Security  has  had  devastat- 
ing efTects  upon  the  economy .  There  is  strong  evidence  for  the  view  that ,  by 
promising  substantial  future  income  flows  without  requiring  either  individ- 
uals or  the  state  to  save  enough  to  fund  those  obligations,  Social  Security 
has  played  the  key  role  in  the  worrisonK  decline  in  American  savings  rates 
and  capital  formation.^ 

Only  against  this  background  can  we  fully  appreciate  the  importance  of 
the  private  pension  system.  The  retirement  income  problem  will  become 
ever  more  acute:  there  are  more  retirees  and  they  are  living  longer.  Ever 
larger  income  flows  must  be  generated  to  support  them.  Meanwhile,  the 
financial  contradictions  of  Social  Security  have  put  it  under  a  cloud  ftxtm 
which  it  will  never  fully  emerge.  The  long  process  of  lowering  popular 
expectations  about  Social  Security  is  well  underway.  The  future  of  the 
retirement  income  system  lies,  therefore,  in  the  private  sector.^ 

U.  HOW  PENSION  FUNDS  WORK^ 

Tlie  variety  of  pension  plan  types  and  features  is  large  and  complex.  The 
details  can  baffle  almost  anyone,  sometimes  even  the  professionals  (ac- 
countants, actuaries,  lawyers,  plan  administrators)  who  specialize  in  the 
field.  FtKtunately,  in  order  to  understand  the  main  issues  in  the  social 
investing  debate,  it  will  suffice  to  describe  only  some  basic  distinctions  and 
characteristics. 

Funding.  The  great  difference  between  a  modem  private  pension  plan 
and  a  transfer  system  such  as  Social  Security  is  that  private  plans  are 
funded.  Savings  are  set  aside  regularly  during  the  employee's  working 
career.  This  money  is  invested,  and  the  investment  yield  (often  called  the 
"build-up")  accumulates  along  with  the  savings.  When  the  employee  re- 


'See.  e.g.,MutiaS.  Feldstein,  Sociit  Security,  Induced  Retiremeat  and  Aggregate  Cental 
Pormatioii,  82  Journal  of  Politicil  Economy  902  (1974). 

*But  (ce  Dennis  E.  Logue.  How  Social  Security  May  Undeimine  the  Privite  Induuriat 
Ptaskm  System,  in  Fuiancing  Social  Security  <Colio  D.  Campbell,  ed.)  (Washington.  D.C. 
I»79)  265. 

^See  genenlly,  Dan  M.  McGUI,  Fundamentals  of  Private  IVniions,  Sth  ed. ,  (Homewood, 
m.,  1984). 


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tires,  the  fund  is  used  to  suf^rt  him  (and,  under  most  plans,  to  suf^mrt  his 
spouse  as  well)  until  death. 

Taxation.  Federal  tax  policy  has  encouraged  the  private  pension  move- 
ment, especially  since  the  I940's.  The  employer  is  allowed  to  deduct  his 
contributions  to  a  qualified  pension  plan  immediately,  even  though  the 
employee  does  not  actually  receive  the  money  until  he  retires."  Funher,  the 
build-up  is  exempt  from  taxation  during  the  period  of  accumulation;'  only 
when  the  employee  begins  to  receive  retirement  income  from  the  plan  is  he 
taxed  on  what  he  receives.  Taxation  is  thereby  postponed.  Since  most 
people  find  themselves  in  lower  tax  brackets  v/hea  they  retire  (retirement 
income  usually  being  somewhat  less  than  employment  income),  postpoiK- 
ment  has  the  fiirtber  effect  of  reducing  the  amount  of  taxes  for  most  people. 

The  Protective  Policy.  These  tax  concessions  reflect  a  consensus  that  has 
been  endorsed  repeatedly  in  tax  and  other  federal  pension  legislation.  Hie 
policy  is  protective.  Private  pension  plans  arc  encouraged  for  fear  that 
people  would  not,  acting  individually,  save  enough  to  meet  their  retirement 
income  needs.  The  tax  concessions  are  meant  to  induce  employers  and 
employees  to  allocate  a  larger  share  of  compensation  away  frcnn  current 
wages  and  into  retirement  savings. 

The  protective  policy  is  manifested  elsewhere  in  pension  law,  apart  from 
the  tax  code.  Federal  law  imposes  a  "spendthrift"  provision  on  most  pension 
funds,  {Hcvenling  an  employee  or  his  creditors  from  alienating  (and  thereby 
consuming)  pension  savings  before  he  retires. '"  Likewise,  federal  law  for- 
bids the  employee  from  waiving  his  right  to  have  his  pension  fund  invested 
prudendy.' '  The  protective  policy  has  been,  although  not  the  only  policy, 
surely  the  centeipiece  of  pension  taxation  and  pension  regulation.  It  will  be 
seen  that  the  protective  policy  bears  importantly  on  the  question  of  whether 
an  employee  has  the  power  to  endorse  social-investing  proposals  that  may 
impair  his  retirement  income  security. 

The  Trust  Form.  Pension  funds  typically  take  the  form  of  a  trust.  The 
trust  relationship  is  one  of  the  most  highly  developed  categories  of  the 
Anglo-American  legal  tradition.  Thus,  although  the  private  pension  fund  is 
a  relatively  young  phenomenon,  it  rests  upon  a  familiar  juridical  basis. 

Trust-investment  law,  now  enforced  by  special  pension  legislatiiHi,  sup- 
plies the  rules  that  regulate  the  investment  of  pension  assets;  we  shall  see 
that  this  body  of  law  takes  the  harshest  view  of  investment  activities  that  are 
iKrt  undertaken  for  the  exclusive  purpose  of  maximizing  the  economic  welt- 
being  of  trust  beneficiaries. 

Contributory  or  Not.  Many  plans  are  funded  entirely  from  employer 
contributions.  Because  there  is  do  deduction  from  the  employee's  pay- 

*Iotenul  Revenue  Code  |beteafter  cited  as  I.R.C]  sec.  404. 
I.R.C.  sec.  402. 

'I.R.C.  sec.  401  (a)(13), 

"En^tloyeeRetircmeDl  Income  Security  Act  [hereafter  cited  as  ERISA]  sees.  404(iKIHI>). 
409,  29  U.S.C.  sees.  1104<aKIXI>).  1109. 


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dieck,  such  plans  are  called  "nonconCribuloiy" — the  employee  does  not 
contribute.  By  contrast,  "contributoiy"  plans  are  those  that  require  the 
employee  to  devote  some  fraction  of  gross  pay — say,  five  percent — to  the 
plan.  Typically,  the  employer  matches  the  employee's  contribution  accord- 
ing to  some  formula,  for  example,  one-to-one  or  two-to-one. 

This  distinction  between  plans  to  which  the  employee  contributes  and 
those  to  which  he  docs  not  would  seem  to  be  important,  but  in  economic 
terms  it  is  not.  Because  even  the  employer-paid  component  of  a  pension 
plan  is  a  cost  of  employment,  it  is  best  understood  as  a  part  of  the  wage 
packet,  hence  a  form  of  involuntary  savings  whose  true  cost  is  borne  by  the 
employee.  Both  the  employer-paid  and  the  employee-paid  contributions 
derive  from  what  is — in  economic  tenns — the  employee's  wages.  Translat- 
ing this  point  into  traditional  trust-law  terms ,  we  may  say  that  the  employee 
is  in  an  important  sense  the  "settlor"  of  his  own  pension  trust. 

Defined  Contribution  and  Defined  Benefit.  Broadly  speaking,  there  are 
two  basic  types  of  pension  plans,  defined  conbibution  and  defined  benefit 
plans.  A  defined  contribution  plan  is  best  analogized  to  a  savings  account. 
The  plan  calls  for  the  establishment  of  a  separate  account  for  each  employ- 
ee. Contributions  are  credited  to  the  account  at  a  rate  specified  in  the  plan, 
and  the  account  paiticipaies  proportionately  in  the  investment  gains  of  the 
plan.  When  the  employee  retires,  the  size  of  his  pension  will  depend  entirely 
upon  the  size  of  his  account.  Ordinarily,  the  plan  calls  for  the  account  to  be 
annuitized  and  distributed  over  the  remainder  of  his  life  (or,  in  the  event  of  a 
joint  annuity  with  his  spouse,  over  the  remainder  of  their  two  lives).  The 
college  and  university  teachers'  plan,  TIAA-CREF,  is  the  best-known  de- 
fined contribution  plan.  IRA  and  Keogh  accounts  work  on  the  same 
principle. 

A  defined  benefit  plan,  by  contrast,  is  one  in  which  the  employer  (or 
other  plan  sponsor)  promises  to  pay  a  retirement  benefit  according  to  a  plan 
formula — for  example,  sixty  percent  of  average  salary  over  the  last  five 
years  of  the  employee's  service.  The  employer  makes  regular  contributions 
to  the  plan,  in  accord  with  acturarial  projections  of  the  sums  needed  to  fund 
the  promised  pension  levels. 

Defined  contribution  and  defined  benefit  plans  allocate  investment  risk 
(f>positely.  Under  a  defined  contribution  plan,  it  is  the  individual  employee 
who  bears  the  burden  of  disappointing  investment  results  or  who  enjoys  the 
gains  from  exceptionally  good  results.  Under  a  defined  benefit  plan,  the 
employer  bears  the  investment  risk;  since  the  employer  has  promised  to 
provide  benefits  of  a  certain  level,  the  employer  remains  liable  lo  pay  the 
benefits  even  if  the  fund  turns  up  short. 

Multiemployer  Plans.  Most  pension  plans  arc  so-calted  "single-employ- 
er" plans — General  Motors  has  a  plan  for  its  employees,  IBM  for  its.  In 
some  industries,  however,  where  employment  patterns  are  episodic  (the 
construction  trades,  entertainment,  tnicking,  the  needle  trades,  and  a  vari- 
ety of  others)  individual  con^Kuiies  do  not  sponsor  pension  plans.  Rather, 


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groups  of  employers  sponsor  a  common  plan ,  mostly  in  response  to  collec- 
tive bargaining  with  a  labor  union.  Although  the  Taft-Hartley  Aci  requires 
equal  numbers  of  management  and  union  trustees  on  the  board  of  such  a 
plan,'^  in  practice  union  interests  tend  to  prevail,  and  these  plans  are  often 
spoken  of  as  union  plans. 

ERISA.  Like  most  substantial  fields  of  finance,  pension  plans  have  at- 
tracted government  regulation.  The  federal  tax  concessions  have  been  con- 
ditioned on  various  regulatory  requirements  since  the  1940's.  In  1974 
Congress  greatly  extended  the  scope  of  federal  regulation  when  it  passed  the 
Employee  Retirement  Income  Security  Act  (ERISA).  ERISA  limits  forfei- 
ture of  benefits  under  pension  plans  (through  the  so<aIled  "vesting"  rules); 
it  imposes  minimum  eligibility  and  funding  standards;  it  nanows  the  range 
of  plan  discretion  in  the  design  of  benefit-accrual  schemes;  and  it  imposes 
fiduciary  rules  for  the  investment  of  plan  assets.'^  Title  IV  of  ERISA 
introduced  a  federal  insurance  scheme,  ostensibly  patterned  on  FDIC  insur- 
ance for  bank  deposits,  that  guarantees  most  benefits  under  defined  benefit 
plans  against  shortfall  or  default.  "*  By  making  the  federal  government  the 
pension  paymaster  of  last  resort,  Title  IV  creates  a  further  public  interest  in 
the  financial  soundness  of  the  investment  practices  of  private  pension  plans. 

Compulsory  Trusteeship.  ERISA  requires  that  pension  plan  assets  be 
placed  in  trust,''  and  ERISA  refines  and  codifies  traditional  trust-invest- 
ment law  for  the  pension  field."  These  provisions  further  the  protective 
policy  of  pension  law.  Pension  trustees  are  financial  intermediaries  who 
specialize  in  investing  pension  funds.  Trusteeship  removes  investment  deci- 
sions into  the  hands  of  professionals  and  prevents  plan  participants  (most  of 
whom  are  inexperienced  in  matters  of  high  finance)  from  doing  their  own 
investing.  Thus,  while  1  am  free  to  be  foolish  in  investing  my  personal 
savings,  my  pension  savings  will  necessarily  be  invested  according  to  the 
professional  standards  of  the  investment  industry. 

Preemption.  From  the  standpoint  of  the  social-investing  movement,  one 
of  ERISA's  most  important  provisions  is  what  lawyers  call  a  preemption 
clause:  ERISA  expressly  supersedes  state  law  for  most  pension  plans. "  By 
federalizing  pension  law — including  pension-investment  law — in  this  way, 
ERISA  has  greatly  narrowed  the  scope  for  social-investing  initiatives  be- 
neath the  level  of  federal  law.  If,  for  example,  the  Missouri  legislature  were 
to  enact  a  social-investing  measure  requiring  the  pension  plans  of  Missouri 
firms  to  invest  their  funds  in  Missouri  mortgages,  the  courts  would  quickly 
invalidate  the  statute  for  violation  of  ERISA's  preemption  rule. 


■^l.abor  Managemcnl  Relations  Acl  sec.  302(c)(3).  29  U.S.C.  sec.  iS6  (cHS). 
"ERISA  sees.  201  ei  seq..  301  et  seq..  401  et  seq..  29  U.S-C  sees.  1051  tt  seq..  lOSl  ct 
seq.,  1101  el  seq. 

"ERISA  sees.  4001  et  seq..  29  U.S.C.  sees.  1301  et  seq. 
"ERISA  sec.  403,  29  U.S.C,  1103 
■'ERISA  sees.  404  «  seq..  29  U.S.C.  sees,  1104  el  seq. 
"ERISA  sec.  3I4<»),  29  U.S.C.  sec.  tl44<a). 


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Suue  and  Local  Plans.  States,  municipalities,  school  districts,  and  var- 
ious other  public  bodies  operate  pension  plans  for  their  employees.  These 
governmental  plans  are  exempt  from  the  requirements  of  ERISA,  '^  which  is 
a  main  reason  why  social-investing  proposals  have  so  often  been  directed  at 
them.  State  and  local  plans  differ  from  private  plans  and  among  themselves 
in  matters  of  structure  and  governance.  Often  a  state  board,  sometimes 
attached  to  the  state  treasurer,  is  responsible  for  those  investment  and 
administrative  functions  that  would  be  performed  by  trustees  for  most 
private  plans." 

Like  Social  Security,  most  state  and  local  plans  are  run  by  bodies  that 
possess  taxing  powers.  As  with  Social  Security,  the  temptation  has  been  fell 
to  leave  future  taxpayers  to  pay  the  retirement  benefits  for  today's  public 
woriters ,  even  though  the  entitlement  to  those  benefits  accrues  presently  and 
should  be  regarded  as  a  cost  of  current  employment.  Thus,  whereas  Social 
Security  is  virtually  entirely  unfunded  and  is  almost  a  pure  transfer  scheme, 
the  stale  and  local  plans  tend  to  be  partially  funded.  There  is  some  current 
saving  and  investment,  but  not  enough  to  meet  future  obligations. 

UI.  THE  HIDDEN  DYNAMIC  IN  SOCIAL  INVESTING 

The  elderly  are,  as  a  group,  neither  affluent  nor  politically  adventurous. 
Why,  then,  is  the  social  investing  movement  aimed  so  resolutely  at  the 
pension  funds  that  exist  to  su[q>ort  the  elderly?  Why  do  the  proponents  of 
social  investing  treat  pension  funds  as  being  especially  appropriate  to  bear 
the  costs  of  an  investment  strategy  that  sacrifices  financial  for  political 
interests? 

Social  investing  could  in  principle  be  attempted  by  any  investor,  not  just 
pension  trustees.  There  are  three  small  mutual  funds  which  proclaim  adher- 
ence to  various  social  principles  in  selecting  their  investments.^  If  an 
individual  decides  to  invest  in  such  a  fund,  presumably  he  has  balanced  the 
possible  financial  costs  of  such  a  policy  against  the  personal  satisfaction  that 
he  derives  from  suppcHting  the  social  aims  implied  by  the  fund's  investment 
policy.  Few  individuals  have  found  these  funds  attractive.  Another  indica- 
tion that  most  investors  disagree  with  most  social  investing  campaigns  is 
that  shareholder  initiatives  in  support  of  the  main  social  investing  causes  are 
invariably  defeated  by  margins  of  95  percent  or  worse.  Furthermore,  there 
has  been  little  pressure  on  trustees  of  individual  trusts  to  adopt  social 

'■ERISA  sec.  4(b)4l).  29  U.S.C.  sec.  1003  (bXl). 

"See  Marcia  G.  Muiphy,  Regulating  Public  Employee  Retirement  Systems  for  Poiifolio 
Emciency,  67  Minnesou  Uw  Review  2t  1  (1982). 

^'*These  are  Foursquare.  Dreyfus  Third  Century,  and  Pax  World.  Foursquare  avoids  liquof, 
tobacco,  and  drug  company  stocks.  Accindingto  its  [ntspectus.  Third  Century  limits  itself  to 
companies  "contributing  to  the  enhancement  of  the  quality  of  life."  whatever  that  means.  Pax 
World  excludes  any  company  nK»«  than  five  percent  of  whose  sales  are  to  the  Defense 
DepactmenI,  See  E^cey.  Investment  Do-Gooders:  A  Look  ai  a  Dogged  Tno  of  Socially 
Conscious  Mutual  Funds.  BaiToa's,  Jul,  21,  1980.  U  9. 


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investing.  The  main  purpose  of  the  typical  individual  tnist  is  to  generate 
income  for  the  immediate  suf^xMl  of  the  current  beneficiary,  who  would  be 
strongly  inclined  to  protest  if  the  trustee  adopted  an  inconsistent  goal.  Many 
trust  inuuments  authorize  the  beneficiary  or  the  settlor  to  change  trustees, 
and  such  a  provison  tends  to  concentrate  a  trustee's  mind  wonderfully  on 
profit  maximization. 

Social  investing  proposals  arc  directed  at  pension  funds  not  in  order  to 
further  the  interest  of  the  pensioners,  but  in  disregard  of  their  interests.  It  is 
the  separation  of  ownership  and  control  characteristic  of  pension-fund  struc- 
ture that  social-investing  proponents  find  so  enticing.  Vast  sums  of  iiKMiey 
are  invested  for — but  not  by — the  concerned  individuals.  That  separation, 
we  have  seen,  exists  in  large  measure  to  protect  piesent  and  future  retirees 
against  the  tendency  that  some  might  have  to  undersave  for  retirement,  or  to 
invest  unwisely.  But  by  concentrating  the  pension  savings  of  tens  of  mil- 
lions of  people  in  the  hands  of  a  few  thousand  pension  trustees,  our  private 
pension  system  has  created  a  pressure  point  that  would  not  otherwise  have 
existed.  Ironically,  therefore,  the  separation  of  ownership  and  control  that 
was  meant  to  protect  pension  plan  beneficiaries  has  also  exposed  them  to  a 
new  danger-^at  pressure  groups  may  politicize  the  process  of  investing 
their  pension  savings. 

The  hidden  dynamic  in  the  social  investing  movement  is  this  effort  to  take 
advantage  of  the  separation  between  ownership  and  control  of  pensicm 
savings.  The  pension  trustees  who  control  pension  investment  work  under 
the  constraints  of  trust-investment  law.  The  proponents  of  social  investing 
understand  that  by  reinterpreting  trust-investment  law  to  permit  politicized 
investment  they  could  capture  pension  savings  for  their  causes. 

But  why  should  the  proponents  employ  such  a  surreptitious  strategy, 
pressuring  pension  trustees,  when  a  more  forthright  path  lies  open?  Why  not 
pursue  political  causes  in  the  political  arena?  It  is  vital  to  understand  thai, 
almost  by  definition,  the  causes  that  are  grouped  uitder  the  social-investing 
banner  are  those  thai  have  failed  to  win  assent  in  the  political  and  legislative 
process.  Congress  has  the  power  to  mandate  all  the  well-known  social- 
investing  causes:  forbid  American  firms  to  do  business  with  South  Africa; 
require  American  firms  to  cease  making  munitions,  or  to  have  unionized 
vfork  forces;  require  pension  assets  to  be  invested  locally;  and  so  forth. 
Federal  legislation  could  accomplish  any  of  these  goals.  For  example, 
present  federal  law  applies  to  Cuba  exactly  the  sort  of  prohibitions  on 
commerce  and  lending  that  opponents  of  the  South  African  regime  have 
sought  without  success  in  recent  years  from  both  Democratic  and  Republi- 
can administrations.  The  reason,  therefore,  that  the  proponents  of  social 
investing  are  bullying  pension  trustees  is  that  they  have  been  unable  to  get 
their  political  programs  accepted  in  the  political  process. 


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IV.  PRINCIPLES  OR  POLITICS? 

Are  there  principles  of  social  investing  that  a  trustee  can  follow  with 
ease?  If  not,  dien  social  investing  is  standardless,  a  mere  label  used  to  clothe 
pressure-group  demands.  If  social  investing  is  intrinsically  standardless, 
adherence  to  it  will  expose  pension  tnistees  to  a  perpetual  wave  of  political 
demands. 

Consider,  therefore,  the  question  of  investing  in  firms  that  do  business  in 
or  with  South  Africa.  It  is  impoitant  to  understand  that  there  is  no  controver- 
sy about  the  racial  policies  of  South  Africa.  People  on  all  sides  of  the  matter 
have  equal  disdain  for  apartheid.  But  there  is  broad  disdain  in  the  United 
States  for  many  other  regimes.  The  hard  question  that  proponents  have  not 
answered  is  this:  Why  is  the  campaign  for  divestiture  directed  almost  entire- 
ly at  South  Africa,  and  not  at  such  monstrously  objectionable  regimes  as 
Libya  or  Soviet  Russia?  South  Africa  is  a  place  in  which  80  percent  of  the 
inhabitants  are  denied  political  and  civil  rights  that  Americans  regard  as 
basic.  But  there  are  many  regimes  in  which  99  percent  of  the  inhabitants  are 
in  this  position. 

In  1978  Yale  University's  Committee  on  South  Africa  Investments  tried 
to  duck  this  question  in  a  report  that  said:  "We  acknowledge  the  possibility 
that  the  policies  of  other  governments  throughout  the  world  are  equally 
antagonistic  to  the  basic  principles  of  American  society  and  this  University; 
if  so,  then  our  recommendations  concerning  South  African  investments 
should  be  applied  to  them."^'  It  is  not  a  possibility  that  there  are  other  such 
societies;  it  is  a  certainty.  (At  the  time  that  the  Ad  Hoc  Committee  wrote  its 
report,  the  Amin  regime  was  still  in  power  in  Uganda  and  the  Pol  Pot  regime 
in  Cambodia.)  What  the  Committee  seems  to  be  saying,  if  one  reads  be- 
tween the  lines,  is  that  it  will  not  consider  further  applications  of  the  social- 
investing  concept  until  some  group  raises  as  great  a  stink  as  the  opponents  of 
the  South  African  regime  have  raised.  This  approach  makes  social  investing 
a  branch  of  interest-group  politics. 

In  truth,  there  can  be  no  consensus  about  which  social  principles  to 
pursue  and  about  which  investments  are  consistent  or  inconsistent  with 
those  principles.  At  a  time  when  most  of  the  social  activism  in  investing  was 
liberal  or  radical  rather  than  conservative ,  diere  was  some  agreement  among 
the  activists  as  to  the  types  of  companies  that  should  be  avoided  and  the 
types  that  should  be  embraced.  The  ranks  of  the  disapproved  included 
companies  doing  business  with  South  Africa,  big  defense  contracttHS,  non- 
union companies,  and  companies  that  polluted  the  environment.  With  the 

^'  Yak  University,  Ad  Hoc  Cmruoittee  on  South  Africa  Investments,  Repot!  lo  the  CoipMi- 
tion4(Apr.  14,  I97S). 


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rapid  rise  of  social  activism  on  the  political  right,  we  can  expect  social- 
investing  advocates  to  appear  who  will  urge  investment  managers  not  to 
invest  in  corporations  that  manufacture  contraceptive  devices,  or  public 
textbooks  that  teach  the  theory  of  evolution,  or  do  business  with  Russia. ^^ 

There  is  also  increasing  awareness  that  the  criteria  used  to  identify  social- 
ly irresponsible  companies  are  dubious  even  if  the  ultimate  objective — say, 
[Hessuring  South  Africa — is  accepted.  An  American  corporation  that  has  a 
plant  in  South  Africa  where  it  creates  jobs,  provides  training,  and  engages  in 
collective  bargaining  with  a  black  union  is  not  obviously  contributing  more 
to  the  perpetuation  of  apartheid  than  an  American  corporation  that,  without 
having  an  office  in  South  Africa,  manufactures  goods  that  find  their  way  to 
South  AMca.  As  the  New  York  Times  reported  in  September  of  1984,  "(a] 
survey  among  black  South  African  factory  workers"  established  tbeir"over- 
whelming  resistance  to  disinvestment  by  American  firms."^^ 

The  Massachusetts  legislature  has  lately  supplied  us  with  a  ^lendid 
illustration  of  the  truth  that  social  investing  is  nothing  more  than  pressure 
politics.  In  a  recent  statute  the  legislature  singled  out,  in  addition  to  South 
Africa,  one  other  country  for  the  disapprobation  of  the  state  pensicm  fund: 
Great  Britain.  Not  Libya  or  Russia;  not  Iran,  Cambodia  or  Syria,  whose 
regimes  have  recently  massacred  tens  of  thousands  of  their  dissident  citi- 
zens; but  Britain,  mother  of  parliaments  and  closest  great-power  ally  of  the 
United  States.  Why?  Oh,  nothing  serious,  just  a  little  gratuitous  intermed- 
dling in  the  difficult  Northern  Irish  situation,  for  the  entertainment  of  the 
Boston  Irish.  (The  Massachusetts  statute  is  reproduced  below  in 
footnote.)" 

If  we  move  beyond  foreign  a^airs  and  examine  other  social-investing 
causes,  we  find  a  similar  lack  of  principle.  In  labor  union  circles  it  has 
become  fashionable  to  decry  pension-fund  investment  in  companies  whose 
work  forces  have  rejected  labor  unions,  but  that  complaint  overlooks  impor- 
tant distinctions.  For  example ,  which  unions?  Some  American  labor  unions 
are  clean  and  are  devoted  to  their  members,  but  others  are  dominated  by 
organized  crime.  Is  it  really  "anti-social"  to  resist  a  latter-day  Jimmy  Hoffa? 
And  what  of  the  right  not  to  join  a  labor  union?  The  elaborate  election  and 
certification  procedures  for  union  representation  under  federal  law  presup- 
pose that  Congress  meant  to  protect  both  the  right  to  join  and  the  right  to 

"See  John  M.  Leger,  BusinessLinkswithSovietsunder  Attack.  Wall  Street  Journal,  Mat. 
26,  1981,  al  23,  col.  3. 

"Alan  Cowell.  Blacks  in  a  Poll  Dispule  Apartheid  Foes'  Tactic.  N.Y.  Tunes.  Sept.  23. 
I9S4,  at  10.  Col-  5. 

"Annotated  Laws  of  Ma^sachusetls,  Cumulative  Supplement.  Ch.  32.  sec.  23  (IKdKiii): 
(N]o  public  pension  fimds  under  this  subsection  shall  remain  invested  in  any  bank  or 
financial  instituIitHi  which  directly  or  through  any  subsidiary  has  ouistanding  loans  to 
any  individual  or  corporation  engaged  in  the  manufacture,  distribution  or  sale  of 
fireamts,  munitions,  including  rubber  or  plastic  bullets,  tear  gas.  armored  vehicles  or 
military  air  craft  for  use  or  development  in  any  activity  in  Northern  Ireland,  and  no 
assets  shall  remain  invested  in  (he  slocks,  securities  or  other  obligations  of  any  such 
company  so  engaged. 


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abstain  from  unitMi  membership.  Equating  unionization  with  social  recti- 
tude thus  flies  in  the  face  of  federal  law.  Nor  would  compulsory  unioniza- 
tion satisfy  all  proponents  of  this  branch  of  social  investing,  since  some 
have  demanded  disinvestment  in  firms,  however  fully  unionized,  that  invest 
abroad  ("expect  jobs").^' 

Every  social-investing  cause  can  be  subjected  to  a  similar  analysis.  How 
much  pollution  is  too  much?  Every  time  somebody  goes  to  the  toilet  there  is 
increased  pollution.  The  question  is  not  whether  there  shall  be  pollution,  but 
bow  much,  of  what  forms,  in  what  places,  subject  to  what  controls,  and  so 
forth.  The  world  is  not  divided  into  evil  polluters  and  saintly  nonpoUuters. 
A  vast  body  of  regulatory  law  and  private  law  exists  to  draw  these  difficult 
lines,  and  the  blunt  instrument  of  social  investing  has  nothing  to  contribute 
to  it. 

Another  form  of  social  investing  closely  associated  with  labor  union 
pressure  is  the  effort  to  use  pension  funds  to  create  jobs — for  example, 
making  mortgage  loans  from  the  carpenters'  pension  fund  in  order  to  stimu- 
late employment  in  the  constructi(Mi  trades.  If  the  loans  were  to  be  made  at 
market  rates  of  interest,  there  would  be  no  increase  in  aggregate  mortgage 
lending  or  in  employment,  on  account  of  routine  substitution  effects  (de- 
scribed in  Part  V  below,  treating  the  economic  flaws  of  social  investing). 
Thus,  the  major  effbil  has  been  to  get  the  pension  fund  to  lend  at  below- 
market  rates.  This  would  indeed  increase  construction  and  thus  stimulate 
some  employment  in  the  industry. 

The  objection  to  bargain-rate  lending  is  that  it  is  unprincipled  in  the  sense 
that  it  violates  the  primary  policies  of  pension  law.  By  reducing  the  financial 
return  to  the  pension  fund,  bargain-rate  lending  necessarily  sacrifices  future 
Fetirement  income.  For  present  workers  it  involves  just  that  trade-off  of 
retirement-for-preretirement  income  that  pension  plans  were  created  to 
guard  against.  But  the  objection  runs  deeper:  the  benefits  and  the  costs 
affect  different  people  and  in  different  proportions.  In  particular,  pensioners 
who  are  already  retired  and  who  depend  upon  the  pensicm  fund  for  current 
retirement  income  would  derive  no  benefit  from  subsidizing  employment 
for  current  workers.  We  shall  see  in  Part  VI  that  trust-investment  law  (and 
now  ERISA)  make  it  flatly  illegal  to  sacrifice  the  interests  of  plan  benefici- 
aries in  this  way. 

The  root  fallacy  behind  these  proposals,  which  is  repeated  incessantly  in 
their  rhetoric, ^^  is  that  unions  have  the  right  to  use  their  pension  plans  to 
promote  their  interests.  But,  of  course,  the  plans  are  not  theirs.  The  plans 
exist  for  the  exclusive  purpose  of  providing  retirement  income  for  the 
elderiy.  For  the  same  reason  that  pension  funds  cannot  be  used  to  defray 
union  organizing  expenses  or  union  officers'  salaries,  they  cannot  be  used  to 

"This  last  suggestion  appears  in  Rullenberg,  Friednun.  Kilgallon,  Gulcbess  &  Associates, 
[|K..  AFL-CIO  Pension  Fund  InvesDnent  Study  (Wash..  D.C..  Aug.  20.  1980)  57. 

^.g.,  Jeremy  Rifkin  &  Randy  Baiber,  The  North  Will  Rise  Again:  Pensions.  Politics  and 
Power  in  the  1980s  (Boston.  1978). 


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subsidize  emptoyment  for  union  workers  at  the  expense  of  retirement  in- 
come for  present  and  future  retirees. 

The  most  persistent  of  the  social  investing  causes  is  also  the  most  trans- 
parently ignoble — the  protectionist  cmsade  for  in-state  investing  of  state 
and  local  pension  funds  ("Michigan  pension  money  should  not  be  exported 
to  Indiana").  But  that  phenomenon  is  better  examined  from  another  stand- 
point, in  Part  V,  treating  the  economic  futility  of  social  investing. 

To  summarize:  There  is  not  and  can  never  be  a  consensus  about  what 
causes  are  socially  worthy.  Consequently,  a  pension  trustee  who  sought  to 
adhere  to  the  criteria  of  social  investing  would  have  no  means  of  identifying 
the  causes  to  which  be  had  committed  the  fund.  Since  there  are  no  princi- 
ples, every  cause  entangles  the  fuitd  in  a  political  struggle.  Social  investing 
would  impose  upon  the  fund  the  turmoil  and  administrative  costs  of  perpet- 
ual politicization  of  the  investment  function.  But  a  pension  trustee  has  no 
business  making  political  choices  for  his  beneficiaries;  his  job  is  to  further 
the  retirement-income  security  of  his  beneficiaries,  and  to  leave  them  (o 
participate  in  die  political  process  on  their  own, 

V.  THE  ECONOMICS  OF  SOCIAL  INVESTING 

From  the  standpoint  of  economic  analysis,  two  fundamental  flaws  impair 
virtually  all  social  investing  proposals.  First,  most  are  futile.  Powerful  and 
well -understood  economic  forces  would  counteract  most  social  investing 
strategies,  rendering  them  hollow  gestures.  Second,  social  investing  has 
costs — economic  disadvantages  that  harm  the  interest  of  pension-plan  bene- 
ficiaries. We  shall  see  (below  in  Part  VI)  that  these  economic  flaws  bear 
vitally  upon  the  legal  standards  that  govern  pension-fund  investment. 

Substitution.  Capital  markets  (the  markets  where  companies  and  coun- 
tries seek  to  obtain  a  share  of  the  available  savings)  are  intensely  competi- 
tive. Capital  flows  to  users  who  offer  the  highest  returns,  adjusted  for  risk. 
The  capital  markets  arc  also  increasingly  international,  as  recent  experience 
with  Middle  Eastern  petrodollars,  Continental  eurodollars,  and  Latin 
American  debtors  has  underlined. 

The  competitive  nature  of  the  capital  markets  complicates  many  social 
investing  strategies  to  the  point  of  impossibility.  That  point  has  long  been 
made  regarding  the  campaign  for  divestiture  of  die  shares  of  companies 
doing  business  with  Soudi  Africa.  The  object  of  the  campaign  is  to  starve 
the  South  African  economy  of  capital.  Although  it  is  unlikely  that  economic 
stagnation  would  really  help  rather  than  hurt  the  oppressed  peoples  of  South 
Africa,  it  is  even  less  likely  that  social  investing  would  have  any  material 
effect  upon  the  South  African  economy.  Pension  money  is  by  no  means  the 
only  source  of  investment  capital;  nor  are  American  firms  and  lenders  the 
only  actors.  To  the  extent  that  social-investing  pressures  succeed  in  limiting 
capital  flows  to  South  Africa  from  some  American  firms,  tiiat  simply 
creates  opportunities  for  other  American  firms  and  for  foreign  firms.  In 

12 

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global  financial  tenns,  the  South  Aftcian  economy  is  miniscule  and  its 
external  capital  requirements  coirespondingly  small.  International  enter- 
prises and  lenders  abound  who  are  free  from  the  pressures  of  the  American 
lobby  that  concerns  itself  with  this  cause.  Thus,  the  campaign  to  affect  the 
South  African  economy  has  had  and  will  have  no  demonstrable  effect. 

An  incidental  indication  that  the  campaign  against  South  Africa  is  inef- 
fectual is  that  nobody  has  bothered  to  invoke  the  doctrine  of  constitutional 
preemption,  in  order  to  have  the  federal  courts  declare  unconstitutional  the 
various  state  statutes  and  city  ordinances  that  direct  the  respective  state  and 
local  pension  funds  to  divest  South  Africa-tinged  holdings.  These  enact- 
ments impinge  upon  the  federal  monopoly  over  foreign  relations,  reaf- 
firmed by  the  Supreme  Court  in  1968  in  Zschemig  v.  Miller.  In  that  case  the 
court  forbad  "an  intrusion  by  [a]  state  into  the  field  of  foreign  affairs  which 
the  Constitution  entrusts  to  the  President  and  the  Congress. "^^ 

In  a  study  published  recently  in  the  New  England  Economic  Review,  the 
distinguished  pension  economist  Alica  Munnell  (of  the  Federal  Reserve 
Bank  of  Boston)  has  pointed  to  the  substitution  effects  that  make  economic 
nonsense  of  the  campaign  forin-«tale  mortgage  lending.  Some  state  pension 
plans  have  been  putporting  to  promote  in-state  construction  activity  by 
buying  packages  of  federally  insured  GNMA  mortgages  that  originate  en- 
tirely within  the  stale  (as  opposed  to  conventional  packages  that  contain 
mortgages  originating  in  all  parts  of  the  country).  Since  the  federal  insur- 
ance eliminates  the  rislc  of  default,  the  regional  underdiversification  of  these 
packages  is  unimportant.  Munnell  concludes  that  the  increasing  purchase  of 
these  instruments  by  stale  and  local  pension  plans  has  "not  increased  the 
supply  of  mortgage  funds  .  .  .  ."^^  Rather,  a  pair  of  utterly  predictable 
substitution  effects  are  occurring.  First,  as  pension  funds  increase  their 
buying  of  these  mortgage-backed  securities,  they  simply  displace  other 
institutional  purchasers  such  as  insurance  companies,  who  shift  their  invest- 
ing toward  the  government  and  corporate  bonds  that  the  pension  funds  were 
previously  buying.^  Second,  the  attempt  to  stimulate  in-state  construction 
by  purchasing  in-state  packages  (so-called  "targeting")  appears  to  be  equal- 
ly futile,  and  for  the  same  reason. 

Whereas  in  the  absence  of  the  recent  targeting  rage,  a  state  such  as  Massachu- 
setts would  buy  GNMAs  backed  by  moitgages  from  a  number  of  states,  such 
as  Alabama,  California,  Pennsylvania,  etc.,  now  Massachusetts  insists  on 
GNMAs  backed  by  Massachusetts  mortgages,  Alabama  on  Alabama  mort- 
gages, California  on  California  moitages,  Pennsylvania  on  Pennsylvania 
mortgages,  etc.  As  long  as  dK  stale's  demand  for  mortgages  is  roughly 
proportional  to  the  size  of  its  pension  fund,  the  developing  mend  of  targeting 

"389U.S.  429,  432(1968). 

^Alicia  H.  Munnell,  The  Pitblls  of  Social  Investing:  The  Cue  of  Public  EVnsions  and 
Housing,  New  Eaglaod  Economic  Review  (Sepc.fOct.  1983)  20.  22. 
*1d.  at  27-28. 


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GNMAs  sboukt  have  no  impact  on  the  supply  of  mortgage  ctcdii  among 
states. 

In  summaiy,  while  social  uvesting  through  the  purchase  of  targeted 
GNMAs  produces  market  returns  and  tbeieby  has  no  adverse  impact  on 
public  pensions,  this  approach  is  also  unlikely  to  increase  either  the  aggregate 
supply  of  rocNigage  fiiods  or  the  supply  of  mortgage  credit  within  a  particular 
sate.  This  assessment  has  been  generally  recognized  by  financial  experts.  In 
fact,  those  who  are  less  than  enthusiastic  iU>out  social  investing  often  push  the 
purchase  of  targeted  GNMAs  as  a  means  of  satisfying  the  pressure  on  fund 
managers  to  pursue  socially  oriented  objectives.^ 

The  largest  claim  for  this  form  of  social  investing  is,  therefore,  that  it  may 
deceive  people  into  thinking  that  it  alters  investments  outcomes,  whereas  in 
fact  it  results  in  no  net  increase  in  construction  or  in  employment.  We  must 
emphasize  that  the  reason  these  "targeted"  portfolios  of  in-state  GNMA 
mortgages  arc  harmless  to  the  pension  funds  that  buy  them  is  that  they 
contain  market-rate  rather  than  bclow-market  loans;  and  that  the  govern- 
ment guarantee  against  default  eliminates  what  would  otherwise  be  a  men- 
acing degree  of  underdi versification.  Murmell  has  pointed  out  that  other 
vehicles  used  by  state  pension  plans  to  invest  in  in-state  mortgages  have 
lacked  the  federal  guarantee  and  in  some  cases  have  entailed  below-mailcet 
lending.  Under  a  Connecticut  scheme,  for  example,  she  found  that  "the 
rates  at  which  the  mortgages  have  been  offered  has  varied  substantially  to 
slightly  below  maiicet.  As  a  result,  the  yield  to  the  pensicm  fund  has  been 
well  below  the  GNMA  yield  that  prevailed  at  the  time  the  funds  were 
cotnmitted."^'  In  Part  VI  below  I  explain  that  both  under  the  common  law 
rules  of  trust-investment  law  and  under  ERISA,  it  would  be  flatly  illegal  for 
a  pension  trustee  to  sacrifice  the  financial  well-being  of  plan  beneficiaries  in 
this  way.  (ERISA  does  not  apply  to  state  and  local  plans.) 

Diversification.  Over  the  last  quarter-century  a  great  revolution  has  oc- 
curred in  scientific  understanding  of  the  behavior  of  capital  mailcets.  This 
revolution  in  the  theory  of  finance  usually  goes  under  the  label  of  modem 
portfolio  theory  (MPT)  or  the  theory  of  efficient  mailcets.''^ 

Crudely  summarized,  MPT  has  established  two  central  pnqwsitioiis. 
First,  a  massive  body  of  empirical  investigation  has  shown  that  it  is  ex- 
tremely difficult  (some  say  impossible)  even  for  investment-industry 
professionals  to  achieve  long-term  results  better  than  the  broad  market 
averages,  such  as  (for  equities)  the  Standard  &  Poor's  500.  It  seems  that 
capital  mailcets  discount  new  information  so  rapidly  and  well  that  there  are 
few  opportunities  to  outsman  other  investors  by  identifying  undervalued 
securities  to  buy  or  overvalued  ones  to  sell. 

*Id.  at  28. 

"Id.  ai  34. 

'^See  generally  R.  Brealey.  An  InlroducIionloRisk  and  Renmi  from  Common  Stocks,  2d 
ed.  (I9S3);  ]ohn  H.  Langbein  &  Richard  A.  Posner,  Maifcei  Funds  md  Tmst-lnveunicni  Uw, 
1976  American  Bar  Foundation  Research  Journal  I . 


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SeccMid,  the  capital-market  investigators  have  shown  that  there  are  sub- 
stantial gains  to  be  had  from  diversifying  investments  quite  extensively. 
The  common  law  of  tiusts  has  long  enforced  a  duty  to  diversify  trust 
investments,  and  ERISA  codifies  that  rule.^^  MPT  research  has  given  new 
meaning  to  the  concept  of  diversification,  by  showing  that  in  order  to 
eliminate  the  uncompensated  risk  of  underdiversification,  a  portfolio  must 
be  much  larger  than  previously  thought.  Optimal  diversification  requires 
equity  portfolios  with  hundreds  of  stocks.  Furthermore,  these  portfolios 
must  be  weighted  for  capitalization,  so  that  large  companies  such  as  the  oil, 
auto,  computer,  chemical,  and  telecommunications  giants  are  difficult  to 
eliminate  from  optimally  diversified  portfolios.  The  question  arises  whether 
social  investing,  if  rigorously  pursued,  would  impair  diversification.  As 
more  and  more  social  causes  are  added  to  the  list,  the  number  of  companies 
that  are  ranked  as  offenders  will  become  large  enough  that  an  optimally 
diversified  portfolio  cannot  be  constructed  from  the  remainder.  Social  in- 
vesting would  then  require  the  pension  plan  to  bear  the  costs  of  the  uncom- 
pensated risk  of  inadequate  diversification.*^ 

The  campaign  for  in-state  or  localized  investing  raises  especially  serious 
risks  of  underdiversification.  The  last  thing  that  workers  in  declining  areas 
need  is  to  have  their  retirement  savings  jeopardized  for  the  supposed  benefit 
of  the  regional  economy.  Or  suppose  that  a  school  board  in  the  vicinity  of 
Mount  St.  Helens  had  insisted  on  investing  locally. 

The  Social-Bargain  Fallacy.  The  claim  is  sometimes  made  that  social 
investing  is  really  economically  advantageous  to  pension-plan  beneficiar- 
ies. For  example,  companies  that  do  business  in  South  Africa  could  suffer 
damage  or  expropriation  from  civil  war  or  revolution;  companies  that  resist 
unionization  may  incur  strikes  and  boycotts;  polluters  will  get  entangled  in 
environmental  liabilities;  and  so  forth.  Avoiding  investment  in  these  firms 
is,  therefore,  really  a  strategy  for  enhancing  the  financial  well-being  of  plan 
beneficiaries  by  avoiding  companies  headed  for  trouble. 

This  argument  is  simply  another  theory  of  how  to  beat  the  market,  and 
like  all  such  theories,  it  mns  afoul  ofthe  empirical  studies  underlying  MPT, 
which  strongly  imply  that  consistent  market-beating  strategies  are  not  to  be 
found.  The  notion  must  be  that  the  risks  associated  with  the  disfavored 
companies  have  not  been  fully  discounted  by  the  securities  maikets,  even 
though  those  risks  are  widely  known.  But  securities  markets  exist  precisely 
in  order  to  discount  such  information — that  is,  to  take  account  of  the 
information  in  securities  prices.  Accordingly,  all  that  we  know  about  the 
behavior  ofthe  securities  markets  suggests  that  political  risk,  like  any  other 
information  that  affects  future  profitability,  is  fully  reflected  in  current 


"Restatemeni  of  Trusis  (Second)  [hereafter  cited  as  Restatement)  sec.  228  (1957);  ERISA  . 
sec.  404<a)(lKC).  U.S-C,  sec,  1104  (aXl)(C). 

''Ttiis  point  is  devek^wd  in  John  H.  Langbein  A  Richard  A.  Posner.  Social  Investing  and 
Ibe  Law  of  Trusts.  79  Michigan  Uw  Review  72.  SSfT  (1980). 


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prices.  The  indifieient  performance  of  the  three  small  mutual  funds  that 
have  been  following  social- investing  strategies  underscores  this  poinl.^' 
To  conclude:  From  the  standpoint  of  economic  analysis,  there  are  two 
types  of  social-investing  outcomes — the  futile  and  the  wealth-impairing. 
The  futile  are  diosc,  such  as  the  in-state  GNMA  packages,  diat  make  no  real 
attribution  to  the  ostensible  social  goal.  The  wealth-impairing  outcomes 
lower  the  return  on  the  fund's  savings,  or  expose  it  to  iitcieased  administra- 
tive costs,  or  impose  upon  it  the  uncompensated  risk  of  inadequate  diversi6- 
cation.  We  shall  now  examine  the  reasons  why  wealth-impairing  social- 
investing  schemes  are  illegal. 

VI.  WHY  SOCIAL  INVESTING  IS  ILLEGAL 

A  trustee  who  sacrifices  the  beneliciaiy's  financial  well-being  for  any 
social  cause  violates  both  his  duty  of  loyalty  to  the  beneficiary  and  his  duty 
of  prudence  in  investment. 

The  Duty  of  Loyalty.  The  essence  of  the  trustee's  fiduciary  relationship  is 
his  responsibility  to  deal  with  the  trust  property  "for  the  benefit  oP'^  the 
trust  beneficiaiy.  The  authoritative  Resiaiemem  (Second)  cf  Trusts  says: 
"The  trustee  is  under  a  duty  to  the  beneficiary  to  administer  the  tnist  solely 
in  the  interest  of  the  beneficiary."'^  Although  most  of  the  case  law  applying 
this  duty  of  loyalty  to  the  beneficiary's  interest  has  arisen  in  situations  of 
self-dealing  or  other  conflicts  of  interest  in  which  the  courts  have  acted  to 
prevent  the  trustee  from  enriching  himself  at  the  expense  of  the  trust  benefi- 
ciary,^" the  same  result  has  been  reached  with  regard  to  fiduciary  invest- 
ments for  the  benefit  of  a  third  party  (that  is,  a  party  other  than  the  trust 
beneficiary  or  the  trustee).  The  Restatement  says,  in  its  Official  Comment 
treating  the  duty  of  loyalty:  "The  trustee  is  under  a  duty  to  the  beneficiaiy  in 
administering  the  trust  not  to  be  guided  by  the  interest  of  any  third  per- 
son."^^  Because  the  entire  object  is  to  protect  the  Inist  beneficiary,  nothing 
of  principle  turns  on  the  identity  of  the  party  who  profits  at  the  beneficiary's 
expense. 

In  the  leading  case  of  Blankenship  v.  Boyle, ^"^  decided  in  1971,  the  duty 

"Supra  Doce  20. 

^estateinenl,  supra  noU  33,  at  sec.  2. 
"Id.  u  sec.  170(1  Kemphasis  added). 

^See  gCDciBlly  2  Austin  W.  Scott,  The  Uw  of  Trusts  sees.  170-170.23  (3d  ed.  1967  A 
Si^  1980). 

"Reslalewcat,  supra  note  33.  at  sec.  170,  Commeniq  (enq>hasisadde<D.  See  id.  at  sec.  187, 
Comment  g  (enqihasis  added): 

The  court  wilt  control  the  trustee  in  the  exercix  of  the  power  wbere  the  acts  form  an 
improper  even  though  not  a  dishonest  nnfive.  That  is.  where  he  acts  from  a  motive 
olher  than  to  fUrthtr  the  piupoiti  of  the  tnisl.  Thus,  if  the  liustee  in  exercising  or 
foiling  to  exercise  a  power  does  so  because  of  spile  in'  prejudice  en-  to  further  some 
interest  of  his  own  or  of  a  person  other  than  the  beneficiary,  the  court  wiL  interpose. 
FoTdectsioDal  authority  see,  e.g..  Conway  V.  Emeny.  139Coim.  612.  96  A.2d  221  (1953). 
•°329F.  Supp.  I089(D.D.C.  1971). 


16 


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of  loyalty  was  applied  to  social  investing  of  pension  funds.  A  multi-employ- 
«  fund  for  coal  miners  that  was  dominated  by  the  United  Mineworkers 
Union  bought  large  blocks  of  shares  in  certain  electric  utilities  in  order  to 
induce  their  managements  to  buy  union-mined  coal.  On  the  complaint  of 
some  of  the  pension-fund  beneficiaries,  the  court  enjoined  "the  trustees 
from  operating  the  Fund  in  a  manner  designed  in  whole  or  in  part  to  afford 
collateral  advantages  to  the  Union  or  the  [employers]."^' 

ERISA  codified  the  duty  of  loyalty  for  pensitm  trusts  in  its  "sole  interest" 
and  "exclusive  purpose"  niles.^^  SectiiMi  404(aKl)  provides  that  the  "fidu- 
ciary shall  discharge  his  duties  with  respect  to  a  plan  solely  in  the  interest  of 
the  participants  and  beneficiaries  .  .  .  ."*^  In  an  essay  published  in  1980,  a 
pair  of  Washington  lawyers,  Ronald  Ravikoff  and  Myron  Curzan,  attempt 
to  escape  this  provision  of  ERISA.'"  1  shall  devote  some  space  in  this  article 
to  refuting  their  essay,  both  because  the  essay  is  misleading,  and  because  it 
typifies  the  flimsiness  of  the  legal  arguments  that  are  advanced  in  social- 
investing  circles. 

Ravikoff  and  Curzan  correctly  observe  that  ERISA  restates  the  common 
lawduty  of  loyalty.^  Accordingly,  they  reason,  since  "(tjhe  purpose  of  the 
duty  of  loyalty  is  to  require  a  fiduciary  to  avoid"  self-dealing,  social  invest- 
ing is  unobjectionable  "ia]s  long  as  the  fiduciary  avoids  self-interested 
transactions."^  But  the  view  that  the  trustee's  duty  of  loyalty  governs  only 
in  situations  of  self-dealing  is  simply  incorrect.  To  be  sure,  most  people 
who  steal  do  it  for  their  own  gain;  that  is  why  most  of  the  case  law  concerns 
self-dealing.  But  the  trustee's  duty  of  loyalty  exists  solely  for  the  protection 
of  the  trust  beneficiary,  and  the  duty  is  equally  violated  whether  the  trustee 
breaches  for  the  trustee's  enrichment  or  that  of  a  stranger.^^ 

Regarding  ERISA's  requirement  that  the  fiduciary  invest  "for  the  exclu- 
sive purpose  of  .  .  .  providing  benefits  to  participants  and  their  beneficiar- 
ies,"^^ Raviko^  and  Curzan  assert  that  "[t]he  concept  of  'benefits'  .  .  . 
iteed  not  be  limited  to  payments  that  a  participant  or  beneficiary  would 
receive  upon  retirement,  i.e.,  economic  return  to  an  investment.  It  is  argu- 
ably broad  enough  to  include  numerous  types  of  positive  returns,  e.g.,  job 
security  and  improved  working  conditions.  "^^  This  interpretation  of  the 
term  "benefits"  was  rejected  by  the  former  administrator  of  the  Labor 
Department's  ERISA  office,  James  D.  Hutchinson,  and  a  co-author,  Charles 


*'329F.  Supp.  al  1113. 

"See  H.R.  Rep.  No.  533.  93d  Cong..  Ut  Sess.  13.  21,  reprinted  in  [1974]  U.S.  Code 
CODgiessioiul  &  AdmimstTaiive  News  4639.  4651,  4659. 

"ERISA  sec.  404(a)(1),  29  U.S.C.  sec.  1 104  (aKI). 

"Roiuld  B.  Ravikoff  &  Myron  P.  Curzan,  Social  Responsibility  in  InvesDnenl  and  (be 
Pnident  Man  RiUe,  58  California  Law  Review  518  (19S0). 

"Id.  Bl  531. 

*^, 

"See  text  u  note  39  and  note  39, 

■"ERISA  sec.  404(aHl)(A),  29  U.S.C.  sec.  1104(a)(1)(A). 

*^vikofF  A  (Tufzan,  supia  note  44.  at  532. 


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C.  Cole,  in  an  aiticle  cited  by  Ravikoff  and  Curzan  bul  ignored  on  the 
precise  question.^  Hutchinson  and  Cole  point  out  that  ERISA  uses  the  term 
"benefits"  throughout  the  statute  in  die  more  narrow  and  natural  sense  'te 
refer  to  those  cash  benefits  that  a  participant  or  his  family  would  receive  in 
acanxlance  with  the  specifications  of  the  [retirement)  plan."^'  Hutchinson 
and  Cole  conclude  "that  ERISA  trusts  are  to  be  established  and  maintained 
kx  the  limited  purpose  of  providing  retirement  benefits  and  not  for  other, 
socially  desirable  purposes  which  provide  collateral  or  speculative  'bene- 
fits' to  plan  participants  or  ^ipeal  to  the  philosophical  leanings  of  the  plan 
^nsor  or  oOier  parties  associated  with  the  plan."'^ 

The  New  York  Teachers'  Case.  The  BUmkenship  case  insists  uncompro- 
misingly that  pension  trustees  must  invest  for  the  purpose  of  maximizing  the 
financial  well-being  of  the  pension  beneficiaries.  Proponents  of  social  in- 
vesting seeking  to  escape  the  force  of  that  precedent  have  been  templed  to 
juxtapose  a  misreading  of  die  1978  case.  Withers  v.  Teachers'  Re'irement 
System.^^  In  the  Withers  case,  retirees  who  were  beneficiaries  of  the  New 
York  City  schoolteachers'  pension  fund,  Teachers'  Retirement  System 
(TRS),  challenged  the  decision  of  die  TRS  trustees  to  purchase  S860  million 
of  New  York  City  bonds  as  part  of  the  plan  that  prevented  the  city  from 
going  bankrupt  in  late  1975.  Like  most  public  employee  pension  funds, 
ins  had  not  been  fiilly  funded.  The  main  asset  of  TRS  was  the  city's 
contractual  liability  to  pay  benefits  out  of  future  tax  revenues  calculated  on 
past  service.  City  payments  to  TRS  in  the  1974  fiscal  year  constituted  sixty- 
two  percent  of  TKS's  total  income  (as  opposed  to  nine  percent  derived  from 
employee  contributions  and  twenty-nine  percent  ftom  investment  income). 
The  TRS  trustees  testified  that  although  the  legal  situation  was  far  from 
certain,  their  best  guess  was  thai  in  the  event  of  city  bankruptcy  essential 
city  services  and  past  city  bond  debt  would  have  priority  over  payments  to 

"'James  D.  Hulchinson  &  Charles  G.  Cole,  Legal  Slandards  Governing  Inveslmenl  of 
tension  Assets  for  Social  and  Potilical  Goals.  I2S  Universily  of  Pennsylvania  Law  Review 
1340  (1980).  Ravikoff  and  Curzan  cite  the  Hutchinson  and  Cole  article  as  it  appeared  in 
Employee  Benelil  Research  Institute.  Should  Pension  Assets  Be  Managed  for  Social/Political 
Puiposes?(D.  Salisbury,  ed.)  (Washington.  DC,  1980).  See  Raviko^A  Curran.  supra  note 
44.  at  531  n.  49.  I  cite  the  revised  version  of  the  Hutchinson  and  Cole  article  that  appeared 
subsequently  in  the  University  of  Pennsylvania  Law  Review,  supra. 

^'HulchinstHiA  Cole,  supra  note  50,  at  1370  &  1371  n.  151 .  The  only  reason  that  ERISA  is 
less  than  explicit  in  defining  "benefits"  as  a  strictly  economic  term  is  that  no  other  usage  even 
occurred  to  the  draftsmen.  In  the  Congressional  findings  that  constitute  the  preamble  to  ttie 
statute  the  term  "beneGls"  is  repeatedly  used  in  the  conventional  and  strictly  economic  sense. 
"Congress  hnds  .  .  .  that  despite  the  enormous  growth  in  [pension  and  other]  plans  many 
employees  with  long  years  of  employment  are  losing  anticipated  reliremeni  benefits  owing  to 
the  lack  of  vesting  provisions  in  such  plans;  Ihaiowinglo  the  inadequacy  of  current  minimum 
slandards,  the  soundness  and  stability  of  plans  with  respect  lo  adequate ^nJ!(  to  pay  promised 
benefits  may  be  endangered:  that  owing  to  the  termination  of  plans  before  requisite /u/u^i  have 
been  accumulated,  employees  and  the  beneficiaries  have  been  deprived  of  anticipated  ^nr^i 
.  .  .  ."  ERISA  sec.  2(a),  29  U.S.C.  sec.  1001  (aXemphasis  added). 

'^Hutchinson  &  Cole,  supra  note  50,  at  1371 

"Restatement,  supra  npte  33,  at  sec.  164(a). 

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TRS  and  hence  that  payments  to  TRS  would  cease.  In  making  the  loan  to  the 
city,  the  TRS  trustees  acted  in  concert  with  four  other  municipal-employee 
pension  funds,  which  agreed  to  purchase  $2.3  billion  in  city  obligations 
over  a  two-and-one  half-year  period. 

The  court  upheld  the  trustees'  action,  even  though  the  bonds  bore  such  a 
high  risk  of  default  that  they  would  not  have  satisfied  the  nonnal  standards 
of  prudent  investing  (die  purchase  was  also  excessive  in  amount  and  would 
have  been  in  breach  of  the  duty  to  diversify) .  Ravikoff  and  Curzan  interpret 
the  court's  rationale  as  follows: 

WiAers  may  rEiMesem  an  interpretation  of  the  prudent  man  rule  itiat  Is  quite  different 
'  from  thatcet  forth  ni  Blankenship.  Blankenship  espouses  the  traditional  conception  of 
the  rale:  a  trustee  may  not  select  an  investment  that  fosters  nontraditional  objectives  at 
iIk  expense  of  adequate  rale  of  return  and  coqwis  safety.  In  contrast.  Withers  a{^>ears  to 

pennil  a  fiduciary  to  comprontise  these  traditianaJ  objectives  in  favor  of  the  other 
goals — at  least  lo  some  extent.  The  couil  upheld  [he  trustees'  investment  only  because 
the  investment  gave  much-needed  aid  to  the  fund's  principal  contributor  and  helped  to 
preserve  the  jobs  of  funds  participants.  That  is.  the  investment  was  prudent  in  this  case 
because  it  provided  "other  benefits."^ 

In  truth,  what  the  Withers  court  did  was  to  point  to  the  host  of  special 
factors  thatmade  the  TRS  purchase  justifiable  under  the  traditional  wealth- 
maximizing  standards  of  trust-investment  law.  The  court  found  that  the 
trustee's  "major  concern"  was  "protecting  what  was,  according  to  the  infor- 
mation available  to  them,  the  major  and  indispensible  source  of  TRS's 
funding — the  City  of  New  Yoric,"  and  that  the  trustees  "went  to  great 
lengths  to  satisfy  themselves  of  the  abi  ^  of  any  reasonable  possibility 
that  the  City  would  be  able  to  obtaii.  "  needed  money  fh>m  other 
sources."^^  The  trustees  used  the  bond  purchase  to  precipitate  federal  gov- 
ernment financing  for  New  York  City,  thereby  creating  for  TRS's  benefici- 
aries the  prospect  of  reaching  the  federal  treasury  to  satisfy  the  City's 
liability  to  TRS.  They  "obtained  a  provision  conditioning  the  pension 
fund's  investment  in  the  City  bonds  on  the  enactment  of  federal  legislation" 
providing  for  interim  financing  for  the  City.^  Indeed,  since  the  trustees' 
$860  million  investment  was  about  what  the  City  would  have  had  to  pay 
TRS  over  the  two-and-a-half  year  period  in  question,  TRS  "could  be  no 
worse  off  under  the  plan  than  it  would  be  in  bankruptcy  without  City 
funds.  "^^  The  court  in  Withers  endorsed  the  Blankenship  case,  and  declared 
that  "neither  the  protection  of  the  jobs  of  the  City's  teachers  nor  the  general 
public  welfare  were  factors  which  motivated  the  trustees  in  their  investment 
decision.  The  extension  of  aid  to  the  City  was  simply  a  means — the  only 
means,  in  their  assessment — to  the  legitimate  end  of  preventing  the  exhaus- 


^Ravikoff  A  Cuiran.  supra  note  44,  at  523, 

"Withers  V.  Teachers'  Retirement  System.  447  F.  Supp.  1248.  1232  <S.D.N.Y.  1978). 
■ffd.  mem.  595  F.  2d  1210  (2d  Cir.  1979). 
"447  F.  Supp-  at  1253. 
"447  F.  Supp.  at  1253. 


19 

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tion  of  the  assets  of  the  TRS  in  the  interest  of  al[  the  beneficiaries."^"  The 
trustees  found  favor  with  the  court  for  their  effort  to  protect  their  greatest 
asset,  which  was  the  liability  of  the  City  to  pay  off  its  obligations  to  TRS 
over  future  decades. 

The  Duty  of  Prudent  Investing.  Another  oMigation  tlial  trust  law  imposes 
on  fiduciaries  is  the  duty  of  care  known  as  the  [midcnt-nian  or  prudent- 
investor  rule.  The  case  law  is  now  effectively  codified  for  pension  law  in 
ERISA."  The  Restatement  of  Trusts  words  the  ruk  thusly:  "In  making 
investments  of  trust  funds  tiie  trustee  is  under  a  duty  to  the  beneficiary  .  .  . 
to  make  such  investments  and  only  such  investments  as  a  prudent  man 
would  make  of  his  own  property  having  in  view  the  [reservation  of  the 
estate  and  the  amount  and  regularity  of  the  income  to  be  derived  .  .  .  ."^ 

Fw  historical  reasons  that  are  widely  understood,  trust  law  has  placed 
greater  emphasis  on  risk-avoidance  than  the  modem  theory  of  finance 
docs,^'  but  risk  and  return,  however,  weighted,  are  factors  exclusively 
related  to  the  investor's  financial  well-being.  The  highly  risk-averse  inves- 
tor of  traditional  trust  law  accepts  a  lower  retum  for  a  lower  risk.  He  docs 
not  accept  a  lower  return  for  some  other,  nonfinancial  purpose.  The  duty  of 
prudent  investing  therefore  reinforces  the  duty  of  loyalty  in  forbidding  the 
trustee  to  invest  for  any  object  other  than  the  highest  return  consistent  with 
the  preferred  level  of  portfolio  risk.^ 

In  1980,  die  then  chief  ERISA  administrator.  Ian  D.  Lanoff  of  the 
Department  of  Labor,  rejected  the  suggestion  that  social  investing  was  not 
subject  to  ERISA's  rules  of  prudence  and  loyalty.  He  said  that  ERISA 
requires  that  the  fiduciary's  "overall  investment  strategy .  .  .  be  designed  to 
protect  the  retirement  income  of  the  plan's  participants,"  and  that  both  the 
duty  of  loyalty  and  the  prudent  investor  rule  would  be  violated  if  a  fiduciary 
were  to  make  an  "investment  decision  based  on  other  objectives,  such  as  to 
promote  the  job  security  of  a  class  of  current  or  fiiture  participants."^^ 
Social  factors  may  be  brought  in  only  if  it  is  costless  to  do  so.  Similarly,  the 
Labor  Department  approved  a  1979  Chrysler/UAW  agreement  endorsing 
some  social  investing  of  pension-fund  assets  on  the  understanding  that  the 
investments  in  question  would  be  "economically  competitive  with  other 
investment  o[^x>rtunities  which  may  not  contain  similar  socially  beneficial 
features."^  (As  previously  explained,  the  field  for  costless  substitutions  is 
largely  limited  to  the  economically  futile  forms  of  social  investing.) 


"447  F.  Supp.  at  I2S6  (emplusis  added). 

'*ERISA  sec.  404(aXlKB).  29  U.S-C.  sec.  1104<aXI)(B). 

'Restatement,  supn  note  33,  at  sec.  227. 

"See  Langbein  &  Positet.  supn  note  32,  at  3-6. 

'^A  similai  ratiofude  underlies  the  trustee's  familiar  duty  to  invest  promptly,  in  onler  to 
make  Iiust  funds  productive.  See  Restatemem,  supta  note  33.  at  sec,  ISl.  CtMiunent  c. 

^an  Lanoff.  The  Social  Investment  of  Private  Pension  Plan  Assets:  May  it  Be  Done 
Lawfully  Under  ERISA?.  31  Labor  Law  Journal  3S7,  3S9  (1980). 

**W.  at  392. 


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The  attorney  general  of  Oregon  issued  a  formal  opinion  in  1978  applying 
the  state's  statutory  pmdcnt-invcstor  nile  to  the  question  whether  invest- 
ment managers  for  the  state  university  endowment  fiinds  could  "take  politi- 
cal and  moral  considerations  into  account  in  making  investment  decisions." 
He  ruled  that  "[i]t  is  inappropriate  and  irrelevant  for  the  investment  manag- 
ers to  consider  any  factors  other  than  the  probable  safety  of,  and  the  prob- 
able income  from,  the  investments  required  by  the  statute. "^^ 

The  proponents  of  social  investing  have  never  reconciled  the  sacrifice  of  - 
beneficiaries'  financial  advantage  with  the  prudent-investor  role.  Ravikoff 
and  Curzan  try  to  avoid  the  common-law  rule  by  rewording  it  to  suit  their 
purpose.  After  quoting  the  Restatemem  version,^'  they  purport  to  summa- 
rize it  in  a  form  which  changes  it  radically,  and  which  they  thereafter  treat  as 
a  statement  of  the  law.  The  objects  of  the  prudent-investor  rule,  they  say, 
are  "preservation  of  the  trost  corpus  and  attainment  of  an  adequate  re- 
tum.*'^^  The  term  "adequate"  is  their  own  invention,  and  in  thus  implying  a 
standard  less  than  "optimal"  or  "maximum"  it  is  wholly  without  authority. 
The  authors  later  endorse  a  movement  from  "adequate"  to  "moderate  or 
even  no  return,"^  still  in  the  name  of  prudence.  It  is  a  revealing  commen- 
tary on  the  weakness  of  the  legal  case  for  social  investing  that  its  proponents 
aie  driven  to  such  transparent  manipulation  of  the  legal  rules  that  oppose 
them. 

ERISA's  No-Waiver  Ride  Applied  to  Social  Investing.  A  general  rule  of 
trust-investment  law,  known  as  the  authorization  doctrine,  permits  the 
settlor  to  impose  on  the  trust  whatever  investment  policy  he  sees  fit.^  The 
settlor  can  waive  otherwise  applicable  rules  and  authorize  the  trustee  to 
engage  in  acts  of  self-dealing  or  imprudent  investment.  One  of  ERISA's 
innovations  was  the  prohibition  against  "any  provision  .  .  .  which  putporis 
to  relieve  a  fiduciary  from  responsibility  or  liability."™  Therefore,  as 
Hutchinson  and  Cole  observe,  "the  [pension]  plan  documents  cannot  autho- 
rize a  policy  of  social  investment  that  would  otherwise  be  impermissible 
under  the  fiduciary  standards  of  the  Act."^*  This  mle  against  exculpation 
clauses  eliminated  the  authorization  doctrine  from  pension  tmsts. 

Consequently,  a  pension  trust  cannot  be  drafted  to  permit  a  social  invest- 


^S  op.  Or.  Any,  Gen.  No.  7616.  al  2  (May  2.  I97S),  litigaled  in  Associated  Students  of 
the  University  of  Oregon  v.  Hum,  No.  78-7503  (Lane  County  Cir.  Ci.,  filed  Nov  22.  1978). 

^'ResuiemetU,  supn  oote  33,  al  sec.  227.  quoted  in  Ravikoff  &  CurTan,  supra  note  44,  al 
520. 

'^Ravikoff  &  Cuizan,  supra  note  44,  at  520. 

"Id.  at  528. 

'"Restatement,  supn  note  33,  at  sec.  164(a). 

'<*ERISA  sec.  410(a).  29  U.S.C.  sec,  1)10(a).  Se«  also  ERISA  sec.  404(aKI)(D),  29 
U.S.C.  sec.  ll04(a)(lKD). 

"Hutchinson  &.  Cole,  supn  note  SO.  at  1372.  1373-75. 


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ing  strategy  that  would  violate  the  duties  of  loyalty  or  prudent  investment. 
This  result  is  quite  consistent  with  die  economic  analysis  of  pension  savings 
(discussed  in  Pan  II,  supra,  under  Ac  subheading  "Contributory  or  Not"). 
Because  both  employer-paid  and  employee-paid  contributions  are  best  un- 
derstood as  deferred  wages,  they  derive  from  die  employee's  compensation 
packet.  Since  die  employee  is  in  this  important  sense  ttw  "settlor^  of  his  own 
pension-trust  account,  diere  is  good  reason  to  prevent  plan  sponsors  (wheth- 
er union  or  employer)  from  using  the  authorization  doctrine  to  impose  social 
investing  upon  him. 

Since,  however,  the  employee  rather  than  the  plan  sponsor  is  the  settlor- 
equivalent  person,  the  oiqx>site  question  arises:  Might  a  pension  plan  be 
tawfiil  if  it  contained  a  social-investing  option  that  the  iitdividual  participant 
could  elect  or  decline?  For  example,  die  plan  might  offer  two  funds,  one 
that  ignored  social-investing  causes  and  another  that  adhered  to  some  politi- 
cal strategy  such  as  excluding  the  securities  of  nonunion  firms.  The  employ- 
ee could  elect  between  the  two  funds. 

It  might  be  possible  to  bring  a  social-investing  option  of  this  sort  within 
the  so-called  ratification  doctrine  of  the  common  law  of  trusts.  Unless  a 
beneficiary  is  deceived  or  acts  under  an  incapacity,  tnist  law  allows  htm  to 
ratify  investment  practices  that  would  otherwise  be  in  breach  of  the  trust 
instrument  or  of  the  common  law.^^  The  idea  is  that  if  the  beneficiary  is 
entitled  to  receive  and  waste  the  trust  fund,  he  is  equally  entitled  to  allow  the 
fund  to  be  wasted  while  still  in  the  hands  of  the  trustee.  But  it  is  just  there 
that  pension  trusts  part  company  from  ordinary  trusts,  on  account  of  the 
protective  policy  of  pension  law.  The  pension  beneficiary  is  not  allowed  to 
reach  pension  assets  on  whatever  terms  please  him.  For  example,  we  have 
seen  that  ERISA's  mandatory  spendthrift  rule  prevents  the  pension  benefi- 
ciary from  consuming  his  pension  account  before  letirement.^^  Further,  the 
Internal  Revenue  Code  now  conditions  the  pension  tax  concessions  on  the 
requirement  that  retirement  benefits  be  made  available  in  the  form  of  an 
annuity, ^^  in  order  to  protect  the  retiree  from  improvident  consumption  that 
could  exhaust  his  pension  benefits  during  his  lifetime. 

Accordingly,  it  seems  unlikely  that  a  genuinely  costly  social  investing 
scheme  could  pass  muster  even  as  a  beneficiary-elected  option.  For  the 
same  reason  we  do  not  allow  a  current  worker  to  spend  his  pension  account 
on  a  sports  car,  we  should  not  allow  him  to  spend  it  on  contributions  to 
political  or  social  campaigns  (which  is  what  he  is  doing  when  he  accepts  a 
below-maiket  return  in  bis  pensitm  savings).  On  the  other  hand,  this  ration- 


'^Resutemenl.  supra  note  33.  at  sec.  216(1). 

'^upra  texl  al  note  10  and  note  10. 

^'I.R.C,  sec.  40I(aXll)  (as  amended  by  the  Relireroent  Equity  Act  of  1984). 


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ale  seems  not  to  extend  to  social  investing  schemes  of  the  merely  futile  sort, 
such  as  in-state  GNMAs.  Even  fw  these  investments,  however,  the  plan 
sp(psor  should  be  obliged  to  disclose  to  plan  participants  that  the  price  of 
cosUessness  is  futility;  and  the  sponsor  should  be  obliged  to  arrange  fw 
confidentiality  respecting  the  portfolio  election  of  each  participant,  in  order 
to  [m>tecl  participants  from  union  or  other  pressures. 

This  discussion  of  a  social  investing  option  presupposes  a  defined  contri- 
bution plan,  with  individual  accounts  whose  investment  risk  is  borne  by 
each  plan  participant.  In  a  pure  defined  benefit  plan,  where  investment  risk 
is  shifted  to  the  employer  as  plan  sponsor,  there  is  less  reason  in  law  to 
prevent  die  employer  from  assuming  the  increased  costs  of  a  social-invest- 
ing strategy  that  entails  below-market  yields.  The  employer,  however,  has 
good  reason  to  resist  such  efforts  to  induce  him  to  increase  his  pension  costs 
and  liabilities.  For  just  diat  reason,  most  of  the  social-investing  pressures 
have  not  been  directed  at  single-employer  defined  benefit  plans,  but  rather 
at  union-dominated  multi-employer  plans,  state- and- local  plans,  and  multi- 
employer defined  contribution  plans  such  as  the  college  teachers'  TIAA- 
CREF. 

Even  within  the  realm  of  the  defined  benefit  plan,  the  plan  sponsor  does 
not  bear  the  whole  of  the  investment  risk.  Under  the  federal  insurance 
scheme  enacted  as  Tide  IV  of  ERISA,  a  federal  agency  called  the  Pension 
Benefit  Guaranty  Corporation  (PBGC)  bears  the  ultimate  responsibility  for 
paying  most  of  the  pension  benefits  promised  under  a  defined  benefit  plan, 
in  the  event  that  the  plan  should  default.^^  PBGC  thus  has  an  interest  in 
preventing  plan  sponsors  &om  engaging  in  improvident  investment  prac- 
tices that  might  require  PBGC  to  have  to  honor  the  sponsor's  defaulted 
promises.  Furthermore,  PBGC  insurance  does  not  protect  plan  participants 
wholly,  because  there  are  statutory  ceilings  on  the  amount  of  the  benefits 
covered.^^  Since,  therefore,  the  plan  participant  would  remain  at  risk  for  the 
portion  of  a  defaulted  plan  not  insured  by  PBGC ,  the  protective  policies  that 
indicate  that  the  participant  should  not  have  the  power  to  acquiesce  in  a 
social-investing  option  under  a  defined  contribution  plan  pertain  as  well  in 
an  attenuated  fashion  to  a  defined  benefit  plan. 

Corporate  Social  Responsibility.  Proponents  of  social  investing  some- 
times think  they  can  find  solace  in  the  authorities  that  allow  a  corporation  to 
engage  in  charitable  giving  or  other  "socially  responsible"  endeavors  at  the 
expense  of  its  shareholders.  Indeed,  this  analogy  misled  the  distinguished 


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tnist  writer,  Austin  Scon,  who,  sbortly  before  his  death  endorsed  social 
investing  of  trust  funds. ^ 

Tfac  legal  analysis  that  has  been  applied  in  the  (xvporation  cases,  is,  in 
fact,  directly  contrary  to  that  which  would  be  needed  to  sustain  social 
investing  of  tiust  funds.  Tfae  rationale  that  has  protected  corporate  directors 
from  liability  when  shareholders  have  brou^t  suit  complaining  of  seeming 
cmporate  altruism  is  that  the  directOTs  were  in  fact  pursuing  the  longer- 
range  self-interest  of  die  finn  and  hence  that  their  conduct  has  been  wealdi- 
maximizing.™ 

Constitutional  Objections.  There  are  serious  doubts  about  the  constitu- 
tioiiality  of  the  two  types  of  social-investing  measures  that  crop  up  in  stale 
legislation  directed  at  state  and  local  pension  funds.  As  regards  the  legisla- 
tion directed  against  Soudi  Africa  (or  any  other  foreign  power),  I  have 
previously  mentioned  the  doctrine  of  constitutional  preemption,^  designed 
to  preserve  the  federal  monopoly  of  audiority  in  foreign  relations,  which 
was  expansively  reaHimied  by  the  Su^me  Court  in  the  1968  case  of 
Zschemig  v.  Miller.*^ 

There  is  also  a  long  constitutional  tradition  inimical  to  protectionist  state 
legislation.  A  main  purpose  of  the  c<Mnnieree  clause  of  the  federal  constitu- 
tion was  to  create  national  markets.  Fm' example,  tiie  Supreme  Court  held  in 
a  famous  case  that  New  York  could  not  by  statute  prevent  price  competition 
in  New  York  from  che^wr  Vermont  milk."  State  legislation  attempting  to 
create  perferences  fm  m-statc  securities  should  be  no  more  justifiable  under 


'nustees  in  deciding  wbelher  lo  invest  in,  or  Co  leUin,  Ibe  secunties  of  a  coiporadoa 
nuyproperiyconsiderlbc  social  pcrfonnuicc  of  the  corporation.  They  may  decline  to 
invest  in,  or  to  retain,  the  securities  of  conrantton  whose  activities  ot  some  of  them  are 
ccxilTtiy  to  fuDdamental  aod  generally  acc^Med  ethical  princi[ries.  They  may  consider 
such  matters  as  pollution,  race  discrimination,  fair  enqilayroeni  and  consumer  icspon- 
sibiiity  ....  Of  course  they  may  well  believe  that  a  corporation  which  has  a  proper 
sense  of  social  obligation  is  moit  likely  to  be  successful  in  the  long  run  ban  those 
which  are  bentoa  obtaining  the  maximum  anwuni  of  profits,  IScott  is  here  reciting  tbe 
social-bargain  fallacy,  refilled  above  in  Pan  V  of  the  present  essay.]  Bui  even  if  ihis 
were  not  so,  the  invcstw.  though  a  tnistee  of  funds  for  others,  is  entitled  lo  consider  the 
welfare  of  Ibccommunity.  and  refrain  from  allowing  the  use  of  the  fiinds  in  a  manner 
detrimental  to  society. 
3  A.  Scod.  supra  note  3S,  at  sec.  227.17  (Supp.  1980).  Scott  nukes  no  effort  to  reconcile  his 
su|q)on  for  social  investing  with  the  trustee's  duties  of  loyalty  and  prudence  tttai  be  canvassed 
so  extensively  in  the  body  of  the  treatise.  2  id.  at  sec.  170-170.25  (loyalty);  3  id.  seci.  227- 
227. 16  (prudent  investing).  He  ignores  tiK  ERISA  rules,  discussed  above,  that  contradict  his 
position.  Scott  cites  some  of  tbe  literature  on  corporate  social  respcmsibility  but  does  not 
disclose  thai  the  legal  analysis  that  has  been  applied  in  tbe  corporation  cases  is  the  opposite  of 
the  rule  he  is  supporting  for  tbe  law  of  trusts. 
"Sec.  e.g..  Shlensky  V.  Wriglcy.  95  III.  A|^.  2d  173. 180-81. 237  N.E.2d  776, 780(1968). 
''Supra  text  at  note  27. 
"389  U.S.  429(1968). 
■'Baldwin  v.  O.A.F.  SecUg.  29*  U.S.  511  (1935). 


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the  commerce  clause  than  legislation  prefening  in-state  enteiprises.  The 
privileges-and-immunities  clause  of  the  constitution  has  also  been  inteipict- 
ed  to  forbid  protectionist  legislation  aimed  at  out-of-staters."^ 

VU.  UNIVERSITY  ENDOWMENTS 

I  have  thus  far  considered  the  social-investing  question  only  in  context  of 
the  pension  fund.  The  analysis  changes  when  we  move  from  pension  trusts 
to  charitable  trusts  (or  to  charitable  corporations,  which  for  present  pur- 
poses are  indistinguishable  ^m  charitable  trusts). ^^  This  is  an  area  of 
considerable  consequence  for  university  trustees;  they  are  currently  being 
pressured  to  apply  social  criteria  to  the  investment  of  their  endowment 
funds,  and  some  boards  of  trustees  have  succumbed. 

The  distinguishing  juridical  feature  of  the  charitable  trust  is  the  absence 
of  conventional  beneficiaries.  A  private  trust  (including  the  pension  trust) 
must  identify  by  name  or  by  class  the  persons  who  are  to  receive  the  trust 
pn^rty,  but  a  charitable  trust  is  void  if  it  is  found  to  serve  individual  rather 
than  community  benefit.^  The  charitable  trust  occupies  a  legally  privileged 
position:  it  is  not  subject  to  the  rule  against  perpetuities;  the  attorney  general 
or  other  public  officer  may  enforce  it;  the  cy  pres  doctrine  protects  it  against 
ordinary  rules  of  defeasance;  and  it  enjoys  a  variety  of  tax  and  procedural 
advantages  pursuant  to  statutes  that  follow  the  common  law  criteria  for 
defining  charitable  trusts.  ^^  The  law  conditions  the  grant  of  these  privileges 
on  the  requirement  of  indehnileness  of  beneficiaries.  A  charitable  trust  will 
fail  if  "the  persons  who  are  to  benefit  are  not  of  a  sufficiently  large  or 
indefinite  class  so  thai  the  community  is  interested  in  the  enforcement  of  the 
trust.'"* 

In  place  of  the  definite  beneficiaries  of  private  trust  law.  the  law  of 
charitable  trusts  substitutes  the  standard  of  community  benefit  defined  by  a 
circumscribed  set  of  charitable  piuposes:  the  relief  of  poverty;  the  advance- 
ment of  religion;  the  advancement  of  education  and  of  health  (including 
research);  and  the  promotion  of  govemmental,  municipal,  and  other  pur- 
poses beneficial  to  the  community.^^  At  the  border  of  each  of  these  catego- 


"See.  e.g.,  Hicklin  v.  Orbeck,  437  U.S.  518  (1978). 

''See  generally  4  A.  ScoU,  supr*  nole  38,  ar  sec.  348.1. 

**A  teceot  Pennsylvuiia  decision  dealing  with  Ibe  claim  of  be  Fratemtl  Order  of  Police  to 
be  a  charilable  organization  concluded  that  the  group  "is  essentially  a  labor  organizatioa 
existing  solely  for  the  benelit  of  its  own  nKmbership."  and  those  that  "its  benefits  are  not 
ai^lied  for  the  advantage  of  an  indefinite  number  of  penons  as  would  be  the  case  if  the  public 
were  to  benefit."  Conunonwcalltiv.  Frantz  Adveitising,  Inc.,  23  Pa.  Conunw.  Q.  536,  533- 
34.  353  A.2d.  492.  496-97  (1976).  For  a  good  general  background  on  such  cases,  see  4.  A. 
Scolt,  supra  note  3S.  at  sec.  375.2. 

*^See  Restaleroeni,  supra  note  33,  at  sees.  365  (unlimited  duration).  391  (publk  enforee- 
roent),  395  (cy  pies). 

•*ld.  at  sec.  375. 

"Id.  al  sec.  368. 


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ries  there  can  be  serious  questions  about  whether  paiticuliir  schemes 
qualify,  but  the  typical  university  chailer  declares  purposes  thai  fall  unam- 
biguously within  the  category  of  education  and  research  (and  often  within 
diat  of  health  as  well). 

In  analyzing  social  investing  by  private  and  pension  trusts,  we  saw  that 
die  tnistee's  obligation  to  invest  for  the  maximum  financial  well-being  of 
the  trust  beneficiaries  derives  from  the  tnistee's  duties  of  loyalty  and  pru- 
dent investing;  but  since,  by  definition,  die  charitable  trustee  does  not  owe 
such  duties  to  particular  private  beiKficiaries,  die  question  arises  whedier 
there  are  any  legal  impediments  to  social  investing  of  university  endowment 
fiinds.  There  are  several: 

Charter.  University  charters  are  often  granted  by  special  legislative  act, 
both  for  state  schools  and  private  universities.  A  university  may  also  be 
chartered  under  the  general  nonprofit  corporation  statute  of  the  jurisdiction. 
In  principle,  an  authorizing  instniment  under  the  common  law  of  trusts 
would  also  suffice.  Regardless  of  die  form,  a  university's  charter  is  usually 
restrictive;  it  dedicates  the  institution  to  educational  and  related  purposes. 

A  variety  of  the  causes  espoused  in  the  name  of  social  investing  are  not 
within  the  purposes  of  such  charters — for  example,  expressing  disapproval 
of  selected  foreign  governments ,  or  supporting  certain  labor  union  organiz- 
ing campaigns.  ¥of  university  trustees  to  spend  university  funds  on  such 
causes  directly  would  be  ultra  vires  and  put  the  trustees  in  breach  of  their 
fidiciary  duty  to  the  instimtion.^"  Were  the  tnistees  to  pursue  the  same  end 
by  engaging  in  social  investing  of  the  university's  endowment  funds,  they 
would  simply  be  attempting  to  do  indirecUy  what  they  may  not  do  directly. 

Under  conventional  charitable  trust  law,  the  state  attomey  general  iias 
standing  to  sue  to  prevent  such  misuses  of  university  endowment  funds. 
Because  he  is  a  political  officer,  and  there  will  often  be  more  votes  to  gain 
from  supporting  than  from  opposing  the  groups  that  advocate  social  invest- 
ing, his  intervention  might  not  always  be  a  serious  prospect.  But  the  attor- 
ney general  {Hobably  does  not  have  a  monopoly  of  standing  in  such  cases; 
other  persons  who  have  a  signilicani  economic  interest  in  the  fate  of  the 
endowment— for  example,  professors  aixl  students — probably  may  sue.^^ 

Noncharitable  Purposes.  If  a  particular  charter  is  too  restrictive  to  permit 
a  particular  scheme  of  social  investing,  the  proponents  of  the  scheme  may 
reply  that  die  institution  ought  to  get  its  charter  amended .  When  the  charter 
originates  in  special  state  legislation,  the  legislature  can  authorize  virtually 
any  use  of  institutional  funds  (at  least  as  regards  the  state  law  of  charitable 
purposes,  although  not  the  federal  tax  consequences).  When  the  charter  is 


"See  id,  ai  sec.  379. 

■nn  Coffee  v,  William  Manb  Rice  Univ..  403  S.W.  2d  340  (Tex.  1966),  two  opposing 
groups  of  alumni  were  held  lo  have  standing  lo  intervene  in  a  lawsuit  in  which  the  trustees  of 
Rice  Univeisity  were  seeking  the  application  of  the  cy  pics  docliine  in  order  to  eliminate 
racially  restiictive  provisions  from  the  trust  instrument  thu  had  created  the  school. 


26 

50-120    O— 85 7 


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DonstalutOfy  and  subject  to  the  common  law  of  charitable  trusts,  valid 
charter  amendments  will  be  impossible  for  many  social  investing  schemes. 
The  law  of  charitable  trusts  denies  private  autonomy  over  the  definition  of 
what  purposes  qualify  as  charitable.  The  standard  of  community  benefit 
does  not  vary  with  the  tastes  of  universities  or  their  founders,  tiustees,  and 
donors. 

Some  of  the  schemes  favored  by  [woponents  of  social  investing  are 
incompatible  with  these  legal  standards.  In  England,  a  trust  for  the  purpose 
of  changing  existing  law  is  not  charitable.*"  Although  this  rule  generally  has 
not  been  followed  in  American  law,  our  law  does  attempt  to  distinguish 
between  "social"  purposes,  which  are  permissible,  and  "political"  pur- 
poses, which  are  not.''  Trusts  to  promote  socialist  political  and  educational 
activity  have  been  held  not  charitable;^  a  similar  fate  befell  a  bequest  to 
create  an  educational  and  information  center  for  the  Republican  women  of 
Peimsylvania.'^  A  Scottish  case  held  that  a  trust  to  support  resistance  to 
strikebreaking  and  lockouts  was  political  and  hence  void,^  and  a  New 
Zealand  case  ruled  similarly  against  a  trust  for  the  League  of  Nations.'^ 
University  trustees  faced  with  pressures  to  adapt  their  portfolios  to  the 
requirements  of  union  organizing  campaigns,  or  some  group's  foreign- 
policy  views,  must  beware  the  force  of  such  precedents.  The  price  of 
yielding  to  social-investing  demands  may  be  litigation  costs  and  potential 
liability  for  breach  of  fiduciary  duty. 

Costs.  From  a  practical  standpoint,  university  trustees  are  obliged  to  give 
full  weight  to  the  savings  in  administrative  costs  that  result  when  the 
institution  is  spared  the  needless  portfolio  reviews  and  difficult  investment 
decisions  that  are  involved  in  social  investing,  especially  in  view  of  the 
absence  of  agreement  on  the  social  principles  to  be  pursued. 

Donors.  Past  donors — more  likely  their  heirs  or  successors — may  claim 
that  since  social  investing  constitutes  a  diversion  from  the  educational 
purposes  for  which  the  funds  were  given,  it  breaches  an  implied  or  express 
condition  and  ought  to  trigger  defeasance  of  the  funds  in  favor  of  the  donor. 
In  Illinois,  legislation  in  force  since  1 874  denies  to  universities  the  "power 
to  divert  any  gift .  .  .  from  the  specific  purpose  designed  by  the  donor."^ 
Donors  would  have  a  strong  argument  against  applying  the  cy  pres  doctrine 
in  order  to  prevent  defeasance ,  since  cy  pres  applies  only  when  it  "becomes 
impossible  or  impracticable  or  illegal  to  carry  out  the  original  charitable 


'"Nuioiul  Anti-Vivisection  Soc'y.  v.  Inland  Revenue  Comnus..  [1948]  A.C.  91. 
*'4  A.  Scott,  supra  note  38,  at  sec,  374.6. 


n  EsUie.  21  Pa.  D.  &  C.2d  65  (1939). 
**Tnistees  for  the  Roll  of  Voluntuy  Woikers  v.  Commis.  of  Inland  Revenue,  [1942]  Sess. 
Cas.  47. 
'nn  re  Wilkinson.  (1941]  N.Z.L.R.  I06S. 
»*IU  Rev.  StH.  1971,  ch.  144.  sec.  1. 


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purpose.""  Thus,  tnistees  who  yield  lo  pressures  to  divert  endowment 
funds  from  education  to  other  causes  are  exposing  their  eiKlowments  to  the 
restitutionary  claims  of  donors  and  heirs. 


VUI.  CONCLUSION 

In  emphasizing  the  legal  risks  that  pensitMi  trustees  and  university  and 
other  charitable  trustees  incur  in  pursuing  social  investing,  I  do  not  suggest 
that  the  law  requires  social  grievances  to  go  without  remedy.  The  law  of 
trusts  has  been  constructed  on  the  quite  intelligent  premise  that  the  grand 
social  issues  of  the  day  should  be  resolved  in  those  institutions  whose 
procedures  and  powers  are  appropriate  to  them.  The  political  and  legislative 
process  of  the  modem  democratic  state  is  well  adapted  to  dealing  with 
pressures  for  social  change.  Pension  trusts  have  been  designed  to  provide 
retirement  security,  and  charitable  trusts  have  been  designed  to  serve  spe- 
cialized purposes — in  education,  healing,  the  arts,  research,  and  so  forth.  A 
board  of  trustees  is  not  well  suited  to  be  a  forum  for  the  resolution  of 
complex  social  issues  largely  unrelated  to  its  work.  There  is  every  reason  to 
think  that  trustees  will  best  serve  the  cause  of  social  change  by  remitting  the 
advocates  of  social  causes  to  the  political  arena,  where  their  proposals  can 
be  fairly  tested  and  defined,  and  if  found  meritorious,  effectively 
implemented. 


"Restatemenl.  supra  noce  33.  i 


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TEXT  OUTLINE 


I.  Context 31 

U.  The  difficulties  of  divergent  investing 35 

Hurdle  1;  What  goals? 35 

Hurdle  2;  Which  priorities? 36 

Hurdle  3:  Who  decides? 36 

Hurdle  4:  How  decide? 37 

Hurdle  5:  The  lack  of  information  on  the  divergent  goals  ...  38 

Hurdle  6:  Inviting  conflicts  of  interest 40 

Hurdle  7:  How  hold  the  fiduciaries  accountable? 40 

Hurdle  8:  For  all  those  difficulties  and  costs  and  risks,  is 

anything  gained? 41 

III.  Two  case  studies 42 

A.  State  and  local  pension  funds  and  recent  pressures  for 
in-state  mortgage  investing 42 

B.  South  Africa-involved  investments 45 

1 .  Factual  context 45 

2.  The  seven  lines  of  action  about  South  Africa-involved 
investments  followed  by  various  States  and  others. ...  48 

3.  What  will  divestment  accomplish? 51 

IV,  The  investment  implications  of  divestment 53 

A.  Key  distinctions  between  small  funds  and  large,  and 
between  operating  funds  and  investment  funds 53 

B.  What  are  the  costs  and  risks  for  an  institution  adopting 

absolute  divestment? 54 

Cost  1 :  Divestment  shrinks  the  investment  spectrum  ....  54 
Cost  2:  Less  information  is  available  on  the  remaining 

stocks 56 

Cost  3:  The  poitfolio  is  riskier  because  it  is  more 

dependent  on  smaller  stocks 56 

Cost  4:  The  poitfolio  is  riskier  also  because  it  is  much 

less  diverse 57 

Cost  5:  Smaller  stocks  have  less  liquidity 58 

Cost  6:  Managing  the  poitfolio  will  cost  mote 58 

Cost  7:  How  hold  the  fiduciaries  accountable? 59 

C.  The  Sullivan  Principles 60 

D.  The  morality  of  divestment 62 

E.  A  postscript  on  the  constitutionality  of  divestment 65 

V.  A  word  on  foundations,  churches  and  charities  and 

endowments 67 

VI.  Conclusion 68 

APPENDIX:  Text  of  the  Sullivan  Principles 71 


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189 

DIVERGENT  INVESTING  OF  PENSION 

FUNDS  AND  UNIVERSITY 

ENDOWMENTS:  KEY  POINTS  ABOUT 

THE  PRAGMATICS,  AND  TWO 

CURRENT  CASE  STUDIES 

by 

ROY  A   SCHOTLAND 

Gary  Tnideau  made  it  clear.  That  cartoonist  and  ex  officio  philosopher 
wrote  about  a  football  team's  pension  fund  diverted  to  meet  the  needs  of 
Lava-Lava  Lenny,  the  "Polynesian  Panzer"  who  was  the  whole  right  side  of 
the  team's  line.  Lenny  had  an  insatiable  need  for  pineapples,  so  the  pension 
fund  was  used  to  buy  pineapples.  Tnideau  asks  "But  how  could  you  use  the 
pension  fund  for  that?"  and  his  answer  captures  perfectly  the  approach  of 
advocates  of  the  countless  forms  of  "social  investing":  "But  the  fund  was 
Just  sitting  there."  As  of  course  It  must  sit  and  grow  if  it  will  serve  its  own 
major  social  goal,  protecting  retirement  security. 

I  agree  with  John  Langbein's  elegantly  reasoned  approach,  although  my 
view  of  Social  Security  is  far  more  positive  than  his  and  my  concern  about 
the  private  pension  system's  limitations  is  greater  than  his.  Still,  one  must 
concur  with  his  point  that  die  economic  soundness  of  private  pension  plans 
is  becoming  ever  more  important.  Four  major  points  warrant  focus.  1  con- 
centrate at  the  outset  on  pension  funds,  involving  $1,277  trillion  in  assets,' 
and  later  deal  with  other  institutional  investors  like  endowments,  which 
involve  under  $30  billion,  and  foundations  involving  about  $47  billion.^ 

L  CONTEXT 

First,  let's  not  use  a  label  that  loads  the  dice:  analysis  suffers  from  the 
outset  if  the  label  "social"  or  "socially  responsible"  investing  is  accepted, 
since  few  minds  will  be  open  to  any  plea  for  the  anti-social  or  irresponsible, 
and  hardly  any  more  will  think  "let  the  market  decide"  a  sufficient  answer. 
But  further,  the  "social"  label  is  over-broad.  Everyone  agrees  that  investing 


'As  of  September  30,  1984.  private  pension  assets  totalled  S934.6  billion,  and  slate  and 
local  pension  assets  were  S34I.6  billion.  Federal  Reserve  Board.  Flow  of  Funds.  Quarterly 
Levels  (November  1984), 

^TheendowmentflgureisbasedonNat'l.Ass'n.  College  and  Univ.  Business  Officers,  1983 
Comparative  Perfoimance  Study  (1984).  p.  1;  the  foundation  figure  is  based  on  FoundMion 
Center.  Nal'l.  Data  Book,  p.  xi  (1984).  TiKise  two  categonesfojerAeraic  only  just  over  5%  of 
pension  assets,  for  all  the  puUic  awareness  of,  say.  the  Font  Foundation  or  the  Harvard  and 
Texas  endowments. 


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for  retirement  security  is  itself  a  socially  responsible  goal.  More  accuiale 
labels  would  be  "alternative"  or  "divergent"  investing,  since  the  proposal  is 
to  tap  pension  assets  for  goals  other  than  retirement  security. 

Whatever  the  label,  surely  it  sounds  attractive  to  invest  both  to  protect 
retirement  security  and  also  to  promote  such  other  goals  as  equal  employ- 
ment opportunity  or  environmental  quality,  or  local  jobs  or  housing — or  to 
avoid  investments  in  tirms  engaged  in  social  evils. ^  If  "Investment  XX"  has 
as  high  a  return  and  low  a  risk  as  other  clearly  appropriate  investments,  but 
XX  also  promotes  common  concerns  of  the  pension  fund's  beneficiaries, 
then  the  only  investment  manager  who  wouldn't  buy  XX  for  that  fund 
would  be  a  misanthrope,  hating  both  his  clients  and  his  own  firm's  future. 
Obviously,  XX  has  more  bang  for  the  buck. 

But  we  cannot  stop  with  how  these  proposals  sound,  and  we  know  how 
artificial  is  "all  other  things  being  equal."  The  considerable  controversy 
over  "social"  ot  divergent  investing  is  more  than  a  fuss  over  labels  or 
ideology. 

Second,  the  reality  behind  the  rhetoric:  The  only  real  issue  in  divergent 
investing  is  whether  non-financial  considerations  should  be  taken  so  far  as 
to  justify  lower  investment  returns  or  uncompensated  higher  risk  or  lower 
liquidity.  A  proposed  divergence  from  the  pension  funds'  traditional  exclu- 
sive goal  to  [H>)tect  retirement  security  may  involve  a  financial  sacrifice,  a 
hidden  subsidy  to  pursue  nonretirement  goals.  Or,  the  proposal  may  be 
merely  that  financial  considerations  need  not  be  the  only  ones,  that  others 
may  be  taken  into  account  so  long  as  prudent  financial  criteria  are  not 
compromised.  That  crucial  distinction  means  that  a  proposal — whether  to 
favor  one  category  of  investments  or  to  avoid  another — must  be  evaluated 
on  the  facts,  the  specific  terms  of  what  impact  it  will  have  on  the  fund's 
investment  earnings.  The  critical  first  step  in  dealing  with  any  proposed 
divergent  investment  is  Sergeant  Friday's:  get  the  facts.  The  facts  may  not 
end  the  matter,  but  neither  rtietoric  nor  even  reasoning  are  meaningful 
unless  first  the  facts  are  out  in  the  open.  Which  facts,  is  made  clear  in  the 
two  examples  treated  fully  below. 

Third,  why  is  it  so  important  to  protect  the  funds'  investment  earnings? 
For  any  institution,  this  question  boils  down  to  "why  is  it  important  to  carry 
out  the  purpose  of  the  institution?"  For  pension  funds,  assuring  retirement 
security  means  being  able  to  honor  the  pension  promise.  Gary  Tnideau 
understands  that  the  fund  is  not  "just  sitting  there."  In  all  the  advocacy  of 
divergent  investing,  nothing  is  so  loud  and  clear  as  the  emphasis  on  how 
huge  are  the  pension  assets — indeed,  that  fact  is  almost  always  the  very 


'Much  cunent  anention.  and  Uiis  p^et,  focuses  on  di  vestmenl  of  holdings  in  firms'  involved 
in  South  Africa.  But  some  instirudonal  investors  have  long  avoided  such  "social  eviF'  indui- 
tries  as  alcohol  and  tobacco,  "nie  Conunissioners  of  the  Church  of  England,  for  example,  avoid 
sKKks  of  breweiies,  newspaper!  and  similar  social  evils. 


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opening  poiot.^  Bui  somehow  the  advocates  are  Cyclopean,  Ibey  use  one 
eye  and  see  only  the  assets,  utterly  ignoring  the  liabilities  those  assets  and 
their  earnings  must  meet.  In  fact,  the  assets  are  small  compared  to  the  legal 
liabilities.  State  and  local  funds,  with  assets  now  over  $340  billion,  have 
projected  unfunded  liabilities  of  about  135%  of  assets,  according  to  the 
most  reliable  and  latest  study  available.^  (An  unfunded  liability  is  by  no 
means  bad  in  itself,  any  more  than  it  is  bad  for  a  homeowner  to  owe  on  a 
mortgage .  Just  as  with  a  mortgage ,  the  question  is  whether  the  amount  owed 
is  appropriate  relative  to  die  ability  to  pay  that  debt  as  it  gradually  comes 
due.  To  evaluate  whether  an  unfunded  pension  liability  is  at  an  appropriate 
level  or  is  instead  a  "ticking  time  bomb,"  one  examines  (putting  it  simply 
but  sufficiently)  the  level  and  trend  of  the  annual  pension  expense  as  a 
percent  of  payroll,  and  the  level  and  trend  of  die  ratio  of  assets  to  liabilities.) 
Private  funds,  with  assets  over  $930  billion,  have  recently  been  thought  to 
have  assets  greater  than  their  liabilities;  but  that  is  only  because  of  a  new, 
misleading  accounting  treatment  forced  on  the  profession  and  the  industry.^ 
For  example.  General  Electric — commendably  disclosing  more  data  than 


*"A  gieai  body  of  money  smrounded  by  people  who  know  exactly  wbai  they  wani,"  Dwight 
MacDonald's  description  in  die  New  Yoricer  of  the  Ford  Foundation,  a  microscopic  fund 
compared  to  the  ones  described  here;  see  n.  2  supra. 

'Arnold.  The  Financial  Status  of  Stale  and  Local  Public  Employee  Pension  Funds:  Theory 
and  Evidence  (unpublished  Harvard  Ph.D.  dissertation.  1982.  using  1978  data);  for  its  find- 
ings, see  KotlikofTand  Smith.  Pensions  in  the  American  Economy  (N.B.E.R.  I9S3).  Sections 
7.7-7.10. 

In  the  past  few  years,  state  and  local  retirement  systems  overall  have  probably  strengthened 
Iheir  fiinding  thanks  to  a  combination  of  increased  oflicial  awareness  of  ttie  necessity  of  doing 
so,  and  relatively  strong  securities  markets.  On  the  other  hand,  in  the  1981-2  recession  several 
major  States  cut  back  on  their  funding,  and  many  States'  local  systems  are  an  increasingly 
acute  problem,  as  highlighted  by  recent  official  studies  in  Missouri  and  Pervnsylvania. 

The  135%  figure  is  for  stale- administered  funds,  the  great  bulk  of  all  stale  and  local  assets; 
coincidentally.  their  unfunded  liabilities  arc  also  about  135%  of  all  outstanding  long-term  state 
debt.  The  20cities  with  the  largest  pension  fund  of  their  own  had  unfunded  projected  liabilities 
of  106  percent  of  Iheir  fijnd  assets,  orjusihalfagain  of  their  own  long-term  debt;  and  a  large 
sample  of  other  localities  with  al  least  one  plan  of  500  or  more  participants,  showed  their 
unfunded  projected  liability  to  be  145  percent  of  their  pension  assets  oralmosttwo-lhirds  again 
of  their  own  long-term  debt.  Ibid. 

'"'Misleading"  is  strong  language  in  this  ccHitext.  but  is  the  word  used  by  AT&T  in  its  annual 
report;  (see  I9S2  Report  at  p.3S).  The  word  (its.  The  Financial  Accounting  Standards  Board, 
over  strenuous  opposition  of  seven  of  the  "Big  Eight"  accounting  firms  as  well  as  the  actuarial 
profession  and  the  corporations  themselves,  has  worsened  the  disclosure  of  pension  data  and 
has  pending  proposals  that  will  do  further  harm.  There  is  no  question  that  eventually  reality  will 
break  through,  but  meanwhile  all  that  we  have  readily  available  is  materially  erroneous 
information — wrong  by  mandated  commission  as  well  as  improperly  allowed  omissions.  In 
addition  to  the  ways  such  data  make  ii  harder  to  implement  actuarially  sound  funding  policy, 
they  also  confuse  or  mislead  both  securities  analysis  and  the  formation  of  public  policy.  They 
do  so  generally  by  conveying  a  misleadingly  sanguine  sense  of  funds'  strength  to  nteel 
liabilities.  They  also  do  so  specifically  with  respect  to  "social  investing"  in  two  ways:  I) 
Reducing  the  apparent  degree  of  need  to  meet  liabilities  only  promotes  the  illusion  that  at  least 
some  of  the  pension  assets  are  indeed  "just  silting  there."  2)  Moving  the  pension  assets  to  the 
balance  sheet  only  strengthens  the  argument  that  these  aie  not  sums  dedicated  to  a  special 
purpose  but  are  pan  of  the  corporate  (or  local  govemmeni)  assets  and  so  available  lo  serve 
general  purposes. 


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requiied  by  the  unsound  cunent  standards — reports  that  its  pension  liabili- 
ties for  1983  arc  $2,575  billion  larger  than  appears  from  the  mandated 
disclosure.^  AsGE  reveals,  the  figures  it  actually  uses  in  operation  reveal  an 
unfunded  liability  of  $899,000,000,  in  contrast  to  die  artificial  figure  GE  is 
required  to  concoct  and  disclose — a  supposed  surplus  of  $2,233  billion  of 
assets  over  liabilities.^ 

Many  people  understandably  suffer  glazed  vision  and  blurred  hearing  if 
an  aspect  of  "accounting"  comes  up.  but  this  one  is  simple:  pension  fund 
assets  are  not  just  sitting  there,  they  and  the  income  they  earn  are  essential  to 
pay  promised  retirement  benefits.  If  earnings  are  insufficient,  more  money 
must  be  put  into  the  fiind  or  else  the  promise  is  dishonored.  Even  if  the 
promise  is  honored,  in  inflationary  times  this  promise  is  diluted,  perhaps 
severely,  if  the  promised  nominal  benefits  are  not  improved  during  retire- 
ment. In  fact,  most  employers  (at  least  large  ones)  have  made  such  improve- 
ments ,  which  obviously  depend  (at  least  in  pan)  on  the  success  of  the  fund's 
investment  earnings.  Among  public  funds,  post-retirement  increases  are 
explicitly  tied  to  investment  results  by  5%  of  funds.^ 

How  much  do  the  investment  earnings  matter?  As  Ohio  State  Teachers 
Retirement  System  points  out,  1%  more  investment  return — say,  9%  in- 
stead of  8% — means  10-15%  more  benefits,  or  a  related  improvement  in  a 
pension  fund's  actuarial  soundness  or  decrease  in  taxpayer  burden  or,  of 
course,  some  of  each. 

For  the  Washington  D.C.  Retirement  Fund's  $438,000,000  at  end-1983, 
the  difference  between  a  7%  and  an  i%  return  over  the  next  20  years  comes 
out  to  $433,000,000;  the  difference  between  a  10%  and  an  1 1%  return  is 
$747,000,000. 

Five  years  ago,  investment  income  was  34%  of  total  receipts  for  state  and 
local  funds;  by  1 98 1  -2  it  had  risen  to  39%  and  in  1 983-4,  it  went  over  45% . 
In  many  systems  it  is  over  50% .  This  is  good  news ;  more  investment  income 
equals  less  battle  of  the  budget— both  pension  participants  and  taxpayers 
gain.  But  it  is  important  news:  how  well  the  assets  are  managed  matters 
more  than  ever,  not  only  in  absolute  dollars — $23  billion  in  1983-4  invest- 


The  muKlatorily  disclosed  liability  of  $8,496  billion  is  only  76%  of  the  vtriuntwily  dis- 
closed liability.  SI  1.07!  billion.  GE  Annual  Report  for  1983,  p.  40. 

'Even  H^isticated  treatments  unaccountably  accept  the  misleading  figures  as  irthey  icAecl 
reality.  Contrast  Business  Week's  Pension  Scoreboard:  A  Conlmversial  Glow  of  Healdi.  S^. 
17.  I9S4,  153-160  wilb  Pension  Scoreboaid:  Improvement  is  Illusory.  Sept.  14.  1981.  114- 
1 1 B.  See  also  Oppenbeimer  &  Co. .  The  SAP  400-^>ension  Assets  and  Liabilities  11 .  June  29. 
1984  ("many  companies  have  .  .  .  overfunded  pension  funds"). 

bankers  Trust  Co..  Study  of  Public  Employee  Retirement  Systems  (1984),  p.  44. 


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ment  income  compared  to  $9  billion  five  years  earlier. '"  It  matters  more 
also  as  a  proportion  of  the  total  income  needed  each  year  to  keep  the  funds 
sound  and  so  protect  retirement  security. 

Fourth,  remember  Mencken's  maxim:  The  idea  that  pension  investments 
can  be  "redirected"  and  so  help  solve  social  problems  other  than  retirement 
security,  is  a  classic  example  of  H.L.  Mencken's  nile  that  "For  every  human 
problem,  there's  an  answer  that's  clear,  simple,  and  wrong." 

It  is  challenge  enough  to  manage  pension  assets  to  maximize  investment 
returns  (at  pnidenl  levels  of  risk)  so  as  to  promote  retirement  security.  But 
contrast  that  challenge  with  managing  diose  assets  to  promote  other  goals. ' ' 
Consider  the  difficulties  of  implementing  the  impulse  toward  divergent 
goals. 

n.  THE  DIFFICULTIES  OF  DIVERGENT  INVESTING 

Hurdle  i:  What  goals?  Everyone  involved  with  a  pension  fund  agrees  on 
at  least  one  goal:  protect  retirement  security.  But  if  other  goals  are  added, 
which?  Consider  goals  actually  F^oposed.  mainly  for  state  and  local  funds: 

I. In-state  investing — 

a]  generally;  or 

b]  mortgages  (or  other  investment  in  housing) — 

1]  generally,  and/or 

2]  for  public  employees,  and/or 

3]  for  senior  citizens,  and/or 

4)  for  low-  and/or  medium-income  people,  and/or 

5)  rental  housing,  and/or 

6)  cooperative  housing,  and/or 

vii]  rural  housing,  and/or 
viii)  neighboiliood  redevelopment; 


'"The  Washington,  D.C.  projections  are  from  the  lestimoay  of  David  Eager,  director  of 
Meideinger  Asset  Planning  Services,  consultant  to  the  D.C.  Retirement  Board,  before  House 
CommlneeonD.C,  Hearings  on  South  African  In vestmeni.  9Sth  Cong.  2dSess.  (Jan.  31. 
19S4),  at  130.  141-2. 

The  data  on  total  receipts  and  investment  income  for  state  and  local  funds  are  derived  from 
\}.S.  Dept.  of  Commerce,  Bureau  of  Census,  Finances  of  Employee-Retirement  Systems  of 
State  and  l.ocal  Govenunenls,  and  id.,  Rnances  of  Selected  Public  Employee  Retirement 
Systems  (various  issues). 

""It  seems  to  nie  that  no  one  really  knows  hoiv  to  make  money,  but  we  all  know  bow  to  lose 
it.  Common  sense  and  hard  knocks  teach  ail  of  us  eventually  thai  one  cannot  in  expectation  of 
sabsfactoiy  results  or  in  good  conscience  serve  two  masters.  It's  hard  enough  to  achieve 
satisfactory  results  when  focusing  all  of  one's  energies  on  making  money:  it's  almost  impossi- 
ble when  aiQie  same  time  one  focuses  on  other  c4)jectives — no  matter  how  lautlable  they  may 
be." 

Bom  talk  by  ERISA  Administrator  Robert  Monks,  Dec.  7,  19S4,  Miami.  Florida,  on 
"Social  Investing  and  Social  Investing  {sic]." 


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c]  small  business;  and/or 

d]  venture  capital;  and/or 
c]  industry  in  rural  areas. 

II. Energy  conservation — 

a]  generally,  and/or 

b]  solar. 

111. Environmental  protection. 
IV. Equal  opportunity  employment. 
V.  Unionization. 

VI. Avoidance  of  alcohol,  tobacco  and  defense  industries  (goals 
proposed  less  often  for  pension  funds  than  for  foundations  and 
endowments.) 
VII.Avoidance  of  firms  involved  with — 

a]  South  Africa  or  Southern  Africa; 

b]  military  activity  in  Northern  Ireland; 

c]  Iran; 

d]  Ubya; 

e]  Muslim  countries  generally  (because  of  their  treatment  of 
women's  rights); 

f]  Communist  countries. 

Hurdle  2:  Which  priorities?  The  above  goals  are  so  many  and  so  varied 
that  they  bring  to  mind  the  child's  problem  in  the  candy  store:  "Which  do  I 
really  want?"  It  may  come  as  a  surprise  that  1 2  of  those  goals  were  proposed 
by  a  single  group,  Governor  Jerry  Brown's  Public  Investment  Task  Force  in 
1981.  (It's  hard  to  believe  that  the  Task  Force  deliberately  omitted  Goals 
III- VII;  maybe  avoiding  investments  in  defense  contractors  and  alcohol  is 
not  an  ethical  imperative  for  California  public  funds,  given  that  Slate's 
defense  industry  and  vineyards — swords  oru/ plows.)  A  pending  bill  in  New 
Jersey  with  important  support  in  the  legislature  has  a  similar  shopping  list. 

In  fact,  the  child's  quandary  in  the  candy  shop  is  easy  compared  to  this 
selection  or  ranking  problem,  for  what  is  to  be  done  when  the  goals  conflict? 
For  example,  Morgan  Guaranty  Bank  is  involved  in  South  Africa  but  also  is 
the  first  bank  to  support  black  business  schools,  is  a  leading  lender  to 
minority  firms  and  a  leading  fiinder  for  redevelopment  in  New  York  ghet- 
tos. Avoid  or  favor  buying  their  stock?  Or:  Grumman,  the  largest  manufac- 
turer of  solar  collectors  and  heaters,  was  involved  in  foreign  payoff  scandals 
and  is  a  major  defense  contractor.  Or:  Atlantic  Richfield,  fined  by  the  EPA 
for  using  leaded  gasoline  in  company  cars  designed  for  unleaded  only,  has 
been  singled  out  by  the  Council  on  Economic  Priorities  as  the  leading  oil 
company  in  pollution  control.  Buy?  Avoid?  Punt? 

Hurdle  3:  Whodecides?  Fiduciaries  have  control  of  other  people's  money 
for  one  reason:  they  are  believed  to  be  citable  and  trustworthy  to  further  the 
purpose  of  the  fund  in  question,  be  diat  purpose  retirement  security  ch- 
educational  or  charitable  activity.  They  may  or  may  not  have  any  expertise 
on  divergent  goals,  their  views  about  such  goals  may  or  may  not  be  shared 

36 

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by  many  or  all  or  even  any  of  the  beneficiaries  of  the  tnist,  and  certainly  they 
were  not  made  trustees  to  fiutiier  their  own  social  or  political  views.  This  is 
a  crucial  distinction  between  such  trustees,  and  legislators  or  other  elected 
public  officials.  (Many  state  w  local  teachers',  police  and  firefighters' 
funds  have  some  elective  trustees,  but  obviously  such  persons  are  selected 
with  a  single  goal  in  mind.) 

It  is  blatant  ^nise  of  trust  for  trustees  selected  to  further  a  specified, 
shared  goal ,  to  use  their  power  for  perstmal  goals.  And  if  personal  goals  are 
pursued  to  the  financial  detrimuit  of  the  trust  fund,  then  the  line  fades 
between  this  conduct  and  plain  embezzlement. 

Hurdle  4:  How  decide?  This  dichotomy  between  shared  goals  and  per- 
sonal goals  is  not  meant  to  suggest  thai  the  only  proper  goal  is  the  fund's 
financial  gain.  Most  obviously,  compliance  with  law  is  required  and  expect- 
ed: if  a  corporation  is  in  sustained,  flagrant  violation  of  law,  avoiding  its 
stock  seems  unobjectionable  and,  I  believe,  desirable.  '^  But  slippery  slopes 
are  avoided  by  setting  up  specific  signposts.  For  example,  J. P.  Stevens  a 
few  years  ago  was  found  guilty  not  merely  of  repeated,  on-going  unfair 
labor  practices  but  even  repeated  contempts  of  court,  and  until  its  com- 
mendable change  of  course,  was  the  leading  labor  relations  outlaw  in  the 
nation.  For  a  collectively  bargained  pension  fund,  it  would  be  hard  to  take 
seriously  any  objection  to  avoiding  that  stock.  But  for  any  trust,  such  a  stock 
could  be  avoided  for  several  reasons.  First,  in  the  J. P.  Stevens  instance 
there  was  no  lack  of  clarity,  or  difficulty  in  determining  the  degree  and 
uniqueness  of  the  corporate  illegality,  so  there  were  no  information  costs  or 
burdens  of  arguing  about  the  specific  situation.  Second,  there  was  no  lost 
opportunity  or  other  investment  cost,  since  that  particular  investment  could 
easily  be  replaced;  the  case  would  be  very  different  were  the  corporate 
culprit  IBM  or  GE,  but  those  firms'  being  guilty  of  such  sustained  illegality 
seems  so  unlikely  that  we  can  leave  such  a  question  until,  if  ever,  it  arises. 

How  different  the  proposition  that,  for  example,  a  fund  should  invest 
only  in  unionized  companies:  such  a  sweeping  limit  would  keep  a  fund  from 
holding  almost  any  high  technology  stock,  likely  inflicting  serious  loss  of 
investment  earnings.  But  it  would  be  wrong  to  rush  to  a  sweeping  proposi- 
tion against  sweeping  propositions.  To  bar  all  alcohol  and  tobacco  stocks, 
for  example,  has  littie  or  no  investment  implications  (because  of  the  modest 
capitalization  involved  unlike,  say,  oil  stocks);  however,  such  a  ban  might 
reflect  shared  views  in  some  beneficiary  groups,  such  as  a  church  endow- 
ment, but  not  in  others,  such  as  a  pension  fiind  with  diverse  participants.  Or, 
even  if  there  is  clear  consensus  on  a  divergent  goal — say,  a  state  pension 
fimd's  favoring  investment  in  firms  with  in-state  employees — one  must 
always  detennine  the  investment  implications.  For  New  Yorit's  funds  such 
a  preference  would  probably  make  no  discernible  di^erence  in  which  secu- 

'^The  New  Jeisey  Investment  Council  has  adopted  a  oew  standard  for  its  $l3-billion-as«eI 
holdings:  "good  coipoiale  citizenship."  Annual  Report  1984.  p.  II. 


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rities  are  held,  but  for  North  Dakota,  a  preference  for  in-state  investing 
would  shrivel  fund  earnings  and  drive  up  pension  costs,  driving  up  taxes  and 
injuring  economic  development  instead  of  aiding  it.  1  remember  one  small 
State's  pension  investment  officer's  saying  that  the  only  thing  worse  than 
not  investing  in-state,  is  investing  in-state  and  losing. 

In  short,  the  specific  facts  of  different  proposed  divergent  investments 
make  some  of  them  desirable,  some  acceptable,  and  some  injurious  or 
unfair  abuse  of  trust.  If  there  is  doubt  about  whether  an  investment  is 
prudent,  it  is  unquestionably  wrong  to  go  forward,  since  so  many  clearly 
prudent  alternatives  are  available.  Similarly,  if  there  is  doubt  whether  a 
divergent  goal  (even  one  which  is  not  injurious  financially)  commands  the 
necessary  overwhelming  concurrence  of  the  beneficiaries,  then  it  is  improp- 
er to  pursue  such  a  goal. 

What  of  polling  the  beneficiaries  about  whether  they  want  to  pursue  X 
divergent  goal?  Polling  has  legal  limits,  certainly  has  some  costs  and  possi- 
bly large  ones,  and  usually  is  unfeasible.  It  would  be  legal  to  follow  poll 
results  if  all  beneficiaries  agree,  but  it  would  be  illegal  to  delegate  to  a  mere 
majority  the  trustees'  responsibility  to  pursue  the  shared  interest  of  all 
beneficiaries.  Polling  would  be  costly  if  the  beneficiaries  are  numerous. 
And  often  polling  would  be  unfeasible  because  the  issue  is  so  complex  or 
requires  just  such  investment  understanding  as  to  exemplify  why  we  have 
trustees  in  the  first  place.  Further,  even  if  one  assumed  a  clear  issue  and  an 
adequately  comprehending  group  of  beneficiaries,  the  likelihood  is  that 
polling  secures  only  such  low  participation  as  to  preclude  any  confidence 
about  the  degree  of  agreement.  For  example,  when  South  A&ica  divestment 
(even  if  that  were  clear  and  understood)  for  the  University  of  Oregon's 
endowment  was  put  to  student  vote  there  in  1977,  almost95%of  the  vofers 
supported  divestment.  But  the  total  number  of  voters  was  under  10%  of  the 
university's  16,000  students,  not  even  counting  the  future  students  for 
whose  benefit  such  funds  exist  and  who  would  be  affected  far  more  by  any 
new  investment  policy  than  the  voting  students  who  would  be  gone  before 
the  policy  took  hold. 

Perhaps  the  clearest  indication  of  the  difficulty  and  divisiveness  sur- 
rounding this  question  of  how  to  choose  any  divergent  goal,  is  the  fact  that 
Gov.  Brown's  Task  Force  divided  23-7  on  whether  to  have  California 
public  funds  take  even  so  modest  a  step  as  submitting  proxy  proposals  upon 
request  of  only  10,000  participants  (or  10%).'^ 

Hurdle  S:  The  lack  of  information — corporate  responsibility  and  irre- 
sponsible responses  by  institutional  investors:  Investment  decisions  are 
made  on  the  basis  of  an  enormous  flow  of  audited,  comparable,  continuing 
data  on  corporate  performance.  An  entire  profession  of  financial  analysts 
brings  trained,  experienced  expertise  to  bear  on  such  information.  A  few 

"Finil  Repoft  (Oct.  1981)  M  54.  62-3. 


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nonlinaDcia]  goals  present  no  informatioa  diHiculty,  for  example,  avoiding 
alcohol  or  tobacco  stocks  (although  even  that  is  not  so  easy  since  the 
devekqnnent  of  corporate  conglomeration) .  But  if  a  portfolio  manager  must 
decide  whether  a  corporation  has  at  least  1 ,000  employees  in  the  stale;  or 
worse,  whether  it  is  engaged  in  "doing  business  in  or  with  South  Africa" 
(the  restriction  in  Massachusetts  and  several  others  places);  or  still  worse, 
whether  it  docs  more  than  SX  of  such  business  (the  threshold  in  the  Oregon 
Board  of  Higher  Education  resolution  is  S500,(XX))  ...  in  all  such  in- 
stances, the  difficulties  are  huge.  The  fact  that  "there  is  no  systematic 
method  for  obtaining  and  evaluating  information  about  the  activities  and 
practices  of  companies  in  which  the  funds  invest"  is  deemed  one  of  the 
prime  reasons  "the  current  decision-making  framework  [for  divergent  in- 
vesting] appears  inadequate,"  according  to  one  of  the  best  studies  advocat- 
ing divergent  investing.  '^  A  similar  study,  done  by  an  able  organization  for 
a  California  state  agency,  also  emphasized  "the  incomplete  and  preliminary 
nature  of  much  of  the  data  available" — "a  prerequisite  for  development  of  a 
coherent  ethical  investment  policy  for  just  these  two  issues  |EEO  and 
involvement  with  South  Africa]  requires  the  gathering  of  sufficient  data 
upon  which  infonned  judgment  can  be  based."'' 

The  data  gap  does  not  mean  pension  fund  managers  cannot  find  out  about 
General  Electric's  relations  with  EEOC,  or  General  Motors'  relations  with 
OSHA.  But  how  decide  whether  GE  or  GM  is  notably  good,  or  notably  bad, 
without  employing  some  standard  of  comparison?  Without  comparable 
data,  investment  decisions  on  non-financial  grounds  risk  being  inaccurate 
(and  therefore  unfair)  as  well  as  ineffective;  Company  A  might  look  good  or 
bad  on,  say,  equal  employment,  only  as  long  as  one  doesn't  know  hew 
others  in  its  industry  or  its  geographic  area  are  perfomiing.  Producing 
responsible  analyses  in  this  area  is  a  considerable  task  involving  substantial 
costs.'* 

The  problem  of  timely  data  is  pointed  up  by  the  fact  that  months  before 
release  of  that  able  group's  report  for  California,  listing  Coca-Cola  as  a 
"bad"  investment  because  of  its  activity  in  South  Africa  without  agreeing  to 


"Colbnan  &  Metzenbaum.  Investing  in  Ourselves  (Mass.  Social  &  Economic  Opportunity 
Council  Task  Force,  June  1979),  at  29, 

"Council  on  Economic  Priorities.  A  Study  of  Investment  Practices  and  Opportunities 
(1980).  at  6S.  144.  159-60. 

'^Tbe  Council  on  Economic  Priorities'  study  of  political  influence  and  lobbying  by  military 
contractors  cost  $75,000;  its  study  of  nuclear  power's  impact  on  job  creation  (in  one  locale!) 
cost  S292.000:  its  much-praised  study  of  paper  companies'  pollution  practices  cost  SSO.OOO 
(and  that  was  back  in  1969-1970). 

Although  responsible  "social  performance"  data  are  costly,  they  can  be  develi^>ed  and 
certainly  1  join  in  believing  Ihey  should  be.  Bui  this  will  occur  only  if  groups,  instead  of 
seeking  publicity  about  being  "socially  responsible."  try  to  implement  that  goal  by  joining  witb 
major  companies  and  major  institutional  investors,  to  bring  us  social  performance  data  that 
could  be  used  to  supplement  financial  analysis.  We  need  the  economies  of  scale  if  such  data  are 
to  be  sound  and  routinely  avail^le.  the  only  way  such  data  can  be  used  properiy  and  maybe 


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the  Sullivan  Principles,  Coca-Cola  had  switched  its  position — in  response 
to  a  shareholder  proposal — and  signed  the  Principles.  Worse,  as  late  as  18 
months  after  that  switch,  the  group  was  still  handing  out  a  summary  with 
Coca-Cola  at  the  top  of  the  list  of  sinners ,  without  even  oral  correction  in  at 
least  one  large  meeting,  presumably  in  many. 

In  short,  the  goals  can  be  pursued  only  at  information  costs  which  them- 
selves injure  net  investment  results;  or  cannot  be  pursued;  or  can  be  pursued 
only  incompletely  and  episodically,  producing  efforts  to  reward  corporate 
responsibility  or  punish  corporate  inesponsibility  on  bases  that  are  closer  to 
random  than  to  prudence. 

Hurdle  6:  Inviting  conflicts  of  interest:  To  the  extent  that  the  divergent 
investments  are  aimed  to  benefit — or  bring  pressure  on — firms  or  ventures 
situated  in  the  same  locality  or  industry  as  the  pension  fund,  consider  what 
kinds  of  investments  are  likely  to  occur:  those  with  political  appeal,  and 
often  those  that  raise  acute  conflicts  of  interest.  If  a  construction  union 
invests  in  mortgages  to  finance  a  construction  project  on  which  its  members 
will  have  jobs,  can  we  be  confident  that  the  projects  will  be  selected  by 
neutral  criteria?  If  state  and  local  pension  funds  are  to  invest  in  local 
projects,  then  (once  we  abandon  the  discipline  of  seeking  maricet  returns) 
won't  there  be  enormous  maneuvering  for  the  pension  fund  dollars,  with 
politics  replacing  mailcet  return  as  the  determinant?  Fiduciaries  who  are 
faithless  or  unclear  about  their  duty  can  always  find  ways  to  use  trust  assets 
to  their  own  benefit. 

Politics  are  the  right  measure  of  who  gets  into  of^ce  and  how  public 
policy  issues  are  resolved.  Contrast  the  safeguards  surrounding  political 
decisions  (pork-barrel  or  not)  as  against  what  will  happen  when  the  bees 
gather  around  the  pension  fund  honey  pot.  Not  even  the  strongest  and  most 
representative  pension  board  will  have  as  much  independence,  as  much 
political  balance  of  countervailing  forces,  as  a  legislature.  And  rarely  if  ever 
would  a  pension  fund  investment  decision  have  as  much  public  visibility 
,   and  relative  comprehensibility  as  decisions  being  forged  in  the  legislature. 

Hurdle  7:  How  hold  the  fiduciaries  accountable?  When  the  only  goal  is 
maximizing  investment  returns  at  a  prudent  level  of  risk,  evaluating  how 
well  the  trustees  have  done  (in  setting  investment  policy  and  selecting  and 
overseeing  the  money  managers)  is  easy.  Not  as  easy  as  measuring  the  size 
of  a  room,  but  we  have  recognized  methods  and  expert,  independent  firms 
to  evaluate  investment  performance.  How  do  we  evaluate  the  portfolio 
managers'  performance,  if  we  diverge  from  traditional  prudent  investing 
with  its  sole  focus  on  investment  return?  How  evaluate  success  or  failure  in 
fiuthering  the  divergent  goals?  In  short,  the  pension  fund  engaging  in 
divergent  investing  is  likely  to  become  captive  to  whatever  interests  have 
muscle — whatever  form  their  strength  may  take — to  shape  the  choice  of 
divergent  goats  and  the  selection  of  specific  investments.  As  everyone  who 
has  ever  dealt  with  money  managers  knows  well,  however  strong  or  weak 


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their  investment  performance,  they  are  always  deft  at  salesmanship.  When 
performance  is  not  strong,  they  will  unfailingly  explain  that  i(  was  not  their 
own  limitations  but  the  result  of  . . .  whatever  scapegoats  are  available. 

If  trustees  cannot  evaluate  their  money  managers  and  the  beneficiaries 
cannot  evaluate  their  trustees,  there  is  no  accountability.  Accountability  is 
the  only  effective  safeguard  against  self-serving,  negligent  or  incompetent 
fiduciaries. 

Hurdle  8:  For  all  those  difficulties  and  costs  and  risks,  in  anything 
gained?  Possibly.  But  usually  not,  even  when  prudent  financial  standards 
are  put  aside  in  favor  of  hidden  subsidies  for  the  divergent  goal,  as  exempli- 
fied by  numerous  union  and  public  funds'  special  mongage  investing  during 
recent  periods  of  scarce  mortgage  financing  (see  below,  section  lU.B).  And 
where  prudent  financial  standards  are  maintained  and  investments  are  made 
on  market  terms,  many  observers  believe  that  our  capital  markets  operate  so 
efficiently  that  the  favored  divergent  goal  ends  up  with  no  more  support  than 
it  would  have  gotten  anyway."  Since  I  believe  our  maricets  arc  essentially 
efficient  but  less  than  wholly  so,  I  am  confident  that  there  may  be  gains  even 
if,  for  example,  a  state  fund  makes  in-state  mortgage  investments  on  maricet 
terms,  especially  if  it  does  so  in  periods  when  very  little  mortgage  money  is 
available. 

If  greater  emphasis  is  to  be  placed  on  local  investing  or  other  new  criteria, 
two  simple  steps  will  assure  both  protection  of  retirement  security  and 
effective  pursuit  of  the  collateral  goals.  First,  the  public  fund  should  never 
buy  privately  placed  securities  (or  other  investments)  in  which  its  stake  is 
larger  than  50%  at  maximum,  with  the  balance  being  purchased  on  the  same 
terms  by  other  tax-exempt  institutions.  That  assures  against  investments 
resulting  from  improper  influence,  and  also  against  inadequate  analysis. 
Second,  public  funds  themselves  lack  adequate  staff  or  expertise  to  go 
beyond  recognized  investment  criteria.  New  York's  Comptroller  Edward 


"See  Langbein.  5  5,  above.  See  also  Utvak.  Pension  Funds  and  Economic  Renewal,  at  13 
("Development  Investing  in  Name  Only")  (Council  of  Slate  Planning  Agencies.  1981):  and  sec 
my  Should  Pension  Funds  be  Used  to  Achieve  "Social"  Goals.  1 19  Tmsis  &  Estates  26.  al  26- 
27  (Nov.  1980;  last  of  three  pans,  Sept.-Nov.  1980).  The  foolishnessof  trying  to  use  pension 
investments  as  a  tool  for  economic  development  is  pointed  up  by  the  calchily-entitled  1978 
book  "The  North  Will  Rise  Again."  aimed  at  reviving  New  England  and  the  upper  midwest  by 
local  investing  of  local  tiiads.  The  book  was  a  good  read  as  fiction;  its  unreality  is  analyzed  at 
1 19  Trusts  &  Estates  22.  n.  8  (Sept.  1980).  New  England  has  nsen  again  remarkably,  but  the 
"driving  force  has  been  education.  We  have  260  colleges  in  New  England,  65  in  the  Boston 
area  alone,  h's  been  the  wellspriag  of  our  entrepteneUrship."  Bank  of  Boston's  chief  ecooo- 
mist  James  Howell  explaining  New  England'sgoinof  222,000  jobs  between  1975-80,  Wall  St. 
Journal,  New  England's  Big  Recovery:  The  'Most  Spectacular'  Event  |in  the  history  of 
Western  capitalism]?.  Dec.  18,  1984,  p.  37. 

Localizing  pension  investing  also  runs  the  risk  of  retaliation  by  local  funds  elsewhere.  San 
Antonio's  well  known  Mayor  Heniy  Cisneros  warned  New  York  City  businessmen  of  this, 
assuring  them  he  did  not  feel  vengeful  but  that  a  popular  bumper  sticker  in  his  region  was 
"Forget  the  5S-mile-per-hour  speed  limit — drive  60  and  hteze  a  Yankee."  New  York  Times. 
Sun  Beh  'Revenge."  January  27.  1982. 


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V.  Regan  has  proposed  that  inoFe  local  investing  can  be  done  and  done  well 
if  state  agencies  expert  at,  e.g.,  development,  will  assemble  packages  of 
appropriate  investments  and  bring  them  to  groups  of  private  and  public 
institutional  investors. 
Last,  the  sheer  indirectness  of  many  of  the  efforts  to  invest  to  pursue 
,  divergent  goals,  must  be  faced.  For  example,  there  are  a  few  small  mutual 
funds  (long  in  business  but  never  significant  in  asset  size)  aimed  at  "socially 
responsible"  investing.  Pax  World  Fund,  sponsored  by  officials  of  the 
United  Methodist  Church,  is  always  mentioned  and  is  obviously  aimed  at  a 
goal  we  all  share.  But  how  much  peace  is  promoted  by  a  fund  averaging  S3 
million  (never  over  $13  million  in  its  13  years)?  It  has  produced  results  for 
the  firm  operating  it,  an  annual  expense  ratio  of  about  1 .6%,  unequaled  by 
few  if  any  other  mutual  funds.  It  has  produced  poor  investment  returns,  an 
annual  average  of  11.9%  for  five  years,  compared  to  13.2%  for  the  average 
similar  fund  (Lipper,  balanced  funds).  Wouldn't  everyone  involved  (except 
the  firm  managing  the  fund)  be  better  off  with  direct  contributions  to 
charities  working  for  peace  or,  say,  feeding  and  educating  children  the 
world  over? 

HI.  TWO  CASE  STUDIES 

A.  Stale  and  heal  pension  funds  and  recent  pressures  for  in-state  mort- 
gage investing 

Between  1980  and  1983,  when  interest  rates  were  alpine  and  mortgage 
money  was  abyssmal ,  there  were  acute  pressures  nation-wide  to  draw  retire- 
ment assets  into  mortgages.  In3l  states,  these  pressures  were  represented  as 
"in-state  targeting,"  allegedly  to  aid  local  homeowners  and  the  construction 
industry.  In  only  a  handful  of  such  States  did  homeowners  get  better-than- 
market  rates;  in  only  a  few  States  was  new  construction  aided.  But  in  most 
of  these  States,  instead  of  continuing  or  expanding  holdings  of  in-state- 
targeted  GNMAS  or  similar  established  mortgage  investments,  new  kinds 
of  packages  were  assembled.  As  a  full  analysis  by  the  South  Dakota  Invest- 
ment Council'^  found,  the  new  packages  were  higher  risk  than  alternatives 
like  GNMAS;  were  also  less  liquid  or  completely  illiquid;  and  yet  yielded 
less  than  did  the  established  alternatives.  Consider  one  example  of  these 
special  in-stale  packages. 

North  Carolina's  pension  fund  in  19S1  bought  a  SS3  million  package  of 
mortgage-backed  bonds  issued  by  a  new  corporation  that  was  capitalized  for 
$1,0CX)  and  that  sold  no  other  securities  to  anyone.  The  corporation  was 
owned  50%  by  the  savings  and  loan  associations,  50%  by  the  mortgage 
bankers  of  the  State.  The  yield  was  34  basis  points  (i.e.,  0.34%)  below 

"Analysis  of  23  "lO'Sute"  Moflgage  Packages  Privately  Placed  wilh  Suie  and  Local 
RetiienKiiI  Funds.  Ocl.  19S0-March  19S2  (May  1982),  icpiinled  in  Joint  Hearing  on  Public 
Employee  Pension  BeneHi  Plans ,  House  Conunittees  on  Ways  and  Means  and  Education  and 
Labor,  98th  Cong.  1st  Sess..  at  321  (Serial  98-56;  Nov.  15,  1983). 


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jrields  available  at  the  same  time  on  GNMAs,  which  are  insured  by  the 
Federal  Govemmeal  and  readily  salable  in  a  highly  liquid  secondary 
matket. 

Why  should  the  "NICM ICs"  have  yielded  less  than  GNMAs?  The  lower 
yield  translates  to  about  $2  million  less  return  on  that  size  package  over  its 
expected  life;  the  difference  between  insurance  by  the  Federal  Government 
and  the  NICMICs'  insurance  by  a  subsidiary  of  Merrill  Lynch,  has  been 
estimated  to  come  to  roughly  another  $2  million;  if,  as  appears  to  have  been 
the  case,  the  state  fund  was  obligated  lo  buy  under  a  forward  commitment 
but  the  sellers  were  not  obligated  to  sell  (they  would  not  if  interest  rates  had 
shiftedintheirfavor)  then  that  was  worth  roughly  another  SO. 5  million;  and 
since  the  NICMICs  could  not  be  sold.easily,  being  an  utterly  unique  securi- 
ty, their  lack  of  liquidity  came  to  roughly  another  $2  million.  All  that  contes 
to  a  give-up  of  about  S6.5  million  on  that  package  of  $53  million.  Why 
would  a  state  pension  fiind  so  subsidize  an  investment? 

Certainly  there  is  agreed-upon  social  value  in  promoting  home  owner- 
ship, especially  for  low  or  middle-income  housing.  But,  the  facts.  First, 
home  buyers  got  market  rates,  not  lower  ones.  Still,  there  might  be  aid 
enough  in  getting  any  mortgage  money  when  it  is  all  but  unavailable, 
especially  for  lower-income  families.  But,  the  flaw  in  that  justification  is 
that  only  5%  of  the  funds  went  to  people  with  under  $12,000  annual 
income.  Well,  one  may  respond,  the  mortgages  must  be  secure.  That  is 
unarguable,  but:  over  30%  of  the  funds  went  to  people  with  annual  incomes 
over  $36,000  and  the  ceiling  on  how  much  a  borrower  could  get — not  the 
home  price,  but  the  mortgage,  for  1981  in  North  Carolina — was  $1S0,000. 
(In  another  Slate's  similar  mortgage  package  the  ceiling  was  $200,000.) 
How  does  one  justify  taxpayers'  having  to  subsidize  (by  contributing  more 
to  the  pension  fund  to  make  up  for  these  poor  investment  returns)  getting 
mortgage  money  to  upper-income  people?  Well,  some  defenders  of  these 
packages  would  say.  all  this  occurred  when  the  housing  industry  was  inert, 
and  the  State  gains  importantly  from  supporting  construction  jobs.  But:  half 
of  the  mortgages  were  not  for  new  housing,  nor  even  for  new  purchases  of 
existing  homes — half  were  for  mortgages  "off  the  shelf."  that  is,  ones 
issued  up  to  five  years  earlier.  Well,  one  might  respond,  selling  those  older 
mortgages  makes  new  funds  available  to  the  savings  and  loans  and  mort- 
gage bankers,  and  those  new  funds  can  go  lo  new  mortgages.  But:  while  I 
have  been  unable  to  pin  down  whether  the  NICMICs  involved  any  commit- 
ment as  to  the  use  of  those  new  funds,  a  number  of  slate  funds  and  small 
multiemployer  funds  in  the  construction  industry  did  fail  to  secure  any 
commitments  and  soon  discovered  that  the  thrifts  (and/or  mortgage  bankers) 
used  the  new  funds  to  buy  Treasury  securities. 

North  Carolina's  was  not  an  unusual  deal.  The  South  Dakota  pension 
fund  was  under  pressure  from  local  firms  to  buy  a  similar  package,  insured 
by  the  leading  private  mortage  insurer.  MGIC.  South  Dakota's  Investment 
Council  agreed  that  market  tenns  were  essential,  so  analysis  was  done  on 

43 


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the  23  in-state  mortgage  packages  privately  placed  to  state  and  local  pension 
funds  between  October  1980  and  March  1982  (when  the  data  were  gath- 
ered). All  were  MGlC-insured,  some  rated  single  A,  most  AA,  some 
unrated.  Most  had  little  or  no  liquidity.  How  did  they  compare  with  the 
completely  liquid.  Government- guaranteed  GNMAs,  which  could  also  be 
packaged  with  mortgages  from  one  state  or  large  locale?  The  average 
MGIC-insured  package  was  149  basis  points  different  &om  contemporan- 
teous  GNMA  yields,  or  around  10%  of  the  interest  rates  then  paid. 

Of  course  financial  experts  would  differ  on  Just  what  is  the  appropriate 
margin  for  the  MGIC  packages'  lower  quality,  lack  of  liquidity,  etc.  But 
dispute  can  be  avoided  because  the  average  MGIC  in-state  package  was 
yielding  not  10%  more  than  GNMAs,  but  10%  less.  Compared  to  FHLMC 
"Freddie  Macs."  the  average  inferiority  of  the  special  in-state  packages  was 
177  basis  points.  And  even  those  average  margins  of  irtferioriiy  would  have 
been  worse  but  for  the  fact  that  four  of  the  special  packages  were  of  second 
mortgages;  not  even  MGIC  could  sell  those,  not  even  to  state  funds,  ai 
yields  lower  than  GNMAs. 

By  no  means  did  all  state  funds  crumble  before  these  pressures.  Texas 
State  Teachers  participated  but  at  strong  yields.  South  Dakota,  New  Jersey, 
New  Hampshire  and  others  completely  stood  off  the  pressures.  But  an  up- 
date of  South  Dakota's  study  found  that  as  of  June  1983.  31  States'  funds 
had  participated  in  $500,000,000  of  special  in-state  packages  insured  by 
MGIC,  receiving  investment  returns  at  least  $10,000,000  per  year  poorer 
than  were  readily  available  in  GNMAs  and  similar  securities.'^  Nor  did 
homeowners  benefit:  only  in  Massachusetts,  Michigan  and  Oklahoma  were 
preferential  rates  given.  In  addition,  Connecticut's  fund  bought  $473  mil- 
lion of  local  mortgages  (MGIC  was  not  involved,  as  it  was  not  in  North 
Carolina),  at  rates  badly  below  GNMAs  but  also  on  bclow-market  terms  for 


"Munnel.TbePitfallsof  Social  Invesling:  The  Case  ofPublic  Pensions  and  Housing.  New 
England  Econ.  Rev.  (Sept/Ocl.  1983). 

While  Munnell  and  the  treatment  here  deal  with  only  state  and  local  funds,  that  is  pailly 
because  the  infomialion  about  their  investments  is  available,  thanks  to  South  Dakota's  Inve&l- 
mcnt  Council.  There  may  be  similar  problems  in  some  mulli -employer  pension  funds.  Accord- 
ing 10  Randall  Smith,  the  leading  reporter  on  pensions,  in  Febiuary  19S2  the  Labor 
Depaitment's  Lx)s  Angeles  ofUce  recdnunended  chat  the  Depailmenl  sue  the  trustees  of  several 
constnjclion- union  pension  funds  in  Southern  California  for  brealung  Federal  pension  law  by 
investing  S268  million  in  local  union-only  projects,  much  of  it  at  below-market  rales.  Secretary 
Donovan  received  a  unanimous  staff  recorrunendation  (o  sue.  around  April  1983.  As  of 
Smith's  report  and  as  of  January  1985.  no  fiirtbcr  decision  or  action  has  occurred.  Wall  Street 
Journal.  Constructive  Plan?  Use  of  Pension  Funds  to  Create  Union  Jobs  Raises  Issue  of 
Ugality.  Jan..  17.  1984,  p.  1. 

How  well  any  such  investing  does  boost  jobs  (or  lax  revenues  in  the  case  of  public  funds)  is 
another  matter  on  which  claims  outrun  facts.  For  example.  Gov.  Brown's  1981  Task  Force 
claimed  that  new  housing  investment  would  produce  almost  twice  as  many  jobs  as  even  the 
local  constnjction  industry  claimed.  Contrast  Final  Report  n.  13  supra  at  22-3  with  Construc- 
tion Industry  Research  Board,  Summary  of  Economic  Impacts:  InvesinKM  In  New  Housing 
Mortgages.  (Sept..  1981),  table  2. 


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the  homeowner.  The  flaw  diere  was  that  the  nxHigages  were  allocated  by 
chance:  whoever  happened  to  be  buying  a  house  when  the  money  was 
offered,  and  got  into  line  early  enough  the  night  before  (hterally)  enjoyed  a 
subsidized  mortgage.  Thai  contrasts  sadly  with  the  long-established  and 
regularized  program  for  public  employees  in  Hawaii,  or  a  careful  new  one 
for  active  and  retired  public  employees  in  New  Hampshire. 

This  1980-83  experience  shows  that  under  such  guises  as  promoting  j<^s 
or  local  home  ownership,  the  taxpayers  and  pension  participants  are  victim- 
ized by  closed-door  concurrence  in  complex  deals  usually  bringing  benefits 
neitherinjobs  nor  for  home  owners.  But  always  benefitted  are  the  political- 
ly muscular  groups  that  seek  aid  they  cannot  secure  in  the  more  open  and 
representative  legislative.  There  is  enough  legitimate  controversy  over 
how,  how  much  and  which  housing  should  enjoy  public  subsidy  decided 
upon  in  prc^r  legislative  process.  Hidden  subsidies  squeezed  out  of  pen- 
sion funds  are  a  case  study  in  how  not  to  proceed. 

B.  South  Africa-Involved  Investments 

1 .  Factual  context 

We  may  take  it  as  a  fact  that  Americans  abhor  apartheid.  I  personally  am 
certain  as  a  matter  of  morality,  politics  and  history,  that  American  compa- 
nies cannot  "do  business  as  usual"  involving  South  Africa,  and  that  Ameri- 
can investors  cannot  do  investing  as  usual  in  South  Africa-involved  firms. 

The  question  is  not  whether  any  steps  shall  be  t^en,  but  only  what  steps 
may  help  move  the  situation  away  from  the  abhorrent. 

Institutional  investors  have  been  involved  in  more  controversy  over  this 
issue  than  any  other  non-tinancial  one.  Some  spontaneous  efforts  and  some 
nationally  organized  ones  have  arisen  in  periodic  waves  since  196 1  on  many 
college  campuses  and,  since  about  1980,  in  several  state  legislatures  and 
city  councils.  Many  foundations,  churches  and  charitable  organizations 
have  also  grappled  with  this  issue.  Much  more  than  on  the  other  issues  noted 
in  this  paper,  there  is  here  overwhelming  rhetoric  and  unusual  impatience  to 
consider  facts.  And  no  other  issue  generates  such  emotion — and,  on  unfor- 
tunate occasions,  such  racial  divisions — as  this  one. 

Since  1961,  when  student  drives  for  divestment  began,  U.S.  firms'  fixed 
investment  in  South  Africa  has  risen  about  50  times.  Even  adjusted  for 
inflation,  so  great  a  rise  indicates  to  some  people  that  the  divestment  drive  is 
farcically  futile,  to  others  that  it  is  needed  more  than  ever.  As  of  1982,  U.S. 
firms'  fixed  investment  there  was  $2.3  billion,  just  at  cost  values;^"  that  is 
about  17%  of  all  foreign  fixed  investment,  about  3%  of  all  investment 


^"^is  was  down  bDm$2.6billJontwo  yean  earlier,  according  1o  the  U.S.  Commerce  Depl. 
Some  may  attribute  the  drop  to  divestment  pressures,  otbeis  may  attribute  it  to  the  depressed 
state  of  liw  economy  in  19S1-2  in  both  countries,  and  to  straight-forwardedly  commercial 
decisions  to  withdraw,  like  Chrysler's. 


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tbere.^'  In  addition,  our  financial  institutions  had  loaned  over  S3.6  billion  to 
South  African  borrowers,  and  U.S.  investors  were  estimated  to  hold  about 
$8billionof  shares  in  South  African  firms,  bringing  the  total  U.S.  financial 
stake  there  to  over  S14  billion,  second  to  Great  Britain's.  In  contrast,  total 
South  African  assets  in  the  U.S.  were  estimated  to  be  only  S200  million  as 
of  1978.  Our  expons  to  South  Africa  totaled  S1.4  billion  in  1979.  $2.45 
billion  in  1980,  $2.9  billion  in  1981,  S2.36  billion  in  1982  and  $2. 1 1  billion 
in  1983.  That  means  about  60,000  jobs  in  the  U.S.;  each  $1  billion  of  U.S. 
exports  supports  about  28,000  Jobs  here.^^  We  have  unilaterally  embargoed 
arms  sales  to  South  Africa  since  1962,  and  have  sold  nothing  there  for 
nuclear  power  operation .  Our  imports  from  South  Africa  include  82%  of  our 
platinum,  87%  of  our  vanadium,  48%  of  our  chrome,  45%  of  our  manga- 
nese, 13%  of  our  gold  and  67%  of  our  industrial  diamonds.  We  are  South 
Africa's  third  largest  trading  partner,  after  Japan  and  Great  Britain. 

As  for  how  many  U.S.  companies  do  business  in  South  Africa,  not  only  is 
there  constant  flux  but  different  sources  report  substantially  different  fig- 
ures, wildly  different  in  one  major  instance. 

•  One  authoritative  source,  Arthur  D.  Little,  Inc.  in  October  1984  named 
281  companies,  including  at  least  31  with  10  or  fewer  employees;  but  the 
report  noted  also  that  as  many  as  40  more  were  believed  to  belong  in  the  list, 
bringing  the  total  to  about  320.^^ 

•  The  most  thorough  study  of  the  investment  ramifications  of  divest- 
ment, published  in  December  1984  by  a  major  investment  firm  managing  a 
"South  Africa-free"  portfolio  for  the  District  of  Columbia  Retirement  Sys- 
tem, listed  229  companies.^^ 

•  But  a  month  later,  the  authoritative  Investor  Responsibility  Research 
Center  published  a  list  with  over  287  companies." 

•  Another  investment  study  (February  1983)  by  a  major  investment  firm 
managing  such  a  portfolio  for  Michigan  State  University,  listed  about  270 
companies.^* 


"Unless  otherwise  indicaled,  Ihe  US-SA  daia  are  from  Davis.  Ca&on  and  Hovey.  Economic 
Disengagement  and  Sou^  Africa:  The  Effeclivcness  and  Feasibility  of  Implemenling  Sanc- 
tions and  Divestment.  13  Law  &  Pol.  Int'l.  Bus.  529  (I9S3)  (advocating  divestment)  and 
Chenle.  TTie  Law  and  Policy  of  Divestment  of  South  African  Stock,  id.  at  445  (contra). 

"Export  data  from  U.S.  Dept.  Commerce,  Job  figure  from  U.S.  Dept.  Commerce,  Inl'l. 
Trade  Admin.,  Export  Factsheet  (Dec.  20,  1982). 

"Eighth  Report  on  IheSignaloiy  Companies  to  the  Sullivan  Principles,  pp.  2,  12  and  42-4 
(1984). 

^Wagner,  Emkin  and  Dixon  (of  Wilsbiie  Associates).  South  African  Divestiture:  Tbe 
Investment  Issues,  Financial  Analysis  Journal  14  (Nov..  Dec.  1984). 

^IRRC  IJirectory  of  U.S.  Companies  with  Opo^tions  in  South  Africa  (1985). 

trinity  Investment  Management  Corp..  Structuring  Portfolios  from  a  South  Africa  Free 
Univetw  (Feb.  1983). 


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•  Bui  one  month  later,  the  District  of  Columbia's  study  by  a  major 
pension  consulting  finn  listed  201  companies.  ^^ 

•  And  that  same  year,  three  advocates  of  divestment  said  "approximately 
6,000  U.S.  companies  do  business  in  South  Africa,"  relying  on  the  most 
prestigious  smdy,  "Report  of  the  (Rockefeller  Foundation)  Study  Commis- 
sion on  U.S.  Policy  Toward  Southern  Africa:  Time  Running  Out."" 

Two  points  emerge.  First,  while  a  core  of  companies  maintain  a  presence 
in  South  AMca,  many  others  come  and  go.  acquiring  subsidiaries  and 
selling  them,  so  that  even  a  fund  determined  to  avoid  South  Africa-involved 
companies  must  either  compromise  significantly  in  light  of  information 
difficulties,  or  risk  highly  imprudent  portfolio  turnover  and  costs — or  both. 

Second,  does  it  make  sense  to  treat  a  company  maintaining  a  presence  in 
South  Africa,  regardless  of  size  or  amount  of  business,  as  more  supportive 
of  apartheid  than  a  company  with  no  office  or  employees  there  but  making 
major  imports  or  exports?  For  example,  Boeing  has  fewer  than  10  employ- 
ees in  South  Africa;  considering  its  products,  does  its  presence  matter  less 
than.  say.  Coca-Cola?  If  Boeing  had  no  office  in  South  Africa  but  still  sold 
planes  there,  wouldn't  it  still  matter  a  great  deal?  GM  and  Ford  have  plants 
in  South  Africa,  but  the  leading  sellers  of  cars  there  are  the  Japanese.  Does  it 
make  any  sense  to  divest  GM  and  Ford  stock,  but  allow  unrestrained 
investing  in  South  Africa's  leading  trading  partners,  Japan  and  Great  Brit- 
ain? What  of  the  New  York  Times,  Washington  Post  and  American  Broad- 
casting company,  with  offices  there  but  not  even  Sullivan  Signatories? 
(They  may  be  distinguishable,  though  Time  and  I  doubt  it.)  How  can  the 
advocates  of  blunderbuss  divestment  attack  companies  that  are  in  South 
Africa,  almost  none  of  them  doing  even  \%  of  their  business  there,  but  at 
the  same  time  allow  investing  in  American  companies  importing  from 
South  Africa  or  using — and  so  keeping  up  the  price — of  South  Africa's 
platinum,  vanadium,  manganese,  chrome,  and  gold?  And,  after  all,  how 
allow  investing  in  the  securities  of  the  most  important  American  institution 
involved  with  South  Africa,  the  U.S.  Government? 

Clearly,  the  determined  South  Africa-free  investor  ends  up  either  keeping 


^Meidinger  Asset  Planning  Seivkes.  D.C.  Special  Investmenl  Study:  South  Africa  Prdpos- 
al  (March  31.  I9S3). 

While  ibere  were  earlier  effoits  to  analyze  divestnteni's  investmenl  implications,  ihey 
(except  for  Trinity's,  supra  n.  26,  and  perhaps  unpublished  ones)  either  utterly  ignored  relative 
riskiness,  liquidity,  manageability,  etc.;  or  treated  such  crucial  aspects  only  with  a  verbal 
acknowledgment,  or  only  in  pan;  or  were  simply  superficial.  For  example,  one  published  in 
1979  was  "heavily  qualified"  by  its  author  in  testimony  later  that  same  year  because  "imponant 
procedural,  legal  aitd  economic  implicatiotis  have  not  been  examined."  BNA  Pension  Repoft- 
er,  Dec.  17,  1979,  p.  A-19.  reporting  on  Andrew  Rudd's  testimony  about  his  Divestment  of 
South  African  Equities:  How  Risky?,  J.  Portf.  Mgt.  (Spring  1979).  p.  5. 

^"The  Commission  was  chaired  by  Ford  Foundation  IVesidenl  Franklin  A.  Thomas:  it  was 
published  in  1981  by  Univ  Calif.  Press.  The  19S3  article  using  the  6,000  figure  Is  Davis. 
Cason  and  Hovey.  supra,  n.  21. 


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money  in  the  mattress  or  making  major  compromises,  questionable  not 
merely  in  policy  and  logic  but  also  in  fairness.  Dubious  compromises 
become  indefensible  if  more  sensible  alternatives  to  absolutism  arc  avail- 
able and  being  used. 

2.  The  seven  lines  of  action  about  South  Africa-involved  investments: 
There  are  ftmdamental  differeiKes  between  the  divestment  statutes 
passed  in  Massachusetts,  Connecticut,  Nebraska,  Maryland  and  Michigan, 
wholly  apart  from  the  fact  that  the  first  three  deal  with  their  state  pension 
funds,  Michigan's  with  its  university  endowment,  and  Maryland's  only 
with  bank  deposits .  New  York  City '  s  pension  funds  and  Harvard  have  taken 
still  other  courses.  Unless  we  focus  on  these  differences,  debate  may  be 
unnecessarily  polarized  and  unwise  action  promoted  unwittingly. 

(a}  Massachusetts  has  adopted  blunderbuss  divestment:  its  pension 
fund  can  hold  no  companies  doing  business  in  or  with  South  Africa,  ^^  which 
is  taken  to  mean  the  2S0-or  so  firms  usually  listed  as  having  a  presence  in 
South  Africa.  Similar  blundetbuss  restrictions  have  been  imposed  on  the 
retirement  fiinds  of  the  EHstrict  of  Columbia,  Boston  (which  adds  Namibia), 
Hartford  and  Philadel[4iia.  It  is  important  to  add  that  Massachusetts  adopted 
similariy  sweeping  divestment  of  firms  involved  in  military  action  in  North- 
em  Ireland — a  newer  statute  signed  into  law  on  March  /7,  1983.^" 

(b)  Connecticut  originally  passed  a  similar  statute,  but  after  the  Gover- 
nor vetoed  it  as  not  having  been  adequately  considered,  substantial  study 
was  done  and  a  very  different  approach  adopted:  divestment  is  not  applied  to 
firms  which  have  secured  the  top  two  ratings  of  compliance  with  the  Sulli- 
van Principles  (see  section  C  and  Appendix)  unless  the  company  supplies 
strategic  products  or  services  to  the  Government  of  South  Africa.^'  The 
State  Treasurer  has  begun  reporting  on  the  pension  fund's  South  Africa 
efforts — what  has  been  sold  or  put  on  their  "avoid"  list,  what  dialogs  are 
occurring  with  specified  companies,  and,  happily,  which  companies  have 
signed  the  Sullivan  Principles  since  the  State's  efTon  began.^'  The  differ- 
ence between  the  Connecticut  and  Massachusetts  statutes  matters  enor- 
mously in  investment  implications,  treated  fully  below,  and  in  the  morality 
of  the  distinctions  that  Connecticut  recognizes  and  Massachusetts  ignores. 
The  National  Association  of  State  Treasurers  has  formally  endorsed  the 
Coimeclicut  apiRX>ach. 

(c)  Nebraska  limits  permissible  holdings  for  its  pension  fund  to  firms 


"Title  32.  i  23(1)(dKvi);  Stat.  1982,  c.  669, 

"  Id.,  i  23(lKdK«);  Sttt.  1983,  c.  661. 

^'Public  Act  82-324,  Conn.  Gen.  Suis.  i  3-l3f.  Connecticul  has  also  since  1980  a  statute 
provoked  by  the  Iran  hostage  crisis,  barring  investments  in  firms  dealing  with  Iran  "contrary  to 
the  foreign  policy  ot  nadooaJ  interests  of  the  United  States."  Public  Act  80-431;  S  3-l3g.  That 
1980  statute  has  never  been  implemented. 

"HeniyE.  E>ailcer  to  MembenoflDvestmenl  Advisory  Council.  March  14, 1984  (Grit  lemi- 
annual  report  on  their  two  Ingest  pension  funds). 


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in  the  top  rating  of  Sullivan  Principles  compliance,  a  difTcicnce  with  signifi- 
cant investment  implications.^^ 

(d)  New  York  City's  Retirement  System  tnistces  in  1984  adopted  a  five- 
phase  approach  to  divesting: 

After  IS  moalhs;  companies  doing  business  with  the  Souih  African  military  and 
pt^ice,  providing  financial  services  to  the  Govenunenl  or  refusing  to  sign  the  Sullivan 
Principles. 

After  two  ycin:  companies  that  have  signed  the  principles  but  do  not  allow  monitor- 
ing of  compliance. 

After  three  years:  companies  that  do  not  achieve  the  highest  rating  in  complying  with 
the  Sullivan  Principles. 

After  five  years:  all  companies  except  those  whose  activities  are  deemed  by  the 
trustees  to  be  of  substantial  issistance  to  effocts  to  eliminate  ^Mribeid. 

Their  City  Council  is  now  considering  barring  investments  in  companies 
th^  discriminate  against  Catholics  in  Northern  Ireland. 

(e)  Michigan's  statute  requires  divestiture  by  its  state  university  en- 
dowment; it  is  now  in  litigation,  the  Board  of  Regents  claiming  infringe- 
ment of  their  authority  under  the  state  Constitution.  On  the  one  hand  the 
statute  is  absolute  as  in  Massachusetts,  but  its  moral  absolutism  is  called 
into  question  by  the  provision  that  the  proceeds  of  divestiture  sales  should 
be  invested  in  Michigan  firms.  And  while  the  Regents  have  denied  that  they 
arc  required  to  OMT^Iy  with  the  statute,  they  have  chosen  to  sell  some 
holdings  but  to  keep  particular  holdings  in  firms  that  are  substantial  Michi- 
gan employers  and  actual  or  potential  donors  to  the  endowment.  (Involve- 
ment in  South  Africa  is  immoral  unless  we  get  direct  benefit  from  the 
inunonil  firm?) 

Similar  to  Michigan  is  New  Jersey,  with  two  pending  bills  being  support- 
ed as  a  package:  one  is  absolute  divestment,  the  other  requires  a  preference 
for  investing  in  New  Jersey  and  replaces  the  prudence  standard  with  an 
"acceptable"  standard.  As  of  June  1984,  New  Jersey's  Investment  Council 
found  that  of  the  103  South  Africa-involved  firms  having  the  investment 
characteristics  allowing  that  SI0.2-bil)ion  pension  tiind  to  invest  in  them, 
all  butj^ve  were  Jersey  employers.-**  Of  those  98  Jersey  employers,  31  had 
more  than  i  .000  employees  in  the  State  and  another  seven  had  headquarters 
in  the  State.  Moreover,  a  far  larger  proportion  of  the  South  Africa-involved 
firms'  market  value  was  also  Jersey-linked,  since  the  firms  with  headquar- 
ters (H-  over  1,000  employees  in-state  included  IBM,  Exxon,  GM,  GE, 
Ford,  Mobil,  Texaco,  Dow,  DuPont,  Johnson  &  Johnson,  Merck,  MMM, 
Raytheon,  Revlon,  Schering-Plough,  Squibb,  Union  Carbide,  United  Tech- 
nologies, Warner-Lambert,  Westinghouse  and  Xerox.  Such  blue-chip  in- 
state  investments   would  virtually  certainly  not   be  divested,   so  the 


signed  Apr.  10,  1984. 

rrenl  holdings  are  Jersey  employers. 


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proponents  of  the  two-bill  package  are  pursuing  only  the  thinnest  symbol- 
ism. Even  that  will  be  tarnished  when  Jerseyans  leam  that  behind  the 
emotional  intensity  about  avoiding  immoral  investments,  the  prudence  stan- 
dard was  being  repealed  so  that  in-state  investing  could  be  stretched  from 
blue-chip  to  back-scratch.  (Is  anything  but  symbolism  as  facade  for  conflict 
of  interest,  involved  in  such  "divestment"  "efforts"?) 

(j)  Maryland  bars  only  deposits  of  state  funds  in  banks  lending  to  the 
South  African  Government,^'  a  step  far  more  easy  for  the  State  than  the 
preceding  ones,  whatever  its  effectiveness.^^  Most  local  governments  listed 
as  having  adopted  divestment  have  taken  only  this  step. 

(g)  Harvard,  with  an  endowment  of  about  $2.S  billion,  has  long  been 
engaged  in  intensive  grappling  with  the  divestment  issue,  and  as  recently  as 
October  1984  reiterated  its  1978  refusal  to  adopt  absolute  divestment. 
Harvard  has  twice  sold  debt  securities  of  banks  lending  to  the  South  AMcan 
Government.  (Harvard's  1980  sale  of  $51  million  in  Citicorp  debt  instru- 
ments was  one-third  of  all  divestments  by  all  universities  since  1976.)  But 
the  University  and  President  Bok  separately  have  stated  with  unusual  thor- 
oughness the  reasons  for  their  believing  that  shareholder  activism  is  the 
sounder  route." 

Hanaid  will  consider  divesting  stock  of  a  company  wilh  operations  in  South  Africa 
when  the  company  has  subsUnCially  failed  to  implement  reasonable  ediical  standards 
for  its  operations  in  South  Africa,  when  persistent  efforts  over  a  substantial  period  of 
time  to  persuade  the  company  to  change  its  policies  have  failed,  and  where  there  is 
cleariy  no  hope  for  Improvement. . , 

We  must  distinguish  between  the  failure  of  a  good-faith  effort  to  meet  the  standards 
of  conduct  we  espouse  and  conduct  which  detnonstraies  such  disregard  of  (hose  stan- 
dards dial  Harvard  does  not  wish  to  associate  itself  with  a  company  as  a 
stockholder. . . . 

Divesting  shares  in  a  company  is,  under  our  present  policy,  a  last  resort  diat  bespealcs 
the  failure  of  dialogue. 

Harvard  has  a  code  that  substantially  follows  the  Sullivan  Principles,  and 
University  officials  engage  in  intense  dialog  with  top  management  of  any 
company  not  a  signatory  or  lacking  an  acceptable  compliance  rating;  the 
dialogs  are  reported  on  in  extraordinary  detail. ^^ 

The  Harvard  route  of  dedicated  shareholder  activism  is  the  one  rccom- 


"Anicle  95,  S  21;  1984  Uws.  ch.  775. 

'^ven  cash  holdings,  particulaily  in  the  form  of  commercial  paper,  are  affected  by  absolute 
divestment.  See  Wagner,  n.  24.  at  20. 

"See  Statements  of  Harvard  Corp.  Committee  on  Shareholder  Responsibility  and  President 
Bok.  Harv.  Univ.  Gazette,  Oct.  5.  1984.  pp.  1. 8,9;  Corp  Committee  Annual  Report  1983-4. 
Harv.  Gazette,  September  1984  (supplement);  Bok.  Beyond  the  Ivory  Tower:  Social  Responsi- 
bilities of  ttie  Modem  University,  chapters  10,  12  and  conclusion  (1982). 

"See  Corporate  Committee  Annual  Report,  supra  n.  35.  at  4-7  ("intensive  dialogs"  with  Joy 
Manufacturing,  Dun  A  Bradstteet.  Pepsico  [since  then  has  signed  Sullivan  Piinciplesl,  Phibro- 
Sikimon;  ~other  dialogs"  with  American  International  Group.  G.  [>.  Searle,  Baker  It 
al.  Dart  &.  Kraft.  Newmoni  Mining  and  nine  other  firms. 


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mended  by  the  Rockefeller  Commission  Report,  "Time  Running  Out."" 
Thai  report  flatly  opposed  divestment,  advising  institutions  instead  to  act  as 
active  shareholders  pressing  corporations  to  { 1 )  make  no  new  investment  in 
South  Africa;  (2)  contribute  to  social  development  there  at  twice  the  rate  of 
total  charitable  giving  by  the  paient  company  in  the  U.S.;  and  (3)  sign  the 
Sullivan  Principles  and  advance  the  Sullivan  Principle's  content  and  (at 
least  as  of  the  date  of  thai  Report.  1981)  their  monitoring. 

In  1984,  New  York's  State  Comptroller  Edward  V.  Regan,  as  sole  trustee 
of  the  $23  billion  Common  Retirement  Fund,  began  an  approach  like 
Harvard's,  carefully  distinguishing  among  different  companies  on  the  basis 
of  their  different  Sullivan  Principle  ratings — or  non-rating — and  communi- 
cating dircctiy  with  the  companies  to  encourage  responsible  conduct  and 
further  progress. 

3.  What  will  divestment  accomplish?  A  moment's  analysis  reveals  why 
blunderbuss  divestment  will  not  further  antiapartheid  goals  in  South  Africa, 
but  will  at  best  (a)  leave  the  problem  in  slMus  quo,  (b)  probably  make  it 
worse,  and  (c)  certainly  hurl  jobs  here  at  home. 

Consider  what  happens  if,  say,  the  D.C.  pension  fund  stops  buying  stock 
or  bonds  of,  say,  FordMolororlBMor  Johnson  &  Johnson.  The  securities 
of  such  big  companies  are  instantly  absorbed  by  other  investors  which,  by 
definition,  care  less  about  the  company's  activity  in  South  Africa.  The  stock 
price  is  unaffected.  The  company  is  not  wholly  unaffected — no  company 
likes  negative  publicity.  But  even  as  symbol,  divestment  produces  only  a 
one-shot  annoutuement  of  the  sale  or  the  blacklisting  of  that  stock,  and  no 
more.  In  contrast,  if  the  socially  concerned  institutional  investor  were  to 
press  proxy  proposals  about  the  firm's  rote  in  South  Africa,  there  is  a 
continuing  stream  of  communication  and  pressure. 

A  particularly  telling  example:  United  Technologies  is  Connecticut's 
largest  employer,  certainly  concerned  about  its  relations  at  home.  Within  a 
month  after  Connecticut  passed  a  statute  putting  prudent  limits  (see  above) 
on  its  South  Africa-related  investing.  United  did  not  hesitate  to  acquire  a 
substantial  new  subsidiary  in  South  Africa. 

But  even  if  any  significant  U.S.  company  did  respond  to  divestment  of  its 
securities  by  withdrawing  from  South  Africa,  what  impact  would  that  pro- 
duce in  South  Africa? 

First,  even  complete  economic  sanctions,  far  more  severe  than  U.S. 
investors'  selling  their  shares  of  U.S.  firms,  have  a  poor  record  of  effective- 
ness. Second,  the  (British)  Economist  Intelligence  Unit  concluded  in  1982 
that  South  Africa's  black  neighbor  nations  were  likely  to  be  hurt  more  by 
any  sanctions  against  South  Africa  than  would  the  target  itself.^  Third,  to 
come  back  to  the  mere  withdrawal  by  U.S.  firms,  both  experience  and  the 
current  scene  indicate  ineffectiveness. 


>s  Prospects  Reassessed.  93. 


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A  particulariy  telling  example:  In  1977,  Polaroid  did  withdraw,  nd 
because  of  divestment  but  because  of  sustained,  forceful  pressure  by  share- 
holders who  kept  their  shares  to  press  for  change.  Polaroid  was  deemed 
especially  important  to  South  Africa,  because  its  then-unique  cameras  and 
film  were  used  for  apartheid's  key  operating  tool,  the  passes.  Impact  of 
Polaroid's  withdrawal?  None.  Polaroid  supplies  went  in  through  Europe, 
with  Polaroid  unable  to  do  anything  about  it. 

Should  Polaroid  have  slopped  all  sales  abroad,  to  stop  the  flow  to  South 
Africa?  {Could  they  if  they  tried?)  In  answering  that,  please  consider  not 
only  South  Africa  or  Polaroid  stockholders^ — how  about  their  U.S. 
employees? 

As  for  U.S.  companies  with  competitive  products,  that  is,  almost  all 
firms:  if  they  withdraw  from  South  Africa,  can  one  believe  South  Africa 
will  be  without  the  goods  or  services?  Can  one  doubt  that  the  major  foreign 
presence  in  South  Africa,  the  British,  or  else  the  Japanese,  Germans, 
French,  etc.,  will  at  once  fill  the  gap,  even  if  local  firms  could  notT*' 

For  example,  U.S.  firms'  largest  share  of  the  South  African  market  is  in 
computers,  where  we  account  for  70%  of  all  sales.  Can  one  doubt  that  the 
firms  doing  the  other  30% — let  alone  new  entrants— would  speed  into  any 
gap?  And  since  our  firms  would  withdraw  only  l>ecause  of  concern  about 
apartheid,  the  remaining  firms  are  by  definition  less  socially  sensitive,  so 
apartheid  would  be  stronger  or,  at  best,  unchanged.  Leaving,  at  best,  no 
impact  on  South  Africa,  but  fewer  jobs  back  in  America  for  the  withdrawn 
U.S.  firms.  Does  anyone  doubt,  if  U.S.  firms  reduce  employment  because 
of  reduced  exports  or  reduced  profits  brought  home,  whose  Jobs  will  go 
first? 

Divestment  might  work  if,  as  Congressman  Solarz  has  been  trying  to 
accomplish,  the  major  industrial  nations  work  together  on  this.  Until  we  get 
that — and  major  trade  unions  could  help  enormously — divestment's  only 
impact  will  be  some  Americans  feeling  morally  superior,  and  other  Ameri- 
cans losing  jobs. 

But  ineffective  as  divestment  will  be,  it  is  bound  to  be  costly. 

"a  provocalive  predicllon  of  whai  wojld  happen  if  the  South  A&ican  economy  actually 

were  changed  by  multinationals'  withdrawal,  was  given  lecenlly  by  Rowley  Arenslein.  the 

peison  imprisoned  or  "bamieij"  by  the  South  African  Government  longer  than  anyoTK  else. 

There  is  a  big  movement  in  the  U.S.  to  break  dte  economy  of  South  Africa.  I  think  that  is 

stupid.  Without  investments.  Africans  will  be  pushed  back  into  the  countiyskle  and  the  trade 

union  movement  would  eoWapse.  Even  if  you  did  get  liberation,  what  kind  of  liberation 

would  that  be?  You  would  starve  like  the  people  in  Ethiopia  or  Mozambique . " 

(Wall  Si.  Journal.  A  'Banned'  South  African  Speaks  Out.  and  Faults  Some  Anti-Pretoria 

Tactics,  Dec.  II.  1984.  p.  33. 

AiuHher  long-time  critic  of  the  Government,  (qjposition  number  of  Parliament  Helen  Suz- 
man.  says  the  determining  factor  insltk  South  Aftica  has  been 

"the  steady  upward  movement  into  skilled  occupations  by  blacks  eventually  giving  blacks 
the  muscle  widi  which  to  make  demands  for  shifts  in  power  and  privilege,  backed  up  by  the 
force  of  black  uibanization." 

(Washington  Post,  In  South  Africa.  Washington  Can  Only  Play  a  Bit  Part.  Dec.  9. 1984.  at 
a.  C2.) 


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IV.  THE  INVESTMENT  IMPUCATIONS  OF  DIVESTMENT. 

A .  Key  distinctions  between  small  fiuids  and  large,  and  between  operat- 
ing funds  and  investment  funds: 

This  is  simple.  The  number  of  potential  securities  investments  is  vast, 
and  even  if  your  or  my  own  personal  investments  were  barred  from  2/3  of 
those  securities,  we  could  still  find  a  dizzying  range  of  appropriate  invest- 
ments. But  if  we  arc  trying  to  invest  the  California  state  pension  funds  with 
about  $30  billion,  or  even  a  fund  under  $100  million,  it  is  impossibk  to 
avoid  investing  mostly  in  large  companies,  whose  securities  are  highly 
liquid,  that  is,  readily  bought  and  sold  in  large  blocks;  and  even  more 
important,  companies  large  enough  to  withstand  adverse  events.  Moreover, 
many  people  want  massive  public  pension  funds  to  invest  some  in  small 
companies,  and  that  is  happening.  But  that  "some"  must  remain  a  small 
proportion  of  those  assets  of  $340  billion,  or  government  funds  would 
quickly  own  and  control  most  firms.  Therefore  almost  all  institutional 
funds,  public  and  private,  limit  themselves  to  a  maximum  of  5%  of  any 
hnn's  outstanding  stock.  Since  5%  of  a  small  firm  is  microscopic  for  a  large 
fund,  research  and  other  transaction  costs  also  limit  investing  direcdy  in 
small  firms.  In  short,  big  funds  must  have  a  broad  spectrum  of  securities, 
which  must  include  the  issues  of  most  big  firms. 

Unquestionably,  for  small  funds  even  absolute  divestment  is  easier  than 
for  large  fiinds.  However,  it  is  equally  unquestionable  that  for  any  institu- 
tional-size fund,  such  divestment  means  inescapably  much  higher  transac- 
tion costs,  major  opportunity  losses  (e.g.  IBM),  increased  risk  because  of 
the  larger  number  of  holdings  in  smaller  stocks  and  also  because  of  far  less 
diversification.  Therefore,  such  divestment  means  inescapably  either  im- 
prudent overall  risk  or,  to  balance  that,  types  of  investments  not  usually 
used  or  not  used  so  much  because  they  produce  lower  overall  returns.  All  of 
this  being  so,  even  for  smaller  funds  total  divestment  is  plainly  imprudent.'*^ 

'^For  several  yeais.  1  focus&ed  only  on  large  funds  because  of  my  dealing  with  Uie  divesl- 
menl  issue  in  the  context  of  stale  pension  funds.  See.  e.g..  my  leslimony  inianuaiy  I9S4,  U.S. 
House  Committee  on  the  District  of  Columbia.  Heinngs  on  South  Africa  Divestment.  98th 
Cong.  2d  Sess..  US,  121.  126.  In  addition.  I  have  been  in  contact  directly  with  a  number  of 
state  pension  fund  trustees  and  investment  officers,  and  in  July  19S4  lestilied  in  New  Jersey's 
fiist  round  of  legislative  lieaiings  on  this.  Therefore  I  had  in  mind  only  die  overwhelming 
evidence  diat  fm'such  large  funds,  absolute  divestment  was  close  to  impossible  or  enormously 
risky  and/or  encHmously  cosdy.  and  I  failed  to  focus  on  what  problem  there  is  for  smatln 

In  November  1984, 1  testified  as  an  expert  witness  for  the  Oregon  Sute  Investment  Council 
in  Assockaed  Students  of  the  Univ.  ef  Oregon  v.  Oregon  Investment  Council,  die  suit  to  compel 
divestitUFe  for  the  endowment's  approximately  S20  million.  Testifying  similarly  was  Wilshire 
Associate's  Wayne  Wagner,  now  managing  $2S  million  in  a  South  Africa-free  index  fund  for 
Ibe  D.C.  Reliicment  Fund.  He,  like  tne,  had  written  focussing  on  large  funds  only.  See 
Wagner,  supra  n.  24.  at  p.  IS. 

The  .Oregon  trial  court  niled  on  Dec.  S.  1984.  that  the  Investment  Council  was  acting 
lawfully  in  refiising  lo  invest  despite  the  resolution  by  the  Board  of  Higher  Education,  since  the 
relevant  statute  required  prudent  investing  and  atoolute  divestmeni,  the  court  held,  is  not 
prudent.  The  case  will  be  appealed. 


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Oie  other  distinction:  for  operating  funds,  e.g.  a  city's  or  a  state's  cash 
accounts,  divestment  is  not  the  problem  that  it  is  for  investment  funds,  for 
two  reasons.  First,  operating  funds  are  kept  in  such  cash-equivalents  as 
U.S.  Government  securities,  bank  certificates  of  deposit  and  perhaps  com- 
mercial paper,  for  which  any  adjustment  is  much  less.'*^  There  are  more 
than  enough  banks,  including  large  ones,  not  involved  in  South  Africa. 

B.  What  are  the  costs  and  risks  for  an  institution  adopting  absolute 
divestment?  The  picture  is  clearest  if  we  start  with  blunderbuss  divestment, 
which  imposes  seven  costs  and/or  risks  on  a  fund. 

Cost  1:  Divestment  shrinks  the  spectrum  of  possible  investments  to  a 
remarkable  extent.  Of  the  Standard  &  Poor's  500  (the  largest  tirms,  consti- 
tuting the  vast  bulk  of  the  investments  all  institutional  investors  tend  to  use 
and  which  large  institutions  must  use),  the  South  Africa-free  fund  is  barred 
from  holding  at  least  47%  of  the  market  capitalization.  Even  that  rests  on 
limiting  the  blacklist  to  229  companies,  which  now  is  unreatistically  low.^ 
One  cannot  respond  "Well,  that  leaves  53%  available,"  because  the  barred 
companies  are  far  from  fungible  with  the  ones  still  available.  The  leading 
example  is  IBM,  which  has  a  market  value  of  just  under  $70  billion:  the  next 
largest  computer  stock  is  Digital  Equipment,  with  about  $5  billion  in  market 
value.  (When  Wilshire  constructed  for  the  D.C.  Retirement  Fund  a  South 
Africa-free  index,  they  replaced  IBM  with  the  next  largest  computer  firm 
not  already  in  the  S&P:  Commodore.)  In  one  day,  albeit  a  record  day, 
IBM's  price  rise  of  $5.38  per  share  added  $3.28  billion  market  value  (June 
20.  1984).  Even  within  the  500  largest  companies  of  which  IBM  is  the 
lai^est.  the  smallest.  Eagle-Picher,  has  a  market  value  of  about  $220  mil- 
lion. l/320th  of  IBM. 

The  barred  stocks  tend  to  be  so  large — IBM,  Exxon.  GM.  GE.  Citicorp, 
etc. — that  of  all  5,000  stocks  in  the  broadest  index  (Wilshire's),  even  the 
limited  blacklist  of  229  firms  accounts  for  35%  of  total  market  value.  If  cme 
tried  to  build  a  South  Africa-free  index  of  500  stocks,  replacing  each  barred 
stock  in  the  S&P  500  with  the  next  largest  similar  stock  not  already  in  the 
S&P  500,  then  at  least  152  stocks  with  an  aggregate  market  value  of  $554 
billion  (end-1983).  would  be  replaced  by  152  stocks  aggregating  $107 
billion.  The  average  market  value  of  the  barred  stocks  is  $3.64  billion — for 
the  alternates,  $0.70  billion.  The  two  largest  restricted  stocks,  IBM  and 
Exx(Mi,  are  worth  as  much  as  all  844  issues  on  the  American  Stock  Ex- 
change. The  12  largest  restricted  stocks  are  worth  as  much  as  all  3,812 
NASDAQ  over-the-counter  issues. 

The  best  way  to  grasp  how  much  investment  power  is  lost  by  absolute 


''Bui  see  Wagner,  n.  36  supra. 

"See  discussion  at  111  B.  1,  above.  The  47%  Rgure  is  Wilshiie  Associates'  based  on  values 
a[  end-November,  19M.  The  data  in  this  Section  B  are  from  Wagner,  supra  a.  24  and  frocn 
Trinity  Investment  Management.  lupra  n.  26  and  infra  n,  45. 


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divestment  is  to  use  an  analogy  suggested  by  Trinity  Investment  Manage- 
ment/' dte  finn  managing  just  under  $10  million  of  Michigan  State  U.'s 
$4S-million  Soudi  Aftica-ficc  endowment.  Think  of  the  universe  of  avail- 
able stocks  like  a  deck  of  cards .  Rank  all  stocks  into  1 3  categories  of  market 
value,  like  the  13  different  cards.  Every  institutional  investOT  gets  S2  cards, 
except  the  South  Africa-free  funds  which  give  up  at  least  a  third  of  the 
market  value.  Such  a  fund  must  play  with  only  30-35  cards  against  the  other 
funds  holding  52  cards.  Worse  yet,  the  SA-frce  fund  has  given  up  a  dispro- 
portionate number  of  the  big  stocks  or  powerful  cards:  the  S  A-free  deck  of 
30-35  cards  lacks  at  least  two  aces,  two  kings,  two  queens,  and  two  jacks. 
Willing  to  play  that  way? 
Consider  c(Hicretely  what  opportunity  costs  can  mean: 
If  we  lunit  our  review  to  the  27  largest  stocks  barred — all  Aces  or  Kings 
in  our  poker  anology — we  see  these  opportunity  costs: 


Calendar  1979 

CalcFidar  19S0 

Standard  Oil 

+  111.2% 

Rockwell 

+  96. 7» 

Mobil  Coip. 

+  70.4 

Texaco 

+  74.5 

Phiilips  Pet. 

+  58.6 

StandaidOil 

+  71.2 

Rodiwell 

+43.4 

Exxon 

+  58.2 

Dow  ClKinical 

+  37.4 

Eastman 

+  52.9 

Caltndar  1981 

Calendar  1982 

American  Home 

+  40.8 

Ford  Motor 

+  132.1 

J&Johnson 

+  14.1 

Hewlett  Packard 

+  85.2 

American  Express 

+  13.6 

IBM 

+  77.9 

Bristol  Myers 

+  12.6 

General  Elec. 

+  73.3 

Coca  Cola 

+  12.5 

General  Motors 

+  72.1 

Calendar  1983 

1984.  through  7131 

Ford  Motor 

+  65.4 

Coca  Cola 

+  41.1 

Rockwell 

+  60.0 

Bristol  Myers 

+  10.2 

DuPont 

+  52.8 

Boeing 

+  9.0 

Exxon 

+  37.3 

Exxon 

+  7.0 

Dow  Chemical 

+  36.3 

American  Home 

+  3.3 

''investment  lnq>licatiofl$  of  South  Africa  Divestiture  (Oci.  1984),  "The  P(riLer  Analogy."  at 


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"Clearly,  these  are  important  winners — not  only  because  they  ouQ>er- 
formed  the  S&P  500  so  much  in  each  of  these  six  time  periods,  but  also 
because  they  are  all  in  the  top  50  stocks  in  terms  of  maricet  capitaliza- 
tion and/or  average  daily  trading. 

"To  argue  that  the  loss  of  the  oppcxtunity  to  buy  and  sell  such  big 
stocks — Aces  and  Kings  in  our  poker  analogy — will  not  inhibit  perfor- 
mance simply  doesn't  make  sense."'^ 

Cost  2:  Less  iitformation  is  available  on  the  remaining  stocks.  Having 
lost  so  many  of  the  biggest  stocks,  the  portfolio  is  inescapably  fuller  of 
smaller  stocks,  which  simply  are  not  researched  by  as  many  analysts.  The 
152  baned  S&P  stocks  were  the  subjects  of  an  average  19.9  earnings 
estimates  by  broker-dealers;  the  152  replacements  were  covered,  on  aver- 
age, by  10.9  estimates.  Having  fewer  estimates  means  greater  difficulty  in 
relying  on  research  &om  the  brokers  normally  selected  for  their  good  execu- 
tions, since  special  efforts  will  have  to  be  made  to  use  firms  providing  the 
scarcer  research.  It  also  means  the  research  is  probably  less  reliable.  These 
factors  raise  only  transaction  costs,  but  those  too  are  real.  One  authority 
estimates  that  these  research  costs  might  triple  normal  costs. "^ 

Cost  3:  The  portfolio  is  riskier  because  it  is  more  dependent  on  smaller 
stocks.  Generally,  the  larger  the  company  the  lower  the  risk,  in  two  senses: 
First,  a  greater  proportion  of  small  companies  go  bankrupt.  Second,  smaller 
stocks  tend  to  be  far  more  volatile,  which  means  the  holder  is  at  risk  of  the 
price  being  quite  depressed  before  he  can  carry  out  a  decision  to  sell,  or 
quite  inflated  before  he  can  buy  enough.  Of  course  there  are  stable  smaller 
stocks  and  risky  larger  ones,  but  the  generalization  holds.  Again,  the  two 
firms  that  are  running  SA-free  funds  and,  being  professionals  rather  than 
advocates,  have  measured  the  difference  in  risk  levels,  show  significantly 
higher  risk  for  the  SA-free  portfolio  compared  to  the  S&P  500.  Michigan 
State  U.'s  South  Africa-free  investment  manager  found  16%  greater  risk  in 
that  firm's  "SAP  Universe"  compared  to  the  S&P  (as  of  Febiuary  1983, 
looking  back  over  the  years  1975-82).  But  that  "SAP  Universe"  earned  only 
a  thin  margin  more  than  the  S&P.  15.4%  versus  14.9%  (average  annual),'** 
The  District  of  Columbia's  South  Africa-free  index  manager  found  8% 
more  risk  as  of  June  1984,  plus  3%  more  diversification  risk  plus  unquanti- 
fiable  further  strategic  risk  (see  below.  Cost  4). 

True,  a  diverse  portfolio  of  higher  risk  stocks  should  produce  higher 
fctiims,  a  "risk  premium."  Otherwise,  no  one  would  ever  venture  beyond 
the  blue  chq>s.  But  will  the  premium  compensate  for  the  risk  assumed?  And 
is  the  higher  risk  level  prudent?  The  D.C.  Retirement  Fund  has  been 


"Trinity,  jupra  a.  45,  at  12. 
"Trinity,  supra  n.  26,  u  S,  9. 


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advised,  its  index  manager  testified,  that  its  ri^  level  in  SA-free  securities 
is  such  that  it  may  need  to  consida  changing  other  investments,  i.e.,  to 
lower  the  total  poitfolio's  risk  level  by  holding  more  utility  stocks  or  bonds 
or  short-term  Treasury  securities.  Such  lower-return  holdings  wipe  out  the 
risk  premium  &om  the  small  stocks  and,  considering  the  experienced  supe- 
riority of  stocks  over  fixed-income  investments  and  similar  superiority  of 
growth  stocks  over  utihties,  the  portfolio  will  almost  surely  suHer  weaker 
overall  returns  dian  without  absolute  divestment. 

Remember,  1%  more  returns  means  10-13%  more  pension  benefits  or  a 
related  drop  in  costs,  etc. 

Cost  4:  The  portfolio  is  riskier  also  because  it  is  much  less  diverse.  If  you 
have  a  crystal  ball,  you  don't  want  to  bother  with  diversification — as  Will 
Rogers  would  say,  just  buy  the  stocks  that  are  going  up.  But  if  you  lack  a 
crystal  ball,  the  prudent  way  to  cope  with  the  uncertain  future  is  to  diversify. 
Consider  the  majcv  maricet  sectors,  and  how  many  of  them  and  how  much  of 
each  the  SA-free  fund  cannot  buy  (using  market  value  of  the  S&P  500 
slocks  in  each  group  as  of  June  1984)'. 


Industrial  equipment 
Banks 

Hiolography 

Chemicals 

Drugs 


99%  Conglomerates 

97%  Office  equipment 

93%  Autos 

87%  Int'l  oils 
87% 


85% 
84% 
85% 
76% 


Again  risk  rises,  sharply.  Wilshire  Associates  found  that  in  addition  to 
the  8%  rise  in  market  risk  because  of  the  dependency  on  smaller  stocks, 
there  was  3%  more  diversificalicm  risk,  plus — 

strategic  risks  dut  ate  more  difficult  to  quantify.  For  example,  during  late  1983  and 
eariy  1984.  Ibe  only  sector  lo  show  positive  price  appieciation  was  Eneigy.  Energy 
stocki,  bowever,  are  heavily  affected  by  divestiture  restrictions.  Divestiture  thus  leads 
lo  an  iiic(Miq)leIe  exposuie  lo  opportunities.  The  result  is  a  diversification  loss  beyond 
the  manager's  conlnil  and  a  risk  liai  must  be  bome  by  Itie  fund. 

As  a  matter  of  law,  recently  a  British  judge  held  it  imprudent  for  the 
National  Coal  Mineworkers'  Pension  Fund  to  avoid,  as  the  union  trustees 
insisted,  further  investing  in  oil  or  overseas:^^ 

[T]be  broad  econonuc  arguments  of  the  [union  tnistees]  provide  no  justiScation  for  the 
restriclkias  that  Ihey  wish  lo  impose.  Any  possible  benefits  &om  in^)osing  the  reslric- 
tions  dut  would  accrue  to  Ihc  benebcjaries  under  the  scheme  (as  distinct  from  the 
general  public)  are  far  too  speculative  and  remote.  Large  though  the  fund  is,  J  cannot 


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see  bow  ihe  adoption  of  Ok  restrictions  can  nuke  any  material  impact  on  the  national 
economy,  orbring  any  appreciable  benefillo  the  beneficiaiiesundeitbe  scheme.  ...  In 
any  case,  the  question  is  one  of  excluding  a  very  targe  sector  of  Ihe  market,  and 
preventing  diveisilicalion  into  investments  in  other  countries  which  may  do  well  at  a 
lime  when  the  British  market  is  depiessed;  and  1  can  see  no  possible  benelil  In  such  an 
excluskm,  especially  in  the  case  of  a  very  large  fund  with  highly  skilled  investment 

Cost  5:  Smaller  slocks  have  less  liquidity.  This  is  a  negative  double- 
whammy.  Because  smaller  stocks  are  more  volatile,  investors  want  to  be 
able  to  move  quickly,  certainly  if  events  call  for  selling  but  also  when  trying 
to  accumulate  a  position.  However,  precisely  because  these  stocks  are 
smaller  and  draw  much  less  institutional  interest,  their  normal  trading  vol- 
ume is  even  smaller  compared  to  the  big  stocks  than  their  relative  market 
capitalization.  Recall,  for  example,  that  IBM  is  worth  about  320  times  as 
much  as  the  500th  largest  company,  Eagle-Picher.  But  IBM's  average  daily 
trading  volume  is  $155,000,000  and  Eagle-Picher's  is  $100,000:  IBM 
trades  over  /  ,550  times  as  much.  Even  if  one  structured  a  South  Africa-free 
portfolio  with  as  big  stocks  as  possible,  as  was  done  hypothetically  for  New 
Jersey's  pension  fund,  the  median  number  of  days  needed  to  sell  out  a 
holding  rose  from  ITforthecuirent  portfolio  to  5 1  or  3 1 ,  depending  on  the 
hypothetical  chosen.  Comparing  the  most  illiquid  holding  that  fund  has  to 
what  it  hypothetically  would  have,  the  maximum  days  needed  to  buy  a 
position  rose  from  172  to  3,160.**^ 

The  rise  in  trading  costs — not  merely  the  minor  matter  of  commissions, 
but  the  major  matter  of  market  impacts — according  to  an  analysis  of  actual 
trades  by  a  Wells  Fargo  officer,^'  would  rise  by  one-quarter  for  a  small  fund 
{$3.8miIlion— from  0.8%  of  price,  to  1.0%),  by  one-half  for  a  middle-size 
fund  ($38  million — from  1.0%  of  price  to  1.5%),  and  over  three-fifths  for  a 
large  fund  ($380  million:  from  2.3%  of  price,  to  3.7%).  Those  trading  cost 
rises  are  believed  to  be  understated  for  an  active  manager  operating  a  SA- 
firee  fund,  since  the  thin  markets  in  those  stocks  are  likely  to  react  especially 
sharply  to  orders  from  a  firm  with  a  good  performance  record  and  with  a 
reputation  accordingly. 

Cosl  6.  Managing  the  portfolio  will  cost  more.  The  portfolio  will  have  to 
be  managed  separately.  This  may  mean  merely  an  extra  management  fee 
(because  of  the  information  costs  and  unique  attention  required),  but  it  may 
mean  finding  a  new  manager.  For  example,  when  the  University  of  Wiscon- 
sin endowment  adopted  total  divestment,  the  major  firm  managing  that  fund 
refused  to  continue.  Even  if  a  fund  doesn't  have  to  go  through  the  delay  and 
cost  of  finding  a  willing  manager  (and  though  a  survey  for  the  D.C.  Retire- 


'"Ttinity.  supra  n.  45,  at  20. 

^'Loeb,  Trading  Costs:  The  Critical  Link  Between  Investment  Infonnalion  and  Results. 
Fin'l.  Anal.  J.  (May-June  l983):reliedupon.  adjusted  tothe  figures  in  text  above  for  buys  or 
sells  instead  of  "round-trips."  by  Wagner,  supra  n.  24,  at  17-18, 

S8 

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ment  Board  found  half  of  the  manageis  surveyed  saying  they  would  not 
accept  such  an  assignment,  of  course  many  willing  managers  are  bound  to 
emerge),  a  great  many  managers  use  investment  approaches  that  could  rtot 
be  employed  for  a  portfolio  barring  so  many  major  investment  of^xjrtuni- 
ties.  Inability  to  use  a  significant  proportion  of  good  management  firms  and 
standard  investment  styles — Wil shire  estimates  31%of  management  styles 
or  managers — may  itself  prove  costly  in  lost  opportunity,  even  if  this  is  not 
readily  quantified.^^ 

Last,  Cost  7:  How  hold  the  fiduciaries  accountable?  All  the  above  costs 
and  risks  and  uncertainties,  are  certain.  If  after  divestment  the  fund  does 
poorly  or.  to  use  the  more  pertinent  measure,  does  less  well  than  funds  of 
similar  size  and  nature,  how  would  one  decide  whether  that  is  the  fault  of  the 
divestment  or  poor  management?  Given  the  high  trading  costs .  it  is  artificial 
to  measure  an  actively  managed  South  Afnca-free  portfolio  against  a  South 
Africa-hree  index.  Then  use  only  passively  managed,  i.e.,  indexed  invest- 
ing? In  some  markets,  active  management  will  be  vastly  superior,  in  some 
not.  Over  the  long  run,  we  have  no  data  on  how  a  divested  index  would  do. 
Isn't  thai  in  itself  a  preclusive  degree  of  uncertainty  for  any  prudent 
fiduciary? 

Given  such  evidence,  blunderbuss  divesting  seems  good  only  for  mas- 
ochists  and  soap-box  simplifiers.  What  of  divesting  only  non-signatories  of 
the  Sullivan  Principles,  or  signatories  with  lower-tier  compliance  ratings? 
If,  like  Connecticut,  the  barred  companies  are  those  below  the  top  two 
compliance  ratings,  flien  only  15%  of  the  S&P  500  is  lost,  compared  to  the 
47%  that  absolute  divestment  bars.^'  However.  Nebraska's  barring  all  but 
top-compliance  firms  makes  a  striking  difference.  Nebraska  loses  almost  all 
drug  firms  as  well  as,  this  year.  Ford  and  GE  et  at.  ^  In  short.  Nebraska's 


'^Wagner,  supra  n,  24,  at  19. 

Emergence  of  willing  managers  is  in  process.  Pensions  &  InvesUnenl  Age.  Social  resiric- 
tions  make  new  maikets  for  adviseis.  Dec.  10.  19S4.  p.  24. 

Note  that  the  investment  implications  analyzed  bere  focus  almiKt  exclusively  on  equities. 
Impact  on  cash  equivalents  was  noted.  Wagner,  supra  n.  36;  and  Ibe  severe  impact  on  bonds  is 
also  treated  in  Wagner,  supra  n.  24.  at  19.  The  New  leisey  Investment  Council  has  calculated 
that  because  so  much  of  the  corporate  bond  mariut  would  be  baited,  U.S.  Government 
securities  would  have  lobe  used  much  moie.  leading  to  a  loss  of  about  S2.5  million  annually 
ioi  each  $1  billion  in  a  bond  portfolio. 

'^Valtucion  by  Wilshire  Associates  using  data  as  of  end- November,  I9S4. 

*'As  stressed  by  Arthur  D,  Little  Inc..  compliance  monitor  for  the  Sullivan  Principles,  it  is 
vtTOOg  and  possibly  unfair  to  judge  a  company  on  a  single  year's  rating  as  distinct  From  its 
pattern  over  several  years.  Economic  circumstances  external  to  a  firm  may  cause  changes 
relative  to  other  firms  in  other  industries.  For  example,  both  Ford  and  GM  were  top-category 
compliers  before  the  October  I9S4  Report.  Tlte  lop  two  categories  aic  both  "passing."  For 
fairness  and  also  in  light  of  concern  for  a  fund's  manageability  and  investment  implications, 
not  only  is  Nebraska's  narrowness  imprudent,  but  any  fimd  that  makes  deieiminalive  distinc- 
Ikms  between  the  different  categories  of  compliance  should  be  less  rigidty  mechanical  than 
Nebnska  and  Connecticut,  and  should  allow  some  evaluation  case  by  case. 


50-TZO    O— 85— 


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line  is  more  prudent  dian  total  divestment,  but  Nebraska  public  employees 
and  taxpayeis  will  bear  a  substantial  burden  for  going  as  far  as  their  statute 
does,  and  given  the  ine^ectiveness  of  their  step,  here  again  is  plain 
imprudence. 

The  prudent  fiduciary  will  adopt  an  ap[»oach  like  Harvard's  or  perhaps 
Connecticut's. 

C.  The  Sullivan  Principles 

Four  times  since  their  beginning  in  1977,  the  Principles  have  been  ampli- 
fied from  six  brief  statements  to  36  more  specific  goals  concretizing  the 
Principles,  and  two  additional  commitments.  The  Principles  are: 


hinciple  2 — Equal  and  Fair  Eniployment  Practices  for  All  Employees; 

Piinciple  3 — Equal  Pay  for  All  Employees  Doing  Equal  or  Comparable  Work  for  the 
Same  Period  of  Time; 

Principle  4 — Initiation  and  Development  of  Training  ftogrems  that  Will  Prepare 
Blacks,  Coloureds,  and  Asians  in  Substantial  Numbers  f(«  Supervisory,  Administra- 
tive. Clerical,  and  Technical  Jobs; 

Principles — IncieasingtheNumberof  Blacks,  Coloureds,  and  Asians  in  Management 

and  Supervisray  Positions: 

ftinciple  frr-In^roving  the  Quality  of  Employees'  Lives  Outside  the  Work  Envinin- 
meni  in  Such  Areas  as  Housing,  Transportation.  Schooling.  Recreation,  and  Health 

(The  full  current  PritKiples,  working  objectives  and  additional  commit- 
ments appear  in  an  Appendix  to  this  paper.) 

U.S.  corporate  signatories  total  1 28  as  of  October  1984,  down  from  148 
two  years  earlier  because  29  were  dropped  in  1983,  but  the  total  number  of 
companies  reporting  has  not  droiq)ed.  Six  of  the  29  dropped  have  been 
reinstated  and  a  few  new.  ones  added. 

The  program  began  with  12  majtu'  firms  including  Control  Data,  Ford, 
GM,  IBM  and  Union  Carbide.  Reverend  Leon  Sullivan,  pastor  of  Philadel- 
phia's Zion  Baptist  Church  since  19S0  and  a  leader  in  the  civil  rights 
movement,  in  1971  becamediefirstblackonGM'sBoard.  There,  from  the 
outset  he  argued  that  GM  should  widxlraw  from  South  Africa.  But  in  1975 
in  South  Africa,  he  was  urged — particularly  by  black  union  leaders — lo 
advocate  not  withdrawal  but  rather  marshalling  dte  resoiut:es  of  U.S.  and 
other  multinationals  "into  true  forces  for  change 

Ii  had  been  talked  about,  but  ttever  genuiiKly  tried.  After  deep  reflectioD  and  nuidt 
prayer,  I  decided  to  make  nich  an  efioR,  deqnte  the  overwhelming  oddt  againu  in 


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success Penuadiiigkaikn  of  UScompuiieiU}  accept  tbcqifnachwu^frofn 

easy .  I  embuked  on  a  lobbying  cniMde  which  requited  two  yean  of  exiensive  travel 
and  numcims  meetings.  On  Match  I,  l971.de5pi(ettK  tefiual  of  many  companies  lo 
become  involved,  the  initial  StatemeniofhiDciples.  signed  by  llnMJorU.S.  conqw- 
nies.  was  annouDced." 

Today,  the  signatories  employ  65,000.  about  74%  of  the  workforce  of 
U.S.  companies  in  South  Africa.  In  addition,  the  consortium  of  10  South 
African-owned  firms  woricing  toward  the  same  goals  since  1979,  employ 
far  greater  numbers  such  as  Barlow  Rand's  over  750.000.  There  are  also 
Eiut^iean  and  Canadian  codes  but  the  European  firms,  mostly  British,  lag 
behind  the  Sullivan  signatories  and  their  "progress  is  miserably  slow.  Japa- 
nese companies  are  doing  even  less  than  the  Europeans."'^ 

What  the  Sullivan  signatories  have  accomplished,  and  how  much  they 
have  stepped  up  their  efforts,  is  detailed  in  the  next  section.  Reverend 
Sullivan  is  neither  patient  nor  willing  to  settle  for  yesterday's  goals.  In  the 
beginning  in  1977,  there  were  merely  the  six  Principles  and  an  effort  to 
expand  the  number  of  signatories — no  reporting,  no  compliance  rating. 
Annual  reporting  was  begun  despite  the  failure  of  Sullivan's  effort  to  secure 
aid  from  foundations:  the  signatories  were  assessed  (SI.OOO  to  S7.000  a 
year,  depending  on  amount  of  worldwide  sales).  Since  1978,  Arthur  D. 
Little,  Inc.  annually  evaluates  the  signatories'  progress,  based  on  question- 
naires which  since  1982  are  verified  in  designated  parts  by  each  firm's 
certified  outside  accountants.  The  latest  questionnaire  was  SS  pages;  many 
signatories  must  submit  separate  questionnaires  for  separate  subsidiaries. 
The  original  lack  of  compliance  ratings  was  replaced  first  by  three  catego- 
ries, then  more;  now  there  are  10.  The  annual  evaluations  involve  both 
quantitative  and  qualitative  points;  the  maximum  possible  is  60 — I984's  top 
compiler  received  52. 

Each  year,  new  requirements  have  been  added.  In  1983,  for  the  first  time 
a  number  of  signatories — 29  of  the  then-total  148 — were  dropped ,  partly  for 
failure  to  repmt  (nine  never  had),  partly  for  failure  to  pay  the  assessments, 


''Sulliviin.  Agents  for  Change:  The  Mobilization  of  Muliinational  Companies  in  South 
Africa.  15  Law.  &  Pol.  Int'l.  Bus.  427,  428  9  (1983).  This  section  tests  on  that  source:  on 
Communicuioas  Task  Gtoup  of  the  Sullivan  Signatmy  Companies,  Meeting  flie  Mandate  for 
Change  ( 19S4);  on  Eighth  Report,  supra  n.  23;  and  on  the  testimony  of  Sullivan  Principles 
Administrator  Daniel  Pumcll  'm  Associated  Siudenu  itfihe  Univ.  i^Orrgonv.  Oregon  Invest- 
ment Council.  Lane  County  Circuit  Court.  Nov.  30.  1984. 

'*Sullivan,  id.  at  435. 

In  Janiiary  1985,  six  South  African  employer  groups  Issued  a  statement  challenging  the 
Goveniment's  racial  segregation  policies.  The  groups  said  that  the  private  sector  is  committed 
to  pushing  tor  six  major  political  and  economic  changes,  including  "meaningfiil  political 
participation  for  Blacks."  These  employers,  representing  about  80%  of  the  country's  workcn, 
include  the  Afiikaanse  Handelsinslltut  made  up  of  Afrikaner  business  executives  and  relied  on 
heavily  by  the  governing  National  Party.  Wall  Street  Journal.  Employers  Assail  Racial  Separa- 
tion  in  South  Africa,  Ian.  9,  I9B5.  p.  31. 


61 

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partly  for  unsatisfactory  progress.  None  of  the  29  had  been  in  the  top  two 
categories  in  the  preceding  two  years. 

In  1984,  for  the  firet  time  the  signatories  are  called  upon  to  deal  more 
directly  with  laws  and  customs  impeding  social  and  political  justice: 

Increased  Dimensions  of  Activities  Outside  the  Workplace 

•  Use  influence  and  support  the  unrestricted  rights  of  Black  businesses  to  locate  in  the 
urban  areas  of  the  nation. 

■  Influence  otlter  companies  in  South  Africa  to  follow  the  standards  of  equal  rights 
principles. 

•  Support  the  freedom  of  mobility  of  Black  workers  to  seek  employment  opportunities 
wherever  they  exist,  and  make  possible  provisions  for  adequate  housing  for  families 
of  employees  within  the  proximity  of  woriKis'  employment. 

•  Support  the  ending  of  all  apartheid  laws. 

In  1983,  the  Ninth  Report  on  compliance  will  decrease  attention  on  goals 
that  have  been  accomplished  in  order  to  focus  on  new  objectives,  concen- 
trating especially  on  areas  of  greatest  need,  "particularly  those  on  which  the 
companies  can  have  a  considerable  impact  in  the  stimulation  of  social 
change."*' 

SuUivan  wTites:>^ 

Critics  admonish  that  the  Principles  are  not  the  solution  to  the  South  African  contro- 
versy, artd  ]  wholeheartedly  agree.  Many  thnists  are  needed  if  a  solution  is  ever  to 
come. The  Mnciplesareontyone  . . .  1  plead  for  a  hall  to  bank  loans  and  new  corporate 
investment,  until  political  equality  for  blacks  is  realized.  It  must  nevertheless  be  argued 
that  the  Principles  have  bad  some  influence  favoring  political  change,  and  that  they  will 
continue  to  do  so.  Help  a  person  gain  economic  rights  and  you  will  foster  gains  in  his 
political  rights.  Equality  at  the  workplace  and  massive  education  programs  for  black 
and  non-white  workers  ultimately  will  affect  every  aspect  of  their  lives,  public  and 
private. . . .  Simply  put.  theevidencereveals  that  the  Principles  are  aconduit  from  the 
workplace  through  which  the  workers  learn  to  address  broader  societal  issues.  Includ- 
ing political  rights.  . . . 

The  Pnnciples  are  not  an  academic  response  designed  to  advance  the  views  of  those 
who  are  proponents  of  cither  investment  or  divestment.  To  the  contrary,  the  Principles 
are  a  pragmatic  policy,  based  upon  the  most  judicious  engagement  of  available  re- 
sources, and  are  intended  to  improve  the  quality  of  lite,  to  help  bring  justice  to 
unliberated  people,  and  to  help  build  a  peaceful,  fxe  South  Africa  for  everyone.  The 
ultimate  purpose  of  the  EhiiKiples  is  to  contribute  toward  the  elimination  of  apartheid. 
The  enormous  resoim:es  artd  influence  of  U.S.  companies  present  a  ciitica)  mass  whkh 
can  have  a  profound  catalytic  effect  favoring  fundamental  change  In  South  Afiica.  With 
the  help  of  Almighty  God.  I  still  believe  attainment  of  these  goals  is  possible. 

D.  The  morality  of  divestment 

Even  if  the  costs  and  risks  are  high,  and  even  if  there  is  also  almost  no 
likelihood  of  blunderbuss  divestment's  accomplishing  anything,  still  it  is 


^'Eighth  EUpoit,  supra  a.  23,  at  4. 
"Supra  n.  55.  at  44l>443. 


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defended  on  the  ground  dut  it  is  the  only  moral  position.  It  is  neither  the 
tmly  moral  one  nor  even  moral. 

First,  there  is  the  deepest  difficulty  in  predicting  which  route  is  more 
likely  tobring  the  changes  we  all  seek — cither  responsible  presence  in 
South  Africa,  specifically  including  educating,  training  and  promoting 
blacks,  or  the  other  route,  simple  withdrawal.  Very  few  of  us  have  the 
competence  to  judge  that,  and  even  persons  with  great  knowledge  of  South 
Africa  and  of  history  can  only  speculate  more  knowledgeably.  Remember 
that  when  Hitler  took  power  in  1933.  the  German  Communists  rejoiced 
because  soon  the  situation  would  come  apart  and  they  would  lake  power. 
Soon  they  were  dead. 

Given  the  difficulty  of  predicting  which  route  is  more  likely  to  produce 
constructive  change,  certainly  it  is  high  error  and  high  arrogance  to  label 
"immoral"  responsible  involvement  with  South  Africa.  In  such  uncertainty, 
neither  route  toward  change  can  be  called  immoral. 

Second,  there  is  no  evidence  that  divestment  has  had  any  impact  at  all. 
Consider  in  contrast  what  the  Sullivan  signatories  have  already 
accomphshcd:'' 

1.  End  ofalldiscriminaikin  in  all  faciodesand  on  all  company  property,  by 
all  signaiories. 

2.  Equal  pay  for  equal  woik.  by  all  signalories. 

3.  Minimum  wages  "well  above  the  appropdale  local  mialmum  economic 
living  level"  paid  by  all  but  three  signaiories. 

4.  Instead  of  only  hourly  wages  for  blacks,  all  signatories  have  common 
medical,  pension  and  insurance  plans. 

5.  Substantially  higher  pay  increases  for  black  employees  than  for  white, 
every  year  from  1979  to  1983. 

6.  Blacks  in  signatories' supervisory  and  management  categories:  21. 2%  in 
19S3.  upfrom  16.7%  in  1979  although  down  ftompre-recession  19SI's 
figure  of  2S.2%. 

7.  In  19S3. 6.942  blacks  in  signatories' training  programs,  upfrom  19S2's 
5,544.  Anodier  14,585  in  their  job  advancement  training,  up  from 
1979's  4.221.  Another  35,523  in  scholarship  and  tuition  refimd  pro- 
grams, up  from  1979's  5.077.  And  spent  on  education  and  training  for 
black  non-employees  in  1983,  $2,805,468  for  22,154  people,  up  from 
19S2's  $2,194,146  for  21.841  people. 

8.  Total  contributions  by  signatories  to  educational  and  training  programs 
for  blacks.  $13,278,000  in  1983,  up  from  1978-9's  $2,740,000. 

9.  Total  contributions  outside  the  busioess  to  inqxove  health  care  and 
living  conditions,  $4,098,600. 

10.  Total  contributions — education/tiaining,  health/ welfare,  and  black  en- 
trepteneuiship,  $22,418,000  in  1983,  up  from  $3,632,000  in  1978. 

1 1 .  "Adoption"  by  signatories  of  200  schools,  up  fntm  96  in  1980  although 
down  in  dollars. 

12.  Similar  Eun^an  and  Canadian  codes  adopted  and  three  South  African 
company  codes.  In  1979,  Kl  South  African  companies,  led  by  Barlow 


'^SuUivan  signatories'  results  are  drawn  from  sources  in  n.  55.  supra. 


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lUocI  (over  750,000  employMS)  and  including  anoiher  mijor  conglom- 
eiBte.  fonnedaconsoitium  for  similar  action.  A  number  of  Iheir  member 
companies,  all  South  African-owned,  are  recognizing  "uniegisteied" 
tabor  unions  as  well  as  registered  (mks.  an  unprecedented  step  among 
such  companies. 
13.  Efforts  in  Weston  Europe  and  South  Afijca  10  enlist  more  companies  in 
dK  codes. 

Given  such  results,  it  is  even  more  certainly  wrong  to  call  responsible 
involvement  immoral,  and  even  more  [»t>bable  that  this  route  is  the  more 
moral  because  more  effective  and  demonstrably  life-enhancing. 

Third,  since  it  is  wrong  to  discriminate  on  bases  that  ignore  irKrit,  ab- 
solute divestment  is  inmxnal.  Kellogg  was  die  first  fonign — not  just  U.S. — 
company  to  recognize  and  bargain  with  a  black  union. ^  Ford  was  the  first 
foreign  company  to  promote  blacks  to  be  shop  stewards.  Control  Data  is  a 
way-out-front  leader  in  education,  including  the  most  modem  skills.^' 
Another  U.S.  firm  was  the  first  to  bring  about  desegregated  housing.  Sulli- 
van signatories  have  ended  discrimination  on  company  property  and  some 
have  gotten  desegrated  housing  into  use.  (Sometimes  imaginative  manage- 
ment is  amazing.  One  factory  supervisor,  ordered  to  end  segregated  dining 
rooms,  tore  down  the  wall  between  them  but  immediately  replaced  it  with  a 
complete  trellis  and  planted  thick  ivy  covering  the  trellis.  Soon  he  thinned 
the  ivy,  soon  after  let  it  wither,  and  soon  after  that  he  removed  the  trellis.) 

Are  such  companies  the  same  as  Boeing,  which  will  not  sign  the  Sullivan 
Principles,  or  Baker  Intemational,  which  was  dropped  as  a  signatory  and  is 
on  record  that  its  only  obligations  are  to  its  stockholders  and  customers?  Is  it 
moral  to  ignore  the  difference  between  those  who  care  and  try,  and  those 
who  do  not?  New  Jersey's  Assembly  Speaker  Alan  Karcher  dismisses  the 


'"Lane  Kiildand  declared  "aiding  South  A&ican  unions  the  most  elective  means  of  promot- 
ing equality."  And  the  head  of  South  A&ica's  largest  black  labor  federation,  Pbirosaw  Camay, 
said  the  most  effective  way  to  piessuie  South  Africa  to  end  apaitheid  is  a  can^iaign  of 
"selective  divestment."  He  "noted  that  unions  within  his  country  are  divided  on  stnlegy.  with 
some  advocating  total  disinvestment,  some  opposing  it.  and  others  saying  it  should  be  aimed 
only  at  linns  abusing  worfceis."  Both  speakers  addressed  a  strategy  conference  on  labw  in 
South  Africa  sponsored  by  AFL-CIO  African-American  Labor  Center  and  the  A.  Philip 
Randcdpb  Educational  Fund.  Washington  Post,  Ljibor  Urged  to  Pressure  South  Africa,  Jan.  II, 
I9S5,  p.  A13. 

"ConiiDl  Data's  Chainnan  William  C.  Nonis  sent  most  state  pension  investment  ofhceis  in 
December  1983  his  p^jer  on  "South  Africa:  A  Case  fyc  Selective  Investment,"  detailing 
CtMiIrot  Data's  efforts.  They  also  ran  full-page  ads  in  South  Africa,  e.g.: 

"Elia*  Mudau  should  have  been  an  engineer.  He  had  talent.  ...  At  the  age  of  10,  Elias 

designed  a  bicycle.  Now  he  rides  one. 

"Elias  represents  a  tragedy— not  just  for  himself,  but  for  South  Africa.  .  .  . 

"Omtrot  Data  is  meeting  the  need  for  training  and  education  with  PLATO.  This  is  a 

con^wler-based  training  system,  developed  by  an  intemalioDal  team  of  educationalists,  and 

used  in  more  than  20  countries  atound  the  world.  .  , 

"Call  Ron  Mukdge  ...  or  write  to  CtMitrol  Data  HQ  .  .  .  Sandtoo  ..." 


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difference,  saying  tfie  Sullivan  Principles  remind  him  of  the  sign  over  dw 
entry  to  Nazi  concentration  camps:  "Woik  Will  Set  You  Free."  Would  such 
a  viewer  also  see  no  difference  between  Eichman  and  Ike,  since  both 
ivesided  over  killing? 

Fourth,  is  it  immcKal  or  only  hypocritical  to  divest  but.  as  a  Michigan 
university  did,  then  assure  a  divested  company  (Dow  Chemical,  a  Michigan 
firm  which  raised  the  question  after  being  divested)  diat  its  annual  contribu- 
dons  were  still  entirely  welcome? 

Is  it  moral  to  treat  South  Africa  as  the  only  serious  problem?  Anyone  who 
has  discussed  divestment  knows  the  ritual  arguments  about  Libya,  USSR, 
Amin's  Uganda,  Ethiopia,  etc.  But,  it  is  said.  South  Africa  is  unique 
because  it  enshrines  racism  in  law.  Regrettably,  many  countries  do.  Liber- 
ia, for  example ,  a  country  with  special  ties  to  the  U.  S . .  allows  only  blacks  to 
be  citizens,  only  citizens  to  own  land,  etc. 

Last,  absolute  divestment  is  immoral  because  it  certainly  risks,  and 
almost  certainly  inflicts,  injury  on  people  who  may  depend  on  a  pension 
fund's  doing  well,  or  who  are  students  relying  significantly  on  an  endow- 
ment— people  whose  interest  is  enshrined  in  trust  obligation.  Advocating 
the  diversion  of  funds  in  trust  for  the  advancement  of  education  or  retire- 
ment security  is  wrong.  Inflicliiig  financial  loss  on  the  people  for  whose 
benefit  the  funds  were  established  in  reliance  on  fiduciary  faidifulness  is 
abuse  of  trust. 

What  is  right?  The  most  careful  exploration  we  have,  by  the  Rockefeller 
Commission,  made  three  recommendations:  First,  no  new  investtiKnt.  Sec- 
ond, major  giving  for  social  development  by  companies  involved  in  South 
Africa.  Third,  the  Sullivan  Principles.  That  is,  we  must  "keep  saying  to  the 
companies,  we  must  do  more,  more,  more  ...  we  must  move  faster,  faster, 
faster. . .  ."^^  If  ultimately  dialog  fails  because  of  corporate  disregard  for 
this  terrible  problem,  then  divest.  We  should  join  efforts  like  the  one  (led  by 
President  Bok)  that  now  has  300  nonwhite  South  Africans  in  U.S.  universi- 
ties. We  should  join  efforts  to  make  sure  our  own  Government  is  not 
passive. 

All  that  is  harder  work  than  blunderbuss  divestment.  The  moral  prudent 
person  will  meet  the  challenge. 

E.  A  postscript  on  the  conslilutionalily  of  absolute  divestment:  Are  stale 
and  local  funds  adopting  it  violating  the  Commerce  Clause  and  exclu- 
sively Federal  responsibility  for  foreign  affairs? 

A  Congressional  Research  Service  analysis  in  January  1984^  presents 
die  constitutional  questions  raised  by  absolute  divestment.  I  am  confident 


"Rev.  Sullivan  to  the  signatories,  Nov,  9,  1983. 

"Eig.  Analysis  of  Whether  the  DC,  South  Africa  Investment  Act  Violates  the  Conunerce 
Clause  and  the  Exclusive  Federal  Power  Id  Conduct  Foreign  Relations  (Am,  Law  Div, ,  Ian. 
31.  1984). 


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that  a  statute  like  Massachusetts'  would  be  held  invalid  if  subjected  to  a 
properly  framed  lawsuit. 

States  can  regulate  interstate  commerce  to  promote  such  local  interests  as 
health  and  safety,  and  sometimes  even  local  economic  interests,  so  long  as 
no  federal  interest  stands  in  the  way.  The  question  is  whether  the  state 
statute,  on  balance,  promotes  legitimate  local  concerns  without  interfering 
(or  interfering  unduly)  with  national  concerns.  Absolute  divestment  does 
not  promote  local  economic  concerns,  since  it  does  not  reflect  concern  for 
the  stability  of  the  investments:  it  singles  out  one  nation's  possible  instabil- 
ity, ignores  all  other  potentially  unstable  nations  and  all  other  types  of 
investment  risk,  and  ignores  the  extent  to  which  a  company  wouM  be 
a^ected  even  if  its  South  African  investment  were  lost.  Absolute  divest- 
ment statutes  or  practices  are  not  as  defensible  as  nondiscriminatory  laws 
barring  state  agencies  and  funds  from  supporting  racial  discrimination, 
because  it  applies  to  corporate  involvement  in  a  specified  nation  regardless 
of  discrimination  elsewhere  and  regardless  of  the  corporation's  actual 
conduct. 

When  it  is  foreign  commerce  that  a  slate's  action  affects,  there  is  a  greater 
burden  on  the  state  in  the  balancing  between  local  and  national  interests. 

Absolute  divestment  statutes  or  practices  are  vulnerable  first  because 
their  purpose  involves  the  affairs  of  another  nation  and  our  foreign  relations 
with  that  nation  and  with  other  interested  nations.  Purpose  is  a  recognized 
factor  given  weight  in  the  balancing.^  Second,  if  many  or  even  several 
jurisdictions  passed  such  statutes,  there  would  be  a  significant  impact  on 
interstate  commerce  at  least  because  of  securities  transactions;  and  if  the 
divestment  had  its  intended  effect  even  on  one  corporation,  clearly  there 
would  be  an  impact  on  foreign  commerce.  Third,  the  diversity  of  ap- 
proaches to  divestment  (see  section  111.  B.  2.  above)  is  inconsistent  with  the 
national  interest' in  uniform  regulation  of  commerce.  Fourth,  the  prolifera- 
tion of  targets  of  divestment — South  Africa  of  course,  but  also  Namibia 
(Boston  and  the  Oregon  endowment),  Zimbabwe  (the  Oregon  endowment), 
Iran  (Connecticut)  and  Northern  Ireland  (Massachusetts  on  military  in- 
volvement there  and  New  Yoric  City's  pending  ban  against  firms  discrimin- 
.  ating  against  Catholics  there) — is  both  inconsistent  with  national 
uniformity,  and  highlights  the  extent  to  which  these  efforts  reflect  not  local 
concerns  but  varying  viewsof  what  our  foreign  policy  should  be.  FifUi  and 
last,  various  Federal  statutes — the  1976  Act  curbing  arms  sales;  action  that 
has  been  taken  under  the  1979  Export  Administration  Act;  and  special 
treatment  of  Expon-Import  Bank  aid  for  some  South  Africa-involved  trade 
and  investment — indicate  Federal  regulation  of  the  subject  probably  pre- 
empting the  field  even  if  no  other  factors  were  present. 

The  exclusive  Federal  power  to  conduct  foreign  relations  has  been  held  to 

''See  eg..  ZstAemig  v.  UaUr.  389  U.S.  429,  437-8.  442  (1968). 


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bar  even  state  statutes  reflecting  greater  local  interests  and  less  impact  cm 
fweign  nations  (or  on  our  relations  with  them)  than  absolute  divestment. 
The  leading  case,  Zsckemig  v.  hSilUr  of  1968,**  struck  down  an  Oreg<m 
statute  requiring  its  probate  courts,  before  allowing  inheritance  by  someone 
abroad — essentially,  in  Russia  and  its  satellites — to  find  that  U.S.  citiz^is 
would  be  able  to  inherit  from  an  estate  in  that  legatee's  country,  and  that  that 
country  would  not  confiscate  the  inheritance  going  to  the  legatee  there. 
While  the  Court's  tests  raise  the  usual  questions  of  just  where  lies  the  line, 
absolute  divestment  falls  on  the  wrong  side.  The  state  interest  in  probate  is 
traditionally  recognized,  but  the  state  interest  in  changing  a  foreign  nation's 
practices  is  nil.  The  impact  (mi  a  foreign  nation  if  an  occasional  individual 
there  may  be  denied  a  legacy,^  is  tiny  or  less.  The  impact  on  a  foreign 
nation  from  an  effcHt  to  sever  American  economic  involvement  widi  it  is 
potentially  massive.  And  the  impact  on  the  Federal  Government's  ability  to 
conduct  foreign  relations  if  state  governments  are  also  trying  to  affect  them 
is  clear.  Further,  the  interest  in  not  allowing  a  state  to  provoke  retaliation 
firom  abroad — e.g.,  cutting  off  our  platinum,  chrome,  etc. — is  obviously  a 
national  interest  thattnust  be  controlled  at  the  federal  level. 

Note  that  absolute  divestment  focuses  on  South  Africa  itself,  while  C(hi- 
necticut's  more  prudent  course  focuses  on  the  conduct  of  the  particular 
corporations.  Here,  then,  in  the  constitutional  vulnerability  of  absolute 
divestment,  is  yet  another  indication  of  its  inferiority  to  steps  like 
Connecticut's. 

V.  A  WORD  ON  FOUNDATIONS,  CHURCHES  AND  CHARITIES. 
AND  ENDOWMENTS 

In  the  context  of  divergent  investing,  few  words  need  be  added  about 
these  funds. 

Foundations,  whose  total  assets  are  about  S47  billion,  are  hard  to  general- 
ize about.  Many  have  purposes  sufficiently  defined  that  the  label  "diver- 
gent" remains  applicable.  Some  repose  a  broader  authority  in  their  trustees 
so  that  it  is  wrong  to  say  that  the  pursuit  of  any  new  goals  via  investing 
would  be  "divergence."  To  the  extent  that  a  foundation  has  a  defined  goal  or 
range  of  goals,  e.g.,  promotion  of  education  or  the  environment,  then  the 
considerations  pertinent  to  divergent  investments  by  pension  funds  are 
essentially  applicable.  To  the  extent  that  a  foundation's  goals  are  more 
loose-knit,  the  only  caution  concerns  the  efficiency  and  effectiveness  of 
pursuing  non-financial  goals  by  choice  of  investments.  Pax  World's  mutual 


''The  Coun  in  Zschtrnig  expressly  noted  how  minor  and  incidental  was  the  impact  on 
foreign  nations,  but  still  beld  the  statute  invalid.  And  this  was  in  the  face  of  an  amicus  brief 
from  ttw  Depanment  of  Justice  defending  the  state  statute. 


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fund  (above,  section  11)  is  an  example  of  well-intentioned  inventing  that 
advances  one  advisory  finn  more  than  anything  else — if  anything  else. 
More  significantly,  the  Ford  Foundation  built  up  substantial  experience 
showing  that  the  most  effective  route  is  investing  to  maximize  the  funds 
available  to  pursue  desired  goals,  and  then  pursuing  those  goals  by  direct 
support.  Need  more  be  said? 

Churches  and  other  charitable  organizations  are,  for  these  purposes, 
substantially  similar  to  foundations,  witii  one  important  difference .  Founda- 
tions' board  membership  tends  to  be  more  stable  than  those  other  organiza- 
tions' boards.  The  more  new  trustees,  the  more  need  to  re-educate  about 
investing,  prudent  or  otherwise — and  the  more  likelihood  of  year-in,  year- 
out  discussions  of  which  non-financial  goals  to  pursue  and  how  to  pursue 
them.  That  in  itself  seems  an  argument  for  investing  for  strictly  financial 
goals  and  pursuing  non-financial  goals  with  the  enhanced  means  made 
available  by  prudent  investing  (subject  of  course  to  the  non-injurious  over- 
lay of  considerations  like  no  alcohol-tobacco  or  no  blatant  law-breakers). 

University  endowments,  with  about  $30  billion,  are  unique.  No  one  has 
treated  this  matter  as  fully  as  Harvard's  President  Bok.^^  An  informal  and 
incomplete  statement  of  his  position  is  that  "A  university  should  in  a  way 
compatible  with  its  mission  try  to  make  a  constructive  effort  to  solve  the 
problems  of  the  world"  instead  of  relying  on  "negative  ineffective  ways  like 
fiddling  around  in  stock. "^  Under  a  program  Bok  began  and  now  chairs, 
160  non-white  South  Africans  were  in  American  universities  in  1983-84,  up 
from  six  in  the  year  the  program  began ,  1 979-80  (a  similar  number  is  here  in 
a  companion  program).  Those  160  are  here  for  four-year  undergraduate 
degrees,  some  for  master's  degrees.  They  are  selected  by  a  bi-racia)  com- 
mittee in  South  AMca,  headed  by  Bishop  Tutu. 

A  fuller  statement  of  Bok's  view  that  universities  arc  different  in  crucial 
ways  is  to  be  found  in  his  article  reprinted  in  this  monograph;  see  especially 
pages  100-102. 


VI.  CONCLUSION 

Institutional  investors'  assets  are  huge,  with  pension  funds  making  the 
others  seem  tiny.  But  these  assets  are  not,  as  Gary  Trudeau  put  it,  "just 
sitting  there."  Pension  liabilities  dwarf  the  assets,  and  the  protection  of 
retirement  security — or  the  endowments'  goal  of  advancing  education  and 
the  foundations'  varied  goals — are  all  not  only  socially  responsible  but  truly 


*'Supra,  n.  37. 

**Htfvard  Crimson,  Tht  Bok  AlienuUive,  p.  F-S. 


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noble  endeavOTS.  How  well  those  objectives  are  met  depends  in  large 
measure  on  the  investment  pcrfonnance  of  their  funds. ^ 

The  varied  efforts  to  divert  these  funds  from  their  crucially  impwtant 
goals,  whether  to  [MDmote  local  investing  or  avoid  investing  abroad,  or  to 
promote  a  special  clearly  desirable  social  goal  like  environmental  improve- 
ment or  small  business  or  low-income  housing,  or  to  discourage  cleaily 
undersirable  conduct  like  sustained  and  substantial  violation  of  law  or 
uncaring  aad  irresponsible  involvement  in  South  Africa,  come  from  a  vari- 
ety of  motivations.  Some  advocates  of  divergent  investing  arc  as  well- 
intentioned  as  people  can  be,  although  almost  none  of  those  advocates  even 
think  ^XMit  the  goals  they  may  be  interfering  with,  and  even  fewer  have  the 
patience  to  consider  the  investment  implications  of  their  effort.  Other  advo- 
c^es  may  or  may  not  be  so  well-intentioned,  but  knowingly  put  their  own 
goals  ahead  of  the  social  and  legal  trust  obligation  to  use  other  people's 
ntoney  only  for  the  noble  purposes  for  which  the  fiind  was  created.  Such 
struggle  among  competing  noble  goals  is  natural  in  a  pluralist  society.  But 
there  are  also  some  advocates  who  (sad  to  say)  are  usually  the  most  power- 
ful of  the  divergent  pressures  on  these  funds — particularly  on  public  pen- 
sion funds — who  use  the  facade  of  helping  housing  or  in-state  development 
to  enrich  their  own  firms  or  their  power  in  politics  or  in  a  union,  and  perhaps 
their  campaign  coffers  as  well. 

Confusion,  let  alone  deception,  about  precisely  what  is  really  being 
advocated  usually  can  be  averted  only  by  following  Sergeant  Friday's 
practice  of  getting  the  facts.  If  a  particular  divergent  investment  or  policy 
will  not  injure  the  fund  and  does  not  reflect  merely  the  personal  view  of  the 
trustees,  then  objection  to  going  forward  is  either  foolishly  narrow-minded 
(asif  decisions  must  be  exclusively  financial)  or  else  plain  foolish.  But  that 
"if  is  a  crucial  one.  Too  often  the  only  investment  aspect  considered  is  the 
likely  returns,  sometimes  measuring  them  relative  to  inappropriate  com- 
parisons, more  often  ignoring  the  other  essential  aspects  of  returns:  relative 
risk,  relative  liquidity,  and  implementati<Mi  costs. 

Without  the  persistence  to  bring  out  the  facts  and  the  patience  for  full 
analysis,  the  legal  and  moral  obligation  to  abide  by  the  trust  power  over 
other  people's  money  and  interests  will  not  be  hcmored.  Hcmoring  that 


^o  improve  the  inveslmenl  performance  of  such  funds,  which  do  not  all  do  as  well  as  they 
should  and  are  not  as  accountable  as  Ihey  should  be,  involves  several  problems  that  stilt  need 
vioA.  See,  e.g.,  my  efforts  (as  task  force  chairman,  editor  and  pan  author)  in  Twentieth 
Centuiy  Fund.  Abuse  on  Wall  Stieei:  Conflicts  of  Interest  in  the  Securities  Mailtets(19S0):  and 
my  Should  Pension  Funds  be  Used  lo  Achieve  "Social" Goals.  I  l9Trusts  &  Estates  IO(Sept .), 
27  (Oct.)  and  26  (Nov.)  (1980);  Why  Mutual  Funds  are  Top  Performers  (Client  as  Culprit). 
E>ensions  &  Investment  Age,  July  20,  1981 .  at  13  and  editorial  at  10:  Why  Have  Pension  Funds 
Perftnmed  So  Poorly?  (unpubli^ed  talk.  May  1982);  Picking  Inveslmenl  Managers,  Pensions 
&  Investments.  Apr.  24,  1978,  at  61  and  editorials  at  S;  Govenunenl  Finance  Officers  Ass'n, 
Resources  in  Eteview;  New  Directions  in  Investment  and  Control  of  Pension  Funds,  July  1984. 
p.  20  and  id.,  New  Data  on  Pension  Funds.  Sept.  1984.  p.  22  Oiook  reviews). 


69 

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obligation  takes  some  knowledge  and  some  woik.  When  the  challenge  is 
increased  by  having  to  fend  off  soap-box  simplifiers,  well-intentioned  or 
not,  it  also  takes  savvy,  durability  and  even  courage.  Generations  of  experi- 
ence of  countless  faithfiil  and  prudent  fiduciaries  doing  their  best  to  meet 
their  obligations  make  clear  dial  the  challenge  will  be  met. 


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The  Sullivan  Principles 

Statement  of  Principles 

of  U.S.  Finns  with  Affiliates 

In  the 

Republic  of  South  Africa 

PRINCIPLE  I:  Non-Segregation  of  the  races  in  all  eating .  comfort  and  work 

facilities 

Each  signalor  of  the  Sutement  of  Principles  will  proceed  immediately  to: 

•  Eliminate  all  vestiges  of  racial  discrimination. 

•  Remove  all  race  designation  signs. 

•  Desegregate  all  eating,  comfort  and  work  facilities. 

PRINCIPLE  II:  Equal  and  fair  employment  practices  for  all  employees 
Each  signator  of  the  Statement  of  Principles  will  proceed  immediately  to: 

•  Implement  equal  and  fair  tenns  and  conditions  of  employment. 

•  Provide  non-discriminatory  eligibility  for  benefit  plans. 

•  Establish  an  appropriate  and  comprehensive  procedure  for  handling 
and  resolving  individual  employee  complaints. 

•  Support  the  elimination  of  all  industrial  racial  discriminatory  laws 
which  impede  the  implementation  of  equal  and  fair  tenns  and  condi- 
tions of  employment,  such  as  abolition  of  job  reservations,  job  frag- 
mentation, and  apprenticeship  restrictions  for  Blacks  and  other  non- 
whites. 

•  Suppod  the  elimination  of  discrimination  against  the  rights  of  Blacks 
to  form  or  belong  to  government  registered  and  unregistered  unions 
and  acknowledge  generally  the  rights  of  Blacks  to  fonn  their  own 
unions  or  be  represented  by  trade  unions  which  already  exist. 

•  Secure  rights  of  Black  workers  to  the  freedom  of  association  and  assure 
protection  against  victimization  while  pursuing  and  after  attaining 
these  rights. 

•  Involve  Black  workers  or  their  representatives  in  the  development  of 
programs  that  address  their  educational  and  other  needs  and  those  of 
their  independents  and  the  local  community. 


PRINCIPLE  III:  Equal  pay  for  all  employees  doing  equal  or  comparable 

work  for  the  same  period  of  lime 

Each  signator  of  the  Statement  of  Principles  will  proceed  inunediately  to: 
•  Design  and  implement  and  wage  and  salary  administration  plan  which 
is  applied  equally  to  all  employees,  regaixUess  of  race,  who  are  per- 
forming equal  or  comparable  work. 


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•  Ensure  an  equitable  system  of  job  classifications,  including  a  review  of 
the  distinction  between  hourly  and  salaried  classifications. 

•  Determine  the  extent  upgrading  of  personnel  and/or  jobs  in  the  upper 
echelons  is  needed,  and  accordingly  implement  programs  to  acc(»n- 
plish  this  objective  in  representative  numbers,  insuring  the  employ- 
ment of  Blacks  and  other  non-whites  at  all  levels  of  company 
operations. 

•  Assign  equitable  wage  and  salary  ranges,  the  minimum  of  these  to  be 
well  above  the  appropriate  local  minimum  economic  living  level. 

PRINCIPLE  IV:  Iniiiaiion  of  and  development  of  training  programs  thai 
will  prepare,  in  substantial  numbers.  Blacks  and  other  non-whites  for 
supervisory,  administrative  clerical  and  technical  jobs. 
Each  signator  of  the  Statement  of  Principles  will  proceed  immediately  to: 

•  Determine  employee  training  needs  and  capabilities,  and  identify  em- 
ployees with  potential  for  further  advancement. 

•  Take  advantage  of  existing  outside  training  resources  and  activities, 
such  as  exchange  programs,  technical  colleges,  and  similar  institutions 
or  programs. 

•  Support  the  development  of  outside  training  facilities,  individually  or 
collectively — including  technical  centers,  professional  training  expo- 
sure, c(»Tespondence  and  extension  courses,  as  appropriate,  for  exten- 
sive training  outreach. 

•  Initiate  and  expand  inside  training  programs  and  facilities. 

PRINCIPLE  V:  Increasing  the  number  of  Blacks  and  other  non-whites  in 

management  and  supervisory  positions. 

Each  signator  of  the  Statement  of  Principles  will  proceed  immediately  to: 

•  Identify,  actively  recruit,  train  and  develop  a  sufficient  and  significant 
number  of  Blacks  and  other  non-whites  to  assure  thai  as  quickly  as 
possible  there  will  be  appropriate  representation  of  Blacks  and  other 
non-whites  in  the  management  group  of  each  company  at  all  levels  of 
operations. 

•  Establish  management  development  programs  for  Blacks  and  odier 
non-whites,  as  needed,  and  improve  existing  programs  and  facilities 
for  developing  management  skills  of  Blacks  and  other  non-whiles. 

•  Identify  and  channel  high  management  potential  Blacks  and  other  non- 
white  employees  into  management  development  programs. 

PRINCIPLE  VI:  Improving  the  quality  cf  employees'  lives  outside  the  work 
environment  in  such  areas  as  housing,  transportation,  schooling,  recrea- 
tion and  health  facilities 
Each  signator  of  the  Statement  of  Principles  will  proceed  immediately  to: 

•  Evaluate  existing  and/or  develop  programs,  as  appropriate,  to  address 

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the  specific  needs  of  Black  and  other  non-white  employees  in  the  areas 
of  housing,  health  care,  transportation  and  recreation. 

•  Evaluate  methods  for  utilizing  existing,  expanded  or  newly  established 
in-house  medical  facilities  or  other  medical  jxxigrams  to  improve  medi- 
cal care  for  all  non-whites  and  their  dependents. 

•  Participate  in  the  development  of  programs  that  address  the  educational 
needs  of  employees,  their  dependents,  and  the  local  community.  Both 
individual  and  collective  programs  should  be  considered,  in  addition  to 
technical  education,  including  such  activities  as  literacy  education, 
business  training,  direct  assistance  to  local  schools,  contributions  and 
scholarships. 

•  Support  changes  in  influx  control  laws  to  provide  for  the  right  of  Black 
migrant  workers  to  normal  family  life. 

•  Increase  utilization  of  and  assist  in  the  development  of  Black  and  other 
DOD- white  owned  and  operated  business  enterprises  including  distribu- 
tors, suppliers  of  goods  and  services  and  manufacturers. 

Increased  Dimensions  of  Activities  Outside  the  Workplace 

•  Use  influence  and  support  the  unrestricted  rights  of  Black  businesses  to 
locate  in  the  Urban  areas  of  the  nation. 

•  Influence  other  companies  in  South  Africa  to  follow  the  standards  of 
equal  rights  principles. 

•  Support  the  freedom  of  mobility  of  Black  workers  to  seek  employment 
opportunities  wherever  they  exist,  and  make  possible  provisions  for 
adequate  housing  for  families  of  employees  within  the  proximity  of 
workers  employment. 

•  Support  the  recension  of  all  apartheid  laws. 

With  all  the  foregoing  in  mind,  it  is  the  objective  of  the  companies  to 
involve  and  assist  in  the  education  and  training  of  large  and  telling  numbers 
of  Blacks  and  other  non-whites  as  quickly  as  possible.  The  ultimate  impact 
of  this  effort  is  intended  to  be  of  massive  proportion,  reaching  and  helping 
millions. 

Periodic  Reporting 

The  Signatory  Companies  of  the  Statement  of  Principles  will  proceed  im- 
mediately to: 

•  Report  progress  on  an  annual  basis  to  Reverend  Sullivan  through  the 
independent  administrative  unit  he  has  established, 

•  Have  all  areas  specified  by  Reverend  Sullivan  audited  by  a  certified 
public  accounting  finn. 

•  Inform  all  employees  of  the  company's  annual  periodic,  report  rating 
and  invite  their  input  on  ways  to  improve  the  rating. 

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TEXT  OUTLINE 


1.  Intitxliiction 

n.  Conclusion 

in.  Hw  Constitutional  Anay  . 

IV.  Paiticipant  or  Regulator  . . 

V.  Intcmtue  CcHnmcFce 

VI.  Foreign  Commerce 

VII.  Foreign  Relations 

Vm.  Final  Word 


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DISINVESTMENT— THE 

CONSTITUTIONAL 

QUESTION 

by  Albert  P.  Blaustein* 

I.  INTRODUCTION 

In  justifiabte  outrage  against  patterns  of  human  rights  violations  through- 
out the  world,  American  states,  cities,  universities  and  both  public  and 
private  funds  are  now  engaged  in  the  process  of  disinvestment'  from  hims 
doing  business  in  the  offending  nations. 

At  year's  end  1984,  at  least  half  of  the  states  of  the  United  States  (plus  the 
EHstrict  of  Columbia)  had  introduced  legislation  compelling  South  African 
disinvestment^ — and  such  laws  had  been  enacted  in  Connecticut,  Mary- 
land, Massachusetts.  Michigan  and  Nebraska.  In  addition.  New  York  City, 
Boston,  Philadelphia  and  possibly  another  dozen  or  so  major  municipalities 
had  passed  ordinances  to  that  effect — "with  officials  in  Chicago,  Detroit, 
Los  Angeles  and  Seattle  apparently  contemplating  comparable  moves. "^ 

Nor  is  South  Africa  the  only  target.  Disinvestment  laws  and  ordinances 
have  been  enacted  with  regard  to  the  Soviet  Union  (Michigan),  Iran  (Con- 
necticut), Northern  Ireland  (Massachusetts),  Namibia  (Boston  and  Oregon 
endowments)  and  Zimbabwe  (Oregon  endowment).  Poland  is  a  secondary 
target  in  proposed  legislation  in  Kansas,  and  Massachusetts  is  considering 
the  addition  of  Sri  Lanka  to  its  prohibitions. 

Whether  disinvestment  will  achieve  its  human  rights  objectives — or, 
indeed,  be  counterproductive — is  discussed  elsewhere  in  this  volume.  Ditto 

'In  this  contexl,  the  word  "disinvestmenl"  is  used  interchangeably  with  the  tenns  -divest- 
ment" and  "divestiture."  Technically  speaking,  however,  "'disinvestment'  moiE  correctly 
ai^lies  to  Che  act  of  withdrawing  money  that  has  jnrviously  been  invested  [while]  'dlvestmenl' 
applies  to  the  more  active  procedure  of  ridding  oneself  of  something,  including  certain  stoclu 
in  a  portfolio."  Chettle.  Tlie  Law  itkI  Polky  of  Divestment  of  South  African  Stock,  15  Law 
and  Policy  in  Int'l  Bus.  445  (19S3).  n.  I. 

^The  April.  I9S4,  Lcgutoive  [/pjarr  of  the  American  L«^slative  Exchange  Council  ^port- 
ed on  more  Chan  66  South  African  disinvestment  bills  pending  in  22  states.  Legislative  action  in 
26  states  and  the  DistiicC  of  Columbia  is  compiled  in  Appendix  11  of  the  New  Jersey  Public 
Hearings  before  the  Assembly  State  Government.  CivLI  Service,  Elections,  Pensions,  and 
Veteran's  Affairs  Committee  on  Assembly  Bills  1308  and  1309.  held  in  Trenton,  N.J.. 
September  24,  1984.  (Slate  Actions  on  Legislation  Conceming  Divestment  of  State  Funds  in 
the  Republic  of  South  Africa,  i^.  72s-77x.) 

'Olson,  Introduciion  to  this  volume,  p.  vii  and  n.  1. 

•Chaitman  and  President.  Human  Rights  Advocates  International;  Professor  of  Law, 
Rutgers  University  School  of  Law — Camden .  The  research  contribution  of  Rutgers  law  student 
Patricia  E.  Larkin  is  gratefrilly  acknowledged. 


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the  inevitable  cost  and  potential  hann  to  affected  beneficiaries.  The  conflict 
between  disinvestment  legislation  and  laws  prescribing  the  obligations  and 
duties  of  trustees  is  likewise  analyzed  elsewhere.  Nor  will  this  chapter 
review  the  validity  of  disinvestment  statutes,  (»dinances  and  activities  un- 
der the  state  constitutions. 

The  broad  question  under  consideration  here  is  the  constitutionality  of 
disinvestment  laws,  in  general,^  under  the  Constitution  of  the  United  States. 

II.  CONCLUSION 

Disinvestment  laws  are  of  such  doubtful  constitutionality  that  legal  coun- 
sel shotild  presently  advise  against  their  passage  and,  where  enacted,  cau- 
tion against  their  enforcement. 

Such  conclusion  is  not  predicated  upon  professional  theory  or  law  review 
commentary,  although  neither  can  be  excised  from  the  thinking  on  the 
subject.  The  unconstitutionality  argument  is  real.  It  has  been  raised.  And  as 
long  as  it  remains  unresolved,  disinvestment  activities  are  better  consigned 
to  the  proverbial  back  burner. 

Here  is  a  compendium  (with  comments)  on  the  uncertain  status  of  the 
constitutionality  of  disinvestment  taws: 

I .  The  unconstitutionality  arguments  have  been  publicly  advanced — and 
well  publicized. 

a.  Undoubtedly  the  most  scholarly  statement  is  that  of  Prof.  Gordon 
B.  Baldwin  of  the  University  of  Wisconsin  Law  School,  based  on  his 
analysis  of  the  Wisconsin  disinvestment  statute.'  This  is  incorporated  in  a 
student  note  in  the  Wisconsin  Law  Review.^ 

b.  The  most  comprehensive  study  is  that  of  Larry  M.  Eig,  which  was 
prepared  for  the  Congressional  Research  Service  (CRS)  of  the  Library  of 
Congress.^  This  is  predicated  upon  the  District  of  Columbia  Act  and  is 
included  in  the  19S4  Congressional  hearings  on  resolutions  to  "reject" 
that  act." 

'Likewise  not  under  consideniion  are  possible  consiituiional  disabiliiies  based  on  the 
differences  between  the  various  disinvestmenl  statutes.  The  Conneclicul,  Massachusetts  and 
Netnaska  statutes,  for  example,  deal  with  state  pension  funds,  Che  Maryland  statute  is  con- 
cerned with  bank  deposits  and  the  Michigan  statute  with  university  endowments.  See.  Scbot- 
land.  p.  4g. 

'Wis.  Slat.  1136.29(1)  (1975). 

^ote.  Constitutionality  of  the  No  Discrimination  Clause  Regulating  University  of  Wiscon- 
sin Investments,  197S  Wis.  L.  Rev.  1059.  authored  by  Kevin  Wade  Guynn. 

'Analysis  of  Whether  the  District  of  Columbia  South  Africa  Investment  Act  (D.C.  Act  S-76) 
Violates  the  Commerce  Clause  of  the  Constitution  and  the  Exclusive  Federal  Power  to  Conduct 
Foreign  Relations.  Congressional  Research  Service ,  The  Library  of  Congress,  Jan,  31.  1984. 
Prepared  by  Larry  M.  Eig.  Legislative  Attoiney.  American  L.aw  Division. 

'South  Alrica  Divestment.  Hearings  and  Markups  before  the  Subcommitiee  on  Fiscal 
Affairs  and  Health  of  the  Committee  on  the  District  of  Columbia.  House  of  Representatives. 
98tbCong..  2d  Sess.  onH.  Con.  Res.  216  and  H.  Res.  372.  Ser.  No.  9S-14,  Jan.  31  and  Feb. 
7,  1984,  pp.  72-107.  These  resolutions  were,  ■To  reject  the  District  of  Columbia  Act  5-76  to 
Prohibit  the  Investment  ofD.C.  Funds  in  Financial  Institutions  and  Companies  Making  Loans 
to  or  Doing  Business  with  the  Republic  of  South  Africa  or  Namibia." 

76 

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c.  Ceitainly  the  most  publicized  is  the  article  by  John  H.  Chettle  on 

"The  Law  and  Policy  of  Divestment  of  South  African  Stock."^  Mr. 

Chettle  is  the  Director,  North  and  South  America,  of  the  South  Africa 

Foundation. 

None  of  these  three  studies  is  conclusive.  As  aptly  pointed  out  in  a 
memorandum  by  the  Washington  Council  of  Lawyers  on  the  District  of 
Columbia  Act "...  the  CRS  Memorandum  never  actually  concludes  that  the 
South  African  Investment  Act  is  unconstitutional — it  only  states  that  such 
argument  could  be  made.""*  (Whether  a  CRS  memorandum  could  or  should 
resound  more  coaclusively  is  another  type  of  question;  this  one  did  not.) 

The  Chettle  statement  is  overly  brief.  It  does  present  the  major  arguments 
and  does  list  the  major  precedents,  but  it  wants  of  adequate  analysis.  And 
the  memorandum  of  the  distinguished  Professor  Baldwin  has  three  infirmi- 
ties: (a)  its  public  presentation  has  been  filtered  through  the  law  review 
editing  process  on  its  way  to  publication;  (b)  its  arguments  could  be  distin- 
guished as  being  solely  applicable  to  the  Wisconsin  statute  and  the  Wiscon- 
sin facts;  and  (c)  it  was  written  back  in  1977,  prior  to  some  important 
Supreme  Couri  decisions  which  some  think  controlling  and  at  least  essential 
to  analyzing  the  issue.  These  are  discussed  below  under  the  heading,  "Par- 
ticipmt  or  Regulator,"" 

2.  Opinions  of  attorneys  general  and  other  government  counsel  are  in 
shon  supply.  Letters  requesting  their  views — officially  or  unofficially — 
were  sent  by  this  author  to  all  fifty  of  the  state  attorneys  general  on  January 
!1,  I98S,  but  no  responses  of  any  significance  were  received.'^ 

On  the  public  record  are  the  following — either  noncommital,  inconclu- 
sive or  sketchy,  but  recognizing  and  acknowledging  constitutional 
problems: 

a.  Now  being  widely  circuited  is  a  U.S.  Department  of  Justice  letter 

of  January  4,  1984,'^  containing  (and  sustaining)  this  sentence:  "The 

question  you  pose  is  a  novel  one  for  which  no  direct  precedent  seems  to 

be  available."  While  the  letter  states  and  restates  the  point  that  the 


"15  Law  ind  Policy  in  Im'l  Bus.  445  ( 1983).  Pages  51S  lo  525  are  devoted  loXomlJlulional 

"^Tbe  Washington  Council  of  Lawyers  Memorandum,  also  referred  10  as  the  memoranduni 
from  the  Lawyers  Committee  on  Civil  Riglits.  was  submitted  "in  concert"  with  tlie  prestigious 
Washington  law  hnn  of  Arnold  and  Porter.  Supra,  Note  8.  at  239-42 

"See  in/ra,  pp.  80-84  and  accompanying  notes. 

'^From  Wisconsin  came  the  1978  Depanmeni  of  Justice  opinion  letter  directed  to  the 
president  of  the  University  of  Wisconsin  system,  supra  n.  14;  and  from  Iowa  came  the  1984 
govemtn's  veto  message,  infra  n.  89.  Nebraska  reported  that  it  had  done  some  research  but 
"have  not  at  this  time  issued  any  formal  opinion  of  the  subject."  One  attorney  general  said  thai 
it  was  against  the  policy  of  his  office  to  respond  to  such  inquiries.  The  other  half-dozen 
re^xMises  said  that  the  question  had  not  aiisen. 

"Letter  from  U.S.  Depaitment  of  Justice,  Office  of  Legal  Counsel.  Office  of  die  Deputy 
Assistant  Attorney  General,  signed  Etobeit  B.  Shanks,  to  Ms.  Kathleen  Teague,  Executive 
Director,  American  Legislative  Exclunge  Council,  418  C  Sueet,  N.E.,  Washington.  D.C. 
20002,  January  4.  1984. 


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Department  is  not  authorized  to  provide  legal  opinions  or  legal  advice 
save  to  the  president  and  heads  of  executive  departments,  it  does  provide 
(in  its  own  phrase)  "a  few  general  observations."  And  such  observations 
suggest  a  number  of  constitutional  "arguments." 

b.  Two  opinions  were  rendered  by  the  Wisconsin  attorney  general  in 
1977  and  1978,  but  these  are  likewise  inconclusive  and  of  little  value  as 
precedent.  And  they  have  a  cloudy  history.'^  While  they  sustain  the 
constitutionality  of  the  Wisconsin  disinvestment  law,  they  rest  largely  on 
the  proposition  that  "the  statute  will  not  place  an  unlawful  burden  on 
interstate  commerce  since  the  percentage  of  total  dollars  in  interstate 
commerce  that  is  controlled  by  the  Board  of  Regents  is  so  small. "'^ 

c.  The  bestreasoned  governmental  (or  quasi-governmental)  statement 
is  the  one  submitted  as  the  position  of  the  District  of  Columbia  at  the 
January  1984  Congressional  Hearings  on  the  District's  disinvestment 
act.'^  This  was  the  memorandum  of  the  Washington  Council  of  Law- 
yers. '^  And  while  it  is  a  thoughtful  summary,  it  must  be  classiHed  a  brief 
(four-page)  adversary  document,  responding  to  the  Congressional  Re- 
search Service  analysis.'^  It  is  not  and  is  not  meant  to  be  an  opinion 
sustainingconstitutionality. 

d.  T^e  "opinion"  of  Michigan's  attomey  general  is  in  a  document  of 
advocacy  (a  brief)  in  current  litigation.  See  point  3. 

3.  The  matter  is  before  the  courts,  and  a  precedent  on  point  is  expected. 
Cross  motions  for  summary  judgment  on  the  constitutionality  issues  sur- 
rounding disinvestment  have  been  submitted  to  the  Michigan  Circuit 
Court'^  and  it  is  wise  for  legal  counsel  to  await  their  resolution. 
As  explained  in  the  University  of  Michigan  brief: 

"By  enacting  1982  PA  512,  the  Michigan  Legislature,  amended  the 
[State]  Civil  Rights  Act. .  .to  prohibit  public  educational  institutions 
from  making  or  maintaining  after  April  1 ,  1 984,  equity  or  stock  invest- 
ments in  organizations  operating  in  the  Republic  of  South  Afri- 
ca.. .  [or]  in  the  Union  of  Soviet  Socialist  Repubics. . . .  The  Regents 
seek  a  declaratory  judgment  that  Act  5 1 2  violates  both  the  Michigan 
and  United  States  Constitutions. "^° 


'*T}k  Wisconsin  atlomey  general  construed  the  statute  twice.  The  tirsl  lime  was  in  an 
informal  opinion  submitted  to  the  secretary  of  the  Board  of  Regents  on  May  19,  1977.  The 
attonteygeneral  was  subsequently  requested  to  "reconsider  his  opinion  in  light  of  the  constitu- 
tional questions  raised  by  Professor  Baldwin's  memorandum."  The  second  construction  was  in 
the  formal  opinion  submitted  to  the  President  of  the  University  of  Wisconsin  System  oa 
Januaiy  31.  1978.  67  Wis.  Op.  Atty  Gen.  (1978)  Supra,  note  6.  at  1061-62 

"Id.  at  1062. 

"Supra,  note  8. 

"Supra,  note  10, 

"Supra,  note  7, 

"TheRcgentsoftheUDlversity  of  Michigan  V.  The  State  of  Michigan.  In  the  Circuit  Court 
for  the  County  of  Ingham,  Michigan.  File  No.  83-50309-C2. 

^ricf  of  the  Regents  of  Ibe  Univerwly  of  Michigan,  pp.  1-2.  (Footnotes  omitted.) 

78 

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287 


There  is  also  current  lidgadon  in  Oregon^'  but  the  court  decided  in  a 
rtiling  on  December  4, 1984, diat  it  "did  not  find  it  necessary  to  reach. .  .the 
constitutional  issue."  However,  the  court  pointed  out  that  such  issue  was 
"preserved  for  the  record . . .  (and)  it  can  be  urged  on  the  Appellate  Court 
and  they  [sic]  may  find  it  dispositive."^^  As  of  this  writing  findings  of  fact 
and  conclusions  of  law  were  still  awaited. 

Resolution  of  the  constitutional  uncertainties  is  a  laudable  goal — for 
everyone  included  on  all  sides  of  the  disinvestment  question.  It  cannot  be 
done  via  any  opinion  of  an  attorney  general— hio  matter  how  well  reas(Hied 
and  how  divorced  from  the  inevitable  charges  that  it  is  "political."  And  there 
is  no  point  in  the  preparation  of  fifty  such  opinions,  plus  the  opinions  of 
municipal  counsel.  The  wheel  needs  not  reinvention. 

Iliere  is  also  ample  reason  for  the  nation  as  a  whole  to  await  the  outcome 
in  one  or  a  few  jurisdictions.  In  the  oft-quoted  words  of  Justice  Brandeis: 
"It  is  one  of  the  happy  incidents  of  the  federal  system  that  a  single 

courageous  State  may,  if  its  citizens  choose,  serve  as  a  laboratory;  and 

try  novel  social  and  econmnic  experiments  without  risk  to  the  rest  of 

the  country."^' 

Admittedly,  this  approach  gives  small  solace  to  those  who  see  in  disin- 
vestment a  means  to  combat  human  rights  violations  in  South  Africa,  the 
Soviet  Union,  Iran,  Zimbabwe,  e(c.  How  long  will  it  take  (for  example)  for 
the  Michigan  trial  court  to  reach  a  decision?  How  long  it  will  take  for  the 
completion  of  the  inevitable  appeals! 

But  the  disinvestment  supporters  would  seem  to  have  no  alternative. 
Laws  on  disinvestment  are  probably  unconstitutional  and  are  at  the  very 
least  of  questionable  constitutionality. 

Ill    THE  CONSTITUTIONAL  ARRAY 

Involved  here  is  the  tension  between  the  Tenth  Amendment  on  one  hand 
and  the  Commerce  Clause  and  the  conduct  of  foreign  relations  on  the  other. 
Involved  here  is  the  Supremacy  Clause  and  the  doctrine  of  federal 
preemption. 

On  its  face,  a  divestment  statute  is  constitutional  since  it  involves  "fiscal 
management  of  state  funds,  a  function  which  is  not  specifically  delegated  to 
the  federal  government  by  the  United  States  Constitution."^'*  This  conforms 
to  the  dictate  of  the  Tenth  Amendment:  "The  powers  not  delegated  to  the 


^'Associated  Students  of  the  University  of  Oregon  el  al.  v .  Oregon  Investment  Council  el  al . 
In  the  Circuit  Court  of  ttie  State  of  Oregon  for  the  County  ot  Lane.  Case  No.  7S-7S02. 

^%u1ing  of  the  Hon.  George  J.  Woodrich.  Tuesday.  December  4.  I9S4.  Transcript  of 
proceedings  by  the  Official  Court  Reporter,  p.  5. 

'^Dissenting  in  New  State  Ice  Co.  v.  Liebmann.  285  U.S.  262. 311  (I932>.  Justice  Holmes 
expressed  similar  views,  referring  to  "social  experiments  ...  in  the  insulated  cttambers 
afforded  by  the  several  stales.  Dissenting  in  Truax  V.  Ccnrigan.  257  U.S.  312.  344. 

"Supra,  note  6.  at  1060. 


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United  States  by  die  Constitutioa,  Dor  prohibited  by  it  to  the  States,  are 
reserved  to  the  States  respectively,  or  to  the  people." 

But  this  power  is  not  unlimited.  Suite  discretion  and  state  conduct, 
pursuant  to  the  Supremacy  Clause,^'  is  unconstitutional  when  it  conflicts 
with  the  Commerce  Clause.  It  is  Congress  which  has  been  given  the  power 
'To  regulate  Commerce  with  foreign  Nations,  and  amtmg  the  several 
States,  and  with  the  Indian  Tribcs."^^ 

Disinvestment  laws  may  also  run  afoul  of  the  Privileges  and  Immunities 
Clause:  "The  Citizens  of  each  State  shall  be  entitled  to  all  Privileges  and 
Immunities  of  Citizens  in  the  several  States."^' 

Nor  may  the  state  interfere  with  the  federal  foreign  relations  power.  All 
agree  that  there  are  inherent  limitations  upon  the  power  of  states  in  matters 
of  foreign  affairs  that  go  beyond  the  Commerce  Clause. 

IV.  PARTICIPANT  OR  REGULATOR 

Whether  the  enactment  of  a  disinvestment  law  is  an  exercise  of  state 
sovereignty  protected  by  the  Tenth  Amendment  is  not  easy  to  answer.  But 
whatever  the  ultimate  conclusion,  the  threshold  determinant  is  whether  the 
state  is  acting  as  a  participant  (in  a  proprietary  capacity)  or  as  a  regulator 
{in  a  governmental  capacity).^* 

The  black  letter  law  is  that  state  and  local  govemments  are  not  restrained 
by  the  Commerce  Clause  when  they  engage  in  commercial  transactions  as 
mailiet  participants  rather  than  as  regulators.  Regardless  of  the  burden  on 
interstate  commerce  (so  the  theory  runs)  the  market  participant  is  immune 
from  the  Commerce  Clause.  Indeed,  the  Commerce  Clause  is  not  even 
implicated.  The  participant  is  investing  its  own  market  funds:  it  is  spending 
its  own  money.  This  is  not  the  business  of  the  federal  government. 

This  is  all  very  new  law.  It  sounds  strange  to  ears  (and  years)  attuned  to 
Gibbons  v.  Ogden^^  and  its  myriad  progeny,  interpreting  the  Commerce 
Clause  broadly  and  expansively.  The  new  cases  give  credence  and  credibil- 
ity to  the  Tenth  Amendment;  they  give  new  recognition  to  dual  federalism. 
But  do  they  cover  the  issue  at  hand?  Are  disinvestment  laws  proprietary, 
representing  only  the  acts  of  panicipants?  Is  there  immunity  from  interstate 


"An.  vi,  cl.  2.  "This  Coiuiitution.  and  the  Laws  of  the  United  States  which  shall  be  nude  in 
Pursuance  thereof;  and  all  Treaties  made,  or  which  shall  be  made,  under  the  Authority  of  the 
United  Stales,  shall  tie  the  supreme  Law  of  the  Land;  and  the  Judges  in  eveiy  State  shall  be 
bound  theteby,  any  Thing  in  the  Constitution  or  l^ws  of  any  Slate  lo  the  Contiaiy 
ttotwitbstanding." 

"An.  I.  W.  cl.  3. 

"An.  IV.  12, 

"Sec  Wells  and  Helletstein,  the  Governmental -Piopnetaiy  Distinction  in  Constitutional 
Law,  66Va.  L.  Rev.  1073(1980).  "The  small  body  of  case  law  under  the  commerce  clause 
CODsislently  hoMs  that  a  state's  action  in  its  pFcqnktaiy  capacity  gives  rise  lo  no  constitutional 
objection."  At  p.  1122. 

*»22  U.S,  (9  Wheat.)  1  (1824)  See  especially  22  U.S.  at  34, 


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commerce  strictures?  Does  immunity  from  the  reach  of  interstate  commerce 
apply  equally  to  foreign  commerce?  Will  immunity  from  the  Commerce 
Clause  extend  to  immunity  under  the  Privileges  and  Immunities  Cause? 
And  even  if  the  panicipant-regulator  distinction  is  made  and  disinvestment 
laws  arc  held  to  be  in  the  participant-proprietary  category  for  the  Commerce 
Clause,  may  such  laws  still  conflict  with  the  federal  government's  suprem- 
acy in  foreign  relations?" 

TIkfc  are  no  cases  directly  on  point.  On  this  all  will  agree.  Likewise,  all 
will  agree  as  to  the  five  cases  to  be  parsed  in  arguing  the  applicability  of 
precedent  and  judicial  thought  on  this  aspect  of  the  constitutionality  issue. 
The  cases  are:  (I)  Hughes  v.  Alexandria  Scrap  Corp.,  1976;"  (2)  National 
League  of  Cities  v.  l/sery.  1976;"  (3)  Reeves.  Inc.  v.  Stake.  1980;"  (4) 
White  V.  Massachusetts  Council  of  Const.  Employers,  1983;^''  and  (5) 
United  Building  and  Construction  Trades  Council  of  Camden  County  and 
Vicinity  v.  Mayor  and  Council  of  the  City  of  Camden.  1984.^^ 

The  seminal  case  is  Hughes  v.  Alexandria  Scrap  Corp.^  Its  facts,  hold- 
ing and  essential  language  are  well-stated  in  the  Congressional  Research 
Service  report:'' 

"There  the  Supreme  Court  upheld  a  Maryluid  statute  that  clearly 
favored  in-state  businesses  in  the  payment  of  State  bounties  to  scrap 
processors  for  each  vehicle  abandoned  in  Maryland  that  they  de- 
stroyed. There  appeared  to  be  no  question  diat  favoring  State  Busi- 
nesses in  the  expenditure  of  Sutc  funds  for  the  bounties  had  the  effect 
of  reducing  the  flow  of  abandoned  car  hulks  in  interstate  commerce  to 
out-of-state  businesses,  who  could  not  pay  as  high  a  price  for  the  hulks 
because  of  diRicultics  in  obtaining  Maryland  bounties.  Nevertheless, 
the  Court  held  that  the  Commerce  Clause  did  not  apply.  According  to 
the  Court.  Maryland  did  not  interfcr[e]  with  the  national  functioning  of 
the  interstate  market  either  through  prohibition  or  burdensome  regula- 
tion. 426  U.S.  at  806.  Rather  it  had  entered  into  the  maricel  itself  as  a 
purchaser,  in  effect,  of  a  potential  article  of  interstate  commerce.  Id.  at 
806,  808.  The  court  concluded  that  [olothing  in  the  purposes  animat- 
ing the  Commerce  Clause  prohibits  a  State  . . .  from  participating  in 
the  market  and  exercising  dte  right  to  favor  its  own  citizens  over 
others.  Wat  810."'* 


'"See  F.  Fiankfurter.  The  Commerce  Clause  Under  Marahall,  Taney  and  Waile,  at  40 
<I964— tirsi  published  1937). 

^'426  U.S.  794(1976), 

"426  U.S.  833(1976), 

"447  U.S.  429  (1980). 

"460  U.S.  204(1983). 

" U.S .  104  S.  Cl.  1020  (1984). 

'*426U.S.  794(1976). 

"Supra,  n.  7. 

'*Supra,  n.  7al  19-20.  It  is  also  leprinled  in  Ihe  HouseofRqsreseniatives  hearings,  supra, 
note  8.  U  92-93. 


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National  League  of  Cities  v.  Usery^^  dealt  with  amendments  to  the 
federal  Fair  Labor  Standards  Act  extending  wage  and  hour  provisions  to 
almost  all  employees  of  Sutes  and  their  political  subdivisions.  Striking 
down  these  amendments,  the  Court  held  that  Congress  may  not,  pursuant  to 
die  Commerce  Clause,  "directly  displace  the  State's  freedom  to  structure 
integral  operations  in  areas  of  traditional  governmental  functions."^ 

In  Reeves  v.  Stake,'**  the  Supreme  Court  (in  a  5-4  vote)  upheld  South 
Dakota's  refusal  to  sell  cement  produced  by  a  state-operated  plant  to  non- 
South  Dakotans.  Such  preferential  treatment  of  its  own  citizens  was  sus- 
tained on  the  ground  that  the  state  was  acting  in  a  proprietary  capacity.  Here 
was  the  crucial  language: 

"(T]be  Commerce  Clause  responds  principally  lo  state  taxes  and 
regulatory  measures  impeding  free  private  trade  in  the  marketplace. 
There  is  no  indication  of  a  constitutional  plan  to  limit  the  ability  of  the 
states  themselves  to  operate  freely  in  the  free  market. "^^ 
These  cases  arc  followed  in  White  v .  Massachusetts  Council  (^Construc- 
tion Employers.'*^  There  the  Court  considered  the  validity  of  an  executive 
order  of  the  Mayor  of  Boston  requiring  thai  at  least  50  percent  of  all  jobs  on 
construction  projects  (funded  in  whole  or  in  part  by  city  funds)  be  tilled  by 
bona  fide  city  residents.  The  executive  order  was  held  to  be  "immune  from 
scrutiny  under  the  Commerce  Clause  because  Boston  was  acting  as  a  market 
participant  rather  than  as  a  market  regulator.'"" 

United  Bldg.  &  Const,  v.  Mayor  &  Council  of  Camden*^  dealt  with  a 
municipal  ordinance  which  required  that  at  least  40  percent  of  the  employ- 
ees of  contractors  and  subcontractors  working  on  city  construction  projects 
be  Camden  residents.  On  the  basis  of  the  White'^  case,  the  Commerce 
Clause  challenge  to  the  Camden  ordinance  was  abandoned,  but  not  so  the 
contention  that  the  ordinance  was  a  violation  of  the  Privileges  and  Immuni- 
ties Clause.'*^  Remanding  the  case  for  necessary  findings  of  fact,  the  Court 
came  to  this  conclusion: 

"In  sum,  Camden  may,  without  fear  of  violating  the  Commerce 
Clause,  pressure  private  employers  engaged  in  public  works  projects 
funded  in  whole  or  in  part  by  the  city  to  hire  city  residents.  But  that 
same  exercise  of  power  to  bias  the  employment  decisions  of  [»ivate 
contractors  and  subcontractors  against  out-of-state  residents  may  be 


"426  U.S.  833(1976). 
*'426  U.S.  al  852. 
*'447  U.S.  429(1980). 
"447  U.S.  ai437, 
"460  U.S.  204(1983). 

''Quoted  in  United  BkJg.  &  Coiui.  v.  Mayor  &  Council  of  Ci 
Q.  al  1025. 

" — U.S .  104  S.  a.  1020  (19M). 

*^\tpn,  n.  43.  460  U.S.  204  (1983). 
•'U.S.  Coiutitutioii.  Art.  IV,  12. 


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called  to  account  under  the  Privileges  and  Immunities  Clause."*" 
The  Court's  reasoning  was  as  follows: 

"Our  decision  in  While  turned  on  a  distiiKticm  between  the  city 
acting  as  a  market  participant  and  the  city  acting  as  a  maiket  regulator. 
The  question  whether  employees  of  contractors  and  subcontractors  on 
public  works  projects  were  or  were  not ,  in  some  sense ,  working  for  the 
city  was  crucial  to  that  analysis.  The  question  had  to  be  answered  in 
order  to  chart  the  boundaries  of  the  distinction.  But  the  distinction 
between  market  participant  md  market  regulator  relied  upon  in  While 
to  dispose  of  the  Commerce  Clause  challenge  is  not  dispositive  in  this 
context.  The  two  Clauses  have  different  aims  and  set  different  stan- 
dards for  state  conduct. 

"The  Commerce  Clause  acts  as  an  implied  restraint  upon  state  regu- 
latory powers.  Such  powers  must  give  way  before  the  superior  author- 
ity of  Congress  to  legislate  on  (or  leave  unregulated)  matters  involving 
interstate  commerce.  When  the  State  acts  solely  as  a  market  partici- 
pant, no  conflict  between  state  regulation  and  federal  regulatory  au- 
thority can  arise. . . .  The  Privileges  and  Immunities  Clause,  on  the 
other  hand,  imposes  a  direct  restraint  on  state  action  in  the  interests  of 
interstate  harmony. . . .  This  concern  with  comity  cuts  across  the  mar- 
ket regulator-market  participant  distinction  that  is  crucial  under  the 
Commerce  Clause .  It  is  discrimination  against  out-of-state  residents  on 
matters  of  fundamental  concem  which  triggers  the  Clause,  not  regula- 
tion affecting  interstate  commerce.  Thus,  the  fact  that  Camden  is 
merely  setting  conditions  on  its  expenditures  for  goods  and  services  in 
the  marketplace  does  not  preclude  the  possibility  that  those  conditions 
violate  the  Privileges  and  Immunities  Clause. . . . 

"The  fact  that  Camden  is  expending  its  own  funds  or  funds  it  admin- 
isters in  accordance  with  the  terms  of  a  grant  is  certainly  a  factor — 
periiaps  the  crucial  factor— to  be  considered  in  evaluating  whether  the 
state's  discrimination  violates  the  Privileges  and  Immunities  Clause. 
But  it  does  not  remove  the  Camden  ordinance  completely  from  the 
purview  of  the  Clause."*' 

The  Privileges  and  Immunities  argument  played  no  part  in  the  Memoran- 
dum of  the  Washington  Council  of  Lawyers^  or  the  brief  of  the  State  of 
Michigan.' '  Reason;  United  Bldg.  &  Cemsi.  is  of  later  vintage.  But  it  was 
upon  the  first  four  cases  that  both  the  memorandum  and  brief  largely  based 
their  position:  that  the  Commerce  Clause  simply  does  not  apply  because 
disinvestment  statutes  are  proprietary  rather  than  regulatory.  Certainly. 


" U.S 104  S.  Cl.  ai  1029. 

" —  U.S 104  S.  Ct.  ai  1028-1029. 

"Supra,  nole  10. 
"Surpa,  note  19. 


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whether  the  promulgation  is  a  tolerable  burden  on  interstate  commerce  or 
whether  the  state's  interest  can  be  promoted  as  well  with  lesser  impact  on 
interstate  activities.^  In  other  words,  only  then  can  the  balancing  test  be 
used. 

The  actual  words  of  Pike  v.  Bruce  Church.  Inc.  bear  repetition:  "Where 
the  statute  regulates  evenhandedly  to  effectuate  a  legitimate  local  public 
interest,  and  its  effects  on  interstate  commerce  are  only  incidental,  it  will  be 
upheld  unless  the  burden  imposed  on  such  commerce  is  clearly  excessive  in 
.  relation  to  the  putative  local  benefits .  ...  If  a  legitimate  local  purpose  is 
found,  then  the  question  becomes  one  of  degree.  And  the  extent  of  the 
burden  that  will  be  tolerated  will  of  course  depend  on  the  nature  of  the  local 
interest  involved,  and  on  whether  it  could  be  promoted  as  well  with  a  lesser 
impact  on  interstate  actvities.  Occasionally  the  Court  has  candidly  under- 
taken a  balancing  approach  in  resolving  these  issues,  . . .  but  more  frequent- 
ly it  has  spoken  in  terms  of  "direct"  and  "indirect"  effects  and  burdens.^' 
(Citations  omitted.) 

Based  on  these  rules/tests/crileria,  the  disinvestment  statutes  run  afoul  of 
the  Commerce  Clause.  Of  course,  human  rights  can  be  deemed  a  legitimate 
concem  of  commerce.  But  are  discriminatory  practices  in  South  Africa,  the 
Soviet  Union,  Iran,  etc.,  a  matter  of  "local  public  interest"?^^ 

Nor  could  it  be  concluded  that  the  state  disinvestment  laws  have  only  an 
incidental  effect  on  interstate  commerce.  Too  much  money  is  at  stake; 
investment  portfolios  of  state  pension  funds,  universities,  etc.,  are  not 
inconsequential. 

Yes,  there  are  cases  which  can  be  parsed  to  extract  enough  factual 
snippets  and  sufficient  dicta  to  formulate  legal  argument.  But  there  is  no 
holding  which  sustains  any  state  action  remotely  resembling  disinvestment. 
And  the  weight  of  authority  and  judicial  analogy  is  on  the  side  of 
unconstitutionality. 

VI.  FOREIGN  COMMERCE 

What  has  been  said  relative  to  interstate  commerce  can  be  said  even  more 
forcefully  in  regard  to  foreign  commerce.  This  was  not  always  so  (or  may 
not  have  been  always  so) — at  least  up  to  1979,  and  at  least  by  way  of  dicta. 

For  example,  the  words  of  Chief  Justice  Taney:  "The  power  to  regulate 
commerce  among  the  several  States  is  granted  to  Congress  in  the  same 


'This  analysis  is  used  in  Ibe  Univeisily  of  Michigan  brier,  supra,  noie  20,  al  37.  See  also 
McCarroll.  "Socially  Responsible  Investment  of  Public  Pension  Funds:  The  South  Africa  Issue 
and  Siaie  Uw."  10  N.Y.U.  Rev.  of  Uw  and  Social  Change  407.  42S  (1980-Sl). 

"'397  U.S.  al  142. 

"See  Huron  Cement  Co.  v.  [)etniit,  362  U.S.  440. 443  (1960)  and  Soo^Kni  Pacific  Co.  v. 
Arizona.  32S  U.S.  761  (I94S)  cited  with  approval  in  Pike  v  Brace  Church.  Inc..  397  U.S.  at 
142.  Sec  also  City  of  PhilKlelphia  V.  New  Jersey.  437  U.S.  617.623(1978). 


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But  South  Africa,  ff  a/,  aie  (1)  not  adjuncts  of  American  states  or  cities; 
(2)  disinvestment  laws  are  not  in  conformity  with  the  laws  of  the  nations 
where  disinvestment  is  being  sought;  (3)  state  and  city  disinvestment  laws 
and  ordinances  do  not  only  affect  their  own  citizens — they  affect  foreign 
citizens;  and  (4)  since  the  human  rights  objectives  of  American  states  and 
cities  are  so  different  from  those  of  South  Africa,  the  Soviet  Union,  Iran, 
etc. ,  our  national  relations  with  those  nations  would  necessarily  be  affected 
by  disinvestment  laws. 

This  is  why  the  1979  Court  in  Japan  Line.  Ltd.  took  such  pains  to  argue 
that  "appellee's  reliance"  on  Bob-Lo  is  "misplaced"  and  to  conclude  that 
Bob-Lo  "is  consistent  with  both  the  analysis  and  the  result"  of  the  latter 
case.''' 

The  controversy  in  Japan  Line,  Ltd.  involved  an  ad  valorem  tax  that 
California  had  imposed  on  the  shipping  containers  of  a  foreign  corporation. 
The  State  argued  that  the  tax  was  constitutional  since  it  met  the  four-fold 
requirements  of  Complete  Auto  Transit,  Inc.  v.  Brady."  (I)  the  Containers 
had  a  "substantial  nexus"  with  California  because  some  of  them  are  |»«sent 
in  that  stale  at  all  times;  (2)  the  tax  was  "fairly  apportioned"  since  it  was 
levied  only  on  the  containers'  "average  presence"  in  California;  (3)  the  tax 
did  not  "discriminate"  since  it  fell  "evenhandedly"  on  all  personal  property 
in  the  State;  and  (4)  it  was  "fairly  related  to  the  services  provided  by" 
California.'*^ 

The  Court  agreed:  "We  may  assume  that,  if  the  containers  at  issue  here 
were  inslmmentalities  of  purely  interstate  commerce.  Complete  Auto  would 
apply  and  be  satisfied,  and  our  Commerce  Clause  inquiry  would  be  at  an 
end."''  However,  "[wjhen  construing  Congress'  power  to  'regulate  Com- 
merce with  foreign  Nations,'  a  more  extensive  constitutional  inquiry  is 
required."'^  Again:  "Foreign  commerce  is  preeminently  a  matter  of  national 
concern.  . . .  Although  the  Constitution  . . .  grants  Congress  power  to 
regulate  commerce  'with  foreign  Nations'  and  'among  the  several  States'  in 
parallel  phrases,  there  is  evidence  that  the  Founders  intended  the  scope  of 
the  foreign  commerce  power  to  be  the  greater."" 

Then,  applying  the  "additional  tests  that  a  tax  on  foreign  commerce  must 
satisfy,"^  the  Court  struck  down  the  California  statute.  The  Court  conclud- 
ed that  the  tax  had  resulted  in  "multiple  taxation  of  the  instrumentalities  of 
foreign  commerce"  and  prevented  the  "Nation  from  speaking  with  one 
voice'  in  regulating  foreign  trade."*' 


"441  U,S-  at  456. 

"430  US,  274  (1977). 

■^441  U.S.  al  445. 

"Ibid.  (Emphasis  supplied.) 

'•441  U.S.  at  446. 

"441  U.S.  at  448  (cited  cases  and  fooOioles  omilted). 

"441  U.S.  at  451. 

"441  U.S.  at  431-52. 


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That  foreign  commerce  requires  "a  more  extensive  constitutional  inqui- 
ry" is  (as  noted  earlier)*^  reaffimied  in  the  important  participant-regulator 
case  of  Reeves  v.  Stake:  "We  have  no  occasion  to  explore  the  limits  imposed 
on  state  proprietary  actions  by  the  foreign  commerce  Clause.  . . .  We  note, 
however,  that  Commerce  Clause  scrutiny  may  well  be  more  rigorous  when 
a  restraint  on  foreign  commerce  is  alleged. "^^ 

It  could  be  and  has  been  argued  that  Japan  Line,  Ltd.  "is  inopposite 
because  it  involved  a  state  taxation  scheme  which  is  clearly  regulatory,  not 
proprietary,  in  nature."**  Some  court  in  the  future,  ruling  on  the  constitu- 
tionality of  disinvestment  laws  might  distinguish  Japan  Line,  Lid.  and  so 
conclude.  But  it  is  certainly  not  clear!  On  the  contrary,  it  is  extremely 
doubtful. 

In  support  of  the  proprietary  nature  of  disinvestment  laws  is  the  conten- 
tion that  such  statutes  are  facially  valid  since  they  do  not  deal  directly  with 
foreign  commerce.  The  State  is  only  determining  the  criteria  for  the  securi- 
ties which  it  purchases  with  its  own  funds.  In  doing  so,  it  is  not  intruding 
upon  the  federal  government  in  the  area  or  breaching  federal  statutes  or 
treaties,  or  influencing  trade  with  any  foreign  country. 

There  is,  however,  a  narrow  reading  of  the  word  "regulate,"  and  the 
Supreme  Court  has  never  had  it  so.  it  was  more  that  1  SO  years  ago  that  Court 
decided  Brown  v.  Maryland,^^  holding  that  a  state  license  fee  on  importers 
was  an  unconstitutional  regulation  of  foreign  commerce.  The  lesson  of  that 
case  and  its  progeny  is  aptly  summed  up  in  the  Congressional  Research 
Service  Report  in  this  language:  "The  Supreme  Court  also  has  made  clear 
thai  the  power  to  regulate  foreign  commerce  includes  not  only  the  control  of 
the  terms  and  conditions  of  passage  of  items  of  commerce  (e.g..  capital, 
securities,  financial  obligations,  services,  and  goods)  between  the  United 
States  and  foreign  countries,  but  also  the  control  of  the  terms  and  conditions 
of  the  domestic  markets  for  foreign  items  of  commerce  that  Congress  has 
allowed  into  this  country."** 

Disinvestment  laws  inevitably  work  to  the  detriment  of  American  hrms 
having  investments  in  the  proscribed  countries;  and  disinvestment  laws 
inevitably  work  to  the  detriment  of  commerce  with  those  countries.  It  is  not 
stretching  analysis  to  conclude  that  such  laws  are  regulating  commerce;  artd 
it  does  not  require  an  expansive  reading  of  Brown  v.  Maryland  (or  the 
myriad  other  cases  on  the  subject)  to  reach  the  conclusion  that  such  laws  are 
unconstitutional. 

State  and  municipal  disinvestment  enactments  can  also  prevent  "this 
Nation  from  'speaking  with  one  voice'  in  regulating  foreign  trade."'^  At 

''Supra,  p.  84. 

•»447  U.S.  429.  438  n.  9  (1980). 

**Supn,  note  10:  supra,  note  8  at  241.  (Emphasis  supi^ied.) 

•"12  Wheal.  (25  U.S.)  419  (1827). 

*^upn.  note  7  at  IS;  see  supra,  note  8  al  88. 

"Japan  Line.  Ltd.  v.  County  of  Los  Angeles.  441  U.S.  434.  4S2  (1979). 


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least  five  states  and  more  than  a  dozen  cities  have  such  laws;^^  the  vast 
majority  do  not.  Iowa's  governor  vetoed  such  legislation  in  May,  1984.^^ 

In  addition  there  exists  a  conflict  or  possible  conflict  with  federal  legisla- 
tion restricting  trade  with  these  proscribed  nations.  And  to  the  extent  that 
such  conflict  may  exist,  it  involves  federal  preemption  pursuant  to  the 
Supremacy  Clause  as  well  as  the  Commerce  Clause.  This  is  discussed 
beginning  at  page  30  under  Foreign  Relations. 

Military  expons  to  South  Africa,  for  example,  have  been  prohibited  by 
the  federal  government  since  1964,  in  compliance  with  a  voluntary  arms 
embargoestablishedbythe  United  Nations.  Such  ban  was  made  mandatory 
in  1977  and  in  1978  the  U.S.  E)epartment  of  Commerce  prohibited  all 
exports  to  that  country  "that  the  exporter  knows  or  has  reason  to  know  are 
destined  for  use  by  the  South  African  military  or  police."^ 

Such  restrictions,  according  to  a  commentary  in  the  American  Journal  of 
Intemalion  Law,  "are  not  simply  a  response  by  the  U.S.  Government  to  an 
international  mandate.  They  also  serve  the  recognized  foreign  policy  pur- 
pose of  firmly  disassociating  the  United  States  from  the  apartheid  policies  of 
the  South  African  regime.  ...  At  the  same  time,  however,  the  fact  that  the 
U.S.  Government  has  not  gone  so  far  as  to  adopt  more  expensive  trade 
restrictions  is  recognition  of  the  importance  of  U.S.  commercial  interests  in 
South  Africa."" 

An  America  where  the  federal  government  has  one  set  of  laws  on  trade 
exports  and  its  states  and  cities  have  a  variety  of  other  laws  on  the  subject  is 
not  "speaking  with  one  voice"  in  regulating  foreign  commerce. 

VII.  FOREIGN  RELATIONS 

Even  if  some  court  at  some  time  might  impose  the  participant-regulator 
role  as  a  ban  to  unconstitutionality  in  the  foreign  commerce  context,  disin- 
vestment enactments  would  still  have  to  pass  the  hurdle  of  federal  govern- 
ment supremacy  in  the  conduct  of  foreign  relations. 

Here  is  some  of  the  Supreme  Court  language  on  this  point:  "That  the 
supremacy  of  the  national  power  in  the  general  field  of  foreign  affairs  ...  is 
made  clear  by  the  Constitution,  was  pointed  out  by  the  authors  of  The 


Supra,  notes  3  and  4. 

"Message  of  Iowa  Governor  Teny  E,  Branstad  lo  the  Secreury  of  Stale.  May  19,  1984. 
disapproving  disinvcsUnenI  provisions  in  House  File  252 1 .  The  vela  was  nol  based  on  consiini- 
lioful  considerations  bul  ralher  the  Governor's  position  thai  disinvestmenl  would  be  counler- 
productivc.  "Instead  of  Ihe  negative  approach  reflected  in  House  File  2S21. 1  believe  we  would 
benetil  blacks  in  South  Africa  far  moie  with  a  positive  effoit  lo  achieve  racial  equality.  This 
can  best  be  accomplished,  not  by  divesting  our  ability  toexercise  influence,  but  by  capitalizing 
on  it."  (At  p.  4.) 

''Mehinian,  Milch  and  Toumanoff.  "United  Stales  Restrictions  on  Exports  to  South  Afri- 
ca." 73  Am.  J.  Infl.  L.  581  (1979). 

"Ibid. 


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Federalist  in  1787,  and  has  since  been  given  continuous  recognition  by  this 
Court."" 

Also  oft-qu(Ked  is  this  statement  of  Justice  Frankfurter  "Although  there 
is  in  the  Constitution  no  specific  grant  to  Congress  of  power  to  enact 
legislation  for  the  effective  regulation  of  foreign  affairs,  there  can  be  no 
doubt  of  the  existence  of  this  power  in  the  law-making  organ  of  the  Nation. 
. . .  The  States  that  joined  together  to  forni  a  single  Nation  and  to  create, 
through  the  Constitution,  a  Federal  Government  to  conduct  the  affairs  of 
diat  Nation  must  be  held  to  have  granted  that  Government  the  powers 
indispensable  to  its  functioning  effectively  in  the  company  of  soveriegn 
nations."*' 

The  oft-ciled  opinion  of  Hints  v.  Davidowin**  involved  a  conflict  be- 
'  tween  a-slate  alien  registration  law  and  a  federal  statute  covering  the  sante 
subject.  The  oft-ciied  opinion  of  {/mV«(/5AJ(«s  v.  PinJfc^  involved  a  conflict 
between  a  New  York  judicial  decree  refiising  to  honor  a  Soviet  claim  to 
assets  of  a  nationalized  Russian  company  and  an  Executive  Agreement 
which  had  recognized  die  right  of  the  Soviet  Union  to  nationalized  property. 

But  while  these  and  similar  cases  have  been  cited  as  authority  for  the 
unconstitutionality  of  disinvestment  laws,  they  are  readily  distinguishable. 
As  the  Congressional  Research  Service  report  concclly  points  out,  "because 
of  the  conflicts  between  explicit  federal  and  State  authorities  in  these  cases, 
the  results  in  them  perhaps  may  be  explained  as  much  by  the  Supremacy 
Clause  as  by  any  inherent  inability  of  the  States  to  act  in  any  maimer 
affecting  foreign  affairs."^ 

But  what  of  the  situation  where — as  can  be  argued  in  the  disinvestment 
controversy — there  is  no  conflicting  exercise  of  federal  power.  The  answer 
turns  on  interpretations  of  the  1968  decision  in  Zschemig  v .  Miller,^  which 
has  emerged  as  the  single  most  important  case  on  the  constitutionality  issue. 

As  Professor  Louis  Henkin  has  pointed  out,  the  Supreme  Court  had  long 
found  limitations  on  state  regulation  or  taxation  of  foreign  commerce  im- 
plied in  the  Commerce  Clause.  "The  Court  never  asked  whether  such  state 
actions  might  run  afoul  also  of  some  larger  principle  limiting  the  States  in 
matters  that  relate  to  foreign  affairs."^  "tl]t  was  never  suggested  that  [state 
actions]  might  run  afoul  of  an  implicit  constitutional  limitation  barring  state 
impingement  on  the  federal  domain  of  foreign  relations  even  when  the 


*^Hines  v.  Davidowitz,  312  U.S.  52.  62  (1941).  (FooOwte  references  amilted.) 

"^Perez  v.  Brownell.  356  U.S.  44.  56  (195S).  While  this  esse  wu  later  overruled  by 
Afroyim  v.  Rusk.  387  U.S.  2S3  (1967).  neilher  the  disscnl  in  Pcicz  nor  the  overruling  ina}ority 
in  Aftoyim  questioned  the  validity  of  the  Frankfurter  formulatioii. 

"Supra,  note  92. 

"313  U.S.  203  (1M2). 

''Supra,  note  7  at  28;  see  supra,  note  8  at  101. 

"389  0.5.429(1968). 

''L.  Henkin.  Foreign  A^its  aod  the  Constitution  (1972),  at  238.  (Emphasis  supplied.) 


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federal  government  had  not  acted."^  However,  ProfesstM-Henkin  explains, 
this  was  before  1968  and  the  Zschernig  case.  He  continued:  "Such  a  larger 
principle — how  large  is  yet  to  be  determined — has  now  become  part  of  the 
Constitution.""" 

In  Zschernig,  the  Supreme  Court  was  interpreting  a  so-called  "Iron  Cur- 
tain Act."  The  Court  invalidated  an  Oregon  statute  which  provided  for 
escheat  in  cases  where  a  non-resident  alien  heir  or  legatee  claimed  property 
in  Oregon  unless  such  beneficiary  could  (1)  establish  that  his  country  would 
permit  United  States  citizens  to  receive  monies  from  an  estate  in  his  country 
on  a  reciprocal  basis  and  (2)  that  his  country  would  permit  him  to  receive 
proceeds  "without  confiscation."  Admittedly,  there  was  an  absence  of  any 
"relevant  exercise  of  federal  power"  and  "no  basis  for  deriving  any  prohibi- 
tion by  'interpretation'  of  the  silence  of  Congress  and  the  President.  The 
Court  tells  us  that  the  Constitution  itself  excludes  such  state  intrusions  even 
when  the  federal  branches  have  not  acted. ""^' 

On  its  face,  Zschernig  covers  disinvestment  enactments.  Certainly  it 
provides  precedent  for  arguing  and  sustaining  unconstitutionality.  And  this 
is  further  supported  by  Justice  E)ouglas'  language:  "As  one  reads  the  Oregon 
decisions,  it  seems  that  foreign  policy  attitudes,  the  freezing  or  thawing  of 
the  cold  war,  and  the  like  are  the  real  desiderata.  Yet  they  of  course  are 
matters  for  the  Federal  Government,  not  for  local  probate  court.""*^ 

The  statute  was  found  to  represent  the  "kind  of  state  involvement  in 
foreign  affairs  and  international  relations"  which  involve  "matters  which  the 
Constitution  entrusts  solely  to  the  Federal  Government.""*^  Again:  "The 
statute  as  construed  seems  to  make  unavoidable  judicial  criticism  of  nations 
established  on  a  more  authoritarian  basis  than  our  own.""*^  Finally:  "The 
Oregon  law  does,  indeed,  illustrate  the  dangers  which  are  involved  if  each 
State  ...  is  permitted  to  establish  its  own  foreign  policy. ""** 

Certainly  disinvestment  laws  manifest  "criticism  of  nations  established 
on  a  more  authoritarian  basis  than  our  own."  Certainly,  they  are  expressions 
of  foreign  policy.  Examine,  for  example,  some  of  the  language  of  the 
Connecticut  enactment,  "Sec.  3-13g.  Investments  in  corporations  doing 
business  in  Iran.  The  state  treasurer  shall  review  the  major  investment 
policies  of  the  state  for  purposes  of  ensuring  that  state  funds  are  not  invested 
in  any  corporation  engaged  in  any  form  of  business  in  Iran  which  could  be 
considered  to  be  contrary  to  the  foreign  policy  or  national  interests  of  the 


""387  U.S.  U  437-38. 
'"'387  U.S.  U  436. 
">*387  U.S.  •!  440. 
'"»387U.S.  «I44I. 


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United  Stales,  particulariy  in  respect  to  the  release  of  all  American  hostages 
held  in  Iran.""* 

But  does  Zschermg  go  so  far  as  to  hold  that  statutes  critica]  of  the  policies 
of  a  foreign  nation  are  unconstitutional  per  sel  Is  the  per  se  argument 
strengthened  in  light  of  a  finding  of  unconstitudonatity  despite  the  Justice 
Depaftment  brief  as  amicus  curiae  stating  that  it  "does  not . . .  contend  that 
the  af^licatitm  of  the  Oregon  escheat  statute  in  the  circumstances  of  this 
case  unduly  interferes  with  the  United  States'  conduct  of  foreign 
affairs"?"" 

Answers  will  not  be  found  innstudying  opinion"'"  which  at  this  writing 
is  more  than  sixteen  years  old,  nor  by  second-guessing  the  case  commen- 
taries. '"^  The  Zschemig  analysis  does  not  etid  with  Zschermg. 

Of  course  there  are  numerous  decisions  which  have  applied  tlOsZschermg 
rationale,  particularly  in  New  York.  But,  whether  the  facts  of  such  cases  are 
dispositive  of  the  constitutionality  of  disinvestment  laws  is  questionable.  In 
one  case,  the  New  York  Court  of  Appeals  held  unconstitutional  the  triplica- 
tion of  an  anti-discriminative  ordinance  which  would  have  haired  the  New 
York  Times  from  publishing  advertisements  for  employment  in  South  Afri- 
ca. ' '"  While  none  of  these  advertisements  referred  to  race  or  racial  discrimi- 
nation, the  New  York  City  Commission  on  Human  Rights  coiKluded  that 
because  South  Africa  mandated  apartheid  that  the  advertisements  were 
autoniiUically  violative  of  the  ordinance. 

Another  New  Yoric  case  saw  an  attempt  by  a  state  agency  to  apply  its  slate 
civil  rights  laws  to  the  South  African  Airways  (owned  by  the  Republic  of 
South  Africa)  and  to  the  South  African  consulate  in  respect  to  its  visa 
granting  practices .  The  Supreme  Court  in  New  York  County  issued  a  writ  of 
prohibition,  asserting  that  "[fjoreign  policy  is  a  federal  concern,  not  amena- 
ble to  state  action."'" 

The  most  important  post-Zschernig  case,  however,  was  the  1977  New 
Jersey  Supreme  Court  decision"^  upholding  the  state's  "Buy  American" 
Act.  In  sustaining  a  law  requiring  use  in  government  purchase  contracts  of 
materials  produced  in  the  United  States,  reliance  was  placed  on  the  propri- 


"*Coiin.  ch.  32. 1l3-13g,  P.A.  80431,  S.  3.  4  (1980). 

■"'387  U.S.  u  460. 

'"'Opinion  of  the  Court  by  Justice  Douglas,  concurring  opinion  of  Justice  Stewan.  joined  by 
Justice  Brennan,  concurring  opinicMi  by  Justice  Hanlan  and  dissenting  opinion  by  Justice 
White. 

'""Sec.  for  example,  Note,  the  Supreme  Coun.  1967  Term,  which  contended  that  Zschemig 
might  eventually  result  in  the  application  of  a  balancing  test  as  in  the  Conunerce  Clause  cases, 
82  Harv.  L.  Rev.  244,  245  0968). 

'  "*Nev^  York  Times  Co,  v.  City  of  New  York  Commission  on  Human  Rights,  41  N.Y.2d 
343,  N.E,  393  N,E,S,2d  312  (1977), 

' '  'South  Aftican  Airways  v.  New  York  State  Division  of  Human  Rights.  64  Misc. 2d  707, 
711  (Sup.  Ct..  N.Y.  Cty.,  1970). 

'"K.S.B.  Tech.  Sales  V.  No.  Jersey  Disi.  Water  Supply.  73  N.1. 272, 381  A.2d  774  (1977). 
appeal  dismissed,  435  U.S.  982  (1978). 


93 

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etary  distinction  made  in  Hughes  v.  Alexandria  Scrap  Corp.'^  "Under  the 
principle  of  Alexandria  Scrap,  the  state  agency's  limitations  with  respect  to 
purchases  of  materials  and  equipment  for  that  plant,  to  be  owned  and 
operated  as  a  government  institution,  do  not  offend  the  Commerce  Clause. 
The  New  Jersey  Buy  American  provisions  are  not  measures  regulating 
private  business."'  '*  And  the  New  Jersey  Court  also  concluded,  "[tjhat  this 
case  involves  foreign  commerce,  and  not  interstate  commerce,  does  not 
disturb  our  analysis.""^ 

On  the  other  hand,  the  decision  contained  these  dicta:  "The  Buy  Ameri- 
can provisions  apply  without  any  discrimination  based  on  the  ideology  of 
the  seller's  county.  Nor  is  there  any  evidence  to  suggest  that  the  political 
climate  in  a  potential  foreign  bidder's  nation  has  ever  motivated  the  inclu- 
sion of  the  Buy  American  condition  in  an  invitation  for  bids  or  that  its 
inclusion  is  predicated  on  an  assessment  of  the  internal  policies  of  any 
foreign  country.  If  refined  inquiries  into  foreign  ideologies  entered  the 
decision  to  apply  or  not  to  apply  the  condition,  there  would,  of  course,  be 
little  difficulty  in  finding  a  constitutional  infirmity  of  the  type  condemned  in 
Zschernig ."  ^^'' 

And  where  is  the  disinvestment  statute  not  based  on  the  ideology  of  the 
country  affected?  Where  is  the  disinvestment  statute  that  does  not  involve 
the  internal  policies  of  the  foreign  sovereignty  in  which  disinvestment  is 
sought?  Do  such  dicta  negate  the  reliance  on  Alexandria  Scrap  and  the 
holding  that  statutes  involving  foreign  relations  can  still  sometimes  be 
sustained  as  pro[Hietary? 

VIII.  FINAL  WORD 

The  answer  to  the  question  whether  disinvestment  laws  are  constitutional 
is  that  there  is  no  one  certain  answer.  Perhaps  there  are  too  many  answers  to 
permit  certainty.  The  Tenth  Amendment  makes  such  laws  facially  constitu- 
tional unless  they  are  held  to  be  in  conflict  with  the  interstate  commerce 
provision  of  the  Commerce  Clause,  the  foreign  commerce  provision  of  the 
Commerce  Clause,  or  the  federal  government's  supremacy  in  foreign 
relations. 

The  participant-regulator  (or  proprietary -govern  mental)  distinction,  if 
held  valid  in  this  context,  may  make  disinvestment  statutes  immune  from 
the  interstate  commerce  proscription.  But  the  ultimate  issue  is  whether  this 
distinction  will  be  extended  to  foreign  commerce.  Of  course  there  is  argu- 
ment that  can  be  made,  and  it  is  being  made  in  litigation  now  before  the 
courts — contending  both  for  and  against  constitutionality. 


"'426  U.S.  794  (1976).  See  text,  p.  81.  accompuying  n 
'"75  N.J.  at  300,  381  A.2d  U  788. 
'"75  N.J.  at  299.  381  A.2d  al  788. 
"*75  N.J.  at  291-92,  381  A. 2d  at  783-84. 


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DIVESTMENT  IS  NOT  THE  ANSWER* 


WILLIAM  G.  MILLIKEN 
Fbnner  Governor  of  Michigan 


The  United  States  is  under  increasing  domestic  pohtical  pressure  to  help 
effectuate  changes  in  the  internal  policies  of  other  nations.  South  Africa 
comes  immediately  to  mind  and  the  strategy  of  divestment  of  securities  in 
corporations  doing  business  there  is  the  proffered  tool 

Cunent  U.S.  policy  towards  South  Africa  is  the  widely  misunderstood 
"constructive  engagement."  President  Reagan  defined  that  policy  in  con- 
gratulating Bishop  Tutu  on  receiving  the  1984  Nobel  Peace  Prize,  saying; 
"The  United  States  has  beard  the  i^>peal  for  justice  voiced  by  South  AMcans 
who  suffer  under  apartheid  rule.  We  continue  to  urge  the  South  African 
government  to  engage  in  a  meaningful  dialogue  with  all  its  citizens  aimed  at 
accomplishing  a  peaceful  transition  away  from  apartheid." 

Despite  this,  the  United  States  is  now  seen  as  adopting  a  position  of 
neutrality  regarding  South  African  whites  and  blacks.  However,  U.S.  poli- 
cy officially  rejects  as  morally  wrong  apartheid  and  its  consequences — the 
attempts  to  denationalize  the  black  majority  and  relegate  blacks  to  citizen- 
ship in  tribal  "homelands."  and  the  repression  of  individuals  and  organiza- 
tions through  such  practices  as  detention  and  banning.  Nevertheless,  there 
is  the  growing  feeling  among  those  seeking  change  that  the  United  States  is 
more  interested  in  retaining  the  good  will  of  the  South  African  government 
than  it  is  in  using  its  political  and  economic  influence  against  apartheid. 

In  my  visit  to  South  Africa  earlier  this  year,  I  learned  that  present  U.S. 
policy,  with  its  perceived  emphasis  on  accommodation  and  its  seeming 
willingness  to  embrace  any  govenmient,  however  Feptessive,  which  de- 
clares itself  opposed  to  communism,  is  playing  into  the  hands  of  a  regime 
that  has  no  intention  of  abandoning  its  apartheid  policies.  Indeed,  the  harsh 
security  laws — ostensibly  to  control  communism— have  served  their  real 
purpose ,  which  is  to  control  and  destroy  any  kind  of  opposition  to  apartheid. 

What  can  the  United  States  do  to  help  effect  change?  We  should,  at  the 
very  least,  leave  no  doubt  whatever  that  we  are  unalterably  opposed  to 
apartheid.  That  signal  should  come  through  clearly  and  be  constantly 
sounded.  There  must  be  no  misunderstanding  of  the  U.S.  position  on  this 
point.  There  is  now. 


'Governor  Milliken  has  writttn  morefully  on  Soulh  Alnca  in  Iwo  Op-Ed  ailicles  in  the 
Detroit  Free  Press,  April  19  aad  20,  1984. 


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More  can  be  done .  The  Rockefeller  Foundation-financed  Study  Commis- 
sion on  U.S.  Policy  toward  Southern  AMca  has  recommended  promoting 
political  power-sharing  by  exciting  influence  on  the  South  African  govern- 
ment by  diplomatic  moves;  hairing  export  of  certain  U.S.  goods,  technol- 
ogy (particularly  oil-drilling  technology)  and  services;  broadening  the  arms 
and  nuclear  embargos;  withholding  diplomatic  recognition  and  economic 
aid  from  the  independent  homelands,  and  supporting  organizations  inside 
South  Africa  working  for  peaceful  change  such  as  multiracial  labor  unions, 
educational  pn^rams,  public-interest,  self-help  and  other  organizations. 

Some  of  these  objectives  were  contained  in  bills  passed  by  Congress 
recently.  Others  will  be  considered  during  1985.  What  is  significant  is  that 
there  is  a  growing  interest  in  South  Africa  and  a  recognition  that  the  United 
States  has  a  moral  obligation  to  exert  what  pressure  it  can  to  bring  about 
leform. 

Divestment  is  continuously  being  urged  with  divestment  advocates 
claiming  increasing  momentum.  Eleven  cities  and  five  states  have  passed 
stMne  form  of  divestment  law.  Some  20  states  are  expected  to  consider  such 
laws  in  the  next  year. 

I  did  not  talk  with  a  single  individual  in  South  Africa — white  or  black — 
who  supports  this  aj^nxMich.  The  fact  is,  most  U.S.  companies  are  operating 
in  an  enlightened,  responsible  way.  Since  1977,  with  the  announcement  of 
the  Sullivan  principles  (a  code  of  business  conduct  relating  to  desegregating 
facilities,  equal  pay  for  equal  work,  equalization  of  benefits  for  all  races  and 
a  number  of  other  goals),  more  than  120  companies  have  become  signator- 
ies. Were  commercial  ties  cut  and  U.S.  companies  to  pull  out,  the  United 
Stales  would  lose  part  of  what  leverage  it  has  to  exert  pressure  on  the  South 
Airican  government  for  change  and  wid)  the  loss  of  jobs  the  first  to  su^er 
would  be  blacks,  not  whites. 

Although  I  oppose  an  outright  ban  on  all  South  African  investment,  an 
action  1  took  in  my  last  year  as  governor  of  Michigan  may  a^^ar  inconsis- 
tent with  this  position.  At  that  time  1  signed  a  bill  into  law  requiring 
Michigan  public  colleges  and  universities  to  divest  themselves  of  any  hold- 
ings in  companies  doing  business  in  South  Africa.  It  was  a  difficult  deci- 
sion. At  the  time  I  was  fully  aware  of  the  arguments  on  both  sides  but 
believed  there  was  symbolic  importance  to  the  act  and  that  a  statement 
neededtobemadethrough  our  public  institutions.  Istilldo.  A  total  puUout 
of  U.S.  investments  would  serve  no  one's  puipose.  The  action  itself  had 
little  impact.  It  did,  however,  send  a  signal — and  1  think  American  public 
officials  must  constantly  signal  their  abhorrence  of  apartheid. 

It  is  in  America's  own  interests  to  give  such  signals.  II  is  in  America's 
own  interests  to  signal  its  adherence  to  principles  of  justice  and  to  a  higher 
moral  order  whether  dealing  with  South  Africa  or  the  U.S.S.R.,  Poland  or 
Iran.  Divestment  will  leave  the  U.S.  with  less,  not  more,  influence  and  with 
less  ability  to  assist  in  die  struggle  few  justice.  Just  by  meeting  the  goals  of 
the  Sullivan  [ninciples,  U.S.  companies  are  in  the  fofefroni  of  change. 

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Late  in  1983,  and  again  (his  year,  the  leptesentatives  of  the  signatoiy 
companies  met  in  New  Yoric  to  wfxk  out  a  strategy  to  improve  the  quality  of 
employees'  lives  in  such  areas  as  education,  bousing,  health  facilities, 
recreation  and  transportation.  Even  as  he  increasingly  relics  on  the  skills 
and  services  of  black  labor,  the  Afrikaner  has  relentlessly  continued  to  deny 
opportunity  to  blacks.  To  the  extent  U.S.  companies  achieve  equal  pay  for 
equal  work,  advance  blacks  into  management  positionst  end  all  segregation 
on  the  job  and  seek  to  improve  conditions  behond  the  wmkplace ,  they  will 
give  the  Afrikaner  reason  to  woiiy  that  what  he  has  created  cannot  last 
forever. 

Divestment  is  not  the  answer,  although  the  U.S.  should  do  more  because 
hopes  for  genuine  reform  of  the  South  African  government  are  fading 
among  blacks  and  others.  Desmond  Tutu  said:  "Our  people  are  rapidly 
despairing  of  a  peaceful  resolution  in  South  Africa.  Those  of  us  who  still 
speak  of  'peace'  and  'reconciliation'  belong  to  a  rapidly  diminishing  minor- 
ity." The  central  issue  of  South  African  life,  that  of  political  rights  for  the 
more  than  21  milUon  blacks,  is  simply  not  on  the  govenmient's  agenda. 

There  is  not  much  time  left. 

And  as  Alan  Paton  reminds  us  in  his  "Cry,  the  Beloved  Country":  '"I 
have  one  great  fear  in  my  heart, '  a  black  minister  says,  'That  one  day  wbm 
they  (the  whites)  turn  to  loving,  they  will  find  we  are  turned  to  hating.'" 


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STATEMENT  OF  DEREK  BOK  ON 
INVESTMENT  POLICY* 


PRESIDENT  DEREK  BOK 

Harvard  University 

On  May  9,  19S4,  the  Advisoiy  Committee  on  Shareholder  Responsibility 
(ACSR)  submitted  a  report  on  the  subject  of  Harvard's  investments  in 
American  corporations  doing  business  in  South  Africa.  The  Harvard  Corpo- 
ration's Committee  on  Shareholder  Responsibility  has  today  issued  a  de- 
tailed reply  to  the  ACSR  repon,  agreeing  with  some  of  its  proposals  and 
disagreeing  with  others.  1  will  not  repeat  all  that  is  said  in  that  reply.  But  I 
will  exfHcss  some  thou^ts  of  my  own  on  the  subject  of  divestment,  since  it 
represents  the  point  of  greatest  disagreement  in  this  community  coiKeming 
the  response  of  the  University  to  the  injustices  of  apartheid. 

Let  me  begin  by  making  clear  that  this  is  not  a  dispute  about  apartheid  or 
the  record  of  the  South  African  government.  All  of  us  on  every  side  of  the 
divestment  issue  agree  that  apartheid  is  a  cruel  and  shameful  fonn  of  racial 
exploitation  that  has  no  conceivable  justification.  Nor  does  this  debate 
simply  reflect  a  difference  of  opinitm  over  tactics  or  money — though  1  do 
believe  that  the  tactics  of  divestment  will  not  succeed  and  that  they  would 
cost  the  university  money.  At  bottom,  this  is  also  a  dispute  about  the  nature 
of  the  university  itself  and  the  ways  in  which  it  should  and  should  not 
respond  to  evil  in  the  outside  world. 

Harvard  has  taken  a  number  of  steps  in  response  to  apartheid.  We  have 
cast  our  ballot  with  care  in  shareholder  resolutions  concerning  South  Africa, 
often  voting  to  urge  corporations  to  subscribe  to  the  Sullivan  Principles, 
sometimes  voting  to  have  a  company  withdraw  entirely  from  South  Africa. 
We  have  engaged  in  intensive  dialogue  with  corporations  to  persuade  them 
to  improve  wage  and  employment  practices  for  black  South  African  em- 
ployees and  to  improve  the  quality  of  life  outside  the  workplace  for  these 
employees,  their  families,  and  nonwhites  in  general.  A  number  of  compa- 
nies have  taken  such  steps.  We  have  also  initiated  a  program  to  bring 
nonwhite  students  from  South  Africa  to  study  each  year  at  Harvard.  Finally, 
I  have  helped  to  organize  a  nationwide  effort  of  universities,  corporations, 
and  foundations  which  has  brought  over  300  black  South  African  students  to 
study  in  colleges  and  professional  schools  across  the  country. 

Many  members  of  this  community  would  like  Harvard  to  take  a  different 


*lt«])riiued  with  penniKioa.  Fk^  appearing  in  the  Hward  Gazette  irf  Oct.  5,  1984. 


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course  and  divest  all  of  its  stock  in  American  companies  doing  business  in 
South  Africa.  I  have  disagreed  with  this  view,  and  I  continue  to  do  so.  Much 
as  I  oppose  ^Kutbeid,  I  strongly  believe  that  univosities  should  not  attempt 
to  use  their  power  to  ptess  their  political  and  ectMKMnic  views  <»t  other 
ofganizations  and  individuals  beyond  the  campus.  This  is  essentially  what 
Harvard  would  be  doing  by  divesting — boycotting  the  stock  of  American 
companies  to  bring  the  {vessure  of  this  institution  to  bear  against  them  to 
have  them  cease  doing  business  in  South  Africa. 

My  views  on  this  matter  are  not  casual;  they  involve  the  essential  pur- 
poses of  the  university  and  tlw  terms  on  which  it  exists  and  does  its  wofk  in 
our  society.  Universities  have  the  distinctive  mission  of  promoting  discov- 
ery, new  ideas,  understanding,  and  education.  These  activities  depend  on 
experimenttfion,  self-exinession,  and  the  widest  opportunity  for  debate  and 
dissent.  They  require  insulation  ftom  outside  piessures  that  would  impose 
an  orthodoxy  of  "safe"  ideas  or  use  the  university  for  ends  otiier  than 
learning  aitd  Ilie  pursuit  of  truth.  In  tiiis  respect,  the  univosity  is  quite 
unlike  other  institutions,  such  as  governmental  bodies,  which  are  designed 
to  exert  power  over  others  and  to  be  subject  in  turn  to  outside  pressures  from 
groups  seeking  to  influence  tlie  uses  of  power  in  a  democracy. 

In  order  to  proiea  the  process  of  learning  and  discovery,  universities 
must  maintain  a  leason^le  autonomy  in  the  conduct  of  their  internal  affairs. 
They  must  persuade  die  outside  world  to  refrain  frcHn  exerting  pressure  that 
would  limit  the  freedom  of  their  members  to  speak  and  publish  as  they 
choose.  They  must  also  preserve  the  freedom  (o  select  the  best  teachers  and 
scholars  for  the  faculty  regardless  of  their  opinions  or  political  activities  and 
to  set  their  own  pohcies  without  external  control  save  by  the  government  in 
behalf  of  established  public  ends. 

Today,  these  freedoms  are  generally  respected  in  the  society.  But  this 
was  not  always  the  case .  The  autonomy  of  academic  institutions  was  resist- 
ed for  many  decades  by  those  who  thought  it  too  dangerous  to  allow 
imivcrsities  to  exist  without  some  control  over  what  was  written  or  taught 
within  their  walls.  Even  now,  our  freedom  exists  within  limits.  Like  all 
freedoms  it  has  reciinocal  obligations.  We  cannot  expect  individuals  and 
organizations  to  respect  our  right  to  speak  and  write  and  choose  our  mem- 
bers as  we  think  best  if  we  insist  on  using  institutional  sanctions  to  try  to 
impose  on  them  those  policies  and  opinions  tliat  we  consider  important. 

The  obligation  I  perceive  in  no  way  inhibits  individual  members  of  this 
commimity  from  expressing  themselves  on  issues  such  as  apartheid  (V  from 
engaging  in  political  efforts  to  promote  their  views.  Indeed  the  right  to  act  in 
diis  way  is  an  essential  part  of  academic  freedom.  There  is  lilccwise  no 
reason  why  die  university  should  not  perform  the  ftmction  entnistedloit  as  a 
shareholderunderour  laws  by  votmg  on  issues  of  social  responsibility.  The 
university  may  even  communicate  its  views  through  discussions  with  the 
officials  of  companies  whose  stock  it  holds.  But  the  line  is  crossed  when  a 
university  goes  beyond  expressing  opinions  and  tries  to  exert  economic 

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ivessure  by  diverting  Slodc  (w  engaging  in  a  boycott  in  order  lo  press  its 
views  on  outside  organizations.' 

The  more  the  university  acts  in  this  way  the  more  it  risks  disturbing  the 
implicit  airangemenis  under  which  institutions  of  learning  can  continue  to 
function  with  the  freedom  they  need  to  cany  out  their  essential  mission.  If 
Harvard  insists  on  exerting  leverage  on  issues  we  care  deeply  about,  indi- 
viduals, corporations,  and  other  organizations  are  likely  lo  exert  economic 
pressure  against  us  on  matters  they  feel  strongly  about,  such  as  the  radical 
(pinions  of  particular  professors,  or  Harvard's  position  toward  ROTC,  or 
die  University's  policies  concerning  involvement  in  covert  CIA  activities. 

Every  year,  shareholder  resolutions  are  introduced  to  bar  coiporate  sup- 
port to  universities  on  grounds  such  as  those  just  mentioned.  These  resolu- 
tions are  regularly  defeated  because  most  shareholders  are  persuaded  that 
corporations  should  not  use  economic  leverage  to  influence  the  internal 
policies  of  universities .  It  would  be  unreasonable  to  expect  such  altitudes  to 
continue  if  we  begin  boycotting  [voducts  w  selling  shares  to  press  particular 
policies  on  corporations  and  other  organizations. 

Some  of  the  strongest  proponents  of  divestment  are  not  deterred  by  this 
prospect.  Indeed,  they  have  organized  a  fimd  to  be  given  to  Harvard  only  if 
it  agrees  to  sell  its  stock  in  companies  doing  business  in  South  Africa.  I 
could  not  disagree  more  with  this  approach.  Once  we  enter  a  world  in  which 
those  with  money  and  power  feel  fiee  to  exert  leverage  to  influence  univer- 
sity policies,  we  should  not  be  surprised  to  find  that  universities  have  lost 
much  of  their  vatu^le  independence.  Nor  should  we  complain  when  we 
discover  that  those  who  wield  the  most  power  are  not  necessarily  those 
whose  policies  are  congenial  to  our  own. 

Critics  may  reply  that  I  am  putting  the  i»ivale  interest  of  the  University 
ahead  of  the  plight  of  the  black  majority  that  suffers  under  the  heel  of 
apartheid.  In  response,  I  would  begin  by  resisting  the  charge  that  the 
interests  just  described  are  merely  self-serving.  In  carrying  out  its  tasks  of 
education  and  research,  a  university  is  performing  public  functions  of  great 
importaiKe  to  society.  The  freedoms  universities  seek,  like  their  buildings 
and  endowments,  are  not  private  assets  but  resources  essuitial  to  the  accom- 
plishments of  a  vital  public  mission. 

In  addition,  I  reject  the  suggestions  that  a  policy  against  divestment  will 
peipetuatc  injustice,  since  1  see  no  realistic  possibility  that  having  universi- 
ties sell  their  stock  in  American  companies  will  make  a  noticeable  contribu- 
tion to  ending  apaitbeid  or  improving  the  lot  of  black  South  Africans. 


'The  Univenity  may  occtsionaUy  tell  ttte  stock  of  a  corpontioa  becuue  of  ■  diugieeineM 
wilb  its  policies.  Such  aciioii,  however,  is  not  taken  to  pcessute  ibe  company  into  confbnning 
with  Harvard's  views  but  occun  became  Ifae  UniveniQ'  does  not  wish  to  continue  an  atsoci- 

aiioD  with  a  fiim  that  fails  to  live  up  to  n'  '  ~ 

proqiect  of  doing  so  in  the  fiuure. 


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Divestment  can  mike  a  significanLcootributioD  to  overcoming  apnitbeid 
only  if  all  of  the  following  questimis  can  be  answered  iffinnalively: 

1 .  Will  selling  slock  offer  a  significant  chance  of  persuading  Amoi- 
can  finns  to  leave  South  Africa? 

There  is  no  indication  that  sales  of  stock  will  put  sitfficient  economic 
pressure  on  the  management  of  American  conqMnies  to  induce  them  to 
withdraw,  since  such  stock  will  be  purchased  by  others  with  no  peimanent 
eccHwmic  consequences  to  the  firm.  Nor  is  there  any  evidence  that  die 
publicity  engendered  by  sales  of  stock  will  lead  companies  to  incur  the 
losses  entailed  by  abandoning  their  South  African  operations.  In  fact,  no 
American  company  has  left  the  countiy  because  of  divestment  actions  taken 
by  various  states  and  municipatities  over  die  past  few  years. 

2.  Is  divestment  a  more  effective  way  of  inducing  ctHi^Mnies  to 
withdraw  than  voting  in  favor  of  corporate  resolutions  to  withdraw? 

There  is  no  evidence  to  indicate  that  this  is  so.  NeidicT  divestment  nor 
shareholder  resolutions  have  caused  any  American  con^iany  to  withdraw, 
and  neither  tactic  holds  much  promise  of  doing  so  in  the  foture.  Shareholder 
resolutions  and  dialogue  with  company  executives  have  at  least  led  to  some 
tangiUe  corporate  actions  to  improve  the  lives  of  black  South  Africans. 
Divestment  has  not  had  even  diis  effect. 

3 .  Even  if  divestment  could  somehow  help  persuade  American  com- 
panies to  leave  South  Africa,  would  their  withdrawal  materially  help 
in  overcoming  apartheid? 

In  fact,  if  American  companies  left  South  Africa,  it  is  vuiually  ceitain 
that  their  operations  would  be  taken  over  either  by  local  interests  or  by 
foreign  concerns.  Since  die  business  would  continue  operating,  it  is  not 
clear  just  how  withdrawal  would  pressure  the  government  into  refcvming 
the  ^lartheid  system. 

4.  Would  corporate  withdrawal,  assuming  it  somehow  occurred,  con- 
tribute more  to  the  defeat  of  apartheid  than  efforts  by  American 
companies  to  improve  wages,  employment  oppormnities,  and  social 
conditions  of  nonwhite  w<»kera? 

At  bottom,  this  question  raises  the  difficult  issue  of  how  major  social 
change  can  come  about  in  a  country  like  South  Africa.  Those  who  support 
corporate  activity  on  South  Africa  argue  that  ectmomic  development  will 
eventually  undennine  apartheid  as  the  needs  of  the  eoMKimy  fuce  the 
Nationalist  regime  to  give  more  education,  economic  opportunity,  and 

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ultimately  power  to  nonwhites.  Pn^Kwients  of  divestiture  believe  that  real 
change  will  never  occur  by  evoluttonaiy  means,  whereas  the  withdrawal  of 
American  companies  could  produce  widespread  unemployment  and  eco- 
nomic distress  Aat  would  either  force  the  govermnent  to  institute  reforms  or 
lead  to  a  successful  revolution. 

Both  these  theories  leave  many  questions  unanswered,  and  it  would  be 
difficult  to  choose  between  them  or  to  assert  that  either  will  prove  to  be 
correct.  In  response  to  propoiKnts  of  divestment,  it  seems  most  unlikely  thai 
corporate  withdrawal  would  cause  an  economic  collapse,  since  other  com- 
panies would  presumably  take  over  the  operations  abandoned  by  American 
firms.  Even  assuming  that  withdrawal  did  hurt  the  economy  substantially, 
the  question  still  remains  whether  this  result  would  bring  about  the  end  of 
i^>artfaeid  or  simply  cause  more  suffering,  black  unemployment,  and  repres- 
sion. This  question  seems  all  but  impossible  to  answer.  Proponents  of 
divestment  argue  that  blacks  and  their  leaders  favor  withdrawal  of  Ameri- 
can companies.  In  fact,  some  do,  but  others  don't.  In  the  words  of  the 
American  columnist  William  Rasfrt^eny,  writing  from  Capetown,  "If  the 
Harvard  students  find  the  questions  easy,  black  South  Africans  are  by  no 
means  unanimously  agreed." 

In  summary,  divestment  can  have  a  constructive  effect  on  South  Africa 
only  if  we  ciui  answer  all  four  of  the  preceding  questions  affirmatively.  In 
reality,  it  is  far  fnmi  clear  that  one  can  give  a  positive  answer  to  any  of  these 
questions.  The  likelihood  that  all  four  can  be  answered  affirmatively  is 
vanishingly  small.  Hence,  I  find  no  basis  for  concluding  that  universities 
will  help  defeat  apartheid  in  South  Africa  by  agreeing  to  divest.  As  a  matter 
of  principle,  therefoFC,  I  see  no  reason  for  departing  from  the  basic  norms 
th^  define  the  ro\c  of  the  university  in  society.  Even  apart  from  the  special 
constraints  on  universities,  1  do  not  believe  that  we  can  know  enough  about 
the  future  of  a  distant  country  to  insist  to  the  point  of  public  boycott  that 
American  cmnpanies  will  do  more  for  black  South  Africans  by  leaving  the 
country  than  by  remaining  and  instimting  better  employment  and  social 
conditions.  And  f  find  it  difficult  to  su[^x>n  in  good  conscience  a  decision 
that  would  jeopardize  resources  given  to  us  for  education  purposes  to  pursue 
a  strategy  that  neither  furthers  the  academic  erjds  of  the  institution  nw  offers 
a  realistic  chance  of  achieving  its  objectives. 

E)espite  these  conditions,  some  critics  contend  that  Harvard  should  divest 
rather  than  continue  its  practice  of  voting  on  shareholder  resolutions  and 
communicating  with  corporate  managements  because  the  present  practice 
has  failed  to  overcome  apartheid  <»'  to  close  the  gap  in  wages  and  working 
ciMtditions  between  black  and  white  workers.  This  argument  misconceives 
the  current  policy.  The  University  did  not  adopt  this  policy  because  it  felt 
that  its  actions — or  any  actions  that  universities  could  take — would  have 
substantial  effect  on  apartheid.  Harvard  decided  on  this  course  of  action  in 
the  conviction  that  it  should  vote  shares  as  conscientiously  as  possible,  even 
if  the  ejects  are  only  limited,  and  because  of  a  strong  belief  in  the  principle 


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thai  voting  and  conununicating  views  aie  ^qtropiiate  fonns  of  behavior  for 
a  university  while  efforts  to  exert  (Hcssure  ttvough  boycotts  and  divestment 
are  not. 

Others  who  advocate  divestment  have  suggested  that  the  University's 
nomial  policies  as  a  shareholder  need  not  ipp\y  because  South  Africa  is 
such  a  special  case — the  only  nation  that  institutionalizes  racial  discrimioa- 
tioD  and  practices  it  on  a  massive  scale.  Recognizing  the  enormities  of 
^KUlheid,  Harvard  has  gone  beyond  its  normal  |»BCtices  by  communicating 
directly  with  corporate  officials  to  persuade  them  to  alter  their  employment 
practices  and  by  creating  special  scholarship  programs  for  black  South 
Africans.  Bui  it  is  one  thing  to  make  etfmts  of  this  kiixl  and  quite  another  to 
disregard  one  of  die  University's  basic  i^iKiples,  especially  when  such 
action  is  urged  in  pursuit  of  a  strategy  that  has  no  significanl  chance  of 
affecting  the  course  of  events  in  South  Africa. 

Those  who  seek  a  more  effective  way  of  putting  pressure  on  the  Afrikaner 
government  need  not  look  far.  Last  year,  for  example,  bills  were  introduced 
in  Congress,  and  passed  the  House  of  Representatives,  to  maitdate  fair  latxH' 
practices,  limit  bank  loans,  impose  export  controls,  and  forbid  all  new 
American  investment  in  South  Africa.  Whatever  one  may  think  of  these 
bills,  those  who  favoc  divestment  must  concede  that  such  legislation  would 
be  a  vastly  more  effective  means  of  achieving  their  objective.  Nevertheless, 
I  have  not  observed  substantia)  numbers  of  persons  on  this  campus  working 
actively  for  die  passage  of  these  measures. 

Other  critics  take  a  very  different  tack  and  argue  that  we  should  divest, 
whether  or  not  it  will  have  any  practical  effect,  because  it  is  simply  inunoral 
to  hold  stock  in  any  firm  that  does  business  in  South  Africa.  This  argument 
would  have  more  force  if  Harvard  owned  stock  in  companies  doing  all  or 
most  of  their  business  in  South  Africa.  But  that  is  not  the  case.  The  compa- 
nies from  which  we  are  asked  to  divest  typically  do  less  Ihiui  one  percent  of 
their  business  in  South  Africa.  We  do  not  invest  in  these  concerns  because 
of  their  South  Africa  operations;  it  would  be  more  nearly  correct  to  say  that 
we  invest  despite  those  operations. 

The  point,  therefore,  must  be  that  Harvard  should  sell  »ock  <mi  [mnciple 
if  it  is  tainted,  however  slightly,  by  the  stain  of  doing  business  in  South 
Africa.  This  is  a  troublesome  argument.  It  suggests  that  morality  lies  in 
trying  to  avoid  all  contact  with  the  wrongs  of  the  world  and  that  it  is  better  to 
sell  one's  stock  and  simply  turn  away  from  the  injustices  of  South  Africa 
than  continue  working  as  a  shareholder  to  persuade  companies  to  improve 
the  wages  and  conditions  of  their  black  employees. 

We  should  also  recognize  that  far  more  than  divestment  would  be  needed 
to  sever  all  our  links  to  South  Africa.  If  it  is  wrong  to  bold  stock  in  an 
American  company  doing  a  tiny  share  of  its  business  in  South  Africa,  one 
would  suppose  that  it  is  also  immoral  to  hold  shares  in  the  many  companies 
Aat  buy  goods  from  South  Africa  or  sell  goods  to  it,  since  they  too  benefit 
ftoffl  the  South  African  economy  and  presumably  help  to  sustain  it.  One 

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would  also  suppose  that  Harvard  should  not  accept  gifts  of  money  derived  in 
some  demonstrable  pait  from  South  African  operations,  since  they  would 
also  be  tainted.  Accepting  tuitions  from  South  African  students  would 
likewise  seem  suspect;  even  tuitions  from  American  students  paid  for  in  pait 
by  dividends  from  companies  doing  business  in  South  Africa  could  be 
questioned.  In  short,  the  ramifications  of  such  a  rigorous  policy  are  far- 
reaching  indeed. 

Before  we  insist  on  such  a  drastic  moral  standard,  we  should  ask  our- 
selves not  only  whether  it  is  practical  but  whether  we  are  willing  to  apply  it 
to  our  own  lives.  How  many  of  us  have  examined  the  purchases  we  make  to 
see  whether  they  come  from  companies  that  do  business  in  or  with  South 
Africa?  How  many  students  have  inquired  whether  their  tuitions  are  paid  in 
pait  from  the  dividends  of  companies  with  a  South  A&ican  subsidiary?  For 
that  matter,  how  many  of  us  have  stopped  buying  goods  or  using  funds  that 
can  be  traced  to  Guatemala,  Salvador,  Iran,  Uganda,  or  other  countries 
where  fliousands  of  iniHxent  people  have  been  killed  with  no  justification? 
The  tiulh  is  that  virtually  no  one  follows  such  a  policy  or  regards  it  as  a 
feasible  standard  to  follow. 

Finally,  sonte  have  argued  diat  Harvard  should  divest  because  divestment 
is  a  particularly  dramatic,  affirmative  way  of  expressing  die  University's 
opposition  to  apaitiieid  as  a  system  at  war  widi  our  ideals  of  freedom  and 
justice.  Such  people  often  stress  the  pervasive  influence  of  Harvard  on  the 
society  and  argue  that  the  effects  of  our  divestment  on  worid  opinion  could  . 
be  substantial.  My  experience  leads  me  to  doubt  this  view.  Harvard  may 
command  great  respect  for  what  it  has  accomplished  in  pursuit  of  its  central 
mission  of  research  smd  education;  it  does  not  have  much  influence,  even 
with  its  own  alumni,  when  it  makes  institutional  statements  on  political 
questions  such  as  corporate  involvement  in  South  Africa.  Like  it  or  not,  the 
public  knows  diat  the  University  cannot  claim  any  special  wisdom  in  ex- 
pressing itself  collectively  on  issues  of  this  kiitd. 

It  is  also  important  to  note  that  Harvard  has  already  stated  its  clear  and 
complete  opposition  to  apartheid  on  various  occasions.  In  what  respect, 
then,  is  divestment  a  more  elective,  more  forceful  expression  of  disapprov- 
al? Because  it  will  continue  in  some  significant  way  to  ending  apartheid? 
We  have  seen  that  this  is  most  unlikely.  Because  the  slock  of  American 
companies  in  South  Africa  is  peculiarly  tainted?.  That  rationale  is  also 
unrealistic.  The  argument  that  divestment  will  be  a  peculiarly  effective 
gesture  must  presumably  rest  on  the  belief  that  divestment  will  cost  Harvard 
m(Hiey  and  thus  represent  a  sacrifice  which  will  reveal  the  depth  of  our 
convictions. 

This  too  is  a  hi^y  questionable  argument.  Presumably,  Harvard  could 
also  demonstrate  its  convictions  by  giving  funds  to  the  African  National 
Congress  or  some  other  opposition  group.  Such  a  grant  would  certainly  be  a 
dramatic  gesture  and  might  well  do  more  than  divestment  to  further  the 
struggle  against  the  Nationalist  regime.  And  yet,  despite  our  revulsioa 

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toward  ^>aitheid,  the  fact  remains  that  Harvard's  resources  were  entrusted 
to  us  ftx-  academic  purposes  and  not  as  a  means  of  demonstrating  our 
opposititMt  to  apartheid  or  lo  other  manifest  injustices  and  evils  around  die 
world.  This  is  one  reason  why  we  have  suppmicd  the  expenditure  of  Univer- 
sity funds  to  educate  mnwhites  irom  South  Africa  at  Harvard  but  have 
opposed  a  policy  of  divestment. 

ki  making  these  arguments,  1  am  acutely  aware  of  die  contrary  views 
expressed  by  those  who  strmgly  favor  divestment.  I  respect  dieir  convic- 
tions. I  hope  that  they  will  respect  mine.  It  is  never  a  pleasant  task  lo 
disagree  with  odiers  who  care  deeply  about  injustice.  In  the  case  of  South 
Africa jlheiiiiusticA  is  so  monstrous  that  die  heart  aches  for  some  opportuni- 
ty to  resist  affectively.  Nevertheless,  such  feelings  cannot  bring  me  (o 
support  a^course  of  action  that  would  force.this  University  to  deviate  fmta 
its  [Hoper  role,  jeopardize  its  independoice,  and  ride  its  resources  in  behalf 
of  a  dubious  strategy  that  has  do  realistic  prospect  of  success.  As  a  result, 
having  thought  about  die  issues  as  carefully  as  I  could,  I  continue  to  believe, 
^  1  did  in  1978,.  that  die  arguments  for  divestment  are  not  convincing  and 
thai-flarvaTd  «bould  not  adopt  such  a  policy. 


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CONCLUDING  SUMMARY 

by 
ROBERT  J.  D'AGOSTINO 


"But  the  pension  fund  was  just  sitting  there."  (See,  Schotland,  p.  31). 

Once  again,  groups  pursuing  their  own  political  goals,  having  failed  to 
win  assent  through  the  a^^iropriate  political  or  legislative  processes,  aRempt 
to  claim  public  jurisdiction  over  yet  another  facet  of  private  choice — that  of 
economic  investments  (See  Langbein,  p.  8).  What's  actually  at  stake  in 
accepting  a  policy  of  divestment,  or  social  investing  (Langbein)  or  diver- 
gent  investing  (Schotland),  is  obfuscated  by  the  hysterical  level  of  attacks 
on  both  South  Africa  and  United  States  policy  towards  South  Aftica.  As 
leprdieosible  as  apartheid  is  (See  Milliken,  p.  95),  it  is  neither  the  most 
repressive  of  the  totalitarian  systems  nor  is  it  unique.  The  Soviet  Union, 
Cuba,  Iran,  Ethiopia  all  have  systems  less  respectful  of  humiui  rights  or 
more  brutal  in  their  lack  of  concern  for  human  life .  All  could  or  should  be,  if 
we  are  to  follow  the  logic  of  the  divestment  advocates,  subject  to  divest- 
ment, boycotts  and  the  like,  it  would  be  foreign  policy  by  pressure  group. 

In  addition,  pressure  is  being  increasingly  brought  to  bear  on  state  and 
local  government  and  union  pension  fund  managers  to  invest  "locally"  for 
the  stated  rationale  of  job  creation  or  stimulating  the  local  economy  in  some 
way.  Again  and  like  the  pressure  for  divestment  of  shares  in  companies 
following  someone's  definition  of  social  irresponsibility  the  rationale  is 
based  on  factors  other  than  what  is  a  prudent  investment  decision. 

In  all  of  this  whether  dealing  with  countries  whose  internal  policies  are 
thought  unacceptable,  or  localism,  or  allegedly  socially  irresponsible  com- 
panies, fiduciary  responsibility  to  those  who  have  entrusted  their  savings  or 
retirement  income  to  others  is  ignored  in  favor  of  political  criteria. 

Is  Divestment  Moral? 

The  answer  to  this  question  involves  two  issues.  The  first  is  a  consider- 
ation of  whether  withdrawal  from  countries  whose  internal  policies  we 
disapprove  is  more  or  less  likely  to  bring  about  the  change  desired.  Is 
responsible  involvement  really  immoran  (See,  Schotland,  p.  63). 

For  example,  U.S.  companies  were  the  first  to  bargain  with  black  labor 
unions  in  South  Africa,  generally  are  signatories  to  the  Sullivan  Principles 
(See,  Schotland,  p.  60),  and  are  leaders  in  offering  educational  opportuni- 
ties to  blacks.  Withdrawal  from  South  Africa  will  most  assuredly  harm  the 
very  persons  advocates  of  divestment  claim  they  wish  to  help. 


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Giveo  such  ficts,  it  is  most  cotainly  wrong  to  call  re^tonstble  investment 
immtval,  and  more  logiciUy  to  call  it  moral  because  it  is  a  more  effective 
way  to  influence  policy  and  because  it  demonslrably  enhances  life.  (See, 
Schotland,  p.  62). 

Hie  secfHid  issue  is  a  consideration  of  just  who  is  setting  the  social 
investment  agenda  compared  with  who  is  paying  the  price.  Many  divest- 
ment proposals  are  directed  at  pension  funds,  not  in  order  to  further  the 
interest  of  pensioners,  but  in  disregard  of  their  interests.  By  taking  advan- 
tage of  the  separation  of  ownership  and  control ,  pressure  groups  attempt  to 
politicize  the  investment  process.  The  adoption  of  a  political  investment 
strategy  cairies  with  it  the  risks  of  lower  returns  on  investment  and  a  higher 
investment  risk.  (See,  Langbein,  p.  20).  Is  it  moral  to  ask  the  elderly  to 
surrender  retirement  inctxne?  When  people  are  directly  confronted  with 
adopting  social  or  divergent  investing  voluntarily,  they  generally  refuse. 
Stockholders  routinely  vote  no  on  motions  to  withdraw  investments  in 
South  Afiica;  the  mutual  funds  which  limit  investments  to  "socially  respon- 
sible" companies  are  small.  (See  Langbein,  p.  16  Schotland,  p.  42). 

In  responding  to  pressure  for  Harvard  to  divest  stock.  President  Dtnk 
Bok  discussed  dte  proper  role  of  a  university  and  the  importance  of  its 
remaining  as  free  ftom  outside  political  pressure  as  possible.  Is  the  threat  to 
academic  integrity  posed  by  the  advocates  of  divestment  moral? 

Is  Divestment  Legal? 

The  Constitution  leaves  the  ccmduct  of  foreign  policy  exclusively  in  &» 
hands  of  the  federal  government.  The  impact  on  fcnvign  natims  for  an  effort 
to  sever  American  economic  involvement  with  them  has  potentially  signifi- 
cant impact  on  relations  with  die  target  countries.  However,  laws  which 
focus  on-  c(Hporate  behavior  are  mtxe  insulated  from  Constitutional  chal- 
lenge (See,  Schotland,  p.  65,  Blaustein,  p.  79). 

In  addition,  state  and  local  divestment  or  investment  acts  likely  violate 
the  Commerce  Clause.  The  test  is  whether  a  stale  statute,  on  balance, 
promotes  legitimate  local  concerns  without  interfering  or  interfering  unduly 
with  national  concerns.  Divestment  does  not  promote  local  ecoiximic  con- 
cerr^  since  it  does  not  reflect  ctmcem  for  the  stability  of  the  investments, 
rather  it  purposely  interferes  with  foreign  and  interstate  commerce.  (See, 
Schotland,  p.  66). 

Aside  from  Constitutional  challenge,  a  trustee  who  sacrifices  the  benefl- 
ciary's  flnancial  well-being  for  any  social  cause  violates  both  his  duty  of 
loyalty  to  that  beneficiary  and  ttie  prudent  investment  standard.  A  trost  must 
be  administered  solely  in  the  interest  of  the  beneficiary.  The  Employee 
Retirement  Income  Security  Act  (ERISA)  codified  these  duties  of  loyalty 
and  prudent  investing  in  its  sole  interest  and  exclusive  purpose  rules. 
(ERISA  does  not  apply  to  state  and  local  pension  plans,  hence  they  and  not 


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private  plans  are  the  targets  of  the  divestment  lobby.)  (See,  Langbein, 
p.  6). 

Is  Divestment  Productive? 

Whether  dealing  with  divestment  as  a  foreign  policy  strategy,  a  social 
strategy,  or  a  way  to  keep  investments  local,  the  futility  of  most  such  private 
eflbits  are  clearly  manifest.  Simple  substitution  effects  demonstrate  that 
someone  else  is  there  to  fill  the  gap.  U.S.  laws  foibidding  the  exportation  of 
military  or  police  equipment  to  South  Africa  have  resulted  in  European  and 
Japanese  equipment  being  substituted,  costing  U.S.  jobs.  Localism  laws 
have  resulted  in  retaliatory  localism  laws  or  shifts  of  other  investors  to  the 
forgone  investment  opportunities.  In  those  instances- where  local  investing 
has  increased  the  sum  total  of  such  investing,  it  has  done  so  at  the  cost  of 
accepting  lower  rates  of  return  for  the  invested  fiinds,  harming  the 
beneficiaries. 

Unless  the  U.S..  has  a  substantia]  position  in  a.markct  (as  in  the  intema- 
tional  grain  market)  withdrawal  of  investments  from  a  country  merely 
reduces  our  influence  and  harms  those  we  try  to  help  since  U.S.  companies 
have  shown  the-  most  sensitivity  for  issues  of  fairness  and  justice.  (See, 
Schotland,  p.  61). 

Conclusion 

The  fcMinulation  of  foreign  policy  should  be  left  where  the  Constitution 
placed  it.  An  individual,  voluntarily,-  has  a  rig^t  md^hould  press  his  views, 
cmtrol  his  own  investments,  and  make  whatever  gestures  for  which  he 
mi^t  be  willing  to  take  the  consequences.  Asking  beneticiaries  or  investors 
to  pay  the  costs  of  pressuic-group-induccd  decisions  is  unjust  and 
hypocritical. 

Similarly,  localism  threatens  to  interfere  with  both  interstate  coirnneice 
and  prudent  investment  decisions. 

The  advocates  of  divestment  or  any  other  policy  have  access  to  govern- 
ment. To  pressure  universities,  pension  foods,  wid  foundations  to  politicize 
their  decisions ,  leaving  them  open  to  never  endii^  political  demands  while 
potentially  jeopardizing  their  missions  is  in  itself  imnKval.  Social  investing 
is  a  matter  of  individual  choice.  One  man's  defiiution  of  social  justice  may 
well  be  another  man's  definition  of  tyranny.  Although,  the  result  desired 
from  divestment  in,  for  exanqile,  a  South  Africa  or  Nicaragua,  may  seem 
desirable,  advocates  of  divestment  are  ignoring  die  full  consequences  of 
what  they  propose. 


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National  Legal  Center  for  the  Public  Interest 
Publications  List 

Venue  at  Uie  Crossroads,  by  Senator  Paul  Laxalt,  Linden  H.  Kettlewell, 
Nidiolas  C.  Yost  and  David  P.  Currie  with  an  Introduction  by  Senator 
Dnmis  DeCoocini  (1982  -  $3.50}* 

Exfi>rciitg  Ae  Fourth  Amendment  by  Alternatives  to  the  Exclusionary  Ruie , 
by  Judge  Malcolm  R.  Wilkey  with  an  Introduction  by  Senator  Onin  G. 
HUch  (1982  -  $3  50)* 

Antitrust  Contribution  and  Claim  Reduction:  An  Objective  Assessment,  by 
Griffio  B.  Bell  wttfa  an  Introduction  by  Senator  Paul  Laxalt  and  a  Preface  by 
Congressman  Jack  Brooks  (1982  -  $3.50)* 

Fourteen  Years  or  Ufe:  The  Bankruptcy  Court  Dilemma,  by  Judge  Robert 
E.  DeMascio,  Judge  William  L.  Norton  and  Richard  Lieb,  Esq.  with  an 
Introduction  by  Senator  Strom  Tliurmond  and  a  Preface  by  Congressman 
Peter  W.  Rodino,  Jr.  (1983  -  $3.50)* 

Abolition  t^ Diversity  Jurisdiction:  An  Idea  Whose  Time  Has  Come?,  by  M. 
Caldwell  Butler  and  John  P.  Frank  with  Observations  by  Chief  Justice 
Vincent  L.  McKusick,  Maine  Supreme  Judicial  Court  (1983  -  $3.50) 

Aaivism  by  the  Branch  of  Last  Resort:  Of  the  Seizure  cf Abandoned  Swords 
omfPurjM.byJudgeMalcolmR.  Willu^  and  a  Foreword  by  the  Hcnxvable 
Sam  J.  Ervin,  fomwr  U.S.  Senauir  (1984  -  $3.50) 

Judicitd  Wage  Determination.  .  .  A  Volatile  Spectre,  paspectives  on  com- 
parable  worth,  by  Frank  C.  Morris,  Esq.  et  al  with  a  Ftxeword  by  Linda 
Chavez  of  die  U.S.  Commission  on  Civil  Rights  (1984  -  $3.50) 

Edited  noceedings  of  the  1981  NsHooalCoafenoceoa  Workers'  Compen- 
sation and  Workplace  Liability,  (cunendy  unavailable) 

Edited  Proceedings  of  be  1982  National  Conference  on  Product  Liability 
Tort  Law  Rtform.  (currently  unavailable) 

Edited  Proceedings  of  the  1983  National  Clonference  on  Health  Related 
Claims:  Can  the  Tort  and  Compensation  Systems  Cope?  (1984  -  $35.00 
Law  Libraries:  $50.00  all  else) 

Judicial/Legislative  Watch  Report  -  an  update  report  service  of  NLCPI  on 
legislation  and  activities  affecting  the  judiciary  and  the  judicial  system, 
(published  v/tdie  Congress  is  in  session,  $25.00  per  year) 


I  oly  of  the  CMiginal  printings.  However, 

Xerox  copiei  1 


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National 
Legal  Center 
fc^rthe  Public  Interest 


An  Educational  and  Public  Service  Organization 


The  National  Legal  Center  for  the  Public  Interest  provides  the  public  and 
private  sectors  with  timely  information  on  key  issues  which  concern  the 
judicial  branch  of  government  and  the  development  of  public  policy.  In  its 
capacity  as  an  educational  organization  the  Center  serves  the  public  interest 
by: 

•  Identifying  m^or  governmental  initiatives  which  affect  the 
judiciary; 

•  Serving  as  a  "lightning  rod"  for  new  and  emerging  ideas  about 
the  role  of  the  judiciary  in  our  society; 

•  Publishing  the  "J udiciall Legislative  Watch  Report"; 

•  Commissioning  legal  scholars  and  experts  to  make  timely  con- 
tributions to  the  public  debate  of  important  issues; 

•  Publishing  and  disseminating  to  policy  makers  analyses  and 
opinions  on  issues  under  consideration; 

•  Organizing  conferences  on   national  issues  concerning  the 
judiciary; 

•  Identifying  well-qualilied  candidates  for  the  federal  bench; 

•  Working  with  law  students,  scholars  and  lawyers  to  improve 
respect  for  the  law  and  confidence  in  the  judicial  branch; 

•  Serving  as  an  information,  resource  and  communications  cen- 
ter for  other  organizations  that  share  a  similar  perspective; 

•  Serving  as  a  national  resource  center  to  aid  high  school  forensic 
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The  fad  remains  that  Harvard'i 

to  us  for  academic  purposes  arrd  not  as  a  means  of  denu 
strafing  our  opposition  to  apartheid  or  other  manifest  in- 
justices and  evils  around  the  world. 

President  Derek  C.  Bok 
'  Harvard  University 


The  formulat 

Constitution  placed  it.  An  i 

right  and  should  press  his  views,  control  bis  o 

merits,  and  make  whatever  gestures  for  which  he  might  be 

willing  to  take  the  c 


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270 

Senator  Heinz.  Mr.  Schotland,  I  note  for  the  record  also  your 
prepared  statement  includes  five  comments  on  specific  provisions 
of  S.  635.  They  will  be  a  part  of  the  record,  too. 

Mr.  Schotland.  Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Mr.  D'Agostino. 

STATEMENT  OF  ROBERT  D'AGOSTINO,  NATIONAL  LEGAL  CENTER 
FOR  THE  PUBLIC  INTEREST,  WASHINGTON,  DC 

Mr.  D'Agostino.  I  want  to  thank  this  committee  for  inviting  me. 
I  am  presently  in  private  practice  and  legal  adviser  for  the  Nation- 
al Legal  Center  for  the  Public  Interest. 

The  National  Legal  Center  recently  published  a  mont^aph  of 
which  Professor  Schotlfmd  was  a  major  author  and  President  Bok  a 
contributor,  on  the  issues  of  divestment  or  disinvestment.  It  is  not 
about  apartheid  and  the  opinions  I  express  now  on  S.  635  are  my 
own  and  not  the  opinions  of  the  National  Legal  Center  which  takes 
no  position  on  legislation. 

The  basic  question  I  think  we  must  address  is  that — well,  to  start 
with  is  that  we  are  not  only  talking  about  the  Government  of 
South  Africa.  The  Government  of  South  Africa  is  supported  by  the 
majority  of  the  white  citizens,  so  what  we  are  asking  is  how  can 
the  United  States  help  the  South  African  ruling  classes  open  their 
eyes  to  the  world  in  which  they  live?  That's  the  basic  question.  And 
does  S.  635  do  this? 

I  say  it  does  not  and  I  oppose  it  as  counterproductive. 

The  United  States  does  not  have  an  unblemished  history  about 
influencing  matters  or  the  internal  siffairs  of  a  country  for  the 
better.  We  have  often  influenced  those  affairs  for  the  worse  and  I 
think  that  we  are  in  danger  of  doing  that  with  this  bill. 

In  making  South  African  internal  policies  a  matter  of  continuing 
debate  in  the  U.S.  Congress,  we  are  inviting  the  South  African 
Government  and  a  m^ority  of  whites  to  dig  in  their  heels.  I  realize 
the  high  level  of  debate  that  goes  on  in  the  Congress  all  the  time 
but  I'm  not  sure  the  white  people  of  South  Africa  do. 

It  seems  to  me  that  we  ought  to  ask  ourselves  what  we  are  trying 
to  achieve  and  from  whence  comes  the  improvement?  There  is  an 
old  saying  about  how  the  wise  have  to  undo  the  damage  done  by 
the  good.  We  certainly  are  risking  an  awful  lot  of  damage  if  we 
proceed  with  a  bill  of  this  sort. 

APARTHEID  18  A  TOTALITARIAN  SYSTEM 

Now  I  won't  go  over  my  testimony  or  read  it  in  detail,  but  Sena- 
tor Proxmire  defined  apartheid  and  I  think  he  defined  it  well, 
liiere  is  no  question  under  the  definition  used  by  the  Senator  that 
apartheid  is  a  totalitarian  system. 

Now  the  question  is,  what  has  happened  to  that  system  since  it 
was  imposed  in  1948,  and  I  submit  to  you  that  it  has  changed  and 
changed  in  many,  many  ways.  There  has  been  vast  improvement  in 
certain  areas  and  very  little  improvement  in  other  areas. 

There  has  been  vast  improvement  in  the  economic  well-being  of 
black  citizens  of  South  Africa.  In  1970,  the  typical  South  African 
black  miner,  for  instance,  got  one-twentieth  of  what  a  white  got.  By 


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271 

1979,  it  was  one-seventh,  and  by  1984,  I  don't  have  the  exact  fig- 
ures but  it  was  around  one-third  or  one-fourth. 

Now  how  did  this  occur?  How  did  these  other  advances  occur? 

During  this  entire  time  of  the  improvement  American  companies 
following  the  Sullivan  principles  took  the  lead.  Second,  there  was  a 
boom  in  South  Africa,  an  economic  boom,  which  led  to  a  severe 
shortage  of  white  skilled  workers.  So  out  of  economic  necessity 
blacks  were  allowed  into  previously  all-white  job  cleissifications. 

Now  that  should  tell  us  something.  What  it  should  tell  us  is  that 
the  key  to  continuing  the  breakdown  of  apartheid  lies  in  the  eco- 
nomic advancement  of  blacks  and  the  economy  itself  of  South 
Africa.  Insofar  as  this  bill  would  hurt  that,  we  are  hurting  the  very 
people  we  wish  to  help. 

I  understand  and  I  think  it's  a  truism  to  say  that  change  breeds 
desire  for  more  and  more  rapid  change.  I  think  we  have  seen  that 
all  over  the  world.  It's  also  a  truism  to  say  that  those  who  hold 
power  resist  change.  I  suppose  that's  a  rather  pessimistic  point. 

What  can  we  do  to  improve  the  situation  in  South  Africa? 

I  think  we  can  mandate  the  Sullivan  principles  for  U.S.  compa- 
nies. That's  a  law  that  we  can  apply  to  U.S.  companies  and  we  can 
do  it  here. 

Despite  the  fact  that  bannii^  loans  to  the  Government  of  South 
Africa  might  not  be  effective,  we  should  ban  direct  loans  to  the 
South  African  Government  as  a  gesture  of  disapproval.  We  should 
not  make  South  African  internal  policies  a  matter  of  continuii^ 
debate  in  this  country's  Congress.  We  are  asking  for  a  reaction  that 
will  not  suit  our  goals  very  well. 

Substitution  effects  will  render  the  banning  of  product  exports 
ineffective.  If  we  don't  sell  South  Africa  computers  we'll  lose  Amer- 
ican jobs.  The  Japanese  certainly  will.  Product  bemning  is  an 
empty  gesture  in  my  view. 

1  go  back  to  my  question  of  what  can  be  done.  One  of  the  basic 
mistakes  that  the  South  African  Government  is  making  is  saying, 
"Look  what  we're  doing;  look  at  the  advemces  we  are  making;  let 
us  alone."  Well,  they  are  making  some  advances.  The  Government 
is  slow,  perhaps  too  slow  for  the  blacks  and  the  Asians  and  coloreds 
of  South  Africa.  But  it  is  also  fundamentally  wrong  to  do  things 
that  way. 

One  oif  the  reasons  for  the  success  of  our  constitutional  system  is 
that  there  was  public  involvement.  The  Federalist  Papers  were  ar- 
ticles written  for  the  people  of  the  United  States  so  they  could 
debate  the  Constitution.  The  United  States  must  encourage  the  in- 
volvement of  all  the  segments  of  leadership  in  South  Africa  in  de- 
signing a  system  that  will  guarantee  the  security  and  rights  of  all 
the  citizens,  a  system  perhaps  based  on  our  Federal  system.  It's  im- 
portant to  involve  people  like  Chief  Buthelezi,  chief  of  the  Zulu 
Tribe,  who  has  more  followers  than  any  black  leader  of  South 
Africa.  These  people  understand  the  dangers  in  violent  change. 

As  Aaron  Wildavsky  pointed  out  in  a  recent  article  in  The  Public 
Interest,  we  don't  know  any  way  to  change  a  system  rapidly  except 
by  force  and  violence  and  we  know  of  no  way  to  deal  with  the  con- 
sequences of  such  change. 


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CHANGE  WILL  COME  SLOWLY 

The  answer  is,  the  change  will  come.  It  will  of  necessity  come 
slowly,  but  to  avoid  the  violence  we  must  encourage  the  South  Afri- 
can Government — and  I  think  Ambassador  Nichols  is  doing  this  by 
the  way — to  involve  the  leadership  of  the  blacks,  the  Asians,  the 
coloreds — and  all  the  coloreds.  It's  not  a  simple  issue.  There  are 
Malay  coloreds,  mixed  race  coloreds,  Indian  coloreds — all  the  co- 
loreds in  the  process  of  designing  a  system  that  will  guarantee  the 
rights  and  security  of  all  and  hence  guarantee  the  interests  of  the 
West  in  maintainii^  a  strong  defense  against  the  encroachment  of 
our  enemies. 

Thank  you  very  much  for  hearing  us  and  I  submit  my  written 
testimony  for  the  record. 

[The  complete  prepared  statement  follows:] 


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TBSTIMONy  OF  ROBERT  J.  D'AGOSTIHO 

CGMUTTEE  ON  BANKING,  HOUSING,  AND  URBAN  AFFAIRS 
SDBCOmiTTSX  OH  INTBRHATIOHAI.  FIHANCE  AND  NONETARV  POLICY 

I  BB  Robert  J.  D'Agoatino,  currently  In  private  practice  and 
legal  advisor  to  the  National  Legal  Center  for  the  Public 
Intereati  a  nonpartisan,  nonprofit  educational  organization.   I 
fomerly  served  as  Deputy  Assistant  Attorney  General  for  Civil 
Rights . 

The  National  Legal  Center  recently  published  a  monograph  on 
'Disinvestment,*  vhich  primarily  addressed  the  legal,  constit Jtional, 
and  moral  issues  raised  by  disinvestment  required  by  state  or  local 
law  or  through  pressure  on  pension  and  endowioent  fund  managers. 
That  monograph  was  not  about  South  Africa  or  apartheid,  although 
any  discussion  of  divestment  inevitably  involves  some  discussion 
of  South  Africa  and  the  United  States  response  to  its  internal 
policies.   The  following  statement  is  my  own  and  is  not  the  statement 
of  the  NlXPIwhich  does  not  endorse  or  approve  legislation. 

The  httaring  is  concerned  with  S.635,  a  bill  to  express  the 
opposition  of  the  United  States  to  the  system  of  apartheid  in 
South  Africa. 

In  the  Christian  Century  of  May  16,1984,  South  African  theologian 
John  de  Gruchy  stated,  "Americans  don't  like  to  feel  impotent,  but 
it  is  something  you  will  have  to  live  with.   The  responsibility  for 
change  is  ours.   Nobody  can  do  it  for  us.* 

I  do  not  think  even  for  a  minute  that  Mr.deGruchy  is  correct 
insofar  as  he  implies  that  the  United  States  cannot  influence 
internal  events.   However,  he  is  saying  something  to  us  that  is 
very  important.   The  South  African  government  and  the 


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majority  of  whites  who  hold  the  key  to  power  in  South  Africa  are 
not  going  to  leepond  to  the  kind  of  public  coercion  and 
humiliation  that  Senate  635  pcopoees.      It   is  a  most  blatant 
example  of  explicit   interference  in  the  internal   affaire  of 
another   country,    a  country  which  is   no  threat   to  the  United 
States,     Those  who  analogize  this  to  the  Nlcaiaguan  situation  are 
either  ignorant  of  the  dangers  Involved  In  Central  America  to 
United  States  security  or  refuse  or  are  Incapable  of  making 
proper  dlBtinctlans.     Certainlyi  and  it  must  be  obvious  that  the 
United  States  can^inf luence  the  internal  affairs  of  other 
countries  for  better  or  for  worse.     The  United  States  often  and 
inadvertently  influences  the  affairs  of  nations  for  the  worst. 
One  only  has  to'look  at  what  the  past  administration  did  in  Iran 
and  compare  the  Shah's  regime  to  Komeini'e  regime.      Contrary  to 
some  popular  opinloni    the  United  States  was  supportive  of  the 
Sandanista  takeover  of  Nicaragua,   and  although  some  would  still 
argue,  that  the' Sonoza  regime  was  worsei    I  think  those  are 
becoming  an  Increasingly  small  minority.     Regardless  of  whether 
you  agree  with  what   I   just  said  or  not,    the  point   I   an  making   is 
that  if  the  United  States  is  not  careful ,  it  may  Influence 
matters   for   the  worse,    not  the  better.      There   is  an  old  saying 
.   about  how  the  wise,  must  undue  the  damage  done  by  the  good. 
Stated. another  way,  the  road  to  bell  is  Indeed  paved  with  good 
intentions.     Hay  I  point  out  the  Zimbabwe  situation  as  an 
example,     I  -have  in  fact  attached  as  an  appendix  to  this 
testiotony  a  letter  from  Bishop  Abel  T.   Huzorewa  and  a  transcript 
of  a  press  conference  held  by  the  Bishop  in  regard  to  the 


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Eipbabve  Bituation  to  Albert  T.  Blauit*in,  Profaaaot  oC  Law  at 
Rutgece  Law  School  In  Caadan,  who  la  an  interna t tonally  known 
butaan  lights  advocatei 

Bafoce  we  as  a  country  go  Bucking  around  in  the  internal 
affairs  of  South  Africa,  we  should  first  ask  oursalvaa.  wbat  is 
the  proper  end  of  governiient  and  what  is  it  that  we  wiab  to  see 
achieved  in  South  Africa.  We  nigtat  ask  as  Mtlcles  asked,  'what 
was  the  road  by  wblcb  we  reached  our  positiORi  what  the  for*  of 
governnent  under  which  our  greatness  grew,  wbat  tb«  national 
habitB  out  of  which  it  sprang?'  In  answering  bis  own  question, 
he  said,  'If  we  look  to  tbe  laws,  tbey  afford  equal  justice  to 
all  in  tbeir  private  differences)  .  .  .  the  freedoa  which  we 
enjoy  in  our  government  exists  also  in  our  ordinary  life.''  He 
might  eiprees  tbts  today  tbusly,  'the  object  of  Boat  Western 
thinkers  has  been  to  establish  a  society  in  which  every 
individual,  with  a  alnliBum  dependence  on  discretionary  authority 
of  his  rulers,  would  enjoy  the  privileges  and  responsibility  of 
determining  hie  own  conduct  within  a  previously  defined  fraswworh 
of  rights  and  duties.'^ 

It  is  quite  apparent  that  the  system  of  apartheid  in  South 
Africa  violates  those  very  principles  tbat  tbe  Heat  has  been 
founded  upon.  It  Is  a  totalitarian  system,  not  the  most  brutal 
nor  the  nost  coiaplete  existing  in  tbe  world,  but  nevertheless  a 
totalltarlBn  system.   It  Is  certainly  not  a  unique  system, 
although  based  upon  race.  Hany  of  the  governments,  pactlcularly 
SOBS  of  tbe  neighboring  governments  to  South  Africa,  have 
political  systems  based  upon  tbe  authority  of  one  tribe  over 


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anotherf  wblcb  is  no  less  raclen  noi  athnocentclc  repieeeion  than 
the  South  African  syeteni. 

It  Is  a  truism  that  what  brings  unrest  is  change.  Things 
ar*  getting  better  for  tlie  black  population  of  South  Africa  and 
all  the  statistics  show  that  is  so.   I'll  leave  the  details  to 
others,  but  a  few  facts  will  illustrate  my  point.   Between  1970 
and  1979  the  wage  gap  between  white  and  black  narrowed  in  al  1 
economic  sectors,  including  mining,  industry,  construction, 
retail  trade,  banks,  insurance,  and  the  government.  In  the 
mining  Industry  whites  earned  twenty  times  the  salary  of  the 
blacks  in  1970,  but  by  1979,  whites  earned  less  than  seven  tines 
as  much.   Heal  wages  for  blacks  tripled  between  1970  and  1979. 
In  some  of  the  professions  the  advancement  of  blacks  and  other 
nonwhltes  in  South  Africa  has  even  been  more  dramatic.   In  1979 
blacks  in  the  medical  profession  were  earning  around  75%  of  the 
white  salaries.   It  is  no  coincidence  that  In  the  same  time  that 
the  blacks  have  made  great  gains,  two  things  have  been  occurring. 
One,  American  con^anies,  the  signatories  of  the  Sullivan 
principles,  have  been  equalizing  work  conditions  and 
demonstrating  in  a  graphic  way  that  blacks  can  accept  the 
responsibility  and  do  the  work  that  whites  can  do.  Secondly,  up 
until  recently,  the  South  African  economy  was  a  boom  economy 
which  resulted  in  a  severe  shortage  of  white  skilled  workers. 
Previously  restricted  professions  and  job  classifications  were 
suddenly  open  to  blacks  because  of  the  economic  necessity  or 
because  of  the  growth  of  black  employee  unions.  Hay  I  remind 


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277 


this  Coanitt«e  tlut  black  «^loya«  unions  9i*v  up  Citst  in  tb« 
Anerican   companiCB. 

I  undecstand  that  S,   635  do«B  not  prohibit  tha  InvolvaBant 
of  Anarlcan  firna  in  South  Africa,  but  it  does  prohibit  n«w 
invaataant  and  tba  importation  of  South  African  gold  coins.     Both 
of  these  would  be  counterproductive.     It  is  Aaeiican  inTest>ent 
that  has  bad  the  influence  on  South  Africa,   not  dlBinvestnent. 
It  is  the  fact  that  Aiwrica  is  a  significant  trading  partner  of 
South  Africa  that  has  Influenced  that  country,  not  any  attenpt  to 
bludgeon  tha  South  African  govarnaent  into  doing  exactly  what  we 
tell   than  to  do.     After  all,  Dnltad  States  policy,  as  well 
intentioned  as  it  has  been,   has  not  always  led  to  desirable 

In  a  most  intarastlng  analysis  Richard  B.   Sincere,   Jr., 
discussed  the  econonic  facts  and  political  realities  of  the 
■ituatlon  In  South  Africa.*     Ha  pointed  out  tha  economic 
dependence  upon  South  Africa  of  neighboring  black  ruled  countries 
like  Botswana,  Lesotho,  Zimbabwe,  and  Malawi.     Any  weakening  of 
the  South  African  economy,    and  the  action  proposed   in  S.    635   or 
by  the  dielnvestment  advocates  generally  would  be  marginal,  would 
fall  most  heavily  on  black  South  Africans  and  probably 
neighboring  African  states.^     Certainly  forbidding   the   sale  of 
computers  to  South  Africa  will   only  result   in  the   lose  of 
American  jobs.     The  Japanese  would  be  very  happy  to  sell  those 
same  computers   to   the  South  African  government. 

As  Aaron  Hildavsky  pointed  out  In  a  very  interesting  article 
in  the  recent  issue  of  THB  FDBLIC  IBTBBBST^i  'Experience  showed 
that  our  intellectual  ability  to  measure  failure  was  far  greater 


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than  oar  eollmeti.n  capacity  to  cwm*  ■wtc*—  bj  sltacing  tiHaa 
babaTioc.*^  Mgmia.  and  is  coa—aEimj  abooc  ttaa  laaaona  Laaznad 
fioa  public  policy  r«aTarrli.  Itran  Wilbviky  atatad,  "Steady  «■ 
aba  90a«'  aay  not  b*  aa  glSBicoaa  as  'fall  apccd  ahead*,  bat  tt 
la  piotectlva  af  aankind's  ■uliiT  capacity  foe  Tirto*  diacipltnad 
by  intalll^aoca.*'  Boat  cartalolr  azpactcnca  haa  tao^ht  aa  and 
tbe  i*s«accb  baaia  oat  tbat  'tbata  ia  iittl*  knoNledge  about  ho* 
to  tranafora  inatitutiona  OTcniight  cxcapt  by  focce,  and  oodc  of 
bov  to  c<^e  Mltb  tbe  conaaguencaa.'^ 

Saoat*  €35   ia  a  bad  bill.      It  wilt  be  coiuitacpcodactive.      Hic 
Onlted  Stataa  Jost  doas  not  have  as  aach  ccoooaic  cloat  as  tlia 
bill    illicitly  aaaoaes.        Sobatitation  effects  will  aake  ap  for 
any  product  boycotts,    whether   foe  coapcters  or  anytbing   alse* 
The  South  Afclcan  ccono^  has  substantially  slowed  so  redaction 
in  Aaeiican  investaent  is  Beaninglcsaj    there  already  has  been  a 
significant  reduction   in  Aaerican  inTestaent.      In  fact,    if   tbe 
past  ia  a  guide  to  tbe  future,    increased  Aaarican   invcstaant  will 
have  aore  effect  on  ending  tbe  systea  of  apartheid  than  decreasad 
Invaataent.     8.  635  would  »ake  South  African  Internal  policies  a 
question   of  debate  in  tbe  United  States  Congress,      This   is   a 
aonuaental  insult  to  an  ally  or  to  any  country,  whether  allied  or 
not.     We  are   inviting   the  South  African  governsent  to  dig    in 
its  heels  with  such  a  bill.      Insofar  as  these  restrictions 
would  hurt  tbe  South  African  econoay,    it  would  put  the  very 
people  out  of  work  that  we  are  intending  to  help.      I  don't 
believe  in  putting  a  nan  out  of  work  and  allowing  that  aan's 
family  to  go  hungry  so  that  soae  abstract  and  high  noral 


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principle  can  b«  uptwld,  especially  since  those  who  are  saking 
the  gesture  will  not  have  to  take  tbe  conssquencas.     The  very 
tact  that  blacks  now  have  jobs  with  high  status  in  South  Africa 
is  accelerating  the  pace  of  change  ana  has  led  the  black 
connunlty  to  desire  nore  and  »ore  rapid  change. 

At  this  point  in  tiae  the  followingi  based  on  all  evidence 
before  ne  including  current  news  storieSf   seens  true: 

1  .      There  has  been  significant  change  in  South  Africa. 

2  •      The  change  has  been  primarily  in  the  economic  sphere 

where  blacks  are  far  better  off  today  than  they  were  In  the 
past. 
3>       The  change   In  the  political  and  social   spheres  has  been  slow 

4.      The  South  African  ruling  elites  will   resist  pressure  or 

obvious  pressure  to  make  changes. 
S-      The  pace  of  change  is  unacceptable  to  the  blacks  and 

probably  coloreds  and  Asians  in  South  Africa. 
(.      What  we  would  like  to  achieve  ie  a  change  in  the  system  that 

respects  people  as  individuals  rather  than  judges  them  by 

immutable  characteristics. 

This  brings  me  to  what  Is  rather  a  peeeinistic  point.     This 
bill  won't  work)   the  black  community  understandably  would  like  to 
see  change  acceleratedi  and  the  ruling  white  community  is  not 
prepared  to  see  any  change  except  gradual   change.      This   is  not  a 
unique  situation.     People  do  not  take  the  long  view  as  a  rule. 
What  then  can  be  done? 


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Frankly,  I  don't  believe  we  can  do  macb  Doce  than  what  we 
are  doing.     The  Reagan  adnlnistiat ion's  policy  of  constcuctive    . 
engagement  1b  essentially  correct.     Tbe  crucial  element  in  change 
is  economic.     He  should  actually  encourage  more  InveBtment  and 
Kore  involvement  by  American  companies  that  support  the  Sullivan 
principles  rather  than  less.     We  should  also  encourage 
representative  black  leaders  to  come  up  with  a  plan  that  would 
guarantee  the  liberty  of  the  people  of  South  Africa.     The 
Hational  Black  Alliance  led  by  Chief  Gatsha  Buthelezi,  who  is  the 
leader  of  the  Zulu  tribe  and  chief  mlnieter  of  the  KwaSulu 
homeland,    is  one  of  many  who  is  both  against  dlslnvestnent 
initiatives  and  against  apartheid  and   for  a  system  of  government 
that  will  guarantee  the  rights  of  all  the  people  of  South  Africa. 

Perhaps  through  the   Endowment   for   Democracy  a  group  of 
constitutional  scholars  will  meet  with  a  group  of  South  Africane 
opposed  to  the  apartheid  policies  of  the  government  and  draw  up  a 
proposed   political   system  that  will   be  based  on  the  United  States 
■odel  of  federalism  —  a  system  by  which  no  group  could  achieve 
domination  over  any  other  group  and  all  groups  and  all 
individuals  would  be  allowed  to  develop  to  their  fullest 
potential  without  fear  of  repression  or  oppression  based  upon 
their   race  or   their   ethnic  or   tribal   origin.      There  are  many 
white  and  black  South  Africans,   as  well  as  colored  and  Asian 
South  Africans,  who  would  join  in  such  an  effort.     These  people 
understand  the  dangers  of  sudden  and  violent  change  and  the 
necessity  of  reaesurlng  all  the  people  of  South  Africa  that  their 
rights  will   be  protected  and  their  futures  will   be  secure. 


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Pi«sld«nt  Reagan   is   rlgbt.      The  Dnlted  States  should  be  a 
staining  beacon   to  the  world.     He  can   look  back   into  ouc  own 
history  and  know  ttaat  part  of  our  greatness  lies  In  ouc 
plurallsDr  our  cespect  for  the  rights  of  all,  and  a  system  ttaat 
does   not  allow  transient  majorities  or   the  passions  of  a  majority 
to  trample  the  rights  of  others.     Nor  eitbar  Is  the  tyranny  of  a 
minority  permitted.       Keeping  these  principles  In  mind  and 
keeping  In  mind  the  Inadvlsabllity  of  direct  Interference  In  the 
internal  affairs  of  nations  that  are  no  threat  and  In  fact  a 
defensive  help  to  the  United  States,  we  can  still  act  as  the 
example  ttaat  President  Reagan  mentioned.     He  must  do  bo 
~  quietly,   gently,   with  the  cooperation  of  those  leaders  in  South 
Africa  who  share  our  vision  of  Individual  rights  and  liberty  and 
a   strong   and   secure  Hest, 

This  Congress  would  better  serve  the  interests  of  the  Dnited 
States  and  human  rights  by  a  positive,    cooperative  gesture  than 
by  passing  a  punitive  and  Insulting  law  that  will  only  lead  to 
»ore  hardships  and  i 


BO-THI    O— »5— 


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FOOTNOTES 

'Hou  Oppose  Apartheid?*,  Xbe  ctip-lytlap  CsutlU^r    Hay  16, 
1984,  p.  514. 

Tbucydiaee,  Xhe  Peloponneaian  {[u.,  11.  37-39,  trans.  R. 

Crawley  (Hodein  Library  ed,,  p,  104). 

Fcedeclck  Hatkins,  Ibft  Political  Tradition  ai.   the  West 

(saivard  University  Press,  194B). 

Sincere,  IHe  Politica  oL  Sentiment  (Ethics  and  Public  Policy 

C*nter,  Hashlngton,  DC,  1964} . 

Id.  pp.  95-98. 

Aaron  Hildavsky,  The  Once  and  Future  School  of  Public 

Policy,   Public  intereatf   p.  25,   ed.   eeq.    (Spring   1985). 

Id.,   p.    28. 

Id.,   p.    31. 


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THE  UNITED  METHODIST  CHURCH 

ZIMBABWE  ANNUAL  CONFERENCE  HEADQUARTERS. 


ABEL  T.  MUZOKEWA  M.t.  s.b.b.«.u  b.i-  CABLE  iDDRtU 


HARABt  MHBABWI 


Dr  Albert  P  BInus'.ein 
irofosaor  of  Ltt 


nil   Btnaae-l  s 
o.i  -.ho  ell-rln^ 


ol  ciy  top  orgsnl««rB  -oro  rauniepoi  by  2A."il{??) 
triin.      r;.e  Z;.  "U[prl   hsd   tpl«a  tlia  r' ol«  d«."  to  try  ani  diEr-.i?t  our 
In  Hranpe,  bul  nftar  Xh»y  h»i  f»lloi,   V..iiy  -oTiai  to  i-.lll   t!i«r: 
r»ll-ay  Etstion  baforo  th«.v  retumiJ  to  Su1^-b;-q. 


I-t  h-.E  liaen  eonflr^.O''.  b;--  nolica 
r]p,->ton'.  to  brinr  th^-  tr.  court 
cjo  rlo  all  sor-.E  of  owil  thingfi 
■t   the  insti-joiion  of  sooebo3:.- 

i  »s;.- 

BOine-ero  Zi.U  (PF)   an." 
Doopla,   CBu.:^-t  by  polios, 

t\ey 

^in;-  peopl 
but  freed 

I  have  ericlDsed  theea  Btsteiicn* 
international  P-eei:  attended  in 
ProBE   Conferen'^e  --^Bre  I  tolJ 

a  Just  f 
Great  r> 

i,r  your  inlc-Tation.      The 
UTbare  and  at  abort  notio 

e  the 

tP9ac:iei7-  raohiner;-  v'.iah  nike 

Kltler 
the  aos 

ini  I'li  f.-lr.  extrenolr-'  ev 
.  terrible  noo'-^en-  anrt  do 

IJ   anl 

■ocrso;-. 

Tish  you  ths  heat  of  •vei^-thin 

i'o'jrs  sinierely 

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IMITED  iFBICiH  MTIOMAL  COUHOIL  ■ 

PRESS  COH^RmCE         JL'i  — 02_  — SS" 

Kr  Chslmaiii  Ladles  ?nd  Centlanen.    Reo«ntlf  local  and  inteniatioaal 
joumalistB  havs  Bought  ittiervlewB  on  olroumstanoea  aiuToundlng 
tho  run  up  to  tho  fortboonlng  gsneral  aleotiona. 

iooordlnglj,  and  In  ordar  to  save  ne  time  fron  giving  individual 
lntaivi««a  wbilst  at  tt»  sane  tine  aannering  oany  sueh  queationa,  I 
have  ctooidod  to  oalX  thle  presB  oonferenco.     Proa  th«  outset 
Itr  Chairnaiit  lat  ■«  point  out  that  tho  f resdon  and  fairness  of  the 
noxt  olectlon  la  not  eupposed  to  start  and  end  on  the  polling  de; 
Itaelf.     But  the  nhola  proceBs  leading  to  llie  election  must  be  eeen 
to  be  fr«e  and  fair. 

Ihe  fundaaentsl  Tig^te  end  fresdams  nbloh  oust  prevail  and  be 
u^eld  Vefare  and  during  the  proceae  leading  up  to  free  and 
fair  general  election  are  univereally  aoicnovledgsd  and  eaehrined 
1b  oup  conBtltution  es  folloval- 

1.     Tbe  Ireedon  of  e^preselon.     That  is  to  a«y,  freedoB  to  hold 
opinlona  and  to  reoelve  and  Inpart  ideae  and  infomation 
without  Interference  and  freedom  from  Interference  nlth  one'e 
eovrespondence.  * 

2>  The  freedon  of  assembly  and  aaaooiation.  That  is  to  aay,  one's 
right  to  asaemhle  freely  and  aesooiate  nlth  other  perBone  and) 
in  partloulaff  to  foim  or  belong  to  political  parties  or  other 
BSBoelationa  for  the  proteetlon  of  oaa'B  Inteieata . 

3*  The  freedom  af  DOvsMent.  That  Is  to  gajr,  the  ri^t  to  move 
freely  throughout  Zimbalnie,  the  right  to  i«alde  In  any  part 
of  Zimbabae,  the  right  ta  enter  Zlobafaaa,  the  right  to  leave 
Zimbabwe  and  inaunity  from  oxpulaioa  from  Ziabafano. 

i.      Sefturlty  of  the  parson. 

5a      Froteetion  by  tha  Ian. 

6.       Pretaotion  tor  the  prlvaoy  of  one'e  hone  and  other  property. 


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Mr  CbaimaR)  althou^  all  the  abovo  rightB  and  freedoms  are  enshrined 
in  our  Constitution!  I  regret  to  lofonn  you  tbat  sll  thesst  altbout 
exception,  have  been  and  nre  being  eonatsntly  violitad  by  both  tha 
ruling  party  and  its  govomnont  either  acting  individually  or  in  unison. 

Tha  folloning  ezanples  and  explanations  serve  to  illustrate  tha  degree 
and  e:£tent  of  violation  of  thaco  rights  and  freedoma  which  I  have 
ali^ady  cited. 

Some  examples  of  the  violation  of  freedon  of  assembly  are 

B3  follonei 

1.     On  July  4)   1982,  ingllcans  in  Vutare  ssre  driven  away  from  tba 

Holy  Comnunion  table  during  aaaa  and  then  driven  out  of  church ,  and 
foreod  to  go  to  attond  the  ruling  party's  political  rally.     On 
the  sans  dats  Hilltop  United  Xethodist  Church  congregation  In 
ilutaro  was  prevented  by  a  wild  and  nad  2ANU  (ET)  mob  froa  attending 
a  church  servioe,  end  they  destroyed     tha  paator'o  houao. 

2*     On  July  31,   ^9&3i  the  ruling  party  aocoapanled  by  3  unlfomed 
pelleemen  nent  to  savagely  attack  innocent  norohippera .at  nigbt 
at  the  St  Maik  United  Hethodlst  QiueiA  Id  high  danslty 
suburb  of  Rlghfleld.     Other  obupeh  danavlnations  have  been 
prevented  troa  holding  ohuroh  services  at  various  intervale  and 
at  different  plsoaa  throughout  ths  oountry  between  198I   and  1965. 

Sranples  of  tha  vtolatlons  of  tha  freedoms  of  expression)   and  of 

association  sr^  aa  follons: 

If     Sines  the  day  Zimbsbne  gained  independence  from  Britain  at 
md-night,  iprll  18,   1980,  until  thia  vary  day  and  hour  as  na 
are  horS)  praotloally  eveiy  U  A  H  C  rally  and  those  of  other 
political  parties  other  than  ZABU  (FP)  have  been  disrupted  Igr 
ZjUIU  (FP).     These  violentp  destructive,  murderous,  unprovoked 
attars  on  other  political  parties'  rallies  have  been 
orsaniEed  and  financed  fcen  high  abova,  even  at  Central 
Committee  level.     One  of  the  beat  axamples  of  this  in  the  most 
reeent  attempted  assaslnitlon  of  Br  Joshua  Nkomo  in  Uasvlngo. 
2.       Tha  ruling  party  has  not  confined  themselves  since  iDdspbndanoe 

to  going  to  attack  other  politlonl  parties  whenever  such  parties 
are  holding  legalised  rallios  and  oeetlngs  but  have  baen  attaoklng 
ersn  Innooant  mourners  at  funerals  using  their  usual  lethal 
nsapons  of 


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-  3  - 

giuiB)  knives,  knobkeriias,   enocde,  catapults,  axes,   spears,   picks  and 
enss  slashoro.     This  in  despite  the  fact  that  the  ZANU  (PF)  knows 
that         African  fun.  :-\1b  are  attended  by  Rwat  numbers  of  people  and 
that  many  testimonial  apeeohaa  are  made  at  each  funeral  to  console 
the  bc:rocived. 

!!=  -.IV.  highly  distressed  and  concerned  that  whilst  the  nation  and  the 
■orli!  1I-JV3  been  repeatedly  hearing  the  hypocritical  and  double- 
stnrid:ird  outcry  about  "dissidents"  and  their  "atrocities",  nhat  ths 
nation  ^ind  the  norld  have  not  been  simultonously  told  are  savage 
murdcra  by  the  ruling  psrty.   not  in  tho  bush,  but  at  legalized  rallies, 
meetings,   churches,  religious,  social,  and  cultural  gatherings!   in 
their  homes,  at  noddinge  and  funorgls,  in  broad  day  light, and  at 
night  in  the  interior  and  urban  centres  of  our  counti^  including  In 
cities  such  as  Harare,  Bulanayo,  Mutarc,  Gneru  and  Knokne.     So,  Vr 
Chair^aan,   political  violence  has  boon  the  order  of  the  day  frcn 
Independence  day  to  date  and  .ilnoya  iiithout  exception  these  violent 
activities  have  been  initiated  by  the  ruling  pnrty.     Tho  U  A  H  C 
has  docunented  end  catalogued  these  atrocities  ^nd  on  several 
occasoions  presented  these  facte  to  the  government  but  our  plaaa 
net  nith  oontenpt,  were  Ignored  or  were  suppressed.     If  anyone 
doubts  this  sad  conni^ntsry  of  violent  activities  and  rule  of  terror 
h7  the  ruling  party  they  should  go  to  Hlghfleld  blgti  density  suburb 
and  see  the  nunbpr  of  houses  of  other  political  parties  which  have 
been  stonad  by  the  ruling  party  this  week. 

This  all  Eoas  on  to  illustrate  that  in  Ziabahi*  than  is  definitely 
and  oetegorloally"     BO  security  of  one's  persoa,  no  protection  of 
tha  law  and  no  protootlon  for  the  privacy  of  ono's  hotne  and  other 
property. 

In  ZlcbaWe  there  Is  no  freedom  of  movomonti     So  have  bean  reliably 
informed  thatt     the  ruling  party  has  instruction  from  highest 
authority  to  the  effect  that  the  ruling  party  should  actually 
disrupt  the  leaders  and  offloiils  of  other  political   partiss. 
Becent  demonstrations  in  Uaavingo,  Chinhoyi   ^nd  other  places  igalnBt 
Ifr  Nkomo  ore  cases  in  point.     In  effect  HO  00  areaa  for  othor 
major  parties  have  been  created.     For  axample,  Br  Eddison  Zvobgo 
speaking  in  Hasvingo  on  February  9,   I^j^  said  that  no  representative 
of  any  other  party  should  set  foot  In  llnsvinGOi   nnd  If  nqy  do, 
4/.... 


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-  4  - 

that  should  bo  oonoidarcrd   q   provooatlan  to  tho  Kar^ng?  poople.     T?ura 
IB  one  of  tti8  ZAMI)  (PF)   parllainontarlanB,  nho  la  Hupponod  to  uphold 
tbo  fundaoontal  bunar.  rights  ami  froedoms  "^a  enshrined  in  our 
Constitution, Vila  is,   in  thla  lnatnno«   -.nd  In  other  o.isasi  violitlng  tha 
fraodom  of  novement  and  of  BBsooiation  in  ZimbaoBc  of  various  etbnlo 
groups.     Ife  can  read  hare  that  ho  is  dividing  the   poopls  of  this  oountiy 
Into  'Yanngas"  and  other  othnlo  crouP'- 

Kr  Chalmanf  up  to  this  paint  I  have  dononstrsted  beyond  reasonafala 
doubt  tha  sad  and  twglo  fact  that  Zinbnb»ii  io  ao  IiroEPEHDEMT  CaUMTIiy 
vriTHOtJr  FREEDOM,  ind  tha  world  DUBt  not  mialoid  thamaolvas  into 
bollovlng  that  JUBt  beoauaa  Ztababaa  Ib  an  Indepandont  nntloni  that 
»a  its  eitisana  an  tharafora  frao,  because  ve  ire  not.     But  ite  are 
like  th«  IsgandsiT  Kunta  Kints. 

Ur  CbatmBn,  the  violations  of  human  rlghti:   ^nd  froedons  nhich  I  have 

pointed  out  abova,   combined  with  the  additional   points  nhicti  I  an 

a'bovt  to  tell  you,  aia  not  conduotlva  to  holiini;  free  and  fair  oloctions. 

ta    Wa  eurrantly  havo  rallsbla  Information  ,ind  irrefutable  evidence  to 
tha  foots 'haf  ovor  40  000  nsmberc  of  the  ruling  party  controlled 
loath  Brigada  have  been  deployed  nntlontlly,  fully  equipped, 
Inatraetad,  aupported  and  financed  by  tho  govamBont,  ind  have 
started  eold  and  calculated  politicilj;/-  motlvatad  intiiaidatory  and 
tarxorlst  oanpaisn  In  rural  areas. 

2a    Am  Speoial  Coostabulaiy  which  in  fict  is  ZAtfU  (FF}'a 

valStioal  police  force,  using  govomncnt  uniform  and  facilities 
luva  slao  already  been  deployed  for  intlnidntion  purposao,  ind 
an  alrsady  oanylng  out  undenocratlc ,  binaed  nnd  supproBsive 
aetjvitiaa. 

}«    tbe  Hfth  Brigades  which  is  ZANU  (PF)   political   -trmy 

whloh  also  uses  govenuwnt  uniform  ind  ficllitics,  is  also 
daployad  for  Intimidation  of  all  oth^^r  political   parties 
exaapt  ZiVU  (FP).''The  Fifth  Brigido,  in  Shana,  is  cillod 
'Qnfcursbundl"  vhicb  ueano  "chaff-cleaner". 


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niiP  'a^i^  they  ere  siippooed  to  regard  people  ea  chzff  and  can,  ictiiddate, 

h.ir.-'i;^     nd  trost  pooplo  ?s  ae  do  lith  chaff. 

4>     ■&«  V  i  B  C  ba«  Ji-d  --^.••nl  applle^tlor-^  f':r  l'_.jliliae  political  r^lliae 
tuf.-,^*  down  rhilst  lUtfU  (FF)  are  being  cerLiLttad  to  hold  as  anny  rallios 
ae  tUtv  niab  to. 

5>     Su:'  pijtilic  statescn'a  are  aupproasod  ini  M\»  only  tlae  tba  looal  nms 
nedii  (l.a.  radio,   telsvisioni  and  aoQt  of  t'ai  novepapare)  cublish 
an/th'.ng  sbout  ue  i«  nhen  Jt  io  either  soacthla;!  vaiy  diatorted  or 
tl^t.-int  1L«B  or  obaraetar  aseasinctioriG.     A  caeo  in  point  istbe  article 
vbisii  a^pABred  on  tba  flnt  page  of  th«  Herald  of  Februiiy  J,   1985 
•h^n  It  aia  ntsted  that  I  «9s  In  Bulansjro  and  foiled  to  address  a 
D?o^inii  becauae  of  tosonstratlooe  vbilst  Inf  lot  I  aHo  in  Harare  that 
nbo1«  Keeker^. 

Hr  OiairMR)  «ltb  suob  ovenhelaing  evideno*  of  irrenularities  the 
IsioqcsTelile  oonoluelon  ntst  therofore  be  psaaed,  that  tho  torthoomlng 
eonts^l  election  la  tr9afiii  «ltb  look  of  fnMdon  and  falmeBc.    Ho««vaT( 

not  Trltbctaiklina  tiii,B  oonolualoni  the  'J  i  K  C  is  atlll  determined  and 
rasolvad  to  oonteat  all  tbe  90  seats. 

Tinall/  %r  dMlniBn,  I  Bhell  brlaflj  addrafls  ^^nlE  to  the  iBSuae  in 
thie  !orthoo«ilne  (tdner^l  election.  Ttf  real  Imubb  Id  this  campaign 
ara  in  ear  vlev  «c  tollosa:- 

a)     Vbti  ruling  party's  Intention  to  IntTodUM  the  even  more  opproasiva, 
nipraMlve  dUd  opportvmlBtla  one  party  ^lotatomAlip.  but  ve  the 
U  i  K  C  ai«  pTOfiaslng  and  adveaatlng  <i  ■alti^vrty  daaMomer' 

y>)    TlM  iBporeitahlrut  eoononiaBjlr  aulaldsl  »  o«lL>d  sdentitic 

■oolaUnt  «blob  !a  nana  otbsr  tbati  n  vpict  io  poverty  aad  ooonomlo 
ruiitt  tbe  U  A  tf  C  vsnts  to  introduoe  tbt  mileblngt  «iid  renarding 
■clued  Qoonoqr  nhieh  can  lead  our  cnuntiy  to  procperlty. 

0)     Zut^ltllahnant  af  pnaca  «nd  uiltj  for  our  nation  ^a  advooitod 
V  th'j  U  A  If  0  verstia  oontinuetlon    under  a  Prirao  tUnleter  nho 
h;i3  totnlly  failed  to  ereate  and  Inpleacnt  peace  3  nd  unity  for 
the  nation.     Ha  ba>  diaasllx  failed  t«oau»e  ha  la  often  bi(jhly 
diviaivo  hinsalf  In  speoafa,  s^tro^itoty  nod  vltidietivo  In 


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-  6  - 

d)    The  U  A  H  C  nanto  to  nake  Zlmbib-^iia  rii  irwependflnt  country  «ith 
TBEEDCU.     Zunf  (PF)  has  so  fnr  natia  Zitiliotnra  an  indapaiidont 
oountiy  vlthout  TBIXSKill.     One  of    thn  uaddcat  things  about  the 
proaent  govamcnnt  la  that  they  thin!:  thnt  Juct  iMiMuao  *e  sre  an 
iDdepandent  nation  ro  are  autoEiati^ally  "fraa",  not  raalitine  the 
taot  that  1b  Bote  ■•ye  than  ono,  In  terse  of  fraodon,  iie  ■ira  no* 
«van  «oraa  than  «•  *ai«  under  eolonlil  resln>>  Bort)*  aorea  than 
raoiet  South  ifzloa,  ^nd  oorao  than  Anln'a  Uganda.     Zlnbabire  hca 
l>Mt)  totally  deprived  o;  the  freedon  cba  von  by  self  denial 
vid  aupmDB  eBorifloa,    And  U  A  N  C  «a»to  to  natora  that  fraadon. 

a)    Today  in  ZlBbabse,  people  beta  each  otbar.  In  e  Banner  and  dagraa 
unnreoadanted.     In  a  culture  of  axtandad  fsittUeE  ahlch  derive 
e  lot  of  Joy,  oohealoa  and  unity,  our  people  era  boCn^  trainod  to 
hat*  anyone  «bo  le  not  a  ZUI\}  {TT)  oard  osrvlar  vegardleae  of 
whether  the  peinen  aay  be  a  brother,  aleter,  notber,  fatheri  friend 
or  vhaterar  ralatlonablp  one  nay  hev*.     ne  U  A  IT  0  aanta  to  usher 
a  new  aa«  of  love,  unity,  nutual  rsapaet  and  peaoa  aaong  all  our 
people. 

TEU  IS  ID'JR  LAST  GEAKCX  TO  3iVi;  ZnOUVBl 
ntank  you  Ur  Chslraan,  Ladlea  and  Qentleaea. 


31ahop  A  T  l!UBOT«">a 

I  B  4  B  C 


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Senator  Heinz.  Thank  you  very  much,  Mr.  D'Agostino. 

I  note  that  during  the  course  of  the  statements  of  the  peinel  a 
number  of  our  other  colleagues  have  arrived — Senators  Gorton, 
Mattingly,  and  Cranston.  Do  you  have  any  opening  statements  that 
you  would  Hke  to  make  at  this  time? 

If  not,  let  me  thank  all  the  witnesses  for  their  testimony.  I  have 
a  couple  questions  for  Mr.  Hackney  and  Mr.  Bok. 

Your  position  as  individuals — not  representing  your  universities 
I  understand — seem  fairly  much  identical  to  me.  Let  me  be  clear, 
though,  for  the  record. 

You  are  saying  that  while  you  support  S.  635,  if  S.  635  actually 
legislated  disinvestment,  would  you  support  it  or  not? 

Mr.  Bok.  No.  I  think  if  the  legislation  either  required  the  imme- 
diate disinvestment  by  universities  in  all  stock  in  American  compa- 
nies doing  any  portion  of  their  business  in  South  Africa  or  if  it  re- 
quired all  such  companies  to  leave  South  Africa,  I  do  not  believe 
that  I  could  conscientiously  support  that  bill. 

Senator  Heinz.  Dr.  Hackney. 

Mr.  Hackney.  I  agree  with  that,  yes. 

Senator  Heinz.  If  you  became  convinced — contrary  to  the  views 
that  you  may  hold  today — that  the  result  of  the  prohibitions  on  in- 
vestment by  American  firms  and  their  subsidiaries  in  South  Africa 
would  nonetheless  bring  about  disinvestment  of  those  firms,  wheth- 
er it  was  intended  or  not,  would  you  still  support  that  approach, 
the  one  in  S.  635? 

Mr.  Bok.  If  this  legislation  brought  about  disinvestment? 

Senator  Heinz.  The  sponsors  of  the  bill — Senators  Kennedy  and 
Weicker  and  others — say  their  legislation  is  not  aimed  at  bringing 
about  disinvestment  and  I'm  certain  they  are  sincere  in  that  posi- 
tion, but  if  the  effect  within  2  or  3  years  of  enactment  was  to,  be- 
cause of  the  way  things  worked,  whatever  that  may  be — were  in 
fact  to  bring  about  disinvestment  by  those  firms  so  affected  by  the 
legislation,  pulling  out  in  effect  of  South  Africa,  then  would  you 
think  we  would  be  wise  to  enact  S.  635  in  its  present  form? 

Mr.  Bok.  I'd  like  to  help,  but  I  find  that  so  unlikely  that  it's  very 
difficult  for  me  to  respond  to  a  hypothetical  question  that  seems  to 
me  on  its  face  by  my  calculations  very  unlikely  to  come  about.  I 
just  caui't  make  my  mind  work  that  way. 

Senator  Heinz.  You  don't  want  to  answer  a  hypothetical  ques- 
tion? 

Mr.  Bok.  Well,  not  a  hypothetical  question  that  seems  to  be 
really  so  disconnected  with  the  likely  course  of  events  flowing  from 
this  l^islation  as  I  see  it. 

RESULTS  OF  SWEDISH  BAN 

Senator  Heinz.  Well,  let's  deal  with  the  history  then.  Sweden  im- 
posed a  ban  similar  to  that  proposed  in  S.  635  in  1979.  If  I  were  to 
tell  you  that  at  the  time  there  were  31  Swedish  compianies  in  South 
Africa  who  then  employed  5,500  individuals  and  that  by  1984,  5 
years  later  that  policy  had  resulted  in  the  disinvestment  by  half  of 
the  companies  bringing  the  total  number  of  Swedish  companies  in 
South  Africa  down  to  17  employing  2,800  South  Africems,  would 


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you  continue  to  believe  that  the  result  that  I  described  a  minute 
ago  was  unlikely? 

Mr.  BOK.  Well,  I  guess  the  only  answer  1  could  give  is  that  I 
think  Sweden  is  a  very  different  counti^  from  the  United  States.  I 
have  some  familiarity  with  Sweden.  Both  of  my  parents-in-law 
served  in  Swedish  Cabinets.  And  knowing  what  I  do  about  Sweden, 
I  would  want  to  investigate  very  carefully  to  see  whether  there  ia 
indeed  a  causal  connection  between  that  legislation  and  the  depar- 
ture of  those  firms  or  whether  there  weren  t  various  other  circum- 
stances involved  that  might  have  led  to  the  decision  to  withdraw. 

Senator  Heinz.  Dr.  Hackney. 

Mr.  Hackney.  I  generally  agree  with  what  Derek  said.  If  I  were 
to  become  convinced,  however,  through  your  persuasive  arguments 
and  evidence  that  indeed  the  immediate  result  of  this  legislation 
were  to  cause  disinvestment,  I  would  think  that  that  is  not  a  wise 
step  at  the  moment  for  the  American  Government  to  take. 

I  do  not  believe,  however,  that  such  is  the  case.  At  some  future 
time  it  might  be  a  wise  step  to  take. 

Senator  Heinz.  Let  me  ask  both  of  you  this.  Since  U.S.  compa- 
nies in  South  Africa  employ  well  over  100,000  workers  in  South 
Africa  and  since  jobs  for  the  65,000  blacks  working  for  U.S.  compa- 
nies in  South  Africa  are  among  the  best  paying  and  most  likely  to 
provide  additional  education  and  job  skills,  and  since  a  no-new-in- 
vestment or  bank  loan  policy  for  U.S.  corporations  operating  in 
South  Africa  is  likely  to  lead  to  a  relative  decline  in  U.S.  economic 
presence  there,  even  if  for  the  sake  of  a  hypothetical  argument  it 
doesn't  lead  to  disinvestment,  other  evidence  to  the  contrary,  isn't 
it  true  that  blacks  and  other  blameless  third  parties  are  likely  to 
be  harmed  by  the  policy  which  is  promulgated  in  S.  635? 

Mr.  BoK.  Let  me  try  to  respond.  Since  American  investment  has 
not  been  rising  in  recent  years,  it's  a  little  hard  to  know  whether 
even  this  bill  is  going  to  materially  reduce  the  amount  of  that  in- 
vestment. Nonetheless,  I  think  the  overriding  question  is:  What 
can  the  United  Stetes  do  that  will  maximize  whatever  possibilities 
exist  for  peaceful  and  constructive  change  in  South  Africa? 

I  think  that  American  corporations  may  have  a  role  to  play,  but 
because  the  number  of  employees  that  they  have  is  so  small  rela- 
tive to  the  total  population,  I  think  the  constructive  role  that  the^ 
can  play  is  as  an  example.  I  do  not  believe  that  under  any  plausi- 
ble estimate  of  future  events  American  firms  are  going  to  expand 
in  South  Africa  to  the  point  where  they  are  going  to  have  more 
than  a  tiny  portion  of  black  employees  and  I  believe  the  advan- 
tages that  can  result  from  the  example  that  American  firms  play 
can  be  fully  achieved  with  the  amount  of  investment  that  we  al- 
ready have  in  South  Africa. 

Therefore,  increasing  that  amount  is  not  likely  to  make  any  ma- 
terial difference  to  the  future  course  of  politiceil  events  in  that 
country. 

I  also  fear  that  one  other  matter  may  occur  if  American  invest- 
ment increases  in  South  Africa  which  seems  to  be  very  much  on 
the  negative  side,  and  that  is,  the  more  American  investment  that 
you  have  there,  the  greater  financial  and  economic  stake  we  have 
in  conditions  in  that  country  and  the  more  likely  we  are  to  put 
ourselves  in  a  position  where  there  may  be  a  conflict  of  interest  be- 


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tween  our  economic  interests  in  this  country  and  what  we  really 
feel  we  should  do  on  principle  as  a  country  whose  ideals  are  deeply 
opposed  to  apartheid.  So  I  think  there's  some  risk  in  allowing  the 
level  of  American  investment  to  reach  a  point  where  we  have 
really  very  strong  potential  conflicts  between  economic  interests 
and  those  ideals  which  seem  to  me  central  to  the  American  creed. 

Senator  Heinz.  I  don't  want  to  debate  that  particular  premise 
with  you.  It  seems  to  me  that  it,  however,  proceeds  from  the  notion 
that  a  large  U.S.  presence  in  a  country  will  always  side  with  the 
forces  of  darkness  which  may  bring  about  a  cataclysm  ultimately 
and  the  American  presence  somehow  will  never  be  wise  enough  or 
enlightened  enough  to  see  what  is  in  its  long-term  best  interest. 

I  think  everybody  who  studies  the  South  African  question  wor- 
ries about  one  thing,  and  that  is,  left  to  its  own  devices,  will  the 
South  African  Government,  in  addition  to  pursuing  policies  that  we 
find  morally  repugnant,  bring  about  its  own  bloody  destruction.  It 
seems  to  me  that  a  lot  of  people  do  believe  that.  I  think  it's  a  very 
big  risk,  and  that  it  wouldn't  be  unique  for  American  business 
people  to  believe  that  it  is  a  risk  also  and,  therefore,  they  would 
have  an  interest  in  peaceful  change.  There  is  a  limit  to  the  time 
period  in  which  a  white  minority  can  suppress  a  large  and  growing 
black  majority. 

So  I  don't  know  that  I  would  like  to  grant  your  premise.  I  don't 
want  to  get  into  an  argument. 

TIME  IS  RUNNING  OUT 

Mr.  Hackney.  Briefly,  I  think  you  put  your  Unger  on  the  right 
element  here,  which  is  time.  You  are  suggesting  a  model  of  change 
that  might  indeed  take  place  with  increased  American  investment 
and  development  in  the  economy  perhaps  over  a  long  period  of 
time,  but  I  think  the  events  of  the  last  9  months  or  so  make  it 
clear  that  we  really  probably  don't  have  that  time.  So  one  should 
be  looking  for  what  modest  steps  might  be  made  that  don't  immedi- 
ately harm  the  victims  in  South  Africa  and  will  induce  or  encour- 
age change  from  the  South  African  Government.  That's  how  I 
come  to  support  S.  635. 

Senator  Heinz.  Thank  you.  One  last  question  for  Mr.  D'Agostino. 
Mr.  D'Agostino,  in  your  testimony  you  made  the  statement  that  it 
was  basically  wrong  to  debate  the  internal  repressive  antihuman 
right,  antiwhatever  we  want  to  call  them  policies  of  another  gov- 
ernment. You  said  it  was  destructive  of  us  to  do  so  in  the  case  of 
South  Africa  because,  as  I  remember  what  you  said,  it  caused  them 
to  dig  in  their  heels. 

If  I  applied  that  principle  generally,  I  guess  I  would  never  criti- 
cize the  Government  of  Nicaragua  for  what  it  is  doing.  Why  isn't 
your  admonition  a  selective  admonition  and  invalid? 

Mr.  D'Agostino.  Well,  let  me  answer  that  in  two  ways.  One,  the 
case  of  Nicaragua  involves  a  threat  or  a  long-term  threat  to  the  se- 
curity of  the  United  States  because  of  what  they  are  doing  in  Cen- 
tral America.  The  second  thing  is,  of  course.  South  Africa  is  an 
ally.  What  I  said  is  that  under  this  bill  South  African  internal  af- 
fairs is  a  matter  of  continuing  debate  in  the  U.S.  Congress.  It's  not 
so  much  that  we  debate  the  problem.  I  think  it's  good  that  it's  de- 


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bated  and  we  say  we  don't  approve  of  apartheid.  But  the  bill  says 
the  President  can  come  back  to  Congress  and  say,  "Guess  what. 
South  Africa  is  behaving  better  now."  It  then  goes  back  for  a 
debate  in  the  Congress.  It's  like  the  U.S.  Congress  is  an  oversight 
agency  for  the  South  African  Government  and  the  policies  of  the 
Government.  It's  not  a  question  of  merely  debating  its  policies, 
which  is  fine  and  I  think  appropriate.  It's  a  question  of  being  in  a 
position,  because  of  this  law,  of  being  able  to  approve  or  disapprove 
step  by  step  what  the  South  Africans  are  doing  and  almost  saying 
we  are  going  to  supervise  your  improvement.  It  s  much  more  a  psy- 
chological point  here  than  anything  else. 

Yes,  we  should  debate  these  policies  and  say  they're  wrong.  No, 
we  shouldn't  put  ourselves  in  the  position  I  think  we  are,  supervis- 
ing and  telling  them  how  to  do  step  by  step  what  they  ought  to  be 
doing.  We  haven't  had  a  lot  of  success  in  other  countries — Iran,  for 
instance,  and  Cuba. 

Senator  Heinz.  Thank  you.  Senator  Proxmire. 

Senator  Proxmire.  Thank  you  very  much,  Mr.  Chairman. 

Mr.  Schotland  and  Mr.  Bok,  I  hestitate  to  even  try  to  correct  the 
president  of  Harvard  University  on  anything  and  you  may  be  abso- 
lutely correct  and  I  may  be  wrong  and  Mr.  Schotland  may  be  cor- 
rect and  I  may  be  wrong.  You  gentlemen  agree  on  this  point  but  I 
think  you  are  both  wrong. 

You  say,  speaking  of  S.  635,  "The  bill  bans  loeuis  to  the  South 
African  Government  and  GovemmeDt  entities  but  not  to  others  in 
South  Africa." 

LOAN  PORTION  OF  S.  635 

Now  let  me  read  you  from  the  text  of  the  bill,  section  4(a): 

The  President  shall  no  later  than  90  days  after  date  of  enactment  of  this  Act  issue 

r^ulations  prohibiting  any  United  States  person  from  making  directly  or  through  a 

foreign  afTiliate  of  that  United  States  person  any  investment  including  bank  loans 

in  South  Africa. 

Then  there's  a  further  statement. 

The  term  investment  in  South  Africa  means  establishing  or  otherwise  investing 
funds  or  other  assets  in  a  business  enterprise  in  South  Africa  including  making  a 
loan  or  other  extension  of  credit  to  such  a  business  enterprise,  the  private  sector  as 
well  as  the  Government. 

There  is  one  exception  and  the  exception  is  that  loans  can  be  made 
to  the  Government  provided  they  are  loans  for  housing,  health,  or 
education  and  on  a  nondiscriminatory  basis. 

Now  if  I  misstate  that,  you  show  me  in  the  bill  where  I'm  wrong. 

Mr.  Bok.  Well,  I  think  the  statement  that  I  made  was  that  I 
hoped  that  the  bill  would  be  clarified  to  make  that  clear.  All  I  can 
say  is  you  may  be  right,  but  in  reading  the  bill  last  night  in  prepa- 
ration for  this  testimony,  it  wasn't  as  clear  to  me  as  I  would  have 
liked.  I  have  also  seen  the  bill  described  in  other  publications  as 
simply  prohibiting  loans  to  banks.  And  so  I  didn't  mean  to  say  that 
the  bill  was  other  than  you  stated.  It  did  seem  from  my  reading, 
which  may  have  been  wrong — but  it  did  seem  from  my  reading  not 
to  be  entirely  clear  and  thus  my  statement  was  that  I  hoped  it 
could  be  clarified  so  you  could  extend  that  prohibition  more  broad- 


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294 

Senator  Proxhire.  Mr.  Schotland. 

Mr.  Schotland.  Senator,  this  is  turning  into  a  pretty  good  law 
class.  I  don't  know  how  many  of  you  were  struck  when  a  former 
law  professor  revealed  disquiet  about  handling  hypotheticals. 
[Laughter.] 

I  agree  with  what  President  Bok  has  just  said.  We're  at  the  stage 
where  the  question  isn't  eitactly  how  one  reads  the  bill  but  how  we 
ought  to  make  it  read  to  say  what  is  intended.  If  the  intention  is  to 
bar  more  than  loans  to  the  South  African  Government  and  affili- 
ates, then  I  submit  that  section  3,  *hich  was  not  in  the  portion  you 
attended  to,  ought  to  be  expanded  to  expressly  authorize  the  Presi- 
dent to  bar  further  loans  if  he  so  finds  necessary. 

At  present,  the  specific  of  section  3  on  loans  might  override  the 
much  looser,  broader  general  of  the  section  you  pointed  to  and  I 
think,  therefore,  I  agree  completely  with  your  intent  and  with 
President  Bok's  and  my  own  wish  that  if  there  is  to  be  a  bar  on 
loans  it  ought  to  be  across  the  board,  not  as  now  where  the  only 
s^al  we're  sending  is  that  we're  showboating. 

Senator  Proxmire.  I  thought  we  were  making  that  as  express 
and  as  explicit  £is  possible.  I  can  see  why  the  chairmem  of  this  sub- 
committee and  I  both  went  to  the  Harvard  Business  School  and  not 
the  Harvard  Law  School. 

Mr.  Bok.  There's  always  time  to  rectify  that. 

Senator  Proxmire.  I'm  sure  I  couldn  t  get  in  now.  I  could  have 
gotten  in  in  those  days. 

Senator  Heinz.  I  hope  they  have  a  good  work-study  program. 
[Laughter.] 

Senator  Proxmire.  May  I  say,  Mr.  Schotland,  you  referred  also 
to  the  Lugar  bill  which  you  said  contains  the  Sullivan  principles 
and  that  S.  635  didn't.  S.  147  the  bill  that  Senator  Sarbanes  and  I 
are  also  cosponsoring  does  contain  Sullivan  principles. 

Mr.  Schotland.  I  applaud  that,  Senator. 

Senator  Proxmire.  Very  good.  Thank  you. 

President  Bok,  an  argument  made  by  opponents  of  limited  eco- 
nomic sanctions  proposed  in  S.  635  is  that  moving  beyond  the 
Reagan  administration's  [K)licy  of  constructive  engagement  or  quiet 
diplomacy  will  make  the  white  regime  even  more  intransigent  and 
reduce  the  chances  for  peaceful  reform.  You  say  however  on  page  5 
of  your  testimony. 

Opinion  polls  of  South  African  whites  indicate  far  greater  support  for  change 
than  anything  promoted  recently  by  the  r^me.  Such  trends  suggest  the  opportuni- 
ty for  pressing  the  regime  U>  take  bolder  steps  toward  reform. 

Do  you  think  that  enactment  of  S.  635  would  make  the  whites  in 
South  Africa  more  cognizant  of  the  urgent  need  for  reform  in 
South  Africa  and  have  a  positive  effect? 

Mr.  Bok.  Well,  I  want  to  be  as  candid  as  I  can  and  recognize  that 
the  problem  of  how  one  country  can  increeise  the  possibilities  of 
constructive  reform  in  another  is  an  extremely  difHcult  enterprise. 
I  can't  claim  to  be  certain.  I  think  all  one  can  do  is  meike  the  best 
estimate  that  one  can. 

In  my  opinion,  it  is  too  easy  to  interpret  our  present  policies  as  a 
kind  of  tacit  acquiescence  wiui  the  status  quo  or  at  leeist  not  caring 
very  much  about  the  status  quo. 


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295 

I  think  the  sanctiotifi  of  the  kind  proposed  in  the  Kennedy- 
Weicker  bill  simply  cannot  be  interpreted  as  tacit  acquiescence  of 
the  status  quo.  They  make  a  much  stronger  statement. 

To  the  extent  that  that  is  communicated,  as  I'm  sure  it  will  be, 
because  all  official  emanations  from  the  United  States  involving 
apartheid  are  communicated  widely  in  South  Africa,  I  think  that 
this  message  will  necessarily  get  across  to  large  numbers  of  white 
South  Africans;  yes. 

SIGNAL  TO  THE  BLACK  COMMUNITY 

Senator  Proxmire.  President  Bok,  do  you  think  that  even  if  the 
legislation  did  not  have  a  positive  impact  on  the  white  community 
in  South  Africa,  do  you  think  it  is  worth  enacting  to  give  a  s^al 
to  the  black  community  in  South  Africa  of  where  America  stands 
on  apartheid? 

Mr.  Bok.  I  think  that  certainly  would  be  a  positive  result  of  the 
legislation  as  well  and  it  would  be  an  independent  benefit  even  if 
the  first  message  did  not  get  across. 

Senator  Proxmire.  Now  opponents  of  the  limited  economic  sanc- 
tions proposed  in  S.  635  often  note  that  blacks  in  South  Africa  are 
better  off  than  blacks  elsewhere  in  Africa.  Indeed,  Mr.  D'Agostino 
has  made  that  implication. 

You  note,  however,  on  page  5  of  your  testimony  that  South  Afri- 
ca's homeland  resettlement  policy  has  forced  3.5  million  blacks  to 
move  to  crowded  Bantustans  where  the  economic  and  living  condi- 
tions are  poor  and  the  infant  mortality  is  the  highest  in  the  Afri- 
can Continent. 

Can  you  tell  us  how  many  of  the  22  million  South  African  blacks 
are  forced  to  live  in  these  so-called  homelands  and  what  conditions 
are  like  for  blacks  in  those  areas? 

Mr.  Bok.  I  believe  that  there  are  some  11  million  blacks  now 
living  in  the  homelands.  I  would  point  out  that  a  Government  com- 
mission in  South  Africa  in  the  1950's  estimated  that  the  total 
number  of  people  that  could  be  supported  in  the  homeland  territo- 
ries was  2  million.  So  you  have  over  five  times  the  maximum 
number  now  residing  there. 

We  do  have  reports  from  the  Carnegie  Foundation  with  respect 
to  the  proportion  of  nonwhite  families  below  the  poverty  line.  I 
can't  testify  as  to  exactly  what  measure  of  poverty  they  use  in 
South  Africa,  but  I  think  it's  instructive  to  note  that  by  their 
standard  the  number  of  families  below  the  poverty  lines  stands  at  7 
percent  in  the  cities,  13  to  14  percent  in  the  countryside,  and  80 
percent  in  the  homelands,  thus  indicating  the  relative  deprivation 
that  exists. 

The  proportions  of  nonwhite  children  suffering  from  malnutri- 
tion and  stunted  growth  is  high  for  nonwhites  throughout  South 
Africa  and  much  higher  in  the  homelands. 

A  lot  of  those  statistics  as  well  as  impressions  by  qualified  people 
are  captured  in  a  report  submitted  by  David  Hamberg  who  is  a 
doctor  and  now  president  of  the  Carnegie  Corp.  in  New  York,  enti- 
tled "A  Personal  Perspective  on  the  Second  Carnegie  Inquiry  Into 
Poverty  and  Development  in  Southern  Africa." 


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Senator  Proxmire.  Will  you  make  that  report  available  to  us  so 
we  can  have  that  printed  in  the  record? 
Mr.  BoK.  I  will  submit  that  for  the  record. 
[The  following  report  was  subsequently  submitted  for  the  record:] 


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A  PERSOHM.  PgRSPECTIVE  OH   THE  SECOMD  CARMEGIE 
IWOTIRY  IKTO  POVERTY  AHO  PEVELOPHENT  IH  SOUTHEBM  AFRICA 


David  A,  flanburg,  H.D. 

Presldant 

Carnegie  Corporation  of  New  York 

Hay   13,    19B5 


In  ^ril  of   1984,   I   led  a  Carnegie  Corporation 
delegation  of   seven  people   to  participate   In   a  conference 
reporting  the  main   findings  of   the  Second  Carnegie   Inquiry 
into  Poverty  and  Development  in  Southern  Africa.      He  also 
visited  several  parts  of  South  Africa,   especially  to  see 
at  first  hand  the  manifestations  of  poverty  which  the 
Inquiry  had  examined.     The  visit  proved  to  be  highly 
informative,    surprising  in  some  ways,   and  deeply  moving 
for  all  of  us. 

The  Second  inquiry   into  Poverty  and  Development  in 
Southern  Africa  was   initiated  by   the  Carnegie  Corporation 
of  Hew  York  in  April  of  1982.     Based  in  South  Africa  at  the 
University  of  Cape  Town,    it   Is  directed  by  Dr.   Francis 
Hilaon,   a   labor  economist  and  head  of  the  Southern  Africa 
Labour  and  Development  Research  Unit.    (SALDRU)    at  the 
School  of  Economics. 


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-    2   - 

nie   Inquiry  has   three  main  objectives: 

1.  To  collect  and  collate   up-to-date   facts   about  poverty   and 
the  process  of   Inpoverishment    in  South   Afcica; 

2.  To  generate  public  debate  on  the  causes,  nature,   and 
•xtent  of  poverty   In  Southern  Africai 

3.  To  stimulate  thinking  and  action  on  strategies  against 
poverty  and  on  ways  of  facilitating  equitable  development  in  the 
lagton    in  both    the   short   run   and  the   long   run. 

The   aim  ultimately   is   to  contribute    toward   shaping   a  more 
just  and  peaceful   society   In  Southern  Africa. 

The   Inquiry   is   drawing   upon  the   knowledge  and   research   of   a 
network  of   scholars  and  professional  persons   in   law,   medicine, 
economics,   religion,   and  other   fields  throughout  the  country,   ai 
well   as  community   leaders,    teachers,   and   social  workers  who  have 
first-hand   knowledge  of  poverty   and   the  process  of    impoverishment 
at   the  local   level.     The   intention   is   to  ensure   the   widest 
possible   participation   in   the   study   from   all   segments   and   races    in 
southern  African   lite.      More   than   twenty  universities   in   the 
region  have   participated   in   the   study. 

nie   Inquiry   is   viewed   in  South   Africa   as   the  most   exhaustive 
survey  of  the  causes   and  consequences  of  poverty   In   southern 
Africa   since   the  Corporation-sponsored   study   of  poverty  among 
whites  carried  out   fifty   years   ago.      Popularly   known   as   the 
Carnegie  Poor   White   Study,    the   earlier    study   succeeded    in 
stimulating   actions   that  helped   the   Afrikaner   poor   overcome   their 
conditions  and  bacome  part  of  mainstream  South  African  society. 


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-  3  - 

«ie  current   study. Is   not  confined   to   the   study  of   the  people 
ot  any  on*   race  classification    In   touthern  Africa,   although 
poverty   in   the  19S0s    la  endured   almost  entirely  by  black 
people— African,   Coloured,   and  Asian.      Poverty   is  balng   studied    In 
relationship   to   land   use,    law,    food   and   nutrition,  health   car*, 
education  and   training,   transport,   housing,    social  welfare,   and 
other   qu«lity-of-life    Indicators,      it   is   also  iMlng   studied   for 
its  effects  upon   families,   migrant   workers,   women,   children,   and 
the   elderly.      Overshadowing   all    Is   the   role   and    Impact  of   the 
official  policy  of  drastic    racial   separation   known   as   apartheid. 

Interim  findings  of   the   Inquiry  were  presented  at  a 
ConCerenca   on  Poverty  and  Development  held    in  Cape  To«n  April 
13-19,   1984,   to  which   nore   than   300  papers  were   presented   by 
participants.     'Oie  conference   also  exhibited   a  collection   of 
photographs  pf   the   southern  African  poor,   entitled   "The  Cordoned 
Heart."      A  film   festival   taking   as    its   thene   "Signs  of  Hope- 
brought  together  a  great  deal  oif  Information  about  daveiopmont 
lessons  fron  other  countries. 

The  proportion  of   families   i*io   live   below  the  poverty   line    la 
about  7  percent  In  the  cities,  13-H  percent   In  the  plattaland, 
and   BO   percent    In   the    reserves   or   homelands.      There    Is  poverty   all 
over   South  Africa,    but   It    Is   the   rural  areas,   where  sost  black 
peopl«   live,   that   it    Is  most   acute.      Poverty   In  South   Africa, 
according   to   the  conference  papers,    is   "decisively   affected  by 
apartheid."     Its  dimensions  are  particularly  affected  by  land 
laws,  pass  laws,   and  the  housing  policy  of  the  Nationalist 


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government  and  earlior   govecnmanCs.      OnEoceaeen  circumstances   lUe 
drought  play   their   part,    but   severe  poverty    in   South   Africa  has   a 
deeper   origin    in   the   economic   and  political   structure   of   the 
society. 

The   Inquiry  reports   that   there  has  been   a  great    increase    In 
poverty   in  South   Africa  over   the  past   20  years,    largely  as   a 
result  oE   the   accelerated   Iniplementatlon  of   "Grand  Apartheid,' 
Hherein   blacks   are  deprived  of   their   South   African  citlienship   at»d- 
deported   to   the   reserves   set   aside   for   their   particular   ethnic 
alflllation.     These   reserves,   or  homelands,   have   become   "dumping 
grounds"   for    "economically   redundant"   people.      (One  paper    referred 
to   these  people   as   "the  discarded   and  dispatched.")      Recording   to 
the   Inquiry   reports,   the  number   oE  people  made   destitute  by 
landlessness  and  unemployment  has   risen   from   250,000   In  195  0  to 
1.43  million   in  1980.      The   number   living   below   the  poverty  line 
but  having   some    income  has   reportedly   increased   from  4.9  million 
to  8.9  million—about  one-half  the  population  of  blacks  In  South 
Africa.     Eleven  million  blacks  comprising   37   percent  of  South 
Africa's  population  are   being  crowded   into   the   ten  officially 
autonomous  homelands   that  make  up  only  13  percent  of  South 
Africa's   land   area.      There    is   Insufficient   arable  land  or 
infrastrucutre   to  yield   an   adequate    Income   for   the   families   living 
there.      Traditional   subsistence   agriculture    is  collapsing   with    the 
overcrowding. 

Inquiry   studies  of   the   migrant   labor   system   reveal    Its 
devastating    impact  on   families.      One-quarter   of  black  women   In 


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-  s  - 

South  Africa  arc   sepacatsd   (torn   their   husbands  bacauae  of    influx 
contcol   tegulatlona  and   tha  pass   law*   that   ragulata   th«   movanents 

workecs.  Many  chiLdren  of  homeland  acaas  aca  growing  up  baraly 
knowing  thair  migrant  laborec  fathoca  trtio  vlalt  home  only  onca  a 
yeac.  Advaise  child  davelopment  and  high  ccima  caCes  ara  a  part 
of  thla  picture.  Quito  apart  from  tha  mantal  health  conaaquence 
for  families  of  auch  family  fragmentation,  it  la  more  costly  to 
maintain  apllt  famillea  than  a  united  family, 
'  Mhltaa   in   South   Africa  enjoy   approximataly   the   same   longevity 

as  Americana,   and   the   same  health   standards,    and  commensurate 
access   to    Increasingly   technological  health   caca.        Most  blacka, 
by  contrast,   especially   In   the   rural   areas,    suffer   from  a  very 
heavy  burden  of   illneaa.     Communicable   and  other   aerlous  diseases 
take   the   Uvea  of   a  great  many  South   African    infants   and  handicap 
for    life   those   who   survive.      One-third  of  African,   Coloured,   and 
maian   chliaten  unier    the   age   ot   14    in   South   Africa  are 
undecweight  and  stunted   Cor  thelt   age  because  they  do  not  get 
enough   to  eat  ^   The   infant  mortality   rate   in  Sowato   Is   three   tines 


higher   than   that  of  irtiitas.      Forty-five  percent  ot  Sowetan 
children  who  reach   the   age   of   ten   suffer   from  malnutrition,    59 
percent   from   stunted  growth,   and   24   percent   from   -wasting." 
Oocto^who  examined  children   at   three   large   schools    in  tha 


Gaaankulu  homelan 

d  of 

the  Northern   Transvaal    found   that   four   out 

of   ten  had   notn  in 

g   1^° 

eat   before  coming    to   school   that   day,    and 

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-  s  - 

In  my  vi«w,   povacty   is  partly   a  matter   of    income   ana  partly  a 
nattar   ot  human   dignity,      it   is  one   thing    to  have   a  very  low 
Incoma,  but  to  be  treatad  with  respect  by  your  compatriots;    It   la ' 


quite    another   matter    to   t 


'   low    Income    and    to   be   harshly 


depreciated  by  more  powerful  compatriots.     Let  us  speak  th«n  oE 
human   impoverishment!      low   income  plus  harsh   disrespect.     This 
condition   jeopardizes   survival   in  the  most   tundamenCal 
tarms~e.g..    It  drastically   increases   Infant  mortality,    increases 
tha   burden  ot   Illness    in  many  ways,    and   shortens   life   expectancy. 
But   it  does   even  more.      It  gravely  jeopardizes   the  most 
fundamental  hutaan   attachments   to   family,    friends,   home   and 
community]    it   undermines  self-respect   and   a   sense   of  belonging;    it 
■akea   life  profoundly   unpredictable   and    insecure;    It  erodes  hope 
tor   future   Improvament   and   the   sense  o£   worth   as  a  human   being. 

Thus,   to  spaah  ot   impoverishment   In   this   sense   is   to   speak   ot 
human  degradation   so  profound  as   to   undermine   any  reasonable   and 
decent  standard  of  human  life— measured  by  whatever  religious, 
aclentlElc,   or  humanitarian   standard.      Any  outlook  of  human 
decency   In   any  part  of   the  world   Is    inconsistent  with   the 
persistence  of  such  impovetlshnient   In  the  twenty-tlrst  century. 
Tragically,    it   is  widespread   in  contemporary  South   Africa  despite 
the  many  advantages  ot  that  nation—a.g.,    Its  abundant  natural 
resources   and  beauty,    its  democratic  heritage   from  Britain,   and 
its   easy   access   to  modern   technology. 

South   Africa's  problems,    though   distinctive,    ate   not   unique. 
Therefore,    the   Inquiry   is  an  enterprise   which    should  not  only  be 


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useful   in  South   Attica,   but   throughout   the   wocld.      The  ptobleaa 
Bddcesaad   ao  effectively   In   the   Inquiry   are   of  great   significance 
In  aany  countries.    Including   our   own. 

I    invited   a   rather   large   delegation  of  Carnegie  colleagues   to 
accompany  me   to   the   Inquiry.      That   they   accepted  with   alacrity 
reflects  the   Importance  we  attach  to  this  subject  and  the  respect 
wa  hold  for   those  conducting  this  Inquiry.     All  of  us  were  deeply 
affected  by  our  visit.     He  were  on  a  rapid  learning  curve.     He 
were    informed,   stimulated,   sometimes   shocked,   and  brought   to  a 
renewed   dedication   (o   tackle   the  horrendous  problems  of  human 
impoverishment   in   the  constructive   spirit  of   this   Inquiry. 

Beyond   the  conference,   we  made   a  two-day   journey   through   the 
Ciskel—a   Journey   which   transformed   the   dry  language  of   the 
statutes   and   the   abstract   findings  of   the   Inquiry   Into  a  drama   of 
profound  human   Impoverishment,   especially   in   isolated   and   desolate 
resettlement  can^s.      My  colleague,   Relene   Kaplan,   chairperson  of 
our   board   of   trustees,   gave   an   insightful  presentation  of   this 
visit   at  our   board-staff   retreat   In  May  and   I   quote   some   of  her 
remarks  here.      "Throughout  our   tour   of   the  Clskel,    I   kept 
remembering  Desmond  Tutu's   words,   **«n  we  net  with   him  and  other 
Black   leaders    In  Johannesburg  on  our   first  day   in  South   Africa. 
Be   said   that  our   visit   to  South  Africa  would  be   a  course   in  Human 
Ecology—a   lesson   about   the   sad  wastefulness  of  human   resources. 
Repeatedly,    those   words  haunted  me   as  we   saw  evidence  of   the 
findings  i*  ich   were  presented   at   the  Carnegie  Poverty   Inquiry: 


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Mlnucrltlon,   family   dlsocganlzatlon,   destruction  of  people's 
poaseasions   and   buildings,    squalor   of   the   reaettlenent  cainpa  Mhich 
deaectdte   the  natural   beauty  of  handsome  counttyaide,   and   the   sad 
Idleneaa  of  human   belnga  t*io   literally  have   been   "dumpBd   IIK* 
[•fuse,"   as   one  Black   leader   we  met   expr«sed   it,      «e   witnessed   a 
countryside  of  hutaan  beings  *o  had  been  placed  "out  of 
sight*— and  ware  therefore  "out  of  aind"   for  most  white  South 
Africans.      The  Ciskel  nust  be   viewed   in   the  context  of  a  w«b  of 
laws,   customs  and  policies  concerning  Black  Africans  which  have 
had   as   their   fundamental  goal   the   relocation  of  as  many  Black 
Africans   as  possible    into   tiie   "homelands"   and  prevention  of  those 
who  w«r«   there   from  coming   to   the  cities.* 

"During   our  two-day  trip,   w«  visited   seven   resettlement 
campa — Potsdam,  Ndevarra,   Pakamiaa,   Tswela  Tswills,   Dimbaza, 
Whittlesaa,  Oxton— some  as  old  as  LO  years  or  so,   before  ciskel 
became    Independent,   others  aore   recently  sstabllshad;      but   all 
housing   those   relocated   from  other   rural   areas,   often  quite   far 
away.     And  many  continuing  to  receive  new  arrivals.     As  we  novad 
from  place   to  place,   I   anticipated   that   aurely  the   next   location 
could  not  be  worse— but   Inevitably   it  was,   either   because   of 
greater   numbers  o£  people    In   the  area,   or    less   fertile  land;   or   a 
greater  sense  of   Isolation  and  impoverishment.     In  each  auch 
settlement,   we  visited  nursery  creches,    soup   lines,  health 
clinics,   pitifully  meager    sewing  or   garden  or  handicraft 
projects— each   sponsorsd   by  one  or   another   church   or  charity 
organization— Lutheran,   Svangelical,   Anglican,   Catholic— and   all 


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-  9   - 

teylng,   against   virtually   Inpoaslble  odds,    to   Ea«d  nalnouriahad 
childran,   to  treat   illneasas   assoclatad  with   sev«ce  poverty  and   to 
lend   Boae  dignity  and  Manlng   to  paople'a   Uvea." 

■Each   Buch    location  waa   attuated    In  arid.    Infertile   land— In 
aoae  cases   aluoat  desert   type  condttlans.      The  housing  was 
basically   ttia   sane — either   shacks  nads   from  wooden  pactctng   cases 
with  Metal  roofs,  or  corrugated  Metal  shacks.     He  ware  told  that 
all  had  been  designated  as   "tenporary" — but   in   some  cases   that 
referred  to   settlements  going   back   to  as  early   aa  19701      So  these 
so-called  te^ocary  quarters  have  become  permanent  dwellings— -hot 
In   sunner   and  f reeling  cold    In  winter.      In  each   such   area,    there 
were   four   to  six   such   shacks  nftiich   shared   a  pit   l«trlne~each   such 
shack   often  housing   as  many  aa   ten  or   more  persons.* 

'Although   the  details  of  each   place  may  have   varied,    the 
underlying   theme   remained  constant— the  callous  disregard    for   the 
physical  and   spiritual  needs  of   these  people— and   the   devastation 
and  human   suffering  which   has   resulted   from   the  conscious   and 
unrelenting  dislocation  of   an  entire  culture." 

It   is  not  possible  to   say  precisely  how  many  people  have  baan 
forced  to  move  into  such  camps  since  1970,  though  serious  efforts 
have   been  aade  despite  official  obfuscation.      Suffice    It   to  say 
the   appropriate  metric   Is    In  millions,   not   thousands.      Few  South 
Africans,    let  alone  Americana,   have  visited   these  caiupa.      The 
sights   and   sounds  and   smells   of   the   camps  will  be  with   us   for   a 
long   time.      Perhaps    It   Is   excessive   to  characterize   them  as 
'concentration  caaipa,"   but   that   Is   the   term   that   reverberated 


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-   10    - 
through   our   group   as  we   aaw   the   repressive   squalor   an^   the   grossly 
Malnourished  chlldran   all   around   ua. 

On  June  1?,   197S  ,   the   "children's   uprLaintg"    In  Soweto  matkad 
the  beginning  oC  a  new  period  of  black  protest  and  violent 
government   response  which  continues   to   this  day.      Not   since   the 
'Sharpeville  Massacre'    In  196  0  had   there   been   such   a  large 
outpouring  of  comniunity  anger   and   fierce  government   retaliation. 
In   the    immediate   aftermath   of  Soweto  over   SOO  t>laclt  South   Africans 
were   killed,   most   of   them  children.      The   vehemence   of   this 
reprisal  had   a   sobering   effect  on   all   South   Africans,   cautioning 
blacks  and  disturbing    the  complacency  of  twites. 

The  tenor  of  debate  changed  in  South  Africa  after  Soweto,  and 
even  the  government  was  forced  to  acknowledge  the  need  for 
"raforn' — though  without  conceding  any  of  the  fundamental  changes 
sought  by  the  black  community.  But  the  government's  old  adherence 
to  Uie  purity  of  Afrikaner  racial  ideology  had  begun  to  falter, 
and  Soweto  was  followed  by  a  change  of  Afrikaner  government  and  by 
other   deep   splits    In  Afrikaner  hegemony. 

This   is  not  meant   to   suggest   that   the   South   African 
government  has  embarked  on  a  cleat   program  of   social  arid  political 
reform,      in   fact,    the   continuation  oE   the   'honelands'  policy   is 
designed   to   'partition  out'   the   vast  majority  of  black   South 
Africans,   both   by   physically   removing   them   to   rural  wastelands   and 
by   stripping   them  of   their   South   African  citizenship.      This 
process  has  continued   unabated   until   the   present  day,   with   vast 
and  harsh  human  consequences.      Nor   do   the   recent   'constitutional 


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-  n  - 

teforaa-   signal   a  government  wllltngneas   to   accept   tesponiiblllty 
tor   black   social   and  political  participation.      The   new 
constitution  Is  a  continuation  of  racially  divisive  pollclas 
designed   to  aalntaln   irtilte   dotalnatlon. 

Inpoverlshed  people   are   at  high   risk  of   suffering   from  a  wide 
variety  of  diseases,   prominent   among  i*ich   ace    Infectious 
diseases.     This   latter   point    la   tragically   Ironic    In   view  of   the 
tact  that   infectious  diseases  have   been   drastically  diminished    In 
technically  advanced   societies— and   South   Africa    is  after   all  a 
technically  advanced   society,   at   least    in  part.      In  Europe,   North 
Anerlca,    and  Japan,    Infectious   diseases  have   yielded   to  a 
constructive  combination  of  adequate   nutrition,   clean   water, 
efficient   aanitatlon,    immunizations,    antibiotics,    and   decrease   of 
ovec-crowdlng.      Altogether,    this  decline    In    infectious  diseases 
represents   the  greatest  health   progress  made    in  human  history. 

South  Africa  could  catch   up   In  health   with  other    technically 
advanced  countries    In   a  relatively   ahort   time--to   the   great 
benefit  of   Its  own  people   and   ita   future   as   a  nation.      There   are 
aany  useful    Interventions   tor   this  purpose   that   are   not   expensive. 
Indeed,    their   efficacy  has   been  demonstrated   scientifically  and    in 
large-scale  practice  In  many  countries  all  over  the  world,   some  of 
which   are   less   technically   advanced   and   less   affluent   than  South 
Africa.     The  conference  was   replete   with    the   data  necessary   for 
such    interventions,   and   illuniinatlng   steps   toward   a  coherent 
strategy. 


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-    12    - 
The   Inquiry   showed   that   a  great  many  South   Africans   still 
:   take   for   granted   their   ability   to  meet  basic   adaptive 
ne«ds;      food,   water,    aheltsr,   and  other    factors  essential    toe 
aucvival   and  human  dignity.     Why  are   there   still  widely  prevalent 
thceats   to   survival  lAen  modern   science   and   technology  have  made 
such  powerful  contributions   to  South  African   society?      And   lAat 
can  be  done   to  diminish   the  kind  of   vulnerability  that   leads   to 
desperation?      The   Inquiry  provides   some   answers   to   these  questions 
in   the   structure   and   function  of  Sooth   African   society. 

The  plight  of  the   poor   whites    in   the  Twenties   and  lliirties 
bad   to  be  contended  for    in   a  hostile  political  atmosphere,    in  many 
cespects   as   divisive   and  contentious   as  politics   today.      Indeed, 
the   slioilaribies  between  the   telnCorcing  nechanisins  of  poverty 
fifty  years   ago,    falling  largely  on   the   cural  Afrikaner,   and   those 
of   today,   falling   largely  on   the  black   community,   are   striking. 
But  consider   these  basic  differences   of   social  and  political 
condition:      whites  could  own  land   in  1934,   Africans  cannot,    by   and 
lacge,    in  1984;      whites  could  move   to  the  cities,   with   their 
families,   at   will,  .while   today  black  South   Africans   are   restricted 
by  law   frora   free  movement  or   the  opportunity   to  maintain  an   Intact 
family  lltet    and,   not   least  of   all,   considering   the   successful 
rise   of  Afrikaner   nationalism,   whites  had   the   right   to  express 
themselves  politically,   to   vote.      And,   whites  were   not  physically 
moved   from  place    to  place.    In    Implementation   of   rigid   segregation. 
Tliese   are   painful   facts,   and   they  cannot   be   avoided   in   any   serious 
effort   to   address  human   impoverishment   in  South  Africa. 


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-  13   - 

Let  m*  make    It  clear    that   the  Cacne?!*  Corpoiatlon    Is   not 
■picking  on"  South  Africa,  not  selecting  it  for  unique  prejudicial 
■ccutiny.     We  ace   auppottlng  work   in  our   own  country  and  alseHtiere 
that  alms   to    illuMinate   and  overcome  human    inpoverlstiaent. 
Through   the   Inquiry  we   are   (undamentally   trying   to  be  helpful   to 
all^  South   Africans,    just   as  our   predecessors   tried   to  be  helpful 
to  the  poor  lAiltes  a  half-century  ago.     to  do  so,  we  must  support 
honest   and  penetrating    inquiry,   letting    It  go  uherever    the 
evidence  takes   It.     We  must  be  true  to  out  heritage,  placing  great 
value   upon   democratic    institutions,   universal   education,   equal 
opportunity,  health   foe   all   the  people,    and  compassion   for  huean 
suffering.      He   recognize   that   these   values   ace   very  hard   to 
implement — anyiAere.      But   they  are   no   less   applicable   to  South 
Africa   than   to  any  other   nation. 

South   Africa   is    Important   for    several   reasons.      One    Is   its 
worldwide   symbolism  of  prejudice   and  othnocentcism,   end 
emotionally-charged  efforts   at  democratic   reforsi  and  conflict 
resolution.      South   Africa  carries   to   the  Nth   power   a  set  of    Issues 
that   resonate   with   similar    issues  elseiAere.      south   Africa    Is 
intrinsically   interesting   for   additional   reasons.      It   la  a  kind  of 
twilight  zone,   full  of  complicated  mixtures  and  paradoxesi     pact 
ancient  and  part  modecm   pact  democratic   and  part   totalltaclan) 
pact  black   and  part  tAiitei      natural   beauty  and   rich   resources 
contrasting   sharply  with   human   degradation.      Emotions  of   survival 
and  desperation   are   at  play  on   all   sides  of   the   aulti-fBceted 
conflict.      But   so   too    is   a  great  deal  of   ingenuity,   goodwill. 


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grace  under  pressure,   and  dedication   Eo  humane  values.    It   is 
Just  barely  passible   that  the  world  will   learn  a   lot   from  South 
Africa  in  the   next   few  decades  about  ways   of  dealing  with   the 
noBt  intense  human  predicaments. 

The  most  drastic  change   in  the   long  history  of  our  speciea 
occurred  only  about  two  centuries   ago  with  the  onset  of   the 
Industrial  revolution:      essentially   the   acceleration  of 
technical  advance   and   Its   application   to  human  problems  of 
adaptation.      As   it  happened,    tiiia   revolution  occurred  in  the 
northern  hemisphere — a   fact  which  was   to  have  profound  reper- 
cussions  over  the  ensuing   two  centuries,    some  of  which  are 
painfully   visible   in   South  Africa   today. 

In  short,   light-skinned  people   in  Europe   developed  powerful 
tools  before  dack-skinned  people  elsewhere.      These   tools  permitted 
an  explosive    increase    tn   the  production  of  worldly   goods   during 
the  past   two  centuries.      For   the   fiest   tine    in   our   long   and 
arduous  history  as  a  species,   we  could   achieve  considerable 
control  over   our   envitonnent,    far-reaching  protection   against  old 
vulnecablllties,   and  many  opportunities   Chat   never   existed   before. 

What  a  change  a  century  can  make!  Indeed,  human  initiative 
has  transformed  the  world  in  the  twentieth  century.  An  ordinary 
citizen  of  noet  technically  advanced  countries  has  opportunities 
and  protections  not  available  to  kings  in  earlier  centuries.  In 
recent  decades,  largely  (n  tlie  second  half  of  the  twentieth 
century,  science  has  been  institutionalized  on  a  vast  scale  for 
the   first   tine,   and   the  pace  of  advance    In  deep   knowledge  has 


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aocaletat«d  prBcIpltoualy— knowlega   of   thn    sttuctuce   o£  nattac    and 
of  lift,  of  the  natuE*  of  tho  univers*  and  ot  th«  human 
•nvlconmant,   nv«n  knowladge  of  oursAlvsa.     Thase  scientific 
advances  pcovlde   an  unprecedented  basis   for    technological 
innovation,    and   the  pace  of   such    innovation    la   now  the  nost   rapid 
In  all  of  history — e.g.,   in  computers,   telecoiwunlcatlons, 
biotechnology— and  also  weapons.     The  potential  benefits  of  Modern 
technology  for  human  well-being  ace  profound   in  every  sphecei      In 
food,   water,  health,   eonmunication,    transportation,    energy   and 
human  undaratandlng   In  oil   Its  variegated  splendor.     THis  could 
mean   the  virtual   elimination  of  human    inpoverlshment    in   the   next 
several  decades. 

But   technology  can  be   used    In  oany  ways.      It  can    increase 
human   suffering   as  well   as    relieve    it.      So   far,    technical    advances 
have   been   both   for    batter    and   for   wocs«.      Everyirtiare,    those  who 
have   technical  skills  and  advanced  technology  are  powerful.     They 
can.    If    thay  wiah,    turn   their   power   against   fellow  humans   who   aca 
weak,   vulnerable,   powerlaaa  or  parcelved  as  Mnaclng   to  them.     The 
temptation  to  use  power   in   this  way  has  been  alBoat   Irresistible. 
Such   behavior  could  be   readily  observed  alnrast  anywhere   in 
centuries  past — and   right   nowi 

Please   bear    in  mind   that   the  power   of  modern   technology 
evolved  first    in  Europe   among   llght-sklnned  people.      Prom   that 
time    to  the  present  Moment,    there  baa   been   a   tendency  for 
light-skinned  people  not  only   to  bvcone  wore   technically   advanced 
and   affluent,    but  also   to  depreciate,    exploit,   and  even  subjugate 


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their   dark-skinned   brethren.      This    In   my  view   Is   one  of   th«  moat 
serious  problems   in   Che   modern  world,   a   root  cause   of  human 
Impovet tshment ,   and   a  dilemma   that  has   reached   crisis  proportions 
In  South  Africa. 

The  human   species    is   rapidly   reaching   a  phase   of   its 
evolution   in  trtiich    its  prodigious  capacities   for    technical   skill 
and  social   organization  can   eliminate  human   impoverishment.      But 
to  do  so,    it  will  have   to  take   account   of    its  ovn 
nature — including  ubiquitous   tendencies   toward  prejudice, 
•thnocentrism,  and  violent  conflict. 

■Bie   world   is  now,   as   It  has   been   for    a  long    time,   awash    in   a 
sea  of  ethnocenttism,  prejudice  ana  violent  conflict.     Hhat  is  new 
Is   the   destructive   power   of  our   weaponry:      nuclear,   enhanced 
conventional,   chemical   and  biological.      Horeovet,   the   worldwide 
spread  of  technical  capability,   the  miniaturization  of  weapons, 
and  the  upsurge  of  fanatical  behavior  are  occuting  In  ways  that 
can   readily  provide   the   stuff  of  very  deadly  conflicts   In  every 
nook  and  cranny  of  the  eacth'.     To  be  blunt,  we  have  as  a  species  a 
rapidly  gcowing  capacity  to  make   life  everywhere   absolutely 
miserable   and  disastrous.      As    If   that  were   not  enough,   *two   nations 
already  have   the  capacity  to   totally  destroy   the   species,    to  make 
human   life  extinct. 

I   do  not   think  we  have   the   luxury   any  longer   to   indulge   our 
prejudices  and  ethnocentrlsms.     They  are  anachronisms  of  our 
ancient  past.      The   worldwide  historical   record   is   full  of  hateful 
and  destructive    indulgences  based  on  religious,    racial,   and   other 


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distinctions— holy  wars  of  on*  aoet  or  another.     I  know  th*t«  at* 
■touqh-i»Ind*d"  people  «ho  b«ltave   that   this    is   the  human  condition 
and  w*  nust  natce   the  Bost  of   it.      But  technology  has  passed   the> 
by,  >ad«  th«it:  position  unraalistic— If  not  today,  then  to»ottow. 

If  wa  cannot  Isatn  to  accomodate  aach  other 
respectfully— within   nations   and   across   nations— wa  will  destroy 
each  other   at   auch   a  rata   that  humanity  will   soon  have   little   to 
chariah  —  if    Indeed   there    is   any  humanity  left  on  earth. 

In   such   a  world.   South  Africa  has   special   significance.      It 
the  accomodation  of  diversity  can  occur   there,    it  can  occur 
anyiAere.      If   entrenched  hostilities  can   be   reconciled   there,   the 
world  will   notice.      If   the   structures  of    Impoverishment  can  be 
changed   there   now   as   they  were   a  half-century   ago,    this   time   to 
foster    development    for    a^l   people.    It   would    Indeed   be   cause    for 
rejoicing  everywhere.      Let   ua   fervently  iiope   that   the   Second 
Carnegie   Inquiry  will  provide  a  landmark  on'this  path. 

Senator  Proxmire.  I  might  incidentally  say  that  there's  a  roll 
call  on  the  floor  of  the  Senate  and  that's  why  some  of  the  Senators 
have  left  and  they  will  return  as  soon  £is  they  can.  We  will  stay  as 
long  as  we  can  but  we  must  not  miss  the  roll  call. 

SUIXIVAN  PRINCIPLES  HAVE  BEEN  HELPFUL 

Dr.  Hackney,  you  note  on  page  2  of  your  testimony  that  the  Sul- 
livan principles  have  helped  to  ameliorate  working  conditions  for 
blacks  employed  in  signatory  firms,  but  it  must  oe  remembered 
that  of  the  virtually  300  American  companies  which  do  business  in 
South  Africa  only  about  one-third  are  Sullivan  signatories  etnd 
these  employ  only  a  small  fraction  of  South  African  workers.  I  be- 
lieve Sullivan  signatories  employ  about  70,000  of  South  Africa's  22 
million  blacks. 

Now,  you  endorse  the  provisions  of  S.  635  that  does  not  make  the 
Sullivan  code  mandatory.  Do  you  believe  it  would  strengthen  or 
weaken  the  thrust  of  S.  635  by  including  provisions  making  the 
Sullivan  code  mandatory  on  United  States  corporations  operating 
in  South  Africa? 

Mr.  Hackney.  I,  personally,  think  that  would  be  a  good  step. 

SenatorPROXMiRE,  Even  though  it  would  affect  only  a  relatively 
tiny  proportion  of  the  blacks? 

Mr.  Hackney.  Yes;  I  don't  think  that  it  would  lead  to  a  rapid 
social  change  immediately.  In  fact,  one  of  the  reasons  I  think  other 
sorts  of  governmental  action  are  necessary  is  that  the  process  of 
change  through  the  slow  upgrading  of  black  jobs  in  American  com- 


oO-T2a    O— 85— 


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314 

panics  is  going  to  take  longer  than  the  South  African  black  popula- 
tion will  tolerate.  So,  other  things  are  needed. 

But  I  think  making  the  Sullivan  principles  mandatory  for  Ameri- 
can corporations  doing  business  abroad  would  be  a  moral  step  indi- 
cating that  those  are  principles  of  the  ethical  treatment  of  employ- 
ees and  the  improvement  of  conditions  to  employees  that  reedly 
accord  with  our  own  standards  of  justice  and  I  believe  it  would  be 
appropriate  from  that  point  of  view.  It  would  also  make  some 
modest  contribution  to  the  improvement  of  conditions  for  blacks  in 
South  Africa. 

Senator  Proxmire.  Senator  Hecht. 

Senator  Hecht.  Thank  you  very  much.  I'm  very  happy  to  have 
the  distinguished  people  here  today  from  top  American  universi- 
ties. Of  course,  that  is  Eastern  universities.  I  am  not  comparing 
them  to  Western  universities,  you  understand. 

You  say  you  only  speak  for  yourselves,  the  three  of  you,  but  actu- 
ally when  a  president  of  a  university  Qr  top  leader  of  a  university 
speaks  out,  it's  printed  in  the  school  newspapers  and  college  news- 
papers, so  it  does  have  some  impact. 

I  want  to  remind  you  of  a  little  bit  of  history.  When  the  universi- 
ties started  rebelling  in  Cuba  in  the  1950's  against  Batista,  we 
ended  up  with  Castro,  In  Vietnam  they  went  against  Diem,  the 
universities  first,  and  we  ended  up  with  a  war  in  Vietnam  with 
over  50,000  deaths.  The  university  people  spoke  agfiinst  the  Shah  of 
Iran  and  how  terrible  it  was  and  we  ended  up  with  Khomeini. 

We're  advocating  economic  sanctions.  Governments  fall  on  eco- 
nomic sanctions.  Lyndon  said  there  are  two  types  of  war,  economic 
or  shooting.  Let's  just  say  that  history  continues  in  this  scenario 
£md  we  end  up  in  a  war.  What  would  you  think  about  that — advo- 
cating economic  sanctions  and  then  having  some  of  your  students 
killed — have  you  thought  about  that,  Mr.  Hackney? 

Mr.  Hackney.  Yes. 

Senator  Hecht.  Say  in  case  the  Government  would  fall  we  would 
end  up  with  a  hostile  Government  and  we  might  have  to  send 
American  boys  down  there.  Have  you  thought  about  that? 

Mr.  Hackney.  I  think  all  war  is  a  terrible  thing,  sometimes  nec- 
essary in  the  exercise  of  foreign  policy.  I  don't  think  you're  posing 
the  choices  very  correctly  though,  because  the  change  is  going  to 
come  to  South  Africa.  The  question  is  under  what  conditions  and 
what  will  be  the  result  and  what  will  be  the  attitude  of  that  Gov- 
ernment toward  the  United  States.  1  think  inducing,  through 
modest  measures,  social  change  that  will  lead  to  a  Government 
with  which  we  can  have  a  mutually  good  relationship  is  a  far  pref- 
erable course  than  to  do  nothing  and  to  watch  a  revolution  occur, 
and  the  Government  will  inevitably  end  up  in  the  hands  of  hostile 
forces. 

Senator  Hecht.  Well,  when  governments  fall  how  can  we  know 
in  advance  what  we're  going  to  end  up  with? 

Mr.  Hackney.  Senator,  I  think  if  nothing  is  done  in  South  Africa 
we  are  likely  to  see  a  violent  change  and  the  result  will  be  a  coun- 
try in  the  hands  of  people  who  will  be  hostile  to  the  United  States 
because  we  have  sat  back  and  watched  it  happen. 

Senator  Hecht.  Mr.  Bok,  have  you  thought  about  the  eventuality 
of  a  conflict  if  the  Government  would  fall? 


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Mr.  BoK.  Yes;  first  of  all,  I  would  like  to  say,  with  all  humility, 
that  the  fact  that  some  people  at  universities  may  have  taken  some 
positions  in  the  past  I  hope  does  not  necessarily  implicate  us.  We 
didn't  necessarily  take  those  positions  and  we  are  speaking  in  our 
private  capacity  on  this  question. 

With  respect  to  the  point  that  you  have  posed,  I  think  we  find 
ourselves  in  the  difficult  position  that  anything  that  we  do  with  re- 
spect to  South  Africa  may  contribute  in  some  way  to  bringing 
about  violence  and  therefore  we  must  try  to  select  that  course  of 
action,  however  difficult  that  may  be,  that  is  most  likely  to  avoid 
violence. 

In  my  view,  if  one  looks  at  the  kind  of  sanctions  we  are  propos- 
ing here,  it  seems  to  me  most  unlikely  that  the  denial  of  bank 
loans  or  the  prohibition  on  the  sale  of  krugerrands  is  going  to  bring 
about  violence. 

What  seems  to  be  much  more  likely  is  that  the  continued  unwill- 
ingness of  the  South  African  Government  to  make  significant 
changes  in  the  regime  is  going  to  produce  a  pent-up  frustration 
that  will  erupt  in  the  form  of  violence.  Therefore,  by  trying  to  do 
something  which  will  add  the  moral  pressure  of  this  country  to 
bring  about  those  constructive  changes  is  one  that  has  the  greatest 
prasibility  of  avoiding  violence  and  the  least  possibility  of  contrib- 
uting to  it. 

Senator  Proxmire.  Senator  Hecht,  we  have  about  4  minutes 
before  the  end  of  the  vote.  We'd  better  run.  The  committee  will 
stand  in  recess  until  Chairman  Heinz  returns. 

[ReceBS.] 

Senator  Heinz.  Ladies  and  gentlemen,  the  hearing  will  recon- 
vene. 

I  want  to  thank  Senator  Proxmire  for  continuing  in  my  absence. 
Immediately  before  the  recess  Senator  Hecht  was  engaged  in  ques- 
tioning. He  will  be  back  in  about  4  or  5  minutes.  In  order  to  make 
the  most  effective  use  of  time  what  I'd  like  to  do,  with  the  concur- 
rence of  Senator  Riegle,  is  to  aak  Senator  Ri^le  if  he  would  mind 
proceeding  with  his  questions  but  on  the  understanding  that  Sena- 
tor Hecht  might  interrupt  him  and  resume  his  questioning  and 
then  we  would  return  to  Senator  Riegle.  Would  that  be  amenable? 

Senator  Riegle.  That  would  be  fine. 

Senator  Heinz.  Would  you  then  proceed? 

Senator  Riegle.  First  of  all,  I  appreciate  the  appearance  of  all 
four  witnesses  today  and  I  especially  appreciate  your  statement 
and  testimony,  President  Bok,  because  I  think  it  frames  the  issue 
just  the  way  it  needs  to  be  framed.  I  also  appreciate  hearing  the 
views  Dr.  Hackney,  as  well  as  those  expressed  by  other  members  of 
the  panel. 

I  am  a  cosponsor  of  this  legislation,  as  you  may  know,  and  feel 
very  strongly  that  we've  got  to  take  a  step.  I'm  troubled,  though,  by 
the  contradiction  with  respect  to  the  enormous  emphasis  our  Gov- 
ernment is  giving  to  Nicaragua  and  Central  America.  It  is  an  im- 
portant place,  but  there  is  a  tremendous  preoccupation  with  that 
part  of  the  world,  and  vast  sums  of  money  are  being  spent  on  all 
kinds  of  military  initiatives,  some  known  and  some  unknown.  It 
seems  to  me,  that  in  the  case  of  South  Africa,  we  face  a  question  of 


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different  form  but  of  equal  weight  and  we  are  not  doing  much 
about  it. 

LACK  OF  URGENCY 

The  President  doesn't  seem  to  have  much  of  a  sense  of  urgency 
about  it,  I  don't  sense  within  the  State  Department  and  the  admin- 
istrative machinery  right  down  through  the  Ambassador  in  that 
country  much  of  a  keen  sense  of  urgency  about  trying  to  move 
things  at  a  more  rapid  rate.  And  I  just  think  it's  wrong  and  I  think 
we  are  very  late  as  a  nation  in  responding. 

It  is  difficult  to  determine  what  is  precisely  the  best  l^islative 
vehicle  or  vehicles  to  use  here,  but  it  seems  to  me  our  choice  is  to 
do  nothing  or  to  do  very  little,  and  I  don't  think  that  is  an  accepta- 
ble alternative.  I  think  that  lives  are  being  taken  and  otherwise 
ruined  by  the  policies  there  and  I  think  we  have  a  real  obligation 
to  find  some  more  effective  way  to  try  to  change  things  for  the 
better.  This  package  of  legislative  initiatives  comes  as  close  as  I  see 
us  able  to  come  at  this  particular  time.  I  believe  it  is  a  proposal 
which  tries  to  balance  a  lot  of  different  things  in  a  sensible  way. 

But  I  feel  that  the  time  has  come  for  the  Congress  to  provide 
some  leadership  that's  missing  from  our  Government.  Congress 
must  help  focus  the  administration's  attention  on  this  issue,  to  see 
if  we  can  t  start  to  substantially  have  a  bearing  on  developments  in 
South  Africa,  and  to  try  to  move  them  in  a  more  constructive  way. 

Even  this  morning's  news  concerning  violations  of  pledges  and 
understandings  with  respect  to  the  use  of  South  African  militaiy 
forces  in  areas  where  they  ought  not  to  be,  I  think  shows  that  it  s 
very  difficult  to  deal  even  in  an  open  and  direct  way  with  that  Gov- 
ernment, particularly  if  it  fails  to  honor  the  limited  understand- 
ings and  agreements  which  they  are  willing  to  be  part  of. 

So,  it  seems  to  me  that  the  time  has  come  for  us  to  squeeze  and 
to  squeeze  hard,  and  not  just  in  a  few  isolated  spots  around  the 
globe  where  the  geopolitics  may  be  a  little  different,  but  especially 
in  South  Africa,  where  one  of  the  worst  outrages  on  the  face  of  the 
Earth  that  we  know  about  is  taking  place— it's  taking  place  literal- 
ly this  hour,  last  hour,  next  hour,  tomorrow,  and  next  week — and 
lives  and  opportunities  are  being  just  twisted  hopelessly  out  of 
shape  while  we,  in  a  sense,  conduct  business  as  usual  with  respect 
to  the  overall  thrust  of  American  Government  policy.  Something 
more  has  to  be  done. 

I  think  S.  635  is  the  right  approach  for  us  to  take  at  this  time 
and  I  hope  that  we  will  be  able  to  pass  it.  I  just  want  to  end  by 
commending  the  chairman  for  conducting  these  hearings,  for  allow- 
ing this  kind  of  a  debate  to  go  forward,  and  for  building  a  hearing 
record  and  a  record  of  testimony  from  which  the  Senate  as  a  whole 
can  draw  its  Judgments  as  to  the  decisions  that  it  wants  to  make. 

That's  all  I  have  to  say,  Mr.  Chairman,  at  this  particular  point. 
I'd  like,  at  some  point,  to  get  on  to  our  other  witnesses  because  I'm 
concerned  that  we're  going  to  be  interrupted  by  subsequent  votes.  I 
IHurticularly  want  to  hear  from  Ambassador  McHenry. 

Senator  Heinz.  Very  well.  I  know  Senator  Hecht  will  be  return- 
ing in  a  moment  or  two.  I  do  have  one  other  question  I  would  like 
to  pose  to  our  panel. 


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Mr.  Schotland,  you  spoke  very  articulately.  I  guess  I  can  reserve 
my  question  and  I  will  submit  it  to  you  in  writing. 
[Response  to  written  question  of  Senator  Heinz  follows:] 


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OUBSTIOH  FOR  MR. 
SENATOR  HEINZ 
Page  1 

SCHOTLANO 

1.   You 

have 

endo 

rsed  1 

:he  S 

lulli- 

you 
has 

have 
been 

also 

argu 

endoi 
ed  th; 

rsed 
.t  S. 

635, 

Afllca  to  cut 
capital.   HOW 
Sullivan  Prin. 

woulc 
ciplef 

■  Id  1 

!  thi 
i?   I 

■  ead  ( 
n  yox 

contradiction 
welEace  aspec 
between  no  nei 

between  n 
ts  of  the 

Sulli 

/an  Principles.   At  the  same  time, 
!w  investment  in  South  Africa.   H 
,  with  its  provision  prohibiting 
:oinpanies  operating  in  South 

;ect  efforts  to  comply  with  the 
jr  opinion,  is  there  an  inherent 
1  investment  and  the  social 
iwan  Principles,  or,  indeed, 
and  the  ability  o£  U.S.  companies 

to  remain  in  South  Africa  and  stay  competitive  as  their  plant 

and  equipment  become  obsolete? 


The  Rockefeller  Commission  report  ("Time  Running  Out,"  1981) 
also  endorsed  both  the  Sullivan  Principles  and  no  new  investment. 
Indeed,  their  definition  of  new  investment  is  more  restrictive 
than  the  pussy-cat  provision  of  S.  635. 

I  believe  these  positions  not  only  are  consistent,  but  are 
Che  most  responsible,  effective  and  moral  positions.   Firms 
already  in  South  Africa  should  do  all  they  reasonably  can  to 
improve  the  situation  there.   No  firms  should  make  significant 
new  investment  there--as  S,  635  allows--lest  South  Africans  inter 
that  we  are  not  serious.   This  is  not  a  situation  in  which 
boycott  is  constructive,  nor  one  in  which  we  can  expand  business 
as  we  might  usually. 


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319 

Senator  Heinz.  Senator  Hecht,  we  have  been  careFuUy  guarding 
your  every  right  and  prer{^ative  so  that  you  may  continue. 

Senator  Hecht.  I  thank  the  distinguished  chairman. 

Mr.  Bok,  I  kept  your  thoughts  in  mind  as  I  was  going  over  to 
vote.  You  said,  basically,  these  are  not  particulary  harsh  sanctions, 
just  sanctions,  but  you  understand  the  business  community.  Busi- 
ness does  not  go  where  it's  not  a  good  economic  climate.  Business 
does  not  like  uncertainty.  So,  only  minimal  sanctions  create  eco- 
nomic unrest.  Do  you  agree  with  that? 

Mr.  Bok.  Do  I  agree  with  the  statement  that  even  minimal  sanc- 
tions cause  economic  unrest? 

Senator  Hecht.  They  send  out  a  signal  to  the  business  communi- 
ty and  why  would  business  go  basically  where  they  are  not  wanted 
and  do  not  know  what's  going  to  happen  tomorrow?  They  want  a 
good  business  climate. 

Mr.. Bok.  Well,  I  think  from  that  standpoint,  anything  produced 
by  this  bill  is  dwarfed  by  the  enormous  uncertainties  anout  the 
future  of  South  Africa  that  are  inherent  in  the  political  situation 
in  that  country  itself.  Certainly,  the  events  of  the  last  6  months 
create  all  kinds  of  uncertainties  for  American  business  and  I  think 
they  dwarf  any  uncertainties  that  are  imposed  by  the  limited  sanc- 
tions in  this  legislation. 

CHANGES  ARE  OCCURRING 

Senator  Hecht.  But  changes  are  occurring  in  South  Africa. 
When  I  was  down  there  in  December  I  met  with  a  distinguished 
rabbi  who's  been  there  37  years.  He  said: 

I've  seen  more  changes  in  the  last  5  years  than  I  ever  thought  my  grandchildren 

He  said, 

If  you  want  to  help  the  black  people  of  South  Africa,  send  down  more  American 
investment;  don't  limit  it;  because  only  when  Americans  started  coming  down  they 
started  getting  equal  pay  for  equal  work,  and  equal  job  opportunities. 

So,  the  people  of  South  Africa,  not  all  of  them,  share  your  view, 

Mr.  BoK.  Well,  there  certainly  have  been  changes  in  the  last  5 
years  in  South  Africa  and  some  of  them  I  think  have  moved  in  the 
right  direction.  But  I  think  changes  like  removing  the  ban  on 
mixed  marriage  or  integration  in  sport — some  of  those  were 
brought  about  because  of  pressure.  In  fact,  the  white  South  Afri- 
cans with  whom  I  talked  are  quite  unanimous  in  indicating  that 
without  some  pressure  even  those  changes  wouldn't  have  occurred. 

There  are  other  things  that  are  changing  in  South  Africa  that  we 
also  have  to  take  into  consideration  I  believe  in  making  an  overall 
appraisal  of  what  is  going  on  there. 

We  have  more  pEiss  law  violations  in  the  last  few  years  by  a 
factor  of  two  than  we  had  before  for  blacks  who  are  not  obeying 
the  influx  control  laws  that  keep  them  from  residing  with  their 
families.  We  have  more  people  dying  of  violence.  We  have  more 
people  in  South  Africa  arrested  or  banned  because  of  their  political 
views  than  we  have  had  in  past  years.  We  have  a  substantial  in- 
crease in  the  proportion  of  families  that  live  below  the  poverty 
line.  We  have  many  more  people  forcefully  displaced  from  their 
homes  and  sent  to  the  homelands  than  we  did  5  years  ago. 


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So  I  think  the  picture  is  mixed  and  I  don't  see  fundamental  steps 
taken  by  the  Government  yet  that  have  really  made  large  dents  on 
the  basic  system  of  apartheid  that  takes  away  political  power  from 
blacks  and  reduces  them  to  a  position  far  inferior  to  that  of  the  mi- 
nority of  whites. 

Senator  Hecht.  Well,  the  facts  are  not  exactly  that  way  because 
the  blacks  still  have  the  best  standard  of  living  in  South  Africa 
compared  to  any  other  nation  in  Africa.  I  adso  want  to  state  to  all 
of  you,  in  no  way  do  I  support  the  apartheid  policy  absolutely,  but  I 
wonder  why  are  we  honing  in — what  about  Afghanistan  and  as 
somebody  else  said,  Nicaragua?  Why  are  all  these  sanctions  going 
against  South  Africa  right  now? 

Mr.  BoK.  Well,  to  say  that  we  can't  do  anything  in  South  Africa 
without  examining  the  nature  of  our  policy  in  all  other  countries,  I 
suppose  inevitably  forces  us  to  do  nothing  because  we  will  probably 
never  achieve  perfect  consistency  in  our  behavior  toward  all  coun- 
tries. 

I  do  think  the  situation  in  South  Africa  is  a  particularly  flagrant 
case  in  which  people  are  being  exploited  in  ways  directly  contrary 
to  our  national  ideals,  and  we  have  certainly  not  hesitated  in  a 
number  of  other  such  instances  to  use  economic  sanctions  and 
other  means  to  express  the  policy  interests  of  this  country. 

Senator  Hecht.  Name  a  few. 

Mr.  BoK.  Well,  we  have  just  exerted  an  economic  boycott  against 
Nicaragua.  That's  far  more  sweeping  than  anything 

Senator  Hecht.  Nicaragua's  leader  though,  is  a  man  who  is  sit- 
ting in  Russia  with  the  Communist  leaders,  a  devout  Communist. 
Give  me  another  country. 

Mr.  BoK.  Weil,  we  have  imposed  economic  sanctions  with  respect 
to  Russia  in  the  past. 

Senator  Hecht.  We're  still  trading  with  Russia. 

Mr,  BoK.  Well,  I  can't — if  you're  asking  me  to  defend  the  consist- 
ency of  American  foreign  policy  in  its  treatment  of  all  other  coun- 
tries, I  must  humbly  disqualify  myself.  That's  not  why  I  was  asked 
to  come  and  I'm  really  not  qualified  to  do  that.  But  I  don't  feel  the 
fact  that  we  may  not  be  taking  measures  in  other  countries  that 
you  think  are  wise  ought  to  prevent  us  from  adopting  policies  with 
respect  to  South  Africa  that  we  feel  are  warranted. 

Senator  Hecht.  Let  Mr.  Schotland  respond. 

Mr.  Schotland.  Thank  you,  Senator,  I  think  perhaps  at  least  as 
I  see  it  the  best  answer  to  what  you're  driving  at  comes  from  put- 
ting together  something  you  said  and  something  that  Senator 
Riegle  said.  You  said  not  everybody  in  South  Africa  seems  to  have 
the  same  views  and  Senator  Riegle  emphasized  how  important  it  is 
that  we  make  clear  where  America  is  vis-a-vis  the  direction  that's 
going  to  be  occurring  in  South  Africa.  I  think  it's  important  that 
we  take  carefully  tailored  steps  to  strengthen  the  forces  for  peace- 
ful change  in  South  Africa. 

Certainly  South  Africa  is  an  enormously  important  country  and 
I'm  not  sure  it  isn't  much  more  important  over  the  long  haul  than 
let's  say  Nicaragua.  I  think  we  have  to  make  very  clear  that  we 
don't  believe  in  business  as  usual  with  respect  to  South  Africa. 
We've  also  got  to  be  very  careful,  as  Secretary  Shultz  said,  about 
not  throwing  matches  on  the  fire.  And  that's  why  I  think  carefully 


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tailored  steps  like  knigerrands,  like  military  and  police  equipment, 
limitations  like  new  bank  loans,  like  strengthening  the  educational 
efforts  that  many  universities  are  conducting  to  bring  black  South 
Africans  here — I  think  these  kind  of  steps  hopefully  will  make 
clear  to  whoever  is  going  to  be  in  charge  in  South  Africa  what  it  is 
that  America  stands  for. 

Senator  Hecht.  Can  you  see  the  other  side  of  the  coin  of  an  eco- 
nomic collapse  though? 

Mr,  ScHOTLAND.  I  don't  know  what  will  happen  down  there  what- 
ever we  do.  I  do  know  that  we  ought  to  make  clear  what  it  is  we 
hope  will  happen. 

Mr.  D'Agostino.  Let  me  just  make  a  quick  comment  on  the  Sulli- 
van principles.  It  was  mentioned  before.  The  Sullivan  principles 
have  influence  far  beyond  the  numbers  of  American  companies 
that  signed  them.  In  fact,  the  European  Common  Market  has 
passed  a  code  of  conduct  for  companies  doing  business  in  South 
Africa  modeled  partially  after  the  Sullivan  principles.  So  they  have 
tremendous  spillover  effect  both  in  the  indigenous  country  and  in 
the  way  other  governments  have  treated  South  African  investment. 

Senator  Hecht.  Thank  you,  Mr.  Chairman. 

Senator  Riegi^.  Mr.  Chairman,  when  I  questioned  Senator  Hecht 
earlier  I  did  not  use  all  my  time.  I  wonder  if  I  might  take  1  minute 
to  pose  a  question  to  Senator  Hecht  on  something  that  he  just  said. 

Senator  Heinz.  I  don't  have  any  problem  with  that,  if  Senator 
Sarbanes  doesn't.  He's  next. 

Senator  Riegle.  Paul,  would  you  be  willing  to  yield  for  a 
moment? 

Senator  Sarbanes.  Sure.  I'm  looking  forward  to  the  question. 

Senator  Riegle.  I  appreciate  that.  I  want  to  say  to  my  colleague 
from  Nevada  that  I  was  struck  by  his  question  when  he  referred  to 
the  standard  of  living  of  black  people — the  reference  I  think  was  to 
the  standard  of  living  of  black  citizens  of  South  Africa  as  being 
higher  than  that  of  other  citizens  in  other  areas  of  Africa  outside 
of  South  Africa. 

Senator  Hecht.  That  is  correct. 

Senator  Riegle.  I'm  wondering  how  we  evaluate  standard  of 
living  without  taking  into  specific  account  civil  rights  and  human 
rights  within  the  society.  It  seems  to  me  that  standard  of  living  is 
not  just  dollars  per  hour,  or  wfiges  per  week,  or  what  kind  of  shel- 
ter you're  living  in,  but  it  goes  much  deeper  than  that.  The  reason 
our  country  exists  is  that  we  find  very  precious  the  issues  of  free- 
dom and  how  a  person  stands  within  society. 

CONOrnONS  are  terrible  for  blacks  in  south  AFRICA 

I  was  struck  by  the  Senator's  comment,  because  my  immediate 
reaction  was  that  the  standard  of  living  in  the  human  rights  sense 
and  the  civil  rights  sense  for  black  people  in  South  Africa  is  really 
quite  terrible.  I  was  having  a  hard  time  reaching  a  value  judgment 
on  some  other  definition  of  standard  of  living  which  leads  one  to 
conclude  that  the  blacks  in  South  Africa  are  better  off  than  other 
blacks  elsewhere  in  Africa.  That's  what  I'm  really  wondering 
about. 


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Senator  Hecht.  Thank  you  for  asking  the  question.  You  made 
my  day.  Let's  talk  about  Ethiopia.  Let's  talk  about  Angola  with 
their  30,000  Russian  or  Cuban  troops  down  there.  Let's  talk  about 
Mozambique  with  the  full  Communist  form  of  government.  Let's 
talk  about  Zimbabwe  which  is  hanging  on  by  its  fingertips  only  be- 
cause of  South  Africa  where  one  person  in  Zimbabwe  will  probably 
feed  25  mouths  because  we  have  American  companies  in  Zimbabwe 
that  are  still  staying  there  and  without  them  the  country  economi- 
cally would  go  the  other  way. 

I  know  of  no  country  where  the  blacks  are  better  "off  in  Africa 
than  in  South  Africa. 

Senator  Heinz.  Senator  Sarbanes. 

Senator  Sarbanes.  It's  an  absolute  misnomer  to  refer  to  South 
African  blacks  as  citizens.  One  of  the  essential  wrongs  perpetrated 
by  grand  apartheid  is  that  it  denies  citizenship  to  the  blacks  of 
South  Africa.  They  are  not  citizens.  That's  one  of  the  things  that's 
so  abhorrent  about  the  apartheid  system. 

So  I  really  take  issue  with  those  of  my  colleagues,  or  others,  who 
call  South  African  blacks  South  African  citizens.  One  of  the  great 
indignities  of  apartheid  is  it  denies  to  them  citizenship  status. 

Second,  I  gather  while  I  was  out  that  the  Carnegie  inquiry  study 
by  David  Hamberg  was  put  in  the  record,  is  that  correct? 

Mr.  BoK.  That's  correct,  Senator. 

Senator  Sarbanes.  In  view  of  the  discussion  that's  just  been  held 
I  would  simply  like  to  quote  from  that  very  quickly. 

The  inquiry  reports  that  there  has  been  a  great  increase  in  pov- 
erty in  South  Africa  over  the  past  20  years,  largely  as  a  result  of 
the  accelerated  implementation  of  grand  apartheid  wherein  blacks 
are  deprived  of  their  South  African  citizenship  and  deported  to  the 
reserves  set  aside  for  their  particular  ethnic  affiliation.  These  re- 
serves or  homelands  have  become  dumping  grounds  for  economical- 
ly redundant  people.  One  paper  referred  to  these  people  as  the  dis- 
carded and  dispatched. 

NUMBER  OF  DESTITUTE 

According  to  the  inquiry  report,  the  number  of  people  made  des- 
titute by  landlessness  and  unemployment  has  risen  from  250,000  in 
1960  to  1,430,000  in  1980.  The  number  living  below  the  poverty  line 
but  having  some  income  has  reportedly  increased  from  4.9  to  8.9 
million,  about  one-half  of  the  population  of  blacks  in  South  Africa. 
Now,  11  million  blacks  comprising  37  percent  of  South  Africa's  pop- 
ulation are  being  crowded  into  the  10  officially  autonomous  home- 
lands that  make  up  only  13  percent  of  South  Africa's  land  area. 
There  is  insufiicient  arable  land  or  infrastructure  to  yield  an  ade- 
quate income  for  the  families  living  there.  Traditional  subsistence 
agriculture  is  collapsing  with  the  overcrowding. 

The  inquiry  study  of  the  migrant  labor  system  reveals  its  devas- 
tating impact  on  families.  One-quarter  of  black  women  in  South 
Africa  are  separated  from  their  husbands  because  of  influx  control 
regulations  and  the  pass  laws  that  regulate  the  movements  of 
workers.  Many  children  are  growing  up  in  homeland  areas  barely 
knowing  their  migrant  laborer  fathers  who  visit  home  only  once  a 


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year.  Adverse  child  development  and  high  crime  rates  are  part  of 

this  picture. 
If  we  are  going  to  talk  a  bit  about  the  morality  or  immorality  of 

disinvestment,  we  ought  to  talk  at  greater  length  it  seems  to  me 

about  the  mopEility  or  the  immorality  of  the  apartheid  system. 
Mr.  D'Agostino,  I'd  like  to  go  back  to  your  statement  on  page  6: 
S.  635  would  make  South  African  internal  policies  a  question  of  debate  in  the 

United  States  Congress.  This  is  a  monumental  insult  to  an  ally  or  to  any  country 

whether  allied  or  not. 

Am  I  to  draw  from  that  that  the  internal  policies  of  any  other 
country  are  not  a  legitimate  subject  for  debate  in  the  U.S.  Con- 
gress? 

Mr.  D'Agostino.  No;  I  think  I  answered  that  earlier.  The  import 
of  all  of  what  I've  said  is  the  problem  is  not  debating  the  internal 
policies  and  saying  that  they  are  wrong.  This  bill's  problem  is  that 
it  implicitly  gives  the  U.S.  Congress  supervisory  authority  over  the 
internal  policy  of  South  Africa.  Every  time  the  President  says  that 
things  are  getting  a  little  better  and  they've  done  something  right, 
it  goes  for  debate  in  the  U.S.  Congress. 

Senator  Sarbanes.  What  about  the  emigration  of  Jews  from 
Communist  countries?  Is  that  a  legitimate  subject  of  debate  in  the 
U.S.  Congress? 

Mr.  D  Agostino.  I  think  apartheid  is  a  legitimate  subject  of 
debate  in  the  U.S.  Congress,  t(X).  That's  not  what  I  said.  I  said  this 
bill  makes  it  seem  that  the  U.S.  Congress  is  having  continuing  su- 
pervisory authority  over  the  internal  affairs  of  the  South  African 
Government  and  we're  inviting  them  to  dig  in  their  heels. 

Senator  Sarbanes.  That's  not  what  your  statement  says.  That's 
why  I  read  your  statement  before  I  put  the  question. 

Mr.  D'Agostino.  I  think  I've  addressed  it  in  several  places.  I'm 
sorry  it  weisn't  clear  in  just  that  one  place  but  that  was  the  import 
of  what  I  wanted  to  say. 

Senator  Sarbanes.  Do  you  think  the  immorality  of  the  internal 
policies  of  some  other  government  can  be  sufficiently  abhorrent 
that  it  would  require  us  to  take  meeisures  to  distance  ourselves 
from  that  government — to  seek  to  bring  about  a  change  in  it;  or  if 
we  couldn't  achieve  that,  to  break  the  relationship? 

Mr.  D'Agostino.  I  think  for  the  first  part  of  your  question,  the 
answer  is  yes.  In  terms  of  breaking  the  relationship,  I  think  then  it 
goes  to  the  lesser  of  evils.  For  instance,  we  allied  ourselves  to  the 
Soviet  Union  during  World  War  II  to  fight  a  more  immediate  evil. 
And  the  answer  is  that  sometimes  overall  U.S.  policy  and  interests 
must  prevail  over  something  we  don't  like  and  that  s  a  question  of 
judgment.  The  answer  is,  we  should  distance  ourselves  from  apart- 
heid. I  haven't  suggested  anything  different  in  my  paper.  I  suggest 
a  different  way  of  approaching  it  perhaps,  and  I'm  more  supportive 
of  the  Reagan  administration's  constructive  engagement. 

Senator  Sarbanes.  Let  me  put  to  the  panel  a  couple  of  questions 
which  1  think  could  be  answered  very  quickly. 

First  of  all,  do  you  agree  that  American  policy  toward  South 
Africa  is  being  perceived  as  indulging  the  apartheid  regime? 

Mr.  Hackney.  I  do,  yes. 

Mr.  BoK.  That's  my  impression. 


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324 

Mr.  ScHOTLAND.  I  would  like  to  see  this  bill  amended  to  make  it 
more  clear  that  that  is  not  the  situation. 

Senator  Sarbanes.  But  currently  do  you  think  there's  a  percep- 
tion that  our  policy  toward  South  Africa— current  policy  toward 
South  Africa— is  indulging  the  apartheid  regime? 

Mr,  ScHOTLAND.  I  think  whether  there  is  or  isn't,  there's  too 
much  possibility  of  such  perception. 

Mr.  D'Agostino.  Yes;  I  think  there  is  that  perception. 

Senator  Sarbanes.  Now,  if  there  is  such  a  perception,  would  you 
see  that  as  being  harmful  to  American  interests? 

Mr.  ScHOTLAND.  Clearly. 

Mr.  BoK.  I  do. 

Mr.  Hackney.  Yes. 

Mr.  D'Agostino.  Long-term  interests. 

Senator  Sarbanes.  Now,  we're  agreed  on  that.  There  is  a  percep- 
tion of  indulging  the  regime  and  such  perception  is  harmful  to 
American  interests. 

Now,  what  do  we  do  to  change  the  perception?  Mr.  D'Agostino,  I 
take  you  in  say  effect,  well,  don't  do  2uiything,  the  policy  is  sort  of 
all  right  as  it  is;  just  leave  it.  Mr.  Hackney  and  Mr.  Bok  say  S.  635 
would  send  an  important  message  in  changing  that  perception  and 
making  it  clearer  where  we  are.  I'm  not  quite  sure,  but  I  think  Mr. 
Schotland  is  saying  he  wants  to  make  S.  635  even  stronger:  it's  a 
pussycat  and  he  wants  to  make  it  into  if  not  a  lion  at  least  a  leop- 
ard. Is  that  correct;  or  am  I  missing  something?  I'm  not  quite  sure 
whether  you're  coming  at  this  bill  saying  that  it  ought  to  be  tough- 
er and  then  you  would  be  for  it,  or  whether  you're  coming  at  it  and 
saying,  well,  it's  really  not  so  tough  and  therefore  I'm  not  really  for 
the  bill. 

COULD  GIVE  WRONG  IMPRESSION 

Mr.  Schotland.  I  think  you're  right,  I  think  there's  damage  if  it 
is  perceived  by  those  who  are  in  charge  in  South  Africa  as  being 
showboating  at  home  and  not  really  meaning  business  about  what 
we  do  in  South  Africa.  I  think  that  would  do  more  harm  than  good. 

I  think  the  krugerrand  provision,  bank  loans  provisions  are  real 
provisions  and  would  be  constructive.  I  think  there  are  other  provi- 
sions such  as  selective  divestment,  such  as  military  policy,  nuclear- 
related  sales,  such  as  strengthening  our  participation  in  education 
which  have  got  to  come  along.  I  think  we  have  a  real  danger  be- 
tween their  seeing  us  as  just  showboating  and  our  doing  something 
that  helps  the  people  down  there  who  want  to  take  a  forward 
move. 

Senator  Sarbanes.  Which  of  the  provisions  of  S.  635  are,  in  your 
view,  showboating? 

Mr.  Schotland.  As  President  Bok  and  I  indicated  earlier,  we're 
troubled  about  the  bill's  unclarity — I  now  understand,  thanks  to 
Senator  Proxmire — as  to  whether  all  American  bank  loans  are 
barred  or  only  American  bank  loans  as  to  the  South  African  Gov- 
ernment. 

Senator  Sarbanes.  Well,  I  got  my  training  at  President  Bok's  in- 
stitution, not  like  Senator  Proxmire  in  the  business  school  but  in 
the  law  school,  and  I  thought  Senator  Proxmire  as  a  graduate  of 


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the  business  school  did  a  pretty  good  job  in  asking  two  fairly  good 
lawyers  at  the  witness  table. 

Mr.  BoK.  He  does  have  a  graduate  of  the  Harvard  Law  School  on 
his  staff.  [Laughter.] 

Mr.  D'Agostino.  Senator,  I  just  want  to  correct  the  record.  I 
have  not  proposed  doing  nothing. 

Senator  Sarbanes.  Well,  you  propose  the  Sullivan  principles. 

Mr.  D'Agostino.  Sullivan  principles  among  other  things.  I  also 
propose  that  a  gesture  such  as  a  ban  on  direct  loans  to  the  Govern- 
ment would  make  it  plain  that  we're  serious,  but  anything  that 
would  reduce  American  involvement  in  the  South  African  economy 
I  believe  would  be  counterproductive. 

Senator  Sarbanes.  Well,  we  may  reach  the  point  where  a  judg- 
ment has  to  be  made  whether  we  are  involving  ourselves  in  an  im- 
moral system  whose  immorality  is  so  sweeping  that  we  simply 
can't  continue  to  do  that  in  good  conscience,  or  whether  we  contin- 
ue to  be  involved  in  an  efTort  to  bring  about  constructive  change.  I 
think  S.  635  is  clearly  in  the  latter  category  and  I  am  struck  in  my 
discussions  with  people  from  South  Africa,  including  South  African 
blacks,  by  their  continued  willingness  to  try  to  go  down  the  path  of 
peaceful  change  even  when  the  South  African  Government  is 
thwarting  and  stymying  every  reeisonable  approach  along  that  line. 
Mandela  is  in  jail.  The  UPF  people  now  have  been  arrested  and 
charged  with  treason.  Where  is  a  South  African  black  going  to 
turn,  under  the  current  arrangement  to  bring  about  peaceful 
change  in  his  country — where  he  is  the  overwhelming  majority? 

Senator  Heinz.  The  Senator's  time  expired  some  time  ago.  Are 
there  any  further  questions  for  this  panel?  We  have  Ambassador 
McHenry.  We  have  another  panel  after  Ambassador  McHenry. 

Senator  Sasscr,  I  see  you  have  joined  us.  Do  you  have  any  ques- 
tions or  would  you  care  to  submit  them  in  writing  to  expedite  our 
hearing? 

Senator  Sasser.  Well,  I'm  going  to  delay  the  hearing,  with  the 
Chairman's  permission,  and  ask  a  couple  of  questions. 

Senator  Heinz.  By  all  means.  The  Senator  has  every  right  to  pro- 
ceed. You  will  not  delay  the  hearing.  It  will  simply  encourage  the 
fullsome  involvement  of  the  entire  committee  in  the  question  of 
public  policy  before  us. 

Senator  Sasser.  Thank  you,  Mr.  Chairman. 

Mr.  Schotland,  you  pointed  out  that  this  bill  does  not  touch  cer- 
tain matters  such  as  the  sale  of  $28  million  in  military  equipment 
to  South  Africa  during  1981  through  1983,  does  not  touch  the  ques- 
tion of  seven  nuclear-related  exports  to  South  Africa  in  1981  and 
1982,  the  licensing  of  U.S.  firms  to  service  the  nuclear  reactor,  the 
licensing  for  sale  of  2,500  electric  cattle  prods  for  crowd  control. 

Would  you  support  legislation  that  imposed  comprehensive  bans 
on  such  sales  and  transfers? 

Mr.  Schotland.  Yes,  sir. 

Senator  Sasser.  You  think  such  measures  should  be  added? 

Mr.  ScHOTiAND.  Yes,  sir. 

Senator  Sasser.  You  criticize  the  l^islation  for  not  being  serious 
enough.  What  is  your  reaction  to  the  idea  that  this  may  be  the  first 
step,  a  shot  across  the  bow  so  to  speak,  a  warning,  a  signal  that  if 


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change  does  not  go  forward  with  greater  speed  that  Congress  will 
take  even  stronger  action? 

BILL  WOULD  BE  A  STRONG  SIGNAL 

Mr.  ScHOTLAND.  I  think  that  would  be  an  excellent  step  if  that's 
the  way  we  represent  the  bill.  If  we  represent  the  bill  as  a  strong 
signal  which  is  making  clear  that  we  will  pay  any  price  and  so 
forth,  I  think  we  are  letting  ourselves  in  for  it  being  said  that  we're 
showboating  and  hyping.  If  we  say  this  is  a  shot  across  the  bow,  it's 
a  step,  we  will  take  further  steps,  we've  got  to  get  constructive 
peaceful  change  and  we  mean  it,  I  think  that  would  be  a  very  fine 
move. 

We  ought  to  admit  and  own  up  to  what  we're  doing  when  we're 
saying  we're  trying  to  be  moral. 

Senator  Sasser.  President  Bok,  you're  a  lawyer  and  in  fact  you 
quote  Justice  Harlan's  dissent  in  Plessy  v.  Ferguson  in  your  testi- 
mony if  I'm  not  mistaken,  and  you  certainly  are  familiar  with  the 
role  the  courts  played  along  with  the  Federal  Government  in  the 
civil  rights  movement  in  this  country. 

Is  it  not  the  case  that  the  Federal  courts,  particularly  the  fifth 
circuit  courts,  played  an  important  role  as  an  outside  force  in  the 
South  pressuring  the  States  here  in  our  country,  some  of  the 
Southern  States,  to  change  their  practices  with  respect  to  racial 
segregation? 

Mr.  Bok.  That  is  my  understanding,  sir. 

Senator  Sasser.  And  can  you  draw  any  £inal<^  between  what  oc- 
curred with  the  outside  pressures  of  the  fifth  circuit  court  and  the 
importance  of  outside  pressure  on  South  Africa?  In  other  words,  do 
you  think  that  such  outside  pressure  as  is  contemplated  in  S.  635 
would  strengthen  the  forces  for  moderation  and  change  inside 
South  Africa,  or  would  they  be  counterproductive  as  I  think  Mr. 
Crocker  claims? 

Mr.  Bok.  No;  I  certainly  do  not  agree  with  that.  I  come  here  in 
support  of  the  kind  of  sanctions  that  are  included  in  this  legisla- 
tion. I  would,  however,  like  to  underscore  a  point  that  I  made  in 
my  opening  statement  which  is  very  much  in  line  with  your  char- 
acterization of  the  bill  and  very  much  in  line  with  Mr.  Schotland's 
testimony. 

I  support  this  bill  as  far  as  it  goes.  I  think  there  are  other  inter- 
mediate sanctions,  however,  some  of  which  Mr.  Schotland  has  al- 
luded to,  some  of  which  I  alluded  to  in  my  own  testimony,  which 
ought  to  be  pursued  v^orously  which  would  make  our  effort  even 
more  effective. 

Whether  the  kind  of  pressure  that  would  result  is  on  all  fours  an 
analogy  with  fifth  circuit  lies  beyond  my  ability  to  say,  but  certain- 
ly I  believe  that  a  combination  of  constructive  action  by  American 
firms  and  pressure  from  the  United  States  is  the  most  likely  means 
through  which  we  can  maximize  whatever  chances  for  constructive 
change  and,  therefore,  I  think  we  need  to  add  that  element  of  pres- 
sure through  sanctions  similar  to  those  in  this  bill,  plus  the  addi- 
tional ones  that  Mr.  Schotland  and  I  have  identified. 


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327 

Senator  Sasser.  And  you  would  see  this  as  strengthening  the 
forces  of  moderation  and  a  move  in  the  direction  of  change  in  a 
moderate  fashion? 

Mr.  BoK.  Strengthen  whatever  chances  exist  of  producing  con- 
structive change  rapidly  enough  to  avoid  what  seems  to  me  to  be 
the  growing  danger  of  real  and  treigic  violence. 

Senator  Sasser.  Finally,  Mr.  Chairman,  one  last  question  for  Mr. 
D'Agostino. 

I  note,  Mr.  D'Agostino,  that  you  criticize  S.  635  for  involving  Con- 
gress in  the  debate  on  the  internal  etifairs  of  South  Africa  and  you 
say  in  your  testimony,  and  I  quote: 

S.  635  would  make  South  African  internal  policies  a  question  of  debate  in  the 
United  States  Congress.  This  is  a  monumental  insult  to  an  ally  or  to  any  country 
whether  allied  or  not. 

Now,  I  assume  you  object,  or  would  you  object  to  Congress  taking 
an  interest  in  the  internal  affairs  of  Nicaragua,  for  example?  That 
seems  to  have  preoccupied  us,  some  think  unduly  now  for  a  great 
number  of  months.  Don't  you  believe  the  issue  of  human  rights  is  a 
legitimate  consideration  for  the  U.S.  Congress? 

Mr.  D'Agostino.  I'd  like  to  start  with  again  apoli^izing  for  being 
unclear  in  that  section,  particularly  since  Senator  Sarbeuies  also 
pointed  that  out  to  me.  What  I  was  objecting  to  was  in  conjunction 
with  this  bill.  The  debate  of  the  internal  affairs  of  South  Africa  is 
proper  for  the  Congress.  There's  no  question.  It's  a  moral  problem 
and  it  should  be  stated. 

What  I  meant  is  that  the  bill  makes,  in  a  sense,  the  U.S.  Con- 
gress a  continuing  supervisory  authority  over  the  advances  that 
South  Africa  may  or  may  not  be  making.  If  it  weren't  for  the  bill's 
provision  of  having  the  President  go  down  to  Congress  and  prove 
they've  been  good  boys  today  and  they  have  done  a  little  better  and 
then  having  another  debate.  It's  the  continuing  debate  and  implicit 
supervisory  type  of  debate  that  is  the  problem,  not  the  debate 
itself. 

I  think  the  debate  sends  a  messeige  to  South  Africa  that's  very 
important  to  the  ruling  class  in  South  Africa.  I'm  sorry  I  was  un- 
clear on  that. 

DISTINCTION  OF  INVOLVEMENT 

Senator  Sasser.  Well,  can  you  make  a  distinction  between  our 
Government's  effort  as  you  say  to  supervise  the  internal  affairs  of 
South  Africa  and  our  obvious  efforts  to  supervise  the  internal  af- 
fairs of  the  Government  of  Nicaragua? 

Mr.  D'Agostino.  Yes;  I  think  the  end  of  our  policy  in  Nicaragua 
is  to  bring  down  the  Sandanista  regime.  It's  not  the  end  of  our 
policy  in  South  Africa.  The  South  African  Government  is  friendly 
to  the  United  States  and  is  no  threat  to  the  United  States  in  its 
present  form.  The  Nicaraguan  regime  is.  If  the  other  Central 
Americsui  countries  fall,  I  wonder  how  we're  going  to  prevent  in- 
volvement in  the  future  problems  of  Mexico.  We  have  enough  trou- 
ble defending  our  borders  now. 

Senator  Sasser.  The  question  is  not  whether  or  not  we  involve 
ourselves  in  the  internal  affairs  of  another  government.  The  ques- 


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tion  is  whether  or  not  the  government  is  friendly  to  us  or  whether 
or  not  it  poses  perhaps  a  danger  to  the  United  States? 

Mr.  D'Agostino.  No;  the  question  is  how  far  we  involve  ourselves 
depends  on  that  last.  The  answer  is  that  whenever  we  involve  our- 
selves in  the  internal  affairs  of  any  country  we  must  do  it  very, 
very  carefully.  It  happens  all  the  time.  I  think  Senator  Fulbright 
overstated  when  he  said  "don't  involve  yourself  unless  it  threatens 
your  country  directly."  We  do  influence  the  internal  affairs  of 
other  countries. 

The  question  is  what  is  the  end  which  we  wish  to  achieve?  Is  the 
end  of  using  our  influence  to  overturn  a  regime?  Is  the  end  of  what 
we're  trying  to  achieve  the  upholding  of  certain  human  rights  prin- 
ciples? It's  the  end  of  our  involvement  that's  important.  How  to 
achieve  that  end  is  the  issue. 

What  I  disagree  with  is  not  the  end  that  this  hill  states.  The  first 
two  paragraphs  of  the  hill  are  perfect.  A  colorblind  legal  society  is 
what  it  calls  for.  I  certainly  agree  with  that.  The  question  is,  will  it 
achieve  the  end  which  we  want  to  achieve? 

Senator  Sasser.  Thank  you.  Mr.  Chairman. 

Senator  Heinz.  Very  well. 

Senator  Froxmire.  Mr.  Chairman,  I  have  additional  questions  I'd 
like  to  ask  for  the  record  of  Dr.  Hackney  and  Mr.  D'^ostino  and  I 
have  one  other  point. 

Senator  Kennedy  has  asked  me  to  put  into  the  record  his  ex- 
change of  correspondence  on  S.  635  with  Derek  Bok,  president  of 
Harvard;  Michael  Severn,  president  of  Columbia  University;  and 
David  Hamburg,  president  of  the  Carnegie  Corp.;  and  also  a  letter 
of  endorsement  from  the  UAW. 

Just  one  other  item.  I  want  to  put  into  the  record  a  statement  of 
support  for  S.  635  from  Donald  Kennedy,  the  president  of  Stanford 
University. 

Senator  Heinz.  Without  objection,  they  will  all  be  included  in 
the  record. 

[The  following  information  was  subsequently  submitted  for  the 
record:] 


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"Titmitib  .SAtda*  Amtdt 


lUrch  2S,   1985 


Derek  fiok 

President 

Harvard  Onlvorslty 

Caabrldge,  Massachus 


As  you  know,  on  Harch  7,   1985,  Senator  Weicker 
and   I   introduced  The  Anti-Apartheid  Act   of   1985    (S.    63S). 
I  an  enclosing  a  copy  of  that  bill  for  your  inforaation. 

The  purpose  of  this   letter   is   to   ask  for  your 
views  on  this  proposed  legislation.      I  know  that  you  have 
given  a  good  deal  of  thought  to  the  situation  in  South 
Africa  and  about  ways   that  Aafricans   can  work  aost 
effecitvely  to  assist  in  the  effort  to  ellMlnate  apartheid. 
T  would  be   grateful   for  your  thoughts   on  the   approach  that 
wo  have  proposed   in  this   legislation. 

Thanks   for  your  willingness   i 


Edward  M.   Kennedy 


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April  2,   1985 


Dear  Senator  Kennedy: 

Thank  you  for  your  letter  of  March  2B,  19Q5>  In  Tesponee  to  your 
requeat,  I  an  pleased  to  state  my  vieHS  eoneetnlng  S.  635,  the  Anti- 
Apartheid  Act  of  1965- 

Let  me  make  clear  at  the  outset  that  the  followinE  opinions  are  my 
oun  and  do  not  repreaent  the  official  position  of  Harvard  University. 
Like  other  universities.  Harvard  doea  not  take  institutional  poeltions 
on  any  federal  loglolatlon  that  doee  not  directly  affect  higher  educa- 
tion. On  the  other  hand,  ny  duties  over  a  long  period  have  led  me  to 
pay  close  attention  to  events  In  South  Africa  and  to  develop  personal 
vleHS  on   the  affaire  of  that  country. 

During  the  past  twelve  yearn.  Harvard  has  sought  to  play  a  poal- 
tlve  role  as  an  Inveator  j^n  U.  S.   companiea  doing  a  small  amount  of 
business  in  South  Africa.       He  have  taken  great  pains  to  vote  In  an 
infocaad,   responsible  manner  on  shareholder  reaolutlona.     In  addition, 
we  have  gone  beyond  voting  by  conducting  an  active  dialogue  to  per- 
suade such  fime  to  Improve  working  conditions  for  nonwhite  employees 
and  to  express  opposition  to  Influx  control  and  other  repreeslve 
apartheid   laHS.     The  University  has  also  funded  educational  programs 
for  nonHhite  South  Africans.     Finally,   I  have  aerved  since  Its  incep- 
tion as  Chairman  of  the  Hatlonal  Council  of  the  South  African  Educa- 
tional Progran,   under  which  more  than  225  nonwhite  South  Africans  are 
currently  studying  in  American  universities- 
Apartheid  la  at  war  with  human  freedom  and  dignity.     It  la  a 
system  of  government  that  separates  people  on  the  basis  of  color, 
strips  menbera   of  one   race  of  their  baalc  human  rights,    robs  them  of 
their  citizenship,   denies  them  economic  opportunity,  and  Imposes  these 
indignltlea  through  criminal  law  and  police  action.     Because  of  its 
flagrant  Injustices,  apartheid  Is  universally  condemned  In  the  United 
States. 


t  Invest  in  companies  doing  a  majority  of  their  buai- 


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April  2,    1989 


Recent  events  should  lead  ub  to  revlSH  our  national  polior  tomrd 
South  Africa.     In  the  peBt  ysar,  we  have  heard  atatenente  by  the  Soutti 
African  government  aimed  at  persuedlng  the  world  thet  it  Ib  puraulng 
change  in  ita  relations  with  the  country's  nonxhite  majority       And 
yet,   the  concrete  steps  taken  thus  far  toiranl  refora  have  been  v»ty 
■sager.      Jalllngs  and  killings  by  police  dranatlxe   the  continuing 
repreaslon  practiced  by  the  Afrikaner  reglne.      At  the  saae  time,   ttw 
fruatratlon  and  militance  among  blacka  are  mounting  fast  enough  tfl 
suggest  that  the  time  for  peaceful  aolutions  is  running  out. 

Against  this  backdrop,  the  current  United  Stataa  policy  of  "ceai- 
etnictlve  engagement"  with  South  Africa  seems  increasingly  tnadequata. 
Despite  our  government's  stated  opposition  to  apartheid  the  responses 
of  the  Afrikaner  regime  fall  far  ahort  of  what  i;he  urgency  of  the  aib- 
uation  denando.  Worse  yet,  our  current  policies  ere  easily  mistaken 
for  tacit  acquiescence  In  a  status  quo  that  offends  our  moat  preoloua 
ideals  and  threatens  to  deteriorate  In  growing  vlolenoe  and  Inatabillty- 

Observing  events  in  South  Africa,  aany  shareholders  and  other  In- 
dividuals and  organizations  In  this  country  have  been  trying  to  show 
their  concern  by  pressing  American  corporetlons  doing  business  in  that 
country  to  respond  more  vigorously  to  apartheid.      Some  have  urged 
these  coopaniea  to  improve  Hagos  and  oonditlone  of  aoployaant  for  non- 
white  Korfcers.     Others  have  gone  further  and  asked  such  flras  to  ex- 
press  opposition  publicly  to  influx  control   laws  and  other  repressive 
legislation.     Still  others  have  sought  to  persuade  companies  to  leave 
South  Africa  entirely. 

In  view  of  the  severe  injuoticoa  of  apartheid  and  the  risk  of 
growing  violence  and  unrest,    I   believe  that  efforts  'by  shareholders 
and  other  interested  private   IndivlduBlH  ulll  not  suffice       Instead, 
circumatancea  require  a  more  powerful  expreeaion  of  our  national  COT^ 
cem.     I   therefore  support  legislative  sanctions.     At  the  sane  time     I 
believe    that  w-e  should  avoid,    at  least  for  the  present     sanctions  thet 
threaten  to  inflict  eignif leant  hardshipa  on  Innocent  third  parties 
especially  nonwhltes       It  ifl  simply  too  difficult  to  know  whether  more 
drastic   measures  nould  bring  benefits  that  corapenaate  for  the  burdens 
they  impose  or  whether  they  would  prove  Ineffective  or,    uorae  yet, 
provoke  a  backlash  that  will  further  reduce  Uie  prospects  for  meaning- 
ful refoim. 

In  my  opinion,  S.  6,33   aatlaflea  these  criteria.     The  sanctions  it 
containo   seem  real  enough  to  conununicate  the  sincerity  of  our  convic- 
tions to  South  Afrioe,     The  effaet  of  the  til    will  not  be  to  throw 
nonwhltes  out  of  work   or  impede  the  progpees  of  black  trade  uniona 
The  penalties   fall  directly  on   the  government  and  affect  those  respon- 
sible  for  apartheid  on  whom  we  most  wish  to  impress  our  concern. 
Finally,  S.    635  would  curb  added  investments  that  could  substantially 
increaae  our  financial  atake  in  South  Africa  and  thus  augment  the  risk 


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April  Z,  1985 


of  comprooising  our  Independenco  as  a  nation  to  act  on  principle 
rather  than  econcmic  self- Interest. 

I  should  add  that  much  of  S.   S}3  parallals  the  policies  Harvard 
baa  developed  as  a   shareholder  in   finiB  doing  "bualneBS  in  South  Africa. 
Aa  does  four  bill,    we   have   consistently  opposed  bank  loans  to  the  South 
African  gowemnent.  or  its  subsidiary  organizationa .     He  have  voted 
against  new  Investnents  by  companies  In  which  ve  hold  stock.     And  we 
ar«  cuTPontlj  soliciting  information  from  corporations   in  our  portfolio 
to  ascertain  the  exlstance  of  sales  of  critical  naterlals  to  the  South 
African  goverment. 

Proponenta  of  our  preaent  national  policy  toward  South  Africa 
argus  that  we  can  only  effect  change  in  that  country  If  wa  reoain 

.  fully  and  constructively  engaged  in  its  econcmic  and  political  af- 
fairs      They  assert  that  we   cannot  hope  to  achieve  an  Influence  over 
the  policy  choices   of   the  Afrikaner  regime  if  ue  take  steps   to  dis- 
tance ourselves  from  South  Africa        I   balteve   that  we  need  a  different 
kind  of  engagement,    since   our  current  policy  of  quiet  diplomacy  has 
tailed   tc  achieve  any  significant  refom.     In  recent  months     scores  of 
■blacks  have   been  killed      many  more  hove  been  detained,    and  millions 
are  denationalized  and  restricted  to  "homelands  "     In  the  face  of 
those   brutal  facts,    our  engagsment  with  South  Africa  should  be   inten- 
sified to  leave  no  doubt  about  out  condemnation   of  apartheid  and  our 
determination  not  to  do  business  as  usual  with  the  Afrikaner  rsglma. 

Almost  ninety  years  ago.  Justice  John  Harshall  Harlan  wrote  a 
prophetic  dlasent  to  the  Supreme  Court  declolon  in  Pleesy  v.   Ferguson 
upholding   state-imposed  segregation  In   the  United  Stetes.      Harlan 
condemned  mandated  segregation  *s  "inconsistent  not  only  with  that 
equality  of  rights  which  pertains  to  citizenship     but  with  the  per- 
sonal  liberty  enjoyed   by  everyone    In  the  United  States        .The  desti- 
nies Of  the   tficea  In   this  country  are   Indlssolubly    linked   together, 
and  the   common  government  of  all  shall   not  permit   the   seeds   of  race 
hate  to  be  placed  under  the   sanction  of  law.        These  sentiments  re- 
flect ideals  central  to  our  national   creed.     They  should   inspire  our 
government  to  communicate   Our  opposition   to  apartheid  more   convinc- 
ingly to  the  South  African  people     eapecislly  now  that  the  situation 
In  that  country  seems   to   be  moving   toward   greater  violence  and  repres- 
sion.    The  legislation  you  propose  would  help  to  achieve  this  objec- 
tive.    1.  am  pleased  to  endorse  it. 

Sincerely, 


( /Derek  Bok 


The  Honorable  Edward  H.    Kennedy 
113  Senate  Russell  Office  Building 
Washington,  D.  C.     20^10 


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HARVARD  UNIVERSITY 


SlVplaHnt  to  Naj  2A  Taatlaonr  on  S.63; 


Qmstlon;     Tou  have  endorsad  tha  Sullivan  Prlnolplaa.     At  tha  aasa 
tliu,   jrou  hava  alao  andoraad  no  new  investment  In  South  Afrloa.      It 
has  baan  arguad  ttnt  S  6;3     with  Ita  pnvlelon  prohibiting  nea  In- 
veatnent,   would  laad  coopanlae  operating  in  South  tfrlcs  to  out  eoata 
to  -the  bone  Ir  order  U  gen«t*ta  il*l>  capital.     Hon  Boula  thia  affaot 
efforts  ■..  .    .^,  1-.    wl'i    the  Sullivan  PrinoipleH?     In  your  opinion,   la 
■there  "  -  "r-.  Jlrtloo  between  no  new  InveatiOBOt  and  tha 

aeelsl  welfare  aspects  of   me  Sullivan  Frinaiples     or,   Indoed,  batMan 
no  neH  inveBtment  and  the  abllit;  of  0.B     coapanlea  to  rsialp  In  South 
Africa  and  ■taj'  coopatltiva  aa  thalr  plant  snil  equlpaant  baooaa 
obaotataT 

laar  that  I  aM  not  sufflclsntlr  ac- 

pcDvidB  yaii  with  a  definitive  ansver.     Hevertheleas,  I  en  skeptical 
about  the  eilatanca  sf  an  intrinala  conflict  or  contradiction  twtifeen 
S.655.   particularly  its  oa        for  sn  and  to  nsv  Investment  in  South 
Africa,  and  tha  goala  and  dnonatratad  banafita  of  the  Sullivan 
Princlplaa. 

Uhlle  the  legialatlon  Knild  prohibit  naN  InvaatBent,    It  would 
allow  the  contlnuad  ralnyeataent  of  eamlnga  froa  eilstlng  buelneaa 

H  large  majority  of  tha  aora  than  JZ  billion  in  direct  Inyestaeot  In 
South  Africa  by  United  States  cotpanlsH.  For  Bxaaple,  The  Econoalst 
BBgazlne  .in  B  lengthy  discussion  of  the  Bsnetlons  debate  estimated 
that  new  capital  inflowa  at*  leaa  than  tVX  Billion  of  the  total 
dlraot  Invastaent,  or  about  four  percent.  This  suggests  that  the  ban 
on  naw  invaalaent  would  not  '  '.-■■:-  ■  .-rT^r.'.^'i  '  o  cit  i:^'3tB  on  eilatlng 
operationa  so  rtr.,  ■        ■  ability  to  comply  with  tha  Sulli- 

van Principles  would  If  further  asBurancea  saea 

Inportant,  ori*  could  provids  In  th»  legialatlon  an  eiaaptlon  for 
inveatlng  fundEi  specifically  designed  to  inplement  the  Sullivan 
Principles  or  to  provide  better  housing,  nedloal  care,    or  Job  training 

I  have  seen  no  evidence  thst  eoapllanee  with  the  Prlndplea  iapoaas 
burdenaoata  coata  on  the  algnatory  conpanlea.     Of  the  six  Prlnolplaa, 
only  three  are  directed  prlnarily  at  progran  support  and  devalopaent. 
(They  call  for  Job  training,    incraaalng  the  nubar  of  nonwhitea  in 
aanageaent  and  supervisory  roles,  and  iaprovlng  tha  quality  of  e>- 
ployeea'    livee  outside  the  workplace.)     Hhlte  auch  efforts  can  be 
costly  If  they  aBphaslie  the  funding  of  new  prograas  or  Institutions, 


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th*  l*a>  ooBtljF  altamatlva  of  flnanctal  and  other  support  for  exist- 
ing activities  la  alao  an  Inportant  elenent  of  conpllance.  The  amount 
of  monef  spent  b;  United  States  ccopanies  on  such  prograna  In  198?  has 
baan  eatlaatad  at  t1?  nllllan—not  a  great  deal  of  Doner  for  soae  ZBO 
ooapanies.  The  other  three  Principles  nandate  equitable  trea-taent  of 
oBplorees  of  all  nces  and  Involve  little  cost,  I  suspect. 

Ab  for  the  ability  of  Unltad  Stataa  coapanles  to  reaaln  coapetltlve 
In  South  Africa,  this  concern  should  also  be  alleviated  by  i«calllng 
the  relatively  atall  proportion  of  new  capital  infloiis  in  the  eilatlng 
direct  inveataent. 

I  feel  it  la  Inportant  to  point  out  that  while  the  banning  of  naN 
inveataenta  need  not.  In  ny  vieNi  Interfere  aubetantlallr  itlth  tha 
Sullivan  code  aoapllance  or  the  conpeUtlve  ability  of  United  States 
coBpanles,   this  does  not  nean  that  Banctlone  Hould  be  Ineffective  in 
other  respects.     The  ban  on  new  loans  to  banka  would  affect  a  aource 
of  approxiMitaly  t3  billion  for  South  Africa.     Tha  prohibition  on 
iBportlng  kruggerands  Hould  cost  South  Africa  $600  million  per  year. 
In  short,  S.635  is  legislation  vhleh  can  achieve  the  Inportant  purpoae 
of  exerolBlng  econoilc  leverage  againat  apartheid  Hithout  undermining 
the  constructive  effects  of  the  Sullivan  coda. 


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=: —  HnittJ  gftita  Saiatt       ju«  5^ 


■W031385 


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Qtestioti:  Tou   have   endorsed   the   Sullivan   Principles,      ht   the   saine   tine, 
you   hove   als6  endorsea   no   new   investment   in   South   Africa.      It 
has   been   argued   that   E.    635,    with    ite   piovieion   prohibiting 
new   investment,    would   lead   companies   operating    in   South 
Africa   to   cut   costs   to   the   bone   in   order   to  generate   new 
capital.      HOW  would   this   effect   efforts   to   comply  with   the 
Sullivan   Principles?      In   your   opinion,    is   there   an   inherent 
contradiction   between   no   new   investment   and   the   social 
welfare   aspects    of   the   Sullivan   Principles,    or,    indeed, 
between  no  new   investment   and   the   ability  of   U.S.   companies 
to   remain   in  South  Africa   and   stay   competitive   as   their   plant 
and   eguipnent  become  obsolete? 


Aosv^r:    As  I  HuggeBted  In  ay  teatlmoay,   the  Sullivan  Prlaciples  have  lielped  to 
Isprove  working  conilltlons  for  bladca  In  those  Aaerlcan  flras  riilch  hava 
endorsed  thea,  and  Aaerlcan  buatneas  In  South  Africa  ha*  been  at  the  cutting 
edge  of  progressive  labor  policies  there.      I  believe  that  U.S.   flrva  have 
subscribed  to  the  Sullivan  Prlnclplea  because  first,   they  have  s  strong 
Interest:  In  being,  and  In  being  seen  as,   good  corporate   eltlEens,  and  aecond, 
they  recogolie  that  proaotlng  equal  eaployment  opportunltlea  foe  nonnhlte 
vorkers  Is  both  econonlcally  and  socially  constructive  and  thus  ptowites 
stability,  at  least  In  the  short  run.  In  South  Africa.     Therefore,   I  do  not 
believe   that,   even  if  Aaerlcan  coapanlea  were  to  initiate  aubstantlal 
coat-cutting  neaaures  In  South  Africa  to  generate  new  capital,  their 
.C0Bdt>eQt  to  the  Sullivan  principles  Mould  Buffer. 


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Thart  la,  ■>  job  Miasaat,  an  apparast  cmtradlccloa  batvaaa  tha  aorat-caaa 
aceaarlo  of  raatclcclooa  oo  laTaataeac  laaillns  to  vltbdzaaal  of  D,S.  fin*  awl 
Che  bcnaf Ita  to  bladi  wockara  darlvad  troa  dia  cooclnuad  praaanca  of 
pTograaalT*  Aaarlcan  flraa.  Withdrawal  of  Aaarlcan  fltaa  froa  South  Africa 
could  potaotlallj  raault  in  tba  dlaplae— tBt  of  bladt  voTkers  afao  hare 
benefited  fro«  the  SulllTan  Principles.  Kerettheleaa ,  buaineaaes  aetk   not 
aol7  ■  profitable  econaalc  envltonaent  but  alao  •  stable  political 
envlrcsiBent .   To  the  extent  that  apartheid  coatlsues  to  deprive  Che  wjorlty 
of  South  Africaoa  of  both  political  righta  and  ccOoObIc  oppor tun 1 tics,  the 
Sontli  African  political  envliooMnC  In  likely  to  rasaln  hl^7  volatile  and 
inhoapitable  to  bualneaa.  Political  Inatablllty  and  aoclal  upheaval  la  anch 
■ore  likely  to  drive  out 

Aasrlcan  bualneaa  than  la  a  raatrlctlon  on  n*«  laveatasnt  uhidh,  accoEdlng  to 
a  recent  report  is  The  Eeononlat.  repreaenta  about  SX  of  total  U.S.  direct 
InveBtBent  In  South  Africa. 

Pinally,  as  rou  know,  under  S.  635  the  reattlccion  on  oe«  investment  aa; 
be  waived  by  th«  Fresidenc  and  Coogreas  If  chey  find  that  si^Btantlal  progteas 
has  been  aide  toward  eliainating  even  one  of  the  coodltlona  of  apartheid 
specified  In  the  bill.   Such  a  conditional  waiver  provldea  an  inpetus  for  the 
South  African  govemaent.  If  It  Hiahea  to  aalntaln  and  increaae  Aaerlcao 
Investaent,  to  take  aeanlngful  action  on  apartheid,  and  for  Anerlcan 
busineHSes,  If  they  wish  Co  ptoaote  ■  stable  eavironaent,  to  encourage  the 
South  African  govemaent  Co  take  such  action. 


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:  1   understand   that   prior   to   becoming   a 
you   were   a  historian   of   conaideiable   i 
familiar   with   how   change   takes   place   in   iocieties,   do   you 
believe  enactment   of   S.    635   would   accelerate   the  process   of 
positive   change   in   South   Africa   oi   would    it   polarize   thtt 
situation   there?      I   ask    this   question   because    in   your 
statement   you   say   you   endorse   S,    63S   'to   signal   our 
opposition   to   apartheid,"   but   do   not   give   us   the   benefit   of 
your   views   as   to   the   impact    it   will   or   will   not   have   on   the 
process   of   change   in   South  Africa.      I   would   very  much   like 
your   views  on   that   subject. 


r:        As  ay  acadSMlc  mrk  baa  focuaaed  oo  the  social  hlatory  of  the  soutfaen 
Dnlted  States  rather  than  aouthen  Africa,  I  hesitate  to  draa  broad  historical 
conduBloQS  about  the  proccBs  of  change  In  an  area  of  the  world  lo  which 
econofllc  and  social  conditions  are  ho  diaaatlcallj  different  fron  those  of  the 
Doited  States. 

There  aca,  of  coaisa,  certsin  pozellels  Mlilch  sight  be  drsva  between  the 
situation  In  SouQi  Africa  and  the  condition  of  blacks  In  the  United  States 
prior  to  the  dvtl  tights  aoveBent  -  de  jure  segregation,  gcasBl;  unequal 
economic  opportunities,  offlclall;  condoned  violence  -  to  naae  a  fev.      The 
differences,  however,  outweigh  the  slMllarltles,     Principally,  these 
differences  are  that  first.   In  South  Africa,   these  offensive  policies  are 
Initiated  by  a  nlnorlty  govemaent,  and  second,   that  there  is  no  effective 
Jurldlcol  counterbalance  to  state-Initiated  dlacrlslnatlon,  aa  In  the  United 
States . 

One  hopes,   of  course,   that  the  relatively  peaceful  change  idilch  our  nation 
experienced  In  moving  toward  equal  rights  and  opportunities  would  be 
parallelled  In  South  Africa,   but  we  have  already  seen  there  substantially 
greater  violence  than  that  experienced  In  the  U.S.     Nevertheless,  Che  United 
States,  I  believe,  still  has  an  opportunity,   through  S.   635  and  alntlar 
■eaaures,  to  help  effect  peaceful  change  In  South  Africa. 


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Thl*  l«glsl«tIoit  i«  ■  Modeat  step.    It  do««  not  call  for  dlTaataant.     It 
la  not  llfcel;  to  proaote  reTolutlonar;  ebange.     It  doe*  not  ellMlnat*  or 
ntbatautlall;  narrow  the  taaricaa  acoooalc  preaence  In  South  Africa. 
ObTloualy,  we  would  prefer  to  be  certain  aa  to  the  outcoae  of  our  fotel^i 
policy  Inltlatlvea.     I  bellev*  that  the  Adalnlatratlon'a  current  policy  of 
conatructlTe  ensaseaeat  haa  not  been  auceeaaful  in  aedclng  ■eanlDgfol  cbansa, 
■nd  that  the  altuatlon  la  South  Africa  haa  becoae  Increaalngly  polarlied. 
Kodeat  preaaute  on  the  part  of  our  gorenuMot  toward  the  South  African  reglaa 
can,  I  belleTe,  accelerate  the  proceaa  of  peaceful  change.     To  take  no  action 
voold  alfflal  that  the  Qnlted  Statea  endoraea  a  atatua  quo  which  la 
fimdaacntally  abhorrcmt  and  riilch.  In  th«  long  run,  cannot  be  auataltwd  by  a 
■Inorlty  gorernaaoc.     to  adopt  aubatantlaUy  aore  atrlogent  aanctlona  than 
tiioae  eahodled  In  S>  635  would  limit  ouz  future  ability  to  foater  paacaful 
change.     Econonlc  and  political  leverage  auch  aa  that  advocated  througb 
leglalatloD  auch  aa  S.  OS  rapreaents  the  beat  opportunity  for  prowotlng  the 
future  paaca  and  atablllty  of  South  Africa,  an  outcoaa  irtilch  la  dearly  In  our 
national  Inter eat. 


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EDWARD  U.  KENKEDY 


^tiiteb  fttatm  ftniate 

WASHINGTON,  DC  20610 

March  28,  1985 


Htchael  Sovern 
president 

Columbia  University 
Rew  York,  Haw  York 

Dear  Hichasli 

As  you  know,  on  March  7,  1985,  Senator  Weicker 
and  I  introduced  The  Ant 1 -Apartheid  Act  of  1985  (S. 
635) •   I  am  enclosing  a  copy  of  that  bill  for  your 
infornatlon. 

The  purpos*  of  this  letter  is  to  ask  for  your 
views  on  this  proposed  Isgislatlon.  I  know  that  you 
have  given  a  good  deal  of  thought  to  the  situation  in 
South  Africa  and  about  ways  that  Americans  can  work 
most  effectively  to  assist  in  the  effort  to  eliminate 
apartheid,  I  would  be  grateful  for  your  thoughts  on 
the  approach  that  we  have  proposed  in  this  legislation. 

Thanks  for  your  willingness  to  help  out  on  this. 

Sincerely, 


Edward  M.  Kennedy 


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ggtontrM  Buflmgitp 


Aptll  IS,  19BS 


Dear  Senator  K«nnadyt 

Fleasa  forglva  ny  delay  In  replying  to  your  letter  of 
March  28,  1985,  but  It  did  not  reach  Me  until  April  10.  I 
am  happy  to  have  the  opportunity  to  counent  on  S.635,  the 
proposed  Ant i -Apartheid  Act  of  1985. 

I  share  your  concern  that  quiet  dlplonacy  on  the  part 
of  the  United  States  has  not  had  any  posltlva  Impact  on 
the  Invidious  racist  policies  of  the  South  African 
Government.   It  is,  as  you  say,  time  for  more  afffectiva 
action  by  the  United  states,  and  I  bellava  that  the 
legislation  you  have  Introduced  Is  a  desirable  atap  In 
that  direction. 

I  know  that  President  Bok  took  the  same  position  In 
his  letter  to  you  of  April  2,  and  I  concur  wholeheartedly 
In  the  views  expresaed  In  that  latter. 

At  Columbia,  we  have  already  taken  the  two  actions 
S.635  would  require  of  American  companies  and  institutions 
and  have  actually  gone  beyond  them.   In  1978,  the  Columbia 
University  Trustees  decided  to  divest  our  securities  and 
deposits  in  financial  institutions  which  provide  new  or 
continuing  access  to  capital  markets  for  the  Government  of 
South  Africa.   The  University  has  divested  Itself  of 
approximately  S2.9  million  of  securities  In  such 
institutions  and  does  not  maintain  deposits  with  such 
institutions.  As  you  know,  section  3  of  S.635  similarly 
prohibits  loans  to  the  South  African  Government. 

Section  4  of  S.635  provides  for  prohibitions  against 
new  Investments  in  business  In  South  Africa.  A  year  ago, 
our  Trustees,  In  response  to  a  request  from  the  Columbia 
University  Senate,  imposed  a  moratorium  on  increased 
investment  in  securities  in  companies  doing  business  in 
South  Africa,  pending  review  of  a  Columbia  University 
Senate  report  on  divestment. 


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In  addition,  the  Unlvvrsity  will  not  lnv«st  In  stocks 
o£  coupanlee  doing  business  In  South  Africa  unless  they 
have  enploymont  programs  and  practices  that  ban 
segregation,  afford  equal  pay  to  blacks  and  whites,  and 
otherwise  advance  the  Interests  oC  block  South  Africa. 

I  aa  pleased  to  support  S.63S. 

Sincerely 


Sincerely,  v^ 


Michael  I.  Sovorn 


The  Honorable  Edward  H.  Kennedy 
United  States  Senate 
Washington,  D.  C.  20510 


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tHntteli  AtatM  fteiute 

WASMMOTDN,  DC  MSIO 

J^rll   3,    198S 


Carn«9l«  Corporation 

437  Hadiaon  Avanu* 

Naw  York,  Nav  York  10022 

Daar  Davai 

I  am  ancloalng  a  copy  of  tha  Anti-^arthaid  Act  of 
1985  which  Sanator  Waickar  and  I  introducad  on  Harch  7, 
1985.   I  am  alao  anclosing  a  briaf  amamary  of  tha  bill'a 
proviaion. 

I  would  ba  aztremaly  grataful  if  it  might  ba 
poaaibla  for  you  to  gtv«  ma  your  viawa  on  thii 
legialation.   Tha  Sanata  Banking  Cotmittaa  and  tha  Sanate 
Foreign  Ralationa  Coaaittaa  will  ba  taking  up  tha  aubjact 
of  South  Africa  later  this  nontht  and  I  know  that  any 
cooimanta  you  might  have  on  this  piece  of  laglalation  would 
ba  daaply  appraciated. 


Thanka  for  your  help- 


Edward  M.  Kennedy 


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fc  1 


Carnegie  Corporation  of  New  York 


-   -*■'.'  t  nvid  A.  Hamburg,  M,D. 

hU:i':..:.'-^i-y  Hay  15^  1585 

Sanator  Edward  H.  Kennedy 
Onited  states  Senate 
113  Senate  Russell  Office  Building 
Mashington,  D.C.  20510 

Dear  Tedt 

I  an  very  grateful  foe  your  Inquiry  about  pending 
anti-apartheid  leglalatlon  and  foe  the  invitation  to 
testify.  I  deeply  regret  that  I  simply  could  not  work  out 
a  way  to  testify  because  of  the  extraordinary  pressures  on 
■e  this  month,   Hy  presidency  of  the  American  Association 
Cor  the  Advancement  of  Science  reaches  Its  peak 
responsibilities  this  month,  culminating  in  the  big  annual 
meeting  at  the  end  of  Hay  In  Los  Angeles.   Since  the  AAAS 
is  the  umbrella  organization  for  all  of  American  science, 
this  really  has  been  a  demanding  as  well  as  a  fascinating 
enterprise.   Tn  addition,  Hay  happens  to  be  the  peak  rnonth 
for  Carnegie  responsibilities!  including  a  three-day 
retreat  in  San  Antonio  on  the  Hex lean-American  community 
(see  enclosed  article  by  Fred  itechlnger  from  the  tiew  York 
Times),  and  also  on  U.S.-Mexican  relations. 
Incidentally, it  turned  out  to  be  a  superb  retreat,  and  I 
would  welcome  a  chance  to  discuss  these  subjects  with  you 
the  next  time  we  meet. 

In  any  event,  the  best  I  can  do  under  the 
circumstances  is  to  send  you  a  statement  on  South  Africa 
that  I  recently  prepared  foi  another  purpose.   It  Is  my  own 
perspective  on  the  Carnegie  Inquiry  including  a  few 
conjectures  on  Its  larger  significance,   I  hope  it  will  be 
of  some  use  to  you. 

We  have  had  recent  visits  from  Prancls  Wilson,  the 
Inquiry's  director  —  and  I  an  very  grateful  for  your 
seeing  him  —  as  well  as  Allan  Boesak  who  played  a  major 
part  in  It  re:  church  and  poverty. 


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Lettet  to  Senator  Kennedy 
Hay  15,  1985 
Page  Two 


The  work  of  synthesis  is  going  Cocwacd  afCectively. 
Tbet*  will  be  a  pulling  together  of  majoc  findinga,  aa  well 
as  strategies  for  change  that  build  on  tba  findings.  In 
additionr  thece  will  be  a  book  of  pbotographa  and  several 
fllns  Illustrating  key  aspects  of  the  Inquiry.   I  an 
hopeful  that  all  this  will  contribute  to  public 
anderstandlng  and  to  constructive  action. 


With  very  best  personal  regards. 

As  always. 


(5,- 


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VJf^ 


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VIEWS  ON  5-635 

DONALD   RBHNBDY,    PRESIDENT 

STANFORD  UNIVERSITY 

HAY    23,    1985 


It  Is  a  privilege  to  be  able  to  conment  on  Senate  Bill  63S, 
th«  Anti-Apactheid  Act  oE  1985.   I  welcone  the  opportunity  to  supply 
these  views,  which  are  nine,  and  do  not  represent  the  otClclal 
position  of  Stanford  University. 

There  are,  I  believe,  sone  objectives  that  nearly  all 
Americans  share.   South  Africa  today  represents  an  especially 
repugnant  form  of  Institutional Iced  Injustice  —  special  t 
the  intense  degree  to  which  one  racial  group  restraini 
and  violates  the  basic  human  tights  of  other  racial  groups.   He  havi 
a  responsibility  to  help  end  apartheid  and*  to  help  guarantee 
individual  treedon.   As  a  shorter-term  objective,  we  should  try  to 
help  ameliorate  oppreesion  by  the  South  African  governnent,  and  to 
eliminate  as  many  of  the  restrlctionB  as  possible  that  are  now 
placed  on  the  eights  of  black  South  Africans. 

In  my  judgment,  the  present  policies  of  out  governnent  have 
not  supplied  significant  Incentives  for  the  attainment  of  those 
objectives.   It  is  thus  not  surprising  that  students,  at  Stanford 
and  elsewhere,  ace  focusing  upon  total  divestment  as  a  strategy 
for  supplying  that  incentive.   I  personally  feel  that 
disinvestment  by  non-profit  shareholders  will  not  be  an  effective 
approach;  and  even  if  that  approach  were  to  bring  about 
significant  withdrawal  of  foreign  investment  fron  South  Africa,  I 
am  not  at  all  certain  that  the  results  would  be  beneficial  to 
those  we  ace  trying  to  help. 


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Accordingly,  I  favor  th«  pclnciples  unbodied  In  Senate 
Bill  63Sr  which  applies  Both  positive  and  negative  incentives 
toward  changing  the  laws  that  nake  the  apartheid  eyetem  possible. 
The  essential  provisions  of  the  bill  apply  econonic  pressures  on 
the  South  African  government  now,  rather  than  adopting  the  "wait 
and  see*  approach  that  characteriies  some  of  the  other  currently 
proposed  legislation. 

I  continue  to  be  concerned  lest  U.S.  action  involuntarily 
Inflicts  hardship  on  innocent  third  parties,  especially  the 
non-whites  we  intend  to  help.   Hy  reading  of  8-635  is  that  It  Is 
carefully  shaped  not  to  reduce  enploynent  opportunities  for 
non-whites,  and  that  it  will  not  Impede  such  progress  as  is  now 
being  made  by  the  black  trade  unions.  Rather,  the  result  should 
be  a  retardation  of  growth  by  the  limitation  of  credit  and  of  new 
investment.  With  these  provisions,  I  am  in  full  agreement. 

I  do  have  two  specific  suggestions.  The  first  would,  I 
think,  make  the  application  of  economic  sanctions  significantly 
mote  effective.   As  the  Study  Commission  on  U.S.  Policy  Toward 
South  Africa,  chaired  by  Franklin  Thomas,  reported  In  1981, 
current  export  control  regulations  cannot  be  effectively  applied 
to  products  manufactured  by  wholly-owned  subsidiaries  of  U.S. 
firms  in  South  Africa.   Currently,  the  Export  Administration  Act 
and  its  derivative  regulations  impose  few  if  any  effective 
testclctions  on  the  activities  of  U.S.  eubsidiaties,  as  long  as 
they  produce  products  with  non-U. S.  components  and  do  not  employ 
manufacturing  controls  oc  data  sent  from  the  United  States.  The 
application  of  export  controls  to  such  operations  would  represent 
an  important  extension  of  the  sanctions  envisioned  in  S-635. 


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Secondr  I  believe  that  certain  of  the  aanctions  now 
proposed  could  be  made  both  More  fair  and  More  effective.   S-63S 
currently  proposes  to  prohibit  conputer  sales  to  the  South 
Urlcan  goveinKent,  including  spare  parts  and  servicing  Cor 
eoBputera  already  sold.   It  aeens  to  ae  unfair  to  aingle  out  a 
particular  product  category  tor  use  in  such  sanctions,  especially 
one  that  has  such  a  broad  range  of  benign  and  huaanltarisn  uses. 
It  see«s  to  Be  that  this  provision  could  both  be  broadened  and 
■laed  Bore  directly  at  those  particular  uses  that  support  the 
maintenance  of  the  apartheid  regise  in  South  Africa.  Thus.  I 
vould  prefer  a  general  provision  restricting  exports  of  supplies 
and  equipaent  destined  for  use  by  the  South  African  siilltary  or 
police,  with  exception  for  huManltarian  (e.g.,  nedical)  uses. 
This  could  be  acconplished  by  aaendnents  to  the  Export 
Administration  Act,  so  that  no  goods  or  technology  (except 
technical  data  generally  available  to  the  public)  could  be 
exported  for  use  by  siilltary  and  police  entitles  In  South  Africa. 
It  would  then  be  posaible  to  list  specific  humanitarian 
objections,  as  is  now  done  in  regulations  written  under  the 
Export  Adninlstration  Act. 

I  welcosis  the  opportunity  to  provide  these  comments, 
and  I  hope  they  are  helpful.   I  am,  in  general,  quite  cautious 
about  applying  economic  sanctions  to  another  nation  with  the 
intent  of  changing  conditions  there.  But  apartheid  Is  a   form  of 
xiandsted  segregation  that  no  civilited  nation  should  continue  to 
tolerate.  Accordingly,  I  support  this  legislative  effort  to 
apply  our  national  influence  on  behalf  of  freedom  and  dignity  tor 
all  of  South  Africa's  cltltena. 


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ANSWER   TO  QUESTION  PROPOUNDED   BY   SENATOR  WILLIAM    PROXKIRE 
FfCU 
KEECr  D'AOOSTDO,  National  legal 
Center  for  tbe  Public  Interest,  Washington.  D,C. 
Q.       In  your  career  as  a  law  professor  and  at  the  Department  of 

Justice,  you  are  not  noted  for  being  shy  about  fighting  for 

what  you  believe  in.     Don't  you  think  that  if  you  were  a 

black  living  in  a  totalitarian  state  such  as  South  Africa, 

you  would  be  tenpted  to  use  violence  to  win  your  rights?     I 

ask  this  because  Bishop  Tutu  claina  that  the  present  policy 

of  apartheid  is  driving  blacks  into  the  arms  of  the 

communists. 

A.       Before  I  answer  your  question,  I  would  like  to  make  plain 

that  I  do  not  believe  that  South  Africa  is  a  totalitarian 

state.      I  do  believe  that  tthe  system  of   apartheid   is   a 

totalitarian  system  impoBed  upon  the  black  segment  of  the 

South  African  population.     I  also  believe  that  that  system 

has  changed  greatly  since  its  inposltlon  and  is,   in  fact, 

breaking   down. 

In  answer   to  your  question,   I  do  not  know  that   I  would 

use  violence,  although  I  would  be  sorely  tempted  to  disobey 

some  of  the  laws,  at  a  niniirum.     Being  forceably  separated 

from  my  family  or  forceably  removed  from  where  t  live  would 

certainly  engender  a  tremendous  resentment  in  me  that  very 

well  could  lead  to  violence.     Tbe  short  answer  is  that  I 

understand  very  well  how  many  could  be  led  to  violence. 

Unfortunately,    in  piesent-day  South  Africa  the  violence  of 

certain  blacks  is  as  much  directed  against  other  blacks  or 

coloreds  as  it  is  against  the  government.     The  situation 

there  is  highly  complex  and  fraught  with  much  difficulty. 

Answer  to  Question  Propounded  by  Sen.  Proxmlre  -  1  - 


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One-  point  that  I  mmd*  in  my  pap«r  wa*  catbvr  p«*aiaiBtic  in 
that  Chang*  Is  racely  rapid  enough  for  thoa*  d^Mnding  it 
and  aiwaya  too  capid  foi  thoa*  fighting  it.     T«s,   I  balicve 
the  pace  of  change  nut  quicken.     Ho,   I  do  not  believe  that 
the  bill  will  have  that  efCact. 

It  is  crucial  that  tefoiM  not  cob*  only  fro*  the  top 
down.     These  recent  gestures  fro«  the  South  Afcican 
govecn>ent,   though  helpful  and  buBane>  will  not  quell  the 
[ising  iSBentaent.     Blacks  bave  axpaiienced  in  tbeic  ]ob 
areas  a  certain  feeling  of  equality.    At  least  in  the 
Aaerican  coMpanies  they  are  close  to  equality  of  pay  for 
equal  work.    Tbey  have  been  able  to  for*  their  own  unions 
and  choose  tbeic  own  leadership.     Pcesuaably  80*e  would 
cbooae  to  live  in  a  black  hoaeland.     In  fact,  of  the  four 
honelands   given  independence,    two  ate  doing   latbec  well   and 
two  rathec  poocly.     But  of  course  the  key  to  the  sentence 
that    I    juat    wcote    is    'choose.* 

The  end  of  cue  atteMpt  to  Influenca  the  internal 
affairs  of  South  Africa  are  twoi      (1)   to  nalntain  a 
governnent  friendly  to  the  Dnlted  States  and  the  Hestern 
alliance)    (2)    to  have  a  government  built  upon  the  principles 
that  made  the  West  great,   that   Is,    respect  for  tb* 
individual  and  liberty.     How  best  night  we  achieve  these  two 
ends?      Certainly  not  by  being  punitive  or  withdrawing 
involveoent  in  South  Africa.     It  is  our  very  involvement 
that  has  helped  lead  to  a  breakdown  of  apartheid  Insofar  as 
it  has  broken  down.     South  Africa  is  a  country  divided 

swer    to  Question  Propounded  by  Sen.    Prozmir*  -   2   - 


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against  Itself.     Economic  liberty  and  a  totalitarian  systen 
cannot  co-exist.     Tbe  increasing  economic  pover  of  blacks 
along  with  leEorns  largely  pioneeced  in  American  companies 
must   inevitably  lead  to  the  end  of  apartheid.      What  will 
come  after  Is  the  real   Issue.     To  repeat  It  Is  the  economic 
involvement  of  the  United  States  and  the  growing  economic 
strength  of  the  blacks  that  has  led  to  their  increased  power 
and   led   to  the  concessions   by  the  South  African  government. 

What  must  we  do?    We  must  encourage  the  government  of 
south  Africa  to  bring  together  the  leaders   (I  did  not  use 
the  word  responsible  before  the  word  leaders)  of  all  the 
peoples  of  South  Africai  that  is>  blacke>  colored)  Asian, 
and  white.     The   leadership  should  be  drawn   from  both  major 
white  ethnic  groups  as  well  as  the  various  colored  groups 
and  the  various  black  tribal  groups.     People  must  feel  that 
they  are  participating   In  the  change.      The  great   federalist 
debate  in  this  country  not  only  gave  the  people  the  feeling 
of  participation,  but  also  served  an  educational  purpose. 
Only  through  an  on-going  discussion  can  the  people  focus  on 
what  they  real  ly  want,  and  I  am  sure  that  what  the  people, 
black  and  white,  want  is  liberty,  security,  and  fairness. 
with  all   groups  participating,   a  solution  can  be  worked  out 
that  will   Insure  those  things.     He  must  maintain  our 
involvement,  particularly  our  economic  involvement,  so  that 
change  will   continue  while  urging  the  South  African 
governnent  to  accelerate  change  through  listening  to  and 
being  guided  by  an  on-going  public  process  involving  leaders 
of  all  of  the  groups.    This  Is  tbe  only  way  to  avoid 

'  Answer  to  Question  Propounded  by  Sen.  Proxmlre  -  3  - 


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Tlolenc*  because  this  i«  tba  only  way  to  Hke  a  population 
accept  [«lativ*ly  gradual  change  fcoa  tha  black  persp*ctlv« 
and  woce  rapid  change  than  would  b«  wished  lor  f  ton  tha 
white  perspective. 

There  are  no  shortcuts.      Blstory  is   replete  with  tba 
consaquences  of  rapidi   read  violent,   change.      It  is   cepleta 
with  the  resistance  of  ruling  elltiat  change.     History  also 
has  instances  of  ruling  elites  giving  way,   being  flexible, 
being  accoanodatlng,  and  being  tolerant.     I  will  say  again 
the  words  with  which  I  opened  my  oral   testisKinyi     that  we 
nuBt  help  the  South  African  government  and  the  ruling  white 
elite  of  that  country  open  their  ayes  to  the  world  we  are 
living   in  today. 


RJD/ckB 
June  7,   19B5 

Senator  Heinz.  The  Chair  thanks  all  of  you  for  your  participa- 
tion. I.  appreciate  it  and  I  will  be  submitting  a  question  or  two  for 
the  record  as  well. 

Our  next  witness  is  Donfild  F.  McHenry.  He  was  our  Ambassador 
to  the  United  Nations  in  the  late  1970's.  He's  now  with  the  George- 
town University  School  of  Foreign  Service.  Don,  it's  nice  to  see  you. 
Welcome.  I  understand  you  don  t  have  a  written  statement  but  you 
have  some  things  you  would  like  to  say.  I  understand  also  that  the 
reason  you  don  t  have  a  written  statement  is  you  have  been  on  the 
road  and  you  just  got  back  late  leist  night,  which  is  a  tough  time  to 
get  anything  but  a  plumber  in  Washington,  DC.  Please  proceed. 

STATEMENT  OF  DONALD  F.  McHENRY,  FORMER  AMBASSADOR  TO 
THE  UNITED  NATIONS;  GEORGETOWN  UNIVERSITY,  SCHOOL  OF 
FOREIGN  SERVICE 

Ambassador  McHenry.  Thank  you  very  much,  Mr.  Chairman.  I 
have,  in  fact,  been  on  the  road  and  out  of  the  country  and  I  was 
out  of  the  country  at  the  time  your  letter  arrived  inviting  me  to 
appear  here.  I  do  have  some  preliminary  remarks  to  make. 

I  should  inform  the  committee  that  I  appeared  before  a  similar 
committee  in  the  early  1970's  when  I  was  on  leave  from  the  De- 
partment of  State  and  at  the  Brookings  Institution  and  their  coun- 
sel on  foreign  relations.  I  did  an  extensive  study  of  American  in- 
vestment in  South  Africa  and  in  1973  I  published  my  conclusions 
with  regard  to  that  situation. 


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Senator  Heinz.  But  isn't  most  of  that  just  window  dressing? 

SOME  IMPROVEMENTS  IN  URBAN  UVING 

Ambassador  McHenrv.  No;  it's  not  window  dressing.  I  think  it's 
important  that  one  acknowledge  that  there  have  been  substantial 
improvements  in  some  aspects  of  urban  living. 

What  I'm  saying,  however,  is  that  none  of  these  changes  which 
we  have  seen — and  we  have  seen  many — none  of  them  address  the 
structure  of  apartheid.  None  of  them  provide  an  opportunity  for 
the  citizens  of  that  society  to  participate  in  their  Government  and 
to  themselves  decide  whether  there  is  going  to  be  a  repeal  of  a 
Mixed  Marriages  Act  or  whether  there's  going  to  be  a  new  consti- 
tution or  whether  they  are  going  to  have  a  continuation  of  some  of 
the  laws  like  the  Terrorism  Act. 

In  that  regard,  in  regard  to  the  structure,  there  has  been  no 
change. 

Senator  Heinz.  Why  during  the  Carter  administration  wasn't 
there  a  more  aggressive  attack  on  apartheid  which  as  you  say  hfis 
remained  virtually  the  same  for  the  iMt  8  years?  It  was  no  less  re- 
pugnant then  I  hope  than  today.  I  really  have  some  difficulty  un- 
derstanding what  the  difference  of  the  passage  of  4  or  5  years 
makes  when  we're  talking  about  an  egregious  wrong. 

Ambassador  McHenry.  Senator,  I  think  most  South  Africans 
would — certainly  the  South  African  Government  would  say  that 
the  Carter  administration  was  much  tougher  on  them  than  the  cur- 
rent administration.  I  don't  think  that  there  is 

Senator  Heinz,  I'm  not  talking  about  rhetoric. 

Ambassador  McHenry.  I  am  not  talking  about  rhetoric  either.  It 
was  in  the  Carter  administration  that  the  arms  embargo  was  made 
mandatory.  It  was  in  the  Carter  administration  that  the  restric- 
tions on  sales  to  the  South  African  military  and  police  were  en- 
forced. It  was  in  the  Carter  administration  that  restrictions  were 
placed  on  sales  and  where  some  computers  went.  It  was  in  the 
Carter  administration  that  negotiated  Resolution  435  on  Namibia. 
The  Carter  administration  tried  to  set  forth  a  series  of  steps  with 
regard  to  Southern  Africa. 

Senator  Heinz.  As  I  understand  what  you've  said  so  far — and  I'm 
not  dis^reeing  that  you  didn't  do  those  things — what  you've  said  I 
think  you  would  agree  is  that  they  didn't  accomplish  anything  in 
terms  of  apartheid. 

Ambfissador  McHenry.  No,  I  wouldn't  say  they  didn't  accom- 
plish anything. 

Senator  Heinz.  I  said  in  apartheid. 

Ambassador  McHenry.  I  would  remind  the  Senator  that  the  Sul- 
livan principles  were  brought  into  effect  under  the  auspices  of  the 
Carter  administration.  I  was  present  in  the  room  when  we  finally 
persuaded  the  last  of  the  companies  to  sign  that  measure.  So  that 
too  was  a  contribution. 

The  President  set  forth  a  policy  with  regard  to  all  of  Southern 
Africa  and  this  was  communicated  to  the  South  African  Govern- 
ment. We  had  a  complex  of  measures.  We  had  Zimbabwe  on  our 
hands.  We  had  Neunibia  on  our  hands.  We  had  apartheid  on  our 


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356 

the  surrounding  countries  and  into  such  an  unstable  situation  are 
likely  to  move  those  very  political  groups  and  developments  which 
I  think  the  Senator  earlier  v/as  referring  to  when  he  talked  about 
the  changes  which  took  place  in  Iran  and  various  other  countries. 
In  other  words,  we  are  creating  a  situation,  a  climate  for  radicali- 
zation,  unless  we  and  others,  and  the  South  Africans,  do  what  we 
can  to  make  changes  now  when  there  remains  a  possibility  for  a 
settlement  with  less  violence. 

There  is  more  than  this.  Here  one  gets  into,  I  think,  largely  a 
demonstrated  faction.  I  would  like  to  see  the  United  States  fully 
enforce  the  arms  embargo.  I  would  like  to  see  the  United  States 
once  again  develop  the  kind  of  communication  with  citizens  of 
South  Africa,  of  all  citizens  of  South  Africa,  that  I  think  we  once 
had  and  that  I  regret  that  we  have  lost.  And  there  may  be  in  the 
future  and  the  time  remains  in  doubt — there  may  be  an  opportuni- 
ty and  a  necessity,  if  you  will,  for  the  Congress  to  enact  more 
sweeping  legislation  with  regard  to  this  area. 

But  I  will  repeat  again,  it  seems  to  me  that  this  is  an  appropriate 
first  step.  Thank  you. 

Senator  Heinz.  Ambassador  McHenry,  thank  you  very  much. 
You  were  not  only  our  Ambassador  to  the  United  Nations  but  to- 
gether with  Andrew  Young  when  he  was  Ambassador  were  among 
the  most  influential  voices  in  the  Carter  administration  with  re- 
spect to  policy  in  Southern  Africa. 

What  elements  of  S.  635  did  the  Carter  administration  advocate 
with  regard  to  South  Africa? 

Ambassador  McHenry.  S.  635  contains  four  elements  and  none 
of  those  were  advocated  at  the  time  and  I  don't  believe  that  we 
were  at  a  point  at  that  time  that  we  are  now.  We  have  seen,  I 
think,  the  steady  deterioration  over  the  last  year,  I  would  say 
steady  deterioration  over  the  last  4  or  5  years,  with  regard  to  South 
Africa. 

That  is  why  I  put  my  comment  in  terms  of  appropriate  first  step. 
It  seems  to  me  that  this  is  a  step  which  is  consistent  with  condi- 
tions which  we  find  now. 

There  were  other  measures,  however,  which  were  enforced 
during  the  Carter  administration  which  are  not  enforced  now  and 
which  I  regret  are  not  being  enforced. 

One  of  those  is  the  arms  embargo.  An  earlier  witness  has  given 
you  an  indication  of  how  many  changes  have  taken  place  with 
regard  to  that.  Another  of  that  was  the  very  positive  and  I  think 
constructive  role  which  we  played — and  I  played  personally  with 
regard  to  negotiations  on  Namibia.  Those  have  gotten  nowhere  and 
in  fact  1  think  they  have  been  set  considerably  back. 

But  none  of  those  steps  was  at  the  time  advocated,  but  I  don't 
believe  that  we  had  reached  the  point  where  we  have  now. 

Senator  Heinz.  Now,  you  say  the  situation  is  worse  today  than  it 
was  during  the  Carter  administration.  Objectively,  now,  is  the  situ- 
ation for  the  black  majority  in  South  Africa  worse  today  than  it 
yvaa  then? 

Ambassador  McHenry.  Senator,  that  depends  on  what  aspect  of 
it  you  are  talking  about.  There  is  no  question  in  my  mind  that 
there  have  been  improvements  in  some  of  the  eispects  of  urbeui 
living  in  South  Africa. 


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358 

hands.  I  think  we  went  a  long  ways  toward  resolving  the  firBt  two. 
We  had  to  set  priorities. 

With  regard  to  apartheid,  there  was  clear  indication  of  policy. 
The  South  Africans  were  clearly  told  that  if  there  was  no  progress 
toward  full  political  participation  there  would  be  a  deterioration  of 
relations  between  the  United  States  and  the  South  African  Govern- 
ment. There  was  no  progress.  There  was  the  deterioration. 

Now  we  have  not  changed  the  structure.  I  am  not  arguing  here 
that  these  measures  are  going  to  change  the  structure.  I  don't 
think  they  will.  Will  they,  however,  add  additional  pressure?  Will 
they  change  the  perception,  the  misperception  which  is  present? 
WiU  they  contribute  to  change?  I  hope  so. 

Senator  Heinz.  Let  me  ask  you  this.  Did  you  and  Ambassador 
Young  at  any  point  at  which  the  Carter  administration  was  con- 
templating increasing  the  pressure,  some  of  which  you  just  de- 
scribed, consider  the  application  of  a  ban  on  new  investment  and 
did  you  reject  it?  If  so,  why? 

Ambeissador  McHenry.  Well,  I  was  in  New  York  and  not  in  the 
State  Department  in  Washington.  I  don't  think  that  a  ban  on  in- 
vestment was  considered  but  I  don't  believe  that  it  at  the  time  was 
appropriate.  I  would  say  this.  We  cannot  overlook  the  direction  of 
events  over  the  last  year  or  over  the  last  several  years. 

Senator  Heinz.  I  don't  think  anybody  is.  That's  why  we  are 
having  these  hearings. 

Ambassador  McHenry.  And  that,  it  seems  to  me,  has  provided 
more  fuel  for  these  proposals  than  anything  else.  The  fuel  for  these 
proposals  comes  not  from  the  United  States  Government,  not  from 
the  students,  not  from  the  churches,  but  from  actions  on  the  part 
of  the  South  African  Government. 

Senator  Heinz.  I  don't  think  anyone  would  contest  that,  Don. 
You  mentioned  the  Sullivan  principles.  This  is  my  last  question. 
I'm  going  to  run  out  of  time  shortly. 

In  the  next  panel,  Reid  Weedon,  of  A.D.  Little,  will  argue  that  it 
is  important  to  remember  that,  "the  evil  of  apartheid  will  end  only 
by  vote  of  the  white  South  Africans  or  by  revolution." 

Is  it  possible  to  achieve  our  goals  while  avoiding  revolution  in 
South  Africa,  and  what  policies  would  you  recommend  for  the 
present  administration  to  pursue  in  order  to  maximize  United 
States  influence  and  leverage  with  the  Government  of  South 
Africa,  particularly  if  our  goal  is  to  induce  the  South  Africans  to 
move  toward  full  political  participation  for  all  its  people? 

HOPE  TO  AVOID  FURTHER  VIOLENCE 

Ambassador  McHenry.  Senator,  I  would  hope  that  it  would  be 
possible  to  avoid  further  violence  and  bloodshed  in  South  Africa.  I 
am  reminded,  however,  of  the  lines  in  Allen  Payton's  book,  "Cry  of 
the  Beloved  Country,"  where  he  said  or  he  has  one  of  his  charac- 
ters say  that  he's  afraid  that  by  the  time  whites  learn  to  love, 
blacks  will  have  learned  to  hate,  I  think  we  are  seeing  that  in 
South  Africa.  It's  taken  a  long  time.  In  fact,  almost  any  visitor  that 
goes  there  even  today  marvels  at  the  fact  that  there  is  still  so 
much  moderation  among  the  African  population. 


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We  can*t  change  South  Africa.  It  is  not  for  the  United  States  to 
do  so.  South  Africans  themselves  will  have  to  get  together  and 
come  up  with  that  political  consensus  which  allows  them  all  to 
govern  themselves,  and  there  will  be  a  series  of  compromises  £ilong 
the  way  just  as  there  have  been  compromises  within  this  society, 
and  there  are  compromises  in  every  society  that  I  know  of. 

The  point  is  that  everyone  has  to  participate  in  reaching  those 
compromises.  What  we  can  do  is  make  clear  what  our  own  policies 
and  attitudes  are.  We  c£in  try  to  reduce  the  extent  that  anything 
that  we  have  control  over  contributes  to  the  continuation  or  the 
strengthening  of  apartheid.  That  is  all  these  measures  are  aimed  at 
doing.  It  does  not  seem  to  me  that  they  aim  at  anything  else. 

We  would  be  fooling  ourselves  if  we  pretend  that  they  will  bring 
down  apartheid.  They  won't.  But  they  will  correct  the  perception 
and  they  will  ensure  that  the  United  States  does  nothing  to  contin- 
ue it  and  strengthen  it. 

Senator  Heinz.  My  time  has  expired.  Thank  you  very  much.  Sen- 
ator Proxmire. 

Senator  Proxmire.  Thank  you,  Mr.  Chairman. 

Ambassador  McHenry,  I  am  extremely  impressed.  I  think  your 
statement  and  responses  to  the  chairman  have  been  very,  very  per- 
suasive and  I  want  to  thank  you  for  them. 

There  are  those  who  say  that  South  Africa  is  really  a  bulwark 
against  communism  and  we  need  to  help  South  Africa  in  our  ef- 
forts to  stem  the  tide  of  communism  in  an  extremely  important 
area  of  the  world. 

Others,  such  as  Bishop  Tutu,  claim  that  the  greatest  inducement 
to  the  growth  of  communism  in  South  Africa  is  the  apartheid 
policy  of  the  present  Government  and  we  must  help  eliminate 
apartheid  if  we  want  to  stop  the  growth  of  communism  there. 
What  are  your  views  on  this? 

-Ambassador  McHenry.  Senator,  I  think  we  have  seen  the 
answer  to  that  question  throughout  Southern  Africa.  To  the  extent 
that  there  has  not  been  an  opportunity  for  growth  or  change,  those 
who  have  sought  the  redress  of  their  grievances  have  become  in- 
creasingly radicalized.  Those  who  have  sought  the  redress  of  their 
grievances  have  increasingly  turned  to  the  Soviet  Union  and  other 
forces  which  we  may  not  like  for  support.  And  along  the  way  many 
of  them  have  become  advocates  of  the  policies  of  communism. 

I  think  any  time  that  you  have  such  instability,  any  time  that 
you  have  such  longstanding  legitimate  grievances  without  recourse, 
you  provide  the  most  fertile  soil  that  I  know  of  for  communism.  I 
have  long  said  that  South  Africa,  far  from  being  a  bulwark  against 
communism,  is  one  of  its  most  positive  elements  in  Southern 
Africa. 

NEED  NEW  CONSTTTUnON 

Senator  Proxmire.  As  you  know,  the  Progressive  Federal  Party, 
the  PFP,  has  long  been  regarded  as  the  white  conscience  of  racial 
justice  in  South  Africa  and  it  is  the  official  opposition  party  in  the 
South  African  Parliament.  Progressives  talk  about  a  need  for  a 
new  constitution  in  which  everyone  in  South  Africa  is  given  full 


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rights  as  a  citizen  and  in  which  there  is  genuine  power  sharing 
among  racial  groups. 

Under  this  system  the  homelands  policy  would  be  scrapped  and 
blacks  would  be  allowed  to  vote  and  be  represented  in  a  new  broad- 
based  national  Government.  However,  blacks  would  not  be  allowed 
to  dominate  the  Government.  Whites  would  be  permanently  pro- 
tected by  a  minority  veto  under  a  special  coDstitutional  arrange- 
ment. 

Do  you  think  such  a  plan  has  any  merit  or  do  you  think  we 
should  press  South  Africa  to  go  forward  on  a  one-man-one-vote 
system. 

Ambassador  McHenry.  Senator.  I  indirectly  answered  that  earli- 
er when  I  said  that  all  South  Africans  ought  to  get  together  and 
try  and  work  out  that  political  consensus  which  enables  them  to 
govern  themselves  and  I  suggested  that  whatever  consensus  that 
they  may  get  today  may  not  be  adequate  for  tomorrow.  It  may  be 
that  what  the  Progessive  Federal  Party  has  outlined  is  a  first,  or 
second,  or  third  step  along  the  way.  In  my  judgment,  I  doubt  if  it's 
going  to,  in  the  final  analysis,  be  satisfactory. 

That  does  not  say  that  it  is  not  something  which  ought  not  to  be 
done  as  a  step  along  the  way.  But  the  process  of  government  is  the 
process  of  constantly  trying  to  find  a  political  consensus.  South  Af- 
rica's problem  today  is  because  it  has  no  political  consensus. 

Senator  Proxmire.  Thank  you,  sir. 

Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Senator  Sarbanes. 

Senator  Sarbanes.  Thank  you,  Mr.  Chairman. 

Mr.  Ambassador,  I'm  struck  by  the  fact  that  the  focus  tends  to  be 
on  the  policy  as  it  impacts  within  South  Africa,  but  I  want  to  shift 
from  that  focus  for  a  moment  and  ask  you  how  high  a  price  you 
think  we  are  paying  for  an  American  policy  that  is  perceived  as 
indulging  the  apartheid  regime  and  all  it  stands  for?  How  high  a 
price  are  we  paying  elsewhere  in  Africa  with  respect  to  American 
interests  and  indeed  elsewhere  in  the  world? 

Ambassador  McHenry.  Senator,  that  is  hard  to  gauge.  It  is  hard 
to  gauge  for  a  number  of  reasons.  If  you  are  a  poor  African  country 
dealing  with  the  United  States  and  you  don't  like  the  policy  of  the 
United  States,  under  the  current  policy  you  had  better  keep  quiet 
because  aid  is  likely  to  be  affected  and  other  programs  are  likely  to 


deterioration  of  respect 

It  is  my  judgment,  however,  that  there  has  been  a  steady  deterio- 
ration in  the  level  of  respect  for  the  United  States  among  other  Af- 
rican countries  as  a  result  of  this  policy.  The  policies  have  been 
criticized  by  African  countries.  More  than  that,  the  United  States 
finds  that  it  has  little  or  no  support  with  regard  to  its  South  Afri- 
cem  policies  among  some  of  its  allies,  particularly  with  regard  to 
the  actions  which  have  taken  place  in  Mozambique,  Angola,  and 
Namibia.  The  once  united  front  presented  by  the  compact  group  ie 
no  longer. 

We  have  been  sharply  criticized  by  our  colleagues  and  our  closest 
allies  with  regard  to  that  worldwide,  it  seems  to  me. 


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In  the  long  term,  when  we  find  ourselves  sticking  with  a  govern- 
ment to  the  bitter  end  long  after  we  know  that  we  should  have 
taken  stei»  to  change  our  policy  and  long  after  we  know  that  gov- 
ernment should  have  taken  steps  to  change  its  policy,  we  are  likely 
to  see  the  kind  of  thing  that  we  have  seen  in  Iran,  or  Cuba,  or 
Nicaragua,  or  the  Dominicein  Republic.  The  list  is  very  long  of 
countries  where  the  United  States  has  found  itaelf  supnorting  poli- 
cies which  were  rejected  by  their  inhabitants,  found  the  situation 
radicalized,  and  then  we  worry — we  get  concerned  when  a  radical 
government  takes  place.  But  all  the  time  when  change  could  have 
been  taken  under  more  moderate  circumstances  we  didn't  speak 
out  strongly  enough. 

That  is  the  situation  in  South  Africa  today. 

Senator  Sarbanes.  Just  over  5  weeks  ago  Deputy  Secretary  Dam, 
testifying  before  this  committee,  pointed  to  progress  on  Namibia  as 
an  instance  of  the  successful  working  of  the  constructive  engage- 
ment policy.  Within  3  days,  the  South  African  Government  moved 
unilatereillv  and — at  least  in  the  perception  of  many,  shortcircuited 
U.N.  Resolution  435  and  the  work  of  the  Contact  Group,  so  that 
our  Ambassador  in  South  Africa  was  in  to  lodge  an  American  pro- 
test with  the  South  African  Government. 

This  morning's  paper  carries  a  major  story  pointing  out  that  the 
Lusaka  accord,  which  again  was  pointed  to  by  Secretary  Crocker  as 
an  effective  instance  of  constructive  engagement,  has  been  totally 
violated  by  the  South  Africans  in  Angola.  In  fact  they  have  their 
military  in  the  very  north  of  Angola  and  were  apparently  intend- 
ing to  commit  sabotage  against  American  economic  interests  there, 
as  I  understand  it. 

I  wonder  if  you  would  comment  on  the  administration's  assertion 
about  the  success  of  its  constructive  engagement  policy  with  re- 
spect to  Namibia  and  Angola. 

Ambassador  McHenry.  Senator,  eis  you  know,  I  was  very  much 
involved  in  the  negotiation  of  U.N.  Resolution  435.  I  don't  believe, 
frankly,  that  any  progress  has  been  made  with  regard  to  solving 
the  problem  of  Namibia.  On  the  contrary,  I  think  we  have  taken 
some  steps  backward. 

I  am  not  suggesting  to  you  that  the  administration  could  have 
resolved  it.  I  left  it  unresolved.  But  I  think  we  have  marched  back- 
WEirds. 

We  introduced  the  question  of  the  Cubans  and  we  allowed  the 
South  Africans  to  follow  a  policy  of  destabilization  which  far  from 
obtaining  our  objective  of  getting  the  Cubans  out  of  Angola  result^ 
ed  in  making  the  Angolan  Government  more  dependent  today  on 
the  Cubans  than  they  were  before.  And  certainly  the  action  which 
was  reported  today  in  the  newspaper  of  South  African  saboteurs  in 
the  far  north  of  the  country  is  likely  to  make  the  Angolans  even 
more  justified  in  keeping  the  Cuban  presence  and  not  trusting  the 
South  Africans  when  they  say  they  want  peace  in  the  area. 

There  hsB  been  also  an  effort  to  take  a  great  deal  of  credit  for 
what  went  on  in  Mozambique,  the  Empinadi  accords.  I  hope  the 
Empinadi  accords  are  successful.  But  quite  frankly,  I  would  not 
take  very  much  credit  for  them.  The  Empinadi  accords  came  as  a 
result  of  the  destabilization  policy  of  the  South  African  Govern- 
ment, military  actions  by  South  Africa's  military,  strong  support 


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for  the  MNR  and  its  destruction  of  infrastructure  in  the  area,  and 
they  also  came  about  as  a  result  of  the  drought  which  came  along 
at  the  same  time  and  the  ineffective  policies  of  the  Mozambique 
Government. 

What  I  am  suggesting  to  you  is  that  constructive  engagement 
was  not  the  major  factor.  The  major  factors  were  those  other 
things  that  I  referred  to. 

Senator  Sarbanes.  Thank  you. 

Senator  Heinz.  Senator  Ri^le. 

Senator  Riegle.  Thank  you,  Mr.  Chairman. 

Let  me  thank  you  very  much  for  coming  today.  I  know  it's  not 
easy  when  you're  moving  around  to  come  to  a  hearing  of  this  kind, 
but  I  thought  your  statement  was  certainly  eloquent,  and  also  very, 
very  important — very  important  to  the  country  to  hear  and  for  the 
Senate  to  hear,  and  I  think  an  excellent  guide  to  us  in  terms  of 
where  we  are  and  how  we  try  to  sensibly  work  our  way  forward. 
So,  I  am  very  appreciative  of  the  effort  and  the  thoughts  that  you 
shared  with  us  today. 

Elarlier  in  the  discussion  that  we  had  here  at  the  table  among 
Senators,  the  assertion  was  made  that  the  living  standard  of  black 
people  in  South  Africa  was  better  than  in  any  other  country  in 
Africa.  I  found  that  to  be  a  breathtaking  proposition,  and  I  would 
be  interested  in  your  view  on  that  proposition? 

Ambassador  McHenry.  Senator,  it's  one  of  those  true  but  irrele- 
vant statements.  I  wouldn't  doubt  that  the  living  standard  among 
blacks  in  South  Africa  is  higher  than  most  or  all  other  areas  in 
sub-Saharan  Africa.  But  so  is  the  gross  national  product.  So,  is  the 
level  at  which  other  citizens  in  the  society  live.  The  standard  by 
which  South  African  blacks  ought  to  be  measured  is  not  the  stfuid- 
ard  of  Chad  or  Mali  but  the  standard  of  South  Africa.  How  do 
South  African  blacks  compare  with  South  African  whites? 

It's  when  you  use  that  as  a  mesisurement  which  makes  it  very 
important.  And  again  I  say  the  observation  I've  heard  and  it's  part 
of  the  sort  of  fill  and  propaganda  type  material,  but  it's  totally  ir- 
relevant. 

Senator  Riegle.  I  think  the  phrase  "living  standard"  tends  to 
connote  dollars  and  cents  and  material  well-being.  I  was  attempt- 
ing to  broaden  it  out  more  to  the  notion  of  what  your  whole  condi- 
tion is — how  you  are  treated  as  a  human  being,  what  kind  of  soci- 
etal situations  you  find  yourself  in  that  defines  all  aspects  of  your 
life,  the  quality  of  your  life,  the  quality  of  your  being,  what  your 
standing  is  in  society. 

It  seems  to  me  that,  if  that  broader  definition  of  living  standard 
is  used  in  terms  of  any  measure  of  civil  rights,  or  human  rights,  or 
legal  rights  within  the  governmental  system,  there  is  an  enormous 
factor  there  that — I'm  not  sure  anyone  can  understand  that's  not 
inside  that  experience. 

Ambassador  McHenhy.  Right. 

Senator  Riegle.  Since  one  cannot  place  themself  inside  a  black 
person's  body  in  South  Africa,  I'm  not  sure  any  other  person  can 
begin  to  comprehend  what  that  type  of  existence  really  means. 

Yet,  a  picture  should  be  drawn,  should  it  not?  Could  we  find 
some  way  to  bring  this  pertinent  point  into  even  a  superficial  dis- 
cussion of  living  standard? 


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DEGRADATION  BECAUSE  OP  BACIAL  ORIGIN 

Ambassador  McHenry.  Well,  I  would  agree  with  the  Senator. 

That's  one  of  the  reasons  why  I  said  the  observation  is  irrelevant. 
It  doesn't  cover  the  whole  picture.  It's  irrelevant  in  economic  terms 
in  which  it  is  presented,  but  it  is  even  more  irrelevant  if  one  is 
'talking  about  apartheid.  In  no  other  society  do  you  have  govern- 
ment-imposed racial  discrimination  or  do  you  have  determination 
of  birth  to  grave  on  the  basis  of  the  one  thing  that  an  individual 
cannot  do  anything  about;  namely,  his  racial  origin. 

I  think  the  most  poignant  way  of  looking  at  ^uth  African  socie- 
ty and  one  which  I  continue  to  say  and  tell  people  tells  you  a  great 
story  about  the  society  is  to  go  into  a  pass  port  and  see  people 
move  through  at  the  rate  in  which  they  are  moving  through  as  the 
Government  tries  to  enforce  its  influx  control  laws.  It  is  to  go 
through  even  an  urban  area  like  Soweto  and  see  in  a  day  the 
number  of  children  around  with  little  or  no  supervision  because 
their  families  have  been  split  because  both  mother  and  father  have 
to  find  some  kind  of  way  to  eke  out  a  meager  living.  It  is  to  see  the 
trains  moving  back  and  forth  in  the  evening  taking  the  people 
I  from  the  city  to  the  rural  areas.  It  is  to  see  the  desertion  of  a  city 
I  in  the  evening.  It  is  to  tolk  with  an  educated  South  African  and 
find  the  limits  which  he  finds  imposed  upon  him.  It  is  to  hear 
Bishop  Tutu,  as  he  did  on  Ted  Couples'  Show  several  weeks  ago, 
ask  why  it  was  that  he,  a  citizen,  didn't  have  the  same  rights  as 
the  person  that  he  was  talking  to. 

That  gives  you  a  picture  of  South  Africa. 

Senator  Riegle.  Thank  you. 

Senator  Sarbanes,  Would  the  Senator  yield? 

Senator  Riegle.  Yes. 

Senator  Sarbanes.  I  simply  want  to  commend  my  colleague  from 
Mich^an  for  I  think  bringing  the  hearing  back  to  a  very  interest- 
ii^  focus.  We  get  into  the  practicalities  of  how  this  will  work, 
which  way  it  will  impact,  and  I  think  we  tend  to  lose  sight  on  occa- 
sion of  the  fundamental  overwhelming  moral  issue  that's  present- 
ed. 

There  were  those  who  asserted  when  the  slaves  were  set  free 
that  their  economic  circumstances  would  worsen  and  in  fact  it  did 
in  some  instances  worsen,  but  that,  of  course,  it  seems  to  me  is  no 
basis  to  ai^ue  for  slavery.  And,  I  think.  Senator  Riegle's  focus 
again  on  the  fundamental  issues  of  human  dignity,  of  the  individ- 
ual's right  to  participate  in  his  society  and  to  shape  his  course  and 
his  own  destiny  and  the  destiny  of  the  society  is  in  the  end  why 
this  is  such  a  pressing  issue  and  why  I  think  the  focus  in  this  coun- 
try which  has  now  come  upon  it  in  recent  times  is  not  going  to 
recede.  I  think  that  it's  going  to  deepen  and  broaden  and  that  it 
will  continue  to  be  a  prime  issue  on  the  national  eigenda,  and  that's 
why  we  need  to  come  to  grips  with  it  in  a  constructive  way  in  the 
Congress  in  the  form  of  l^slation. 

Senator  Heinz.  Senator  Sasser. 

Senator  Sasser.  Thank  you,  Mr.  Chairman. 

Mr.  Ambassador,  good  to  see  you  ageun  here  today. 

Ambassador  McHenry,  in  your  opinion,  what  can  the  U.S.  Gov- 
ernment do  now  today  that  would  so  fundamentally  challenge  the 


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364 

continued  existence  of  apartheid  that  the  effect  would  cause  an 
erosion  in  that  policy  perhaps  leading  to  a  change  in  that  policy? 
What  could  wG  do  today  about  it? 

Ambassador  McHenry.  Senator,  I  don't  look  upon  social  change 
in  such  a  short  term  nor  do  I  believe  that  the  United  States  is  that 
all  powerful  in  difficult  situations. 

Change  is  going  to  come  about  in  time  in  South  Africa.  It's  going 
to  take  time.  The  question  and  the  whole  debate  is  not  over  the 
manner  in  which  change  takes  place.  If  this  debate  was  over  when 
and  how,  it  would  be  much  less  heated.  Unfortunately,  the  debate 
is  still  over  whether. 

Once  South  Africa  answers  the  question  of  whether,  then  we  can 
all  engage  in  a  rather  respectable  debate  in  which  there  is  a  great 
deal  of  compEtssion  and  understanding  of  the  very  difficult  situa- 
tion in  that  country  with  regard  to  when  and  how  things  are  goii^ 
to  be  accomplished.  But  they  haven't  moved  that  far.  They  haven't 
'  made  the  commitment  to  structural  change. 

Once  that  commitment  is  made,  there  will  be  a  great  reservoir 
even  among  the  Africans  with  regard  to  how  to  work  out  the  proc- 
ess. 

Senator  Sasser.  I  quite  ^ree  with  you  that  change  is  not  going 
to  come  quickly  and  it's  not  going  to  be  rapid.  At  least  if  it  comes 
quickly  and  very  rapidly,  my  judgment  is  that  it  might  not  be  the 
sort  of  change  that  we  in  the  United  States  would  particularly 
want.  It  might  be  a  very  radical  change  that  would  move  South 
Africa  in  a  direction  that  we  would  consider  not  in  the  national  in- 
terest of  the  United  States. 

But  what  I'm  trying  to  put  my  finger  on  is  what  could  we  do  as  a 
government  that  would  bring  the  greatest  pressure  on  South  Africa 
to  change  the  policy  of  apartheid,  to  move  them  in  the  direction  of 
making  the  decision,  "Yes,  we  are  going  to  change  it."  What  do  we 
do  that  might  be  contagious,  not  just  as  between  ourselves  and 
South  Africa,  but  between  ourselves  and  other  countries  to  cause 
this  to  happen? 

Ambassador  McHenry.  Senator,  I  should  say  many  of  us  on  the 
panel  before  me  and  I  have  in  my  own  remarks  sought  to  try  and 
put  these  actions  proposed  in  the  bill  in  perspective  and  to  suggest 
that  they  were  limited  measures. 

Senator  Sasser.  Well,  you  do  consider  this  serious  legislation? 

Ambassador  McHenry.  It  is  serious  legislation  in  that  it  is  an  ap- 
propriate first  step  and  it  is  a  significant  first  step.  But  more  than 
that,  I  don't  believe  that  Americans  appreciate  how  much  South 
Africans  focus  on  what  the  United  States  does  and  says.  These 
hearings  are  going  to  be  followed  very  closely  in  South  Africa. 
"They  won't  get  as  much  coverage  in  this  country  as  they  will  get  in 
South  Africa. 

CHANGE  WILL  COME  SLOWLY 

So,  I  think  the  fact  that  there  is  movement  will  help  to  counter 
the  impression  which  is  there  now  with  r^ard  to  the  constructive 
engagement  and  I  think  it  will  be  a  very  significant  morale  booster 
and  shot  in  the  arm  for  the  African  population  of  that  society.  But 
it  is  not — and  I  don't  think  we  should  fool  ourselves — change 


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doesn't  come  overnight.  We  shouldn't  delay  things  and  I'm  not  sug- 
gesting that.  One  ought  to  move  and  move  ahead,  but  it's  going  to 
take  some  time  to  work  out  that  situation  in  South  Africa  emd  the 
pity  is  that  they  haven't  started  making  the  significant  change 
down  the  road  toward  it. 

Senator  Sasser.  Thank  you,  Mr.  Ambassador. 

Senator  Heinz.  Senator  Riegle. 

Senator  Riegle.  If  I  may,  I  will  add  one  other  comment.  First,  I 
want  to  thank  Senator  ^rbanes  for  his  very  generous  personal 
comment. 

I  want  to  touch  once  again  on  the  standard  of  living  question  in 
broad  economic  terms. 

The  Carnegie  report  tells  us — and  Senator  Sarbanes  quoted  from 
this  earlier — that  there  are  some  11  million  black  people  in  South 
Africa  that  live  in  the  so-called  homelands.  The  living  condition  in 
the  homelands,  as  separate  from  the  urban  areas  cited  earlier  as 
showing  improvement,  is  starkly  different.  We  might  see  in  some 
narrow  segment  a  somewhat  gradually  improving  economic  condi- 
tion. In  other  areas,  we  are  seeing,  a  very  large  number  of  people, 
a  profoundly  depressed  kind  of  living  situation.  This  stanaard  is 
probably  far  fjelow  that  in  other  societies  even  in  tfiat  region  of 
Africa. 

Isn't  that  correct? 

Amtmssador  McHenry.  Senator,  the  homelands  situation  is  very 
bleak.  It  is  bleak  because  people  have  in  many  instances,  particu- 
larly those  who  have  been  removed  from  so-called  white  spots  have 
been  moved  into  areas  which  they  were  unfamiliar  with,  though 
there  may  have  been  some  distont  ancestral  relationship.  They 
have  been  moved  into  areas  where  it  is  very  hard  to  make  a  living 
and  they  have  l>een  moved  into  areas  where  social  and  other  facili- 
ties are  very  thin. 

One  shouldn't  generalize  about  the  situation  there.  One  ought  to 
talk  about  the  rural  areas  and  the  urban  areas  and  so  forth.  But 
with  regard  to  the  question  which  was  raised  earlier — that  is  com- 
paring it  with  the  situation  in  other  parts  of  Africa — it  is  still  irrel- 
evant with  regard  to  the  situation  in  South  Africa.  The  economic 
conditions  of  the  living  stondards  of  all  black  South  Africans  are 
far  below  those  of  whites  in  the  society,  far  below  even  the  lowest 
rung  of  whites  in  the  society  as  a  whole. 

Senator  Sarbanes.  Would  the  Senator  yield? 

Senator  Riegle.  Yes;  of  course. 

Senator  Sarbanes.  It's  really  as  irrelevant  as  saying  to  American 
blacks  who  may  complain  about  their  particular  economic  stetus  in 
this  country  that  they  live  better  than  blacks  in  African  countries. 
It  seems  to  me  to  have  the  same  degree  of  irrelevancy  with  respect 
to  material  standard — let  alone  the  other  dimension  that  Senator 
Riegle  added  to  his  question,  which  I  happen  to  think  is  fundamen- 
tal. 

Senator  Riegle.  Well,  the  propaganda — and  I  use  that  word — the 
sort  of  propaganda  that  is  very  carefully  constructed  to  put  a 
veneer  of  decency  and  positiveness  on  the  Grovernment  of  South 
Africa  has  to  be  stripped  away.  You  have  to  teke  every  one  of  these 
phony  arguments  when  it's  put  up  there.  These  arguments  have  to 
be  taken  apart  right  in  the  front  window.  If  this  is  not  done,  there 


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are  a  certain  number  of  people  who  will  buy  these  phony  argu- 
ments. They  will  turn  off  that  issue  and  they  won't  think  about  it 
any  more. 

Ambassador  McHenry.  I  fully  agree  with  you.  Senator,  and 
anyone  who's  seen  some  of  the  literature  supporting  or  justifying 
or  rationalizing  current  j>olicy  would  agree  with  you. 

Senator  Riegle.  Well,  thank  you  again  very  much  for  coming 
today. 

Senator  Heinz.  Ambassador  McHenry,  we  thank  you.  You  have 
been  very  eloquent  and  we  appreciate  your  testimony.  Thank  you 
very  much. 

Ambassador  McHenry.  Thank  you  very  much. 

Senator  Heinz.  Our  last  panel  consists  of  Mr.  Reid  Weedon,  Mr, 
Sa!  MarzuUo,  Mr.  George  Schroll  and  Mr.  Patrick  O'Farrell.  Gen- 
tlemen, would  you  please  come  forward,  assuming  you  have  not 
died  of  starvation  yet. 

Gentlemen,  thank  you  for  being  here.  Mr.  Weedon,  would  you 
please  begin, 

STATEMENT  OF  D.  REID  WEEDON,  JR.,  SENIOR  VICE  PRESIDENT, 
ARTHUR  D.  LITTLE,  INC..  EVALUATOR  FOR  SULLIVAN  PRINCI- 
PLE8 

Mr.  Weedon.  Thank  you,  Mr.  Chairman,  It's  a  privilege  to  be 
here. 
[The  complete  prepared  statement  follows:] 


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TBtttlBony  of  D.  Held  H*«don,  Jr.  to  the  S«nate  Banking 
Currency  CosBltta*.  Nay  2«.  1985. 

I  ■■  0.  Raid  Haadan,  Jr.  of  Winchaatar,  HA,  Sr.  VP  of  Arthur 
D.  Llttla,  Inc. 

In  Hsrch  of  1977,  Dr.  Laon  H.  Sullivan  propoundad  what  hava 
coma  to  be  Icnown  aa  tha  Sullivan  Prlnclplaa  for  South 
Africa.   In  aeetina  with  the  chief  axacutlvaa  of  tha  twalva 
coMpanlaa  that  bacaae  the  original  Slgnatorlaa,  Dr.  Sullivan 
stated  that  it  Mould  be  necessary  that  each  coBpany  report 
to  hia  annually  on  Its  activities  In  South  Africa  with 
respect  to  the  Prlnclplaa. 

Tha  nuMber  of  Signatories  graw  rapidly  to  approxlnataly  100 
by  mld-1978  when  half  of  them  aubmlttad  reports  to  Or. 
Sullivan.   At  that  time,  ha  engaged  Arthur  D.  Little  to 
undertake  the  analysis  of  thaaa  progress  raporta  on  his 
behalf . 

The  whole  process  has  developed  substantially  and  an 
elaborate  quaatlonnaire  tiea  evolved  for  collecting  annually 
Information  about  the  operatlona  of  the  Signatory  companies 
In  South  Africa. 


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Th*  first  thr**  of  tha  Sullivan  Principles  deal  prlnarlly 
Mlth  conditions  in  tha  wortcplace  such  as  desegregation, 
agual  [lay  for  equal  worlc  and  mlnlaun  tfage.   They  are 
evaluated  on  a  pass/fail  basis  so  that  It  Is  possible  for 
tha  eaployees  themselves  In  South  Africa  to  verify,  on  the 
basis  of  the  grade  we  give  to  a  company,  the  appropriateness 
of  Its  responses. 

For  the  last  three  Principles  the  companies'  efforts  and 
performance  are  evaluated  with  respect  to  support  of 
training  and  advancement  of  employees,  education  generally, 
and  community  development,  such  as  housing  and  assistance  to 
Black  businesses.   A  portion  of  these  efforts  are 
appropriately  measured  by  financial  contributions.   These 
and  certain  other  quantitative  measures  are  subject  to  audit 
each  year  by  the  company's  regular  certified  public 
accounting  firm.   Our  own  analysis  and  subsequent  grading  of 
each  company  are  based  upon  this  quantitative  Information  as 
well  as  written  descriptions  of  the  company's  activities  and 
accomplishments  related  to  the  last  three  Principles.   This 
analysis  is,  to  a  substantial  extent,  judgmental,  making  It 
very  difficult  to  embody  In  law.   Indeed  I  would  not  wish  to 
undertake  this  evaluation  in  a  legal  rather  than  the  present 
voluntary  environment . 


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SAvcral  other  coda*  for  South  Africa  bav*  b»«n  promlgatad. 
Of  these,  only  the  Burop««a  Beonoalc  Coaaunlty  cod*  requires 
annuaa  repartlng.   Hhlle  the  Sullivan  Coda  h«a  four  tlaea 
Increased  in  ecotie  and  level  of  requlreaents,  the  EKC  coda 
has  reaelned  etatjc.   rurtheraore.  the  reporting  re^lreaent 
Is  quite  unlapreeslve  coapared  to  that  of  tha  Sullivan 

One  of  the  frequently  raised  leeues  la  the  accoapllshaenta. 
it  any,  at   the  Sullivan  Principles.   In  considering  both  the 
compliments  end  the  brlckbete  alaed  at  the  Principle*.  1st 
us  not  forget  that  very  likely,  euch  of  our  eense  of  urgency 
here  In  the  Onlted  States  for  change  In  South  Africa  steas 
froB  our  own  guilt  coeplex  end  fruetratlon  In  atteaptlng  to 
deel  effectively  with  the  alnorlty  situation  In  our  own 
country.   HoMeveri  South  Africa  Is  a  sovereign  country,  with 
Its  OMn  Constitution,  and  Me  need  to  reflect  on  our  own 
likely  reactlone  if  people  of  another  country  Mere  to  tell 
us  the  change*  Me  ehould  >ake  In  our  Constitution.   I  do  not 
eean  to  laply  that  no  should  Ignore  the  situation  in  South 
Africa,  but,  rether,  the  absolute  neceselty  for  moving 
thoughtfully  and  constructively,  reaeaberlng  that  the  evil 
of  epertheld  Mill  end  only  by  vote  of  the  White  South 
Africens  or  by  a  revolution.   I  think  It  Is  laportant  that 
all  of  us  keep  this  thought  In  alnd  because  Mhlla  no  aey  not 


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like  th*lr  daflRltion  of  who  Is  a  citizen  of  their  country, 
It  is  their  country,  not  ours,  and  that  fact  Units  what  we 
can  do  and  have  been  able  to  do. 

The  Sullivan  Principles  have  acconpllshed  many  things  in 
South  Africa.   Non-American  companies  In  South  Africa  have 
told  me  that  It  has  been  necessary  for  them  to  change  their 
own  amployment  and  social  practices  In  order  to  leeep 
Anerican  coBpanies  froa  hiring  away  their  best  employees. 
In  their  various  industries.  Signatory  companies  have  been 
in  the  vanguard  with  respect  to  Increasing  minimum  wages, 
recognition  of  non-white  unions,  training,  and  housing 
assistance.   Although  the  Signatory  companlas  employed  lass 
than  one  percent  of  Black  workers  In  1983,  these  employees 
held  ISK  of  the  99-year  land  leases  outstanding.   This 
record  was  made  possible  as  a  result  of  financial  aid  and 
education  about  the  value  of  home  ownership.   Since  the 
start  of  the  program.  Signatories  have  contributed  over  32 
million  dollars  to  improved  health  care  and  living 
conditions  outside  the  workplace  excluding  education.   Last 
year,  they  contributed  toward  the  education  of  non-white, 
non-employees  over  $10  million.   They  also  contributed  the 
services  of  their  employees  to  the  extent  of  more  than 
110,000  man  days. 


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Tha  SlgnatorlBB  have  also  tmllt  «  vary  tiam   aecondary  achool 
In  Smmta.   It  la  not  only  the  beet  echool  In  South  ACriem, 
pnbllc  or  private,  but  very  likely  one  of  the  beat  schools 
In  the  Morld. 

So«B  people  say  that  the  Sullivan  Principles  do  not  go  far 
enough,  and  a  nuaber  of  Investors  press  the  coapanlea  in 
which  they  are  Invested  to  go  farther.   But  going  further 
nay  be  contrary  to  Mhat  Black  South  Africans  Mant.   Lots  of 
people  In  this  country  say  that  coapanles  should  divest  -  or 
dls-lnvest.   I  have  great  difficulty  with  this  because  I 
think  the  najority  of  the  Black  people  in  South  Africa  don't 
really  Hsnt  It.   Indeed,  Professor  LsMrencs  Schleaaer,  idio 
is  a  profeesor  of  Sociology  at  the  University  of  Metal,  has 
Just  completed  a  survey  and  has  found  that  the  sajorlty  of 
the  Black  people  In  his  sanpltt  are  happy  to  have  foreign 
Inveetnent  In  South  Africa  and  reellzs  that  it  produces  aany 
Jobs  and,  therefore,  helps  a  lot  of  people  to  eat.   Over 
half  reconnend  that  foreign  coMpanlee  expand  rather  than 
wlthdraM:  and  7Sk  were  against  withdratfal  according  to  that 
survey . 

Our  Dost  recent  annual  report  was  published  in  October  of 
1984.  In  sons  instances  It  Includes  Multiple  grades  for  a 
Signatory  conpany  where  the  cospany  reports  on  sore  than  one 


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operation  In  South  Afric*.   Thlrty-tNO  raceivBd.  tha  highaat 
grade,  fifty-one  others  also  received  passing  grades,  and 
thirty-two  received  Calling  grades. 

In  order  to  be  a  Signatory,  a  company  Is  required  to  make  a 
nominal  contribution  to  support  the  Sullivan  admlnistratlva 
operation.  Including  tha  raporilng  process,  and  to  report 
each  yaar . 

Since  last  October,  tHenty-six  new  Signatories  have 
enrolled,  bringing  ttia  total  Auerlca  Signatories  to  ona 
hundred  and  fifty  at   the  approximately  three  hundred 
American  companies  Icnovm  to  have  operations  in  South  Africa. 
The  median  signatory  company  size  In  South  Africa  is  two 
hundred  employees,  the  range  being  from  1  to  about  5000 
employees. 

Last  year  the  Signatories  reported  upon  65,000  employees  or 
about  one  percent  of  the  total  aconomlcally  active  labor 
force  in  South  Africa.   The  Influence  of  the  Signatory 
companies  goes  Car  beyond  this  one  percent,  however. 


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I  sincerely  bellevo  that  the  Sullivan  progran  is  dynamic 
bacauaa  it  la  a  voluntary  code  and  Dr.  Sullivan  ia  a  tough 
taskmaster.    The  Signatory  coapanlas  do  have  a  strong 
positive  effect  In  South  Africa  by  setting  tha  standards  for 
business.   But  they  alone  Mill  not  be  rasponslbla  for  the 
ellslnatlon  of  apartheid.   More  participating  cospanlas  Mill 
both  improve  conditions  and  bring  mors  prsssure  on  the 
government.   My  recoamendatlon  is  that  ms  should  concantrata 
on  urging  the  remaining  American  coapanlas  in  South  Africa 
to  bscoma  Signatories  as  Mali  as  encouraging  South  African 
and  other  foreign  coapanlas  In  South  Africa  to  join. 

In  ay  observation,  economic  boycotta  and  other  foreign 
pressures  short  of  Mar  are  not  effective  in  bringing  changa 
within  a  country.  Our  two  bast  levers  to  motivate  change  In 
South  Africa  are  working  within  the  internal  economy  through 
our  companies  there  and  supporting  aoaantous  Improveaent  in 
ths  education  of  Blacks. 

The  ultimate  objective  of  ending  apartheid  without 
disintegration  of  tha  country  will  come  with  equality  of 
education.   The  Sullivan  Signatories  are  making  a  large 
contribution  to  this  objective  but  the  need  raqulres  tha 
support  of  many  others.   If  wa  in  the  United  Statea  want  to 
cause  peaceful,  naanlngful  change,  we  will  offer  to  support 
aassive  educational  aid  to  Blacks  In  South  Africa.   Our  only 
condition  should  be  that  there  Is  a  single  educational 
system  for  all  tha  people  of  that  country.   He  will  need  the 
help  of  many  others  such  ae  Japan  and  Sweden  who  are 
outspoken  against  apartheid. 


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Senator  Heinz.  Mr.  Weedon,  thank  you. 
Mr.  Marzullo. 

STATEMENT  OF  SAL  MARZULLO,  CHAIRMAN  OF  THE  INDUSTRY 

SUPPORT  UNIT  FOR  SULLIVAN  PRINCIPLES,  SPOKESMAN  FOR 

SULLIVAN  COS. 

Mr.  Marzullo.  Senator  Heinz,  Senator  Proxmire,  I  appreciate 
the  opportunity,  along  with  some  of  my  colleagues,  to  appear 
before  you  today,  however  briefly,  to  explain  why  we  remain  in 
South  Africa  and  why  we  believe  we  are  making  a  genuine  contri- 
bution toward  the  change  process  developing  in  that  country. 

I  think  you  will  agree  that  it  is  doubtful  whether  there  are  many 
more  emotional,  contentious,  and  complex  issues  facing  us  today  in 
the  foreign  policy  area  than  those  posed  by  the  existence  of  apart- 
heid in  South  Africa.  Yet  that  very  fact,  it  seems  to  me,  requires  us 
to  look  at  all  of  the  realities,  both  pleasant  and  unpleasant,  that 
one  must  deal  with  in  looking  for  rational  solutions  to  achieve 
peaceful,  effective,  and  genuine  change  in  that  society. 

We  are  aware,  of  course,  that  there  are  many  strategies  for  deal- 
ing with  this  issue  and  we  do  not  question  either  the  motivation  or 
the  goodwill  of  those  who  disagree  with  us.  Yet  we  would  like  to 
suggest  that  our  position  is  one  that  is  not  only  equally  moral  and 
tenable,  but  a  practical  one  as  well.  We  seek  to  help  change  a  socie- 
ty through  our  active  involvement  and  presence,  not  to  distance 
ourselves  from  the  injustices  that  exist. 

The  utilization  of  our  human,  technical,  and  financial  resources 
in  South  Africa  is  Eill  aimed  at  bringing  about  peaceful  change  and 
racial  equality  in  that  country.  We  seek  to  work  with  all  those  in 
South  Africa  who  strive  for  that  equality:  Government,  business, 
academe,  church,  and  other  institutions.  Our  way  to  change  is  not 
easy  and  it  is  often  frustrating,  but  it  has  produced  measurable  re- 
sults. What  we  are  doing  is  not  the  total  answer  to  that  country's 
problems  and  never  will  be.  But  it  is  an  important  part  of  the  ulti- 
mate solution  and  those  efforts  have  stimulated  initiatives  from 
other  companies,  European  and  South  African,  and  have  galva- 
nized thinking  on  the  need  for  change  among  other  institutions  in 
the  country.  Ido  not  wish  to  overexeiggerate  what  has  been  accom- 
plished, hut  equally  it  would  be  wrong  to  underestimate  or  ignore 
both  the  practical  results  and  the  symbolic  importance  of  the 
change  process  that  has  been  set  forth  by  the  implementation  of 
the  Sullivan  principles. 

SOME  EROSION  THROUGH  ECONOMIC  GROWTH 

Apartheid  has  been  eroded  by  economic  growth.  The  process  of 
urbanization  and  industrialization  hEts  done  more  to  doom  tradi- 
tional apartheid  and  separate  development  than  any  other  single 
influence.  If  South  Africa  is  to  survive  and  prosper,  we  must  build 
on  that  momentum  and  help  to  bring  white  and  black  South  Africa 
together  as  one  people,  one  nation.  American  companies  have 
helped  to  accelerate  reform  and  the  Sullivan  principles,  far  from 
being  cosmetic,  have  been  a  useful  vehicle  for  helping  to  build  a 
climate  for  change — first  in  the  workplace  and  later  in  the  larger 
outside  community.  It  has  not  been  easy— it  will  not  be  easy  in  the 


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376 

future;  but  the  changes  are  real  and  if  apartheid  has  not  yet  been 
dismantled,  its  pillars  have  been  hammered  away  and  chipped  at. 
It  will  ultimately  ffdl.  The  growth  of  black  trade  unionism,  for  ex- 
ample, aided  by  U.S.  companies,  has  provided  one  of  the  most  fun- 
damental changes  to  have  taken  place  in  South  Africa  so  far.  We 
should  be  seeking  not  to  stop  or  impede  the  flow  of  this  force  for 
change,  but  to  encourage  it  and  provide  incentives  for  it.  Harry  Op- 
penheimer,  one  of  South  Africa  s  leading  industrialists  and  liberal 
spokesman — as  a  matter  of  fact,  Senator  Proxmire,  he  is  one  of  the 
founders  and  bankers  of  the  PFP,  the  leading  opposition  party — 
has  written  that  punitive  acts,  however  well  intentioned,  may  com- 
promise the  successes  of  the  past  and  he  counterproductive. 

The  Sullivan  principles  are  not  perfect.  We  keep  revising  them 
and  Dr.  Sullivan,  a  deeply  committed  man  who  has  given  so  much 
of  his  total  energies  to  this  task,  prods  and  pushes  us  and  proposes 
still  more  challenges,  and  I  suspect  he  will  continue  to  do  so.  South 
Africa  is  not  the  same  country  it  was  just  5  years  ago,  and  never 
will  be  again.  Whatever  its  problems,  the  Sullivan  principles  have 
helped  to  shape  major  changes  in  South  African  legislation  and 
labor  policy.  Changes  have  come  both  from  internal  forces  now  op- 
erative in  the  South  African  ambience — primarily  the  economic 
forces  of  South  Africa's  economic  development — and  from  moral 
pressure  from  American  shareholders,  churches,  and  others  here  in 
our  own  country.  The  responsible,  concerned,  caring  pressure  is 
welcome  and  has  been  productive.  The  simplistic  sloganizing 
doesn't  help  vpry  much. 

We  know,  as  you  do,  that  the  Sullivan  principles  alone  are  not  a 
guaranteed  method  of  providii^  quick  and  simple  resolution  of  the 
injustices  that  exist  in  South  African  society.  Only  South  Africans, 
all  of  them,  will  evolve  the  final  solutions  to  their  problems.  But 
we  must  help  them.  In  short,  we  strongly  beheve  that  our  collective 
commitment  to  the  Sullivan  principles,  properly  coordinated  and 
properly  implemented,  offers  the  possibility  of  making  a  greater 
contribution  to  change  than  does  withdrawal.  Again,  I  emphasize 
the  vital  importance  not  only  of  the  changes  but  of  their  symbolic 
value.  Our  efforts  are  multiplied  by  those  of  leading  South  African 
businessmen  euid  by  South  Africa's  major  employer  groups  who  in 
January  publicly  committed  themselves  to  a  full  and  equal  role  for 
blacks  in  both  the  economic  and  political  life  of  South  Africa. 
These  groups  represent  more  than  80  percent  of  the  employment 
strength  of  the  country. 

I  might  add  here  that  since  1977,  when  12  American  signatory 
companies  signed  the  original  principles,  we  now  total  152  compa- 
nies. We  have  spent  well  over  $100  million  in  health,  education, 
community  development,  training,  housing  since  1978.  More  impor- 
tantly, programs  initially  developed  on  a  locfil  level  have  now  been 
developed  for  longer  term  results  at  both  the  regional  and  national 
levels  in  the  fields  of  heedth,  education,  housing,  and  black  entre- 
preneurship.  We  are  making  progress. 

U.S.  firms  in  South  Africa  are  an  antiapartheid  force,  a  force  for 
chaise,  for  bridge  building  and  racial  reconciliation.  Our  severest 
critic  in  the  United  States,  Reverend  Sullivan  himself,  has  said 
while  calling  for  a  complete  end  to  apartheid  the  following: 


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376 

The  principles  ere  not  an  academic  response  designed  to  advance  the  views  of 
those  who  are  proponents  of  either  investment  or  divestment.  To  the  contrary,  the 
principles  are  a  pragmatic  policy  based  upon  the  most  judicious  engagement  of 
availwle  resources,  and  are  intended  to  improve  the  quality  of  life,  to  help  bring 
justice  to  unliberated  people,  and  to  help  build  a  peaceful,  free  South  Africa  for  ev- 
eryone. 

We  are  at  a  critical  juncture  in  South  African  history.  Many 
white  South  Africans  now  understand  that  meaningful  adveuice  for 
the  nonwhite  population  and  their  own  long-term  survival  are  not 
possible  without  fundamental  structural  reform  of  that  society.  We 
must  work  with  these  people  to  hasten  the  pace  and  to  make  those 
changes  South  Africans  of  all  races  desire.  It  would  be  ironic  if  at 
this  critical  point  in  South  Africa's  political  history,  when  a  gov- 
ernment is  beginning  the  process  of  fundamental  change  that  we 
have  all  been  calling  for,  that  we  who  detest  apartheid  and  all  that 
it  represents  should  make  it  impossible  for  those  changes  to  take 
place  peacefully. 

The  apartheid  policies  of  South  Africa  are  repugnant  to  all 
Americans.  The  debate,  however,  is  not  about  defending  apartheid, 
for  it  is  indefensible.  It  destroys  whites  just  as  surely  as  it  destroys 
blacks.  The  argument  is  about  how  best  effectively  to  change  South 
Africa's  racial  policies  and  on  that  strategy  good  and  honest  men 
may  and  do  disagree. 

In  conclusion,  Mr.  Chairman,  I  would  like  to  make  the  following 
points: 

One,  our  only  leverage  to  accomplish  change  in  South  Africa  is 
in  our  presence.  Withdrawal  from  South  Africa  would  neither 
bring  down  the  South  African  Government  nor  affect  the  policies 
of  that  Government. 

Two,  American  Arms,  through  adherence  to  voluntary  standards 
of  social  responsibility,  have  been  a  leading  force  for  evolutionary 
change  away  from  apartheid.  Mandatory,  confrontational  legisla- 
tion would  jeopardize  that  effort. 

Three,  divestment  or  curbing  American  investment  would  be 
against  the  wishes  of  a  large  number  of  South  African  blacks  who 
see  the  role  of  U.S.  business  in  their  country  as  constructive  and 


Four,  economic  power  is  vital  to  the  nonwhite  community  in 
South  Africa.  Investment,  through  jobs  and  training,  provides  that 
power.  A  well-educated  and  well-trained  work  force  is  the  ultimate 
force  causing  the  system  to  change. 

Five,  U.S.  businesses  should  be  encouraged  to  increaise  their  role 
in  the  economy  and  their  voluntary  efforts  to  influence  social 
change. 

Six,  to  the  extent  that  sanctions  seek  to  govern  the  actions  of 
South  African  affiliates  of  U.S.  companies,  they  place  these  compa- 
nies in  an  impossible  situation  between  two  authorities. 

Seven,  enactment  of  economic  sanctions  also  would  set  a  sense- 
less precedent  for  subsequent  legislation  restricting  U.S.  business 
operations  in  any  countries  whose  social  policies  might  be  objec- 
tionable. Not  that  this  is  the  intent  of  the  Senate,  but  all  I'm 
saying  is  ihat  I  think  we  need  to  be  very  careful  about  how  we  put 
American  business  in  a  position  where  it  is  faced  with  competing 
authorities  on  an  issue  that's  as  delicate  as  this  is.  Certainly,  we 


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377 

have  every  right  as  a  country  to  protest  infringements  of  human 
rights  anywhere  they  exist. 

I  thank  you  again  for  your  invitation. 

[The  complete  prepared  statement  follows:] 


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STATE KENT  OF 

SAL  G.    HAKZULLO,    CHAIRMAN,    INDUSTRY  SUPPORT  UNIT 

OM  BEHALF  OF  THE   SULLIVAN  SICTATOBY   COMPAHIES 


I   appreciate   Che  opporci 

believe   ue   are  making   a 
developing    in  South  Afri 

It   ia  doubtful  whether  c 

poaed   by   the  e 


r  before   you   today 
Frica  and  why  ue 
ie  change  pro 


>  look  at  all  the  realitie 
t  deal  with  in  looking  for  ratio 
ire  and  genuine  change  in  chat  so 


e  many  ecrategie 


lally  moral  and  tenable,  but  a 
lelp  change  a  society  through  o 
:   to  distance  ourselves  from  (h 


•    for  that   equality:      gave 

rating,  but  it  has  produce 
:  the  total  answer  to  that 
:   is  an  inportint  part  of 

in,    and  have  galvanized   th 

iccoivplished,  but  equally 
;nore  both  the  practical  resul 
lange  process  that  has  been  se 
illivan  Principles. 

irtheid  has  been  eroded  by 


illivan  Frincipli 


growth.     The  process  of 
LndustrialiEation  haa  done  more  to  doon  traditional 
irate   development   than  any  other   single   influence.      1 

:e  and   black   South  Africa   together  as  one  people,    onl 
companiea  have  helped   to  accelerate   reform  and  the 
!■,    Ear  from  being  cosmetic,   have  been  a  useful  vehie 


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r  helping  Co  boild 
ter  in  the   larger  i 
the  fucu; 
iauntlcd 
t   will  ultinati 
exaaple,   aided  by  U 
daaental  change* 
Should  ba   ••eking,    d: 
flou  of   thi 

Lt.     Harry  Oppenhi 

itioned,  B 


■ace  for  change' 

=  co_i.ic;.     II 

the  changi 

ilUcs  h.v 

.y  fall.      The  gt. 

coapaniea,  ha 

hove   taken  pli 

change,    but   to  encourjlg« 

■er,  one  of  Sout 

has  writtan  thai 
Mile  the  < 


<Ti  ha^Dared  away  i 


for 


to  atop  or  iapeda  the 
C   and  provide  incentive* 
leading  icidustrialiata 


:(Mn*itted  aien  uho  ha*  given 
ik,    proda   and  pushes   us  and 


lep  reviaing  thaa,   and  Dr. 


Principles  have  helped 
legislation  and 


™,  will  evolve  t 
them.  In  short , 
e  Sullivan  Princi 
ncnCed,    offer   Chi 


do,   that   Che  Sull 


van  Principles  alone  arc 
linpl*  resolution  of  the 
Only  South  Africsns,   all 
r  probleas.      But  He  auat 

I  and  properly 


T  might  sdd  here  thst  since  1977,  vhen  12 
signed  the  original  Principles,  ue  now  tot 
spent  well  over  one  hundred  million  dollar 
community  development,  trsining,  housing  ■ 
programs   initially  developed  c 


longel-teia  r 


aultt 


c  both  Che  regional  and  natio 


ignacory  eoapaniea 
ipaniea.     We  have 
n  health,   education, 

1978,     Hare  importantly, 

!  loped   for 


cl  hi 


al  lt\ 


Bla  in  Che 


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fi«l<]>  of  hea 

1th.  educ 

ation,   housi 

ng   an<i 

1  black  entrepre 

neurship. 

Baking  prog re 

at. 

D.S.    finii    in 

South  Af 

riea  are  an 

anti-< 

ipartheid    force. 

a   force   ft 

change ,    for  b 

ridge  bui 

Iding  and  ra 

cial  T 

econc  illation. 

Our  severe 

critic   in  the 

Onited  S 

tatea.   Rev. 

SulUv 

'an  hinaelf,  has 

said  uhilt 

calling    for   a 

compleEe 

end  to  apar 

the  id. 

"The  Prir 

adenic   re 

sponae  designed  tc 

1  advance   the  vi 

evs  of  thoE 

■re   proponent 

■  of   eith 

er   inve3t=.en 

livestTTient        to 

Principles  er 

e  a  pragn 

atic   policy 

ba  ed 

up^in  the  most   j 

udieious 

engageunt  of 

availabl 

and  i 

ioprove  th. 

quality  of   li 

fe,   Co  he 

Ip   bring   ju. 

build  a  peace 

ful,    free 

South  Afric 

a  tor 

everyone." 

Wa  are   at   a  c 

ritical  j 

uneture   in  S 

outh  f 

.frican  history. 

Many  whi( 

AfricflnB  now 

d  that  Deani 

ngful 

advance   for  the 

non-white 

populBtioP  ar 

wn  long-tern, 

survi 

val   is  not  poas 

ible  vithoi 

refonii.      He 

work  with  cheae 

people   to 

the  pace    and 

to  make  C 

hose  changes 

South  Africans  of  a 

1  races  de< 

It  would   be   i 

ronic      f 

at   this  crit 

ieal  p 

.oint   in  South  Africa' s  pol 

history,    uhen 

ment   i.  begi 

nning 

the  proccaa  of 

that  ue  have 

all  been 

calling   for. 

we  who  detest  a 

parcheid   ar 

that  it   repre 

aente.   ah 

ould  nake  it 

impo- 

isible    for   those 

place  peacefully. 

The  apartheid  policies  of  South  Africa  are  repugnant  to  al 
The  debate  however  ia  not  about  defending  apartheid,  for  i 
indefenaible.  It  ia  about  how  best  effectively  to  change 
racial  policies  and  on  that  strategy  good  and  honest  men  n 

In  concluaion,  Mr.   Chalman,   gentlemen,    I  would  like  to  ma 


Our  only   leverage   Co  exetciae  change  in  South  Africa   is  in  our 
pcaaance—withdrawal  from  South  Africa  would  neither  bring  down 
the  South  African  Governnent  nor  affecC  Che  policies  of  that 
Govemoant. 

Anerican  fiima,   through  adherence  to  voluntary  standards  of 
aocial  reaponaibilicy ,  have  been  a  leading   force   for 
evolutionary  change  away  froa  apartheid.     Mandatory, 
confrontational,   lagislacion  would  jeopardiie  that  effort. 


DivtstaenC  or  curbing  Anerican  invescment  « 
wiahea  of  a  large  number  of  South  African  h 
role  of  U.S.  businaaa  in  Chair  countiy  aa  c 
progtaaaive. 


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Bconoatc  power  is  vital  to  cha  non-fhita  caiauciitjr  in  South 
Africa.      Inveacmant,    through  joba  and  training,   providea   that 
power.     A  uell-educitcd  and  wall-trained  work  fore*  is  th« 
ultinate  force  cauaing  the  ayatea  to  change. 

U.S.   buainesae*  should  be  encouraged  to  incraaae  their  role   in 
the  econony  and  their  voluntary  efforta   to  influence  aocial 

To  the  extend  that  sanction*  aeek  to  govern  the  action*  of 
South  African  affiliates  of  U.S.  coaipanies,   they  place  theae 
coapaniea  in  an  impoaaible  situation  between  two  authoritiea. 

Enactment  of  economic  sanctioni  alao  would  aet  a  aanselaas 
precedent   for  lubaaquent   legislation  raatcicting  U.S.   busine** 
operations   in  any  countriaa  whoae  social  policisa  aight  be 
objectionable. 

e  again,    thank  you  for  your  invitation  to  appear  before  thi* 


Senator  Proxmire.  Thank  you  very  much,  Mr.  Marzullo.  The 
chairman  had  to  leave.  He  had  to  go  to  the  White  House  for  a 
meeting  and  he  apologizes,  but  I  would  be  delighted  to  listen  to  you 
gentlemen  and  then  question  you. 

Mr.  Schroll,  you  have  a  2V^-page  statement.  If  you  gentlemen  can 
abbreviate  in  any  way  we  would  be  very  grateful.  The  hour  is  get- 
ting late.  Go  right  ahead,  sir. 


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STATEMENT  OF  GEORGE  J.  SCHROLL.  CHAIRMAN,  EDUCATION 
TASK  GROUP  OF  THE  SULLIVAN  SIGNATORY  COS. 


ttj   naas  is  George  Scbioll  and  since  1977  I  have  been  a  atmher   of  the 
Industry  Support  Colt  ofthe  Sullivan  Principles  and  for  the  past  three 
years  have  served  as  Chairman  of  the  Education  Task  Group  for  the 
Piinclplea. 

I  want  Co  thank  you  for  the  opportunity  of  appearing  before  you  today. Llka 
others,  I  am  heie  today  to  present  InfomatioD  in  support  of  the  vslue  of 
the  continued  preaence  of  American  Corporations  in  South  Africa  to  bring 
about  the  end  of  jipartheld.  At  the  outset   I  believe  it  Is  Inportent  to 
correct  SOtae  trrofieoUB  ImptesEiDus  which  have  been  given  fairly  vide 
circulation.   The  first  of  these  Is  that  the  pre^eUce  of  American  baaed 
corporations  In  South  Africa  In  SOne  manner  BuppoTtB  the  system  of 
apartheid.  Nothing  could  be  further  from  the  truth   Each  company  tfblcb 
endorsed  tbe  Sullivan  Prlnclplea  has  made  a  commitment  to  work  toward  the 
ellalnatlon  of  that  system   Signatorlea  recognize  that  the  whole  concept 
of  racial  separation  and  discrimination  which  forms  the  basis  of  apartheid 
is  not  only  Borally  wrong  but  economically  bankrupt. 

Tbe  notion  that  apartheid  makes  the  conduct  of  business  easier  or  aore 
profitable  la  also  Incorrect   Elements  of  the  apartheid  system  such  as 
Influx  control,  reduce  the  mobility  of  non-vhlte  employees.  Kany  hours  of 
aanagement  time  are  devoted  to  aecuring  residential  rights  in  urban  areaa 
for  employees   Begulationa  controlling  tbe  iViAS  where  employees  may 
reside  neceasltate  the  adjustment  of  shifts  to  match  the  availability  of 
Halted  tranaportaclon  to  the  townships  where  black  workers  are  forced  to 
reside.   The  separate  and  Inferior  eduction  system  provided  for  blacks 
vakas  it  iteceasary  for  companies  to  supply  supplemental  education  at  tha 
work  place  fdr  in  excess  of  the  needs  In  other  aread  of  the  world, 
negotiations  with  unions  are  mote  complex  due  to  the  Interalngllog  of 
political  and  work  related  matters  resulting  from  the  fact  that  union 
Benbersblp  currently  provides  the  only  area  where  the  black  man  haa  a 
voice  In  determining  those  things  which  impact  on  his  life.  Responding  to 
enquiries  from  church  groups,  universities  and  share  holders  on  the 
corporate  preaence  in  South  Africa  imposes  a  work  load  far  greater  than 
that  resulting  froB  a  presence  in  any  other  country  in  the  world.  All  of 
this  is  unique  to  South  African  operatloos. 

For  tbe  vast  aajority  of  the  Signatory  Companies  to  the  Sullivan 

Principles,  dlaioveatnent  of  their  South  African  operations  would  be 

disruptive  but  would  not  have  a  crippling  impact  on  the  organizations* 
continuing  existence. 


It  it  is  true  that  doing  bualneea  In  South  Africa  today  Is  more  cosplmc 
than  in  >any  other  countries,  and  If  the  voluaa  of  business  and  tbe 
profitability  are  auch  that  dlslnvestaent  would  not  have  a  crlpplini 


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Intact,  «h;  then  do  «•,  the  Signmtory  CoBpanlsa,  appo«a  Icilslstlon 
dcBlgaed  CO  apply  pieBuurc  for  dlalnveHtnencT  Thar*  all  n  nmbar  of 
KMons  foT   Chls  but    fiTenost  urongBt  tbu  1«   ChaC   It   la  our  ballef   that 

our  pi-esenee  pernlta  us  to  conilnually  tdke  aetlom  which  erode  aparthald 
and  cceelcrate  evolutionary  change.      Ve  do  not  liellcve  that  the   acElvltla* 
of  the  American  Coicpanles  of.   and  by   thCBselvts      Can  caua*   Che  dovnCsU  of 
apartheid  but  ve  can     and  do.   continnally  vaar  away  the  foundaclnna  of 
thle  sytaa,   and  as  Dr.   Sullivan  haa  often  aaid,  "Va  aarva  aa  a  catalyst 
for  change".      Please  understand   I   am  not   trying  to  palnC  the  ■ultlnaClonal 
oiganlzatlooa  uhli.h  comprlEe  the   Signatory  Coapanli'B  aa  aolcly 
altruistic        T)ie  frea  South  Africa  which  will  Inevitably  evolue.  with  all 
racial  groups  partlclpaCiiig  In  the  political  aod  ecoaonlcal   ayates.  Will 
be   a  atfiblc     wealthy  nation  with  the  Boat  developad  Inlrastmcturc  la  all 
of   Africa  well  into  the  foreseeable  futvre        For  all  of   thaea  Icaaooa.  wa 

accelerating  the  ecoDonic,   social  and  political  chungea  which  will  put  an 
end  tu  apartheid  and  bring  about  a  aore  equitable  society  for  all  the 
people  of  South  Africa. 

If  asked  whether  the  efforts  of   the  Signatory  Coapanlea  have  been 

Teaponslblc  for  any  changes  which  have  taken  place   In  South  Africa  over 
the  past   seven  years     thi?  answer  would  have   to  be  a  definite  yea        The 
Wlehan   Conmlttee  studies  which   led    to   laglslstinn  enabling  the  tocsatlon 
of  black  uitlotiB  were  due  In  a  very  large  part  to  the  adoption  of  the 
Sullivan  Principles  by  Ametlcan  Companlce.      The  granting  of  99  year 
lesseholdB   to  blacks     whlcli  gave  defacto  recognition  of  their  right  to 
reside  permanently  In  the  urban  areas  was  aJao  due  In  a  large  MCature  to 
efforts  of  the  Sullivan  CoiiipanieE  and  this  of  course  wtta  a  aarloua  aroalon 
of   one  of    the  basic  tenets  of   apattheid        Beyond  this      the  Sullivan 
FrinclpleH   led  lo   the  developnent  of  similar  codes  and  initiatives  by 
European  and  South  African  coBpanlea  adding  to  the  growing  preaanrea  for 
Meaningful  change. 

It  Hiat  be  re-caphaslied  that  apartheid  la  equally  repugnant   to  the 
Signatory  Companies  aa   It   is   to   those  critical  of   the  preaenca  of  Aaarican 
business  In  South  Africa.     Where  we  differ  with  these  crltica  1*  In  the 
Beans  by  which  it   is  to  be  ended.     We  believe  that  by  increasing  the 
efforts  which  have  been  applied  over  the  pest  eight  yeara  Hich  wire  can  be 
achieved. 

By  contrast,   the  advocates  of  dlslnveatnent  believe  that  withdrawal  by  tba 
American  Conpanles  would  bring  about  an  economic  crlaia  which  in  turn 
would  lead  Che  govemaent  to  a  rapid  dlsBsatllng  of  apartheid.     While  thia 
sounds  like  an  attractive  result     there  is  little  reason  to  believe  that 
It  would  take  place      The  economic  dislocation  caused  by  Aaarican 
withdrawal  would  not  lie  large  and  the  alack  thiia  created  would  be  taken  up 
by  local  and  foreign   investors  Icbb  committed  Co  racial  equality  than  the 
Aaerican  companies  they  would  be  replacing       One  sura  effect  of  d  Aaarican 
withdrawal   would  be  the  threat  lo   the  enployment  of     20.000  blacks  who 
have  been  trained  and  developed  by  Aaerican  cocpanles,   aa  they 
daaagregated  the  workplace  over  the  paat  decade. 


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Supporting  this  concentlon  is  th«  opposition  to  disinvoatnent  espicssad  b; 
both  the  NatloDal  African  Ch««bi:r  of  Co^Mrce  and  InduatTj  ss  well  as  the 
Federation  of  South  African  Trsde  Uniona  which  currently  bas  an  e«tl>atcd 
■cnberahlp  of  130,000  and  la  the  aoat  active  organizer  of  black  labor  in 
that  country.   In  attacking  the  policy  of  dialnvestsent ,  tbe  national 
Aftlcan  Cbasbex  of  Comncrce  acd  induetry  equated  economic  growth  es  being 
"a  powerful  catalyst  in  the  proceaa  of  peaceful,  aocial  and  political 
'  icfolB  in  the  country". 

Economic  growth  has  also  been  one  of  the  icajor  factors  in  eliminating 
apartheid  In  the  workplace.  Aa  Industry  expanded  more  and  more  positions 
were  opened  to  blacks  and  econonlc  pressures  Joined  with  political  change 
CO  bring  about  the  end  of  Job  lenervation  for  whiten.   These  sane 
pressures  led  to  greater  urbanization  and  ae  mentioned  earlier  blacke 
living  In  Che  urban  areas  are  now  recognized  aa  permanent  residenta  rather 
than  Bojoumera  who  would  eventually  return  to  their  rural  homelands. 


meaningful  reform.  Tbe  announced  abolition  of  the  Hlxed  Harriagea  and 
Immorality  Acts  signified  the  elimination  of  one  of  the  pillars  of  the 
concept  of  aeparate  development.  The  national  party  has  announced  the 
intention  of  opening  of  urban  centera  to  black  enterprise  and  mention  has 
been  made  of  retention  of  South  African  citlienship  by  those  blacks 
residing  in  the  honielands.  Much  remains  to  be  done  but  the  stirrings  of 
change  are  to  be  seen  everywhere. 

In  •ummacy  this  is  not  the  time  to  advocate  the  withdrmal  of  American 
Investments  In  South  Africa.  Rather  It  is  the  time  to  accelerate  the 
voluntary  efforta  of  tbe  signatory  companies.  Recognizing  this  the 
signatory  companlea  overwhelmingly  endorsed  Dr.  Sullivan'a  4th 
AKpllfication  of  the  principles  and  have  promised  to  actively  pursue 
legialatlve  change  to  end  all  aspects  of  apartheid.  Let  the  Signatory 
Co^anlcs  continue  with  renewed  efforts,  tbe  work  we  began  eight  years 


a   appear  before  this  sub 


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Senator  Proxmire.  Thank  you  very  much,  Mr.  Schro!!. 

Mr.  OTarrell,  I  would  be  delighted  to  put  in  the  record  the  state- 
ment by  the  AFL-CIO  Executive  Council  on  South  Africa  made  at 
Bal  Harbour,  FL,  the  statement  of  the  ICFTU  on  apartheid  in 
South  Africa  of  April  13,  1985;  the  statement  of  the  AFL-CIO  Exec- 
utive Council  on  South  Africa  of  May  7,  and  I  think  that's  about  it. 
Gto  right  ahead  and,  again,  I  would  appreciate  it  if  you  could  abbre- 
viate your  statement.  It's  an  excellent  statement,  but  the  hour  is 
getting  late. 

STATEMENT  OF  PATRICK  O'FARRELL,  EXECUTIVE  DIRECTOR, 
AFL-CIO.  AFRICANAMERICAN  LABOR  CENTER 

Mr.  O'Farrell.  Senator,  I  thank  you  very  much  and  I  will  try  to 
abide  by  your  admonition,  but  I  supix>se  I  feel  a  little  bit  like  the 
anchorman  at  the  graduation  ceremony  at  Annapolis  yesterday, 
and  I  think  I  would  be  remiss  in  my  purpose  for  being  here  this 
morning  if  after  looking  at  some  of  the  other  testimony,  particular- 
ly being  the  odd  man  out  on  this  panel,  if  I  didn't  take  just  a  little 
bit  of  your  time  and  1  hope  you  will  indulge  me  for  a  few  minutes. 

Senator  Proxmire.  Fine.  1  hope  you  will. 

Mr.  O'Farrell.  Thank  you. 

Mr.  Chairman,  1  welcome  this  opportunity  to  present  the  views 
of  the  AFL-CIO  on  the  legislation  that  has  been  proposed  to  ex- 
press the  opposition  of  the  American  people  to  the  odious  system  of 
apartheid  in  South  Africa  and  to  hasten  its  dismantlement. 

AMERICAN  LABOR  MOVEMENT  INVOLVEMENT 

The  Americem  labor  movement  has  a  long  history  of  involvement 
in  the  struggle  for  freedom  in  Africa.  Among  the  free  trade  union 
movements  of  the  world,  we  took  the  lead  in  opposing  colonialism 
and  demanding  independence  for  the  African  nations. 

We  cite  this  history  not  to  blow  our  own  horn  but  to  establish 
the  roots  of  our  commitment  to  the  struggle  ageiinst  racism  and  ex- 
ploitation on  the  African  Continent.  Our  efforts  against  apartheid 
are  but  an  extension  of  that  historic  commitment. 

Those  efforts  have  not  been  merely  rhetorical.  If  rhetoric  were 
sufHcient  to  undermine  apartheid,  it  would  long  ago  have  collapsed 
under  the  weight  of  denunciatory  resolutions,  statements,  and 
speeches  emanating  from  countless  international  forums.  The 
AFL-CIO  has  undertaken  active  programs  of  assistance  to  those 
who  seek  trade  union  and  human  rights  in  South  Africa  and  the 
abolition  of  the  apartheid  system. 

The  mored  isolation  of  Pretoria  from  the  world  community  could 
hardly  be  more  complete.  Yet,  the  system  of  apartheid  has  survived 
essentially  unchanged. 

What  has  changed  in  South  Africa  and  what  we  believe  holds  the 
greatest  promise  for  the  ultimate  elimination  of  apartheid  through 
peaceful  means  is  the  emergence  of  the  black  trade  union  move- 
ment. 

In  South  Africa,  as  elsewhere,  the  ability  of  people  to  organize 
and  control  their  own  institutions — that  is,  to  effectively  exercise 
freedom  of  association — is  the  best  alternative  to  the  bloody  resolu- 


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tion  of  conflict,  and  if  violent  revolution  comes  to  South  Africa, 
there  will  be  no  winners,  only  unimaginable  suffering. 

It  is  for  this  reason  that  the  AFL-CIO  several  years  ago  adopted 
a  program  of  action  in  support  of  black  trade  unions  in  South 
Africa,  aimed  at  providing  direct  assistance  for  trade  union  educa- 
tion, leadership  training,  and  exchange  programs.  These  programs 
are  designed  to  meet  the  needs  of  black  trade  unions  inside  South 
Africa  as  they  define  those  needs. 

To  better  ascertain  those  needs,  the  AFL-CIO,  last  January,  in 
conjunction  with  its  African- American  Labor  Center  and  the  A. 
Philip  Randolph  Education  Fund,  sponsored  a  conference  that 
brought  together  10  black  trade  union  leaders  from  South  Africa, 
including  Cusa  and  Fosatu,  and  more  than  300  American  trade 
union  leaders.  At  this  conference  there  was  a  wide-ranging  discus- 
sion of  the  views  of  our  South  African  brothers  and  sisters  with 
regard  to  the  current  situation  in  their  country  and  the  efficacy  of 
various  proposals  to  bring  about  the  end  of  apartheid. 

This  discussion  laid  the  basis  for  the  comprehensive  statement 
issued  by  the  AFL-CIO  Executive  Council  at  its  February  meeting, 
which  you  have  already  entered  in  the  record. 

The  ICFTU  represents  141  national  trade  union  organizations  in 
98  countries  around  the  free  world,  with  a  combined  membership 
of  more  than  82  million  workers.  The  AFL-CIO  has  worked  closely 
with  the  ICFTU  in  its  campaign  against  apartheid,  recognizing 
that  the  black  trade  union  movement  of  South  Africa  requires  the 
coordinated  support  of  all  of  the  world's  free  trade  unions. 

We  were  pleased  that  the  ICfTU  set  aside  a  special  session  at  its 
meeting  of  the  executive  board  in  Washington,  DC,  in  April  for  a 
discussion  of  the  South  African  crisis.  This  session  produced  a 
statement  which  is  appended  to  this  testimony  in  the  belief  that 
the  Congress  would  attach  considerable  importance  to  the  views  of 
this  prestigious  worldwide  orgeuiization. 

The  statement,  in  which  the  AFL-CIO  wholly  concurred  and 
which  was  approved  by  the  leadership  of  South  Africa's  independ- 
ent black  trade  union  movement  which  was  represented  at  the 
meeting,  and  included  representatives  of  Cusa  and  Fusatu,  urges  a 
tough  sanctions  policy  toward  South  Africa.  These  proposed  sanc- 
tions are  detailed  in  very  specific,  concrete  terms  and  you  have  al- 
ready agreed  to  enter  the  statement  of  the  ICFTU  into  the  record. 

Since  some  of  the  other  witnesses  would  say  that  they  talked 
only  for  themselves,  I  would  like  to  say  that  in  this  context  we  are 
speaking  for  not  only  the  members  of  the  trade  union  movement, 
the  15  million  members  of  the  AFL-CIO,  but  we  are  also  bringing 
to  you  the  statements  smd  the  record  of  concern  of  the  82  miflion 
members  of  the  International  Federation  of  Free  Trade  Unions  and 
we  have  been  asked  to  do  that  by  the  leadership  of  that  organiza- 
tion. 

The  statement  of  the  ICFTU  and  the  meeisures  that  they  call  for 
are  very  much  in  keeping  with  the  intent,  the  spirit,  and  the  ac- 
tions spelled  out  in  S.  635.  In  this  connection,  Mr.  Chairman,  I 
would  like  to  bring  to  your  attention  a  resolution  on  disinvestment 
adopted  by  the  Council  of  Unions  of  South  Africa  and  conveyed  to 
us  by  the  general  secretary  of  that  organization,  Mr.  Phiroehaw 
Camay.  A  copy  of  that  statement  is  attached  to  my  testimony  but  I 


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would  like  to  indulge  the  members  of  the  committee  for  a  few  extra 
minutes  by  reading  it.  It's  very  brief  and  I  would  like  to  read  it  to 
you  at  this  time  since  it  reflects  the  viewpoint  of  the  largest  black 
trade  union  organization  in  South  Africa  which  also  contains  the 
larsest  black  union,  the  National  Union  of  Mine  Workers,  and  we 
think  reflects  the  msyority  opinion  of  the  black  workers  of  South 
Africa. 

WORKERS  RESOLUTION 
The  resolution  reads  as  follows.  Senator: 


.  ion,  thifl  National  Executive  Committee 

therefore  concludes  that: 

Any  investinent  in  South  Arrica  is  therefore  investment  in  apartheid. 

There  should  be  no  new  investment  in  South  Africa  whilst  apartheid  still  exists. 

The  sale  of  krugerrands  in  other  countries  should  be  prevented  by  trade  unions  in 
thoee  countries. 

Tliere  should  be  no  defense,  computer  or  nuclear  technology  sold  to  the  South  Af- 
rican white  government. 

There  should  be  no  new  investment  in  homeland  areas  which  exploit  the  racial 

I  submit,  Senator,  that  this  statement  by  the  largest  black  trade 
union  organization  of  South  Africa  is  consonant  with  the  intent 
and  the  position  outlined  in  S.  635. 

Senator  Proxmire.  It's  an  excellent  summary.  It's  precisely  what 
S.  635  provides. 

Mr.  O'Farrell.  And  I  would  say.  Senator,  that  was  adopted 
before  S.  635  was  even  known  to  them.  The  date  on  the  statement 
is  August  12,  1984. 

We  in  the  AFL-CIO  are  concerned  about  the  failure  of  those  bills 
which  we  have  examined  to  address  the  urgency  of  pressing  for  the 
abolition  of  the  so-called  preventive  detention  laws  that  are  used  to 
harass,  intimidate,  and  imprison  labor  leaders  and  others  without 
trial.  These  laws,  as  the  AFL-CIO  Executive  Council  has  pointed 
out,  "in  effect,  nullify  much  of  whatever  benefit  accrued  from  pre- 
vious l^pslation  recognizing  the  trade  union  rights  of  black  work- 
ers." 

The  most  recent  example  of  the  use  of  the  law  by  South  African 
authorities  is  the  death  of  black  labor  leader  Andries  Raditsela 
while  in  police  custody.  A  copy  of  a  telegram  from  AFL-CIO  Presi- 
dent Lane  Kirkland  to  South  African  President  P.W.  Botha  ex- 
pressing the  AFL-CIO  Executive  Council's  outrage  at  this  tragedy 
IS  attached  to  this  testimony. 

It  is  not  enough  to  bring  external  pressure  to  bear  on  the  South 
African  Government.  We  recognize  that  change  must  come  from 
within.  But  such  change  will  not  come  unless  the  democratic  forces 
within  South  Africa — preeminently  the  black  trade  union  move- 
ment— are  able  to  organize  and  effectively  represent  the  will  of  the 
majority. 

It  is  therefore  imperative  that  we  do  all  that  we  can  to  remove 
the  coercive  impediments  to  their  exercise  of  freedom  of  associa- 
tion. Measures  by  the  Congress  aimed  at  eliminating  the  preven- 
tive detention  laws  would  be  a  powerful  encouragement  to  those 


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who  are  fighting  on  the  front  lines  of  freedom  in  South  Africa,  and 
we  urge  the  Clongress  to  include  such  measures  in  the  antiapart- 
heid  legislation  pending  before  it. 

In  a  larger  sense,  we  are  troubled  by  the  fact  that  the  modest 
sanctions  proposed  in  S.  635  could  be  avoided  for  several  years 
while  some  of  the  most  objectionable  and  inhumane  features  of  the 
apartheid  system  are  maintained  in  place. 

The  South  African  Government  must  not  be  led  to  believe  that  it 
can  escape  the  full  effect  of  sanctions  by  piecemeal  measures  that 
stretch  out  for  years  the  complete  elimination  of  the  apartheid 
system. 

The  International  Confederation  of  Free  Trade  Unions  will  meet 
again  in  June  of  this  year  in  Geneva  with  our  delegates  from  the 
South  African  trade  union  movement  in  order  to  begin  the  selec- 
tion of  companies  to  be  boycotted  or  sanctioned  by  the  internation- 
al trade  union  movement  on  a  selective  basis.  The  companies  to  be 
chosen  for  that  will  be  presented  to  us  by  the  trade  unionists  from 
inside  South  Africa  and  they  will  be  those  companies  that  are  not 
moving  toward  the  abolition  of  apartheid.  These  will  not  only  be 
American  companies.  This  is  a  worldwide  operation  to  include  com- 
panies from  other  countries,  and  to  be  participated  in  to  the  extent 
possible  by  all  of  the  trade  unions  of  the  free  world. 

Mr.  Chairman,  we  urge  the  immediate  passage  of  legislation  that 
includes  the  sanctions  proposed  by  the  AFL-CIO  and  their  mainte- 
neuice  until  the  apartheid  system  is  dismantled. 

Therefore,  we  recommend  to  this  committee  the  urgent  passage 
of  S.  635. 

Thank  you  very  much. 

[The  complete  prepared  statement  follows:] 


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ffTATBHEirT  OP  PATRICK  J.  OTARRELL,  EZBCnTTVB  NRBCTOR 

APUCAH-AHBRICAH  LABOB  CSinSR  iAFL-CtO) 

BEPORB  THE  SKMATB  BAMKINa,  HOUSDia  AMD  DBBAM  AFP  AIRS  COMMriTEE 

OM  8B35  AHO  OTHER  PEHDnO  SOUTH  AFRICA  I^OBLATIOH 


Mr.  Owlrmatii  1  walcome  thU  oppcrtunity  to  pnwnt  tha  vl«wa  of  tte  APL-CIO 
on  Ox  legifllatlon  that  hu  b«en  propoMd  to  eipran  the  c^^poaitlan  of  the  Amarlean 
people  to  the  odious  syitem  of  aparthaid  in  South  Africa  and  to  hutm  ita 
dismantle  ment. 

The  American  labor  movement  hai  a  long  history  of  involvement  in  the  atrunlB 
for  freedom  in  Africa.  Among  the  free  trade  union  movements  of  the  Mtrld,  we  took 
the  lead  in  opposing  colonialism  and  demanding  independence  for  the  African  nations. 

We  cite  this  history  not  to  toot  our  own  horn  but  to  establish  the  roots  of  our 
eommltmait  to  the  struggle  against  racism  and  exploitation  on  the  Afrloan 
continoit.  Our  efforts  against  apartheid  ai«  but  an  extenrion  of  that  historle 
commitment. 

Those  effwts  have  not  b«en  merely  rhetorical.  If  rhetoric  were  sufficient  to 
undermine  apartheid,  it  would  long  ago  have  collapsed  under  the  weight  of 
denunciatory  resolutions,  statements,  and  ^leeches  emanating  from  countless 
international  forums.  The  AFL-CIO  lias  undertalcen  active  programs  of  assistance  to 
those  who  seek  trade  union  and  human  rights  tn  South  Africa  and  the  abolition  of  the 
Apartheid  system. 

The  moral  isolation  of  Pretoria  from  the  world  communis  could  hard^  be  mora 
complete.  Yet  the  system  of  spartiteid  has  survived  fundamental^  unolianged. 

Wiiat  has  changed  in  South  Africa— and  what  we  believe  holds  the  greatest 
promise  for  the  ultimate  elimination  of  apartheid  through  peaceful  means— is  the 
emergence  of  the  black  trade  union  movement. 

In  South  Africa,  as  elsewhere,  the  al>iUty  of  people  to  organize  and  cmitrol 
their  own  institutions— that  is,  to  effectively  exercise  freedim  of  associaticn— is  tiM 
l>est  alternative  to  the  bloody  resolution  of  conflict,  and  if  violent  revolution  comes  to 
South  Africa,  there  will  be  no  winners,  on^  imiroaginaUe  suffering. 


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It  is  for  this  reason  that  the  AFL-CIO  several  years  ago  adopted  a  ProgTam  of 
Action  in  Support  of  Black  Trade  Unions  in  South  Africa,  afmed  at  providing  direct 
osslatance  for  trade  union  educstitxi,  leadership  training,  and  exchange  programs. 
These  programs  are  designed  to  meet  the  needs  of  black  trade  unions  as  they  deflne 
those  n«eds. 

To  better  ascertain  those  needs,  the  APL-CIO,  last  January,  in  conjunction  with 
its  African-American  Labor  Center  and  tlw  A.  Philip  Randolph  Education  Fund, 
sponsored  a  conference  that  brought  together  black  trade  union  leaders  from  South 
Africa  and  more  than  300  American  trade  union  leaders.  At  thb  conference,  there 
was  a  wide-ranging  discussion  of  the  views  of  our  South  African  brothers  and  sisters 
with  regard  to  the  current  situation  in  their  country  and  the  efficacy  of  various 
proposals  to  bring  atxHit  the  end  of  apartheid. 

This  discussiM  laid  the  basis  tor  the  comprehensive  statement  issued  by  the 
APIX^IO  Executive  Council  at  its  February  meeting.  A  copy  of  this  statement  Is 
attached  to  this  testimony.  I  would  particularly  draw  your  attention  to  the  Council's 
concluaion  thati 

"The  Reagan  Administration's  policy  of  'craistructive  engagement'  has  not 
produced  significant  results.  Indeed,  Pretoria  apparently  views  its  good 
relations  with  the  Administration  as  a  license  to  delay  indefinitely  the 
dismantling  of  the  odious  apartheid  system." 

To  which  I  would  add,  Mr.  Chairman,  that  Pretoria  can  only  be  encouraged  In 
this  view  by  the  insensitive  statements  made  by  the  President  of  the  United  States 
about  the  killing  of  innocent  people  In  Uitenhage  by  the  South  African  police.  These 
statements  were  deplored  by  the  Executive  Board  of  the  International  Confederatian 
of  Free  Trade  Unions  at  its  meeting  in  Washington  last  month,  and  we  Join  the  ICFTU 
In  calling  on  the  President  to  withdraw  his  harmful  remarks. 

The  ICFTU  represents  141  unions  In  S8  countries  with  a  combined  membvshlp 
of  more  than  BZ  million  workers.  The  APL-CIO  has  wwked  closely  with  the  ICFTD  in 
its  campaign  against  apartheid,  recognizing  that  the  black  trade  union  movement  of 
South  Africa  requires  the  cocM^nated  support  of  all  of  the  world's  free  trade  iMiions. 


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We  were  pleased  Uwt  the  ICFTU  wt  saide  a  veclal  s«srion  at  tta  Waahii^ton 
meeting  for  a  discussion  of  the  South  African  crisis.  His  Msrion  produced  a 
statement  which  is  appended  to  this  testimony  in  the  belief  that  the  Confrev  would 
attach  considerable  importance  to  tlw  views  of  this  prastlfious  arKsnleation. 

The  statement,  in  whid)  tiie  AFL-CIO  wtwlly  concurred  and  which  was 
approved  by  the  leadersiitp  of  South  Africa^  independent  blade  trade  union  movement 
which  was  represented  at  the  meeting,  urges  a  tough  sanctions  policy  toward  South 
Africa.  Ttiese  proposed  sanctions  are  detailed  in  very  ^eelfic,  concrete  terms  and  in 
our  view  would,  if  implemented,  bring  sUtwtantial  pressure  to  bear  on  the  South 
African  government  to  change  its  racist  policies.  Time  does  not  pvmit  m«  to  list  the 
meesures  called  for  by  the  ICFTU,  but  1  hope  that  they  will  be  studied  by  the 
Congress. 

They  are  very  much  in  keeping  with  ttw  intent,  the  ^ilrlt  and  the  aetlont 
qielied  out  in  Sfi3S,  In  this  connection,  Mr.  CItalrman,  I  would  lUce  to  bring  to  your 
attention,  a  resolution  on  disinvestment  adopted  by  the  Council  of  Unions  of  South 
Africa  and  conveyed  to  us  on  Hay  6  by  the  General  Secretary  of  that  organlzationt  Mr. 
Phiroshaw  Camay.  Tlte  resolution,  a  copy  of  which  is  attached  to  my  testimony, 
asserts  that  "any  Investment  in  South  Africa  is  ....  Investment  In  apartheid"|  that 
there  should  be  no  new  investm«it  in  South  Africa";  and  that  "tltere  ritould  be  no 
Investment  in  homeland  areas  wlilch  exploit  the  racial  laws." 

Mr.  Chairman,  the  AFL-CIO  commends  the  Bithors  and  sponsors  of  Uils 
legislation  and  win  si^port  enactment  of  those  proposals  that  are  consonant  with  tiM 
statements  of  the  AFL-CIO  Executive  Council  and  the  ICFTU. 

In  this  regard,  1  call  to  your  attention  the  statement  of  the  AFL-CIO  Executive 
Council  ot  May  T,  19BS,  a  copy  of  which  is  attached  to  this  testimony.  Tlw  statement 
caQa  for  our  government  and  the  other  industrial  democracies  to  take  the  following 

*  ban  new  investment  in  South  Africa; 

*  end  aU  investment  guarantees,  export  credits  and  trade  promotion  with 
South  Africa; 

*  stop  new  IMP  loans  as  weD  as  other  bank  loans  to  the  South  African  state 
and  piblic^-owned  companies 

*  halt  tlte  soles  of  Kruggersnds  and  tlw  purohase  of  South  African  coal,- 


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*  punUh  violators  of  the  U.N.  oU  embargo  against  South  Africa; 

*  embargo  the  sale  of  arms  to  South  Africa,  especial^  those  used  by  its 
military,  security  and  police  forces; 

*  compel  disin vestment  t>y  ■nultinattonal  companies  in  the  energy  and  high- 
technology  sectors; 

*  force  ifisinvestment  by  all  multinational  companies  ttiat  have  been 
identified  by  the  Independent  black  trade  union  movement  as  being  in 
violation  of  interna  tlonaUy  accepted  labor  standards. 

We  are  concerned  about  the  failure  of  those  bins  which  we  have  examined  to 
address  the  urgency  of  pres^ng  for  the  abolition  of  the  so-caHed  Preventive  Detention 
laws  that  are  used  to  harass,  intimidate  and  imprison  labor  leaders  and  others  witliout 
trial.  .These  laws,  as  the  AFL-CIO  Executive  Couneil  has  pointed  out.  In  effect, 
nullify  much  of  whatever  beneflt  accrued  from  previous  leglslaUm  recognizing  the 
trade  union  rights  of  black  vrorkers." 

The  most  recent  example  of  the  use  of  tlie  "law"  by  South  African  authorities  is 
the  death  of  blade  labor  leada  Amfries  Raditsela  while  tn  police  custody.  A  copy  of  a 
telegram  from  APL-CIO  Pre^dent  Lane  Kirkland  to  South  African  President  P.H. 
Botha  expressing  the  AFL-CIO  Executive  Council's  outrage  at  this  tragedy  Is  attached 
to  this  testimony. 

It  is  not  enough  to  bring  external  pressure  to  bear  on  the  South  African 
government.  Change  must  come  from  within.  But  such  change  win  not  come  unless 
the  democratic  forces  within  South  Africa— preeminently  the  black  trade  unlcn 
movement—  are  able  to  organize  and  effective^  represent  the  win  of  the  majority. 

It  is  therefore  imperative  that  we  do  all  that  vre  can  to  remove  the  coercive 
Impediments  to  their  exercise  of  freedom  of  association.  Measures  by  the  Congrow 
aimed  at  dimlnating  the  Preventive  Detention  laws  would  be  a  powerful 
eneouragement  to  those  who  are  fighting  on  the  front  Unes  of  freedom  In  South 
Africa,  and  we  urge  the  C^igresa  to  include  such  measures  in  the  antl-apartlieid 
legialatlan  pending  before  it. 

There  are  currently  21  black  trade  unionbts  In  Jail  who  have  been  held  under 
the  Preventive  Detention  laws,  witiiout  oharges  or  trial,  some  for  man  than  6  mootht, 
and  we  are  attaching  a  list  of  these  trade  mlon  prisoners  to  this  testimony  with  the 
request,  Hr.  Chairman,  that  at  a  minimum,  this  Comnittee  urge  the  Adininistratian  to 
demand  their  release. 


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In  a  larger  mhm,  m  are  troubtod  by  the  faet  that  the  roodest  Mnetiona 
proposed  in  S63S  could  be  avoiitod  for  Mveral  yean  while  aome  of  the  most 
objectionable  and  inhumane  features  of  the  apanheld  aystem  are  maintained  in  place. 

The  government  of  South  Africa  must  not  t>e  led  to  believe  that  It  can  aaoafte 
the  fun  effect  of  sanctions  by  piecemeal  measures  that  stretch  out  for  years  the 
complete  elimination  of  the  apartheid  qntem. 

Ur.  Chairman,  we  urge  the  passage  of  legislati«i  that  includes  tlte  sanetiona 
proposed  by  the  AFL-CIO  and  their  maintenance  untS  the  apartheid  aystem  It 
dismantled. 

Mr.  Chairman)  on  a  related  matter,  the  AFL-CIO  has  alao  propoaed  thet  the 
IntematlMial  Labor  Organisation  consider  estabUshlng  doeumentatltn  and  research 
machino?  to  monitor  ttie  conduct  of  all  corporations  operating  In  South  Africa,  trith 
regard  to  their  recognition  of  black  trade  union  rights,  the  training  and  upgrading  of 
black  workers,  and  their  observance  of  universal  labor  atandards.  Some  Indication  or 
instructlM)  from  the  Committee  to  the  0.8.  government  representatives  to  the  ILO  to 
urge  the  ILO  to  use  Its  machinery  In  the  fight  against  apartheid  would  be  a  positive 
step. 

lliankyou. 


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894 

StaMflMfit  by  th*  AFL^IO  Extcutlve  Ca«ndl 


Aparthald  !i  a  moral  af  Irotit  to  dvUlzad  humanity.  But  daplta  th* 
CondamnatioM  el  an  outrt(ed  world  opinion,  tht  South  African  government  continues  to 
rettlt  the  damandi  of  It*  black  citizen*  for  an  and  to  InttitutlenaUzed  racUm  and  lor  full 
and  equal  participation  In  the  political  1U>  of  the  nation. 

The  AFL-CIO  !•  committed  to  cooperation  with  tftoae  lorcei  In  Soudt  Africa  dtat 
tack  an  and  to  iparthald  through  peaceful,  democratic  meant.  The  aitamatlwa  it  a  violent 
revolutionary  upheaval  Out  would  bring  Immeaturabie  wfferlng  to  all  elementi  of  South 
African  todaty. 

We  appreciate  the  contribution*  of  the  many  indlviduaii  who,  bacaute  of  their 
outspoken  oppotidon  to  apartheid,  have  been  driven  Into  exile  or  prison.  But  it  b  to  theae 
intlde  South  Africa,  (Ishtbig  en  the  front  llna*^  that  we  look  for  Icaderthip  In  the 
eradication  of  apartheid,  which  cannot  be  *u*talned  if  peace  and  stability  are  to  be 
actdevad  In  Southam  Africa. 

We  have  been  aspctdaliy  encouraged  by  the  amergencc  In  recent  year*  of  the 
black  trade  isdon  movement  in  South  Africa.'  Freedom  of  anoclation  It  the  lowidatlon  of 
democratic  Inttitutlon-bidldlng  and  offer*  the  mott  promltlng  hope  for  peaceful  locial 
change. 

The  AFL-OO  will,  therefore,  continue  to  respond  to  requett*  for  atdttance 
through  It*  Program  of  Action  In  Support  of  Black  Trade  Union*  In  South  Africa  and 
through  the  ongoing  pregramt  of  the  Afrlcan.American  Labor  Cenur. 

Our  attittance  will  be  guided  by  the  tame  principle  that  hat  governed  ew  aid  to 
the  wofker*  of  Poland,  El  Salvador  and  every  other  cowitry  where  ew  help  hat  been 
requested  —  namely,  that  wa  will  respond  to  the  expretted  neadi  and  wUhe*  ot  ew 


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Th«  An.-aO  c«Ui  upon  ttw  othar  tn%  labor  mevtriMntt  <t  th*  world  —  ond 
•^•ctally  iheot  in  tte  UidunrUUs*d  natlecw  that  trada  with  Sewth  Alrtea  ~  to  urga  thalr 
gewMnntMl*  t>  proM  South  Urica  for  an  and  to  tha  Pravantlva  Datantien  lawt  that  ara 
UMd  to  haraMi  Intimldata  aint  Imprlton  labor  laadara  and  othar*  without  triaL  Thaaa  la«>i 
bi  af fac^  nullify  mud*  of  wtiatavar  banaflt  acowad  Irom  pravloua  lagtiUtlon  racofnUli^ 
the  trada  union  rigta  «(  blade  worfcara. 

Tha  AFL-QK  will  continua  to  eontrlbuta  to  tha  multUaiaral  profram  oi 
uaistanca  to  btaelt  trada  tailona  dlracMd  by  the  tntamatlonal  C«nf adaration  of  Praa  Trada 
Union*  and  to  partldpata  bi  the  unlon-te-tnlon  protrami  et  tha  bitarnatlonal  Trada 
Secratarlatfc 

bi  addition,  wa  call  Upon  the  Intnnatlonal  Labor  Orxanlzatian  to  bmatifata  tha 
appailb^  condltlem  o^  blad<  labor  bi  South  Africa  bidwllni  tta  forcad  removal «(  blade 
wortcan  to  Bantuttank  Toward  thU  and,  tha  0.0  ihould  comldar  wttlnc  up  a  eommlnkn 
«f  btquiry  eemporabia  to  tha  conunlatien*  It  aatabUAad  bi  tha  catei  of  Poland,  Chile  and 
ether  cointrles. 

The  0.0  riwuSd  alM  contldar  creatinf  dooanantatlon  and  fMaarch  nwdrinwy  to 
monitor  tha  conduct  of  all  cocpontiona  oporadnf  bt  Sauth  Africa,  wMi  retard  to  thalr 
recognition  of  black  trado  unlon.Jllhti,  the  trabdng  and  upgradnf  et  blade  worher^  and 
their  obiarranea  of  unlvanW  WMt  ttandaitfu 

Companiet  that  fallJn<hri»  wdal  raiponalUUtlai  riwuld  be  targatad  for 
dltiiwaatmant,  boycotti,  advadk^ubUdty  campaigna  and  other  appropriate  tnoaaura^  In 
eanaldarbig  whether  and  whan  to  apply  «och  maawrei,  «ia  APL-CtO  wUl  be  guided  by  tha 
iriahat  of  the  blade  trade  taiiOfCnnremant  of  South  Africa. 

The  Reagan  Admbilstratlsn'i  policy  of  "conitnicUva  angagemanl^  hai  not 
produced  ilpilflcant  retultt.  IndMd,  Pretoria  apparently  view*  Itt  good  ralatism  irith  tha 
Admlnlatratlon  a*  a  Ucenae  to  delay  indefinitely  the  ditmantting  of  tiM  edloua  apartheid 
lyttam.  But  apartheid  cannot  be  ntalntalnod  indeflnitdy.  TTm  real  inue  it  whether  It  will 
be  Bbolbtwd  paacefuUy^r  violently.  The  longer  South  Africa  redcta  peaceful  chai^a,  tha 
more  It  Inrftea  the  bloody  alternative 


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ninin'iYii  vmn 


Hm  IOIV  EtcacutlTC  Board  at  its  B7th  vMting.  held  in  Mrtiingten  ai  ll-U 
J^Kil  19BS: 

COOMC  all  ooUitacvtiai  with  the  South  African  rogiiDa  acrvlng 

in  rnif  MV  to  strm*jttmi  or  ^dntaln  aiarthaid; 

gHIPfiM  tlat  all  Mxallad  cxxi>tructl'v«  anBagwpt  polici—  and 

peOitioal  «n±Bnaes,such  «a  visits  to  Head*  of  Onwnivnt 
ty  South  Africa's  Pnsldant.censtituta  such  coUsbcmticn 
provldlm  ^naldaxabls  M«Krt  to  the  raginBr 

nBUJHiR  tl«  iMMsiUva  ststoiwits  ty  the  ftvsldHit  of  the  Uhitad 

Stataa  In  la^id  to  the  kiUiog  of  Innoaaat  people  in 
Ultar^Mga  ty  the  South  African  police,  and  cells  ai  the 
nrMidatit  to  withdraw  his  rotMrics; 

rWBHOERCKiS         on  the  US  GaveameRt  and  all  other  99wetnMntB  ta  antaik 

en  a  vlgarous  policy  of  constxxKtl^n  dlsmgegii^it,  on  ths 
llnee  nci«aed  by  the  stat«imt  »flci*ed  ty  the  87th  aeetlnq 
of  the  jam  BMCutive  Board. 


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D  in  South  UrLtm  i*  t  crUla  poiitt.      9a  pollUal  mi  wcnaHe 
fotBdatloM  c£  tte  qwthtld  ngiaa  an  indv  attack  ■■  naw  bafiwa.      "ti— r-rl-n 
of  blade  laailM*  la  loUnaitylBg,  tha  hMad  inCltB  ooitiod  iMMuria  aca  balag 
Utfitsnd,  and  cJatfaa  b»b««i  ttaa  bladt      miiiI^  and  aacurl^  foR^  oocv  Ailr< 
Ha  lagins  la  dcBparately  tryljig  to  dMnga  tha  l^qa,  alchou^  not  tha  taall^,  ol 
varttald  botii  In  South  Africa  nd  aknad.      Iliatiwaa  laadna  In  ooidtrlw  with 
axtanalve  aeaianlc  llnha  to  South  Afrioa  ara  i^^™«->j  to  raaaaaaa  Ualr  tl^  wmi 
Biartheid.      Sila  la  Oa  to      Mm  pnaataa  cC  piiiUc  ofUnlen  in  ttalr  am  oouttrlaa, 
to  (proMlng  doubCa  dsoA  tla  Cutuca  ca«axn  en  thair  Invatmaita  aid  In  iimIujIj 
■tfiactlve  cwoaltlfn  to  acartlald  In  South  Jl£n<B.      yat  Oiaamtiwa  politinl 
lanTira  ham  yat  to  raact  to  thaaa  raalitl— .      IKm  iM  tha  tlaa  to  at^  ly  Ota 
IntawMtlCTtal  ireaaura  a^liat  aparthald  by  gwamDaital  and  ftsthar  tnda  adoi 
•ctloi. 

2.  9a  icno  iDd  its  aftiliataa  ara  proud  to  ba  In  tha  gj.aenj<t  of  Iha  iM^.alji 
agaltwt  opartteid.  Ha  walccaa  ^±m  racant  i4jbui.v»  in  iMamttlonal  ■miaiiaa  oi 
tt»  avU  nabxa  of  ^wtthaid  tiildi  la  in  put  doa  to  tha  ta^wlgiing  inzk  oC  tha 
&aa  trada  ixiioca  ohbt  mv  yaara.  In  tha  titfit  agaiiMt  ^sEtheld,  tha  tOTU'w 
diatinctiva  cxxiUlbutien  la  tha  Ttaala  tn  aailating  tha  dmalcfRKA  e£  a  atxoq 
In^H—Wit  hlTii  tT^dn  mlm  aciwaiil    to  aontti  afrtea.        Iha  hqr  l^VOCtMOB  Ctf 

iTm Ill    tiada  mlai  or^nintiaa  In  tha  baedm  atiuggla  la  nor  miait  to 

all.      Aa  MB  atatad  in  tha  iwant^  vdatad  ICFTO  Pimima  ef  Actlcn,  the  ^tMtb 
wd  atiangthailng  of  Iha  linVpanrtMrt.  blade  trada  mien  awagait,  ia  tha  alngla  acst 
tfSMUve  maaua  Bar  the  i^*iw«J  njcdty  in  South  AfrKa  to  ^In  baadoa  ad 
Jiatica  and  to  afcolirii  ^artheld.      nua  ecnvlctiai  hUI  ecntliwa  to  be  at  tha 
OBitra  of  tha  icmj  fawial^  agalnat  vuthald.      Aparthaid  la  an  wArandwd  ayat^ 
of  radal  dlacTlndnatlcn  and  aemoDie  «d«ilaltatlOD  t^ilch  ia  baaad  en  a  niAar  of  kqr 
jdaoaa  of  leglalatlen.  badcad  v  by  tha  idolnlatratlw  pohbeb  of  Om  ijinaii—il 
aaUt^  apartheid  meena  oajorltr  cuie  in  an  ladlvidad  aodaty. 

3-      9a  odatam  of  tha  South  Afri^  raglaa  d^^iJi  en  apattlald.       It  will  not  ad 
it.      UpLcnaqr  baa  failed  to  gat  acroee  tha  athecraKa  fait  ty  people  all  o«^  tha 
warld  avlnat  the  i^raealcn  of  Ua  blade  aaJodlT.      Iha  U7ID  la  thaceftaa  oemlncad 


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that  gnnmmnta  nuat  f  Inoly  caoolt  tharaalvia  to  wcalctlng  Eolltiol  rrsBsura  en 
and    applyinj  Bsnctlcns      ^alnat  South  Africa.      M  ■  mttar  of  urgency  all 
goMiTraenta  and  aapaclally  thsa*  of  the  mlu  trading  end  Inn— liiaiiL  partiwis  cf 
South  Africa  should  IncrsBoa  and  InplaMfit  0»  rang*    of      ii—iiiim  to  Icng 
tlmatnad  by  the  Uhited  ttaticra. 


4.  Si«Ect  fcr  a  tou^  BntcUcna  policy  la  growing  «i  public  rwi  whb  of  tla  ctn- 
tlsuBd  rcfKBsalcii  end  inji«tice  niffered  by  ttv  blade  iBjcdty  In  South  Africa  hM 

Increased.  Hie  Oiraat  of  eccncnic  laolatlai  la  «  najcr  ccnoecn  fcr  the  qartheld 
raglne,  but  nust  be  node  mre  ovdlMe  ty  specific  coinitiBaDts  to  affective  action 
by  tht  laige  IxduBtrlalisad  countries. 

5.  Dw  icm;  pccpoBoa  sanctloia  vhldi  should  bagin  with  the  tl^^itonlng  of  the  (It 
mam  aitargo  and  froeetid  fuitiiar.       In  cociaiatloD  with  tlw  IK,  all  governnsnts 
should  develcp  Inniedlate  aff  active  oachlnBry  for  the  lnploicntatiai  aid  nEtiltodng 
oC  ■!  IntcmatioDal  SBnctlore  policy. 

6.  Oammnta  should  tv  aOninlatEsti^  and  logislatlva  ^tiaa  build  19  tim 

i.        The  CDCtoslcn  of  the  ams  oifceego  to  Inrlirie  solaa  tif    Soutli  Afrlc«i  n^- 
sldlariae  of  traiBnatlcnal  cocpccatioxi,  a  tltfttcnlsg  cf  the  daflnltlczi  of 
aniB  saloa  to  incluan  all  type*  of  eisiXst^nt  lataoiBd  fcr  uae  by  South  Africa's 
mllltnry,  a«curlty  aod  police  aervloeB,  salaa  of  imrtilnery  to  ScuOi  A&lc«i 
HI  lie  until  liij  coiiiBilaa,  Oib  purdiaae  of    South  UrlcBi  tsoduoed  anoB  and  the 
stcangthenlsg  of  IntecnaCiaiBl  nonltorlng  to  oosure  ctiiiiliBnn  by  all  njcr 
lodWrlal  cointiiaa. 

11.      Ite  ending  of  InveatnaDt  guanntaea,  expert  txadlts  and  all  tnda  jcaootlai 
neaauTBa,         and  st^a,      proAict  by  pmAict,  to  awltch  both  Ij^ort  and 
aapcrt  trade  fron  South  Africa. 

iii.    Pisnitlen  of  new  iBweetment  In  South  Africa  by  tmsiatlciiala. 

iv.      Ihe  Kidlna  of  all  oaftracta  Ear  the  enrerwifn  of  the  South  Afrlcm  nuclear 

V.        The  ceding  of  all  i.i.in»[i"lw]  cvacatienB  by  trananaticnaU  In  tl*  so-called 


A  atcp  CD  bank  Icace  to  the  South  Uricm  Stat*  md  pdblicly-otnad  ccqsnlas, 
and  nsw  DT  loona. 


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vil.    Pinltlva  actlcn  agtinat  th*  ommti  of  anr  •hip*  iMdi  cvtt  oU  to 
south  AfclcB  and  agUiiBt  oil  ooipaniaa  or  oil  tiadan  lAilch  facvak  cr 
ara  lar^  to  Oa  bEMfdng  of  Uk  W  oU  m±arga.      •ttOa  mil  ntall  IntaaUlad 
nscleoal  nd  Intamatloial  ntnitcring  by  gowm^Dta  of  ahiifdiiB  traffic  to 
South  Africa. 

vlll.  h  ban  on  Mia  ef  Krugar<vi  -'•  ■ 

ix.      A  ban  <n  purcfaaiaa  of    Soutb  A&lcan  coal. 

a  In  South  MricB.  am  li 
lug  all  tlioas  '•'t— <—  iriildi  hava  bom  iilaitlflad  by  the  ladif  .iaot  black 
tcada  inlcn  mowwmC  m  baliq  In  vlolatlai  ot  IntamatloiaUr  rnxmsHai  ttmt^i^ 
of  lAxMT      pcactioe. 
Iheaerauuraa  shcxild  cullita  to  Um  adc|Ucn  of  RMOatocy  U 
laolatlM  of  South  Afrl^. 


ODts  cf  tha  cowitrlan  of  origlji  of  i4ilts  wd^anta  to  South  Jtfrl^.  ateuld  tate 
linadiAta  ttfa  to  wn  ttwlr  dtlava  of  tha  raallty  of  icarUald.  Q»iman^±M 
BtKuld  also  tale  at^a  toi 

I.  Clcaa  all  rffldal  and  <w^nff^r^m^  south  ACrie«i  raccultnsit  crfflces  — < 
tourlat  ptoBPtlcp  oCflcaa; 

II.  DiBure  ti»t  no  piiiUc  aiiiloyBHit  ajunriaa  hndia  Jcb  vacandaa  In  South 
Afrlos;    aid 

lU.    Jtctlvsly  dlacomat^  the  aAnctlaing  of    South  AfilcKi  ]d>  vKtislM; 
iv.      VigcEoualy  dlacounga  mgart*  and  cultural  cmtarta  with  South  Africa. 

9.  Vhm  ICFni  and  ita  afflllaWa  will  alao  mdartake  a  oocrtlnatad  lnfcsmtloi 
nrTlr'y  In  atfpxt  of  mwumuu  to  dUacouraga  white  •nlviatloD  tlvou(ti  tcada  aaiat 
acticn  tacgated  on  Indlvldwl  contilaa  In  tun  tix,  IBA,  Wwt  Ottmmv.  tte 
llatlaclan3a,  Portu^,  Oraece,  Juatialla  an3  Belqlui)  and  at  aultlnMlttals  or 
SouUi  Afrlon  canantae  whldi  cecxult  lAiite  labour  foe  South  Afd^. 
sowpmipt  ^ni^nrwH.^  Yirh  ttlt  gwttl  ttlimt  mUM 

10.  glacial  note  should  ba  tdcan  cd  tha  collaboKBtloa  battiam  Ox  South  African 
gomcmant  «id  other  gc^mniaRta.      Hie  ICTTO  bellevaa  that  Uk  freauit  ladat 
jawaLimiiiL  of  South  Afirlos  ahuU  be  iaolatad  aid  tlst  vialta  bf  ovcncta  of 
^art^Mld  diould  n 


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•flOTimJ^  traiMMtlmal  conectlcfiB 

11.    At  the  •■»  tin*  aa  Kicking  for  gmeimiental  acticn  agUiwt  apartheid,  tha 
ICmi,  tbe  ns  and      their  aftillatas  will  aleo  Incxease  pressure  en  transnatloial 
CQipocatlcn*  cperatlng  ia  SouUi  Africa  and  en  South  AfrlcMi  mltlnatlcnals    with  c^en- 
tlons  outalde  that  country.  Sudi  trsisnatiaials  are  plvatal  to  eccnemlc  ralatlcns 
with  South  Africa.      Itiey  an  litlrectly  affected  ty  ctonges  In    SaaOi  Africa  Md  ty 
•ffoct*  outaide  the  ccuitry  to  incxaase  ;cessure  en  tha  ngliw.       BotSt  IndivlABlly 
and  collectively  trmsnatlcnal  cecpccstlcns  have  a  rbJce'  InfluBnoe  en  the  future  of 
•partJiald  aid  ttnlr  vulnenbllity  to  Intematlaiel  trade  mioi  icessuie  should  be 


12.    The  ICTTV  fiiraly  beliem  that  Raaaures  nuot  be  taken  to  reduce  links  Mlth 
South  Africa,    na  ICPni  cells  on  all  -OKb  operatii^  in    South  Africa  to  cc- 
OfacBte  fully  with  the  IntemBticnBl  effort  to  step  191  eci  iniiil  c  pressure  on  the 
aCATtheld  ragine.       In  additicn,  and  vithln  the  franewccli  of  Uk  icmt's  policy 
en  Mnctlms  end  dlaiivnstnait,  the  ICFIU,  the  US  nd  national  affillataa  will 
wck  In  omsultatlcn  with  the  Independgit  black  tiade  mien  uuvtuaiiL  to  furttMT 
tlalr  <lwi>nff*  via-a-vls  [articular  ctninnies.    These  t^j^"  will  be  targeted 
K  inUvidal  oaifaniee.  including  South  African  UKk  vith  cpentlcns  outside  that 
oouitry,  and  will  Involva.  anng  others,  Uk  following  activities: 
i,      AnEoadas  to  iiwiagpieiit  ty  vnlcns  In  a  oaifBa/'a  hone  country  in  nnxxt 

of  'Vr^r'V  for  full  collective  bazgalnlng  rlf^its  by  Indecendoit  blade  trade 

miens  in  South  A&ics)  siisidlBrieB : 
11.     tlwil  liiji  lull  in  Mil  I  rccceeentativee  traa  the  South  A&lcai  <nlcn  ccncemed  and 

their  'oomteriarts  fraa  the  paroit  ccocxny  of  ttw  South  Afrlcm  >ii»ldlary 

involvad  In  a  di«puta.  In  order  to  put  direct  pressure  oi  nanajtment; 
ill.  MDeklng  contacts  batiieen  mien  mxeeentatlves  In  a  larnit  uaiyacy  and  in 

ita  various  aufcaldlarlas  Inside  and  outside  SouQi  Africa  in  ocdm'  to  pave 

the  NBjr  foe  effective  coUectlve  bar^ining  by  the  InSqandEnt  blade  trade 

mlCD  novment  in  SouUi  Afrlce; 
Iv.     In  cosaa  of  cmtlmed  cfcatructicii  by  nanasiBEent,   Intarostlcnal  c 

the  THCs  CCTioemad  Involving  aagqpclate  soliArlt?  ai 

natlaal  canpaigM  will  be  initiated  In  response  b 

cf  ttn  ini^ipmfltr*  blscJc  trade  mien  imwiaiL.  by  the  lOTU,   in 

enegaratlm  with  naticnal  onbve  and  ITS: 
V.      niiwiai  1 11  Into  the  activitiee  and  structure  of  target  cananlee  with  a  vlaw 

to  IdKiti^tng  the  scale  «d  nature  of  egmerclal  lldcs  id,th  Soutli  Mrica; 


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vl.    ma  awwlopiit  oC  inCoc^tlcn  frial  od  tb*  altaatlai  of  aouch  AfrtcM 
Moctaca  In  da  covUm  «d  thalr  vniena,  wiUi  particular  neuwwt  to  tlalr 
vla«  en  th*  fltfit  agalcat  ■parthald  nd  tha  ojganlaa  mlldaa,  br  dla- 
trllKitlcii  to  tnloD  MB^acs  In  the  targat  eatmiiMmi 

vli.  SMpanalon  oC  <jontxt«a  ^dla  for  baa*  en  obh  InwabiBit  and  illiliiiiaaiwii 
i4m  co^ilaa  raftwa  to  nock  vlth  Ilia  <-*t— *— *  blade  trate  unlaw  In 
SowhAfncB. 

Tn£lu»  awtml  arf  lowit.  inlm 

13.  Iha  unu  raltarat—  Ita  aUncnnoa  oC  tl«  apaeth^d  ayat^  and  cartlail^lf 
alnglaa  out  tha  pan>lcloaa  IntltH  ocntiol  ayat«  idildi  dMilaa  aotth  Atrlon  wcfcKS 
tla  rl^  to  aailc  mcA  hImw  thqr  wlah,  to  Uwa  with  their  *— <11tt  Md  to  Uw 
noosl  f«aUy  llvaa.      Iha  flgM.  of  Ob  lad^ndnt  trade  mlcna  af^OMt  thla 
efanadoui  qrat^B>i°>iU  ba  atwcrtad  ty  the  latarnaUcpal  trade  mloi  wiiwiaiii  tif 
fcovldlflg  aaaUtnoe  aliad  st  idtlgBtliv  the  looedlata  proU4B«,       rinjiwii^  at 
tamiMMtem  to  attpant  wztcKa  audi  aa  thoaa  alr«e4'  asmntixg  In  nnlai^a  aid 
Laaottto  ahoiUbe  grtrndad  Into  South  UeIcb  In  tzdw  to  stracgthB  ttM  ti^ 
lailoi  KWiMMnt  la  the  Soudan  A&lcsi  raglco  aa  a  utola. 

SttMBttw^""  ""**•  *-^n'r  rr"**""i 

14.  Iha  tcnv  ballovaa  that  aiarthald  la  at  tha  icot  d  tbt  hegoov  swand  by 
SouUi  Africa  In  the  reglcn  begligdng  wldi  l>adbia  fee  tahidi  the  Icmi  calla  fn- 
tt'*"'™  vith  Kaeolutlati  435  od  NBalbla  HtUdi  dad^d  to  Baure  Om  early 
i.i*^pi.4»n.  of  ifciillila  thi«u^  £ra>  wd  fair  elactlcna  mdv  tha  aufarvlalai  and 
oontTDl  «C  the  IM.  "Ota  ICTTO  vlgoroualy  ixudaaia  Q«  ccotinuad  dastaUliaatliii 
cC  die  raglen  dxough  polltlal,  nUltaiy  nd  aocnnnlc  Intarfocnca.  Tha  icnu 
•ticagly  faallavaa  dnt  atfiQIiBilag  of  d»  accncnlc  baea  a<  Che  fraitllna  etatae 
aduld  alao  ocntrlbuta  to  d»  dla«tling  of  ^actheU.       It  thecafcn  calla  en 

t  ^fectlvely  rwaeHrae  ni4i.aud  nd  being  mderta)^  by  ttm 
a  A&lea  DmnlcpaDt  Coapantiai  Ctnfamee  (SWCC)  comtrlBe  to  le^xx 
e  en  Scudi  Afrl^.       In  nnporting  tht  SWCC  ccuntiles,  trade  mlena  In 
■  ahcuJil  alao  cmtctbute  to  tha  atzamdanlng  of  trade 

o  pliy  a  mjor  rol«  In  the  StDCC  pcooaaa 
Ihe  mfavourAls  cocdltlma  Imi.niil  by  Intamatlaial  agmdaa  ttA 
banka  in  caapact  of  aid.  !□«■  tnd  InwtaiL  fmb  nagatlwly  affect  Oa  a 
(pnMh  of  thaaa  oomtrlea.  Da  IVIU  calla  en  tha  IfttaKnatlcnal  eaaatai,^  b 
thMe  polldaa  In  order  to  atraiiithaa  da  u-rr^w,ir-  poeitlen  of  the  oouitrleB  . 


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15.     Ob  hay  to  civqa  In  South  Africa  Ilea  within  ttm  ecutry  Md  idll  la 
dvtBQKiiad  by  th*  bladi  najorlty.    [tai«mr,  IntamaUaal  naoluClott  llum 
latod  into  sctloi  can  help  aocaleiate  pnjui'eM  tmaiA  dnocracv  and  Juatice. 
EScalatliq  acantndc  sanctlcna,  dlocaucavU^  iihlta  Inmlgratlan,  anUng  govam- 
nnt  coUabccatlcn  Hitii  ths  South  A&lcBi  laglne  and  targeting  aaifml^ 
actlvltlaa  on  specific  tranenatlcnals  offar  four  specific  and  practical  H^a 
of  fOccing  ths  ineasage  tnce  to  the  South  African  gOTOEmaRt  that  varttaid 

B  will  ba  nQcctad  ty  a  wlft  apectxm  of  opinlcn  In 
,  including  neat  iHVOttantly  the  Independent  blade  trade  mlcm 
in  South  A£rice.    The  intematlcnal  free  tcada  iztlcn  mvBMDt  stroigly  urges 
all  govannaiitg,  and  eapecially  thooe  of  South  Africa's  min  aootonLc  poitiurs, 
to  adopt  these  f*T"°»i»  and  thus  dearly  infacn  the  apartheid  regline  ef  the 
omseqianoaa  of  cmtinulng  Its  iBdst  polidee.    nie  ICPIU  rsltarates  its  "in 
tea  Hm  limedlate  release  e£  lnfrlaoiad  blade  trade  mien  and  political  latfura, 
the  ceeMtlai  of  rtfaxeaiiB  measuree  against  the  blade  eomsiity,  the  irtanning  of  all 
political  orgEulsBtlcns  and  of  pcdltlol  activity  In  ocdm'  to  Jmiwlop  a  sccl«^ 
baaed  on  tnlveisal  suffrege,  full  respect  fee  the  Oiivecaal  Dedacatlai  en 
Bum  Rl^tits  am  an  mdlvlded  South  Africa. 


joogle 


"*-*-■   •  111!  Mil  lit  fnllfw  TWi  IB  tr  fit nr""  **-  '^-~^i  "-mtinf 
mirlr  tr-*'  ■"'"'  ""* 

11.     iwi^rwh.  —  <,rf««^i>».  «— 1«.  with  »h.  m^t^M.^^  H.«wT»1     >» 

^'■'Tir"  liirw  ■IfiriTHii  ir  Baitti  tfilar 

tv.   Tiiltliti  ■  Tlr"-  '-"'"  "■ '— -""TiTi  rtr  «i  m"*'~'  ^^tt,,^!^ 

¥ltt>  ttt  flawti  hfrlfTr  finvini~nt' 
V.    >w*<„  *fc. .— <^  r^  >h.  i— ^.^^  niMii  rf  in  <tot«^««a  trwat 

^„i.*.  4„  o^**.  tfrta  (iiat  tttdadli 
vl.     t*4i«».«-Tr»mr»,,..w,-*«~.fw»«t:ta«  ta«»*«P~  <«*.yn*<m     rTflm. 

«nim  Id  —It  ■wmt-i  «f.itiM  -T*  nn  rrifT  •^ '— ■ — ^ 


tf  AAh  -  13  l«rtl  1965 


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StaMmanl  by  the  AFL-CtO  Evecutiv*  Council 


Deipiic  tha  outcry' of  world  public  opinloo,  the  iltMtlon  In  South  Alrlca  contliHWt 
to  deteriorate  *i  violence  mount*  and  the  regime  Intcnijfiei  its  rcprmion  ol  black 
leader*.  The  Reagan  Admlnlttration'i  policy  of  'coiutructive  engagement*  li  falling.  A 
new  couric  ii  needed  to  force  Pretoria  to  diintantlc  the  *ystem  of  aparthdd. 

The  AFL-CIO  cndonei  the  itatement  by  the  Exacutlve  Board  of  tiie  International 
C«nlederation  of  Free  Trade  Uniom  adopted  in  Washington  on  April  1 1,  and  approved  by 
the  leaderahip  of  the  Independent  black  trade  laiion  movement  of  South  Africa,  which  was 
represented  at  the  meeting.  In  keeping  with  that  statement  we  cell  upon  our  government 
and  the  other  industrial  demooradet  to  take  the  following  stept: 

*  ban  new  investment  In  South  Africa) 

■  end  all  Investment  guarantees,  export  credit*  and  trade  promotion  with 
South  Africa) 

*  stop  new  IMF  loans  as  well  a*  other  bank  loans  to  the  South  African  state  and 
publicly-owned  companlest 

*  halt  the  sales  of  Kruggetand  and  the  purchase  of  South  African  coali 

■  punish  violators  ol  the  U.N.  oil  embargo  against  South  Africa; 

*  embargo  the  sale  of  arms  to  South  Africa,  especially  those  used  by  Its  military, 
security  and  police  forces; 

*  compel  disinvestment  by  multinational  companies  In  the  energy  and  high- 
technology  sectors) 

*  force  disinvestment  by  all  multinational  companies  ttut  have  been  Identified  by 
the  independent  black  trade  wiion  movement  a*  being  In  vlolatlori  of  Internationally 
acc^ted  labor  standards. 


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405 

At  th*  APL-CtO  prepOMd  lut  PcbnMry.  tha  Intcfnattonal  Labor  OrsMUatlon- 


conduct  o(  all  corporttloni  oparMinf  In  South  Africa,  with  ragard  to  thalr  racofnitien  of. 
black  tr»de  ivdon  rifhtt,  the  tralnlnf  and  upgradlni  of  blade  wortitri,  and  their  obwrvanc* 
of  unlwcrul  labor  itandardi. 

bi  conultation  with  the  black  South  African  trad*  imlon  movaiMnt  and  th« 
ICFTU,  the  APL-OO  vlll  continue  to  review  ad<fitlonal  mcaiwei  which  might  be  affac- 
tlve  in  brlnfinf  about  damocratic  ehanfC  In  South  Africa. 

The  AFL-CtO  again  calli  upon  the  South  African  govemmant  to  repeal  tha  *» 
called  Preventive  Detention  Lawi  that  arc  wed  to  harata.  Intimidate,  and  im^lMn  hladi 
labor  leader*.  The  powlnt  black  trade  lyilen  movement  of  South  Africa  remabit  tha  beat 
hope  for  democratic  peaceful  change  in  that  tragic  country,  and  it  desarvei  the  full 
tupport  of  free  trade  wiloni  everywhere. 

Meanwhile,  not  content  to  contlrw  it*  repreuion  within  itt  own  bordan,  Praetoria 
hai  annouiced  It*  intention  ol  etiabUthing  an  international  adminlitration  In  Nambla,  in 
contraventkM  of  U.N.  Security  Council  Rawhition  *33.  The  APL^IO  conor*  with  the 
ICFTU  in  condemning  thii  action  ai  a  provocative  move  aimed  at  perpetuating 
South  Alrica't  Illegal  control  ever  Namibia. 


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South  *fr<ein  tr>dt  unionlitj  fcnowo  to  b«  In  dgtgntion  d*t«nt 1 on 

1  etvuaUt  VUak«zi  UTP  EdUMtor  1Z.1Z.W 

2  XoUnl   Wunt  Chcaical  Uorkers  Induitritt  Union 

3  lanenvuU  lUchd*  Paotr,  Wood  and  Allied  Workers  Union 

t  Ntiiktldo  a«ku  African  Food  and  Canning  workers  Union  24.09.8* 

i  Boy  Nkttc  South  African  Allitd  Uorktri  Union 

6  Andic*  Xintolo  South  African  AlMtd  Uorktri  Union  3.10.S4 

7  Jerry  Kau  N«tionil  AutoaobHe  and  Allied  IMrkcri  Union  3.10.BA 
S  Thcna  Mbtndluni  NuniciDal  and  General  Workers  Union 

9  Zola  Sekel  United  Hetal,  lining  and  Allied  Workers  Union 

10  Edward  Hanilut  United  Hetal.  lining  and  Allied  uorkers  Union 

11  Gilbert  Binda  United  Hetal,  Hining  and  Allied  Uorken  Union  3.10.B4 

12  U»»e  Lekoio  United  Hetal,  Mining  and  Allied  workers  Union  3.10.84 

13  Glen  noUso  United  Hetal,  Mining  and  Allied  Uorkers  Union  3.10.84 

14  J.  Hlubl  Orange  Va«l  General  Workers  Union  30.10.84 

15  E.  Hoeketsl  General  and  Allied  Workers  Union  27.11.84 

16  n.  ndze  <froa  Ciikil,  union  unknown)  10.12.84 

17  Sis«  Hjikelana  South  African  Allied  Uorkers  Union  18.02.8S 

18  Bonile  TuIum  South  African  Allied  Uorken  Union  18.02.85 

19  Saa  Kiklne  trade  unionist  18.02.8S 

20  Isaac  Hgcob*  trade  unionist  18.02.8S 

21  Thoianlle  Gqweti  South  African  Allied  Workers  Union  20.02.85 


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THURSDAY.  MAY  9.  IWS 


Tht  AFL>CIO  Executive  Council,  meetlns  tn  Vaihinrton,  hu  uk«d 
me  W  convey  to  you  it>  outrage  over  the  death  ol  Anklet  RadtMla  while 
In  police  oartody. 

Thit  tragedy  flu  a  pattern  that  hai  become  all  too  famllUr  —  the 
death,  under  mysterious  drcumitancei,  of  black  South  African  leaden 
held  w>d«r  your  Preventive  Detention  Uwt, 

It  wat  under  the  aame  detention  lawt  that  NeU  Aggett,  who 
received  the  George  Heany  Award  for  Human  Rlghu  In  1912,  and  other 
opponent*  of  dte  apartheid  lystem  died  while  in  police  ontedy. 

In  a  statement  Issued  yesterday,  eur  Executive  Council  called  upon 
vnment  to  repeal  these  laws,  which 
d  imprison  Itladc  trade  union  leaders. 

South  Africa  standt  aconed  of  deliberate  and  consistent  disregard 
of  internationally  accepted  standards  of  conduct  and  of  perpetually 
violating  the  Ituman  and  trade  wUon  rights  of  biadt  wortcert  and  others. 

The  AFL-CIO  is  outraged  at  this  needless  loss  of  1U«  and  In 
conjwictian  with  the  ICFTU  calls  on  the  South  African  gov«nment  to 
repeal  the  Preventive  Detention  laws  forthwith  and  ensure  that  human 
and  trade  mlon  rights  are  observed.  Unless  these  basic  freedoms  are 
observed,  all  tailc  at  reform  b  irrelevant. 


(Contact!  Rex  Hardesty,  APL-OO  Department  of  b^formatlon,  202/«37-M10) 


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COUNCIL  OF  UNIONS  OF  SOUTH  AFRICA 

P.O.BOX  1[B2(lJOH»NNESaUBG.SOUTHAFfllCA,ID00TeL:   (Oil)  I9-B031, 


gsomiicw  cw  DisiwEsngMi 


RMfrirming  the  reaolutions  at  ttw  Joint  EKBCutive  Council 


Knowing  that  caeial  oppraasion  through  tha  apart hsid  ayatan 
haa  been  declared  by  the  UN  as  s  crlfie  against  huaanity 


Concluding  that  inveetiicnt  in  South  Africa  therefore  aupporta 
and  perpetuates  racial  diicrlnination 


This  MaLlonal   EiecutlvB  Coanittee  tharefDrs  concludes  t 


Any   inveatnent   in  South  Africa  la  therefore   inveatBont   i 
q>srtheid 


there  ihould 
apartheid  st. 


1  investaent  In  South  It 


the  sale  o 

prevented  b 


d  be  no  defence,  computer 
5.A.  Mhite  governaant 


nuclear   technology 


exploit  the 


a  inveatnent  in  hoaetand  areaa  i^ 


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409 

Senator  Proxmirb.  Thank  you,  Mr.  O'Farrell.  We  thank  all  of 
you  gentlemen.  I  apologize  again  that  it's  bo  late.  We  started  at 
9:30  as  you  know  because  you  have  been  sitting  here  very  patient- 
ly- 

Now  let  me  point  out  first  to  make  it  clear  because  in  some  of 
the  testimony  here  there  was  an  attack  on  disinvestment  proposals. 
There  are  no  disinvestment  provisions  in  S.  635.  I  don't  know  of 
any  member  of  Congress  who's  proposed  disinvestment.  Maybe 
later  on  that  might  be  a  necessary  strategy  but  that  is  not  before 
the  Congress  at  the  present  time. 

SUIXIVAN  PRINCIPLES 

Second,  Mr.  Weedon,  Mr.  Marzullo,  Mr.  Schroll,  you  all  men- 
tioned Leon  Sullivan  and  the  Sullivan  principles,  how  important 
they  are,  and  you  cited  Sullivan  over  and  over  again.  Let  me  quote 
from  a  letter  to  the  committee  dated  April  12,  1985 — as  a  matter  of 
fact,  a  letter  to  me — from  Leon  Sullivan. 

Here's  what  he  said,  and  I  quote: 

For  the  last  6  years  I  have  advocated:  (1)  No  new  investment  by  U.S.  companies  in 
South  Africa;  (2)  no  new  bank  loans  to  the  South  African  Government;  (3)  the  ban- 
ning of  the  gale  of  the  krugerrand;  14)  economic  sanctions  that  will  influence  the 
South  African  Government  to  abolish  all  apartheid  laws.  I  continue  to  support  theoe 
positions  and  urge  l^islation  that  will  make  them  law. 

So  here  you  have  the  Reverend  Sullivan  taking  a  clear,  un- 
equivocal position  in  favor  of  S.  635. 

Now,  Mr.  Weedon,  on  page  4  or  5 — the  pages  aren't  numbered — 
on  ps^  4  or  5  of  your  statement,  you  say:  "Some  people  say  the 
Sullivan  principles  do  not  go  far  enough."  You  then  go  on  and  cite 
a  report  by  a  Prof.  Lawrence  Schlemmer,  who  is  a  professor  of  soci- 
ology at  the  University  of  Natal.  He  has  completed  a  survey  and 
has  concluded  that  the  majority  of  the  black  oeople  in  his  sample 
are  happy  to  have  foreign  investment  in  Soutn  Africa  and  realize 
that  it  produces  many  jobs  and,  therefore,  helps  a  lot  of  people  to 
eat. 

Now,  Mr.  Weedon,  Bishop  Tutu  appeared  before  the  House  For- 
eign Relations  Committee  on  December  4,  1984,  and  he  said  this: 

I  have  tried  to  Bay  to  people  you  should  be  aware  that  if  I  sat  here  and  said  before 
this  committee  that  I  support  economic  sanctions  against  South  Africa  that  that  is 
an  indictable  offense  and  until  recently  on  conviction  the  mandatory  minimum  sen- 
tence would  be  5  years  imprisonment,  which  indicates  how  the  South  African  Gov- 
1b  the  ■  -  -      .      . 


ernment  regards  the  importance  of  foreign  ii 

Then  he  goes  on  to  say  a  little  later. 

The  point  is  that  in  South  Africa  we  have  a  society  that  is  riddled  through  and 
through  with  informers  and  people  arc  aware  of  the  very  heavy  penalties  for  ex- 

firessing  what  you  might  call  unpopular  views  with  the  authorities.  It's  highly  un- 
ikely  that  if  they  were  told  their  views  were  going  to  be  treated  confidentially  that 
tiiey  would  accept  that. 

Now  in  view  of  that,  what  value  is  a  survey  in  which  the  black 
people  in  South  Africa  are  asked  how  they  feel  about  investment? 
If  they  say  that  they  think  investment  should  be  curtailed  or  re- 
strained in  emy  way,  it's  the  slammer.  Isn't  that  right? 

Mr.  Weedon.  I  think  you  have  a  good  point,  but  I  would  com- 
ment that  Professor  Schlemmer  has  been  undertaking  to  de^  with 
these  problems  for  many  years.  I  have  talked  directly  with  him  on 


oO-Tai    O— go 14 


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410 

the  point  that  you  raised.  He  says  that  he  beUeves  that  he  has 
worked  out  techniques  which  will  assure  the  respondents  that  their 
views  will  not  be  conveyed  to  other  people  and  he  thinks  it's  a 
valid  survey. 

I  can  only  say  that  he's  a  very  much  respected  professional  in 
the  field. 

Senator  Proxmire.  On  the  other  hand,  Mr.  O'Farrell  has  given 
us  what  the  black  trade  union  position  is  and  they  are  clearly  In 
favor  of  every  major  provision  in  S.  635, 

Mr.  Weedon.  Yes,  sir;  and  I  think  that,  just  as  in  this  country, 
there  are  many  people  with  many  different  points  of  view.  I  have 
talked  with  the  gentlemen  that  Mr.  O'Farrell  refers  to.  I  know  that 
that's  his  view.  I  have  talked  to  others  who  have  different  views. 

I  am  not  trying  to  say  that  I  know  what  the  majority  view  is.  I 
was  merely  reporting  what  a  respected  surveyor  found  in  going  out 
and  talking  to  a  number  of  people. 

Senator  Proxmire.  You  know  that  the  Schlemmer  report  was 
paid  for  by  the  State  Department,  the  authors  of  constructive  en- 
gjigement? 

Mr.  Weedon.  Yes,  sir. 

Senator  iSioxmire.  They  paid  for  it  and  they  got  what  they 
wanted. 

Mr.  Weedon,  in  your  testimony  you  talk  about  the  importance  of 
education  for  the  black  community  and  I  could  not  agree  with  you 
more.  Of  course,  that's  vital.  One  reason  we  want  to  put  pressure 
on  the  South  African  Government  to  abolish  apartheid  is  precisely 
because  that  Government  uses  education  as  a  political  instrument 
to  keep  South  Africans  in  a  semipermanent  state  of  ignorance  and 
economic  deprivation. 

The  1980  House  report  of  a  study  mission  to  South  Africa  noted, 
and  I  quote: 

Since  the  South  African  Government  passed  the  1953  Bantu  Education  Act,  re- 
stricting severely  the  types  of  subjects  taught  in  African  public  schools,  the  quality 
of  black  education  has  declined  sharply. 

Don't  you  think  that  after  well  over  30  years  of  condemning  such 
policies  without  effect  it's  time  we  should  begin  to  use  limited  sanc- 
tions? 

Mr.  Weedon.  I  was  suggesting  there  was  another  alternative, 
Senator,  than  using  sanctions.  And  the  suggestion  which  I  was 
making  was  that  we  might  think  of  going  to  the  South  African 
Government  and  saying  that  we  are  prepared  to  help  them  to  im- 
prove and  broaden  their  education2d  system  and  make  it  into  one 
educational  system  for  everybody  regardless  of  race  in  South 
Africa,  because  I  sincerely  believe  that  until  the  caliber  and  quality 
of  education  in  that  country  is  uniform  for  everybody  and  is  mark- 
edly rsiised  for  the  nonwhites  in  that  country  that  we  are  going  to 
have  great  problems  with  social  and  political  improvements  that 
we  all  want  to  see  in  that  countiy. 

HELP  PROVIDE  BETTER  EDUCATION 

Senator  Proxmire.  Well,  that's  an  ingenuous  notion.  If  we  were 
talking  about  the  State  of  Wisconsin,  that  might  make  sense.  But 
^ould  we  go  to  the  sovereign  country  of  South  Africa,  which  has 


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411 

been  pointed  out  has  a  relatively  fine  economy,  high  GNP,  euid  tell 
them  that  we  want  to  help  them  provide  better  education?  What  do 
we  do,  have  an  aid  program  for  their  education? 

Mr.  Weedon.  Yes,  sir. 

Senator  Proxmire.  You  don't  think  that's  really  very  practical, 
do  you? 

Mr.  Weedon.  I  really  do.  If  we  mean  business  instead  of  just 
complaining,  we  can  expand  on  our  present '  US  AID  education  pro- 
gram in  South  Africa  and  use  it  as  a  bai^aining  tool  with  the  Gov- 
ernment. 

Senator  Sarbanes.  Would  the  Senator  yield? 

Senator  Proxmire.  I'd  be  happy  to  yield  to  my  good  friend  from 
Maryland. 

Senator  Sarbanes.  Do  you  believe  the  Government  of  South 
Africa  would  join  with  you  in  an  effort  to  institute  a  wholly  nondis- 
criminatory educational  system  in  South  Africa? 

Mr.  Weedon.  Mr.  Senator,  obviously  I  don't  know.  But  by  way  of 
example,  when  the  American  companies  got  together  and  built 
Pace  school  in  Soweto,  they  took  on  the  South  Africtm  Government 
and  said. 

We're  not  going  to  contribute  tc  a  new  school  in  Soweto  unless  you  let  us  change 
the  standards  of  education  so  that  we  don't  obey  the  standards  which  have  been  set 
and  are  enforced  for  black  education. 

And  after  a  period  of  about  2  years  they  won  that  battle  and  they 
won  it  not  with  clubs  and  sticks  but  with  the  offer  of  a  new  school 
which  was  badly  needed. 

Senator  Proxmire.  A  school  in  Soweto  is  one  thing.  How  many 
students  go  to  that  school? 

Mr.  Weedon.  It's  about  1,000  I  think  at  the  moment. 

Senator  Sarbanes.  Mr.  Weedon,  I  think  you  used  the  phrase 
"black  education"  in  describing  that.  Now  I  understood  your  earli- 
er answer  to  Senator  Proxmire  to  be  about  a  system  of  nondiscrim- 
inatory education  and  I  was  asking  whether  you  saw  any  chance 
that  the  Government  of  South  Africa  would  agree  to  that.  They 
m^ht  well  agree  to  you  coming  in  to  support  a  separate  education- 
al system.  In  fact,  some  of  that  is  being  done  today  and  some  think 
it  merely  strengthens  apartheid  rather  than  weakens  it. 

Mr.  Weedon.  Mr.  Senator,  I  said  in  my  statement  that  it  should 
be  a  uniform  system  of  education,  not  multiple  separate  systems  of 
education,  and  I  sincerely  believe  that's  necessary  and  I  think 
that's  what  you're  implying. 

Senator  Proxmire.  Mr.  MarzuUo,  I  agree  with  you  that  the 
American  companies  adhering  to  the  Sullivan  principles  have  been 
a  positive  force  in  South  Africa,  but  since  they  employ  only  70,000 
South  Africans  of  the  22  million,  it's  a  tiny  percentage — that's  a 
small  fraction  of  1  percent — we  need  to  go  beyond  that  to  help 
achieve  change. 

What  I  don't  understand  is  why  industry  opposes  making  the 
Sullivan  principles  mandatory.  Mr.  Schotland  testified  earlier  that 
the  Department  of  State  opposition  to  that  is  not  valid. 

Mr.  Marzullo.  Senator,  I  think  when  you  talk  about  opposing  a 
mimdatory  Sullivan  provision,  part  of  our  dilemma  rests  in  what 
does  one  mean  by  a  mandatory  Sullivan  provision. 


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412 

Senator  Proxmire.  What  we  mean  is  that  every  American  com- 
pany there  would  have  to  comply.  We  would  require  it,  and  we 
could  have  sanctions  gainst  them  of  course.  We  could  provide  that 
they  would  have  to  disinvest  or  something  like  that  if  they  failed  to 
comply. 

Mr.  Marzullo.  That  part  doesn't  bother  me  at  all,  since  I'm 
chairman  of  the  support  unit.  I  have  long  stated  that  I  thought 
every  American  company  ought  to  be  a  member  of  the  Sullivan 
effort. 

The  problem  again  with  mandatory — what  we  are  worried  about 
is  that  in  effect  we  are  on  the  battle  line  of  South  Africa,  trying  to 
change  the  society  and  confronting  authority  in  that  society.  We 
want  to  be  in  a  position  to  maintain  creative  initiatives  and  to  de- 
velop programs  which  are  well  on  their  way  to  being  regional  and 
national  in  scope  rather  than  local  without  having  to  be  put  into  a 
situation  where  we  are:  One,  going  to  force  the  South  African  Gov- 
ernment to  tell  our  affiliates  that  they  cannot  provide  information 
to  us  or  work  with  us,  or  two,  we  are  in  a  situation  where  we  have 
got  extraterritorial  provisions  and  the  South  African  Government 
doesn't  allow  us  to  continue  to  do  what  we  have  done. 

I  think  it's  significant,  Senator  Proxmire,  that 

Senator  Proxmire.  Let  me  just  interrupt.  You  say  that  you 
would  not  oppose  mandatory  Sullivan  principles  for  American  com- 
panies located  in  South  Africa;  is  that  correct? 

Mr.  Marzullo.  I  said  it  depends  on  how  you  define  mandatory.  If 
you  mean  that  every  American  company  should  be  a  member  of 
the  Sullivan  team,  yes.  If  you  mean  enactment  of  laws  putting  in 
monitoring  mechanisms  there  and  here  which  get  us  in  trouble 
there  and  here,  obviously  it's  going  to  be  almost  impossible  for  us 
to  do  what  we  have  been  doing  or  to  expand  the  efforts  that  we 
have  embarked  on. 

Senator  Proxmire.  Why  would  it  be  impossible?  You  expand  it 
automatically  if  you  require  all  American  companies  to  abide  by 
those  principles. 

Mr.  Marzullo.  The  South  African  Government  has  laws  about 
business  practices  which  they  have  never  enforced,  I  understand, 
which  would  make  it  impossible  for  us,  for  example,  to  get  informa- 
tion from  our  companies  if  it  involved  extraterritorial  legislation. 
In  short,  if  they  thought  American  domestic  law  was  impinging  on 
their  domestic  law. 

Senator  Proxmire.  Well,  then  the  South  African  Government 
would  have  a  choice.  In  other  words,  if  they  wanted  to  enforce  a 
law  that  would  make  it  impossible  for  us  to  impose  such  a  require- 
ment for  American  companies,  they  would  just  lose  the  companies. 
We  would  say  that  our  companies  would  have  to  comply. 

Mr,  Marzullo.  Well,  one  would  hope  that  they  would  say  that 
one  would  not  have  to  comply.  We're  not  sure,  and  we  lire  not  bo 
sure  that  you  want  to  penetlize  one  of  the  few  real  change  f^nts  in 
that  society. 

Senator  Proxmire.  Mr.  SchroU,  you  say  on  page  3  of  your  state- 
ment that,  and  I  quote,  "The  free  South  Africa  which  will  inevita- 
bly evolve,  with  all  racial  groups  participating  in  the  political  and 
economical  system,  will  be  a  stable,  worthy  nation." 


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QUICK  CHANGE  OR  RKVOLUTION 

My  concern,  heightened  by  the  testimony  of  other  witnesses  here 
today,  is  that  unless  South  Africa  makes  changes  quickly,  a  free 
South  Africa  will  not  evolve.  Instead,  a  violent  revolution  will 
become  inevitable.  So  our  premise  of  what  will  happen  there  unless 
change  comes  quickly  is  different  from  yours. 

How  do  you  combat  that  notion  that  we've  heard  so  much  and 
we  hear  from  people  like  Bishop  Tutu  and  others  that  if  we  don't 
find  some  way  through  economic  sanctions  to  overcome  this  apart- 
heid system  that  with  the  overwhelming  majority  of  people  treated 
this  way  that  we're  going  to  get  a  bloody  revolution? 

Mr.  SCHROLL.  The  danger,  of  course,  is  there  on  that,  but  as  I 
have  said,  the  American  corporate  presence  there  has  been  very  ef- 
fective in  lobbyii^  with  the  Government  in  securing  some 
chaises — not  enoi^h,  not  fast  enough,  I'll  grant  you,  and  we  are 
renewing  our  efforts.  We  have  em  application  of  the  Sullivan  prin- 
ciples which  involves  our  going  to  the  Government  and  mfddng 
representations.  In  April,  I  went  and  visited  two  members  of  Par- 
liament in  Capetown  and  with  what  Mr.  Weedon  said  there,  one  of 
the  things  I  emphasized  was  the  necessity  for  a  unitary  education 
system  is  there  and  their  Government  has  to  move  in  that  direc- 
tion. And  while  I  was  not  thrown  out  on  my  ear,  I  was  listened  to, 
and  there  was  general  agreement  for  the  need  of  improving  black 
education  and  for  eventually  coming  to  a  unitary  educational 
system. 

Senator  Proxmire.  Senator  Sarbanes. 

Senator  Sarbanes.  Thank  you,  Mr.  Chairman.  I  know  we  have  a 
vote  and  I  will  try  to  move  very  quickly.  Gentlemen,  if  you  could 
hold  down  the  length  of  your  answers  I  would  appreciate  it. 

I  have  a  sense  of  ships  passing  in  the  night  and  I  want  to  get 
right  to  that  point.  You  have  all  come  in  and  argued  against  disin- 
vestment. S.  635,  as  Senator  Proxmire  j)ointed  out,  does  not  involve 
disinvestment.  Therefore,  I  would  like  to  put  to  you  very  directly 
the  question,  what  is  it  in  S.  635  to  which  you  would  object?  Why 
can  you  not  support  S.  635? 

Mr.  Weedon.  Senator,  I  mentioned  in  my  testimony  I  am  the 
person  here  who  is  directly  involved  in  trying  to  evaluate  the  per- 
formance of  the  American  companies  in  South  Africa  in  terms  of 
what  happens  in  the  workplace  and  in  terms  of  their  social  activi- 
ties. 

To  the  best  of  my  knowledge,  nobody  else  is  undertaking  to  do 
that  sort  of  thing  anywhere  in  the  world  and  rating  the  companies 
concerned.  I  would  hate  to  be  involved — in  fact,  I  will  not  be  in- 
volved in  trying  to  carry  out  that  process  if  it's  done  as  a  mandato- 
ry legal  structure. 

We  already  have  Sullivan  signatories  who  have  dropped  out  of 
the  program  because  they  didn't  like  the  grade  we  gave  them.  I 
have  been  getting  threats  from  general  counsels  of  companies  be- 
cause they  don't  like  the  grades  we  give  and  my  answer  today  is, 
"If  you  don't  like  it,  you  can  drop  out. ' 

Senator  Sarbanes.  Well,  Mr.  Weedon,  let  me  interrupt  you  and 
put  my  question  again.  S.  635  does  not  require  meuidatory  signa- 
ture. 


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414 

Mr.  Weedon.  Fair  enough.  If  it  doesn't,  that's  fine. 

Senator  Sarbanes.  Some  of  the  arguments  you  make  eire  not 
without  some  thrust  to  them.  I  recognize  that.  But  none  of  the  ar- 
guments has  gone  as  to  the  provisions  of  S.  636.  What  is  there  in 
S.  635  you  object  to?  Why  can't  you  come  in  gentlemen,  give  exactly 
the  statement  you've  given  on  other  considerations — on  disinvest- 
ment, mandatory  application  of  Sullivan — and  then  say,  having 
said  all  that  and  wanting  to  be  sure  that  you  have  that  in  mind,  we 
support  S.  635? 

Mr.  Marzullo.  Is  S.  635,  Senator  Sarbanes,  the  one  dealing  with 
new  investment? 

Senator  Sarbanes.  Yes,  it  deals  with  new  investment  and  new 
loans. 

Mr.  Marzullo.  I'm  speaking  eis  chairman,  not  as  trying  to  repre- 
sent some  company's  position.  I  understand  from  some  companies 
that  part  of  the  problem  with  the  new  investment  is,  depending  on 
the  industry — and  they  mention  specifically  manufacturing  compa- 
nies— that  they  cannot  really  survive  economically  and  competi- 
tively in  their  business,  not  only  in  South  Africa  but  anywhere 
else,  without  new  infusions  of  capital  and  that  for  them  this  infu- 
sion of  capital  is  not  available  out  of  retained  earnings  in  South 
Africa.  This  is  what  I  was  told  by  two  companies  who  are  manufEic- 
turing  companies,  who  registered  their  concern  about  the  bill. 

COMMrrMENT  OP  BUSINESS  TO  EFFECT  CHANGE 

Senator  Sarbanes. You  say  in  your  statement  that  U.S.  business- 
es should  be  encouraged  to  increase  their  role  in  that  economy,  and 
voluntary  efforts  to  influence  social  change. 

If  those  two  things  are  not  linked,  should  companies  still  be  en- 
couraged to  increase  their  role  in  the  U.S.  economy?  Or  put  more 
bluntly,  would  you  encourage  U.S.  business  to  increase  their  role  in 
the  economy  if  they  were  not  committed  at  least  at  a  minimum  to 
the  Sullivan  principles? 

Mr.  Marzullo.  Absolutely  not. 

Senator  Sarbanes.  What  should  be  done  about  those  companies 
that  will  not  commit  themselves  to  the  Sullivan  principles,  which 
may  in  fact  be  working  directly  contrary  to  the  very  principles  and 
rationale  of  the  case  you  presented  to  the  committee  today? 

Mr.  Marzullo.  Well,  I  think  they  will  have  to  face  the  full  op- 
probrium of  various  critical  constituencies  in  this  country. 

Senator  Sarbanes.  That  answer  leads  me  right  to  my  next  ques- 
tion and  I'm  moving  quickly  because  the  bell  is  going  to  ring  in  1 
minute  and  we're  going  to  have  to  go  vote.  But  we  had  testimony 
before  the  Foreign  Relations  Committee  from  the  Chamber  of  Com- 
merce and  the  Committee  for  Trade  in  South  Africa  saying  that  we 
shouldn't  do  anything  in  terms  of  public  policy.  By  the  same  token, 
they  recognize  ^at  private  action  is  a  shielded  and  protected  activ- 
ity in  our  society.  I  can't  understand  why  the  business  community 
would  not  prefer  to  have  l^islative  action  by  the  Congress  to  set 
the  parameters  imd  establish  the  framework  for  the  process  of 
brii^(ing  about  change  in  South  Africa,  rather  than  leavii^  it,  in 
effect  to  be  fought  out  in  the  streets. 


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415 

Mr.  MAKZULLO.We  don't  want  it  fought  out  in  the  streets.  Some- 
oae  is  opposing  parts  of  it.  One  is  opposii^  certain  parts  of  it,  not 
opposing  other  parts. 

senator  ^ARBANEs.  Well,  you're  doing  a  better  job  than  the  wit- 
nesses did  the  other  day.  'They  were  nowhere  near  as  perceptive 
.and  thoughtful  about- it.  They  said,  well,  that's  protected  under  our 
system  and  we'll  leave  it  to  be  fought  out  in  the  private  sector. 

It's  my  view  that  no  one  should  really  want  that. 

Mr.  Marzullo.  Senator,  we  are  not  in  disagreement  on  what  we 
are  trying  fundamentally  to  do.  We  are  earnestly  searching,  as  you 
are -in  Congress,  to  find  a  way  of  sending  a  message  loud  and  clear 
to  that  troubled  society  that  all.of.us  want  change  in  that  country 
.and  we  want  it  as  quickly  as  it  can  be  obtained. 

Senator  Sarbanes.  Would  you.  agree  with  me  that  our  current 
_  policy,  whether  intentionally  or  not — perhaps  unwittingly — a  mes- 
«£ige  .i.hat'8  being  perceived  as  indulging  the  apartheid  regime?  Is 
that  not  how.  it  a  perceived  by  many  people  in  South  Africa,  by 
people  elsewhere  in  Africa  and  elsewhere  in  the  world,  and  by 
people  in  our  own  country? 

Mr.  Marzullo.  Some  people  certainly  have  that  perception. 

Senator  Sarbanes.  A  significant  number  so  that  it  creates  a  diffi- 
cult problem  for  protecting  or  furthering  American  interests? 

Mr..  Marzullo.  Personally,  I  wouldn't  think  so.  Senator,  because 
I  iiave'  to  differentiate  between  the  statements  that  some  of  my 
'  fiiends  make  publicly  and  what  they  tell  a  lot  of  us  privately. 

Senator  Sarbanes.  Would  you  then  conclude  that  there's  no  need 
to  make  a  change  in  policy  to  send  a  sharper,  stronger,  clearer 


Mr.  Marzullo.  I  am  all  for  sending  sharp,  clear  messages  be- 
cause I  think  that  helps. 

Senator  Sarbanes.  Do  you  think  we  have  failed  to  do  that  at  this 
point? 

Mr.  Marzullo.  I  don't  think  you  have  failed  to  do  it.  Senator. 

•Senator  Sarbanes.  Then  why  do  we  need  to  do  it?  Either  we 
need  to  do  it  or  we  don't.  If  we  need  to  do  it,  it's  because  the  mes- 
aage  that's  been  sent  is  not  efficiently  clear  and  sharp. 

Mr.  Marzullo.  It's  not  really  that  simple,  Senator  Sarbanes. 
There's  a  dichotomy  here.  One,  there  is  real  change  we  are  con- 
vinced is  going  on  in  South  Africa.  It's  not  going  on  fast  enough. 
The  message  helps  to  convey  a  universal,  nonpartisan  sense  that 
we  want  that  change  to  be  accelerated. 

All  I'm  saying  is  we  don't  want  to  become  so  punitive  that  we 
turn  off  a  process  which  in  terms  of  South  African  history  is  really 
unique  in  that  it's  really  started  something  which  has  never  been 
started  before.  That's  all  I'm  saying. 

Senator  Sarbanes.  I'm  a  sponsor  of  S.  635  Euid  I'm  fairly  sensi- 
tive to  that,  because  there's  no  disinvestment  as  yet.  Who  knows 
what  will  come?  That  depends  in  part  on  what  kind  of  change 
occurs.  I  assume  you  don't  hold  the  position  that  American  compa- 
nies should  stay  in  a  society  no  matter  how  abhorrent  the  practices 
of  that  society  might  be,  as  a  hypothetical? 

Mr.  Marzullo.  I  most  certainly  do  not. 

Senator  Sarbanes.  OK.  I  didn't  think  you  ^uld. 


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416 

Senator  Proxmire.  Unfortunately,  the  vote  is  in  the  last  5  min- 
utes. Senator  Sarbanes. 

Senator  Sarbanes.  Let  me  just  make  two  points  to  Mr.  Weedon 
and  I'll  leave  them  as  comments. 

Senator  Proxmire.  You  take  over  the  Chair.  I  have  some  ques- 
tions to  be  asked  to  Mr.  O'Farrell  and  others  for  the  record. 

Senator  Sarbanes.  First  of  all,  reading  your  statement  that 
apartheid  will  be  ended  only  by  vote  of  white  South  Africans  or  by 
revolution,  I'm  not  sure  how  you  would  have  counseled  the  Ameri- 
can colonists  at  the  time  of  the  American  revolution. 

Obviously,  black  South  Africans  face  a  very  difHcult  problem  be- 
cause they  are  blocked  out  of  any  peaceful  way  of  bringing  about 
change  in  their  society. 

If  we  don't  somehow  try  to  contribute  to  developing  a  process  for 
achieving  peaceful  change,  it  seems  to  me  they  are  going  to  be 
forced  back  to  a  violent  approach,  simply  because  the  peaceful  ap- 
proaches are  all  denied  them.  Mandela  is  in  jail.  The  UDF  people 
now  face  trial,  and  potentially  long  jail  sentences. 

The  final  point  I  want  to  make,  and  then  I'm  goii^  to  adjourn 
the  meeting,  is  that  it's  an  unfair  putdown  to  many  people  in  this 
country  who  are  very  genuinely  concerned  with  the  South  African 
situation  and  its  potential  for  violence  there  to  attribute  their  con- 
cern to  a  guilt  complex  and  to  frustration  with  trying  to  deal  with 
a  minority  situation  in  our  own  country. 

Many  of  the  people  who  are  very  much  involved  in  this  effort 
have  expended  an  enormous  amount  of  time  and  energy  on  it  over 
the  years,  and  I  do  not  regard  them  as  functioning  out  of  a  guilt 
complex.  They  are  simply  being  consistent  in  carrying  forward 
some  very  strongly  held  ideas. 

Gentlemen,  thank  you  very  much.  I'm  sorry  we  had  to  bring  this 
to  a  close. 

[Whereupon,  at  1:25  p.m.,  the  hearing  was  adjourned.] 

[Response  to  written  questions  of  Senator  Proxmire  to  Patrick 
O'Farrell  follows:] 


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African-American  Labor  Center 

Centre  Afro-AmeriMJii  du  Travail  ■  dj^JSt^/Mt^^]^ 

1400  K  STREET.  N.W.     •     SVTTE  TOO     •      WASHINGTON.  DC  3000S 


Mr.  Paul  Freedtnbcrg 
Staff  Director 

Subcommittee  on  tnternatlonal 
Finance  and  Monetary  Policy 
Committee  on  Banking,  Houdng 
and  Urtun  Affairs 
United  sutes  Senate 

Washii«ton,  D.C.   20510 

Dear  Mr.  Freedenberg: 

In  reply  to  Senator  Proxmlre's  question,  triileh  you  trananiitted  in  your  letter  of 
May  SI,  19SS,  1  would  make  the  followii^  atatement: 
QUESTION   FOR   HR,    O'FURELL 
SENATOR   FROXNIRB 
Page   1 

1.      I   pcesune   that   you   are   familiar   with   the  viewe   of  black   iBboc 
leaders   and   theii   union  members   in  South  Afclca.      Vftiat   li 
youi  Impress  ion  ti-ltb   respect   to  how  South  African  blacks   feel 
about   the  tjueation   of   American   Investment   in  South   Africa? 
Do   they   favot   mote    investment?      Do  they   favor   cestcictiona   on 
new   investment?     Do   they   favor  disinvestment?     What   is  your 
sense  of   how   thev   feel   on   these  questions? 

It  ii  understandable  that  there  may  be  some  reservations  and  hesitations  amcng 
black  leaders  as  to  the  beat  way  to  go  In  the  fight  against  apartheid.  There  la, 
however,  a  commitment  In  the  black  labor  movement  to  flgtit  apartheid  without 
compromise   to  the  bitter  end.      "niere   Is  also  a  growing  demand  on  the 
international  community  to  put  mere  preswre  on  Pretoria  and  to  undertake 
more  effective  action  to  end  the  system  of  apartheid.    While  for  35  years  the 
victims  of  apartheid  have  heard  condemnetioiu  against  the  system  from  public 
podiums,  at  the  market  place  it  has  been  "builnees  as  usual".   While  they  hear 
Secretary    of    State    George    P.    Schultz    describe    apartheid    as    "morally 
indefenaible ......  unjust,  anachronistic  end  untenable,"  they  live  with  the  reality 

of  "constructive  engagement"  and  the  perception  tliat  it  is  a  compromise  with 
apartheid  and  a  gesture  to  white  South  Africa. 

On  the  basis  of  extensive  consultations  with  black  South  African  trade 
unionists,  both  leaders  and  rank-and-file  membeis,  it  is  clear  to  us  that  a  large 
majcrity  fully  airports  the  kind  of  actions  called  tor  in  S63S. 

The  Federation  of  South  African  Trade  Unlcns  (FOSATU),  one  of  the  two  major 
black  federations,  went  on  record  in  April  1M4  thati  "FWATU  as  a  trade  unlm 
organisation  concerned  with  the  Jobs  and  livelihood  of  its  members  has  to  give 
full  consideration  to  the  question  of  disinvestment.  However,  It  is  FOSATU^ 
considered  view  that  the  preasure  for  disinvestment  has  had  a  positive  effect 
and  rtiould  therefore  not  be  lessened." 


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418 

-   2   - 


Joe  Foster,  General  Seeretsr;  of  FOSATU,  declared  recent^  Out  Ms 
organization  would  whol^esrtedly  suEport  total  disinvestment  if  it  could  be 
assured  ttwt  such  a  move  vrould  bring  about  the  changes  de^red  by  the  workers. 
Joe  Poster  did,  however,  indicate  that  he  d[d  not  favor  the  withdrawal  of 
foreign  companies  at  present  because  FOSATU  has  a  sizeable  membership  at 
such  Arms  as  Ford,  General  Motors  and  VoUcswagen.  He  pointed  out  that  as  of 
now  the  vganizaticn  had  no  mandate  from  the  workers  In  these  Grma  to 
advocate  withdrawal. 


Such  reservations  are  not  uncommon  among  labor  leaders  taking  a  pragmatic 
view  of  their  situation  and  concerned  with  tite  deepening  recessioi  in  South 
Africa.  One  such  labw  leader  warned  that  in  prescribing  a  remedy  we  "should 
not  klU  both  the  disease  and  the  patient  at  the  same  time." 


The  Council  of  Unions  of  South  Africa,  the  second  majw  black  trade  union 
federation,  passed  a  resolution  on  didnvestment  on  December  8,  1984  which 
clearly  states  its  opposition  to  new  investments  in  South  Africa  (A  co^  of  the 
full  text  of  the  resolution  is  enclosed.) 

In  summary,  1  would  conclude  that  the  vast  majority  of  Black  South  Africans 
would  welcome  strong  legislation  in  the  United  States  which  would  ccHivey  the 
moral  outrage  of  Americans  and  a  commitment  to  help  aid  apartheid.  The 
reservatioiis  which  have  been  voiced  are  merely  a  safeguard  against  a  pyrrtilc 
victory  whitdi  they  cannot  afford  and  -  after  all  the  suffering  that  has  gone  on 
in  South  Africa  -  which  they  do  not  deserve. 

'e  can  si^iply  to  your  committee,  we  would  be 
Sincerely  yours, 

Patrick  ^TarreU 
Executive  Director 


Enclosure:  a/a 


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ANTI-APARTHEID  ACT  OF  1985 


THURSDAY.  JUNE  13.  1985 

U.S.  Senate,  Committee  on  Banking,  Housing,  and 
Urban  Affairs,  Subcommittee  on  International  Fi- 
nance AND  Monetary  Poucy, 

Washington,  DC. 
The  subcommittee  met  at  11:50  a.m.,  in  room  SD-538,  Dlrksen 
Senate  Office  Building,  Senator  John  Heinz  (chairman  of  the  sub- 
committee) presiding. 

Present:  Senators  Heinz,  Gorton,  Mattingly,  Hecht,  Proxmire, 
Dixon,  Riegle,  and  Sarbanes. 

OPENING  STATEMENT  OF  SENATOR  HEINZ 

Senator  Heinz.  Today  we  are  going  to  have  the  third  in  a  series 
of  hearings  dealing  with  the  legislative  proposals  to  alter  the  eco- 
nomic framework  of  the  U.S.  Government's  relationship  with  the 
Republic  of  South  Africa.  During  the  past  two  hearings  we  have 
heard  from  the  administration,  from  Senators  Kennedy  and 
Weicker  who  drafted  S.  635,  from  academic  and  legal  experts  on 
the  subject,  and  from  those  who  directly  represent  or  audit  United 
States  companies  that  currently  do  business  in  South  Africa. 

I  think  these  hearings  to  date  have  built  a  strong  record  for  deal- 
ing with  the  issue.  My  colleagues  and  I  have  learned  a  great  deal 
about  the  realities  of  United  States  banking  and  investment  and 
United  States  commerce  with  South  Africa  and  about  the  details  of 
current  proposals  to  alter  the  relationship  we  have  with  South 
Africa.  Today,  if  I  may  say  so,  we  are  particularly  lucky  to  have 
with  us  a  man  who's  done  more,  in  my  judgment,  than  any  other 
single  individual  in  the  United  States  to  effect  peaceful  change  in 
South  Africa  and  to  better  the  lives  of  the  nonwhite  population  in 
that  country. 

South  Africa,  aa  we  all  know,  has  become  one  of  the  dominant 
issues  on  the  political  agenda  for  1985  and  it  is  clear  that  Congress 
will  be  taking  action  on  that  issue  this  year.  The  Rev.  Leon  Sulli- 
van, who  I  am  so  pleased  to  have  as  a  constituent,  of  the  Zion  Bap- 
tist Church  in  Philadelphia,  is  an  individual  who  is  famous  not 
only  in  Philadelphia  and  our  State  but  throughout  the  country, 
and  in  particular  we  in  this  country,  I  think,  owe  him  a  deep  debt 
for  bringing  the  issue  of  South  Africa  to  our  attention  and  to  our 
moral  consciousness  many,  many  years  ago. 

Since  the  founding  of  the  Republic  of  South  Africa  in  1948, 
Americans  have  been  concerned  about  United  States  corporate  in- 
vestment and  involvement  in  that  troubled  land.  Most  have  de- 
spaired that  anything  could  ever  be  done  peacefully  to  better  the 
(419) 


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420 

lot  of  the  noDwhite  population  in  South  Africa.  Reverend  Sullivan 
has  shared  that  concern,  but  apparently  not  that  despair,  and  he 
has  gone  beyond  rhetoric  to  promulgate  a  voluntary  code  of  con- 
duct for  United  States  companies  operating  in  South  Africa.  Today, 
the  mtyority  of  black  workers  employed  by  U.S.  companies  are  cov- 
ered by  Sullivan  principles.  As  a  result,  they  are  guaranteed  deseg- 
regated facilities,  equal  pay  for  equal  work  with  their  white  coun- 
terparts, and  other  principles  of  fair  play  and  decency  which  we 
take  for  granted  here  in  this  country.  From  1977  until  today,  no 
one  familiar  with  South  Africa  has  difficulty  understanding  what 
is  meant  by  the  term  "Sullivan  principles,"  Reverend  Sullivan's 
importance  is  reflected  in  the  fact  that  his  name  has  become  a 
term  of  art  and  a  symbol  of  fair  play.  I  can't  think  of  a  more  fitting 
introduction  than  to  cite  that  fact  and  I  can  think  of  no  one  who  is 
more  knowledgeable  on  the  subject  of  United  States  corporate  in- 
volvement in  South  Africa  than  the  Rev.  Leon  Sullivan  from  whom 
we  will  be  hearing  in  a  moment. 

I  would  also  like  to  note  the  presence  in  our  audience  of  Mr. 
Norman  Holmes.  Mr.  Holmes,  would  you  please  stand  up.  Mr. 
Holmes  h£is  come  to  Weishington  from  Philadelphia  to  present  a  pe- 
tition with  more  than  500  signatures  on  behalf  of  "Philadelphia 
Lawyers  Against  Apartheid."  Mr.  Holmes,  I  would  be  happy  to  re- 
ceive your  petition  at  this  point  and  we  will  make  it  a  part  of  the 
record  without  objection.  Thank  you  very  much. 

I  would  also  like  to  note  the  presence  of  Philip  Lacovara,  repre- 
senting the  American  Bar  Association.  Because  of  the  shortness  of 
time  caused  by  the  rescheduUng  of  Treasury  Secretary  Baker  to 
today's  date,  this  hearing  will  necessarily  have  to  be  truncated. 
Therefore,  we  are  unable  to  receive  the  oral  testimony  of  Mr.  Laco- 
¥{0*8  and  instead  will  make  his  written  testimony  a  part  of  the 
hearing  record  without  objection.  Mr.  Lacovara,  however,  you  are 
here  and  you  are  available  I  know  to  answer  any  questions  should 
any  of  my  colleagues  wish  to  direct  any  questions  to  you. 

[The  complete  prepared  statement  of  Mr.  Lacovara  and  report  of 
the  ABA  follow:] 


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STATEMENT  OF  PHILIP  A.  LACOVARA,  MEMBER,  HOUSE  OP 
DELEGATES,  AMERICAN  BAR  ASSOCIATION 


ind  SubcOBiiittee  fieaber 

81 

ine  iB  Philip  C.  Lacova 

ra  and  I  practice  law  in 

.C.    1  appreciate  your 

courteay  in  peraittinq  a«  to 

1   theae  haaringa.   I  an 

a  aenber  of  the  Anerican  Bar 

policy-naking  House  of 

Delegates  and  also  serve  aa  i 

participate  i 

aeober  of  the  Council  of  the  ABA's  Section  of  Individual  Rights  and 
Responsibilities.   It  was  that  Section  which  proposed  the  policy 
upon  which  I  appear  today.   I  ac  particularly  honored  to  be 
representing  the  President  of  the  ABA,  John  C.  Shepherd,  in  the 
eipression  of  the  ABA's  views. 

The  American  Bar  Association  supports  inaediate  legislative 
action,  including  inposition  of  carefully  tailored  econonic 
sanctions,  designed  to  induce  the  Governnent  of  Bouth  Africa  to 
dismantle  Its  official  policy  of  apartheid. 

Apartheid  is  of  special  concern  to  the  lawyers  of  Aaerica. 
South  Africa  ia  by  no  means  alone  In  the  world  in  repressing  the 
natural  human  rights  of  its  citizens,  but  it  is  alone  in  the  world 
in  seeking  to  shunt  its  black  citiiens  into  aake-believe  "countries" 
unrecognized  by  any  other  nation.   South  Africa's  systea  is  unique 
because  it  enshrines  in  its  constitution  this  odious  eysten  of 
diacriminetion  and  repression  and  because  it  perverts  the 
instruments  of  the  law  —  statutes  and  courts  —  in  iapleaenting 
this  official  policy.   Quite  siaply,  apartheid  is  a  violation  of 
international  law  and  is  contrary  to  what  we  believe  are  the 
purposes  of  the  law. 


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In  February  of  this  year,  the  pollcy-aaking  body  of  the 
ABA,  the  House  of  Delegates,  adopted  this  lesolutioni 

Be  it_ReBolved.  That  the  Ancrican  Bat  Association  oppoaes 
the  South  African  policy  of  apartheid  and  Its  various 
iianifestations  and  urges  the  United  States  Government  to  take 
appropriate  action  to  oppose  apartheid  and  Its  various 
pan ifestat ions. 

Be  It  Further  Resolved^  That  the  American  Bar  Association 
opposes  the  palicies  of  any  governnent  which  discrininates 
against  its  inhabitants  on  the  basis  of  their  race. 
This  resolution  reflects  the  strong  sentlnent  of  the  A>erican  Bar 
not  only  that  the  South  African  systen  of  apartheid  is  unacceptable 
but  also  that  it  is  now  tine  for  our  Qovernnent  to  take  positive  and 

that  policy. 

The  House  of  Delegates  had  before  It  a  detailed  and 
exhaustive  report  outlining  the  systenatic  Disuse  of  the  law  and  of 
the  forces  of  the  law  to  inpleoent  the  south  African  Government's 
policy.   As  one  of  the  members  of  the  House  of  Delegates  who 
supported  the  resolution,  I  know  that  the  House  found  the  case  for 
action  by  our  Government  clear  and  compelling.   I  request  that  the 
report,  that  was  before  the  House  of  Delegates,  which  had  been 
prepared  by  Professor  Goler  Butcher,  chair  of  the  Subcommittee  on 
South  Africa  of  the  Section  of  Individual  Bights  and  Kesponsibi- 
litles,  be  included  in  the  forma)  record  of  these  hearings. 


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One  of  the  ABA'a  eight  goals  coBBit*  the  Aasoclation  to 
advance  the  rule  of  law  in  th«  world.   Our  cOMitKsnt  to  thim  goal 
reflects  our  view  that  the  united  States,  through  its  aajor  public 
and  private  institutions,  has  both  the  right  and  the  responsibility 
to  speak  out  when  we  see  other  nations  syatesatically  violating 
fundanental,  internationally-recogniEed  huaan  rights.   Our  Nation 
also  has  both  the  right  and  the  responsibility  to  take  prudent  but 
effective  action  to  try  to  relieve  these  abuses.   To  fear  that  a 
particular  initiative  Bay  not  be  fully  effective  is  no  excuse  to  do 
nothing.   Noble  rhetoric  and  furrowed  broMs  do  not  Bsrk  the  liBit  of 
a  great  Nation's  capacity  to  proBOte  the  International  rule  of  law. 

As  lawyers,  we  know  that  carefully  crafted  sanctions  can 
deter  persons  froB  continuing  on  an  offensive  or  injurious  course. 
The  practical  lesson  of  the  law  is  that  precisely  tailored  sanctions 
are  effective  in  influencing  private  behavior.   He  are  satisfied 
that  the  sanctions  of  the  law  also  can  be  effective  in  inducing 
nations  to  conform  their  conduct  to  basic  international  legal  noras. 
Principles^ Governing  Econoni^c  Sanctions 

It  is  the  ftBA's  position  that  sanctions  at  this  tiae  are 
appropriate  and  necessary.   Although  the  AfiA  does  not  clain  any 
special  expertise  in  selecting  particular  sanctions  that  will  be 
both  prudent  and  effective,  we  can  suggest  several  Bajor  principles 
that  should  guide  Congress  in  selecting  specific  sanctions  to  be 
applied  in  the  struggle  to  end  apartheid. 


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Firati  aanctlons  ahould  be  directed  pEiBarily  at  the 
Qovernaent  of  south  Africa  Itaelf.   It  i*  tt>*  South  African 
Governaent  that  ha*  adopted  the  policy  of  apartheid.   It  i*  that 
govern>ent  that  has  the  political  power  and,  in  our  view,  the  legal 
and  >oral  responaibility  to  end  apartheid.   Thoae  aras  of  the 
government  vested  with  the  responsibility  of  enforcing  apartheid  — 
the  police  and  the  military,  aaong  others  —  should  be  the 
particular  object  of  such  sanctions.   That  focus  would  be  consistent 
with  the  current  embargo  against  the  sale  of  ailitary  material  to 
South  Africa. 

Second  I  Just  as  with  the  coercive  sanctions  that  American 
courts  apply  in  order  to  compel  coapllanc*  with  the  dictates  of  the 
law,  sanctions  directed  at  South  Africa  ahould  be  conditional  and 
prospective.   That  is.  the  Government  of  South  Africa  should  be  able 
to  relieve  Itself  of  continuing  sanctions  aa  soon  as  it  has  taken 
measurable  and  substantial  steps  toward  ending  the  various 
manifestations  of  apartheid.   Just  as  with  the  recalcitrant  witness 
who  is  committed  to  custody  until  he  Is  willing  to  testify,  the 
Government  of  South  Africa  would  have  in  its  own  pocket  the  key  to 
unlock  sanctions.   All  it  would  need  would  be  the  political  will  to 
bring  its  conduct  Into  conformity  with  basic  legal  standards 
recognised  by  the  world  community. 

Third,  the  sanctions  adopted  should  recognise  that,  as  a 
practical  matter,  a  system  that  ha*  evolved  over  generations  cannot 
be  purged  peacefully  overnight.   Therefore,  sanctions  should  be 
designed  to  stimulate  a  pattern  of  reform  over  a  period  that,  while 
it  must  be  brief,  may  take  aeveral  year*. 


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Th*  lapoaltion  of  aanctlona  for  a  Btatad  p«rlod  would  hava 
tha  added  banafit  of  alarting  tha  South  Atclcan  govainaant  that  U.S- 
attantion  to  diasolutlon  of  aparthald  will  ba  cloaaly  ■onltoced. 
Convazaalyt  tha  impoaltion  of  Incraaslngly  BOia  rlgoEOua  aanctlona 
within  a  aat  pariod  will  act  to  focua  tha  •nargiaa  of  tha  South 
African  govarnaant  on  continuad,  aubatantial  progtaaa, 

Tha  prospvctlva  afipllcatlon  of  aanctlona  will  ap^haaisa  the 
iaportanca  of  conatcucttv*  action,  Inataad  of  dwalling  on  paat 
■iaconduct.   Such  application  alao  would  poae  no  Interfaranca  with 
existing  contractual  obllgationa. 

Fourth,  recocfnizing  the  Pteaidant's  apaclal  reaponalbili- 
tlaa  for  conducting  foreign  relations  within  tha  contours  of 
national  policy  deacrlbed  by  law,  legislation  ahould  give  tha 
Freaident  prlaary  responsibility  for  iapleaantlng  the  sanction*  and 
for  deterainlng  thair  ef fectivenesa.   Thua,  the  Prealdent  should 
have  priaary  rasponslbllity  for  datarninlng  whether  the  South 
African  Govcrnnent  haa  achieved  auatained  and  significant  progresa 
in  dianantling  the  syatan  of  apartheid  and  thus  In  qualifying  for 
raalaalon  or  auapension  of  the  aanctlona.   The  President  also  is  In 
the  strongest  position  to  raquaat  the  laposition  of  c^iparable 
aanctlona  by  other  nations.   Such  an  expanded  aultllateral  effort  Is 
to  be  strongly  encouraged.   In  this  regard  the  actions  by  Japan  and 
Sweden  should  be  good  exanples. 

The  President  alao  can  assure  that  our  policy  la  consonant 
with  that  of  our  allies.   A,  repeat  of  the  Soviet  pipeline  Incident 
would  be  counter-productive.   Siailarly,  the  President  can  beet 
dateraine  inatancea,  if  any,  where  acces*  to  critical  aatarial* 
■hould  be  a  factor  in  foreign  policy  decisions. 


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Spgclf ic_  Propp»al»  for_Sanctlona 

The  ABA  is  not  Buppocting  any  particular  bill. 


latent  with  the 
tucea  of  the  bill 


prohibit 


though,  that  aany  of  the  features  of  G.635  are 
basic  principles  that  are  outlined  above.  Sa>e  fe( 
tfould  have  to  be  nodified  to  reflect  what  we  reco>i 
appropriate  principles  to  infon  congreasioi 
Specifically,  the  ABA  would  support 
the  United  States  Governnent  and  Anetican  f: 
xither  private  concerns  froB  extending  further  loam 
the  GoveEnoent  Of  South  Africa.  As  provided  in  pending  legislation 
such  loans  would  be  pernitted  if  they  were  to  be  used  by  the 
government,  for  Instance,  to  finance  non-dlscrininHtory  housing  or 
schools  or  to  provide  other  public  services  without  dlscri>ination. 
Si>ilarly,  in  light  of  evidence  that  Anerlcan  computers  nay  be  used 
to  nonitor  and  enforce  various  apartheid  laws  and  regulations,  we 
support  restrictions  on  the  sale  of  conputers  to  the  governnent  of 
South  Africa,  Sanctions  of  this  sort  seen  to  us  to  be  narrowly  and 
precisely  targeted. 

It  ha»  been  said  that,  if  American  banks  do  not  make  loans 
to  the  South  African  Governnent,  banks  and  governments  elsewhere 
Mill.   It  has  been  said  that,  if  American  companies  do  not  sell 
computers  to  the  South  African  Government,  companies  elsewhere 
will.   Perhaps  that  is  true,  although  I  doubt  that  these  objections 
adequately  measure  our  economic  and  technical  leadership  and 


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But  thoae  protaatB  bIsb  the  point.   A*  a  nation,  h«  can 
only  do  what  we  can  do.   Each  nation  Buat  ansMBi  to  ita  own 
contcienc*.   As  SBcrctaiy  of  Stat*  G«org«  P.  Shulti  notad  in 
defending  tbs  iapoaition  of  awesping  trade  and  other  aconoalc 
aanctlons  againat  Nicaragua,  "...there'a  a  certain  aanae  of  feeling 
that  regardleaa  of  the  effect,  certain  klnda  of  relatlonshipa  with 
countriea  we  think  are  doing  a  lot  of  daaage  are  undeairabie." 
Aa  Senator  Cranaton  noted  in  the  recently  iasued  report  of  the 
Foreign  Relattona  Coaaittee  approving  S.998,  aoae  26  U.S.  banks  have 
voluntarily  decided  to  aake  no  new  loans  to  the  South  African  public 

The  ABvrican  Bar  Aaaociation  believes  that  our  governaent 
and  our  inatltutlona  ahould  not  help  to  finance  the  South  African 
Governaent ,  whoae  legal  syatea  is  a  perversion  of  unlveraally 
recognieea  atandarda.   In  the  atruggle  for  International  huaan 
righta,  the  United  Statea  ahould  continue  to  ba  a  proud  and 
aelf -confidant  aoral  leader. 

In  aua,  without  Indulging  in  the  rhetoric  of  racrlaination, 
the  Anerican  governnent,  through  congressional  action,  ahould  take 
iMBadiate  and  concrete  atepa  to  denonatrate  to  the  Govarnaent  of 
South  Africa  that,  at  least  in  Its  relations  with  the  United  Statea, 
It  cannot  with  Inpunlty  preserve  a  systaa  that  uses  the  law  to 
repress,  divide,  and  deprive  on  the  basis  of  the  color  of  a  person's 
akin. 


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TABLE   OF   COITEtlTS 

Page 

I .   Background        2 

II.   Diacussion ••• 6 

A.  Aparthaia 8 

1.  The  PsBB  I.awB 11 

2.  The  Denial  of  Political  Participation      .    .  14 

3.  The  Ilonalands  Policy 14 

a.  Dsnationalizationa  and  Daprivationa 

of  Citizenship 15 

b.  Relocatiana   and   Itsnovala 16 

B.  The  Socurit/  Legialation 18 

1.  Banninga 20 

2.  Disappearances 21 

3.  Detentions  without  Charges  or  Trial      ...  21 

4.  Detentions  Kitliout  Access  to  Counsel  or 
Ilabeaa  Corpus 22 

5.  Torture  and   Deaths   in   Dotentiou 22 

6.  The  Dae  of   the  Judicial  Proceaa   to 

Enforce  Apartheid     23 

C.  :iaDibia        26 

D.  The  llarraasDont   and   Intinidation   of   Attorneys    .  28 


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aSPORT 

*?ron  our  boctlnniiig     r«garil  for  huaan  ri^ta  and 
the   stoady  o^panaiou   □!  hunan   treaJoa  bav«  dofinad   tlio 
Ancrlcan  «xporioncQ.     And  tliay  rsoaln  toda/     the  r«al> 
aoral   cora  of  our    foreign  policy.      Tha   Unltod  Status  has 
said,    on   nany  occasions,    that   ^e  vieu  racisn  k/ith 
repugnance.      Mo   fool   a  noral   reaponalbillty   to   spaak   out 
on  this  oattor,    to  aaphaalzv  our  concacns  and  our  griaf 
ovor    tho  huna.i  and   spiritual   cost   of   apacthaid   in   Soutli 
Africa. 

7o  call  upon  tlia  govarnnant  of  South  Africa,    to 
reach  out  to  Its  black  Bajority  by  ending  the  forced 
renoval  of  blacks  fron  theii  cosaunlties  and  the 
detention,    uithout  trial  and  lengthy  iBpriaonnant,   of 
black   leaders.' 


"The  political  systen  in  South  Africa  is  Borally 
ifrong.     Wc  stand  against  injustice,    and,    therefore,   ua 
aust   reject   tlio   legal   and   political   prealses   and 
consequences   of   apartlteiJ. . .Wo   reject   unequivocally 
attenpts    to   denationaliie   the   Black   South  African 
najority   and   relegate   then   to   cltisanslilp   In   the 
separate  tribal  honclands.     We  Jo  not  and  will  not 
recog;)i=o  these  areas.     All  Anoricans  are  rapallad  by 
the   sight   of   long-sottlad      otatle  black   connunitioa 
being   uprooted  and   their    inha'jitatitB   forcibly  ronovad   to 
barren  sites   in  far  aifay  ''honelands'  thoy  "have  never 
secii  before,      neither    can   we   countenance  repression  of 
organisations   and    individuals  by  neans   of   adninistrativa 
noasures  like  banning  and  detention  without  duo  process 


T7         aonarka   of    the   PresiJent   In   cereaony  cooaeBorating 
Tnternational   Hunan   Rights   Day   (Oecoabor    10,    19S4} .      Tho 
President   noted    that    "there  are  occaaiona  irtien  quiet  diploaacy 
is  not   enough         lAion  ire  nuat  renind  the  laadars  of  nations  who 
are   friendly   to   the   United  States,    that   such   friendship  also 
carries  rospousibilltles  for   than,   and  for  ua.* 

2/       Bureau  of  Public  Affairs,   U.S.   Dop't  of  State.    Currant 
Policy  ilo.   497,    Southern  Africai  Anerica's  Responsibility  for 
Peace  and  Change   (June  23,    1983)    [hereinafter  eitad  aa 
Eagleburger  Stataoent]. 


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1.  BacKqiound 

It   ia  of  paranount   iBportanc*  that  the  Amecican  Bar 
Aksociation,   with   ita  long  tradition  of  aupport  for  the  Rule  of 
Law  inter nationally I    adopt  thle  reconnendation  to  sake  clear 
Ita  concern  cegacdlng  South  Africa's  utter  disregard  of  the 
Rule  of  Law  and  gross  abuse  of  fundamental  hunan  rights  and 
fceedons.    2 A/ 

As   the  above-cited   atatenetita   of  Preaident   Reagan   and   the 
then  Undersecretary  of   State  Lawrence  Eagleburger   demonatratei 
this   recoDEiendatlon   for   an  ABA  resolution  declaring    ita 
oppoGltion   to  apartheid   and   Ita  various   nanlf estations   la   In 
fact   consistent  with   the    long-standing  position   of    the  United 
States  Covernoent.    3/ 

2A/      This   resolution    is   consistent   with  at    leaat    five    (5) 
previous  policies  adopted  by  the  ABA  House  of  Delegatesi    1)   The 
Rule  of   Law   ceaolutlon    (2/75);    2)    favoring   econonic   sanctiona 
against   Rhodesia    [8/72] j    3)    support    for    the   International 
Covenant  on  Civil  and  Political  Rights    (2/79)i    support  for    the 
International   Convention  on   the  EliDinatlon  of  All  foras   of 
Racial  Discrininatlon    (6/78];    and  5)    support   for  the  Interna- 
tional Covenant  on  Econonic,    Social  and  Cultural  Rights    (2/79). 

3/       In  August   1963  ths  U.S.i    because  of  its  concern  over   the 
dangers  of  apartheid  to  International  peace  and  security, 
supported  the  Security  Council's  non-mandatory  ama  aabargo 
against  South  Africa.   The  U.S.   Ambasaador    to   the  United  Nations 
conuented      "It    ia   only   calling   things   by   their   right   name   to 
aay  that   we   are   confronted   for   the  nonent   with  a  deadlock 
between   the   overwhelming  majority  of  nankind   and   the   Republic 
of   South  Africa.    There  has  been  no   forward  motion;    indeed. 
there  has   been   retrograasion  — calculated  retrogreaalon.    Press 
Releaee  Ho.    4332,   July  31,    1963. 

Again,    in   the   Deoember   1963   Security  Council   action 
strengthening   the  non-mandatory  arms   embargo.    Ambassador 
Stevenson   remarked,    "We   all  have  an  obligation  under    the 
Charter    ...      to  act    individually      to  use   our   own   Influence   to 
bring   about   a   change    in  South  Africa.   Preas   Release  Ho.    432S, 
December   4,    1963. 

On  February  1970  President  Hixon  set  forth  the  U.S. 
position  on  southern  Afxicai    "Claarly  there  la  no  question  of 
the  U.S.    condoning     or    ac^uleaclng    in,    the  racial  policies   of 
the  white-riil«d  regimes.     For  moral  as  well  as  historical 
reasons,    the   U   S      stands   flrnly   for   the  principles  of   racial 
equality  and  ae If -de termination.     See,  Hearings,    Gubc.  on 
Africa,    Comm.    on   For.   Aff.,    House   of   Rep        93rd  Cong.,    lat 
Seaa,    1973,   p.    159.     The  Assistant  Secretary  of  Etata,    David 
Newsome,    affirmed   that    "we  have  reiterated  our  abhorrence  of 
apartheid  and  have  reaffirmed  our   Intention  to  Maintain  our 
arms  embargo  to  South  Africa.   Id. 

In  November   1977,   U.S.   Ambassador  Young  In  joining  in  the 
unanimous  vote  of   the  Sacurity  Council   in  favor  of  E.C.   Res. 


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The  inportanco  e>£  support  for   tha  cotmitnant  to  th« 
staiidarJ   of    equal   rights  ancj  digiiit/   for   all   wl fiiout 
dJBtlnc^lon   on   thg  baaia  of   race   or    color   naads   no 
elaboration.      Ilenbcrs   of    tho   legal  pcofeaalon  hava  a   apacial 
obligation   to   apeal:   out  ogainat   a   conatitutlonally  and   legally 
nandateJ  policy  o£  cacial   discrlaination  and  of  other    flagrant 
Violations   of  huraan   righta   and   fundaaental   freedoaa      4/ 
South  Africa    is   unique   in   that   it   ifl   tho  only  country   in   the 
world  with  racial  dtscrininatioa  enshrinaJ   into  ita 

3/(cont.")/    418,    ii'   U.Il.SCOH   (2046th  litg.)    at   5,    U.H.DOC 
&P.V.2046    11377],    stated,    'In   the   intaraat  of  encouraging  South 
Africa's  leaders  to  enbark  on  a  new  couraei  Preaidont  Carter 
has  now  authorized  oe  to  state  that  the  United  States  is 
praparod  to  join  with  other  BaHbora  of  this  Council  in  iaposing 
a  nandatory  aros  enbargo   (under  Chapter  VII  of   the  Charter)   on 
Soutli  Africa  " 

Ij-i  ilarch  of  197S  Patricia  11.  Darlan,   Assistant  Secretary 
of   Ststa   far   Hunan  Rights   and  Uuaanitarian  Affairs,    in   a   speech 
before   the   Lawyucs'    Connitteo   for   Civil   Itights  Undor   Law   and 
Division  V   of    the   D.C.    Bar   Association,    stated   that   as   regards 
South  Africa  "it  is  the  positlou  of  tho  United  States  that  tho 
provisions  of  Articles  1,    S5,   and  56  of  tha  United  Dations 
Chartor  anboJy  nutual  recognition  by  all  parties  that  every 
person  without  distinction  ia  entitled  under  the  charter  to 
rospact   for  his  or  her  hunan  righta  and  fundaaental  froodooa.* 
n.    3   cont. 

4/         Indeed,    Anericau   laifyera  have  been  actively   involved 
atjainst   apartheid.      In   19S8   tha  Aasociation  of   the  Bar   of   the 
City  of   ae:t  York,    in   connection  with   the   trial  of   the   37 
iJaoibians    in   South  Africa  -   a   trial   which   was   the   first 
application  of    tho  Terrorisn  Act   -    "rasolvad  to  record    'its 
deep   concern   and    Ita   protest   over   the  actions   of   the  Republic 
of   South  Africa,    In  applying   its  own   Isk/  and   judicial  process 
axtra-territorially,    to  South  West  Africans  and  by  prosecuting 
37  of   then  under  the  Terrorisn  Act  of  1967-.  This  Act  offetids 
basic  concopta  of    justice,   due  process  and  the  rule  of  law 
accepted  by   civilized  nations  and  violataa   the  Declaration  of 
Iluoan  Sights."      (Cited   in  Joel  Carlson.   Mo  Heutral  Ground  208. 
1973). 

Uote  should  also  be  aado  of  the  work  of  tha  Lawyers' 
CooDittee   for   Civil   Rights  Under  Law.      The  Cocuiittee  has 
enjoyed  the  support   of   eoinent  xisisbers   of   tho   lagal   profession. 
Including  past  preaidenta  of  tha  Anerlcan  Bar  Aasociation, 
fornor  Attorneys   General   and   law   school  deans.      In   1967   tha 
Lawyers'    Connittee   established   the  Sout>iern  Africa  Project 
ifhich   seeks   (1)    to   enauro   that  defendants   in  political   trials 
in  South  Africa   and   Manibia  receive  the  naCaasary  raaourcea   for 
their   defenso   and   a   conpetent  attorney  of  their  choice   <2      to 
initiate  or    intervene  in  legal  proceedings   in  this  country  to 
deter   actions  that  are  supportive  of  South  Africa's  policy  of 
apartheid,    when  such  actiona  aay  be  found  to  violate  U.S.    lawt 
and(3)    to  serve  as  a  resource  for  those  concerned  with  tha 


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Constitution. 5/  Ita  cntira  govarnnantalt  political,  econonict 
•oclal  and  l«gal  stiuctura  ia  pradicatad  on  dlatlnctiona  baaad 
on  race  and  color.  G/ 

Thla  aituatlon  of  abnegation  of  the  Rulo  of  I>au  in  South 
Africa  calls  for  the  reiteration  of  tha  dadication  of  the 
Aaerican  Bar  Association  co  the  Rule  of  Law  and  specifically 

for  the  declaration  U/  the  Aaaociation  of  its  Opposition  to  the 
governnentall/  established  and  enforced  policy  of  the  South 
African  Governoont  of  apartheid   for  the  condonnation  by  the 
Aasociatioii  of  the  nost  egregious  violations  of  tha  Rule  of 
Lawi  for  the  authorizing  of  the  President  of  the  Association  to 
take  further  actiona,  as  appropriate,  in  inplenentation  of  this 
policy,  and  finally  for  the  encouragement  of  aanbars  of  the 
Association  to  act  in  support  of  this  policy. 

Tha  inparativa  for  lauyers  and  for  the'  Association  to  speak 
out  on   this  isaue  aay  be  illustrated  by  the  proainance  uhich 
the  situation  of  escalating  violence  in  South  Africa  has 
attained  7/   On  Deceober  10,  1984,  President  Reagan  in  a  speech 

4/(cont.)/  erosion  of  the  rule  of  law  In  South  Africa  and  that 
governnent's  denial  o£  basic  hunan  rights. 

The  International  CooDission  of  Jurists  coapllad  a  report 
Sooth  Africa  and  tha  Rule  of  Law,"  Geneva,  1960  {hereinafter 
cited  as  ICJ  Report)  "in  the  hope  that  world  legal  opinion  will 
thereby  be  inforned  of  the  profoundly  diatraasing  conditiona  of 
Ufa  in  the  Union  of  South  Africa  and  the  perilous  state  of  the 
rule  of  law  in  terns  of  both  classic  freadoDS  and  social 
justice. - 

5/   See  Oep't  of  State  Country  Reports  on  Iluaan  Rights 
PractTcaa  for  1983,  p.  322.   [hereinafter  citad  as  Human  Itights 

S/   See  connents  in  the  House  foreign  Affairs  Subconnittee  on 
Africa  Report  of  Special  Study  Missions  to  Africa,  The  ?aces  of 
Africai  Diversity  and  Progress;  Repression  and  Struggle" (1971) , 
p. 141.   The  Special  Study  llisalon  noted  that   "With  the  advent 
of  the  United  Nations  and  the  dedication  of  the  Charter  of  the 
United  Jationa  to  the  principle  of  equal  righto  and 
aelf-dotaruination  o£  peoples,  a  new  era  of  international  law 
dawned.   This  has  been  marked  by  progress  in  many  countries 
toward  the  eradication  of  legal  -distinctions  based  on  race  and 
color.   South  Africa  is  an  ignominious  exception   While  the 
rest  of  the  uorld  embarked  on  a  course  of  rocognizing  the 
equality  and  dignity  of  each  man.  South  Africa  has  enshrined 
apartheid  into  its  systea  of  law..." 

The  Human  Rights  Report  coimsnts  that  the  "83.3  percent  of 
South  Africa's  population  which  is  not  part  of  the  white 
minority  suffers  from  pervasive  discrimination  which  severely 
linita  political,  econonic,  and  social  lifs."  Uunan  Sights 
Oeport,  supra  note  5  at  324. 

7/   See  the  sobering  Report  of  the  South  African  Bishops 
Conference,  "Report  on  Police  Conduct  During  Township  Protests 
{August-1964)". 


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atlng  International  Uunui  Sight*  Da/  apolc*  out  on  tho 

Issue  of   aparthold  by   noting   that   tho  Unitad   Statas   vioua 
'xacien  \iit1i  topugnance"   and   urging: that  south  ACiica   "nova 
toviarJ   a   note  juat   aociaty."      Tiva  Prosidont   aaid   that   tho 
adalnlatration  uanted    'the    govornoont   of   South  Africa   to  raach 
out   to    ics  black  najoritj-  by   ending   the   forced  ronoval  of 
blacks   fcoa  thair  cooaunitiaa  and  the  detontlon,   without  trial, 
and  lengthy  inpriaonnent  of  black  laadera."    8/ 

The  cacantly  reportad  poaition  of  Sanator  Lugaci    th« 
incooing  chairoan  of   the  Sanato  Foreign  Relationa  Coaaltta*.    In 
calling  for   tho  release  of    16  black  political  priBOnsrs  in 
South  Africa   ia   of   aignal    inportance   in   Indicating   that  now   la 
tha  tiae  for  peraona  and  aasaclatlona  dedicated  to  the  Rule  of 
Lau   to   speak   out.    9/      Rafcrence  should  also  be  made  to  tha 
Deconbar   4,    1984   letter   of   35   consecvative  Republican 
congEoaa^o:i    to   the  Aobaasador   of   South  Africa  to  tho  Uulti  d 
States.     Tne  letter  road   in  partlnant  parti 

">4o  are,    for  tha  Bost  parti   politically  consorvatlvo 
and  as  conaecvativaa  Eocognisa  all  too  wall  tha 
inportance  and  strategic  value  of  South  Africa,     ufa 
understand   tha  nead  for  atability  both  within  the 
internal  affairs  of  /our  country  and  your  astarnal 
relationship  witli  the  United  States       But  precisaly 
because   i/e  do   feel  atrongly  about  our   sutual   intoceBtB. 
no   cannot   condone  policies  of  apartheid  uTilch  wa  ballava 
iieakeii  your    long-tern  Interests  and   certainly  our   ability 
to  deal   witli  you  in  a   constructive  nanner 

Wa  are  looking  for  an  Inaediate  end  to  the  vlolanca 
in  South  Africa  accoapaniad  by  a  denonstrated  aana*  of 
urgency  about  ending  apartheid. '10/ 


'If  conservatives  look  to  freeiloB  «a  tha  doainant 
guiding  pcincipl*  in  doaeatic  policiee,  should  wa 
not  look  for  tha  satie  in  the  international  area? 
Therein  liaa  tha  great  challenge  inherent  in  tha 
question  of  South  Africa.  .  .  •  The  aoral 
inplicationa  of  supporting  an  avowadl/  raolat 


8/         Supra   note   1,    at   2. 

9/        ~B.V.'   Tines.    Oecenber   9,    19S4,    at   30.    ool.   a. 
10/        The   letter   was   signed  by  the   follouing   congresspersonst 
Tin  Weber,    Dan   Coats,    Bill  Ooodllng,   John  Uiler,    Richard  Araay. 
Bob  Walker,    Robert  Dornan.   Benjanin  Giloan,  George  Gekas, 
Barbara  Vucanovich, .Robert   Lagonaxsino,    Connie  Hack,   Hewt 
Gingrich,    Too  Bliley,    Bill   Dannemeyar,    Bob  Livingston.    Duncan 
Hunter,    Jin  Courter,    Bill  llcColluia,   Hike  Decline,    ilancy  Johnson. 
Frank   Wolf,    Ilicke/  i:dwarda,    Lynn  llartin.    Ton  Lewis,   Bobbi 
Fiedler.    Steve  Gunderaon,    Chalners  M/lie.  Hark  Siljander,    Ed 
Zachau,    Too  Aldge,   Bill  Thooas.   Bill  Clingcr.  lod  Chandler,    and 
John  Rowland. 

-  5  - 


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govarnaenk  w«r« -EatlenAlissd  away.    If  not  blatantly 
Ignorail.      But  if  consarvatlvas  ar»  to  lead  the  fr«a 
krarld   into  the  21at  centacy,    w>  niiat  do  ao  on  tho 
baala  of  a  policy  that  haa  a   ficn  and  conslatent 
.  DOral    foundation.      Me-aust   atand   fiealy   for    fraedoo 
and  deiiocEacy,    and  that  does  not  porsit  ua   to  blind 
our   eyea   to  a   govetrnoent   that  denies   both   to   the 
vaat  najorlty  of   ita  citlaena  aiaply  because  of  tlia 
color   of   their   akin.*    11/ 

II.  DiaguBBion 

Conaonant  with   ita    undertaking   in   the   1975   Rule   of   Law 
'  Baaolution   12/   affirning    1-ta    support   of   the   Rule   of  Law   in  tha 
intornational   connuuity      the  Aneeican  Bar   Association   ahould 
adopt   the   proposed   reconnendation.      This  reconaendation    la   sado 
pursuant   to    the   roa£ficaatiOn   in   1983  of    the   conoitaont   of   the 
Asaociation   in   Goal   VIII    1^/   to  advance   the  rule   of   lau 
in   the   iiorld   and   to  pronoto   peace   and  huaan   rights   throuijli   law. 

The   recoanendation -ia    consistent   with   the  positions   of 
the  Anorican  Bar   Associ-ation   in   aupport   of    the   ratification  by 
the  United   States    of   the   significant  huaan  righta   conventions: 
the  International  Covenant  on  Civil  and  Political  Rights,    14/ 
the  International  Covenant  on  Econoalc,    Social  and  Cultural 
Rights,    1^5/   and   tho    International  Convention   on   tho  Elinlnation 
of  All- Poms   of  .Racial   Diacr  inination.    16/ 

The  raconaeudation  is  also  in  line  iwith  the  1972  ABA 
eeaolutlon  urging  the  Congraaa  to  repeal  the  Syrd  Artendnent 
'.ihich  perni-ttod  the  United  ^tatea  to  iaport  Hhodesian  ehrono 
notwithstanding  the  Chapter  VII  Security  Council  decision  to 


^^7         VJas'.iington   Post,    Decenber   11,    1904,    at  A19,    col.    2-3. 

12/        See  Anecican  Bar   Aasociatlon,    Report   on   the  History   and 

laplono.itation  of    the   Rule   of   Lau   Resolution 

13/         See   Aaerican   Bar  Association,    International   Law  and 

Relations    (Advancing    the   Rule   of .  Law  Aoong  nations:   The 

Association's   Goal   VIII). 

14/        In  February  1979  the  ABA  (in' Report  to  tho  llouae  of 

Selegates,    Section   of   International   Law)    adopted   a  position   in 

support  of   the  International  Covenant  on  Civil,  and  Political 

Rights,    Annex   to  Q.A.    Res.    2200,    21   GAOR,    Supp.    16,   U.U.    Doc. 

A/e316,    at   52    (1966). 

15/       In  Fobruary  1979  tha  ABA  (in  Report. to  the  House  of 

Celegatea,    Section  of  International  Lau]  adopted  a  position  in 

support  of    the  International  Covenant  on  Ccononic,    Social  and 

Cultural  Righta,    Annex  to  Q.A.  Rea.    2200,    21  QAOR,   Supp.    16, 

U.d.  Doc.  A/6316,  at  49   1966). 

16/  In  August  1978  the  ABA  in  Report  to  the  House  of 

Delegates,  Section  of  International  Law)  adopted  a  poeition  in 

support  of  the  International  Convention  on  tha Xliaination  o£ 

All  Focus  of  Racial  Discrinination,  C.A.  Ras.  2106,  20  OAOR, 

Supp.  14,  U.H.  Doc.  A/6014,  at  47  (1966). 


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icipoBS  aandatocy  «coiiotiic  aanctiona   against  lOiodaaia.   17/     ^« 
pieanbulatory  paragraphs   of    this  rasolution  noted    the   treaty 
obllgatiori  to  anforce  Jaclalons  of   Gho  Sscurlty  Council  18/   and 
corononted      inter    alia,    that    tha  Unitod    Stataa   conaldara    the 
rule  of   law   to  be   the  only  alternative   to  the  rule  of   force  and 
that   the  good   faith  fulfillnant  of   treaty  obligations   la 
central   to  the  rule  of   law. 

This  report   is   coneenant  with  the   'Seporta  oo  the  Trip 
to  South  Africa  and  Zlnbabwe"  written  by  sone  partlclpanta  of 
the   trip  iiliicn  was  eponadred  by  the  International  Legal 
Exchange  Progran  of   the  Section  of   International  Law  and 
Practice    {19B2).    19/ 

T77        In  August   1972   the  ABK   (loportation   froa  Rhodaaia, 
Standing    CotiaittOG    on  Morld   iJrdar   undor   Law)    adopted   a 
recoanonJatio.i   favoring   oconoalc   sanctiona   agalnat   IQiodeaia. 
This    folloireJ   the  adoption  by   Congreas    in   1971  of   the   Byrd 
AnendBont  to  the  Strategic  and  Critical  Materials  StocXPiliiig 
Act.    50  U.e.C.    Sec.   98-98h  uhich  provided  that  the  President 
could   not  prohibit   the   Inportatlon  of  any  oaterial  that  uaa 
nllltarily  strategic  and  critical  and  that  originated   in  a 
non-Comiunist  country  ao  long  as   its   inportatlon  was  not  banned 
frOQ    connunist    countries.      This  Act   conflicted  with   the  Chapter 
VII   ueasure  passed  by    the   Security  Council   of    the   United 
Satlons    that  pro^ilblted   all    trade   with   Bhodeala. 
IB/  It  reads   in  portinont  parti   'MU&IIEAS,   Artlcla  25  of   the 

Charter   of   tho  United  Nation*  provides  that    'The  Benbors  of  the 
Unitod  nations    agree    to   accept   and   carr/  out   the  decisions   of 
the  Security  Council   in  accordance  with  the  present  Charter'.*, 
loportation   froo  Rhodesia,    supra  note   17. 
19/  See   eapecially  Ssc.    VI,    Findings   of    ths  TUp 

Participants    iji    Reports  on    ths  Trip   to  South  Africa   and 
tfinbabuc.    International  Legal   Exchange   Progran  of   the  Section 
of    In tor national  Law  and   Practice      October  39   to  UoveDber    6, 
1982,    [hereinafter   cited   as   ILCi  Trip  Report],    at    51-SS.      Kote 
also    the  obaorvatlon    that    "South  Africa    la   a   terribly  divided, 
racially  segregated   country    in  lAiich  the   legal  aystaa  has  been 
•nployod   to  further   the  political  objectives  of  apartheid  or 
racial  dlscrlnination   "      The  penultiaate  paragraph  of   the 
findings  conciudos  that   "to  the  extent   that   the  laus  of  South 
Africa  operate   to  deprive    the  great  aajority  of    Ita  citieens  of 
their    fundancntal  hunan  rights,    it  becones  a  Batter    not  aerely 
at  donestlc   concern  within  South  Africar    it    juatifiably  becoaas 
a   concern  of    the    International  legal  conaunity  and  of    the 
organised  bar    In    the  United  States   and  elaewhere        That   concern 
for   hunan  rights    under    law  waa  «xpresaed  aa  recently  as  August 
1983   When   the   Uouso   of   Delegates  of   the  ABA  adopted  Association 
Goal  Ho.    VIII    —   to  advance    the  Rule  of   Law   in  the  World.      The 
first    sunoary  objective    in    iaplenenting   that   goal   was    stated   to 
bat    'ProBota   the  developnent  of   International  law  and  practice 
by   foataring  research,   education  and  legal- Initiatives  for 
peace   and  hunan  rights  through  law. '" 


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A.  Aparthaid 

ApartiiaiJ  is  the  polio/  wltlch  th»  16  pttrcont  white 
ainozity  inposas  on  the  73  percent  African  najority  to  tiaintain 
whito  Buprenacy.  20/     Aparthaid  haa  been  found  by  the 
International   Couct   of   Juatica   to  be   a  governasntall/ 
eatablishod  and  enfarceO  syatsn  of  pxaf arancea,   diatinctiona, 
oxcluslona,    linitations   and   restcictiona  baaed   exclualvaly  on 
race,    color,    national  and  ethnic  origin.    21/     It  ia  a 
fundaoantal  prenlae  that  the  Rule  of  I>au  requires  a 
governDcntal  syst«n  that  treata  all  peraona  aa  equal  before  the 
law.    22/     Apartheid   ia  dianetrically  oppoaed  to  thia  porenptory 
nora  o7  non-diacrinination.    22A/ 

20/         Hunan   Rights   Roporti    aupra  nota   5   at   322. 

TT/         5ae  paragraph   131   at    the   International   Court   of  Juatice'a 

Ailviaory  Opinion  of   21  Juno  1971  on  the  Legal  Consequences  for 

States  of  the  Continued  Presence  o£  South  Africa  in  Uaaibia 

(South  West  Africa)  Notwithstanding  Security  Council  Resolution 

276   (1970),    [hereinafter  cited  as  ICJ  Advisory  (pinion  on 

Uanibia3- 

22/        Sea  I      the  Univoraal  Declaration  of  Iluoan  Itlglita,   G.A. 
Res.    2T77  3   OAOIt,    U.U.    Doc.    1/777    (1948),    which  reads    in 
part, 'Art.    7.    All   are   equal   before   the   lau  and   are   entitled 
without  any  discr inination   to   equal   protection   of   the   law..."; 
Charter   of    the   United  Nations,    Art.    55   and   56,    59   Stat.    1031, 
T.S.    993,    3   Bevans    1153    (1945),    which  reads    in  part,'...    the 
United  nations   aiiall  pronotei...    universal   respect   for,    and 
observance   of,    hunan   rights   and   fundanental   fraedoDS   for   all 
without  distinction  as   to   race,    aex,    language      or   religion."; 
South  Weat   Africa   Casea    [Second   Phase},    [1966]   I.C.J.    4,284 
(Tanalta,    J.,    diaaenting)    in   which  Judge   Tanaka   concludes, 
drawing   upon  every  source   of    international   law   authorized   in 
the   Statute  of   the   International  Court   of   Juatice,    that    "the 
norn  of   non-diacrinination   or    non -separation   on   the  basis   of 
race  has   becono   a  rule   of   custonary   international   law....    The 
principle   of    equality  before    the  law      .is   stipulated   in   the 
list  of  hunan  rights  recogniced  by  the  aunicipal  systen  of 
virtually   every  State   no  aatter   whether    the   fora  of   governnent 
be   republican  oi   nonarchical   and   in   spite  of   any  differences   in 
the   degree  of  precision   of   the  relevant  provisions.      This 
principle  haa  becona   an   integral  part   of   the   constitutions   of 
noat  of  the  civilieed  countries   in  the  world." 

22A/  The  philosophy  of  apartheid  was  e:tplainod  in  the  1953 
Sa^rt  on  the  U.U.-  Coonission  "The  Racial  Situation  in  South 
Africa,"  ECOSCX:  Oocunent  E/CS. 4.9*9,  Uoveaber  22,  1967,  which 
stated  that,  "It. is  the  aisaion  of  the  white  race  living  in 
South  Africa  to  protect  that  civilisation,  'against  attacka 
froD  outside  and  subversion  froB  within.'  In  other  worda, 
though  repreaenting  a  nunerical  Binozity,    it  auat  at  any  coat 


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Tills  reconnttndation   Is  proposttd  alndful  of  th«  eoBBltaant  of 
tita  Auarican  Bar  Assoclstion  to  sncourags  rsspsct  for   wiiI 
obsorvance  and  pronottou  of  human  rights  and  dignity  of  all  nan 
ifitiiout  distinction  on  tho  basis  of  racs.   color  or   athnic 
origin. 

Also  apposite  hare  ara  th«  words  of  tha  Univarsal 
Declaration  of  ilunan  Rights  that  'roCO^nltlon  of  tha  inhsrant 
dignity  and  of  tha  «qual  and  inalienable  rights  of  all  Baabars 
of  the  hunan  faall/  is  the  foundation  of  fraadoa.  justice  and 
peace  in  the  world'  and  that,  'whereas  it  is  asssntial,  if  nan 
is  not  to  be  coopellad  to  have  recoursst  as  •  last  rasort>  to 
rabellion  against  t/ranny  and  opprsssion>  that  hUBan  rights 
should  be   protected  by   the  rule  of    law.*    33/ 

2'2A(coiit. )/        safeguard   its  position  of  dootnation  over   the 
colourcJ   races.. .71)0  best   Borvice,    thareforsi    that  the  whites 
can   render    to    the   nonwhitaa    is    to    separata   than   fcon   the  wliita 
population,    to   consider    theo   as   distinct    social   and   acononic 
groups,    and    to   see    that    as    far    as  possible,    they  live    in 
territories,    zones,    or    'locations'    assigned    to  then  as   thalr 
own."      Jn   surveying   the  official   toxts  of   th«  South  African 
governnent    to  ascertain   what    the  policy  of  apartheid    is,    Judga 
Announ    i.i  his    separate   opinion  of    tho   ICJ  Advisory  Opinion, 
aupra  note  20,    at   82      cited  stateoents  of  various  South  African 
prioe   ninisters.      ilote   eapocially  his   reference   to  D-r 
Verwoerd's    statonsnt    to   Parliaoent    in   1958    in  which  he  raeallod 
the  positions  of   two  other  prine  ainistarsi      'Or.   Halan  said 
it,    and  ilr.    Strijdoo  said   it,    and   I  have  said   it  rap«atedly  and 
I   want   to  say   it   againi      Tne  policy  of  apartheid  novas 
consistently    in    the  direction  of   nore  and  core  sapacata 
developoent  with   the   ideal  of   total  separation  in  all   spheres. " 

As   its  various   aanifestations  denonstrata,    tho  apartheid 
syston   represents   a   deliberate,    conprehensivo  systenatic 
deprivation   of    tho    fundaoental   freedons    inherent    in  the  nora 
against   racial   discrinlnation  by   ita  dlstlnotions,    exclusions. 
restrictions   and   preferences.      Tho   International  Convention  e>a 
the   Elioination   of   All  Pocos    of    Racial  Discrinlnation,    supra 
note   16,    at  Art.    1    (1),    defines  racial  discriuinatlon  as 
"...any  distinction,    exclusion,    rsatrlction   or   preference  based 
on  race,    colour,    doscent,    or   national  or   ethnic  origin      i^iich 
has    the  purpose  or    effect   of    nullifying  or    iapairing    the 
recognition,    enjoynent  or    axsrcise,    on  an  equal    footing      of 
hunan  rights  and   fundanantal   freodons  in  the  political, 
eoononic,    social,    cultural  or   any  othar   field  of  public  llfa." 

23/        Universal   Declaration  of  Uuaan  Bights,    supra  note  21. 


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lloreovvc,    tUa  International  conaunity  haa  conalstantly 
condcnnoi]  apartli«lil  aa  a  "criaB  agalnat  husanity' .   24/     Indood, 
tho   International  Convantion  on  tha-Suppr«aaion  anU  Puniahnsnt 
of    ciic  Crine  oi  Aparthaid  haa  b«an  ratlflad  by  67  atatea, 
although  it  ^laa  not  baan  algnsd  or  ratlfiad  by  tha  UnitaO 
States .    24A/ 

By  adopting  thla  raconnanJatlont    the  Aoarican  Bar 
Aaaociatlon  would  add   Its  preatlgloua  voice  to  thoaa  of  other 
respected  inatitutionai    such  as  tha  International  Conaisaion  of 
Jurists.    25/    in  daclaring  tha  repugnancy  of  apartheid  to  tha 
Rule  of  Law. 


|77        G.A.   R«e.   i6?4   l'A)t).      Saa  alao  G.A.  Res.   2202   (XXI)  of 
.   SaceObar  16,    19GG. 

TliQ  Special  Rapporteur  for   the  Uuiaan  Rights  Connission  in 
his   raport,    "Study  a£   Apartheid   anJ   Racial   Discriiaination    in 
Soutliern  Africa"    (E/CII. 4/949,    Hov.    22.    1967      found   the   laws   of 
South  Africa   violative  o£    the   follouing    fundanental    frcoUooa 
and  huoan  rights     The   rule   of   non-discrlBinationi    the  right    to 
take  part    in   Governnent,    freedoQ  of  peaceable   asaenbly  anJ 
aaaoclationi    frcodoo  of   opinion  and   exprcsaion,    the   right   to   a 
nationality,    the  right    to   aoel;   and   enjoy   another    country's 
aaylua   froii  persecution,    fceedoii  of   religion,    the   right   to 
marry   anJ    to  protection  of   fanily   life,    tha   right   to  property, 
freedoa  of   novenant   and   roaidsnce,    tho   right   to   leave   one's 
country  and  return,    tha  right  to  privacy,    tha  xight  to  personal 
freedon  and   security,    freedoa  fron  slavery   and  servitude, 
freedoa  from   inliuaana   and   degrading   traatnant   aiid   punlshnent, 
tha   right   to  a    fair    trial,    tha  right   to   an   adequate   standard   of 
living,    tha   right    to  r«st   and   leisure,    the  right   to   social 
aecurity,    the  right  to  education,    tha  right  to  participation  in 
cultural   life,    access   to  public   facilities   and  acconaodatlona, 
and   tha   right   to  a   just   social   order. 

a 4 A/      Opened  for  signature  Hovenber  30,    1973,   entered  Into 
Torce  July   18,    1976    (See   S.A.    Rea.    306a    (XXVIIl)   Ann.   UUOA  Off. 
Rao.    2ech   Seas.,    Vol.    1,    Supp.   Ho.    30    (a/i930)    (1973),    p.    75i 
13   Int   1   Legal  tlateriala   51    (1974).      Article   III  provides   that 
international   crininal   responsibility    is   to  aj^ly   to 
individuals,    uedbars   of   organizations   and   officials   uho   cooait 
tha  crine  of  apartheid  as  defined  in  Article  ii  of  the 
Convention.      For    the  United  States  position   tbat   this   extension 
of    international    crininal    jurisdiction  requires,    inter   alia, 
nore  aoticulous  olaboration,    see  the  stataaant  of  Aab.   Ferguson 
before  the  Qenaral  Asseably  Uovenber   30,    1973,   1973  Digest  of 
U.S.  Practice  in  Intl.   Law  130-132;   U.iJ.DOC  A/PV.2ie5,   Uov.    30, 
1973,    pp.    12-18. 
25/         ICJ   Report,    sugra  note  4. 


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*(x)a9«r(llasB  o£  lAictliar  at  not  th«  a«w  Constitution 
rspresantB  rcforu  of   apartheid  or   only  Ita 
ratlonalieatlon  and  oodBrnltation.    the  practlca  of 
apacthslil  xanalna   tha  basis   for   the  organization  of   South 
African  society.      Apartheid   Institutionalizes  political 
and    oconoaic;  control  b/  the  White   alnorlt/. 
Discrlninatory  laua  and  practices  are  woven  throughout 
the   fabric  oZ  South  African  society."   26/ 

^le  fundaaental   thesis  of  apartheidi    racial 
discriaination,    is   not   only  antithetical    to  basic  notions  of 
lau  and    justice  but    Is  perilous   to   International  peace  and 
security.      Tne  Unitad  ilatlons    Charter  predicates    inteiiiationel 
peace   and   oecurit/  and   conditicns  of  stability  Jnt-ar   alia  on 
"universal   respect   fori    and  observance   ofi    huoan   iTghta    and 
fundanental   froedons   for   all  without  distinction  as   to  race, 
color,    sex  or   religion."    27/ 

The  right  against  racial  discriaination  has  been 
characterized  by   the  International  Court  of  Justice  as  one  of 
the   'basic  rights  of   the  liuaaii  person",    and  therefore  of  such 
laportance   that   "all   states  oan  be  held   to  have  an   Interest   In 
their  protection;    they  are  obligations  erga  OMnae.*   28/ 

The  gravity  of   the  situation  in  Soutli  Africa   to 
international  peace  and   security  is   indicated  by  the  iaposltion 
by   the  Security  Couucili    with  the  support  of   the  United  States. 
of   nandatory  sanctions   in  1977.   29/      In  that  resolution  42,    the 
Security  Council,    Inter   allai 

call(ed)    upon   the  Oovernnent  of   South  Africa  to  abandon 
the  policies  of   apartheid  and  discriaination,....   and   to 
liberate  all   persons   laprlsoned,    interned  ex   subjected   to 
otlier    restrictions    for   having  opposed   the  policy  of 

aparthald.    30/ 

1.  Tae   Pass   Laws 

7no  South  African  constitution  codifies  apartheid  31/   and 

25;        lluoan  Sights   Seport,    supra  note  5,    at  323. 

TT/       Charter  of   the  United  Nations,   supra  note  21,    at  Art.l 

TT). 

28/       Tlie  Barcelona  Traction,   Light,   and  Power  Coopany   (Balgiun 

V.   Spain),   paragraph  33,    I.C.J.   3,    31   (1970). 

23/        S.C.   Res.   416,    32  U.H.   8COR  (2046th  Btg.)  at  5,   U.H.   Doc. 

Wp.V.    2046    (1977). 

30/        S.C.   Res.    181,    IB  U.:i.   SCOR  (1056th  Btg.)   at  7,   U.H.   Doc. 

675366    (1963). 

31/        'South  Africa   Is  a  aultlracial  country  wboae  present 

constitution  codifies  the  s/sten  of  apartheid  under  Which  the 

white  ninority  holds  a  aonopoly  of  power   in   the  country's 

national   political    institutions.",    UUBan  Sights  Report,    supra 

note   5,    at   322. 


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unJer  thia  policy  Africana  are  pMrcBivoJ  aolcly  as  units  of   labor 
and  tiieir   peesoi^ce  Ln  tlio  urban  aroas   ii  peraittsJ  onlyto  tha 
lovcla    to   iiMch  labor   is   naaileil  and' is  ragulatad  by  tlie   influx 
control   and  pass   laiifs  as   wall   aa  by   tha   Oroup  Areas  Act.    32/ 

737         "Blacks' 
"Tnflux   contro 

of  blacks  entitled  to  atay  in  a  given  urba:i  area  for  Bore  than  72 
hours  at  a  tine.  Periodically  the  police  conduct  raids  or  suoops 
o£  the  restricted  areas  during  which  all  paasea  are  chcclcod.  All 
parsons  illegally  reaidont  are  arrested  and/or  transported  to 
their  aaaociated  honeland.'  Huaan  Rights  Report,  supra  note  5.  at 
329." 

idote  here  should  be  Bade  of  tha  infaooua  section  10  of   the 
Black    (Urban   Arcaa      Consolidation  Act,    Act  So,    25   of   1945. 

"Section   10   of   Sout'.i  Africa   a  Urban  Aroas  Act   linita   tiia  nuni:ior    of 
Blacks   uho   can   live  pemaoently   in  tho  citlea.      It   atatos  that 
Blacks   not  born   in   a      uhito'    ar-aa  nay  qualify   for  paruancnt  living 
rights   only   if    the/  have  worked  Continuously  for   one   aoployar    for 
ten  yoara  or   for   15   years  Uitli  sdVeral  enployera.      A  1968   law 
rcBtrlctcd   the  eserclse  of   thia  rig'nt  by  requiring   nigrant 
laborers   to  return   to   the  honelanJs   for  a  least  oiia   aonth   per   year 
to  renew   thair   iJor)t   contracts        Regulations    interpreted   this 
obligatory  return   as  disrupting  continuous   residence  aiid 
anployaent   within   tha    'white'    area."   South  Africa   1983: 
Keorganising  Apartheid,    Southern  Africa  Project  o£   the  Lauyers' 
Connittee   for    Civil   Rights  Under   Law,    1983  Annual   Report. 

In  Llay  1983,    in  a  landaark  case,    the  appeals  court  uphold  a 
Supraoe   Court   decision   in  the  Bikhoto  case  that  nigranta   who  nave 
worked   10   years   or   aoce   for   the  saoe   onployer   or   15  years   Cor 
different   enplo/srs   are   entitled  to  peroanent   city  residency.      In 
June   the   Govornnent  agreed   to   Inpleiicnt   the  decision,    but 
parliament  aceiidcd  the  Urban  Consolidation  Act  with  the  effect  of 
tying   tho   i.iflu^t  of   fanllles   of   resident   workers   to   the 
availability  of  housing.      In  practice,    this  lioita  the  iapact  of 
the  decision.",   Hunan  Rights  Report,    supra  note  5,    at  329. 

The  Ad  lloc  Conoittee  on  Forced  Labour  of  the  International 
Labour  Or^anieatlon  has  nade   the  following   finding  with  respect   to 
the  qviostio!!  of    forced   labor   in  South  Afrlcai      That  there  exists 
in  South  Africa   'a    legislative  eysteo  applied   only  to   the 
Indigenous  population  and  designed   to  maintain  an   insuperable 
barrier   betwsan   these   people  and  the   inhabitants  of   European 
origin,"    that    "the    indirect   effect  of   this   legislation   is   to 
channel   the  bulk   of   the   indigenous   inhabitants   into   agricultural 
and  naiiual  \jorX  and  thus  to  create  a  peraanant,    abundant  and  cheap 
labour   force"  and  that  in  this  sense  "a  systso  of  forced  labour  of 
significance  to  the  national  aconony  appears  to  exist  in  the  Union 
of  South  Africa".    ("Declaration  Concerning  the  Policy  of 
'Apartheid'   of  the  Republic  of  South  Africa",  July  8,    1964,   Oanava 
ILO.) 


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It  should  be  fucthat  notod  tliat  approzisately  2OO1OOO  p^xtona 
are   arrested  each   /oar    for   pasa   lau  offaiiaas.    33/ 

32(cor.t.)/  ' 

TcJonJitioiis  in  South  Africa  reflact  to  a  conaitlarabla 
degree  a  special  ciccuaatance  a  conacioua,  ayataaatic  affort 
over  the  years  to  control  black  labC'ii  to  channel  It  whore  it 
will  benefit  whitea  and  to  raise  barriars  againat  it  uhera  it 
is  not  needed  or  whare  It  s-oeos  to  conpete  iritli  whitea.*  Soutli 
AiiricaiTine  Running  Out,T;io  Report  of  the  Study  CooaiBBion  on 
U.'S.'  Polic/  Toivard  Southern  Africa  [tinivaraity  of  California 
Press  and  Foreign  Policy  Study  Foundation,  Inc.,  1981],  p. 81 
[hereinafter  cited  as  South  Afrlcai  Tine  Running  OutJ. 

33/         nanaruQO  ilonaaa,    la   This   JusticeJ-A  Study  of    the 
Johannesburg   Connissioners'     (Paanl    Courta    (Univeiaity  of 
Witsuatersrand,    1983). 

'Si.tce  the  beginning  of  thla  centur/i   nore  than  17 
nillion  people  have  been  arreatad   or   prosecuted  unJer   South 
Africa's   "battery     of   pas*   laija  and    influx   control   ragulationa, 
according   to   figures   aubnitteJ   to  the   Carnegie   Inquiry. 
Professor   llichaol   Savage   af   the  University   of   Cape   Tov/n'a 
sociology   departne.nt   said   that  at   least    17,252,146   Africans 
were   arrested   for    these   offences  bctijeen   1916  and   1962. 
However,    if  prosecutions   unJer   relatsil  poll   tax  aad   traspaas 
laws   are   included,    he   estimates   that  oora   than  26  Billion 
Africans   have  been   prosecuted    In   terns   of   various   influx 
control   laws    in   this   period.    (Star   18-4-S4).      In   1982,    the 
nunbor   of   arrests   was   noro   than  202,000.      In   1963,    275,934 
blacits   Mcra   prosocuteJ   in   the  Conniasionera'    Court;    under   1% 
had   legal  representation;    and   there   uere    142.000   convictions, 
flono   cases   were   observed  to   laat  as   little   as   90   seconds.'. 
Violations   of   Hunan   Hights    in  South  Africa   1983-84,   Working 
Group   i^airos,    Tne  .lethcrlanda.    July   1984,    at  p. 12,    [hareinaftar 
cited  aa  Kairos  Report]. 

"'i"no   act   [The   Blacks    (Abolition  of   Paasea  and 
Coordination  of  Docunenta)  Act  67  of  1952]  r«t]uir«s  that  every 
African  over   the  age  of  aixtean  be  fingerprinted  and  furniaheJ 
with  a  reference  book  containing  the  individual'a  identity  card 

and  enployaent  infomatlon. 

"Self-governing  honalanda  aay  iaaua  identity  docunenta  to 
their  citlsona  to  replace  reference  books,    and  the  Independent 
hoaelands  now  issue  passports  to  their  citisana.     But  under 
South  African  law  these  paaaports  are  still  treated  as 
reference  books-in  other  words,   as  passes* 

"A  policeman  aay  aak  an  African  to  produce  hia  reference 
book  at  any  tine,    and  failure  to  produce   it  on  desand  is  a 
crinlnal   offense   punishable  by   a   fine  of   up   to  R50   or 
inpriaonacnt   of   up   to   three   nontha.'Soutli  Africat   Tina   Running 
Out,    supra  note   32,    p. 81. 


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2.  T.ie  Denial  of  Political  Participation 

It  nuat  bo  not«<]  that  under  t^o  recent  conatltutlonal 
raforns  political  participation  continues    to  be  (IsnloJ    to 
Africans   and    is   extendeil   to  other   population   groups,    Indiaus 
and  Coloured*,    onl/  on  a  lioitcd   anJ  differential  basis.    34/ 
nie  neu  Constitution  'provides  tliat  existing  legislation 
underpinning  the  legal  separation  of  the  races  will  continue  in 

3.  Tlie  llonolanda  Policy 

The  apartheid  policy  conprehends  bot'n  the  denial  under 
tho  South  African  constitution  to  731  of  the  population,  that 
is,  the  African  citizenr/,  of  the  right  of  political 
participation  in  tho  QovernDant  of  South  Africa  and  tho  policy 
of  'separata  dGVelopmonf .  The  latter  involves  the  allocation 
of  each  African  to  a  tribal  'honeland,'  the  denationalization 
of   the  Africans   and    their   rolagation   to   specified   'honelands", 

577        tlunan  Rights  Soport,    supra  note  5,    at  322. 

35/        Id. 

Tlit}  report  signed  by  nearly  all  of  the  participants  of 
the  ILIZI  sponsored  trip  to  South  Africa  connentedt 

As  presently  structured,    the  proposals,    ulth  their 
preponderant   enphasis   on  Mhite   control,    aerely   conplete 
the   sophisticated   s/aaatt/   of   racial  discrinination  or 
apartheid.      Coloureds   and  Aaiaria   are   given   token 
representation   in   a   white  doninateJ  parlianant   while 
Africans   are   totally   excluded   altogether.      For   Africans, 
the  naw  constitution   Is   based   on   an   unasserted  but 
nonetheless  devaatatiug  reality  that   no  African   Is    to  be 
considered  a  citiscn  of  the  state  for  which  the 
constitution  has  been  drafted.      Indeed,    the   exclusion   of 
Africans  has  beo:i  based  on    'cultural  differencas'    and 
'divergent  political   objectives. '      All  Africans   will 
belong    to  one  of    ten  honalands   which,    when   given 
independence  by   South  Africa     ulll  a^^n   the   loss   of   their 
South  African   citizenship.      When   questioned  by  Deobers   of 
the  delegation,    the   Council   explained   that   the  hoaelands 
or    'states'    ware   established   to  allow   each   of   South 
Africa's   nuaorous    tribes   to  develop  saparately  aiid 
independently.      The  governaant  has   never  ascertained 
whether   Africans   want   to  exercid-a   the  right  to  separate 
dovalopoont   and,    Indaedi    Ignores   the  continuing  call   of 
the  black    coouunity   for   a  unitary  state   for   all  South 
Africans,      rfhilo  the  governoent  assarts  the  right  of  the 
various  African  groups  to  develop  separately     ic  does  not 
assart  the  sane  rictht  to  the  various  uhite  groups  nhich 
appear    to  ba   of   greater   diversity,    cultural   experience 
and  backijround  than  Dany  of  South  Africa's  black 
tribes. ',    ILEX  Trip  Report,    supra  nota  19,   at  50-51. 


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whoae   total   area  coBpria«a   13t  o£   th*  land  ar«a  of   South 
Africa,   all   for   a  racially  dlacrininatory  purpoa*  of  achieving 
a    'white   South  Africa'.    36/ 

Kith  the  exception  of   South  Africa,    no  atata  haa 
recognised   the   'independent*  honelanda  aa   Indapandent   atataa 
37/     The  policy  of   the  United  States  Coverment   In  haraony  with 
that   of   the  other   atataa  of   the   international  coBBimity   Is 
opposed   to  the  recognition  of   these  areas.    36/ 

a.       DenationallzntionB    and    DeprtvnttonB   of   Citlgenahip 

The   hoDelands  policy   contemplates  planned 
dsnationalization   of  the  diaenfranchlBed    majority  by  th« 
"independence"    of   each  homeland    in   order    to  aftectuata   the 
denationalization  of   all   Africans  both   those   who  reside   in  the 
honelan^   areas   and    those  who   reside    in    the  urban  areas.    39/ 

36/  "All  honelands  would  becoae  indepandent  atatasi  the 
entire  African  population  of  the  Republic  would  ba  granted 
political  rights  and  citlcenship  in  these  states;  conaequentlyi 
thece  would  ultimately  be  no  African  citisen  of  the  Republic  of 
South  Africa  requiring  acconnodat ion  In  the  political  order  of 
South  Africa  itself.'  South  AfrlcaiTime^ Running  Out,  supra  note 
32,    at    p.    50. 

37/        Hunan    Rights    Report,    aupra   note   5,    at    332   saction  2(d). 

3E/         Eagleburger    Statenent,    supra   note   2. 

39/        The   najorlty  of   participants   of    the   ILEX   trip  report 
noted,    'The   nost    disturbing   tMtig    that    the  participants    learned 
was    that    the    South   African  Government    is  «iiibBTked  on  a  masslva 
effort    to   denationalize   nearly  70  percent    of    its  population    in 
the   nai:ie   of    furthering    and    achieving    the   concept  of  racial 
discrimination    enbodied    in  the  doctrine  of   apartheid.      What 
South   Africa  >ias   done      and   continues    to  do.    Is   to  daprlva 
African   South  Africans   of    their    cttleenship  by  the  process   of 
denationalization.      Despite    the   fact    that    no   nation  has 
recognized   any  of    the  homelands,    nearly    10  ■llllon  people  have 
thus   far    lost   their   nationality  with  nilliona  Bora   to  be 
denationalleed   In   the   Imnediately  foreseeable  future.     Hie 
unilateral,    nasslve,    uholeecale  exchange  of   «  valid,    recognised 
South  African  nationality  for   that  of  a  nationality  of  a 
non-recognized  homeland    creates   a   statelaas  person    for    whoB   the 
international    coonunity    is   ultimately  responsible.      The 
iuplications   of    this  policy  and    the    effects    that    It  has  had, 
and   is  having  on  black  South  Africans  was  of  grave  concern  to 
the  participants   and   warrants    the  moat    urgent   study,'    ILEX   trip 
Report,    supra  note   19,    at   52. 


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Such  (lanatlonalisation  !•  contcar/  both  to  t\io  paranptory 
noraa,    iua   cog an a.    of    Intarnatlonal   lau,    tiie  norns   agalnat 
caclal   illacrinlnatlon   and   involuiitaty  denationaliEation,    and   1 
the  principle  of  aelf-doteraination>   40/ 

b.      RelocaCiona   aniJ   Heaovals 


In  pursuance  of  the  bantuBtan   (honelands)   policy,    the 
South  African  aovernaont  has   carried   out   the   internationally 
decried  policy  of  relocations  and  renovala  of  Black  people  fron 

40/        "DBnationalization  on  racial,    ethnic,    religious,    or  other 
related   grounds    is   particularly  notorious  because  of   its   close 
association  ^/ith  Hazi   and   fascist   atrocities. • .ThQ   eaerging 
pereoptory  norn   (jus    cogens      of  nondiscriaination  will,    as 
previously  noted,    oaXe   unlawful   many   typos'  of 
denationalization.      In   sua,    the  whole   complex  of   core 
fundanental  policies   for   the  protection   of  hunan  rights,    as 
eobodied,    for    instance      in   the  United   ilations   Cliartert    the 
Universal   Declaration  of   iluiian  Rights,    the   International 
Covenants  on   Iluoan   Rights      and  other   related   instruoents   and 
progcans,    global  as   well   as  regional,    say  eventually  be 
interprotea   to   forbid   use   of   doiiationaliaation   as   a   forn  of 
'cruel,    inhunan   and   degrading  treatnent   or   punlshnent . ' "   U.S. 
ilcDougal,    II. D.    Lasanell   and  Lung-chu   Qien,    [lunan   flights   and 
World   Public   Order;    Tno   Basic   Policios   of   an   International   Lau 
of   [luoan   Dignity   [Yale  University  Press,    Ne^  Haven   and   London, 
19B0],    pp.    906,909. 

The  anlnent  South  African  professor,    John  Dugard,    in 
coanenti;ig  on   the   Tranakei    and  Bophuthatsiiana,    has   said   that 
"both   the   Status  of   TransKei   Act   and   the   Status   of 
Bophuthatsiiana  Act  provide   that   on   iadapondenco   a  wide  range  of 
parsons      sthnicall/,    linguistically   or   culturally  connected 
Uith   those   states,    ceaaed   to  be  South  African   nationals.      Both 
statutes  aro   careful   to   avoid   any   express   suggestion   of 
danationalisatlon  on   the  ground  of   raco      but   there  2an  be 
little   doubt    that   they  are   intended    to   apply   to  Africans   onlyt 
and  this  Is  borne  out  by  their   inplencntation  in  practice. 

nieae  statutes  offend  the  norn  of  contenporary 
International    law  prohibiting  denationalization  aeasurea  based 
on   racial  or   ethnic  grounds;    a  norm  which  derives   its   validity 
fZoEt   the   universal   condemnation  of   the   1941  tlazl   decree 
denationalizing  Jews   and   fron  ooderu  huaan   rights    instruoents. 
Denationalization   la   widely  deplored   in   the    international 
eODnunity  as   is  shown  by  the  stateosnt  of  Uannah  Arendt  thati 

'One  is  alooat  tospted  to  neasure  the  degree  o' 
totalitarian  infection  by  the  extant  to  uhlch  the 
concerned  governaents  use  their  sovereign  right  of 
denationalisation."    (The  Origins  of  Totalltarianiaa  [3ra 
ed,    1967]    276} 


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"black    apots"    in   white-designated   areas  41/    and    3.5   Billion 
people  have  been  lenoved    In    furtherance   of    the  hoMelanda 
policy,    42/      At    least    1.4   Dilllon  people  have  bean    forced   off 
white-owned    faros    since    1960.    43/      Sobb    1.3    ailllon  have  been 
"sndoreed   out'    of    city  areas   and    into   the  bantuatane    since 
195£.    44/      Over    400,000  have   bean    forced   out   of    long 
eatablTshed  hooes    in   so-called   Black    apote    to  perntt    those 
areas   to  be  consolidated  with  adjoining  whlta  araaa.   45/ 

40(cont.)/ (Independent   Elonelands  -  Failure  of  a  Fiction.    1979 
Ftasidential  Address   E Johannesburg >    S.A.   Institute  of 
Race   Relations,    1979],   p.    14. 

41/        "Since   the  pattern  of  group  residence  sought  by  the 
Seveloped    apartheid    Bysten  does   not   correspond   to   the   actual 
location  of   various  groups   that  exlated  when  apartheid  was  set 
up,    the   Coverniaent   has    forcibly  renoved  aany  people    fron   their 
hones.      These    forced    resettleaents    of   black   and   colored 
'squatters'    In   urban   areas   and   reooval   of   black    settled 
communities,     'black    spots,'    fron  designated  white   areas    to 
black   tribal  honelands   is   a  najor   feature  of  governiient 
policy.      Such   removals    often  result    in  violence,    as    in  the 
October    19C3    atteapt    by  officials    to  nove   agatters    fiOQ 
Katlehong. "Hunan  Rights   Report,    supra  note   5,    at   328. 

42/        See  Kairos   Report,    supra  note  33,    at   4  at   aaq. 

43/        Coler   Butcher,   Testlnony  Before  The  House  Foreign  Affair* 
SubconEiitteeE   on  Africa  and  on  International  Econoaic  Policy 
and  Tradei   U.S.   House  of   Representatives   [on  behalf  of   the 
I,awyers'   Connittee   for   Civil   Sights  Under   Law  on  February  9, 
19Q2],    29   How.    L.J.    166    (1983),    Chereinaftor    cited  as 
Testlnony]. 

44/        Idi 

45/         Id. 


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V8  thsir  honas  in 

B.        ^la  Saeurity  Laglalatlon 

The  socurlty  l»u»  47/  o£  the  South  African  Oovarnoent 

46/      The   ILEX.  Trip   Itaport.    aupra   nota   19,    at   41,    coonantB    that 
tha    "aiack   Land  Act   of    X913    (Act  Ho.    27   of   1913)    aiiJ   tlia 
Oavslopnent   Tcuat  and   Lanil  Act  of   1936    (Act  Ho.    18  of   1936)    sat 
aside  13)  of  tha  total  area  of  South  Africa  for  tha  exclusive 
occupation  of  Africans.      Umlar    ths   1913  Act.    certain   araas   More 
'roaorveU'    for   Africans  only      whilo   at   the   sana   tine   the  Act 
nada   It    unlawful   for   an   African  to   acquire   land   anywhere 
outsida  of    the   reserves        The   territory   that  waa   set  aaido 
conaistad  of   scattered   and  fragnentea  pieces   of   land   varying 
greatly  in  size  and  dansity.     Uiidar  tha  1936  Acti    land  owned  by 
Africana  outsida  of   Uic  i-Cs^rv^t  systan,   particularly   'black 
spota'    —    land    aurroundeJ  by  lAtita   farns   —   could  bo 
axpropriatod   by   the  ^outh  African  govarnaant   in   furtherance  of 
ita  policy  of   saparata   devalopaant .' 

47/      Tlie   Internal   Security  Act,   Act  Jo.    74   of   19B2,    largely 
consolidated   the   security   legislation.      "Tha  Act    Is  divided 
into  seven  chaptarsi    74  sections  and  4  schedules,    and 
consolidates    in   ifliolo   or    in  part   28  previoua    security   laws. 
Ciiapter  One  ostablishae  a   Director  of  Security  Legislation  who 
is   responsible   for   perforning   the    functions   assigned  by  tha 
Act.      Chapter   Two   seta    forth    the  neasurea   that  are   to  be   taken 
against  organizations  and  publications,    including  declaring 
certain  organizations   as   unlawful   and   prohibiting   certain 
publications   should   the  llinister   of   I.aw   and   Order   deternine 
tliat   thoy  are   engaged   in    'activitias   which   endanger   or   are 
calculated   to   endanger    the   security  of    the   state   or   the 
naintonanco  of  law  and  order."     Ciapter  Three  is  entitled 
'lleasures   in  raspact  of  certain  Persons',    and  includes 
provisions   for   rastrlctiona   on   nenbarship   in   organizations   and 
public  bodies,    'banning',   or   the  restriction  of  an  individual 
to  a  certain   place      restrictions  on   attending   gatherings   and 
disseoination   of    speeches,    publications  and   utterances         In 
addition,    the   chapter  provides   for    intaraent  or  praventiva 
detention   for    purposes   of    interrogation  or    for  holding   aa 
witnesaea.     Chapter  Four   is  the  first  legislative  attenpt   to 
provide   for   a  board   of   review   and   tha   inspection   of  detainees 
in  police  custody.     Chapter  Five  establishos  certain 
restrictions    in   connection   with  various   gatherings   and 
abrogates   the   right   to  public   assedbly   without  govarnnant 
authority.      Chapter  Six  enuncratss  varioua  offenses  and 
penalties  while  Chapter  Seven  provides  fox  the  rules  of 
procedure,    jurisdiction  of  courts  and  adalssimi  of  avidonee  in 
natters   Involving  the  Act."     IIXX  Trip  Report,   supra  nota  19, 
at  33-34. 


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and   chs  practices  pursuant  to  theiii    i.a.  banningsitliaappakr- 
anctto,   detentions  uithout  char>{o  and  procaUural  rulaa  In 
derogation  of  due  procoss  4B/ .    are  contrary  to  the  rule  of  law 
and   violate   the  hunan  rights   of   all   cititttna   of   South  Africa, 
lAiatover  tlioic  race,    coloc.    national  or  athnic  origin.  49/ 

The  Report  iaaued  b/  the  oajorit/  of  participants 
on  the  Trip  to  South  Africa  and  Sonibia  fron  the  International 
Legal  Exchange  Progran  of  the  Section  of  International  I^w  and 
Practice    (hereinaftei    tlie  ABA  Iteport   on   the   Trip   to  South 

47[coiit.)/      TiiQaQ  na'i7 Vecurity  laws  were  introduced  following 
the  February   1982   report  of   the   Rable  Cooalsaion     Tna   new  Act 
replaces   the  Terrorian  Act  No     83  of   1567   and  other   security 
legislation  but   retains   nany  of  the   infanous  provisions   of   the 
earlier    laws.      For    exaople      Section  29   of   the   Internal   Security 
Act   contains   an   enlarged   ■j^taion  of  the  Toetorian  Act.      In 
regards   to   t.ic   Terrorisn  Act.   JiiOgG  Announ   coonented   that   the 
Act   "...intended    to   enforce   apartheid   through   savara 
repression,    .iViic'.i  violates   the   nost  aicr^d  principles   of 
crininal   law,    nanely   the   nullun   crinan   sine   lege,    tho  rules 
relating    to   the  definition   of   principal   and   accessory,    the 
non-rotroactivity   of   penal    lans   and   of  penalties,    the 

iiid   the  rule  of   rea    judicata."   ICJ 
'•    supra  note  20.   Separate  Opinion  at 
83. 

48/     Tue  Terrorisn  Act   "...obliged  the  detainee  to  prove  his 
THiiocence  beyond  reasonable  doubt.     It  further  provided  that 
once   charged,    the   attorney   general   could   iasua  a  certificate 
pro.iibiting   any   court   fron  granting  bail.      Tiie  atCor.ie/   general 
could   also  decccnine  unat   court   could  hear    the  natter   and   where 
and   when   that   court   would   sit.      Sliould   any  defendant   aucceed    in 
being   acquitted,    the   act  provided   that   the   defendant   could  ba 
redetaincd   and   charged   again   for   the  offenses   arising   out   of 
the   actions  he   had   already  been  charged  with.      Fuithemore,    the 
act   provided   a  yuiit-by-aasociation  clause,    joining   all 
defendants   together    and  holding   all   of    then  responsible   for   any 
criainal   action  of    aiiy  defendant  or   of   any  naned  neaber   of   the 
organization   to   which   the  defendant  belonged.'      Uo  lieutral 
Ground,    supra   note   4, at   154. 

See  also  Davis,    Inf ringenents  of  the  Rule  of  Law  in  South 
Africa,    Review  of  the  International  Conaiasion  of  Jurists   (Dec. 

1971). 

49/     The  basic  inconsistency  between  the  Rule  of  Law  and  the 
South  African  Security  Laws  was  condeoned  in  1967  by  the 
reference  of    the  U.S.   AiabasDador   to   the  U.U.    to  'the   atrocious 
Terrorisn  Act   under   which   37   South  West  Africans  ware  charged 
and  brought    to   trial,    under   conditions   repugnant   to  ail  Ulio 
believe    in   justice   under   the   law."      So  Hautral  OrounJ    ,    supra 
note  4,    at  207. 


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By  And    largo,    tha  «ntlr«   Act  haa   been    structured    BO   «■   to 
be   outside  of    the    scope   and    fraaework   of    the    judicial 
aystaa.      Chapter  Four  provides   for   a  right  of  appeal   froo 
■one  of   the  provisions  of   the  Act;   howavari    it   is  an 
appeal    to  a   review  board   which    Is   a  gavernaent    appointed 
tribunal   as   opposed    to   a   court   of    law.      While    the   review 
board   gives   the    iDpression  of   objectivity,    it   does    not 
addiesa   the  essential    issue   of    the    unfettered  dlacxatlon 
given  tha  Hiniatar  of  Law  and  Order   and  the  Conolsstoner 
of  Police.     By  the   tine  one  tiaa   legal  recourse  to  the 
review  board   so   aa   to  dBtsinlno   whether    the    actiona   of    the 
governaent  are  arbitrary  or  capricious,   iiore   than  six 
■onths  of  detention  will  have  passed.   50/ 

1.        Bannings 

The  South  African  government  has  virtually 
unfettered  powers  to  silence  opposition  by  executive  fiat 
through  the  power  conferred  upon  tha  Minister  of  Law  and  Order 
to  issue  banning  orders   which  are  not  subject  to  court  review, 
against  individuals!  organisations  and  publications.  Banning 
51/  includes  restriction  to,  or  excluaion  fcon,  certain  areas 
Textendlng  even  to  house  arrest],  prevention  of  attendance  at 
any  gathering   with  gatherings  being  defined  to  include 
■eetings  of  twa  or  uore  persons),  prohibition  froo  being  quoted 
or  published.  Although  a  banning  order  la  not  subject  to 
review  by  the  courts  the  violation  of  a  banning 

to?      ILEX  Trip  Report,  supra  note  19,  at  34-35. 

51/  Prior  to  the  internal  Security  Act  the  authority  for 
banning  uaa  the  Suppression  of  ConounisD  Act  of  1950  In  a  1972 
study  coDBiesion  on  "Law,  Justice  and  Society", Report  of  the 
Legal  Cowalssion  of  the  Study  Project  On  ChriHtianity  in 
Apartheid  Society  (SPBO-CAS  Publlontlon  Ho.  9  1972) (hereinafter 
cited  as  Spro-cAS),  the  chairnan.  Jack  Unterhaltar  wiitesi'Not 
only  Is  the  treasure  of  the  law  and  of  our  values  thus  wasted. 
There  has  developed  with  this  apartheid  legislation,  and  to 
reinforce  It,  a  trend  that  is  counter  to  our  aodern 
understanding  of  due  process  of  law  -  a  fair  investigation  by 
an  iapartial  tribunal  of  evidence  openly  given  and  tested  in 
regard  to  any  matter  affecting  the  liberty  or  other  Intereat  of 
a  perBOn  concerned    Thus  persons  prohibited  fron  attending 
gatherings  in  terms  of  the  Suppression  of  Connunlsn  Act  and 
confined  to  magisterial  dietricts  or  house  arrested,  are 
proscribed  by  the  Minister  of  Justlca  without  being  told  the 
acts  [foiaing  the  basis]  for  his  decision,  nor  being  able  to 
test  the  credibility  of  the  inforaant,  nor  to  offer  evidence  to 
deny  what  the  informer  has  said."  (p. 17} 


igilizedb/Vj' 


lOogle 


ocder   ia  a  crininal  offenso  and  co  punlshabls.   52/ 

ThOBo  detained  and  bannod  lepresant  a  croaa-aaction  of 
•oci«t/i  atudeiita,  trado  u.-iionlata,  journaliata,  church  and 
coanunit/  Ieadoi:D.    53/ 

2.  Diaappearancoa 

Aa   notad   In   tho   State  Dapartaont   Hunan   Righta   Reporti 
"South  African  laii  doaa  not  raqulce  notification  of  a 
dataineo'a  faoilyi.  la»yort    or  other  peraon  uhon  an  individual 
la  datalnad  or  released,    and  people  have  aiopl/  diaappeareil 
into  policy  cuatoJy  for   long  perioda."   54/ 

3.  Detontiono   Witiiout    Cliargos   or   Trial 


Tha   Internal   Security  Act  authorisaa   datentiona   without 
charge  or   trial   foi  certain  offanaaa  for  varying  conditiona  and 
periodsi    In  sodo  casAB  unlinitad  perioda.    55/ 

52/       "Ab    1981   en'ileJ.    govarnaant   figures   ralaasad   in  Parliaaant 
rcvoalaJ   tiiat  179  people  continued   in  detention  on  that  date 
under   various   aecurit/  laws    (up   froo  ninaty-two  detainad  on 
tiiat   date   a   year   ago);    520  political  prisonara  uere   aerving 
aentoiicea   under    aecurity   lawat    and  approxLoataly  Ifi-O  reDaineJ 
on    that   date  restricted   under   banning  orders      ...   Statiatica 
available  for   the  twelve  nontha  of  IdSO  reveal  that  in  that 
year    nore      than   965   people   were  detained   under   one  or   ooro   of 
Soiit^i  Africa' a      security   lawa,    thirty-aix  ot   uhoo  uere 
seiitcncoO   to   a   total   of   227   years    iiapr  iBOiiaent   for  offansea 
unJer   Soutli  Africa's  Tarroriao  Act,    wliich  has  been  unlvecaally 
condcmiod   aa   a   gross   violation  of    international  atandards   of 
duo  proceas."     Taatinony,    aupra  note  43,   at  162-63. 

53/      Id.    at   163. 

54/      Ilunan  Righta  Report   . supra  note  5,    at  326. 

55/      Id.   at  327.      The  Intornai  Security  Act  rencwa  the  powers 
o7  the  authoritiea  "to  hold  people   indefinitely  in  preventive 
detention   and   to  detain    incoonunicado  potential  witneaaoa   In 
future   political    trials.      However,    provision  waa   aade   £or 
fortnightly  vlaita  to  Section  29  detainees     by  K  aagiatrata,    a 
doctor   and  an   Inspector   of   DotainocB   appointed  by   the  Mlniatar 
of   Justice        Procedures   were   also  oatabliehod   for   reviewing   the 
cases   of   Section   29  detainees   after    aii  aontha'   detention.      A 
board  of  Revie^j  ^i&s  set  up  to  whloh  Section  28  detalneea     thoas 
in  preventive  detention,    and  banned  people   sight  apply,    but   the 
liiniater  uaa  not  required  to  inplaaant  the  board's 
rocormendatlona.  Annesty  Int'l  Report   (1983)    (hecclnaftax  cited 
aa  Aaneaty)   at  77-78. 


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4.  Datention  Without  Accoaa  to  Counaol  or  Itabea»  CorpuB 

Interrogation   of   porsons   helJ   undsr    t'ae   aecurlt/ 
l!i\ia   aa/  be   doiio   uithout  accea*   to   counsal.    56/      Tlie   securit/ 
lagifllatlon   in  practice   nullifies   ths   principTe  of  haboaa 
corpus.    57/ 

5.  Torture   and   Deaths   in   Detention 


Tlio  policy  of    incoanunicaJo  detention*   pursuant   to   these 
security   laws   authorizes   a   s/stea  of  datentiona   ranovad   £roB 
judicial  or  public  scrutiny  and  leads  to  torture  and  deaths   in 
detention     58/ 

TeT      "Because   security  detainees   nay  bo   interrogated   without 
~,    tiiey  oay  adnit  to  actions  or  charges  the 
iiioh   they  nay  not   fully  understand.      However, 
Eten   are   not  admissible   in   court,      llany   trials 
in  distant  parts   of   the   i 


it   difficult   or    injjossibla   for   fanily  or   others   to  attend        If 
deeood   nocoasary,    by   the   court,    witnesses  nay   testify  without 
Ijeiiig  publicly   identified.      Gscurity   and   criainal   trials   are 
held  before  regular    courts   which   are  generally  regarded   aa 
independent  of   executive   or   Dilitary   control,    although  all 
Judges  and  practically  all   Daglstratea   are   white  and   thus   the 
■black  population  has   virtually  no  representation   in   the 
judicial   systora."   lluaan   Itights   Iteport,    aupra  note   5,    at   327- 

57/      Id. 

56/      'Between  1963  and  1976,    50  persons  died  in  detention  and 
iKair  deaths  especially  where  autopsies  occurred  in  tne 
presence   of   representatives  of    the  deceased   were   widely 
attributed   to  police   torture.   Following   the   extraordinary 
exhibition  of   police   netlioda   and   attitudes   in   tlie   inquest   in 
1977    into   the  death   of   Steve   Biko,    deaths    in  detention   appeared 
to  have  dropped   away        But   in   Docenber    1981,    Tshifhiwa   Isaac 
lluofhei    a    former   nenljer  of   the   Black   People's   Convention,    died 
two  days   after  he   and  nine  others  had  been  detained  by   security 
police   in   the   bantuatan  of  Venda.      Iluofhe   was   a  nenber   of   the 
Lutheran  church        Tour   of   the   nine  others,    who  are   still 
datalnodi    are  □eabera   of   the  Lutheran   clergy,      niey  are 
reliably  reported   to  have  been  brutally  assaulted  and   taken   to 
the  hospital."     Toatloony,    supra  note  43,    at  163  -  164. 

'In  1962  Heil  Aggett  becaae  the  first  white  person  to  die 
In  detention.      Aggett,    "a   doctor   working   as   a   trade   union 
official,    was    found  hanged    in  hi*   cell   at   the  Johannesburg 
security  police  headquarters   on   5  February.   He  had  been 
detained   in   Iloveober    19B1   when  a  nuirilier   of   students,    officials 
of   black    trade   unions   and  other   critics  of   the   governnent  were 
arrested  by   security  police       He  waa  hold   incoonunicado  under 
section  6  of  the  Terrorisa  Act  and  was  not  charged.     Following 
Ileil  Aggett's  death,    detainees  who  had  been  in  custody  with  hin 


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■fell  attestaa  fri 

recorded   that   savant/  percent   of  hia   cliants   diapla/ed   evidance 

o£   assault. 53/ 

6.        Yho  Use  of  fiiB  JuJlclal  Proceaa  to  Enforce  Apartheid 

B/  its  v^iy  iiature  aparthold  has  a  'debaalng  effect*  upon  all 
aspects   of   the   legal   systen  and   legal  profeaalon   In  South 

Africa.   60/ 

53/ tcont . 1/     alleged  that  he  had  been  aasaultod  and  subjected 
to  electric  shock   torture  b/  aecurit/  police  and,    shortly 
before  his  death,    intorrogatad  contlnuousl/  for  aoro  than  60 
hours.      At   an   inquest   e/euitneases   testified   to  his   ill 
treatno.)t   and   allegeJ   that   they,    too.    had  tiaen   tortured  b/ 
security  police.      L^avryers  represonting   ileil  Aggett'a   faoily 
acXnowledgeJ   that  ho  had   died   by   suicide   but  argued   that   it  had 
been    induced   by   ill-treataent ,      An  Amieaty   International 
observer  attended  part  of  the  inquest  in  October.      In  late 
Docenbec   the  i:i3jistrate  disnissed  the  evidence  of  foraer 
detaineos,    accepted  the  account  given  b/  the  security  police, 
and   absolved    then   ftom   any  resiiOHSibility. 

"In  early  August  Ernest  SipalOt    aged  21,    was  also  found 
hanged   in  a  cell  at  the  Joiianncsburg  headquarters  of  the 
security  police.      Ho   inquest  had   boon  held  b/   the   end  of   1982." 
Annesty,    aupra   note   54,    at   78. 

Tlie   Bopartnent   of   State,    in   Its   lluaan  Rights   Report,    notes 
"Cases   of   deaths    in  detention  or   at   the  hands   of  police, 
prison,    or    security  police   eleaents   included   six  known 
instances   uith   nine   deaths    in   1983."      lluaan  Rights   Report, 
supra   note   5    at   324.      For   a   detailed   Investigation   into 
inquests,    court    transcripts,    and  parlianontary  Inquiries   into 
deaths   in   detention,    see   the  Iteport   of   the  Lawyers  Comalttee 
Cor   Civil   Rights   Under   Law,    "Deaths    In   Detention  and  South 
Africa's  Security  La»a"    (Septenbei:    1983).'  ~~~ 

59/      Testinony,    supra   note   43   at   165. 

60/      See   SPRO-CA5,    supra   note   51   at   1.      Professor  John   Dugard, 
writing   as   Secretary  of   the   1972  I,egal   Connisaion  of   the  Study 
Project  on  Christianity  in  Apartheid  Society,   and  Peter 
Randall,    Director   of    SPRO-CAS,    state,    inter   alia,    in   their 
introduction   to   the   Report   of   the  Connission   that   the   connon 
theno   of   the   essays    in   the   ItBport    is  the  debasing  effect 
apartheid  has   upon   the   law,    the   courts,    the   legal  profession 
and    the   officers   of    the   law." 

Dote  also  the  observations  of  the  Study  C(»oisslon  on  U.S. 
Policy  Toward   Southern  Africa i      "The  fomal   constraints  on   the 
South   African   courts   as   defenders  of   civil   liberties   axe  not 
limited  to  the  curbs  placed  on  then  by  the  laws  affecting 
rights.     Ti)e  constraints  also  include  the  courts'    lack  of 


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I  trt«  Trip  to  South  Africa  Aad  Ziobabwa 

"nio  lauB  o£  aparthaid  can  broadl/  be  JiviJod  into  tuo 
catogotlasi     Thos«  laws  which  proscribe  th«  personalr 
social,    econoaic,    cultur&l   and  aducational   status  of   tha 
Individual   in  society;    and  those  laws  lAiicii  construct  the 
institutions  of   sejiar^te  davelopnent   and  deteroine   the 
political   status  of   the   Individual.      Becauao  'botli  a^ts  of 
lEjiko   h^&   unACtaiX  by  Parliaaent  which  aakes  no  pretenses   at 
repreBanting   all  of    the   country's   people;    and  because   t'le 
judiciary  is  required  to  uphold  auch  legislation  without 
revieuing   or    connenting   on   its    legality  or   adherence   to 
universally  recognized  standards  of   justice  and  dacancy. 
South  Africa's   legal   systeo  has  becono   a  proper   subject 
for   International  acrutiny."   61/ 

60/ (cont. )/       constitutional   standing   as  protectors  of   rights    in 
South  Africa.      Ti\e  principle  of  parlianentary  sovereignty  and 
the   absence   of   a  bill   of   rights   enforceable  by  the   courts   put 
the  South  African   judiciary  at   a  nariied  diaaJvantaga   conparod 
with  Anorican  courts      .    .    .    One  explanation  of  why   the  courts 
have   not    taken  a   stronger   libertarian   stand    is   that   song   judges 
regard   the  inf ringenenta  of   civil   rights   as   necessary   for    state 
security        Allen  Orury      in  his  booki    A  Very   Strange   Society, 
records  an  interview  wiUi    judges  who  evidenced   unconcern  about 
the   application  of  the   Internal  Security  Act,      On  the  other 
hand,    oven   judges   critical  of   security  legislation   fr^quantly 
do  no  better    than   colleagues   who   favor    the   laws  beoause   they 
regard   judicial   intervention  as   undesirable  noddling   In 
politics.'     South  Africai     Tloe  Running  Out,    aupra  iioto  32  at 
77. 

61/      See  ILEX  Trip  Report,    supra  note  19  at  15.     Further   the 
reluctance  of  tha  courts  to  push  the  outer  Units  of  tho 
restrictive  security  laws   is   indicated   In   the   following  renarks 
of   Professor    Dugard:    "South  African   judges  have  less  power   than 
their   Anorican  counterparts.      They  have   no   coQpotence  to 
daclara    invalid   acts   of   Parlianent   which  offend  the  basic 
fraadoaa  of   the   individual  despite   tha    fact  that   these  nay  ba 
regarded   as   connon   law  rights   or   constitutional  conventions. 
Saction   59    (2      of   Republic  of   South  Africa  Conatitution  Act 
places  this  beyond  all  doubt   in  providing  that       no  court  of 
law  shall  be  conpatent  to  Inquire  into  or   to  pronounce  upon  the 
validity  of  any  act  passed  by  Parllanent   .    .    .    .    '      ... 
Although   it   is  clear   that   the   judiciary   has   acted  with 
integrity  and    Inpartlality,    their   perfornanca  sonetlmcs  has 
been  disa.ppolnting   to  natural    Lawyers   in   the   interpretation  of 
those   laws   which   nost  seriously  offend   the   foundation   of   our 
legal   order,    tha   dotentlon-without-trlal  laws  .    riiara 

are   other   cases    in  which   statutes  have  been   interpreted   in 
£avour   of   the  exacutlve  and   in  which  inadequate  consideration 
has  baon  given   to   those  basic  rights   which     according   to 
Cantlivres  C.J.,    are  to  be  regarded  as    'constitutional 


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The   conduct   of  political   trlala  ahowa  avidanca  of 
Inccaaalng    State    Intaifaronce    In   tha    judicial  procaaa,    62/      Tha 
liable   CoEmlssion   was   appointed    in    1979    to   iDvaatigata    internal 
aacurity   legialation   In  rasponae   to  crltlciaa  that    it  waa 
iapoBEible  for   political  prlaonara   to  gat   a  fair   trial.     Many 
argunenta    In   court    over    the    adniaaibillty  of   stateaenti 
obtained  under   duress   le-d  to  the  amendment  of   tha  Criminal 
Pcocadutes  Act    In    1979i    so   that  now  admissions  of   guilt   ars    to 
be  assuned   to  have  b«an   freely   given.      In  this  respect,    tha 
judicial  proceae   ia  clearly  weighted  In  favor   of   the  State. 
Zncreaeingly  aevere  aentances   for   convicted  political  prisoners 
appeara   to  mark    a  deteralnatlon  on   tha  part   of   ths   South 
African  governoent   to  use   the   ultimate  weapon  of   Its   judicial 
proceae   to  suppress  political  opposition.   63/ 


61/ (cont . }/      conventions* .    ...      n»e   Judgas  have   failed  to  uaa 
their    Interpretativa  powers    to   the   full    In  raapact   of 
diecrininatory   legislation  and  harsh  security   laws.". 
EPRO~CAS,    supra   not«    51    at    24,    26,    and   27. 

Professor   Dugard   further   notes,    *ni«   judiciary's     paaalve 
attitude   towards   legislation  contrary  to  tha  South  African 
legal   tradition   is   largely  shared  ty  the  practising   legal 
profession.      This    is   apparent    from    its    lack   of   organieed 
opposition    to   racial    legialation  which  offenda    the  principle   of 
equality  before    the    law   or    to   the   det ention-without-trlal 
laws.      Universal    and   unequivocal   condeanation  of    such  abhorrent 
measures   as   section  6  of   the  Terrorism  Act  was  aurely  to  be 
expected    fron  a   profeseion  proud  of    Its    legal  heritage.      Yet, 
with   certain    exceptiona,    this   has  not  been   forthcoming.      The 
moat    notable    exception    is    the  Johannesburg   Bar   which  condemned 
both    the   90-day  and    the    180-day  detention  law  when  they  were 
first    introduced.      Althougli    it   failed   to  respond    to    the 
Terrorisn  Act   when    it   was  passed   in   1967    it    did    later   condemn 
it    in   the   most    vigorous   terms   when   its   full  horror*  became 
apparent    ....    The    incorporated    law   society  of  Natal,    too, 
has   made    it*    attitude    clear    and    in   1970   It   reafflrasd    its 
abhorrence  of   any  statute  denying  the  due  process  of   law, 
interfering   with   the  preeutiptlon  of    Innocence  of   an   accused 
person  or  permitting   interference  with  personal  liberty  without 
accssB   to  a  court  of   law.    ...  -Other  branches  of   the  organised 
profession  have    'spoken  out'      on  several  occaslmis.      Id.   at  29 
-  30. 

62/     Undersecretary  of   State  tagleburger   noted   In  his  June   1963 
statement,      In  recent  ysars   the  power   of  the  courts  has  been 
clrcunscri'bed  by  new  acts   of   parliament  and  police  practices 
which  remove   from  the  courts  the  ability  to  review  executive 
action."   Xagleburger  statsoent,   supra  note  2   at  4. 

f 
63/      See  Testimony,    supra  note  43  at  164-165. 


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Til*  Hunan  ttlghts  Report  o£  1989  of  tli«  U.S.   Dopartuent  of 
State  pointa   out   further    fundatiantal   deficiencies   in   the   South 
African  govemaont   eyaten  uith   respect   to   the  denial  of   a   fair 
public   trial   64/   and   arbitrary   interference   \iith   privacy 
fanily,    hone   or   correspondence,    aa   well   aa   rsgardlnij    freedoa  of 
apeech  and  press   65/ ,    frendon  of   peaceful   asaeobly   and 
aaaociation,    and  Treedon  of  aoveoent  within  the  country, 
foreign  travel  and  ealgration.   €6/ 

vil  libertiea 


Tito    International   Court   of  Justice  has   declared   that   the 
application   of   apartheid   to  Uanibia   ia   a   "flagrant  violation  of 
the   pucpoaea  and  principles  of   the  Cliartar"  .67/ 

g?7      lluaan   Highta   .teport.    supra  note   5,    at   327. 

65/      Id.   at   327-28. 

66/      Id.    at   332. 

67/      In   reaponae   to   the   South  African  request   to  provide   the 
Court   with   infornation  aa   to   the  objectives   and  purposea   of    ita 
policy  of  apartheid  or   separata  developBont,    the  Court 
responded   in   tlie   concluding   paragraphs  of   ita   1971  Advisory 
Opinion  on  Hanibia.    aupra  note  21,    at  46.    in  paragraphs  129, 
130  and  131 > 

The  Government  oC   South  Africa  having  nade   this 
request,    the   Court   finds    that   no   factual   evidence 
ia   needed   for    the   purpose  of   deternining  of   whether 
the  policy  of   apartheiil   as   applied  by  South  Africa 
in  Haalbia   is    in   confornity  iiith   the   international 
obligations   assuned   by   South  Africa   under   the 
Charter   of   the  United  nations.      In   order    to 
deternlne   whether    the   lawa  and   decrees   applied  by 
South  Africa   in  NaBibia,    which  are   a   Batter   of 
public  record,    constitute  a  violation  of   the 
purposes   and  principles 

of  the  Charter  of  the  United  nations,    the  question 
of    intent   or   governnental   discretion   is   not 
relevant;    nor   la  it  necessary  to  investigate  or 
deternlne  the  effects  of   thosa  neasures  upon  the 
welfare  of  tha  inhabitants. 

It   ia   undisputed,    aftd   is   anply   supported  by 
docuDents   annexed    to  South  Africa's   stateneiit    in 
these  proceedings,    that   the   official   governncntal 
policy  pursued  by  South  Africa  in  iJaaibia   is   to 
achieve  a  couplete  physical   separation  of  races  and 
ethnic  groups  in  separata  areas  within  tha 


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T*.!*  position  of  tha  Unitsil  States  SovernDsnt   in  affiraation  of 
tite   action  of   tlie  United  Nations   Oanaral  Assenbly  of 
torninating   the  nandat*   69/   —   a  resolution  ultich   the  Ualteil 
States  flupported  and  In   support   ol   the   illegality  of   th« 

introduction  oi  apartiioiJ   into  Hanibia   ia   cogently   set   forth   in 
thA  Written  Statooant  of   the   United  States   to   the   International 
Court  o£   Juotico,    subaitted    in  .lovenber    1970   in  the   nature  of 
an  aaicus  brief  for   the  Court  in  its  consideration  of  the  1971 
Advisory  opinion.    70/ 

67/(eont.)/  Territory.  Tho  application  of  this  policy  has 
ratjuiraJ,    as  has  been  concedad  by  South  Africa, 
restrictive  □oasures  of  control  adopted  and 
enforced  in  the  Territory  by  the  coercive  pouer  of 
the  foruer  llaiidatory.  Tliose  aeaaurea  establish 
linitationa,    exclusion   or   restrictione   for   the 
noDbars   of    the    indigonoua  population  groups   in 
respect  of   their  participation  In  certain  types  of 
activities,    fields   of   study  or   of   training,    labour 
or    ouploynont   and   also   subnit   then   to  restrictions 
or  exclusions  of  residence  and  aoveaent   in  large 
parts  of  tiio  Territory. 

Under   tlie  Cliazter  of   the  United  Uatious   the  forner 
Mandatory  had  pledged  itself   to  observe  and 
respect,    in   a   territory  having   an   International 
status,    hunan   rights   and   fundaoental   freedoas   for 
all   uithout   distinction   as   to   race.   To  establish 
instead,    and    to   cnfoEce,    distinctions,    exclusions, 
restrictions   and   linitationa   excluaively  based  on 
grounds   of   race,    color,    descont   or  natioudl  or 
ethnic   origin   uhich   constitute   a   denial  o£ 
fundanental  hunan  rights    is   a   flagrant  violation  of 
the  purpose   and  principles   of    the   Oiarter. 

68/      Tiio  Court  held,    inter  alia,    that  "the  continued  presence 
of  South  Africa  in  Uanibia,   being  illegal.    South  Africa  is 
under  obligation  to  withdraif  its  adainistratlon  fron  Uaaibia 
ionediately  and    thus  put   an   end   to   its   occupation  of   the 
Territory.'      Id.    at   46,    para.    133. 

69/     General  Assenbly  Resolution  2145    (1966). 

70/      In  its  Written  Statonent,    the  United  States  arguedi 

"A.      The   United  tlations   validly  terainatad   the   rights   and 
authority   granted   to  South  Africa   under   the  llandate  of   17 
Decenbor    1920.      The  llandate   was   a   treaty   in   force   and 
South  Africa   uas   legally  obligated   to   carry  out    its 
provisions   in   good   faith.      Although   there  was   no   case 
brought  before  the  Council  of  the  League  alleging  that  a 
na.)datory  had  breached  its  obligations!   had  such  a  breach 

-  27  - 


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D.         T.\c   llaraasaant    anJ    Iiitinidatlon   ot   Attorneys 

On  th«  bcl'glitar   lide  of  this  glooa-j  pictura  ia  the  fact 
that   there   are   lawyers    In  South  Africa   and   i^anibia   uho  are 
striving    to   upholJ  huaan  rights   and    fundanental   freedona   under 
traaendouB   difficulties,      llany  ace   subjecteii    to   varying  degrees 
of   isolation  and   intioidatlon,    hazasanont   and   coiiaiiqugiitial 
loss  of   public   and  private   clients.    72/      Special  nention   sitould 
be  aado  of  the  obstacles  faced  by  Black  attornoys.    73/ 

It   is  subnitted   that  coonunl cat ions  from  the  Aaerican  Bar 
Association   in   f Irn   support   of    the   Itula   of   I<aw   and   o£ 
fundamental  tiunaii   rights   would  greatly  hearten   the  Bar 
Associations   i:)   South  Africa   and  Ilaciibia.      This   would  be 
consonant   with   the  belief   of   the  Association   in   the 

70/(cont.)/   ijeoii   established  during   the  League  period, 

the   Council   would   have  had   ths   authority   to   ternlnato   the 
rights  of   the   Uaiidatory        Tlte  United  Nations   succeeded   to 
this  pouer.      In  a  nunbec  of  respects,    naaely,   by  rofualny 
to   suboit  reports   and   to   tranaoit   petitions  of    the 
inhabitants   of    tno   Territory     by   aysteciatic  rejection  of 
raconuendatlons   of   the  General   Aasenbly   and   the   Security 
Council   with   respect   to   the  Adninlsttation  of   the 
territory  and  by   the   application  of   apartheid   in   Uanibia, 
South  Africa   aaterially  breached   its  ilaniJate   obligations. 
In   tho   light   of    the   failure  of   other   peasures    taXen   over 
nearly   two  decades    to    inJuco  .South  Africa    to   cease    its 
oaterlal  breadies,    tho  General  Asseably  reasonably 
exercised   its  poMer   to  revoke  South  Africa's  rights  and 
authority  as  liandatory   by   resolution   2145    (XXI),      Tho 
Asaeobly   was   also   coopctent    to  assuae   the   functions  of 
adEiinlstration  under  the  Mandate  of   17  Decaober  1920. 

*B.     South  Africa  no  longer  has  any  rights  In  Uaaibia 
under   the  llandate;    there  is  no  othor  legal  basis  for   its 
continued  presence   in  the  territory.     South  Africa  is 
therefore,    in  Illegal  occupation  of  Honibia." 

71/      Security   Keaolutlon   301    (1971). 

72/     Sea  ILEX  Trip  Haport,    supra  note  19  at  27. 

73/     The  Black  South  African  attorneys  ara  handicapped  by  all 
tho  usual  accoutranents  of  apartheid,  pass  laws,    curfews  and 
group  area  laws  which  have  a  crippling  affect  on  their  ability 
to  have  an  office  in  an  urban  areas  and  to  provide  legal 
rapraaantlon  to  the  Black  oajority. 


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iuaapendenco  of   lau/ars  and  in  the  need  foi  an  Indttpandant 
judiciary.     Iloraovsr,    it  uoulJ  ba  ancouraging  to  the  South 
African  ami  Ilaniblan   la./yers   often   working   at  great  personal 
aacrifice   in   tlie  Jefenso   of    individual   clients   Charged  under 

the   apartheid   and/or    secuiit/   laws. 

COiJCLUSI  CM 

Tlie  recoauendatiou  to  the  House  uould  raaffiro  and 
inplenent   the   connitnatit   of   the  ADsrican   Bat  Association   to  the 
Rule  of  Lau  internationally,    to  the  advaiicaoant  of  the  Rule  of 
Law  in  th«  world  and   to  the  pronotion  of  peace  and  hviaan  rights 
through  lau. 

Respectfully  subnltted. 


J.    David  Ellwangeri    Chairpers< 
Section  of  Individual  Rights 
and  Responsibilities 


Robart  F.   Drinan,   Oiairparson 
Standing  Connittee  on  World  Order 
Under  Lau 


.   February.    1985 


Senator  Heinz.  Now  I'd  like  to  turn  to  Reverend  Sullivan,  unlesa 
any  of  my  other  colleagues  have  any  remarks  they  would  like  to 
make.  Senator  Proxmire. 

Senator  Proxmire.  Yes,  I'd  like  to  just  say  that.  No.  1,  I  would 
appreciate  it,  Mr.  Chairman,  if  you  would  permit  a  letter  from  the 
president  of  Wellesley  College  supporting  the  Kennedy- Weicker  bill 
to  be  included  in  the  record. 

Senator  Heinz,  Without  objection. 

OPENING  REMARKS  OF  SENATOR  PROXMIRE 

Senator  Proxmire.  And  I  also  would  like  to  say  how  delighted 
and  impressed  I  am  that  Mr.  Phillip  Lacovara,  representing  the 
American  Bar  Association,  has  submitted  a  statement  which  sup- 
ports sanctions  with  respect  to  South  Africa.  It  doesn't  support  any 
particular  bill,  but  it  does  support  sanctions  and  I  think  that's  ex- 
tremely important. 

I'll  tell  you,  the  ABA  weis  very,  very  helpful  to  us  when  th^ 
changed  their  mind  on  the  genocide  convention.  It  made  all  the  dif- 
ference in  the  world.  So  it's  good  to  have  this  remarkable  organiza- 
tion supporting  sanctions. 

I  have  an  opening  statement  that  I  will  not  make  because  of  the 
time  limitation,  but  I  want  to  add  ray  words  to  the  welcome  that 
the  chairman  has  given  to  Rev.  Leon  Sullivan.  I've  heard  him  a 
number  of  times  over  the  years.  He's  been  an  inspiration  to  all  of 
us  and  I  think  the  chairman  is  exactly  right  in  saying  that  Mr.  Sul- 
livan more  than  any  other  individual  by  far  has  kept  this  issue 
alive  and  has  prodded  our  conscience  and  put  us  in  the  position 
where  we  are  in  now,  and  I  think  that  means  that  we  are  going  to 


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act  and  act  effectively  and  do  something  about  changing  that 
apartheid  system  in  South  Africa. 
[The  complete  prepared  statement  follows:] 

Opening  Statement  of  Senator  Wiluam  Proxmire 

Today  we  have  the  last  in  a  series  of  three  hearings  on  S.  635,  the  Anti-Apartheid 
Act  of  1985.  Since  our  last  hearing  on  May  24,  there  have  been  two  very  significant 
developments  dealing  with  the  issue  of  U.S.  policy  toward  the  racist  South  African 
government. 

On  June  4,  the  Senate  Foreign  Relations  Committee  reported  out,  by  an  over- 
whelming bipartisan  vote  of  16-1,  an  amended  version  of  Senator  Lugar's  bill  S.  995, 
which  calls  for  the  imposition  of  economic  sanctions  against  South  Africa.  That  bill 
severely  restricts;  (1)  New  bank  loans  to  the  Government  of  South  Africa;  (2)  nucle- 
ar exports  to  South  Africa  and  (3)  sales  of  computers  to  any  Government  agency 
there  enforcing  apartheid.  It  also  mandates  that  American  companies  presently  in 
South  Africa  adhere  to  the  Sullivan  principles.  Finally  it  calls  on  the  President  to 
recommend  additional  sanctions,  including  a  ban  on  new  investment,  if  the  South 
African  Government  does  not  make  significant  progress  in  dismantling  its  apartheid 
system  within  18  months.  The  action  by  that  committee  is  certainly  a  severe  rebuke 
to  the  administration  and  its  discredited  policy  of  constructive  engagement. 

On  June  5,  the  House  of  Representatives  passed  H.R.  1460,  a  bill  similar  to  S,  635 
that  is  before  this  committee,  by  a  vote  of  295  yeas  to  127  nays — with  over  50  Re- 
publicans voting  for  the  5  sanctions  in  that  bill. 

For  those  of  us  who  want  to  pressure  South  Africa  to  change  its  evil  apartheid 
system,  without  putting  at  risk  the  perilous  livelihood  of  its  oppressed  blacks,  these 
are  encouraging  developments.  Let  me  emphasi?*  again  that  S,  635  and  H,R,  1460, 
the  bill  passed  by  the  House,  are  not  disinvestment  bills.  The  main  difference  be- 
tween them  and  the  bill  reported  by  the  Foreign  Relations  Committee  is  that  thev 
ban  new  investment  and  private  bank  loans  to  South  Africa,  while  the  Lugar  bill 
does  not.  Another  difference  is  that  S,  635  and  H,R,  1460  do  not  mandate  the  Sulli- 
van principles,  while  the  Lugar  bill  does,  I  support  mandating  those  principles  and 
S.  147  the  bill  I  introduced  on  January  3  of  this  year  had  a  provision  providing  for 
that. 

That  brings  us  to  the  subject  of  today's  hearing.  Our  final  witness  reminds  me  of 
the  story  of  the  Marriage  Feast  at  Cana — for  we  truly  have  saved  the  best  wine  for 
the  last.  Reverend  Sullivan's  accomplishments  in  helping  blacks  in  South  Africa 
have  won  him  international  acclaim.  He  originally  wanted  American  companies  to 
leave  South  Africa  so  they  would  not  continue  to  make  excessive  profits  off  of  cheap 
labor,  the  lack  of  worker's  rights  and  segregated  employment  practices.  When  he 
found  he  couldn't  accomplish  that  he  pressed  forward  with  establishing  a  code  for 
United  States  companies  that  would  at  least  ensure  they  act  against  racial  discrimi- 
nation in  their  own  operations  in  South  Africa,  and  take  a  stand  against  apartheid. 
Thus  was  born  the  Sullivan  code  in  March  1977,  with  12  companies  adhering  to  it. 
Now  we  have  about  130  of  the  280  United  States  companies  in  South  Africa  adher- 
ingto  that  code  and  bettering  the  lives  of  70,000  blacks. 

There  is  nothing  in  S.  635  that  prevents  American  companies  from  continuing  to 
better  the  lives  of  their  South  African  employees.  They  are  not  being  required  to 
withdraw  from  that  country  by  our  bill.  The  Reverend  Sullivan  has  already  written 
to  me  endorsing  S,  635,  so  he  sees  no  incompatibility  between  its  provisions  and 
having  American  companies  adhere  to  the  Sulhvan  code, 

S,  635  is  aimed  at  the  South  African  Government,  not  American  companies  doing 
business  there.  It  is  designed  to  send  a  strong  signal  that  the  dismantlement  of 
apartheid  must  begin.  Adoption  of  this  legislation  is  needed  to  show  that  the  Gov- 
ernment of  the  United  States  will  no  longer  just  condemn  apartheid  while  continu- 
ing business  as  usual.  To  send  this  message  is  right  and  in  our  national  interest. 

1  will  continue  to  push  for  enactment  of  S,  635  and  look  forward  to  hearing  from  a 
man  I  admire  for  his  fine  reputation  that  has  preceded  him  before  our  committee,  I 
welcome  you.  Reverend  Sullivan, 

Senator  Heinz.  Are  there  any  other  statements  by  any  members 
of  the  committee? 

Senator  Dixon.  In  the  interest  of  brevity,  I  will  put  mine  in  the 
record,  Mr.  Chairman. 

Senator  Heinz.  Without  objection.  Senator  Dixon,  so  ordered. 

[The  complete  prepared  statement  follows:] 


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STATEMENT  OF  SENATOR  ALAN  DIXON 

Mr.  Chairman,  I  am  extremely  pleased  to  eee  that  we  have  the 
distinguished  author  of  the  Sullivan  principles.  Rev.  Leon  Sullivan 
before  the  committee  today.  I  would  like  to  take  this  opportunity  to 
commend  him  for  his  tireless  and  outstanding  efforts.  He  has  my 
respect  and  my  admiration;  the  Sullivan  principles  are  responsible 
for  improving  the  lives  of  tens  of  thousands  of  blacks,  Asians,  and 
others  suffering  under  apartheid,  and  provide  a  crucially  needed 
impetus  toward  ending  that  abhorrent  system. 

I  am  pleased  to  see  that  the  Senate  Foreign  Relations  Committee 
has  reported  legislation  to  the  Senate  that  would  put  the  SuUivem 
principles — which  are  now  only  advisory — into  law,  which  will,  I 
hope,  make  their  operation  even  more  effective.  That  bill  also  for- 
bids: One,  new  bank  loans  to  the  South  African  Government,  two, 
nuclear  exports  to  South  Africa,  three,  sales  of  computers  to  agen- 
cies enforcing  apartheid  there,  and  four,  further  investment  by 
United  States  firms  in  South  Africa  if  the  Government  does  not 
make  significant  progress  toward  dismantling  apartheid  within  the 
next  18  months. 

This  committee  also  has  before  it  legislation  which  is  even 
stronger  than  the  bill  reported  by  the  Foreign  Relations  Commit- 
tee, and  a  very  tough  bill  has  passed  the  House  of  Representatives 
by  an  overwhelming  295  to  127  vote. 

These  actions  clearly  demonstrate  the  bipartisan  desire  in  both 
the  Senate  and  the  House  to  pressure  South  Africa  to  end  apart- 
heid. It  also  clearly  indicates  that  Republicans  and  Democrats  in 
both  the  Senate  and  the  House  believe  that  the  administration's  so- 
called  constructive  engagement  policy  has  not  worked  and  should 
be  abandoned. 

I  look  forward  to  hearing  Reverend  Sullivan's  testimony  and  his 
recommendations  for  legislative  action.  It  is  clear  that  the  time  to 
act  is  now.  I  look  forward  to  working  with  my  colleagues  to  ensure 
that  the  Senate  quickly  acts  on  a  reasonable,  effective  legislative 
package  that  leaves  no  doubt  where  the  United  States  sUinds  on 
the  question  of  apartheid,  and  which  expresses  that  in  a  concrete 
and  mefiningful  way. 

Senator  Heinz.  Senator  Gorton. 

Senator  Gorton.  No  statement. 

Senator  Heinz.  Senator  Mattingly, 

Senator  Mattingly.  No  statement. 

Senator  Heinz.  Very  well. 

Reverend  Sullivan,  at  your  pleasure.  Welcome  again. 

STATEMENT  OF  REV.  LEON  H.  SULLIVAN,  MINISTER,  ZION  BAP- 
TIST CHURCH,  PHILADELPHIA,  PA;  AUTHOR  OF  THE  SULLIVAN 
PRINCIPLES 

Reverend  Sitllivan.  Thank  you.  Senator  Heinz.  It's  always  a 
privil^e  and  pleasure  to  see  you  and  I'm  happy  to  be  here  with 
your  colleagues. 

I  have  a  Drief  statement  and  then  I  will  be  happy  to  respond  to 
questions. 

I  welcome  the  opportunity  to  bring  this  testimony  before  this  im- 
portant Senate  Banking  Committee. 


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EFFECT  OF  MULTINATIONAL  COMPANIES  IN  SOUTH  AFRICA 

The  question  of  apartheid  is  a  tragedy  in  the  world  and  we  must 
take  the  lead  in  America  to  bring  about  its  abolition.  My  main  in- 
terest here  has  to  do  with  the  effect  of  multinational  companies  on 
the  ending  of  apartheid.  Multinational  companies  in  South  Africa, 
along  with  other  influential  institutions  and  thrusts,  can  be  a 
msgor  force  in  the  liberation  of  blacks  in  that  nation.  However,  for 
this  to  happen,  American  and  other  outside  companies  doing  busi- 
ness in  South  Africa  must  be  pushed  to  the  utmost  to  eliminate  all 
racial  discrimination  in  their  own  operations  and  to  use  their  great 
strength  to  help  persuade  the  South  African  Government  to  end  all 
apartheid  laws. 

American  companies  that  fail  to  do  so  should  be  compelled  to 
leave  South  Africa  because  they  have  no  moral  justification  for  re- 
maining there. 

Action  by  the  companies,  however,  is  not  the  total  solution  to  the 
problem  of  South  Africa.  Apartheid  is  the  most  racist  and  ruthless 
system  on  Earth  and  its  destruction  will  require  the  combined  ef- 
forts of  companies,  unions,  churches,  governments,  world  public 
opinion,  and  most  of  all,  the  courageous  efforts  of  those  within 
South  Africa  itself  who  are  standing  up  for  justice  and  freedom. 

But  companies  can  and  should  play  a  major  roie  in  this  effort  be- 
cause the  companies  have  been  the  main  beneficiaries  of  the  injus- 
tices from  this  uryust  system  in  the  past  and  they  have  a  duty  to 
help  end  those  injustices. 

AMERICAN  COMPANIES  SHOULD  SET  THE  EXAMPLE 

American  companies  in  particular  should  set  the  example.  We 
are  the  representatives  of  freedom  and  justice,  I  am  told,  in  the 
world. 

This  can  be  done  through,  among  other  ways,  full  adherence  to 
the  Sullivan  principles.  The  principles  are  an  equal  rights  code  for 
corporate  conduct  in  South  Africa.  They  were  initiated  8  years  ago 
and  are  the  most  stringent  and  demanding  measurement  for  corpo- 
rate equal  rights  responsibility  in  the  world  today.  Essentially,  the 
principles  call  for  an  end  to  all  discrimination  against  blacks  in 
company  operations;  equal  pay  for  equal  work;  training  and  eleva- 
tion of  blacks  in  large  numbers  to  supervisory  and  administrative 
jobs,  including  black  supervision  over  whites;  extensive  aid  to  hous- 
ing, health  and  other  community  programs;  the  recognition  of  rep- 
resentative, independent,  free  black  trade  unions,  thereby  helping 
empower  the  black  worker  who  is  the  greatest  hope  for  peaceful 
change  in  South  Africa;  and  the  companies  are  called  upon  for 
major  emphasis  of  support  to  education  for  blacks  without  which 
political  apartheid  will  one  day  become  economic  apartheid. 

A  strengthening  of  the  principles  now  requires  U.S.  companies  to 
actively  support  the  freedom  of  blacks  to  work  or  live  where  they 
choose,  as  well  as  to  work  actively  through  their  lobbying  process 
and  any  other  means  at  their  disposal  for  the  end  to  all  apartheid 
laws.  This  means  U.S.  companies  must  actively  work  for  the  end  to 
influx  control,  forced  removals,  passbook  requirements,  detention 
without  trial,  and  for  black  full  citizenship  rights  and  the  full  and 
equal  participation  of  blacks  in  the  political  process. 


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461 

The  principles  are  working.  As  a  result  of  them,  the  U.S.  plants 
are  desegr^ated.  Equal  pay  for  equal  work  is  beginning  to  be  paid 
for  black  workers.  Blacks  are  being  elevated  to  administrative  and 
supervisory  jobs.  Blacks  are  supervising  whites.  Blacks  are  being 
trained  for  new  technical  skills.  Independent,  free  black  trade 
unions  are  beginning  to  be  recognized.  Schools  are  being  built. 
Housing  developments  are  being  constructed.  Health  centers  and 
pr<%ram&  are  being  initiated  and  young  blacks  by  the  tens  of  thou- 
sands are  being  assisted  with  better  education. 

Also,  the  impact  of  these  principles  goes  far  beyond  these  gains 
and  the  opportunity  to  provide  to  the  limited  number  of  blacks  em- 
ployed by  American  companies  who  are  less  than  1  percent  of  the 
total  black  work  force.  The  principles  are  a  catalyst  for  change  and 
affect  conditions  for  black  workers  throughout  the  country.  They 
are  a  lever  on  other  companies. 

A  group  of  South  African  companies  employing  a  million  work- 
ers, mostly  black,  are  now  using  the  principles  in  their  practices. 
The  principles  have  started  a  revolution  in  industrial  race  relations 
across  South  Africa.  Also,  they  have  become  a  platform  for  many 
in  South  Africa  arguing  for  equal  rights  in  Government  and  other 
places. 

But  with  these  gains,  far,  far,  far  more  must  be  done  by  Ameri- 
can and  other  companies  of  the  world.  Growing  and  mounting 
times  of  protest  and  turmoil  within  South  Africa  makes  fundamen- 
tal change  crucially  urgent  if  that  country  is  to  avoid  a  bloodbath. 
The  pace  of  change  is  far  too  slow.  The  companies  in  South  Africa 
are  powerful  and  must  become  more  active  in  the  struggle. 

Also  1,000  companies  from  America  and  the  world  in  South 
Africa  practicing  equal  rights  and  taking  firm  stands  against  apart- 
heid laws  would  make  a  dramatic  difference  in  helping  bring  about 
the  ultimate  dismantling  of  apartheid.  The  compamles  must  be 
pushed  harder  for  faster  results. 

The  U.S.  company  effort  is  the  most  vital  and  impactful  company 
effort  in  South  Africa  today.  But  even  with  that,  unfortunately, 
more  than  100  U.S.  companies  in  South  Africa  still  do  not  support 
the  equal  rights  principles  and  some  who  claim  to  be  supporters 
are  dragging  their  feet  and  getting  failing  grades. 

All  U.S.  companies  should  become  a  part  of  these  principles  and 
measure  up  fully  in  their  implementation,  or  those  who  fail  to  do 
so  should  be  pressed  to  leave  South  Africa,  through  total  divest- 
ment actions,  stockholders'  resolutions,  boycotts,  and  the  actions  of 
the  Congress  of  the  United  States. 

Also,  Congress  should  make  the  newly  tough  and  amplified  prin- 
ciples mandatory  for  all  U.S.  companies  in  South  Africa,  backed  up 
with  embargos  and  sanctions  and  other  penalties  for  noncompli- 
ance. For  I  would  rather  see  50  American  companies  remaining  in 
South  Africa  ^gressively  promoting  equal  rights  and  actively  op- 
posing apartheid  than  300  American  companies  and  of  them  many 
using  the  principles  as  camouflage  and  doing  business  as  usual. 
The  noncomplying  U.S.  companies  must  shape  up  or  get  out  of 
South  Africa. 

Companies  from  other  nations  doing  business  in  America  as  well 
as  doing  business  in  South  Africa  should  be  required  to  follow 


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stringent  equal  rights  principles  in  South  Africa  or  face  severe  U.S. 
import  restraints  to  the  ability  of  the  United  States  to  do  so. 

These  companies  must  also  be  pressured  within  their  own  coun- 
tries by  their  own  peoples  and  their  own  parliaments  to  oppose 
apartheid  aggressively.  Unfortunately,  Europeim  companies  are 
lagging  well,  well  behind  the  Americans  and  the  Japanese,  who  do 
such  heavy  business  in  the  U.S.  as  well  as  sell  meissive  amounts  of 
commodities  in  South  Africa,  are  doing  nothing. 

South  Africa  is  the  place  for  the  companies  of  the  world  to  dem- 
onstrate a  concern  for  justice  and  benefits  to  humanity.  The  enemy 
of  capitalism  is  not  communism,  but  the  selfishness  of  capitalism. 
It  is  time  the  companies  showed  another  side  to  the  world. 

MORATORIUM  ON  AMERICAN  ECONOMIC  EXPANSION 

Meantime,  until  we  see  clear  and  effective  movement  toward  the 
abolition  of  this  ruthless  system,  meantime,  there  must  be  a  mora- 
torium on  all  American  economic  expansion  in  South  Africa  until 
apartheid  is  ended  officially. 

There  should  be  no  new  investments,  no  new  bank  loans  to  the 
South  African  Government  or  its  agencies,  and  the  end  of  the  sale 
of  the  krugerrand,  and  a  halt  to  the  sale  of  any  equipment,  materi- 
al, or  services  to  the  military  or  police  of  South  Africa,  backed  up 
with  embargos,  sanctions,  and  other  penalties  by  the  U.S.  Congress. 

It  is  also  my  hope  that  the  President  of  the  U.S.  will  support 
strong  measures  involving  sanctions  and  will  set  aside  constructive 
engagement  and  use  direct  diplomacy  with  the  South  African  Gov- 
ernment calling  in  the  strongest  of  terms  for  the  abolition  of  apart- 
heid. 

Finally,  more  and  more  it  is  clear  to  me  that  a  deadline  is 
needed  for  conclusive  action  in  South  Africa.  Lives  are  being  lost 
daily  and  that  nation  is  near  the  threshold  of  revolution. 

It  is  my  view,  therefore,  that  if  apartheid  has  not  in  fact  ended 
legally  and  actually  as  a  system  statutorially  within  the  next  24 
months  there  should  be  a  total  U.S.  economic  embargo  against 
South  Africa  and  the  withdrawal  of  all  American  companies  and 
that  it  will  be  followed  hopefully  by  similar  actions  by  other  na- 
tions and  companies  in  South  Africa  from  those  measures. 

There  are  those  who  say  that  these  measures  cannot  work,  but  I 
say,  with  the  help  of  God  and  with  the  action  of  this  Nation  ring- 
ing a  new  bell  of  freedom  for  black  rights  in  South  Africa,  showit^ 
the  world  that  we  are  drawing  the  line  and  taking  a  stand  against 
apartheid,  and  I  say  with  the  support  of  those  within  this  Nation 
and  within  South  Africa  who  want  to  see  a  nonviolent  resolution  to 
this  issue,  and  I  say  with  the  help  of  God,  the  peaceful  ending  of 
apartheid  can  still  be  attained  if  governments,  the  companies,  and 
others  searching  for  workable  solutions  act  now  before  chaos  comes 
and  the  sky  falls. 

Thank  you  very  much. 

[The  complete  prepared  statement  follows:] 

Testimony  Given  b 


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must  take  the  lead  in  America  to  bring  about  its  abolition.  My  principle  interest 
here  had  to  do  vrith  the  eFTects  of  multinational  companies  on  the  ending  of  apart- 
heid. 

Multinational  companieB  in  South  Africa,  along  with  other  influential  institu- 
tions,  can  be  a  major  force  in  the  liberation  of  blacks  in  that  nation.  However,  for 
this  to  happen  American  and  other  outside  companies  doing  business  in  South 
Africa  must  be  pushed  to  the  utmost  to  eliminate  all  racial  discrimination  in  their 
operations  and  to  use  their  great  strength  to  help  persuade  the  Sooth  African  Gov- 
ernment to  end  all  apartheid  laws. 

Companies  that  fail  to  do  so  should  be  compelled  to  leave  South  Africa  because 
they  have  no  moral  Justification  for  remaining  there. 

Action  by  the  companies,  however,  is  not  the  total  solution  to  the  problem  of 
South  Africa.  Apartheid  is  the  most  racist  and  ruthless  system  on  Earth,  and  its 
destruction  will  require  the  combined  efforts  of  companies,  unions,  churches,  gov- 
ernments, world  public  opinion,  and  most  of  all,  the  courageous  efforts  of  those 
within  South  Africa  itself  But  companies  can  and  should  play  a  major  role  in  the 
effort,  because  they  have  been  the  main  beneficiaries  of  the  injustices  in  the  past 
and  they  have  a  duty  to  help  end  those  injustices. 

American  companies,  in  particular,  should  set  the  example.  This  can  be  done 
through,  among  other  things,  full  adherence  to  the  Sullivan  principles.  The  princi- 
ples are  an  equal-rights  code  for  corporate  conduct  in  South  Africa.  They  were  initi- 
ated 8  years  ago  and  are  the  most  stringent  and  demanding  measurement  for  corpo- 
rate equal  rights  responsibility  in  the  world  today. 

Essentially,  the  principles  call  for  an  end  to  all  discrimination  against  blacks  in 
company  operations;  equal  pay  for  equal  work;  training  and  elevation  of  blacks  in 
large  numbers  to  supervisory  and  administrative  jobs — including  black  supervisors 
over  whites;  extensive  aid  to  housing,  health,  and  other  community  programs;  the 
recognition  of  representative  independent  free  black  trade  unions — empowering  the 
black  worker,  who  is  the  greatest  hope  for  peaceful  change  in  South  Africa— and 
major  emphasis  on  education  for  hlacke,  without  which  political  apartheid  will  one 
day  become  economic  apartheid. 

A  strengthening  of  the  principles  now  requires  U.S.  companies  to  support  actively 
the  freedom  of  blacks  to  work  or  live  where  they  choose,  as  well  as  an  end  to  all 
apartheid  laws.  This  means  U.S.  companies  must  use  their  lobbyir^  power  and  any 
other  means  at  their  disposal  to  work  for  the  end  of  influx  control,  forced  removals, 
passbook  requirements,  and  detention  without  trial;  and  for  black  full  citizenship 
rights  and  the  full  and  equal  participation  of  blacks  in  the  political  process. 

The  Sullivan  principles  are  working.  As  a  result  of  them,  U.S.  plants  are  desegre- 
gated, equal  pay  for  equal  work  is  beginning  to  be  paid  to  black  workers,  blacks  are 
being  elevated  to  administrative  and  supervisory  jobs,  blacks  are  supervising  whites, 
blacks  are  being  trained  with  new  technical  skUls,  independent  free  black  trade 
unions  are  being  recognized,  schools  are  being  built,  housing  developments  are  being 
constructed,  health  centers  and  programs  are  being  initiated,  and  young  blacks  by 
the  thousands  are  being  assisted  with  better  education. 

Also,  the  impact  of  the  principles  goes  far  beyond  these  gains,  and  the  opportuni- 
ties provided  the  limited  number  of  blacks  employed  by  American  companies,  who 
are  less  than  1  percent  of  the  total  black  work  force.  The  principles  are  a  catalyst 
for  change  and  affect  conditions  for  black  workers  throughout  the  country.  They  are 
a  lever  on  other  companies. 

A  group  of  South  African  companies  employing  1  million  workers,  mostly  blacliB, 
are  now  using  the  principles  in  their  practices.  The  principles  have  started  a  revolu- 
tion in  industrial  race  relations  across  South  Africa.  Also,  they  have  become  a  plat- 
form for  many  in  South  Africa  arguing  for  equal  ri^ts  in  Government  and  other 
places. 

But  far  more  must  be  done  by  American  and  other  companies  of  the  world.  Grow- 
ing and  mounting  tides  of  protest  and  turmoil  within  South  Africa  make  fundamen- 
tal change  crucially  urgent  if  the  countiy  is  to  avoid  a  bloodbath. 

The  pace  of  change  is  far  too  slow.  Ine  companies  in  South  Africa  are  powerful 
and  must  become  more  active  in  the  struggle.  1,000  companies  from  America  and 
the  world  in  South  Africa  practicing  equal  rights  and  taking  firm  stands  against 
apartheid  laws  would  make  a  dramatic  difference  in  helping  bring  about  the  dis- 
mantling of  apartheid.  The  companies  must  be  pushed  harder  for  faster  results. 

Unfortunately,  more  than  a  hundred  United  States  companies  in  South  Africa 
Btill  do  not  support  the  equal  rights  principles  and  some  that  claim  to  be  supporters 
are  dragging  their  feet.  All  Unit«d  States  companies  should  become  a  part  of  the 
principles  and  measure  up  fully  in  their  implementation,  or  those  who  fail  to  do  bo 


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should  be  pressured  to  leave  South  Africa  through  total  disvestment  actions,  stock- 
holder resolutions,  boycotts  or  other  means. 

Also.  Congress  should  make  the  newly  toughened  amplified  principles  mandatory 
for  alt  United  States  companies  in  South  Africa,  back^  up  with  embargoes,  sanc- 
tions, and  other  penalties  for  noncompliance,  I  would  rather  see  50  American  com- 
panies remaining  in  South  Africa  aggressively  promoting  equal  rights,  and  actively 
opposing  apartheid,  than  300  companies  using  the  principles  as  camouflage  and 
doing  business  as  usual. 

The  noncoraplying  U.S.  companies  must  shape  up,  or  get  out.  Too,  companies  from 
other  nations  doing  business  in  America,  as  well  as  doing  business  in  South  Africa. 
should  be  required  to  follow  stringent,  equal  rights  principles  in  South  Africa  or 
face  severe  United  States  import  restraints. 

These  companies  must  be  pressured  within  their  countries  by  their  people  and 
their  parliaments  to  oppose  apartheid  aggressively.  Unfortunately.  European  com- 
panies are  lagging  well  behind  the  Americans,  and  the  Japanese  are  doing  nothing. 

South  Africa  is  the  place  for  the  companies  of  the  world  to  demonstrate  a  concern 
for  justice  and  benefits  to  humanity.  The  enemy  of  capitalism  is  not  communism, 
but  selfish  capitalism.  It  is  time  the  companies  show  another  side  to  the  world. 

Meanwhile,  there  must  be  a  moratorium  of  all  American  economic  expansion  in 
South  Africa  until  apartheid  is  ended  officially.  There  should  be  no  new  invest- 
ments, no  new  bank  loans  to  the  South  African  Government  or  its  agencies,  an  end 
to  the  sale  of  the  kruggerrand  and  a  halt  to  the  sale  of  any  equipment,  material,  or 
services  to  the  military  or  police,  backed  up  with  embargoes,  sanctions,  and  other 
penalities  by  the  United  States  Congress. 

It  is  also  my  hope  that  the  President  will  set  aside  constructive  engagement  and 
use  direct  diplomacy  with  the  South  African  Government,  calling  in  the  strongest  of 
terms  for  the  abolition  of  apartheid. 

Finally,  more  and  more,  it  is  clear  that  a  deadline  is  needed  for  conclusive  action 
in  South  Africa.  Lives  are  being  lost  daily  and  the  nation  is  on  the  threshold  of  rev- 
olution. 

It  is  my  view,  therefore,  that  if  apartheid  has  not,  in  fact,  ended  legally  and  actu- 
ally as  a  system  within  the  next  24  months,  there  should  be  a  total  United  States 
economic  embargo  against  South  Africa,  but  with  the  help  of  God  it  can  still  be  at- 
tained, if  governments,  the  companies,  and  others  searching  for  workable  solutions 
act  now,  before  the  sky  falls. 

Senator  Heinz,  Reverend  Sullivan,  the  term  anticlimax  for  what 
the  rest  of  us  are  going  to  engage  in  is  inadequate  to  describe  what 
is  about  to  happen. 

I  have  a  few  questions  as  I  suspect  many  of  my  colleagues  do.  I 
cannot  begin  to  make  my  questions  nearly  as  eloquent  as  your  very 
moving  declamations. 

I  gather  from  your  testimony,  though,  that  you  do  feel  that  the 
Sullivan  principles  have  caused  some  companies — not  all — to  im- 
prove their  practices  where  the  companies  might  otherwise  not 
have  done  so.  Is  that  right? 

Reverend  Suluvan.  That's  an  absolute  fact.  The  principles  have 
been  the  main  factor  that  have  caused  the  companies  to  improve 
their  efforts  and  to  work  toward  chatnges. 

Senator  Heinz.  Now  the  Sullivan  principles  are  voluntary.  What 
is  it  about  the  current  Sullivan  principles  system  that  causes  com- 
panies that  do  adhere  to  it  to  do  so? 

Reverend  Suluvan.  Because  of  the  commitment  I  think  more 
from  the  leadership  from  the  companies,  that  they  want  these  prin- 
ciples to  be  aggressively  followed,  and  by  the  support  and  the  ag- 
gressive efforts  of  management  who  are  required  to  carry  out  those 
commitments,  and  because  of  the  initiatives  that  are  taking  place 
within  South  Africa  in  order  to  implement  these  principles. 

Senator  Heinz.  Now  a  number  of  U.S.  companies^ndeed,  I'm 
told  more  companies  than  not — do  not  participate  in  the  Sullivan 
principles.  The  ones  that  do  participate  cover  the  mtyority  of  work- 


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465 

ers.  The  ones  that  don't  are  more  numerous  as  entities  but  have 
the  minority  of  workers. 

Do  you  believe  that  the  companies  that  do  not  participate  in  the 
Sullivan  principles  should  be  required  to  do  so  by  law? 

IMPACT  OP  SUUJVAN  PRINCIPLES  BY  LAW 

Reverend  Sullivan.  I  absolutely  believe  all  United  States  compa- 
nies doing  business  in  South  Africa,  if  they  remain,  must  be  re- 
quired and  should  be  required  to  do  so  by  law. 

Senator  Heinz.  What  will  the  results  of  such  a  law  be?  Would 
you  anticipate  all  of  the  companies  now  there  in  fact  would  comply 
or  would  some  of  them  simply  close  up  and  leave?  You've  been 
there  many  times.  You  have  looked  into  this  on  many  occasions. 
What,  in  your  best  judgment,  would  be  the  likely  outcome  of  that 
requirement? 

Reverend  Suluvan.  Some  of  these  companies  will  close  up  and 
leave.  Some  will  aggressively  follow  through  on  the  implementa- 
tion of  these  principles,  and  I  believe,  through  their  efforts,  will 
make  up  for  those  who  leave. 

Senator  Heinz.  Is  it  because  their  competitors  would  not  be  im- 
plementing anything  similar  to  the  Sullivan  principles  that  the 
companies  that  would  close  up  and  leave  would  do  so,  or  would  it 
be  just  because  they  don't  like  being  told  what  to  do? 

Reverend  Sullivan.  Many  companies  will  not  want  to  be  told  by 
the  Government  what  to  do  and  who  prefer,  rather  than  to  risk 
this  kind  of  relationship  with  Government,  would  take  the  side  of 
leaving.  Some  would  leave  because  to  live  up  fully  to  the  Sullivan 
principles  takes  away  a  lot  of  profit.  It  means  salaries  must  be  es- 
calated to  be  equal  to  white  workers.  It  means  that  support  must 
be  given  to  the  development  of  schools,  health,  and  education  pro- 
grams. It  means  that  they  must  assume  a  cost  far,  far,  far  beyond 
anything  companies  have  ever  had  to  assume  before. 

And,  therefore,  taking  it  all  in  the  picture,  there  are  many  who 
will  say  that  it  is  cheaper  to  leave  and  certainly  the  problems  will 
be  less  if  they  left. 

Senator  Heinz.  And  those  companies  that  now  do  subscribe  and 
implement  the  Sullivan  principles  do  pay  a  cost? 

Reverend  Sullivan.  All  companies  if  they're  subscribing  and 
supporting  the  principles  bear  a  cost  in  new  wages  first  to  black 
workers.  One  reason  I  initiated  the  principles  is  because  of  the 
cheap  labor  many  companies  for  100  years  or  200  years  from  Brit- 
ain and  other  places  have  been  going  to  South  Africa  and  they 
have  been  making  vast  profits  off  of  cheap  labor.  So  I  wanted  to  do 
away  with  that  cheap  labor  and  bring  equity  to  the  black  worker 
and  that  is  why  I  stand  so  strongly  behind  independent  free  black 
trade  unions  because  they  can  do  more  in  that  respect  than  I  can 
do  because  internally  they  can  collectively  bargain  for  equal  w^es 
and  see  that  they  come. 

But  the  effort  of  the  principles  takes  away  a  lot  of  that  extra 
profit  and  brings  them  into  line  with  the  kind  of  business  relation- 
ships and  profits  that  should  be. 

Senator  Heinz.  How  do  you  feel  that  the  Sullivan  principles, 
your  principles,  compare  to  other  national  codes  of  conduct  for 


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466 

their  companies  in  South  Africa,  if  there  are  any?  Are  the  Sullivan 
principles  unique?  If  they  are  not  unique,  are  they  stronger,  better, 
or  are  there  some  codes  of  conduct  that  in  fact  that  are  better  than 
ours? 

Reverend  Suluvan.  The  Sullivan  principles  are  the  forerunner 
of  all  codes  of  conduct  in  South  Africa  and  because  of  our  measure- 
ment criteria  and  because  of  the  process  of  the  evolving  nature  of 
the  principles  that  requires  companies  to  continue  to  strengthen 
their  implementation,  the  principles  are  stronger,  more  stringent 
than  any  equal  rights  codes  in  South  Africa  by  far. 

Senator  Heinz.  What  you  have  described  is  costly,  you've  de- 
scribed it  as  voluntary,  you've  described  as  effective.  What  resist- 
ance has  there  been  by  American  companies  to  subscribing  to  your 
principles? 

Reverend  Sullivan.  I  have  received  letters,  telephone  calls,  and 
visitations  from  companies  who  have  told  me  it  is  not  their  desire 
and  it  will  not  be  their  will  and  they  will  never  become  signatories 
to  the  principles  where  the  operations  are  determined  by  a  black 
preacher — I  mean,  by  a  preacher — or  by  anyone  else,  who  might  be 
telling  them  what  to  do.  I've  heard  from  companies  that  it's  not 
their  role  to  get  involved  in  matters  Hke  this  in  foreign  countries. 
It  is  their  role  to  do  business  as  business  and  it's  not  their  role  to 
get  involved  in  social  change  and  other  matters. 

REACTION  OF  SOUTH  AFRICAN  GOVERNMENT  TO  THE  PRINCIPLES 

Senator  Heinz.  Is  it  your  impression — I'm  really  going  to  ask  you 
a  two-part  question — first,  that  the  South  African  Government  en- 
courages any  of  these  companies  that  have  not  signed  up  to  the 
Sullivan  principles  to  indeed  not  to  do  so;  and  second,  going  a  little 
bit  beyond  that,  what  has  been  the  reaction  of  the  South  African 
Government  to  the  Sullivan  principles?  Have  they  resisted  it? 
Have  they  fought  it?  Have  they  objected  to  it?  What  has  been  their 
reaction? 

Reverend  Suluvan.  I  have  no  record  that  the  South  African 
Government  has  attempted  to  dissuade  American  companies  from 
becoming  voluntarily  connected  with  the  principles.  I  have  no 
record  of  that  at  all. 

I  do  know  that  when  I  began  the  initiation  of  the  principles 
there  was  a  sympathetic  receiving  of  these  principles  from  Govern- 
ment officials  when  they  began  because  perhaps  they  thought  that 
there  would  be  a  few  statements  and  perhaps  they  would  not  go 
very  far.  But  they  did  not  realize  that  these  principles  represented 
a  beginning  and  that  the  intent  of  these  principles  is  not  just  fair 
employment  practices,  but  the  elimination  of  apartheid.  And  now 
these  principles,  with  this  new  stronger  amplification,  requires  for 
companies  to  lobby  for  the  ending  of  all  apartheid  laws  and  to  get 
to  the  heart  of  the  influx  control  to  see  that  black  workers  have 
the  right  to  live  and  work  where  they  choose. 

So  at  this  point,  I  would  think  that  the  South  African  Govern- 
ment would  be  very  much  disturbed  about  my  direction  and  I  be- 
lieve particularly  these  sanctions  and  these  deadlines. 


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467 

Senator  Heinz.  Less  than  1  percent  of  all  the  black  workers  in 
South  Africa  are  fortunate  enough  to  work  for  a  company  that  sub- 
scribes to  the  Sullivein  principles,  a  very  small  fraction  at  that. 

How  about  the  other  99  percent  of  the  workers?  To  the  extent 
that  they — what  do  they  know  about  their  fortunate  few  brethren 
who  may  be  working  in  compfinies  covered  by  the  Sullivan  princi- 
ples and  do  they  believe  that  your  principles  in  fact  are  makini;  a 
difference  and  can  make  more  of  a  difference? 

Reverend  Sullivan.  I  am  certain  you  will  find  all  kinds  of 
shades  of  opinion  in  South  Africa  from  blacks  and  whites  pertain- 
ing to  the  principles  and  their  effectiveness.  I  am  sure  that  blacks 
who  are  not  working  at  all  will  say  that  it's  not  helping  at  all  be- 
cause nothing  is  helping  a  man  who  has  no  job.  And  certainly  they 
are  not  helping  persons  in  compfinies  where  they  are  not  being  im- 
plemented and  where  they  are  not  being  used,  certainly  outside  of 
American  companies. 

So  I  would  think  that  the  worker  in  the  plants  outside  of  Ameri- 
can companies  would  be  hopeful  that  strong  equal  rights  efforts 
would  be  implemented  within  their  own  work  environments. 

And  one  reason  the  principles  are  important,  in  spite  of  the 
small  number  of  blacks  in  proportion  to  the  total  work  force  work- 
ing in  American  companies,  is  because  they  are  a  lever  on  the 
other  companies  within  South  Africa  and  for  the  catalyst  that  they 
are  on  other  companies  in  South  Africa. 

It  was  5  years  ago  that  the  chairman  of  one  of  the  largest  corpo- 
rations in  South  Africa  visited  me  and  asked  what  they  could  do.  I 
asked  him  to  go  back  and  organize  a  consortium  of  10  companies  or 
fis  many  as  he  could  that  employed  1  million  workers  outside  of 
American  companies,  and  to  begin  the  implementation  of  the  prin- 
ciples in  their  spirit,  if  not  in  their  signatures. 

They  went  back.  This  was  done.  And  for  the  first  time  in  those 
companies  employing  1  million  workers,  desegregation  began.  Ef- 
forts b^an  toward  equal  pay  for  equal  work.  Registered  and  unreg- 
istered unions  for  the  first  time  began  to  be  recognized  and  b^an 
to  even  speak  out  against  apartheid  laws  as  oppressive. 

So  the  catalytic  effect  of  the  principles  goes  far  beyond  the  Amer- 
ican companies.  They  are  a  lever.  They  are  like  a  crowbar.  If  I  de- 
cided that  the  changing  of  the  practices  of  the  American  companies 
was  all  that  was  needed,  I  would  never  have  started  these  princi- 
ples because  it  would  have  been  an  illusion.  The  American  compa- 
nies' size  is  too  small  in  number  to  change  or  help  change  in  any 
proportion  South  Africa.  But  you  can  take  a  little  pick  and  if  you 
have  8  hammer  on  it  you  can  move  a  mountain  if  you  hit  it  at  the 
right  place. 

And  what  I'm  trying  to  do  with  these  American  companies  with 
a  pick  and  a  hammer  is  to  hit  them  at  the  right  place. 

Senator  Heinz.  Reverend  Sullivan,  my  time  has  expired,  but 
thank  you  for  such  direct  and  eloquent  answers  to  my  questions. 

Senator  Proxmire. 

Senator  Proxmire.  Thank  you,  Mr.  Chairman. 

I'm  delighted  we  could  hear  that  little  pick  and  hammer  story 
because  I  think  that  that's  a  good  analogy. 

One  trouble  with  your  principles— ana  I  think  they  are  excellent 
and  they  have  obviously  had  a  great  success  and  I  don't  know  any- 


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body  else,  anybody  in  the  country,  who's  had  principles  named 
after  them  as  you  have  named  after  you  that  have  had  this  kind  of 
remarkable  effect. 

But  a  difficulty  now  is  that  on  May  24  we  had  one  panel  of  four 
witnesses  here  and  three  of  the  four  were  gainst  the  Kennedy- 
Weicker  bill.  The  people  who  appeared,  as  I  recall,  were  for  the  vol- 
untary Sullivan  principles.  The  Sullivan  principles  were  fine,  just 
keep  them  the  way  they  are,  that's  all  they  said  we  have  to  do. 

Now  you're  Mr.  Sullivan. 

Reverend  Suluvan.  I  am  Leon  Sullivan.  I'm  it. 

Senator  Proxmire.  You're  the  author  of  the  Sullivan  principles. 
I'd  like  to  hear  how  you  feel  about  whether  Sullivan  principles  are 
enough  or  whether  we  should  do  more? 

Reverend  Sullivan.  Absolutely  not.  They  are  a  part  of  a  broader 
effort,  but  they  are  not  the  solution  to  the  ending  of  apartheid.  It  is 
important  that  there  be  sanctions,  embai^oes,  and  the  kinds  of  ac- 
tions that  are  embodied  in  the  Sullivan-Gray  Act — in  the  Kennedy- 
Gray  Act. 

Senator  Proxmire.  Well,  you  can  call  it  the  Sullivan-Gray,  too.  I 
think  Senator  Kennedy  would  be  delighted  to  have  it  called  the 
Sullivan-Gray  Act. 

Senator  Heinz,  I  don't  know  how  Senator  Weicker  would  feel  to 
be  removed  from  it. 

Reverend  Suluvan.  I  support  totally  the  Anti-Apartheid  Act  of 
1985  because  I  believe,  as  I  have  stated,  that  no  new  investments, 
no  new  bank  loans,  the  end  of  the  sale  of  the  krugerrand — I  think 
you  have  to  send  a  strong  message  and  I  think  the  ending  of  any 
materials  or  equipment  to  the  South  African  police  or  military — all 
these  are  essential  as  we  begin  to  bring  this  iceberg  down. 

But  I  do  think  that  the  mandating  of  the  principles  is  important 
because  all  American  companies  should  be  a  part  of  this  and  be 
measured  alike  if  they  remain  there,  and  for  one  other  reason,  Sen- 
ator Proxmire.  I  make  trip  after  trip  to  Europe.  I  have  been  to 
London.  I  have  been  to  France.  I  have  been  to  Germany.  I  have 
been  to  Denmark.  I  have  been  to  Sweden.  And  something  has  to 
happen  in  the  world  that  will  move  the  parliaments  of  the  world  to 
require  that  companies  from  their  nations  aggressively  follow  equal 
rights  principles  in  South  Africa. 

"There  is  more  patience  with  South  Africa  in  Europe  than  there 
is  in  America.  There  is  not  the  desire  for  change  in  Europe  as 
there  is  in  America.  And  America  must  take  the  lead.  And  what 
the  United  States  Congress  does  will  have  an  effect  on  every  parlia- 
ment of  the  world  and  I  am  hoping,  too,  that  it  will  have  an  effect 
on  the  Japanese  Parliament  because  the  Japanese  take  up  where 
others  leave,  and  if  they  take  up  where  others  leave,  I  say  either 
they  must  practice  equal  rights  in  South  Africa  when  they  take  up 
or  we  should  not  have  their  commodities  in  America.  I  think  we 
should  get  tough  with  the  Japanese,  too.  Amen. 

HIGH  RISK  OF  BLACK  UNEMPLOYMENT 

Senator  Proxmire.  One  of  the  arguments  being  used  by  the  oppo- 
nents of  the  Kennedy-Weicker  bill  is  that  somehow  it  will  result  in 
the  loss  of  jobs  by  those  blacks  employed  by  Americeui  firms  and 


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it's  harmful  to  the  black  community  in  South  Africa  and  thus  they 
argue  the  blacks  in  South  Africa  oppose  its  provisions. 

Since  Kennedy-Weicker  is  not  a  disinvestment  bill,  I  fall  to  see 
the  logic  in  their  argument.  Nonetheless,  it's  being  made. 

Now  as  one  very  familiar,  as  you  are,  with  the  situation  in  South 
Africa,  we  would  benefit  from  your  views  on  this. 

No.  1,  would  Kennedy-Weicker  if  enacted  cause  blacks  employed 
by  American  firms  to  lose  their  jobs  and  would  it  help  or  aid  the 
situation  of  blacks  in  South  Africa? 

Reverend  Suluvan.  I  think  the  Kennedy-Weicker-Gray  bill, 
whatever  it  is,  talks  about  no  new  investments.  I  think  it  talks 
about  businesses,  whatever  they  do,  doing  it  out  of  their  own  re- 
sources. Businesses  who  will  stay  will  continue  to  employ  black 
workers  and  the  fact  is,  those  who  leave  will  be  bought  up  by  some- 
one else.  So  you  will  still  have  jobs. 

I  think  that  the  weight  on  the  side  of  the  Americans  to  be  there 
is  that  there  is  no  other  unified  effort  in  the  world  that  is  pushing 
for  equal  rights  like  the  Americans.  And  therefore,  they  should 
stay  there  as  long  as  possible  in  order  to  push  for  the  ending  of 
apartheid  if  they  occur  within  this  deadline. 

The  second  concern  I  have  in  terms  of  the  black  worker  and 
what  happens  even  if  he  stays  on  the  job  and  why  it's  important 
that  apartheid  be  ended  and  influx  control  be  ended  and  why  the 
abolition  of  apartheid  is  so  important  is  that  the  m^ority  of  blacks 
in  South  Africa  are  still  very  poor  and  unemployed.  Those  who 
work  in  companies  are  still  the  minority. 

Therefore,  if  you  provide  opportunities  for  those  in  the  minority 
as  I'm  striving  to  through  equal  rights  codes,  they  will  move  fur- 
ther and  further  ahead,  which  I  recognize  and  applaud,  but  the 
vast  number  of  blacks  still  remains  stagnant  because  of  the  struc* 
tured  discriminatory  form  of  apartheid  that  requires  people  to  live 
in  homelands,  that  requires  the  people  not  to  be  able  to  move  or 
work  where  they  choose,  that  relegates  them  to  lower  forms  of  edu- 
cation so  they  cannot  compete  adequately  in  the  job  market — these 
forces  of  deseparation  that  make  this  big  block  of  poor  unemployed 
people  remain  stable  while  others  advance — and  that  is  why  the 
system  has  to  be  ended,  so  that  people  have  the  freedom  to  move, 
because  the  system  that  restricts  them  helps  them  to  move  closer 
to  those  that  have. 

Senator  Proxmire.  I'd  like  to  Eisk  Mr.  Lacovara,  if  he  would,  if  he 
would  come  forward  and  sit  at  this  microphone  right  here.  I  want 
to  ask  Mr.  Lacovara  a  question. 

ECONOMIC  SANCTIONS  ADVOCATED  BY  ABA 

I  note  on  page  6  of  the  statement  of  the  American  Bar  Associa- 
tion that  you  believe  that  many  of  the  features  of  S.  635 — that's 
the  Kennedy-Weicker  bill — are  consistent  with  the  principles  gov- 
erning economic  sanctions  advocated  by  the  ABA. 

Now  people  argue  against  those  types  of  sanctions  on  the  basis 
that  they  will  only  make  the  South  Africans  more  resistant  to 
change. 


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470 

Thus  I  note  with  satisfaction  your  statement  on  page  3  of  your 
testimony  that  you  believe  that  sanctions  can  be  effective  in  induc- 
ing nations  to  conform  their  conduct  to  international  legal  norms. 

Can  you  tell  us  whether  and  why  you  believe  that  the  economic 
sanctions  in  S.  635  might  be  efTective  in  inducing  South  Africa  to 
change  its  apartheid  system? 

Mr.  Lacovara.  Senator,  I  will  be  happy  to  answer  youj  question. 

The  American  Bar  Association's  position  supporting  sanctions 
against  the  South  African  Government  rests  on  two  premises.  One 
is  the  empirical  premise  that  sanctions  generally  work  in  legal  af- 
fairs and  we  think  that  sanctions  directed  by  the  United  States 
Government  at  a  major  trading  partner.  South  Africa,  are  likely  to 
work. 

That,  however,  is  only  half  the  basis  for  the  American  Bar  Asso- 
ciation's support  for  mandatory  economic  sanctions  zigainst  the 
South  African  Government.  The  other  part  is  the  importance  of  the 
United  States  maintaining  its  moral  leadership  position  in  the 
world.  Regardless  of  whether  South  Africa  will  respond  favorably 
to  sanctions,  as  we  hope  it  will,  we  think  it  is  essential  for  our 
Nation  to  draw  the  line  between  the  rule  of  law  and  lawlessness. 
We  should  not  provide  economic  support  for  a  regime  that  en- 
shrines this  hateful  system  in  its  own  l^al  system. 

So  although  we  have  some  degree  of  confidence  based  on  our  ex- 
perience as  lawyers  that  sanctions  work  to  a  greater  or  lesser 
degree,  we  don't  necessarily  expect  that  these  sanctions  alone, 
without  the  kinds  of  things  that  Reverend  Sullivan  is  talking 
about,  will  cause  the  dismantling  of  the  apartheid  system  over- 
night. Nevertheless,  we  think  the  expectation  that  sanctions  will  be 
effective,  coupled  with  this  strong  moral  principle,  combine  to  lead 
us  to  support  the  congressional  imposition  of  sanctions  against  the 
South  African  Government. 

Senator  Proxmire.  Thank  you  very  much. 

Mr.  Sullivan,  we  have  also  in  this  bill  a  requirement  that  the 
President  engage  in  negotiations  to  try  to  persuade  other  countries 
to  cooperate  with  us  in  exercising  economic  constraints  on  South 
Africa  to  get  rid  of  their  apartheid  system  and  we  ask  the  Presi- 
dent to  report  to  us  annually  on  such  negotiations. 

Do  you  think  that  can  be  elfective?  One  of  the  criticisms  of  our 
wheat  embargo  of  the  Soviet  Union,  when  they  invaded  Afghani- 
stan, was  that  nobody  else  paid  any  attention  to  it  and  it  didn't 
have  much  effect.  Do  you  think  if  the  President  is  vigorous  in  this 
respect  that  he  can  persuade  other  countries  to  cooperate  in  a  way 
that  can  make  this  really  effective? 

Reverend  Suluvan.  I  believe  that  if  the  President  of  the  United 
States  is  vigorous  enough  and  committed  to  that  effort  that  he 
could  indeed  persuade  others,  particularly  the  Western  powers,  to 
become  more  strident  In  their  efTorts  against  apartheid  and  to 
move  toward  the  abolition  of  apartheid. 

Senator  Proxmire.  In  your  visits  in  Europe  and  elsewhere,  did 
you  get  the  feeling  that  there  was  a  willingness  on  a  part  of  a  sub- 
stantial and  significant  part  of  the  people  there,  people  in  power,  to 
act  with  respect  to  South  Africa  and  follow  our  lead  if  we  move? 


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APATHY  IN  EUROPE 

Reverend  Sullivan.  I  have  got  a  feeling  that  some  persons  in 
leadership  roles,  particularly  in  parliaments,  would  be  willing  to 
£iggressively  act  if  the  U.S.  Congress  acted.  But  there  is  an  apathy 
in  Europe  regarding  South  Africa  like  you  would  never  believe. 
You  do  not  have  the  divestment  efforts  and  you  don't  have  the  free 
Africa  movement  and  you  don't  have  the  Sullivan  principles.  You 
don't  have  [>eople  like  me  and  you  and  others  up  here  who  are 
talking  about  freedom  for  people  in  Europe  as  we  have  it  in  the 
United  States. 

But  there  are  those  who  once  the  United  States  acts  will  then 
unquestionably  act.  I  met  with  labor  leaders.  I've  spoken  before  the 
International  Free  Trade  Labor  Union  organizations  in  Germany 
and  met  with  the  leaders  of  labor  organizations,  the  Labor  Con- 
gress in  the  United  Kingdom,  and  there  is  a  desire  on  their  part  to 
become  more  formidable  in  their  efforts,  but  the  apathy  is  still 
there.  But  this  action  from  the  U.S.  Government  will  lift  it  to  a 
point  of  world  consciousness,  particularly  in  Europe,  that  will 
prompt  the  Europeans  and  the  other  parliaments  and  governments 
to  move,  whereas  before  I  do  not  believe  they  will,  barring  a  holo- 
caust. 

Now  the  thing  that  will  happen  for  some  nations  to  move  is  for 
chaos  to  erupt.  Some  people  move  out  of  necessity.  I  am  saying  that 
it  is  possible  to  avert  that  chaos.  I  am  saying  that  it's  possible,  if 
we  act  and  move  now  deliberately  with  a  plan  to  avert  a  violent 
end  to  the  South  African  condition,  that  it  can  be  obtained  through 
nonviolence. 

Senator  Phoxmire.  Thank  you.  My  time  is  up. 

Senator  Heinz.  Senator  Sarbanes,  then  it  will  be  Senator  Riegle 
and  Senator  Hecht,  following  the  early  bird  rule. 

Senator  Sarbanes.  Thank  you,  Mr.  Chairman. 

Reverend  Sullivan,  I  join  the  others  in  welcoming  you  to  the 
committee  and  in  expressing  appreciation  for  your  very  strong,  elo- 
quent and  effective  testimony  as  well  as  for  your  long  standing 
leadership  on  this  issue. 

I  want  to  repeat  a  question  that  Senator  Proxmire  put  to  you, 
perhaps  in  a  somewhat  different  way,  because  I  think  it's  very  im- 
portant to  get  your  answer  clearly  on  this  record. 

There  are  some  who  use  adherence  to  the  Sullivan  principles  to 
preclude  moving  to  sanctions  such  as  are  contained  in  the  Kenne- 
dy-Weicker  bill.  They  maintain  an  either/ or  approach. 

I  take  it  that  you,  as  the  author  and  advocate  of  the  Sullivan 
principles,  reject  that  approach  and  see  the  Sullivan  principles  as 
part  of  a  larger  effort  which  also  embraces  support  for  sanctions. 
Would  that  be  correct? 

Reverend  Sullivan.  Yea.  I  see  the  effort  of  the  Anti-Apartheid 
Act  and  the  Sullivan  principles  as  complementary  toward  reaching 
our  ultimate  objective,  and  that  is  the  reason  I  strongly  go  on 
record  in  support  of  these  sanctions,  embargoes,  and  penalties. 

And  it  is  nothing  new  that  I've  said.  Senator.  I've  made  this 
statement  for  the  last  5  years. 

Senator  Sarbanes.  Second,  I  take  it  that  you  believe  that  if  there 
is  not  rapid  movement  to  dismantle  the  apartheid  system  the  sanc- 


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472 

tions  considered  should  go  well  beyond  those  provided  in  the  Anti- 
Apartheid  Act  of  1985;  is  that  correct? 

Reverend  Sullivan.  I  say,  Senator,  that  if  conclusive  action  does 
not  occur  in  South  Africa  with  its  Government  to  in  fact  end  legal- 
ly and  actually — that's  statu  tor  ially — the  system  of  apartheid 
within  the  next  24  months,  we  should  move  toward  a  total  United 
States  economic  embai^o,  even  to  the  withdrawing  of  our  diplomat- 
ic relations  and  the  withdrawal  of  all  American  companies  from 
South  Africa. 

Senator  Sarbanes.  Mr.  Chairman,  I  would  like  to  ask  Mr.  Laco- 
vara  to  come  to  the  table.  I  want  to  take  the  balance  of  my  time  to 
draw  him  out  on  the  American  Bar  Association  statement,  which  I 
regard  as  a  very  significant  statement.  Since  we  would  like  to  put 
some  additional  troops  in  the  trenches  alongside  Reverend  Sullivan 
here,  I'd  like  to  hear  from  Mr.  Lacovara. 

I'd  like  your  comments,  first  of  all,  on  the  Bar's  perception  of  the 
apartheid  system  and  what  they  find  so  repugnant  in  it,  and, 
second,  on  the  position  the  ABA  has  now  taken  as  to  what  we 
should  do  to  remedy  or  rectify  that  situation. 

Mr.  Lacovara.  I  will  be  pleased  to  respond  to  that  two-part  ques- 
tion. Senator. 

First,  we  have  asked  that  the  printed  record  of  these  hearings  in- 
clude the  ABA  report  that  was  before  our  House  of  Delegates  when 
it  adopted  its  resolution  in  February.  This  is  a  report  of  some  30 
pE^es  in  length,  copiously  footnoted,  describing  how  the  South  Afri- 
can system  of  apartheid  is  inconsistent  with  the  rule  of  law  that  is 
subscribed  to  by  all  civilized  nations  of  the  world.  It  is  based  on  the 
observations  of  an  ABA  delegation  that  went  to  South  Africa  last 
year,  the  testimony  of  others  and  the  various  legal  determinations 
by  international  Eigencies  and  by  our  own  State  Department. 

REPREHENSIBLE  APARTHEID  LAWS 

We  describe  in  the  report  the  variety  of  conditions  to  which  Rev- 
erend Sullivan  has  referred — the  homelands  policy,  for  example, 
the  forced  relocation  of  black  citizens,  the  attempts  to  denationalize 
South  African  blacks  and  the  pass  laws  that  restrict  the  ability  of 
black  South  Africans  to  travel  or  to  work  freely.  We  also  discuss 
the  various  internal  security  laws  that  are  of  special  concern  to 
members  of  the  legal  profession  because  they,  like  the  apartheid 
system  itself,  involve  the  perversion  of  the  concept  of  law  which  is 
supposed  to  be  for  the  protection  of  the  public  and  of  the  individ- 
ual. Under  the  South  African  legal  system  not  only  is  this  system 
of  racial  s^regation  enshrined  in  its  Constitution  and  statutes,  but 
all  of  the  forces  of  law  are  devoted  to  making  that  system  work, 
including  special  powers  given  to  the  police  and  the  Interior  Minis- 
try to  suspend  rights,  to  ban,  to  observe  all  of  the  kinds  and  forms 
of  repression  through  the  authorization  of  the  law  that  we  find  so 
detestable. 

These  are  the  conditions  that  led  the  American  Bar  Association 
to  determine  that  it  is  absolutely  fundamentiil  for  the  American 
Government  to  take  strong  action — through  the  imposition  of  sanc- 
tions— to  do  whatever  we  can  as  a  people  to  induce  the  South  Afri- 


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can  Government,  which  is  responsible  for  this  system,  to  b^in  to 
dismantle  it  as  promptly  as  possible. 

Turning  to  the  second  part  of  your  question,  Senator,  concerning 
what  specifically  the  ABA  proposes,  we  have  lesser  expertise  in 
fashioning  particular  sanctions.  However,  as  an  association  of  law- 
yers we  have  developed  a  series  of  guiding  principles. 

As  I  mentioned  in  response  to  Senator  Proxmire's  question,  we 
believe  generally  that  sanctions  directed  at  recalcitrant  parties  can 
be  effective.  We  have  suggested  in  our  prepared  statement  that  sev- 
eral principles  ought  to  guide  the  fashioning  and  implementation 
of  sanctions  that  the  subcommittee  should  recommend. 

The  first  of  these  is  that  the  sanctions  should  be  directed  at  the 
South  African  Government  because  it  is  the  Government  which 
has  implemented  and  which  continues  to  maintain  the  system  of 
apartheid  and  which  has  the  political  power  to  dismantle  it  if  it 
has  the  will  to  do  so. 

We  therefore  suggested  that,  regardless  of  the  possibility  that 
other  companies  or  nations  may  step  into  the  breach  if  the  United 
States  b^ns  to  ratchet  down  its  economic  support  for  the  South 
African  Government,  nevertheless,  we  should  do  what  we  are  capa- 
ble of  doing  now  to  register  our  repugnance  of  apartheid.  Thus  we 
should  at  least  cease  further  economic  support  for  the  South  Afri- 
can Government  and  cease  providing  some  of  the  instruments  that 
are  used  by  that  Government— the  military  and  the  police— for  the 
implementation  of  this  system,  particularly  in  the  etrea  of  high 
teomology  and  computer  support. 

Senator  Sarbanes.  This  is  a  position  officially  adopted  of  the 
ABA,  is  that  correct,  by  the  House  of  Delegates? 

Mr.  Lacovara.  Yes,  sir,  this  is  the  official  position  of  the  ABA. 

Senator  Sarbanes.  This  is  the  first  time  the  ABA  has  taken  a 
position  on  this  issue? 

Mr.  Lacovara.  On  apartheid,  yes,  sir.  We  have  other  positions 
on  international  human  rights,  but  this  is  the  first  time  the  Ameri- 
can Bar  Association  has  specifically  addressed  the  question  of  sanc- 
tions against  South  Africa. 

Senator  Sarbanes.  And  this  ABA  position  is  premised  in  part  on 
the  extensive  report  which  you've  submitted  along  with  your  state- 
ment which  I  assume,  Mr.  Chairman,  would  be  included  in  the 
record. 

Senator  Heinz.  Yes,  without  objection. 

Mr.  Lacovara.  That  is  correct,  Senator. 

Senator  Sarbanes.  Mr.  Chairman,  it's  been  asserted  that  if  the 
United  States  acts,  the  action  will  be  meaningless  because  other 
countries  will  simply  move  into  the  breach. 

First  of  all,  I  think  there's  a  great  deal  to  what  Mr.  Lacovara 
says  when  he  asserts  that  we  ought  to  do  what's  right;  but  second, 
both  he  and  Reverend  Sullivan  have  strongly  underscored  the  lead- 
ership role  which  the  United  States  can  play,  and  the  impact 
which  it  can  have  on  other  countries. 

I  saw  just  a  few  days  ago  a  newspaper  report  that  Norway  is 
moving  with  respect  to  the  South  African  situation  and  that  the 
Norwegian  action  followed  on  the  heels  of  action  taking  place  here 
in  the  Congress,  and  in  fact  the  passage  of  legislation  in  the  House 
of  Representatives. 


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474 

The  French  Prime  Minister  just  last  week  stated  that  France 
will  not  be  able  to  continue  its  investments  if  in  the  next  18  to  24 
months  definite  measures  are  not  taken  by  the  Government  of  Pre- 
toria to  end  the  practice  of  apartheid. 

Reverend  Sullivan.  That's  correct. 

Senator  Sarbanes.  As  Reverend  Sullivan  points  out,  a  strong, 
forceful  role — well,  let  me  put  the  question  to  you.  Do  you  feel  that 
a  strong,  forceful  role  by  the  United  States  would  result  in  other 
countries  following  the  U.S.  lead  and  taking  similar  action  them- 
selves with  respect  to  the  South  African  situation,  or  do  you  think 
they  would  instead  seek  to  fill  the  breach  and  simply  move  into  the 
economic  vacuum  that  would  be  created  by  the  American  action? 

Reverend  Sullivan.  I  think  the  action  of  the  U.S.  Government 
will  move  other  nations  and  parliEiments  in  the  direction  of  the 
action  of  the  U.S.  Government.  In  my  visits  to  Europe  on  occasions 
gave  me  that  confidence  that  it  would  happen.  I  believe  there  are 
those  that  are  waiting  for  the  solid  signal  of  the  action  of  the  U.S. 
Congress,  hopefully  followed  by  the  support  of  the  President  of  the 
United  States,  and  I  think  if  that  occurs  that  you  will  see  a  signifi- 
Cfint  move  across  the  Western  world  in  particular  with  respect  to  a 
stronger  push  for  the  endii^  of  apartheid. 

WINDOW  OF  FREEDOM  IS  OPEN 

And  may  I  say,  I  want  to  emphasize  the  ending  of  the  system, 
the  pulling  out  of  the  root.  This  is  not  to  say  you  still  don't  have 
problems.  We  still  have  problems  in  America  after  100  years  that 
we're  still  working  with.  But  the  window  of  freedom  must  be 
opened  and  that  allows  people  to  have  the  right  of  citizenship,  the 
right  of  political  equality,  and  the  right  to  move  and  work  where 
they  choose.  The  window  of  freedom  is  open  and  the  thing  we  want 
to  do  is  pull  the  law  out  at  the  roots  because  it  is  the  only  such  law 
in  the  world. 

I  have  personally  been  asked  why  I'm  so  involved  in  this  thing. 
It's  not  political.  I'm  not  running  for  anything.  First,  because 
apartheid  is  against  the  will  of  God.  That  s  where  I  am.  I'm  a 
preacher.  Second,  because  I'm  one  of  700  million  black  people  in 
the  world  and  we  can't  permit  it  to  continue  to  exist  in  this  world. 
Third,  because  millions  of  lives  will  be  lost.  In  case  a  racial  war 
starts  over  there,  it  will  become  an  ideological  war.  This  effect  will 
spread  across  Africa.  The  impact  will  be  on  every  major  city  on 
this  country  and  riots  will  occur  in  your  Harlems  across  this  coun- 
try and  North  Philadelphias  like  you  have  never  seen  in  the  histo- 
ry of  America  because  we  will  not  permit — I  will  not  permit  in 
Philadelphia  this  Nation  to  stand  beside  and  fight  with  a  govern- 
ment that  is  racist  and  against  black  people. 

Senator  Sarbanes.  Thank  you,  Mr.  Chairman. 

Senator  Heinz.  Thank  you. 

Senator  Riegle. 

Senator  Riegle.  Reverend  Sullivan,  we  have  marched  together 
before  on  OIC,  on  other  issues  and  civil  rights  struggles,  and  we  are 
marching  together  again  today  on  this  one.  I  want  to  thank  you  for 
the  tremendous  moral  force  you  bring  to  this  discussion  which  is 
really  what  has  to  drive  the  conscience  and  in  turn  drive  the  ac- 


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tions  of  this  Nation  and  other  nations  as  well.  When  you  just  made 
the  statement  as  to  why  you  feel  so  strongly  and  why  blacks  can't 
permit  this  to  continue,  these  are  really  the  same  reasons  why 
whites,  who  feel  the  same  way,  can't  permit  it  either.  So  you  are 
not  alone  in  that  feeling.  In  fact,  that  is  our  feeling,  and  a  feeling 
that  belongs  to  us  together. 

I  want  to  take  my  time,  but  I'm  going  to  yield  first  to  my  col- 
league so  that  he  might  go  ahead  of  me  because  I  know  he  has 
some  different  points  of  view  on  some  of  the  issues  that  he'd  like  to 
raise,  and  I  may  want  to  follow  along  and  go  through  some  of  those 
myself.  So,  if  he  has  no  objection,  I'm  going  to  let  him  go  next  be- 
cause I  know  he's  anxious  to  go  and  then  Til  follow  him,  if  I  may. 

Senator  Hecht.  Thank  you.  Senator  Riegle. 

Reverend  Sullivan,  when  our  chairman  asked  you  a  question  you 
mentioned  that  you  thought  that  the  Sullivan  principles  should  be 
a  part  of  the  law.  Whose  law?  The  U.S.  law  or  the  South  African 
law? 

Reverend  Suluvan.  Part  of  the  U.S.  law. 

Senator  Hecht.  These  companies  that  o^rate  in  South  Africa 
that  you  ask  to  adhere  to  the  Sullivan  principles,  do  they  adhere  to 
the  Sullivan  principles  in  total  in  America? 

Reverend  Sullivan.  If  the  SuUivEui  principles  were  applied  to 
companies  in  the  American  setting,  do  they— — 

Senator  Hecht.  In  other  words,  you're  asking  the  companies  in 
South  Africa  to  adhere  to  standards  that  we  do  not  require  them  to 
adhere  to  in  America. 

Reverend  Sullivan.  We  have  equal  rights  acts,  the  Civil  Rights 
Act  of  1965,  but  beyond  that,  we  have  an  Emancipation  Proclama- 
tion that  frees  Americans.  We  have  a  Constitution  that  embodies 
the  rights  of  all  Americans.  They  have  the  privilege  to  decide  those 
who  would  govern  over  them.  We  do  not  have  written  into  the  stat- 
utes of  America  the  deseparation  of  the  races  constitutionfilly. 
There  is  no  other  place  that  it  exists  on  Earth. 

Therefore,  to  attempt  to  relate  America  to  South  Africa  does  not 
meet  the  semblance,  I  think,  of  an  actuality  of  a  humanitarian,  or 
a  legal,  or  a  constitutional,  or  a  national  condition. 

Senator  Hecht.  But  is  it  not  hypocritical  for  us  in  Congress  to 
mandate  certain  principles  for  an  American  company  to  follow 
when  it  operates  outside  the  United  States  and  yet  not  require  the 
same  principles  of  doing  business  in  America? 

Reverend  Sullivan.  We  can  mandate  the  efforts  of  companies 
from  America  other  places  because  those  companies  are  licensed  le- 
gally to  operate  by  America,  and  by  those  licenses  and  by  that 
Erivilege — companies  operate  by  privileges.  The  privileges  are 
eing  a  part  of  the  United  States  and  that  license  lets  them  oper- 
ate here  and  elsewhere  in  the  world  on  the  basis  of  that  privilege. 

Senator  Hecht.  I  don't  have  all  the  Sullivan  principles  in  front 
of  me,  but  obviously  these  same  companies  do  not  strictly  adhere  to 
these  principles  in  America.  Do  you  agree  with  that? 

Reverend  Sullivan.  I  agree  with  that.  The  fact  is,  if  the  Sullivan 
principles  were  applied  totally  by  all  American  companies  in  terms 
of  the  utilization  of  its  resources  and  the  total  initiation  of  its  prac- 
tices, it  would  mfike  a  tremendous  impact  on  the  economic  and 
social  development  of  this  country. 


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MANDATE  DOUBLE  STANDARD 

Senator  Hecht.  Well,  let's  get  back  to  the  original  question.  Do 
you  think  it's  right  for  the  American  Congress  to  prescribe  certain 
conditions  outside  of  America  and  not  require  the  same  conditions 
in  America  regarding  a  single  company? 

Reverend  Suluvan.  Yes,  at  this  point,  because  in  America  we 
have  the  Civil  Rights  Act  and  we  have  the  initiation  of  the  Con- 
gress that  is  on  record  and  we  have  a  Constitution  of  the  United 
States  that  protects  the  rights  £uid  the  privileges  of  people  in  move- 
ment and  the  work  on  the  part  of  this  country  that  does  not  exist 
in  South  Africa  for  the  meyority  of  its  population.  Therefore,  Amei^ 
ican  companies  operating  at  the  privilege  of  the  American  Nation 
should  initiate  these  kinds  of  equal  rights  principles  or  else  they 
should  be  deterred  from  that  operation  as  AmericEUi  companies. 

Senator  Hecht.  Let's  take  principle  No.  6,  "Improving  the  qual- 
ity of  employees'  lives  outside  the  work  environment  in  such  areas 
as  housing,  transportation,  schooling,  recreation,  and  health  facili- 
ties." That  is  what  you  want  to  require  of  an  American  compimy 
doing  business  in  South  Africa,  and  they  do  not  do  it  in  America. 

Reverend  Suluvan.  I  think  the  action  of  the  Congress  with  re- 
spect to  the  eiTorts  of  companies  in  dealing  with  housing  and  edu- 
cation outside  of  the  workplace  would  be  a  worthy  consideration, 
but  my  interest  is  an  inhumane  state  of  condition  in  a  part  of  the 
world  where  American  companies  operate  where  the  rights  of  indi- 
viduals are  abridged  because  of  a  God-given  color  of  their  skin. 

Senator  Hecht.  I'm  not  an  attorney,  I'm  one  of  the  few  Members 
of  Congress  who  is  not  an  attorney,  but  I  question  the  constitution- 
ality of  such  a  law.  How  do  you  feel  about  that? 

Reverend  Sullivan.  I  think  it's  constitutional  for  the  U.S.  law  to 
not  only  permit  but  to  encourage  the  efforts  of  U.S.  companies  to 
initiate  humanitarian  ideals  and  causes  and  aims  when  they  are  in 
conformity  with  the  ideals  of  our  American  Constitution. 

I  do  not  separate  the  American  Constitution  or  the  American 
Nation  to  a  geography;  that  is,  to  a  continent — that  is,  to  this  par- 
ticular place.  I  think  wherever  American  presence  is,  it  should  rep- 
resent what  America  is,  and  America  should  stand  for  equal  rights 
and  principles  of  humanity  wherever  it  is,  institutionally,  as  com- 
panies and  even  as  individuals. 

Senator  Hecht.  How  can  we  have  allies  around  the  world  when 
we  prescribe  principles  outside  of  America  but  do  not  prescribe 
them  in  America? 

Reverend  Sullivan.  I  think  your  allies  for  America  in  the  future 
will  come  more  strongly  as  we  need  it  and  deserve  it  on  the  basis 
that  we  exercise  our  ability  to  help  poor,  underprivileged  people  in 
developing  nations  of  the  world.  And  I  believe  that  if  we  do  not, 
the  time  will  one  day  come  when  free  enterprise  and  the  very 
things  we  hold  dear  will  be  taken  away  from  us. 

Senator  Hecht.  Go  on.  Explain  that. 

Reverend  Sullivan.  I  think  that  the  world  itself— and  I'm  just  a 
preacher,  I'm  a  Baptist  preacher 

Senator  Hecht.  I'm  just  a  businessman. 

Reverend  Suluvan.  I  think  the  world  is  at  the  crossroads  in 
terms  of  free  enterprise,  in  terms  of  capitalism,  in  terms  of  our 


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477 

way  of  life  and  how  we  deal  with  other  peot^e  of  the  world  and 
how  they  deal  with  us,  and  I  think  there  is  a  skepticism  in  much  of 
the  world  eibout  American  principles,  not  because  the  principles 
are  not  there  in  our  Constitution,  but  the  principles  are  not  there 
in  our  actions.  And  I  believe  that  much  of  this  world  is  waiting  for 
America  to  demonstrate  its  Constitution  on  the  basis  of  its  actions 
£md  those  actions  must  be  demonstrated  in  those  parts  of  the  world 
where  there  is  injustice,  where  there  is  poverty,  and  where  people 
are  waiting  for  something  to  happen  to  turn  their  condition 
around. 

If  it  does  not — because  I  said  we  are  at  a  very  important  time  in 
the  world — I  believe  that  socialism  and  I  believe  that  communism 
will  more  imd  more  gain  strength  in  this  world  until  America  and 
a  few  European  countries  will  be  isolated  as  entities  on  this  Earth, 
and  the  final  battle  for  your  existence  will  be  one  that  we  might 
well  lose  because  the  population  of  this  world  still  is  poor,  still  is 
nonwhite,  still  is  striving  for  opportunity,  and  they  are  waiting  for 
us  to  demonstrate  our  commitment  to  what  we  say  we  believe.  And 
they  are  saying.  Practice  what  you  preach,  not  only  at  home  but 
where  they  are;  and  if  you  don't,  one  day,  step  by  step,  country  by 
country,  continent  by  continent,  they  will  turn  against  us  and  they 
could  well  destroy  us. 

Senator  Hecht.  Getting  back  to  what  you  said,  don't  you  think 
we  would  breed  skepticism  among  the  world  requiring  something 
outside  of  America  that  we  don't  require  here?  I  just  want  to  follow 
through  on  that.  You  have  not  answered  me  on  that. 

Reverend  Sullivan.  I  think  if  you  mandate  against  continuation 
of  apartheid,  you  will  have  more  friends  to  support  that  initiative 
than  you  could  ever  dream  existed.  I  believe  you  will  have  friends 
within  South  Africa,  white  friends  within  South  Africa,  Afrikaners 
within  South  Africa. 

When  I  announced  a  deadline  several  weeks  ago,  there  was  great 
consternation  in  America  with  some  of  my  company  friends  and 
others  that  I  had  painted  myself  in  a  corner,  that  I'd  never  be  able 
to  walk  out,  that  the  people  in  South  Africa  would  never  receive  it, 
particularly  the  whites.  I  received  a  telephone  call  firom  a  member 
of  the  South  African  Parliament,  who  preferred  not  to  use  his 
name,  thamking  me  for  taking  the  position  because  it  would  give 
them  something  to  stand  upon.  There  are  friends  out  there  who  are 
welcoming,  looking  for  something  to  happen  to  break  the  logjam  in 
South  Africa,  and  1  believe  if  we  took  this  position  we'll  have 
friends  and  support  around  the  world  that  we  never  dreamed  we 
would  have  before. 

Senator  Hecht.  Tell  me  one  country  in  Africa  that  has  better 
conditions  for  the  blacks  than  South  Africa. 

Reverend  Sullivan.  All  of  them. 

Senator  Hecht.  Ethiopia? 

Reverend  Sullivan.  All  of  them. 

Senator  Hecht.  Ethiopia? 

Reverend  Suluvan.  All  of  them.  Senator,  because  conditions  are 
not  dependent  upon  the  money  you  have  in  your  pocket.  It's  the 
freedom  you  have  in  your  mind.  It's  the  realization  that  even  if 
you're  poor,  one  day  your  children  can  have  a  farm;  that  even  if 
you're  uneducated,  that  one  day  your  children  can  have  Em  educa- 


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tion;  that  even  if  there's  no  school  in  your  village,  that  one  day 
your  children  will  have  a  school  in  their  village;  and  that  although 
you  are  illiterate,  one  day  your  child  can  be  president  of  the 
nation.  It  is  the  freedom.  It  is  not  the  money.  It  is  not  material 
things  that  makes  a  person  free  or  that  makes  a  person  rich  or 
that  makes  a  person  proud.  It  is  the  freedom  in  their  minds  that 
they  are  free  as  individuals  made  of  God  to  live  and  work  where 
they  choose,  whether  they  make  it  or  not. 

That's  the  difference  between  black  Africa,  where  you  talk  about 
desiwts  and  where  you  talk  about  the  problems  of  Uganda  and 
Ethiopia.  The  difference  is,  there,  a  man  can  still  hope  that  the  day 
will  come  when  his  child  can  be  president  of  that  nation.  It  might 
happen. 

Senator  Hecht.  My  time  is  up  but  I  want  to  point  out  one  thing. 
In  order  to  be  President  of  a  nation,  you  have  to  survive,  and  in 
Ethiopia  the  death  rate  and  the  dying  and  the  sickness  is  horren- 
dous. 

Reverend  Sullivan.  May  I  just  say  this? 

Senator  Hecht.  Yes,  and  then  my  time  is  up. 

Reverend  Sullivan.  May  I  just  add  one  thing? 

Senator  Hecht.  Yes. 

Reverend  Sullivan.  The  condition  in  Ethiopia  is  a  condition  that 
is  tied  to  the  tug  of  nations  and  powers  for  control  of  parts  of  the 
world,  and  whether  we  want  to  accept  it  or  not,  America  is  a  part 
of  that  tug  for  power.  And  to  the  extent  we  can  move  humanitarily 
to  help  those  people,  to  that  extent  we  show  that  we  are  on  the 
right  side  rather  than  on  the  wrong  side. 

Senator  Hecht.  Thzmk  you,  Reverend. 

Senator  Heinz.  Thank  you.  Senator  Hecht. 

Senator  Riegle,  I  think  you  still  have  some  time  left. 

Senator  Riegle.  Yes,  I  hope  so. 

Senator  Hecht.  Ten  minutes.  I  took  all  of  his  time. 

Senator  Sarbanes.  Would  the  Senator  yield  very  briefly? 

Senator  Riegle.  Yes,  1  yield  briefly  to  my  colleague. 

principles  adhered  to  in  united  states 

Senator  Sarbanes.  I  want  to  make  one  point  before  Senator 
Hecht  leaves,  as  the  one  lawyer  here  on  the  panel.  That  is  that  it  is 
not  accurate  to  say  that  the  Sullivan  principles  are  not  mandated 
in  this  country  and  that  we  are  trying  to  impose  somewhere  else 
what  we  don't  impose  on  ourselves. 

"Principle  1:  Nonsegregation  of  the  races  in  all  eating,  comfort, 
locker  rooms  and  work  facilities,"  clearly  required  by  American 
law. 

"Principle  2:  Equal  fmd  fair  employment  practices  for  all  employ- 
ees," clearly  required  by  American  law. 

"Principle  3:  Equal  pay  for  employees,"  clearly  required  by 
American  law. 

"Principle  4:  Initiation  and  development  of  training  programs 
that  will  prepare  blacks,  colored  emd  Asifins,"  in  effect,  nondiscrim- 
inatory training  programs.  That's  required  by  American  law. 


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"Principle  5:  Increasing  the  number  in  management  and  supervi- 
sory positionB,"  again  a  nondiscriminatory  application  to  manage. 
All  of  that's  required. 

Now  principle  6  which  says  they've  got  to  try  to  improve  the 
quality  outside  the  workplace  in  housing,  transportation,  schooling, 
recreation,  and  health  facilities,  is  made  necessary  in  the  South  ^- 
rican  context  because  the  Government  imposes  a  highly  discrimina- 
tory system  in  all  of  those  areas  and  has  a  two-tier  approach  in 
education  and  recreation  and  health  with  respect  to  their  white 
and  black  populations.  It's  not  necessary  to  mandate  that  for  corpo- 
rations in  this  country  because  the  law  in  this  country  mandates 
that  the  Government  must  practice  nondiscrimination  in  all  of 
these  areas  with  respect  to  all  American  citizens. 

So  1  don't, think  it's  fair  to  say  that  somehow  we  are  applying  a 
~4ouble  standard-  here.  CompEuiies  are  mandated-  in  this  country  to 
follow  these  practices,  and  to  the  extent  practices  outside  of  the 
workplace  are  involved,  it's  not  necessary  to  mandate  them  be- 
cause the  law  mandates  that  the  society  in  its  entirety  must  prac- 
tice nondiscrimination. 

Senator  Riegle.  Mr.  Chairman,  before  my  colleague  leaves 

Senator  Hecht.  May  1  just  answer  a  telephone  call  and  I'll  be 
rirfit  back. 

Senator  Riegle.  1  understand.  I  will  repeat  when  my  colleague 
comes  back  from  the  phone,  because  I  want  to  help  him  see  what 
we're  trying  to  say  here.  I'd  like  to  bring  him  to  our  point  of  view, 
-  although  that,  too,  is  a  long  journey.  But  I  think  that  one  really 
has  to  imagine  what  it  would  be  like  if,  rather  than  sitting  here  in 
our  own  individual  circumstances  as  a  successful  white  person  in 
America,  you  were  to  wake  up  the  next  morning  and  be  in  the 
body  and  in  the  circumstances  of  a  black  person  in  South  Africa. 

Until  a  Member  of  Congress  has  enough  knowledge  of  what  the 
reality  is  there  to  imagine  what  it  would  be  like  to  be  that  person, 
which,  as  you  said  earlier  today,  is  an  accident  of  fate  as  to  what 
body  we  happen  to  find  ourselves  in  or  what  place  on  this  globe  we 
happen  to  nnd-ourselves — it  seems  to  me  that,  as  you  say,  it's  not 
the  amount  of  money  that's  in  one's  pocket.  You  could  take  most  of 
the  Senators  and  if  they  were  suddenly  tomorrow  to  find  them- 
selves as  blacks  in  South  Africa  and  still  had  their  money,  the 
things  that  they  would  not  have  are  the  things  that  they  would  re- 
alize are  what  people  need  to  have.  And  it's  not  the  money. 

Reverend  Suluvan.  That's  right. 

Senator  Riegle.  It's  nice  to  have  the  money,  but  without  the  citi- 
zenship, without  the  standing  under  the  law,  without  the  ability  to 
be  a  person  in  the  full  sense  of  the  word  on  an  equal  standing  with 
any  other  person  in  your  country  and  in  your  nation,  your  money 
means  nothing.  It  just  means  nothing. 

Reverend  Suluvan.  Right- 
Senator  Riegle.  So  1  was  just  going  to  sav  to  my  colleague  from 
Nevada,  as  I  listened  to  that  exchange  today  and  previously  the 
other  day,  in  trying  to  make  sense  out  of  it,  I  was  just  saying  in 
your  absence,  that  I  think  the  only  way  we  could  really  understand 
what  life  is  like  for  a  black  person  in  South  Africa  would  be  if  we 
were  to  leave  our  own  circumstances.  All  of  us  in  the  Senate  I 
think  have  quite  favored  circumstances— but  if  we  went  to  bed  one 


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evening  and  we  woke  up  the  next  morning  and  we  were  black  and 
in  South  Africa  and  that  was  our  reality  we  could  more  fully  ap- 
preciate the  terrible  situation  they  are  in.  But  if  we  did  not  have 
the  other  things  that  we  enjoy  here,  things  that  the  blacks  in 
South  Africa  do  not  have,  such  as  the  standing  of  citizenship  on  an 
equal  footing  with  others,  or  the  chance  to  see  that  change  within 
one's  lifetime  or  even  within  one  child's  lifetime,  the  question  I 
think  is,  what  does  the  money  in  the  pocket  mean?  I'm  not  sure  we 
can  address  that  question  very  meaningfully  unless  we  try  to  imag- 
ine what  it  would  be  like  to  be  in  the  shoes  of  that  person,  which 
you  and  I  could  very  easily  be  but  for  the  accident  of  fate. 

FAMILY  OF  PEOPLE 

You  know,  you  had  no  more  to  do  with  landing  in  your  family 
than  I  did  landing  in  mine,  and  we  could  just  as  well  be  black  and 
be  in  South  Africa.  The  question  is:  Do  we  have  any  connection 
with  one  another?  I  think  we  do.  I  think  there  are  around  this 
globe  connections  between  people  and  that  we  are  really  a  family 
of  people,  regardless  of  the  color,  regardless  of  the  background,  and 
r^ardless  of  the  circumstance. 

So  I  want  two  things  for  the  South  Africans — money  in  their 
pocket  and  the  measure  of  decency  and  dignity  within  their  own 
land  so  that  they  can  live  as  full  human  beings  with  rights  that 
you  and  I  take  for  granted  and  would  never  for  a  minute  give  away 
for  all  the  money  that  we  may  have  in  our  pockets. 

So  that's  what's  missing.  "That's  the  part  of  the  equation  that's 
missing.  And  if  we  don't  see  that  and  if  we  don't  understand  it 
from  inside  the  experience  of  that  person,  then  I  think  Reverend 
Sullivan  is  right  when  he  says  that  we  are  headed  for  a  catastro- 
phe. The  catastrophe  is  occurring  now  in  the  sense  that  lives  are 
being  destroyed  and  ruined.  Hopes  are  being  destroyed  and  shat- 
tered. 

But  there  is  another  fate  coming.  The  catastrophe  is  going  to 
change  and  it's  going  to  turn  violent.  It  is  turning  violent,  and  that 
violence  may  not  be  contained  to  South  Africa  because  of  the  fun- 
damental questions  that  it  poses. 

So  I  think  what  he's  saying  to  us  is  something  we  have  to  hear 
and  we  have  to  try  to  understand.  So  when  you.  Reverend  Sullivan, 
talked  about  the  need  to  set  a  deadline,  it  would  help  me  and  I 
think  it  would  help  the  committee  if  you  gave  us  two  insights — one, 
what  life  is  like  today  in  South  Africa  for  that  black  person  that 
yearns  to  be  a  free  person  and  a  full  person;  what  is  that  life  like 
for  that  person  today,  whether  they  are  50,  or  60,  or  40,  or  30,  or 
10,  or  12  years  in  age — what  is  that  life  like  today? 

No.  2,  what  is  coming  down  the  road  in  12  months,  or  18  months, 
or  24  months,  or  whenever,  if  these  issues  are  not  dealt  with  along 
the  lines  that  you  have  described  here?  Help  us  understand  those 
realities. 

Reverend  Sullivan.  It  would  take  a  black  South  African  to 
answer  your  question.  I  am  a  black  American  and  even  I,  as  a 
black  American,  cannot  identify  with  the  problems  and  with  the 
despair  and  hopelessness  of  a  black  person  in  South  Africa. 


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481 

Let's  assume  a  person  who  must  live  in  a  certain  place  because 
he  is  black.  He  must  work  in  a  certain  place  because  he  is  black. 
His  child  must  go  to  a  certain  school,  if  he  goes  to  any  school  at  all, 
because  he  is  black.  He  must  leave  a  certain  town  by  a  certain 
time  because  he  is  black.  He  must  ride  on  a  certain  bus  because  he 
is  black.  He  cannot  have  due  process  of  law  because  he  is  black.  He 
can  be  picked  up  at  any  time,  any  place,  by  any  policeman  because 
he  is  black.  He  can  be  put  in  jail  and  left  there  until  he  dies  with- 
out a  trial,  without  a  jury,  without  a  judgment  because  he  is  black. 
He  has  no  ability  to  vote  because  he  is  black. 

He  looks  at  his  child  and  he  realizes  that  child  cannot  go  but  so 
far  except  in  that  black  situation  in  that  nation  of  such  prosperity 
where  so  many  nations  of  the  world  are  taking  riches  from  it  and 
material  things,  because  that  child  is  black. 

And  that  is  why,  if  apartheid  is  not  abolished,  with  the  rising  ex- 
pectations in  South  Africa,  with  20,000  and  30,000  people  coming 
out  in  funeral  marches  and  for  the  first  time  20,000  people,  30,000 
people,  50,000  people,  100,000  people  becoming  a  part  of  stay  away 
programs,  and  for  the  first  time,  black  leaders,  in  spite  of  perhaps 
the  loss  of  their  lives,  walking  in  protest  to  the  jailhouse  door  to 
say  that  we  need  the  dismantling  of  apartheid,  that  if  apartheid  is 
not  pulled  out  by  the  roots  within  the  next  24  months,  one  of  these 
townships  is  going  to  break  loose  and  20,000  or  30,000  or  40,000 
[>eople  are  going  to  surge  toward  those  urban  areas,  in  spite  of  who 
dies,  and  the  military  is  going  to  try  to  stop  it  and  hundreds  of 
people  are  going  to  be  kilted  and  the  sui^e  is  going  to  catch  on  like 
a  chain  reaction  across  that  country  and  it  cannot  be  contained  by 
the  police  and  the  military  with  its  force  will  come  down  and  the 
whole  thing  will  go  up  in  fire. 

OIL  SUPPLY  SITUATION 

You're  talking  about  a  situation  where  the  very  existence  of  a 
country  is  at  stake,  that  will  involve  not  only  a  country,  but  will 
involve  nations.  South  Africa,  as  you  know,  is  situated  so  that 
much  of  the  oil  supply  that  goes  to  the  rest  of  the  Western  World 
and  Central  America  must  come  down  and  around  the  Indian 
Ocean.  In  case  of  great  tragedy  and  chaos,  there  will  be  those  ships 
still  having  to  flow  because  we  need  that  energy,  we  need  that  oil. 
So  they  will  be  accommodated  by  the  fleets  of  their  nations.  They 
are  not  going  1,000  miles  off  course  into  the  ocean.  No  ships  have 
the  capability  of  doing  so.  They  have  to  come  around  the  Cape  of 
Good  Hope.  It's  a  strategic  necessity  that  oil  keeps  moving.  The 
minerals  you  can  do  without.  You  can  do  without  the  paladium. 
You  can  do  without  the  gold.  You  can  do  without  the  silver.  But 
you  can't  do  without  that  oil.  And  at  some  point,  there  will  be  a 
contact  between  nations  with  all  that  happening  there  and  you  will 
find  a  racial  war  becoming  an  ideological  war  and  you  will  find  the 
banning  of  a  situation  that  will  involve  all  of  Africa,  much  of  the 
Western  world,  and  that  could  become  the  beginning  of  an  atomic 
confrontation  in  that  part  of  the  world.  And  these  things  can 
happen  within  the  next  2  years. 


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482 

If  we  had  acted  on  Nazism,  you  would  not  have  had  the  holo- 
caust, but  we  waited.  Do  not  wait  on  South  Africa.  Act  now  be- 
cause if  you  don't,  America  and  the  world  will  r^ret  it. 

Senator  Riegle.  Thank  you  very  much. 

Senator  Heinz.  Reverend  Sullivan,  I  have  just  one  or  two  more 
questions.  I  had  a  few  questions  for  Mr.  Lacovara,  but  he  has  a  con- 
ference that  he  has  to  speak  at  in  5  minutes,  so  he  has  had  to 
leave. 

Let  me  just  ask  you  this.  You  had  in  your  remarks  a  very  inter- 
esting proposition  as  to  how  we  might  address  the  fact  that  the 
United  States  is  pretty  much  alone  right  new  when  it  comes  either 
to  taking  any  action  that  the  South  African  Government  can  read 
as  genuine  disapprobation  of  apartheid  or  any  codes  of  conduct  for 
companies  doing  business  in  South  Africa,  and  you  suggested  that 
it  might  be  desirable  for  the  United  States — and  I  think  you  par- 
ticularly had  some  thoughtful  words  to  say  about  Japan — that  it 
might  be  a  good  idea  for  the  United  States  to,  given  I  assume  some 
leeway  in  terms  of  time — but  subject  any  company  from  another 
country  doing  business  both  in  South  Africa  and  here  to  some  form 
of  economic  inconvenience  or  outright  retaliation  if  those  compa- 
nies from  that  country  did  not  somehow,  someway  have  a  program 
of  implementation  presumably  somewhat  similar  to  the  Sullivan 
principles. 

Do  I  understEind  your  proposition  correctly? 

Reverend  Sullivan.  Absolutely.  You  described  it.  There  are 
codes  for  Western  nations  out  of  the  European  parliament.  They're 
called  the  EEC  codes.  And  there  are  other  codes.  But  they  are  not 
codes  that  are  stringent  enough  to  really  prompt  the  companies  to 
significant  action.  "Hiere  is  no  disclosure  of  the  implementation  of 
the  codes  by  the  companies.  They  are  solvents.  They  are  palliatives. 
They  have  no  strength. 

And  it  seems  to  me,  because  most  of  these  countries  do  business 
in  the  United  States — all  of  them  do  business  in  the  United  States, 
and  many  of  these  companies  do  business  in  South  Africa,  that  we 
should  not  only  put  penalties  on  our  own  companies  for  compli- 
ance, but  so  that  our  companies — those  who  even  remain  in  compli- 
£ince  with  the  principles,  even  for  2  years,  should  at  least  be  com- 
petitive in  the  market  with  those  companies  from  other  nations 
who  otherwise  will  take  the  markets  and  take  over  when  they 
leave  out.  And  if  they  do  leave  out,  their  leeises  require  those  com- 
panies who  take  their  place  follow  the  stringent  codes  that  were 
promoted  by  the  U.S.  Government  through  the  Sullivan  principles. 

Senator  Heinz.  You  know,  in  all  the  debate  we  usually  have 
about — whether  it's  Sullivan  principles,  sEuictions,  bank  loans,  in- 
vestment, no  new  or  none  at  all,  the  issue  that  you  have  just 
spoken  to  often  gets  ignored.  It  is  often  assumed,  although  we  wish 
it  were  true,  that  if  the  United  States  does  something  everybody 
else  just  falls  right  into  place. 

That  is  not  to  say  that  we  can't  set  a  good  example  and  that  that 
example  does  not  have  some  impact.  But  you,  yourself,  have  named 
at  least  one  coimtry  that  you  somewhat  despair  of,  I  gather,  in  fol- 
lowing anybody's  moral  example,  namely  Japan;  and  they  are  not 
alone.  And  to  the  extent  that  we  place  additional  requirements  or 
burdens  or  disadvantages,  whatever,  on  American  companies,  I 


jOOgle 


think  it  would  be  a  very  good  idea  for  ub  to  seek  a  method  of  trying 
to  encourage  the  other  mutual  trading  partners  of  the  United 
States  in  South  Africa  to  do  likewise. 

NO  NEW  INVESTMENTS 

The  last  point  I  guess  is  one  that's  been  a  very  hot  issue  for  all  of 
us  and  it's  this.  I  am,  like  you,  to  say  the  least,  a  great  supporter  of 
the  Sullivan  principles.  I  think  they  have  done  a  remarkable 
amount  of  good.  I  think  we  should  statutize  them.  I  think  we  have 
to  give  them  greater  visibility.  I  think  we  have  to  find  methods  of 
gettii^  American  companies  to  step  up  to  the  line  and  actually  ob- 
serve them,  not  just  give  them  lip  service  either. 

At  the  same  time,  in  the  Anti-Apartheid  Act,  S.  635,  that  Senator 
Kennedy,  Senator  Weicker,  Congressman  Gray,  and  others  have  in- 
troduced, there  is,  as  you  know,  an  immediate  no  new  investment 
sanction. 

Reverend  Sullivan.  Yes. 

Senator  Heinz.  Now  it  can  be  waived  under  certain  circum- 
stfuices,  but  as  I  read  the  list  of  waiver  requirements  it's  probably 
stretching  it  to  imagine  that  immediately  the  no  new  investment 
requirement  is  goit^  to  get  waived  because  while  the  conditions 
are  good  conditions,  one  would  have  to  be  an  optimist  to  think  that 
you're  going  to  get  to  them  overnight,  and  it  has  always  troubled 
me  that  meritorious  as  taking  some  action  against  in  particular  the 
South  African  Government  may  be,  to  say  on  the  one  hand  to  com- 
panies, "Now  we  want  you  to  spend  more  money  to  implement  the 
Sullivan  principles,  but  on  the  other  hand,  we're  not  going  to  allow 
you  to  send  more  money  to  your  South  African  subsidiary,  that's 
investment,"  is  somewhat  inconsistent.  In  fact,  it's  not  somewhat 
inconsistent.  It's  got  to  be  inconsistent. 

And  I  wrestled  with  that  for  some  time  and  I  thought  I'd  just 
throw  the  ball  to  you  and  let  you  wrestle  with  it  for  a  while. 

Reverend  Sullivan.  It's  all  right.  I'm  a  wrestler.  I  have  wrestled 
with  it,  too,  because  I  have  been  concerned  about  black  workers 
and  I  wanted  to  be  sure  that  black  workers  continued  to  have  these 
opportunities  that  are  coming  more  and  more  as  a  result  of  the 
principles  largely,  and  as  a  result  of  the  United  States  compeuiy 
effort  that  is  unquestionably  the  forerunner  in  South  Africa  in 
helping  bring  about  industrial  race  relation  change. 

But  I  concluded  that  the  situations  as  they  are,  it  is  imperative 
that  the  industrial  leadership  of  South  Africa  and  the  Government 
of  South  Africa  realize  that  all  the  United  States  economic  expan- 
sion must  halt  and  that  American  presence,  whatever  it  is,  in  the 
economic  field  must  mark  time  until  we  can  see  the  extent  to 
which  the  South  African  Government  will  move  decisively  to  the 
end  of  all  of  our  efforts — the  opening  of  the  window  of  freedom  to 
the  black  population,  the  emancipation  of  the  black  people  through 
the  ending  and  the  abolition  of  apartheid  as  a  system. 

And  I  came  down  with  the  conclusion  in  my  own  mind  that  the 
bemefits  of  the  abolition  of  the  apartheid  system  at  this  time  are 
more  important  than  the  expansion  of  American  companies  or  any 
others. 


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484 

Senator  Heinz.  Do  we  have  any  reason  to  believe  that  the  no 
new  investment  bein  will  be,  on  top  of  banning  bank  loans,  stopping 
the  importation  of  krugerrands  being  the  main  other  sanctions — do 
we  have  any  reason  to  believe  that  that  is  the  make-weight  that 
will  actually  cause  something  to  happen  that  would  not  otherwise 
happen  if  we  do  the  first  set  of  sanctions  directed  to  the  South  Afri- 
can Government?  Because  it  seems  to  me  in  order  to  say — and  I'm 
not  talking  about  2  years  from  now.  I'm  talking  about  now.  In 
order  to  say  that  we  ought  to  have  a  no  new  investment  policy  for 
United  States  companies  in  South  Africa,  in  order  for  that  really  to 
be  worth  the  cost,  which  you  yourself  recognize — I  mean,  you  your- 
self just  from  what  I've  said  would  say,  "Well,  it's  not  going  to  be 
good  for  those  companies.  They  may  or  may  not  be  able  to  make  it. 
Some  will,  some  won't."  They  tend  to  be  the  more  capital  intensive 
companies  that  need  the  investment  more  than  others — that  it  is 
important  to  be  able  to  conclude,  with  reason,  that  after  you've  im- 
plemented the  ban  on  bank  loans,  the  ban  on  krugerrands,  the  ban 
on  the  computer  sales,  and  the  ban  on  anything  that  helps  the 
South  African  Government  or  its  police  force  repress  the  majority 
of  people  there  who  happen  to  be  black,  that  one  can  make  a  credi- 
ble case  that  somehow  that  isn't  going  to  be  enough  to  wake  up  the 
South  African  Government,  No.  1,  and  that  you  have  to  do  some- 
thing more;  and.  No.  2,  what  is  enough,  even  though  it's  very  limit- 
ed in  one  respect,  no  new  investment  to  American  companies,  is 
somehow  really  going  to  make  a  difference,  it's  going  to  tip  the 
scales,  and  that  that  is — while  there  may  be  a  lot  of  moral  force 
behind  it,  that  there's  also  going  to  be  sufficient  increment  of  polit- 
icsil  force  here  and  there  to  make  a  difference? 

You've  been  to  South  Africa  a  lot. 

Reverend  Sullivan.  Not  a  lot. 

Senator  Heinz.  You  know  it  better  than  any  other  member  of 
this  committee.  I  confess  myself  to  some  skepticism  as  to  whether 
that's  going  to  be  the  make-weight,  but  I  would  value  your  judg- 
ment. 

EFFECTS  OF  U.S.  POUCY 

Reverend  Sullivan.  No  new  investment  by  the  United  States 
will  not  be  the  tip  weight  in  itself,  but  the  effects  of  the  U.S.  Gov- 
ernment taking  this  initiative  will  cause  a  tip  weight  because  there 
is  no  question  but  that  the  leadership  of  the  United  States  will  be 
one  that  will  be  used  as  a  standard  for  others  to  follow  in  parlia- 
mentary actions  and  acts. 

The  other  factor  is  that  many  U.S.  companies  are  already  assum- 
ing a  policy  of  no  new  investment.  Many  of  the  companies  e^e 
saying  now  that  there  should  be  no  additional  risks  economically  in 
South  Africa,  and  that  will  continue  on  as  this  debate  gathers  be- 
cause it's  just  starting. 

This  2-year  deadline  is  going  to  cause  it  to  be  heightened  even 
more  because  it  comes  at  the  beginning  of  the  Presidential  debates 
and  South  Africa  must  become  a  part  of  that  debate.  The  2-year 
deadline  ends  at  that  point.  It  has  to  become  a  point  of  debate. 

So  you're  not  going  to  have  companies  making  great  expansion 
or  any  great  investment  at  any  rate. 


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485 

Then  you  must  remember  you  will  still  have  the  divestment 
movement.  You  will  still  have  stockholders'  resolution.  The  efTorts 
of  the  States  and  the  city  pension  funds  will  not  go  away.  The 
action  of  the  U.S.  companies  will  not  preclude  all  these  other  ef- 
forts going  on  in  America  and  in  the  world.  You  will  still  have  boy- 
cotts. 

What  America  is  saying  is  in  a  message  loud  and  clear,  that  this 
is  the  direction  that  must  be  taken  in  order  to  help  bring  down  this 
oppressive  regime.  And  I  think  that  you  will  have  more  friends  and 
support  within  South  Africa  than  you  would  ever  believe  because 
many  white  South  Africans,  Afrikaners,  are  hoping  for  something 
to  happen  for  them  to  hang  their  hats  on  so  that  they  can  get  on 
with  the  business  of  building  a  free,  prosperous  South  Africa.  Be- 
cause, when  apartheid  ends,  South  Africa  will  become  one  of  the 
most  prosperous  nations  in  the  world.  Businesses  will  exptmd 
beyond  their  expectation.  Half  of  all  the  noble  metals  in  the  world 
used  for  a  technolc^cal  age  are  in  South  Africa.  The  other  half  are 
in  Russia  and  the  Baltic  states.  And  if  South  Africa  sees  the 
wisdom  of  taking  that  root  out,  of  abolishing  it — they  have  already 
begun.  The  process  has  already  begun.  When  you  admit  blacks  into 
political  parties,  it's  already  begun.  When  you  recognize  free  black 
trade  unions  with  collective  bargaining  rights,  it's  already  begun. 
When  you  abolish  laws  against  mixed  marriages,  integrating  fami- 
lies in  the  bedroom,  it's  already  begun.  When  you  get  Government 
officials  talking  about  ending  influx  control,  talking  about  citizen- 
ship rights  for  blacks,  talking  about  black  political  participation,  it 
has  already  begun. 

When  you  get  people  in  South  Africa  saying,  "We  must  talk  to 
Nelson  Mendela,"  because  if  they  don't  talk  to  Nelson  Mendela 
there  will  be  no  resolution  of  the  problem,  you've  already  begun. 

And  those  forces  will  help  in  2  years  for  them  collectively  to  pull 
that  root  out.  That's  not  saying  that  the  problems  of  South  Africa 
will  disappear.  You're  going  to  have  black  communities  like  you 
have  Harlem,  black  communities  like  you  have  in  North  Philadel- 
phia, cities  like  you  have  the  District  of  Columbia.  And  we've  been 
free  for  200  years. 

But  the  importeint  thing  is  a  man  is  free  to  move  where  he  wants 
to  move,  to  work  where  he's  capable  of  working,  free  to  say,  "One 
day,  doggone  it,  I  can  be  President  of  this  country,  like  everybody 
else." 

Senator  Heinz.  I  can't  imagine  a  better  note  on  which  to  con- 
clude this  hearing.  Reverend  Sullivan,  thank  you  very  much. 

[Whereupon,  at  1:35  p.m.,  the  hearing  was  adjourned.] 

[Additional  material  supplied  for  the  record  follows:] 


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AS  Prepared  Coc  Delivery 


SOtlTHERH    AFHICA: 
TOWARD    AH    AMERICAN    COKS5NS0S 


ADDRESS    BY 


THE  HONORABLE  GEORGE  P.  SHULTI 


SECRETARY  C 


BEFORE  THE 


NATIONAL  PRESS  CL[ 


WASHINGTON,  D.C. 


TUESDAY,  APRIL  16,  1985 


EMBARGOED  UNTIL  DELIVERY,  SCHEDULED  FOR  APPROXIMATELY 

1:00  P.M.,  EST,  APRIL  16,  1985.   HOT  TO  BB  PREVIOUSLY  CITED, 

QUOTED  FROM,  OR  USED  IN  ANY  HAY. 


^y  Google 


487 

Huch  has  b«an  satd  in  [«c«nc  yaata  abouc  cha  naad  to 
[abulld  tha  national  consanius  in  foreign  policy  —  the 
consensus  chat  asaucas  continuity  and  pucposa  in  our 
diplomacy.   I  shaE«  that  viaw. 


ConsBnsus  doas  not  just  happen  apontanaously.   It  nuat  ba 
nuctucad,  like  a  garden;  it  grows  fcon  knowledge  and 
expaciancc.   consensus  should  be  a  positive  force:   He  need  to 
decide  what  wa  ace  foe  and  know  what  naana  ace  available  to 
achieve  ouc  goalsi  conaensus  cannot  ba  simply  a  nagatlva 
catalogue  of  what  we  aia  against.   And  we  will  achieve  neither 
consensus  noc  results  it  our  public  discoucse  is  siaply 
enotlonalf  ot  divocced  fcoM  facts  and  fcon  a  ceallstlc 
understanding  of  the  pioblans  at  hand. 

Today,  I  want  to  speak  about  an  acea  of  the  world  that  has 
become  a  focus  of  intecest  and  debater  and  where  both  our 
policies  and  the  cegional  realities  ace  too  often  nlsundecstood 
oc  even  distorted.   I  am  talking  about  southern  Xftlca. 

A  great  human  drama  is  unfolding  in  southecn  Africa,  as  new 
nations  struggle  for  stability  and  progress  and  as  South  Afcica 
Itself  confronts  the  necessity  of  internal  change.   This  drama 
has  crucial  implications  for  the  United  States.   The  region's 
future  touches  on  our  most  basic  moral  convictions  as  well  as 
our  interests  and  our  global  responsibilities  for  security  and 


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On  such  «R  iaau«  abov«  all/  a  nacional  < 
iBpacatlva.  On  a  queition  at   such  ovacwhalnlnq  ffloral, 
practical,  and  sccaceglc  significance,  oue  national  policy  oust 
ba  coherent,  considered/  and  effective.  We  simply  cannot 
afford  to  let  southern  Africa  becojne  a  divialve  donestic  issue 
—  tearing  our  country  apart,  rendering  our  actions  haphazard 
and  impotent,  and  contributing  to  the  ugliest  and  most  violent 


Equally  important  —  and  I  believe  this  deeply  —  the 
elaaenta  of  such  a  consensus  exist,  based  on  out  principles, 
our  goals,  and  our  capabilities.   Fev  Americans  today  would 
contest  that  ue  want  to  help  the  people  of  South  Africa  — 
black  and  white  —  build  a  just  society;  and  ue  want  to  promote 
peace,  freedom,  and  progress  throughout  southern  Africa.   Few 
Americans  would  contest  that  change  is  inevitable.  The  question 
now  being  debated  is:   How  beat  can  ue  help  South  Africans 
manage  that  change?  what  is  the  moat  effective  way  to  promote 
a  just  and  peaceful  outcome? 

Today  I  will  outline  the  analysis  and  the  facts  that 
underlie  our  strategy.   1  do  ao  with  confidence  that  Americans 
overwhelmingly  support  the  goals  of  racial  justice,  progresa, 
and  peaceful  change,  and  are  realistic  enough  to  judge  for 
themselves  what  policies  work  and  don't  work. 


» Google 


489 

So^iEhTB  African  R«alltl«« 


In  19S1.  th«  new  Rsagan  Adnlnistcation  four.d  In  southerr 
;ica  a  r«9lon  natkad: 


by  gtowtn^  cacial  tension  m  souch  Afrieat 


by  «acalatinq  ccoa«-bord«[  vlolenc«i 


by  Sovlac  and  Cuban  InCecventlon  In  the  reglonj 


by  atallad  nagotlations  for  the  independence  of 
Hanibla,  a  tetdcoEy  Illegally  ruled  by  Souch  Africa) 


by  govainmanca  that  wece  willing,  indeed  eagec.  to  aea 

the  United  States  undertake  an   effective  and  EorceCul 
diplonatic  cole. 

TO  play  such  a  cole,  we  had  to  take  into  account  hacd 
c«allties. 

The  first  reality  is  that  South  Africa's  denial  of 
political  Eights  to  the  country's  majority  —  apartheid  —  is 
not  only  moEally  indefenslblej  it  is  in  the  long  run 
unsustainable. 


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South  Mtic«'»  blacks  act  nakinq  thelc  votcea  heard,  aaying 
that  thay  ata  no  longac  willing  to  live  undct  a  system  that 
denies  tham  fair  political  participation;  both  demography  and 
econonica  are  on  the  side  at   those  challenging  the  old  order. 
The  key  psychological  breakthrough  will  cone  when  evaryona  in 
South  Africa  recognizes  that  change  is  comingi  then  the 
question  shifts  from  "whether"  to  "hoWi"  hn   upheaval  of 
bloodshed  and  destruction  would  be  a  nonstrous  tragedy  foE  all 
South  Africans  of  all  races. 

Second,  South  Africa  is  not  a  small  island.   It  is  a 
regional  powerhouse  endowed  with  vast  mineral  resources  and 
real  economic  might.   It  is  the  hub  of  the  entire  area's 
economy  and  Infrastructure.   The  bordering  states  — 
Mozambique,  Simbabwe,  Botswana,  Lesotho,  Swaziland,  Namibia  — 
and  even  countries  farther  away  such  as  Zambia  and  Zairei  are 
heavily  dependent  upon  South  Africa's  ports,  industries, 
railway  networks,  and  financial  institutions.   At  the  same 
tine,  South  Africa  needs  —  but  to  a  lesser  degree  —  the 
■arkets,  the  labor,  the  transport  systens  o£  Its  neighbors. 
Any  policy  which  Ignores  this  symbiotic  relationship  is  out  of 
touch  with  reality.  A  scenario  of  upheaval  in  South  Africa 
will  spell  disaster  for  its  neighbors. 


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But  Coi  iiuch  oC  tha  pasc  d«cada.  ctiis  intacdapcndence  has 
ft««n  sctained  by  hcstility  and  armed  conflict.   This  is  tha 
^hird  cealicy:   soucharn  ftfclca  has  been  a  region  of  conflict, 
^Itb  warfare  or  armad  dissldanca  of  one  forn  or  anothac  in 
South  Africa,  limbabwe,  Mozambique,  Namibia,  Lesotho,  and 
Angola.  A  senseless  cycle  of  cross-border  violence  increased 
In  ferocity  as  guerrillas  operating  from  the  black  states 
thrust  Into  South  Africa,  while  South  Africa  turned  on  its 
aeighbors  with  its  militacy  might  and  destabilizing  efforts. 

The  violence  has  provided  new  opportunities  for  our  global 
adversaries.   AAd  this  is  a  fourth  reality.   Today  thera  aca 
about  30,000  Cuban  troops  in  Angola,  along  with  Soviet  and  Bast 
European  advisers.   Soviet  aid  in  the  region  has  been  almost 
exclusively  military.   Our  adversaries  have  no  constructive 
stake  in  the  region,  seeing  rather  in  instability  their  best 
chance  to  expand  their  influence,   when  the  Soviets  and  Cubans 
intervene  in  a  part  of  the  world  far  from  their  borders,  we  had 

Independence,  as  well  as  the  global  balance.  The  peoples  of 
Africa  deserve  batter  than  the  bankruptcy  —  economic, 
political,  and  moral  —  of  the  Soviet  model.  Hore  and  more 
Africans  have  cone  to  look  to  the  United  States  and  the  West 
for  help  in  addraaaing  the  twin  challenges  of  regional  peace 
and  aconoBic  survival. 


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This  iaads  to  a  fifth  ceality  —  th«  i»poce«nce  of  the 
Aioedcan  role.  Of  coucs«  thec«  are  liwits  to  what  we  can  do 
directly.   Out  influance  ovsc  Issues  and  play«rs  Is  not  the 
detetninlng  factor  in  ttieit  actions.  Kevertheless,  we  ace  not 
without  potential  to  affect  events.  While  the  Soviets  can  fan 
conflicts  and  supply  the  implements  of  wac  to  pursue  them,  they 
cannot  produce  solutions.  That  peacemaking  role  can  only  be 
played  by  a  power  that  has  a  working  relationship  and  influence 
Witt)  all  the  parties,  including,  of  course.  South  Africa. 

1   have  devoted  some  tine  to  describing  the  broad  regional 
realities  because  the  regional  context  Is  all-important,   its 
many  dimensions  are  interrelated.  The  external  environment  has 
a  direct  bearing  on  the  situation  within  South  Africa]  a  white 
government  that  no  longer  sees  itself  as  besieged  from  outside 
its  borders  will  be  better  able  to  take  the  steps  it  must  to 
reform  its  own  society.   Conversely,  internal  upheavals  in 
South  Africa  can  spill  over  and  complicate  the  regional 
diplomacy.   An  end  to  cross-border  violence  is  essential  if  the 
surrounding  black  states  are  to  be  able  to  demote  their 
energies  to  economic  development  or  to  offer  less  tempting 
opportunities  to  Soviet  adventurism. 

From  the  outset,  the' Reagan  Administration  undertook  to 
help  Influence  the  process  of  change: 


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to  Bcctlerate  th«  p#«c«ful  svolution  in  South  Attica 
auay  ft:oin  apartheid;  and 

to  diminish  th«  violence  and  instability  that  threaten 
lives  and  livelihoods  throughout  th<  cegion. 

The  complexities  ace  daunting.   But  the  United  States  hat 
confconted  an  unsatisf actoiy  situation,  uocked  at  the  pcoblen 
with  cace  and  detetaiination,  and  achieved  a  good  neaaute  of 
progress.  There  have  been  ups  and  downs,  obstacles  and 
setbacks.   But  through  painstaking  diplomacy,  we  have  reached 
the  point  where  the  agenda  we  proposed  Is  accepted  by  all 
participants;  where  we,  not  the  Soviet  Union,  have  a  major  say 
in  helping  shape  the  region's  political  future.   There  is  now 

years.  There  has  been  more  reform  In  South  Africa  in  Che  past 
four  years  than  in  the  previous  thirty. 

The  gains  are  fragile.   Nonetheless,  a  process  of  change  is 
clearly  under  way  —  offering  hope  to  Africa's  peoples  if  we 
continue  to  show  responsibility  and  dedication  in  helping  them 
manage  that  process. 


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south  Afric* 

Lee  ma  start  with  the  centcal  issue  of  domestic  reform  in 
South  Africa,  in  pursuing  that  goal,  we  have  been  guided  by 
two  important  facts. 

First,  South  Africa  is  not  a  cloaed,  totalitarian  society 
in  which  the  govstnnent  controls  all  aspects  of  life,  all  means 
of  communication,  all  avenues  of  thought.  -  While  the  white 
nlnocity  dominates  Che  system,  there  is  In  that  system  a 
significant  degree  cf  openness  of  political  activity  and 
expression  —  a  generally  free  press,  an  Independent  judiciary, 
vigorous  debate  within  Che  governing  party  an-)  In  parliament, 
and  vocal  critics  of  all  viewpoints.  There  is  nothing 
comparable  in  the  Soviet  Union,   This  degree  of  openness 
reflects  the  fact  that  white  South  Africa  is  not  immune  to  the 
moral  influence  of  the  West;  indeed  the  white  community's 
desire  to  be  viewed  as  pare  of  the  Western  world,  and  its 
growing  recognition  of  the  need  for  change,  are  among  the 
grounds  for  hope  for  peaceful  change.  How  many  governments  in 
the  world  would  permit  ABC's  Hightline  program  to  set  up  shop 
for  a  week,  probe  and  dissect  the  country's  ills,  film  heated 
debates  between  government  leaders  and  their  most  ardent 
critics,  and  then  show  those  programs  to  its  people? 


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Sscond,  we  chose  to  focus  on  getting  tasulti. 
have  It  both  ways:  we  cannot  have  influence  with  people  iC  we 
tceac  them  as  mocal  lepers,  especially  when  they  ate  themselves 
beginning  to  address  the  agenda  of  change.  South  Afcica's 
neighbors  recognise  this.  We  must  too. 

By  the  same  token,  this  has  not  kept  us  fcom  speaking  out 
—  to  South  Africans  oE  all  races  and  to  the  Junerican  people. 
Ha  have  conveyed  the  message  to  the  South  African  Covecnment 
that  a  more  constcuctlve  relationship  with  the  United  States  is 
possible,  pcovided  that  it  demonstrates  a  sustained  commltRient 
to  significant  reform  toward  a  more  Just  society: 

He  have  consistently  called  for  an  end  to  apartheid] 

He  have  spoken  out  forcefully  for  press  freedom  and 
against  repressive  measures  such  as  forced  removals, 
arbitrary  detentions,  and  banningst 

we  have  called  for  political  dialogue  between  blacks 
and  whites  and   for  an  end  to  Nelson  Mandela's  long 
imprisonment; 

With  our  support]  U.S.  businesses  have  become  a 
positive  force  for  change  in  South  Africa  by  adopting 
the  Sullivan  code  of  faic  labor  employment  practices 
and  by  providing  educational,  housing  and  other 
benefits  worth  more  than  $100  million  to  their  black 
•nployaes  over  the  past  few  yearst  and 


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496 

H«  h«v«  davaloped  nearly  $30  million  In  assistanca 
progcams  to  train  leaders  in  the  black  community  co 
help  them  vork  more  effactively  Cor  change  in  cbeir 

The  truth  is  that  South  Africa  ia_  changing.   Por  the  moaC 
parti  the  transCornacion  is  being  brought  about  by  reality  — 
by  the  growing  realization  that  a  modern  industrial  society 
simply  cannot  be  governed  by  a  pre-industrial  political 
philosophy  of  racial  segregation. 

The  old  illusion  that  South  Africa's  blacks  could  live 
permanently  or  enjoy  citizenship  rights  only  in  designated 
tribal  homelands  —  so  that  in  the  end  there  would  no  longer  bi 
any  'South  African  blacks'  —  is  being  abandoned.   Slacks  are 
no  longer  pcohibited  fcom  acquiring  property  rights  in  the 
supposedly  'white'  urban  areas.  The  right  of  blacks  to 
organize  trade  unions  has  been  recognized,  and  black  unions  ar' 
now  a  powerful  factor  on  South  Africa's  industrial  relations 
scenei  fully  SO  percent  of  trade  unionists  in  South  Africa  are 
black.  Central  business  districts  are  being  opened  to  black 
busineasmenr  and  cities  like  Durban  and  Cape  Town  are 
desegregating  their  public  facilities. 


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Fac«<J  with  th«  obvloui  inju*tlc«  of  focc«d  teaoval*  of  aettlvi] 
black  conmunititti,  and  with  the  obvious  Inability  to  stop  tht 
inClux  of  blacks  into  th«  cltioa,  tha  govecnnant  has  suapandad 
such  cemovals  and  Is  shifting  to  what  it  call*  an  'ocdacly 
urbanization*  policy. 

The  goveEnnant  has  now  acknowladgad  that  it  must  coniult 
with  cepcesentative  blacks  about  political  participation 
outslda  the  ttibal  homelands  and  at  cha  national  lavali  mar<. 
local  self-govacnment  is  undetstood  to  ba  inadaquata.   Just 
this  weak,  the  government  accepted  a  special  connlssion's 
cepoct  that  calls  fot  the  abolition  of  laws  banning  Intaccacial 
macciage  and  saxual  lelations  —  one  of  the  most  important 
symbols  of  apattheld. 

If  we  recognize  that  white  opinion  holds  vital  keys  to 
changa,  than  we  must  also  recogniza  that  change  must  odginate 
in  shifts  In  white  politics.   In  this  regardt  in  the  past  three 
years,  the  white  government  has  crossed  a  historical  dlvidai 
It  has  been  willing  to  accept  ma]oc  defections  Ccon  its  own 
ranks  in  otdet  to  begin  to  offer  a  better  political,  econoniCf 
and  social  deal  to  the  nation's  black  majority. 

These  changes  are  not  enough.   South  Africa  is  not  now  a 


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498 


SarlouB  Inaquitita  contlnua:   ccpcession,  decentlona  without 
tdalf  and  th«  pcoapect  of  treason  trials  foe  some  black 
leaders.  The  issues  of  common  cltizsnstiLp  foe  alli  and  of 
^laclc  political  rights,  havs  been  raised  but  not  yet  concretely 
addressed  by  the  governnent.  The  hated  pass  laws  and  influx 
control  continue,  though  the  govecnraenc  appears  to  be 
rethinking  its  actions  on  this  front.   Much  more  must  be  don*. 
Chang*  has  just  begun,  but  it  has  b*qun.  Our  job  is  to 
.continue  to  encourage  it. 

The  recent  domestic  violence  is  clearly  a  setback.  All 
Americans  ace  saddened  and  dismayed  at  the  almost  daily  reports 
o£  violent  encounters  that  have  caused  nearly  300  deaths  among 
black  South  Africans  over  the  past  nine  months.  The  United 
States  has  consistentlyt  repeatedly,  and  publicly  deplored  this 
bloodshed  and  the  police  tactics -that  only  produce  killings  and 
add  fuel  to  the  unrest. 


There  is  no  excuse  for  official  violence  against  peaceful 
demonstrators.  Any  government  has  a  duty  to  maintain  law  and 
order.  Nevertheless,  that  cannot  be  done  simply  on  the  basis 
of  force;  law  and  order  also  means  due  process,  and  adequate 
channels  for  airing  and  resolving  grievances. 


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499 


But  juat  as  w«  tecogniz*   ch«  clghe  of  peaceable  assafflbly, 
»b,  too.  If  w«  are  to  be  taken  seclously,  must  we  reject  the 
right  of  any  to  take  the  law  into  their  own  hands.   That  is  a 
formula  for  anarchy.  He  applaud  the  courage  of  chose  black 
leaders  who  press  Cor  non-violent  change,  confronted  on  one 
side  by  a  surging  aiaam   of  black  bitterness  and  on  the  other  by 
a  long -unresponsive  political  systen.  He  welcome  the  words  of 
Bishop  sesaond  Tutu,  Hobal  peace  laureate,  who  urged  a  crowd  of 
blacks  at  a  funeral  the  other  day:   'Don't  undermine  our 
wonderful  cauee.   Let  us  not  use  the  methods  that  are  used 
against  us  by  our  enemies,   when  we  finally  achieve  our  goal  of 
freedom,  we  mult  ba  able  to  look  back  with  pride  at  how  we  got 
there." 

There  are  responsibilities  here  for  all  South  Africans,  and 
most  particularly  for  those  in  authority,   wa  hope  the 
governaent  will  nove  quickly  and  concretely  to  restore 
confidence  in  its  reform  commitments;  we  urge  It  to  take  up  the 
dialogue  with  black  leaders  about  the  road  to  a  just  society. 
He  urge  all  South  Africans  to  take  advantage  of  openings  for 


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a»Bional  Security 

Peace  witnln  South  Africa,  as  I  said,  is  directly  linked  t 
the  question  of  regional  peace.   A  society  that  feels  immense] 
threatened  by  outside  forces  is  less  likely  to  loosen  the 
controls  at  home.   Nor  can  black  states  normalize  their 
calatlons  with  theic  South  African  neighbor  so  long  as  there  i 
no  convincing  movement  away  from  apartheid. 

The  United  States  has  uorked  hard,  and  successfully,  to 
maintain  the  confidence  of  the  parties  and  to  facilitate 
negotiated  solutions: 

We  helped  bring  south  Africa  and  Mozambique  together 
in  the  Hkomati  Accord  of  March  1984,  ending 
government-supported  cross-border  violence  and 
promoting  economic  cooperation.   This  accord  faces 
serious  challenges,  but  both  sides  are  committed  to 

We  helped  Angola  and  South  Africa  agree  on  a  plan  Eoi 
the  withdrawal  of  south  African  forces  from  Angola  ai 
control  of  SViAPO  and  Cuban  troops  in  southern  Angola. 
The  war  between  South  Africa  and  Angola  is  over;  chei 
has  in  fact  been  peace  for  the  last  14  months. 


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The  e»w  South  African  eroopa  left  in  Angola  as  part  of 
a  joint  monitoring  comnission  will  be  vithdraun  this 
weeK  as  the  final  step  of  disengagement.   The  problems 
of  Angola  and  Namibia  are  fat  from  solved,  but  this 
macks  impoctant  progress. 

Out  diplomacy,  in  concert  uith  key  western  allies,  has 
brought  Namibia  closet  to  independence  than  ever 
before.   Agreement  on  a  timetable  for  Cuban  troop 
withdrawal  from  Angola  is  the  one  issue  remaining  in 
the  overall  settlement  package.   Let  there  be  no 
mistake  about  it:   U.N.  Security  Council  Resolution 
435  remains  the  only  internationally  acceptable  basis 


The  United  States  has  helped  bring  about 
understandings  between  Lesotho  and  Botswana,  on  the 
one  hand,  and  South  Africa  on  the  other,  averting 
potential  conflicts. 

And  we  helped  move  Mozambique  away  from  heavy 
dependence  on  the  Soviet  camp  and  closer  to  true 

best  interests  are  served  by  closer  cooperation  with 
the  West,  and  by  rejection  of  confrontation  with  Soutt 
Africa.   The  trend  of  our  relations  with  Mozambique  is 
positive  and  needs  further  encouragement. 


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All  of  these  steps  have  lessened  the  danger  of  waefare. 
But  the  situation  remains  fragile:  it  requires  the  continued 
pragmatism,  realism,  and  dedication  of  the  patties  involved. 
New  opportunities  have  been  created;  they  should  be  seized. 

America's  Pesponsibility 


Southern  Africa  is  thus,  clearly  and  anmistakabl^.  In  a 
process  of  transformation.   The  only  question  is  how  this 
change  will  come  about.  The  idea  chat  our  policy  is  simply 
reinforcing  the  status  quo  is  an  utter  misconception  —  a 
display  of  ignorance  of  what  is  going  on.   Vie  are  engaged  as  a 
force  for  peace  and  for  constructive  change  throughtout 
southern  Africa.  This  is  the  only  responsible  course,  and  we 
will  not  be  deflected  from  it. 

Some  believe  that  the  United  States  should  have  nothing  to 
do  with  Marxist  regimes  such  as  Angola  or  Mozambique,  leaving 
them  to  cope  with  their  predictable  economic  failures  or 
throwing  in  our  lot  with  their  armed  opponents.  Such  a  notion 
ignores  the  realities  on  the  ground  in  southern  Africa  as  well 
as  significant  distinctions  between  those  two  countries. 

In  Angola,  when  the  Portuguese  granted  independence,  a 
number  of  black  liberation  movements  competed  for  power. 


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A  Macxisc  party  took  over  the  country  In  1975  bacited  and 
suscained  by  the  massive  Soviat/Cuban  intervenCLon.  UNITA,  an 
impoitant  indigenous  nationalist  movement,  was  denied  a  share 
of  power.  The  U.S.  Jonqtess  passed  the  lunney  and  Clark 
amendments  batting  any  U.S.  support  for  those  Angolans  opposing 
the  soviet/Cuban  intervention  —  as  if  Co  grant  the  Marxist 
regime  immunity  against  its  own  people;  the  Brezhnev 
Doctrine  —  which  declares  that  Communist  revolutlo  s  are 
irreversible  —  was,  in  effect,  enacted  into  American  law. 
Since  1975,  UHITA  has  waged  a  determined  armed  struggle  in  the 
countryside  against  the  KPLA  government's  monopoly  of  pouer;  it 
has  steadily  grown  in  strength  and  territorial  control. 

we  do  not  believe  that  Angola's  agony  —  still  continuing 
ten  years  after  independence  —  can  be  resolved  militarily.   In 
our  contacts  with  both  the  HPLA  government  and  aniTA,  we  sense 
little  optimism  about  military  solutions.  Our  diplomacy, 
therefore,  has  sought  constructive  alternatives  to  open-ended 
warfare  and  suffering.  By  focusing  on  the  related 
international  questions  of  Namibian  independence  and  Cuban 
troop  withdrawal  from  Angola,  we  have  taken  important  steps 
forward.   The  principle  of  a  regional  settlement  Involving 
these  two  issues  —  Namibia  and  Angola  —  is  now  accepted;  the 
next  step  is  to  agree  on  specifics. 


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If  we  succ««d,  Africa's  last  colony  will  achieve  statehood,  and 
foceign  intervention  and  foceign  forces  will  be  removed  £com 
the  Angolan  equation.  This  can  set  the  stage  for  alj  Angolans 

In  Mozambique,  we  make  a  different  calculation  based  on 
different  facts.   Mozambique  and  South  Africa  have  moved  toward 
coexistence  based  on  their  own  national  interests.  This 
prospect,  which  we  encouraged,  offered  an  opening  for  improved 
relations  with  Western  nations  and  Western  help  for 
Kozambigue's  shattered  economy.  Me  have  seized  these 
openings.   By  competing,  we  have  strengthened  a  trend  favorable 
to  our  interests.   In  these  circumstances,  our  European  allies. 
South  Africa,  and  Mozambique's  other  neighbors  have  thrown 
their  weight  behind  that  country's  turn  toward  moderation,   we 
have  done  the  same. 


with  the  government  of  South  Africa  because  of  its  racial 
policies.   This  Is  just  ag  mistaken  as  the  idea  that  we  should 
refuse  to  deal  with  Angola  and  Mozambique  because  of  their 
Marxist  Inclinations.   We  cannot  bury  our  heads  in  the  sand. 
We  do  not  enhance  out  ability  to  Influence  change  in  the  region 
by  eliminating  ourselves  as  an  actor. 


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some  propose  that  we  try  to  cut  South  AEcica  off,  to  run  it 
out  of  the  Western  world  through  boycotts,  embacgoos,  and 
sanctions.  They  argue  that  even  if  such  actions  do  not  bring 
about  change,  out  position  will  'put  us  on  th«  side  of  right.' 
I  r«j«ct  that  view,   it  leads  us  down  the  coad  to  ineffectual 
actions  that  are  moce  liKely  to  strengthen  resistance  to  change 
than  strengthen  the  forces  of  reform.   It  ignores  the  hacn  that 
such  an  approach  will  inflict  precisely  on  th«  black  najotity 
whom  the  advocates  of  boycotts,  embacgoea,  and  aancclona 
purportedly  want  to  help. 

Opinion  polls  in  South  Africa  by  reputable  organizations 
reveal  that  the  overwhelming  majority  of  black  factory  workers 
are  opposed  Co  disinvestment  by  American  firms.  An  economy 
that  even  now  needs  to  create  2S0,QOO  new  Jobs  for  young  blacks 
each  year,  and  that  will  have  twlc*  as  many  of  then  entering 
the  job  market  by  the  turn  of  the  century,  needs  more  job 
opportunities,  not  fewer. 

I  do  not  understand  why  it  is  good  for  American  investors 
to  create  jobs  for  black  workers  in  Zimbabwe  or  Zaire,  but  not 
in  South  Africa.  And  I  suspect  the  tens  of  thousands  who  have 
flocked  to  the  squatters'  camp  at  Crossroads  outside  Cape  Town 
in  a  desperate  search  for  work  would  not  understand  either. 


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Not  would  the  mote  than  one  million  Afcicans  from  the 
surrounding  nations  who  have  mowed  into  South  Africa  in  search 
of  employment. 

I  do  not  accept  the  argument  that  it  is  in  ouc  interests  to 
help  a  black  middle  class  develop  in  Guinea  or  Gabon,  but  not 
in  South  AEcica. 

I  do  not  agree  with  those  who  argue  that  American  companies 
should  promote  the  social  and  educational  advancement  o£  theit 
black  workers  in  Sierra  Loone  oc  Senegal,  but  not  in  South 
Africa. 

Now,  I  am  quite  aware  that  some  of  the  proposals  now  before 
the  Congress  are  not,  strictly  speaking,  disinvestment  bills. 
Instead  they  are  couched  in  terms  of  conditional  bans  on  'new 
investment,'  or  new  loans,  unless  certain  political  changes  are 
made  within  a   year  or  two.  Other  proposals  would  make  the 
voluntary  Sullivan  Code  mandatory  and  severely  penalize  firms 
that  do  not  comply  adequately.  Well-intentioned  as  these 
propoeala  may  be,  let  us  not  kid  ourselves  about  their  likely 
effect.  Given  the  additional  risks  and  uncertainties  which 
such  legislation  would  create,  many  U.S.  firms  are  apt  to 
conclude  that  their  continued  presence  in  south  Africa  is 
simply  no  longer  worth  the  candle.  The  result  will  be  reduced 
American  influence. 


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U.S.  flrtnfl,  private  U.S.  qcotipa   and  foundations,  as  wall  a! 
Che  U.S.  Govecnment,  have  played  an  impoctanc  cole  In 
influencing  th«  changes  we  have  seen.  That  is  because  chey 
were  there. 

The  only  course  consistent  with  American  values  is  to 
engage  ourselves  as  a  force  for  constructivs,  peaceful  change. 
It  is  not  our  business  to  cheer  on,  from  Che  sidelines,  the 
forces  of  polarizacion  Chat  could  erupt  in  a  race  war;  it  is 
not  our  job  to  exacerbace  hardship,  which  could  lead  to  the 

AC  the  same  tine,  a  clear  bipartisan  American  voi-ce  that 
rejects  apartheid  as  an  unjusti  anachronistic,  and  untenable 
system  is  anocher  essencial  building  block  of  a  successful 
policy.   And  here  I  return  to  my   opening  theme  of  consensus. 
As  long  as  Americans  speaK  with  contrary  and  confusing  voices, 
our  influence  will  be  less  than  it  could  be. 


Fitstf  we  can  all  agree  that  souther 
important  part  of  the  world  that  demand: 


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Second,  we  can  all  agcae  that  th8  pace  of  change,  of  cefoim 
and  developnenC  in  each  of  tha  countries  of  the  region,  depends 
on  regional  peace  and  stability.  Continued  conflict  only  helps 
perpetuate  racism  and  poverty. 

Third,  we  can  agree  that  apartheid  must  go.  It  is  a  systen 
contrary  to  all  that  wa  stand  Cor  as  a  nation. 

Fourth,  we  can  agree  that  we  are  more  interested  in 
promoting  real  progress  than  In  posturing,  debating  pointSi  oc 
grandiose  schemes  that  are  likely  to  prove  ineffectual. 

Fifthi  we  can  agree  that  in  southern  Africa,  as  in  every 

other  part  of  the  world,  the  engine  of  economic  and  social 
advancement  is  the  productive  private  sector  and  its  links  to 
the  global  economy. 

And,  finally,  we  should  agree  that  America's  role  must 
always  be  on  the  side  of  those  seeking  peaceful  change.  He 
should  agree  that  we  do  not  support  violence,  but  that  we  do 
support  —  and  will  support  aggressively  —  those  who  have 
conmitted  themselves  to  promote  change  and  justice. 


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N*  aust  cacognize  th«  importanct  of  what  haa  baan  taking 
pLaca.in  South  Africa  in  i«c«nt  yeara,  and  wa  nuat  iainfocc« 
that  piocess  creativaly.  Only  by  angaglng  ouiaclvaa  can  wa 
bopa  to  do  10.  Ha  will  not  ba  tha  nain  actors  In  this  bunan 
dcamat  that  cola  nust  b«  playad  by  tha  ragion'a  paopla  —  black 
and  vhlta  Africans.  But  wa  BUSt  not  stand  by  and  thcow 
Aaaclcan  natchas  on  tha  anotional  tindac  of  tha  region. 

OuE  Docality  and  our  Intacssts  coinclda.   huacica's  valuas 
and  Anacica's  global  casponsibllitlas  both  conpal  us  to  stay 
angagadi  to  wock  actively  for  juatlca  and  dacancy  and 
caconclliatlon.   Ha  should  ba  Indignant  at  in]ustica  and 
bloodshad  —  but  indignation  alona  is  not  a  stcatsgy.   Tha 
morality  of  a  nation's  policy  must  ba  judgad  not  only  by  tha 
nobla  goals  it  Invokas  but  by  tha  casults  and  consaquances  of 

If  all  Ansiicans  work  cogather,  this  nation  can  be  a  major 
tocca  foe  good.   Thus  we  aecve  our  highast  ideals. 


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INTERNMIONAL  rNVESTDRS  INCORPORATED 

REET,  NEW  YORK.  N.Y.  10166  *  (212)607-5200  •  TOU- FREE  BOO  221-2220 


Kay   14,    1985 


Honorable  Jake  Garn 
United  States  Senator 
Chairman,  Senate  Conimittee  on 
Banking,  Houaing  and  Urban  Affairs 
Washington,  d.  c,   20510 

Statement  In  Opposition  to  S.  635 

Dear  Hr.  Chairman: 

I  respectfully  request  that  you  include  the  following  state- 
ment in  the  record  of  the  hearings  on  S.  635,  99th  Congress,  a  bill 
"To  express  the  opposition  of  the  United  States  to  the  system  of 
apartheid  in  South  Africa": 

I  an  Chairman  and  President  of  International  investors 
Incorporated,  a  leading  American  mutual  fund  registered  with  the 
Securities  and  Exchange  Commission  under  the  Investment  Company  Act 
of  1940,  with  over  158,000  BtocJcholdere  residing  in  fifty  states 
and  the  District  of  Columbia,  and  over  5900  million  of  investments 
primarily  in  marketable  securities.   As  disclosed  in  our  Prospectus 
filed  with  the  Commission,  our  company  concentrates  its  investments 
in  shares  of  gold  mining  companies,  and  holds  substantial  invest- 
ments in  shares  of  South  African  gold  mining  companies  which  are 
not  registered  with  the  ComtnisBion  or  listed  on  any  securities 
exchange  in  the  United  States.   There  are  also  many  additional 
American  stockholders,  perhaps  as  many  as  one  million,  who  own 
possibly  S5  billion  or  more  of  South  African  gold  mining  shares 
either  directly  or  through  other  investment  companies. 

!  and  Americans  similarly  situated, 
)n  to  S.  635.   Section  i   of  the 
"Restrictions  on  New  Investments",  would  prohibit 
any  United  states  person  from  making  (directly  or  through  a  foreign 
affiliate)  any  investment  In  South  Africa,  excepting  from  this 
prohibition  only: 

"(1)  an  investment  which  consists  of  earnings  derived 
from  a  business  enterprise  in  Sooth  Africa 
*  established  before  the  date  of  the  enacbnent  of 
the  Act  and  which  is  made  In  that  bualnesa  enter- 


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(2)   purchase,  on  a  securities  exchange  registered 

as  a  national  securities  exchange  under  Section 
6  of  the  Securities  and  Exchange  Act  of  1934, 
o£  securities  in  a  business  enterprise  described 
in  (1)." 

Depriving  our  company  and  Its  ahareholders  and  other 
Americans  similarly  situated  of  the  right  to  purchase  shares  of 
South  African  gold  mining  companies  which  are  traded  on  over-the- 
counter  marlcets  in  the  United  States  and  on  securities  exchanges 
in  a  number  of  free  world  countries  will  have  no  effect  on  the 
government  of  South  Africa,  but  would  be  grossly  damaging  to  the 
interests  of  our  company  and  its  shareholders,  and  all  other 
Americans  similarly  situated.   It  would  be  an  intolerable  inter- 
ference with  the  free  markets  which  exist  in  the  free  world,  and 
be  highly  prejudicial  to  American  investors  ns  compared  with  their 
counterparts  in  the  United  Kingdom,  West  Germany,  Japan  and  other 
free  world  countries  which  would  not  be  subject  to  these  restric- 

Accordinqly,  whatever  action  your  Committee  may  take  to 
condemn  apartheid,  I  urge  that  your  Committee  not  act  favorably 
on  S.  635  or,  at  the  very  least,  that  it  amend  the  bill  to  permit 
investment  by  United  States  investors  in  shares  of  South  African 
enterprises  which  are  traded  in  the  over-the-counter  markets  in 
the  United  states  as  well  as  on  registered  national  exchanges,  or 
are  publicly  traded  in  other  free  world  countries. 

I  would  be  happy  to  testify  before  your  Committee  concerning 
the  detrimental  effects  of  S.  635,  if  enacted  as  la,  and  to  meet 
with  members  of  your  staff  to  discuss  possible  amendments  that  would 
avoid  the  unfavorable  results  of  the  current  bill. 

Respectfully  submitted. 


'e^2l. 


1  and  President 


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612 

Cliambcr  of  Commerce  of  the  Uniiod  States  ZIL""™ 


and  Urban  Affairs' 
Bshlngton.  D.C.      20510 


Coameice,  as  presented  to  the  Senate  Foielga  Eelatloas  Coonglttee  on  Hay  22, 
be  nade  part  of  the  record  of  the  Bubcomlttee  heatings  on  S.  635,  propoBlng 
U.S.   [sspfmacs  to  Che  systen  of  apartheid. 

Essentislly.  the  statenent  addresses  the  role  of  Awrlcan  business  as  a 
neaaa  of  encouraging  positive  change  In  South  Africa  and  Identifies  the     - 
criteria  by  which  U.S.  policy  Initiatives  tovard  South  Africa  ahould  be 
Judged. 

African  governoienc  of  our  affiliated  American  Chamber  of  Coniierce  In  South 


direct  action  that  Is  only  possible  throug 
presence.     The  Aiterlcan  Chsnber  In  South  A 


Dl^LJuX. 


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LETS  REBUIU),  AIHERKA 


Statement 

of  the 

Chamber  of  Commerce 

of  the 

United  States 


ON;  United  States  Policy  Toward  Soutx  Africa 

TO:  Senate  Cowittee  on  Foreign  Relations 

BY:  Michael  A,  Samuels 

date:  May  22,  1385 


and  responsibilltY. 


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Tbe  Chamber  of  Coaaerce  of  the  United  States  Is  the  world's 
largest  federation  of  coapanlea  and  associations  and  Is  the 
principal  spokesman  for  the  American  business  community.  It 
represents  more  than  160,000  companies  plus  several  thousand 
other  organizations  such  as  local/state  chambers  of  commerce 
and  trade /professional  associations. 

More  than  65  percent  of  the  Chamber's  members  are  small 
business  firms  with  fewer  than  100  employees.  Yet,  virtually 
all  of  the  nation's  largest  companies  are  also  active 
members.  We  are  particularly  cognizant  of  the  problems  of 
smaller  buEinesses,  as  well  as  Issues  facing  the  buslnesB 
community  at  large. 

Besides  representing  a  cross  section  of  the  American  business 
community  in  tetms  of  number  of  employees,  the  Chamber 
represents  a  wide  management  spectrum  by  type  of  business  and 
location.  Each  major  classification  of  American 
business — manufacturing,  retailing,  services,  construction, 
wholesaling,  and  finance — numbers  more  than  14,000  members. 
Tet  no  one  group  constitutes  as  much  as  26  percent  of  tbe 
total  membership.  Further,  the  Chamber  has  substantial 
membership  In  all  SO  states. 

The  Chamber's  International  reach  Is  substantial  as  well.  It 
believes  that  global  Interdependence  provides  an  opportunity, 
not  a  threat.  In  addition  to  the  50  Atrerican  Chambers  of 
CoDuserce  Abroad,  an  Increasing  number  of  members  are  engaged 
In  the  export  and  Import  of  both  goods  and  services  and  have 
ongoing  Investment  activities.  The  Chamber  favors 
strengthened  International  competitiveness  and  opposes 
artificial  U.S.  and  foreign  barriers  to  international 
business. 

Foaltions  on  national  Issues  are  developed  by  a  cross  section 
of  its  members  serving  on  committees,  subcommittees  and  task 
forces.  Currently,  some  1,600  business  people  participate  in 
this  process. 


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STATEMENT 

UNITED  STATES  RlLlcr  TOMARO  SOUTH  AFRICA 

before  the 

SENATE  COmlTTEE  ON  FOREIGN  RELATIONS 

for  the 

(HAMBER  OF  CQWERCE  OF  THE  UNITED  STATES 

by 


Hr.  Chalnun.  I  m  Michael  A.   S«Mue1$.  Vice  President,  International , 
of  the  ChMber  of  CcoBerce  of  the  United  States.     I  appreciate  the  opportunity 
to  share  with  the  cosilttee  the  Cbwber's  vleos  on  U.S.  policy  totMrd  South 
Africa.     This  Is  a  part  of  the  world  that  1  have  visited  several  tines, 
written  about  when  I  was  In  the  acadenic  world,  and  followed  professionally 
interalttently  for  the  last  20  years. 

The  ChMber  is  ajwng  those  strongly  critical  of  apartheid  and  favors 
the  speediest  possible  evolution  of  South  African  society  into  one  that 
extends  basic  huMn  and  political  rights  to  all  its  people,  regardless  of 
color.     The  Chwber's  particular  function,  as  a  business  organization.  Is  to 
identify  the  ways  in  which  the  taerican  builnessfresence  In  South  Africa  can 
play  a  positive  role  In  the  process. 

In  the  public  debate  on  U.S.  policy  toward  South  Africa,  there  are  two 
basically  distinct  views  on  the  role  of  AKrican  business.     One  side  believes 
that  business  does  oore  to  reinforce  the  basic  systen  of  apartheid  than  It 
does  to  advance  black  South  Africans'  welfare  and  interests  and,  therefore, 
should  be  discouraged.     The  Chamber  disagrees  with  that  view. 

He  believe  that  Aaerlcan  business  in  South  Africa  is  a  major  force  in 
advancing  black  opportunity  and  welfare.    Ue  believe  that  black  econcoiic 
advancenent  In  South  Africa  Is  the  aajor  key  for  turning  the  coaplicated  lock 
of  apartheid.     The  AKrican  business  presence  In  South  Africa  lends  sone 
weight  to  that  effort.    He  are  not  Inplying  that  the  sole  function  of  AaeHcan 
business  in  South  Africa  Is  to  bring  about  the  end  of  apartheid:     its  prim 


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concern,  as  In  any  urket,  is  to  achieve  a  net  return  on  its  Investment.     But, 
In  the  South  African  case.  It  does  do  other  positive  things  as  Mil. 

As  Chief  Hangosuthu  G.  Butheleil  has  stated,  no  business  today  "can 
secure  future  plans  without  challenging  apartlield.     It  was  the  lar^ 
corporations  that  broke  the  apartheid  harriers  that  led  to  real  advancement 
for  black  workers."    Ford  Motor  Conpany  for  example,  consciously  Ignored  the 
law  and  began  training  black  apprentices.     Other  companies  followed,  and 
eventually  Job  reservation  became  passe.     The  efforts  of  progressive 
■anagenent  In  talking,  dealing,  and  negotiating  with  workers  brought  black 
trade  union  recognition  sooner. 

Although  external  actions  are  Important,  the  key  events  In  the  South 
African  situation  will  be  Internal.     From  our  perspective,  what  the  Congress 
should  be  asking  Is  whether  It  wants  to  be  responsible  for  eliminating  or 
reducing  a  positive  force  for  change  within  South  Africa  —  by  either  forcing 
disinvestment  or  outlawing  new  Investnent,     He  urge  you  to  do  neither. 

Is  U.S.  business  such  a  positive  force  in  South  Africa?    Absolutely. 
Let  us  look  at  the  following  examples. 

1)    The  Sullivan  Principles  are  well  known  and  have  been  widely 
acclainied.     They  have  produced  results. 

2]     Earlier  this  year,  our  affiliated  American  Chamber  of  Commerce  In 
South  Africa  {AnCham)  Issued  a  significant  11st  of  reconmendations 
for  basic  changes  In  the  apartheid  law,     I  have  attached  Its 
statenent  to  my  testimony.     He  are  pleased  at  Senator  Kennedy's 
positive  description  of  this  initiative  when  he  inserted  It  into 
the  Congressional  llecord  of  Hay  8. 

3)     The  AiCham-initlated  PACE  College  Is  a  key  commercial  and  technical 
school  for  black  students.     I  an  proud  to  have  given  the  keynote 
address  at  the  opening  ceremony  of  PACE  three  years  ago.     Such 


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preparation  for  greater  responsibility  Is  necessary>  and  Awrlcan 
business  deserves  credit  for  this  initiative. 


The  Legislative  Situation 

This  covilttee  hat  before  It  several  proposals  for  a  legislative 
response  to  the  South  African  situation.     The  Chanber  believes  that  any  action 
by  the  Congress  should  be  guided  by  the  folloMlng  principles: 

1)  Conduct  a -forceful  dlploaatlc -effort  against  apartheid.  Including, 
for«xMp1e,  the  use  of  United  nations  votes  when  appropriate. 

Z)  Encourage  the  ellalnatlon  of  apartheid  through  peaceful  change  in 
South  Africa  with  moral  support  and  tangible  resources.  Including 
support  for  nore  rapid  econonlc  progress  of  blacks. 

3)     Encourage  universal  participation  by  United  States,  South  African, 
and  third-country  companies  in  eaployment  codes  respecting  huaun 
dignity  and  proaotlng  social   responsibility  and  economic 


4)    Avoid  aeasuret  which  intentionally  or  unintentionally  result  1 
disinvestment. 


5)     Avoid  relying  on  unilateral  econoailc  sanctions  to  solve  political 


6)     Avoid  actions  Mhich  would  widen  the  gulf  between  the  govemaent  and 
non-whites  and  which  would  encourage  further  violence  and 
repression. 


Additionally,  the  Chanber  believes  that  it  Is  appropriate  here  to 
reiterate  a  key  tenet  of  our  policy.     The  U.S.  govemawnt  should  not  apply 


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unlltteni  econoMic  sanctions  for  foreign  policy  reasons.     He  believe  this 
tenet  applies  as  micIi  to  the  South  African  situation  as  Me  believe  It  applied 
to  the  mistaken  policy  of  controls  related  to  the  Soviet  pipeline  Issue  i 
couple  of  years  ago. 

A  parallel  situation  exists  In  an  extraterritorial  reach  by  Anerlcan 
law  to  Bake  the  Sullivan  Principles  mandatory.  As  good  and  as  Important  as 
the  Principles  may  be,  we  oppose  legislating  thefi  to  be  mandatory. 

There  are  sone  steps  you  could  take  that  would  be  helpful.     They 
Include  the  following: 

1)  Creating  a  scholarship  fund  for  black  South  African  education  in 
South  Africa  and  In  the  U.S.; 

2)  Encouraging  the  developewnt  of  black  independent  business  and  trade 
union  organizations;  and 

3)  Creating  restrictions  on  actions  that  would  tie  the  U.S.  Goverrwent 
in  any  way  to  interna)  enforcement  of  apartheid. 

Finally.  Hr.  Chairman.   I  would  urge  the  Congress  to  work  with  the 
Executive  Branch  as  it  conducts  our  foreign  policy  related  to  South  Africa, 
but  not  to  tie  Its  hands  In  conducting  that  policy. 


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SUMISSIOH  BIf  THE  MIERICAH  CHWlBtR  OF  COWERCt  IH  SOUTH  AFHICA 
TO  THE  5PgCI*L  CABIhET  tOtwinEE  uHBEIl  THE  CHAIftHAhiHIP  OF  ThE 
H»l[5TEa  OF  COWTITuTIOhAl  PEvEtOWEHT  ■JIJlT'l'L'ahi^lliS 


Drtunily  of  Submitting  t 
tentton  of  Hking  a  conj 
Icy  fomulitton.       Ue  do 


Hve  contribution 


n  \i  deaU  Hith  under  the  following  three  h 


SUBHISSIOH 

1,     Sgeclftc  foli 


-  for  some  yeers,  and  that 


evidence  shows  Chat  t 
indefinitely  arrested 
necessary  prerequisU 


rate  of  economte  srov, 
this  country  urgently 
process  of  phasing  oi 
of  black:  labour  into 
by  a  deliberate  progi 


0  trafisfer  them  from  a  company's 
ountry  to  another.  The  1nflu» 
indrance  in  this  connection. 


mnge   thei 

'"to°"ge''that 

e  frealj  than 
the  government 

programne 

to  phase  out 

influi  control 

d  of  time, 
he  process 
.       In  add 

The  weight 
of  urbaniiat 
tlon.   urbani 

of   international 
on  can  seldom  be 
ation  is  a 

e  of  economic  growth. 

We  Believe  that 

a  inf1u.  c 

ontro!   in  South  Africa  ars 

elude     (a) 

asts  to  the 

and  admini 

opportunity 

arid  to  bus 

ree  moveme 

ness  resultl 
I  of  labour. 

9  from  artificia 

age  to  goo 

dviiH  bet-een 

ate  that  the 

the  races.      We 
e     influ.  of 

ow"s  that  wou  d  re!  it  from 

sar  ly  be  as  gre 

thought. 

Ame    c*n  err 

loyers  wish  to 

hey  can   to  r 

ising  Sojlh  Airi 

tional  jooi  that 

needs . 

ie  believe  t)i 

t   the   present 

t   restrict 

ed  jobs  shou 1 

Be  accompanied 

anme   to   ph 

se  out  geogr 

phical   restric- 

loyees  are 

re  responsib1lit> 

it  frequent 

y  .becomes  tieceis 

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Vt   are  «i«re  of  reports  tmt  new  tdencUy  documenU  My  be  Issued 
in  South  Afric2,  but  It  is  important  that  tFie  iaut   of  such 
documents  be  accompinled  by  the  pfiaiing  out  of  discriminatory 
influi  control  laws. 

tntroducCion  of  the  99-year  lease  system  in  many 
s  Has  a  major  step  fortard,  and  the  government's 
uncement  Chat  this  systen  Mill  now  be  extended  to 

...  ..wnships  in  the  western  Cape  Is  also  to  be  welcomed. 

Accocairg  to  prsss  reports  V\t   Minister  of  Co-operation  and 
Developmsnt  tm     tated  that  the  goverrment  Mill  give  serious 
thought  to  ine   question  of  freehold  rights  for  urban  blacks. 
Me  strongly  ufqt     t  to  grant  such  rights.   This  Is  the  logical 
follow-on  to  the  99-year  lease  systen  and  it  Is  also  a  logical 
consequence  of  the  recognition  of  the  pennanence  of  urban  black 
coBTiunities.   The  granting  of  freehold  rights  would  remove  a 
major  piece  of  racial  discrimination,  and  at  the  same  time  be 
conducive  to  greater  political  stability  in  the  urban  townships. 
Continuing  to  deny  black  people  the  right  to  own  land  In  freehold, 
a  right  which  lies  at  the  very  heart  of  the  free  enterprise  system, 
is  likely  to  undermine  black  commitmeTit  to  that  system.   Granting 
freehold  rights  In  urban  townships  is  important  from  another  point 
of  view,  which  is  that  it  would  create  a  source  of  Income  for 
local  authorities  In  these  areas,  as  they  would  be  able  to  levy 
assessnent  rates  upon  such  property. 

{c)  Removals;  population  removals  do  grievous  damage  to  South  Africa, 
both  in  terms  of  racial  goodwill  within  the  country  and  in  terms 
of  the  country's  Image  abroad.   A  prominent  South  African 
business  leader  has  said  that  population  removals  are  the  one 
thing  «ost  likely  to  ensure  success  of  Che  disinvestment  lobby 
In  the  U.S.,  which  wou  d  harm  both  Ainerican  companies  and  South 
Africa  Itself.   There  i  much  e  idence  to  Indicate  that  removals 
are  frequently  accompanied  by  coercion,  and  that  once  people  have 
been  removed,  particularly  into  Some  of  the  more  densely  populated 
homelands,  they  suffer  stress  nd  deprivation  and  become  an 
additional  burden  on  the  taxpayer.   Some  of  the  coirmunities 
removed  are  economically  relatively  prosperous,  and  It  Is  tragic 
to  see  such  conw  it>es  destroyed.   Uhile  we  recognise  that 
Increased  black  urbanisation  resulting  from  the  abolition  of 
Influi  control  would  entail  additional  housing  and  other  costs, 
we  do  not  believe  that  there  would  be  any  costs  in  simply  halting 
removals  altogether.   Indeed,  there  would  probably  be  savings. 
Since  the  State  would  no  longer  have  to  provide  housing  for 

Ue  urge  that  the  Immediate  cessation  of  removals  apply  not  only 
to  blacks  removed  to  the  homelands,  but  also  to  coloured  and 
Indian  (and  the  small  number  of  white)  people  removed  in  terns 
of  the  Group  Areas  Act. 

(d)  Migrant  Labour;  Concomitant  with  the  phasing  out  of  Influx 
control,  tne  migratory  labour  system  should  also  be  phased 
out.   Denying  a  worker  the  right  to  live  with  his  or  her 
spouse  and  family  for  very  large  parts  of  his  or  her  working 
life  Is  not  socially  desirable,  conducive  to  productivity,  or 
morally  right,  nor  Is  It  compatible  with  the  sanctity  of 
marriage  and  family  life.   Again,  allowing  migrant  workers  to 
bring  their  families  to  live  with  them  at  their  places  of  work 
would  Involve  costs,  but  the  government  would  be  entitled,  if 
It  were  to  agree  to  the  abolition  of  the  migratory  labour  syitea. 


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to  ei1 

upon  the  priva 

r  to  pi 

y  its  full  part  in  con- 

trltwt 

ng  towards  hous 

ng  and 

infrast 

uctura'l  development. 

Buiine 

s   riqlts:     hCn 

m   a  a- 

are  tha 

the  question  of  opening 

ral   business  <ji 

trieii 

to  trad 

rs  of  an  races  has  been 

under  c 

onstderation  si 

ce  the 

f  the  Rieliert  Comissioo 

was  pu 

shed    n  1979. 

:  some 

this  a 

ree     on        Ue  s 

rongly 

urge  th 

t  CBOs  should  be  opened. 

not  «>i 

y  to  CO  oured  a 

d  India 

n  busin 

ss  and  professional  men 

*nd  won 

bUclis 

We  endorse  the  i»ovei  that  some 

locil  a 

uthortties  have 

made  to 

segr^qj     on  c     CBD  trading 

rights 

-h      «    t'irfii 

5  our  c 

hat  others  have  refused 

to  atlwlhsflfncsn  E 

nk.  for 

eiampl 

.   to  open  a   Branch   in   the 

CBD. 

The  question  of 

-hether 

local 

uthorlties  should  have 

tht  right  to  refuse  to 

open  th 

eir  :B0 

is  a  veied  one.       The 

another 

may  not  be  ".iUing   to 

dictate 

to  them.       Ho. 

e  quest 

on  at   stake   is   not  only 

one  oF 

the  autonony  of 

1ocIl  a 

es ,  but  a  principle 

fundaoc 

ntal  to  the  fre 

enterp 

tern  and  to  the  dismantling 

of   TK 

al  discrimination.       01 

should  not  be  left  in  the 

hands  of  local  author! 

les,  ho 

necessary.  It  would  be 

posslb 

e  to  provide  for  buslne 

ssmen  r 

fused  adnlsston  to  any 

parti cu 

lar  CBS,  for  «h 

tever  re 

have  a  right  of  appeal 

local  a 

Supreme  Court, 
uthoriiy. 

nd  to  empo-er 

he  court  lo  overrule  any 

taCham 

also  urges  the 

overnne 

nt  to  remove  the  petty  restriction 

that  Inhibit  both  forw!  and 

nforma! 

business  development  "ithi 

the  bla 

Accord 

ng   to   t 

e  Free  Market  Foundation, 

the  dev 

elopment  of  the 

infon-a 

is  inhibited  by  a  great 

deal  of 

legtslattofi  of 

AmCham  believes  that  in 

the  In 

erests  of  Nitm 

sing  Job  creation,   restrictions   on 

business  development  1 

CBOs  a 

nd  b1ac 

townships  should  tie 

reduced 

to  the  barest 

ssentia 

Is. 

In  particular  we  would  like  to 
Uelgemoed  Conaalssion  to  restric 
The  growth     n  recent  years  of  t 


rge  that  proposals 


protect  com 

etinq  i-d      or  Bus 

services 

faction  ,\x 

transport  servic 

and  disrupt 

ve  boycotts   in  re 

ent  year 

1t  would  be 

inviting   trouble 

0  interfere 

of   black  entrepreneurs  who  pr 

vide  a  s 

willing  to  pay  for. 

Citiienshio 

the  policy  of  o 
g   their  South  Afr 

national 
can  citi 

,{ 

i.e.  re.TOvi 

of  constitu 

By  home 

This  policy 

ry  to   in 

universally 

rejected  by  black 

.        With 

re 

that  a  form 

of  dual  citizensh 

so  that  bla 

ks  who  have  lost 

heir   Sou 

not  deprive 

y-recogn 

AmCham  woul 

like  to  state  its  view  th 

t 

black  peopl 

to  denattonalisa 

ion   is   i 

of  pomica 

rights  rather  th 

n  to  the 

dl 

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frO"  i   travel  flocumentsCton  point  of  view.   Accordingly, 
*nChan  &eHe»es  thst  merely  restoring  eitiiensMp  of  bleik 
people  for  travel  purposes  while  reitricting  their  political 
rights  to  homelands,  hIII  not  meet  their  objections. 

ST.Cham  s"dorse5  the  stitement  on  page  2Z  of  the  report  of  the  Deosrtinefit 
of  Constitutional  Oevelopment  «nd  Planning  for  1983  that  the  reiiuies 
and  demands  of  the  conscltutionzl  develapmeni  of  blacks  should  be  con- 
sidered with  an  open  mind  and  with  a  new  vision.   Our  submission  on 
the  question  of  constitutional  developmenc  is  made  in  this  spirit.   We 
propose  to  discuss  this  question  under  the  heading  'Democratic  Participa 
tion"  and  from  the  local,  regional,  and  national  perspectives. 

Our  broad  position  is  that  government  should  rest  upon  the  consent  of 
the  governed  and  that  all  adults,  irrespective  of  race,  should  be 
ccorded  the  right  to  representation  in  the  legislature  that  his  ultimate 
control  0^  the  r  '\    ves.   ilhile  we  are  aware  that  all  blacks  in  Soutn 
Africa  broadly  defined  in  this  document  to  include  homelands  that  were 
formerly  part  of  South  Africa)  have  a  franchise  for  sg  ;  stures  in  the 
homelands,  we  do  not  believe  that  this  alters  the  fact  that  ultimate 
Contra  remain?  n  Parliament  In  Cape  Town  and  in  the  State  President, 
who  is  vested  by  the  Republic  of  South  Africa  Constitution  Act  of  1933 
with  the  control  and  administration  of  black  affairs.   This  is  the 
case  partly  because  almost  half  of  the 
outside  the  home  ands,  partly  because  a 
dependent  on  Parliament  to  balance  thei 
some  two-th  rds  of  the  homelands'  coll* 
earned  n  the  white -designated  areas. 
to  refer  to  a  statement  by  the  Minister 
and  Planning  (Financial  Hail  19th  October 

little  political  binding  or  connection"  between  blacks  in  the  white- 
designated  areas  and-  the  homelands. 

Although  AmCham,  for  the  reasons  Just  set  out,  believes  that  blacks 
are  entitled  to  representation  in  Parliament,  we  are  not  in  a  positlo 
to  prescribe  how  this  should  be  effected.   Me  are  aware  that  the  idea 
of  1  "fourth  chamber"  for  blacks  has  been  ruled  out  by  both  the  govern 
ment  and  black  leaders  (among  them  the  president  of  Inkatha}.   We  are 
aHare  too  tbat  some  black  organisations  regard  a  constitution  based  on 
■one-man-one-vote  n  i  unitary  state  as  the  only  acceptable  type,  but 
that  the  government  has  very   firmly  rejected  this  notion.   Me  are 
convinced  however,  that  South  Africans  will  ultimately  devise  a 
solution  acceptab  e  to  the  great  majority  of  the  country's  population. 
Whether  this  is  a  unitary  or  federal  system,  or  whether  rights  are 
protected  on  an  individual  or  jroup  basis,  and  other  fundamental 
matters,  are  all  quesiions  that  South  Africans  of  all  races  will 
ultimately  have  to  decide  among  themselves  during  appropriate  negotia- 
tions between  representatives  of  all  races  and  political  parlies  in 
tne  country.    In  our  view  such  negotiations  are  a  matter  of  urgency. 
If  the  process  of  consultation  that  the  cabinet  committee  has  embarked 
upon  with  various  blacic  leaders  proves  to  be  a  first  step  in  that 
direction,  AmCham  would  applaud  the  fact- 
Having  stated  the  broad  principles  we  have  in  mind  we  wish  now  to 
put  forward  a  number  of  specific  proposals  that  we  believe  will  help 
create  a  climate  for  negotiation  and  carry  the  process  of  political 
reforn  in  South  Africa  forward. 


lacks  in 

South  Afi 

rica 

L  reside 

1    ten  t,or 

;e  ands  a' 

,ea     ly 

budgets. 

and   par 

il  product  is 

■ontext  i 

t  is 

,  relevant 

)f  Consti 

tutional 

Dev 

■elopment 

-  1984)  t 

■hat  -there  i 

s  very 

DjczedbyGoOgle 


(a)  tocil  So^ernment: 

(1)  One  of  the  Isporttnt  fttturcs  of  the  current  uphMvals  1 
certain  black  townships  in  tM  southern  IransMal  is  the 
violent  a  Tacti  on  the  persons  and  property  of  members  of 
soae  of  the  new  b  ic  local  authorities.  Such  persons 
are  fn  a  nvKltous  poj  tion  Qecaust  a  docunent  dlstribu 
tn  19S3  by  the  Department  of  Foreign  Affairs  on  behalf  o 
the  Department  of  Constitut  ona  Development  lid  Plannln 
Ml  widely  nle-preted  as  Jortrsyin^  the  new  local  autho 
ties  as  tubltitutes  for  tfit  parliamentary  franc  se.  T 
authorities  «r«  In  an  inyidious  position  a  So  because  th 
have  been  granted  important  responsibilities  but  lack  th 
financial  resour-^e?  w  th  which  to  discharge  their  duties 
effectively.  Ue  strongly  reconnend  that  the  governnenc 
lamedlately  issue  a  clear  statement  to  the  effect  that  t 
black  local  authorities  are  a  font  of  three-tier  governm 
only  and  that  their  establtsttinent  sHould  in  no  oay  be  se 
as  a  substitute  for  black  political  rights  at  other  leva 

(ft)  Ue  ire  aware  that  the  auestion  of  how  local  auttioritles 
should  be  financed  has  been  the  focus  of  official  attent 
for  some  tine,  nost  recently  by  the  pernanent  finance  li 
cooRiittee,  and  that  a  number  of  proposals  trt  being  consi 
We  strongly  advise  against  introducing  nethods  (taxes  ba 
on  the  number  of  employees,  for  eiample)  to  finance  loc» 
authorities,  be  they  black  or  white,  that  may  have  the  e 
intentionally  or  otherwise,  of  discouraging  business  inv 
ment  in  metropolitan  areas.  Ue  do  not  believe  that  Sou 
Africa  can  afford  any  measures  which  discourage  Job  crea 
Ue  do  not  wish  to  conrnent  on  whether  as  a  natter  of  gene 
principle  it  is  appropriate  for  local  authorities  to  be 
setf-financing.  We  do.  however,  strongly  believe  that 
apply  such  a  principle  to  local  authorities  tn  black  tow 
In  South  Africa  at  the  present  time  is  most  Inappropriat 
The  large  backlogs  in  infrastructure  in  these  areas  are 
result  Of  public  policy  (the  freeze  on  housing  construe 
In  certain  townships  in  the  late  1960's  for  e>anp  e]  an 
we  believe  it  is  unjust  and  unvorkable  to  burden  local 
authorities  with  the  responsibility  for  the  substantial 
upgrading  that  the  township;  reaulre.  Ue  would  urge  th 
government  to  introduce  direct  subsidies  for  development 
and  upgrading  of  the  townships  and  to  regard  such  suBsid 
as  a  form  of  development  assistance  [similar,  perhaps,  t 
that  provided  tohomelsnd  administrations).  As  we  have 
above,  the  granting  of  freehold  land  rights  in  black  tow 
shiDS  would,  in  tine,  provide  local  sources  of  revenue. 

sufficient  would  tUo   reqLiire  naximum  business  developme 
in  those  sreas.  ■■■.■nich  unaerhnes  tne  need  to  remove  rest 


ham  'las  noted  that  tne  Regional  Services  Councils  B 
reduced  in  Parliament  in  1984  and  subsequently  refer 
a  select  conmittee,  provides  for  white,  coloured,  an 
ian  local  authorities  to  be  members  of  these  council 
hough  black  local  authorities  will  ba  able  to  obtain 
vices  from  the  councils  on  a  contract  basis,  they  wi 
be  formal  nemfiers.  Ue  can  see  no  sound  economic  o 
inistrative  reason  for  eicluding  blaclit  and  we  are  g 


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to  note  that  the  prfsldent  of  the  Transvial  Municipal  Associa- 
tton  has  reconnended  that  thty  bt  Included.   Accordingly  we 
itrongly  urge  that  the  legljlation  be  emended  before  being 
prewnted  to  ParlUment  again.   In  th  s  contest  «  feel  tl 
Is  relevant  to  point  out  that  the  eic  us  on  of  b  icks  from 
the  new  trlcameral  Parliament  t\ts   created  a  -grea  deal  of 
bitterness  irnong  black  people  of  a11  political  persuasions 
and  we  believe  that  this  exclusion  should  not  be  repeated 
at  the  level  of  regional  services  councils.   On  the 
contrary,  we  believe  that  the  regional  services  councils 
provide  a  golden  opportunity  for  consultation  and  negotia- 
tion between  blaciis  and  other  groups.   To  allow  this  pro- 
cess to  go  ahead  in  the  regional  services  councils  would, 
we  believe,  be  a  valuable  eiperiment  for  South  Africa  and 
contribute  to  the  process  of  evolutionary  change. 

nil  Government: 


Although  ten  hooelands  have  already  been  set  up  in  South  Africa 
with  their  own  adninlstrations,  eight  developnient  planning  regions 
subsequently  established  straddle  homeland  boundaries,  which  Is  a 
recognition  of  the  Increasing  economic  Integration  of  South  Africa, 
The  regional  development  advisory  committees  established  In  respect 
Of  these  development  regions  are  also  i  recognition  of  the 
inevitability  of  Joint  decision-making  on  matters  of  corrmon 
Interest.   If  this  can  happen  in  the  sphere  of  regional  develop- 
ment. It  is  logical  to  extend  the  principle  to  decision-making  of 
regional  relevance  in  other  fields,  including  the  social  and 
political.   In  this  context  we  uojld  commend  to  the  coanittee 
the  report  of  the  Buthe  ezi  Commission,  which  found  that  the 
existence  of  separate  authorities  in  Kwa:ulu  and  Watal  led  to 
expensive  and  ineffit  ent  dup  ication  and  overl  pping,  and 
accordingly  reconsiended  that  all  regiona  functions  be   carried 
out  on  a  Joln.t  basis  by  the  provincia  administration  and  the 
Kwazulu  leg<  lative  assembly   As  AmCham  understands  it,  the 
eonsnfsslon  recommended  a  form  of  multi-racial  regional  govern- 
ment In  Natal  and,  without  wishing  to  endorse  the  policies 
either  of  the  Kwaiulu  legislative  assembly  or  of  the  Natal 
provincial  adminlitration,  we  would   ke  to  contend  to  the 
committee  the  principle  of  allowing  co-operation    the  eight 
development  regions  over  matters  of  economic  development  to 
evolve  into  Joint  decision-ruMng  on  regional,  political,  and 
Other  issues.   Again,  without  wishing  to  prescribe  the  precise 
fonDula,-AmChin  Is  confident  that  such  a  formula  can  be  reached 
through  black  and  white  negotia  on  and  compromise.   The  formula 
could  differ  from  region  to  region,  depending  on  political, 
economic,  and  other  ciroumstances,  but  regional  governments 
of  this  nature  could  evolve  into  coinponent  units  of  an  ultimate 
federal  political  system  for  South  Africa,  if  sucii  a  system  were 
eventually  decided  upon  In  preference  to  a  unitary  state. 


We  have  already  stated  above  AmCham's  confidence  that  eventually 
South  Africans  will  devise  an  appropriate  formula  for  blacit 
participation  n  Parliament.   The  proposals  for  local  and 
regional  government  outlined  above  would,  we  believe,  pave  the 
way  for  such  a  development  If  they  were  successfully  imple- 
■ented.   Ue  would  In  the  meantime  wish  to  make  the  following 
reconBendatiens: 


,  Google 


(1] 

blacks  and  thai  tl 
formula  has  be«n  i 
population  groups 

)uld  ■at«  an  announceoent  tnat  It  Is 
jrant   the  pirlianerilary   franchise   to 
lis  win  be  done  when  an  appropriate 
igreed  upon  Oy  the  leaders  of  all 

(111 

1     the  govermcnt  shi 
xat  tqrfei  uDon,  1 
e>tendea   not  only 
but  also  to  BUcki 

)uld  also  announce  that  once  the  formulj 
the   parliamentary   franchise  would  be 
to  blacks  in  tne  -fif te-desis«ated  area! 

(Hi] 

1    blacks  should  bs  i 
President's  Co™r 
conmittee  -ill   pi, 
priorities  and  ihi 

given  representation  on  the  State 

ly  a  major  role  In  determining  Budget 
[refore  haue  a  major  impact  o"  public 

spending   and  on   tne  economy,   to  etclude   blacks   from   It 
Stems  unjust  and  anomalous^     and 
(i»)      the  goiernment   Should   not   proceed   any   further  with  plans 
for  a  confederation,  as  it  is  evident  that  tills  particular 
formula  Is  rejected  by  a  great  utr-/  biacli  people,   Including 
a  number  of  leaders  of  iho  h.;.-.eijii'rn.       Ue  refer  In  this 
context  to  meetings  held  between  the  leaders  of  Kwaiulu, 
Iransliei ,   Lebowa,   and   Xangwane  with  a   view  to  prorating 
federation  rather  than  confederation.       Confederation  is. 
xe  believe,  unacceptable  because  it  Is  based  upon  the 
removal  of  cltiienshlp  from  blacks. 

3.     negotiation  and  Consultation 

As  stated  above,  an  appropriate  political   formula  for  South  Africa  can 
only  be  arrived  at  by  South  Africans  themselves  through  an  agreed  proces 
of  negotiation  In  whIcA  representatives  of  alt  race  groups  and  poUcicat 
parties  can  freely  participate.       For  such  a  process  of  negotiation  to  b 
effective.  It  must  necessarily  include  leaders  or  organisations  now  pro- 
scribed and/0     0D«ratlng   in  cille.        AmCham  does   not   presume  to  claim 
that  such  organ  satlons  are  the  only  authentic  voice  of  black  people. 
Some  of  th-em  ire    ndoubtedly  aiii^n;  the  most  Important  voices,  however. 
AmCham  accord  ngly  Believes   tha"    t>ie  organisations   In  question   should 
be    *ga     sed  ind  tna     leaders  tliereof  now  in  prison  or  In  exile  should 
be  granted        amnesty,  subject  to  their  agreement  to  participate  In 
lawful  denocrattc  procedures  and  to  dissociate  themselves  from  violence. 
Al     persons        detention  without  trial   should  at  the  same  tine  be 
charged  or  released. 

COflCLUSIOH 

A.TCham  believes  that  South  Africa  ha 
making   important  changes   in   policy, 

the  legislation  providing  for  the  registration  of  black  trade  unions 
that  followed   the   report  O      the  Uiehahn  Comnisslon.        Ue  have  witnessed 
alio  the  employmeiit  of  black  people  In  ever  greater  numbers  in  skilled 
and  managerial  posts,  and  tfie  gradual  abandonment  of  the  industrial 
colour  bar.       Blacks  and  whites  have  proved  themselves  capable  of 
effective  and  mutually  beneficial  negotiation  in  the  Industrial   rela- 
tions field,  and  we  believe  this  principle  can  successfully  be  applied 
In  the  political  field  at  local,  regional,  and  national   level.       Ue 
have  seen  also  the  desegregation  of  sport  and  sports  facilities 
i^many  fi«lds,  the  desegregation  of  theatres  and  of  certain 
hotels  and  restaurants     whi le  an  increasing  number  of  black 
students  are  attending  wK  te  universities.       All   this  encourages 
us  in  the  belief  that  peaceful  evolutionary  change  In  South  Africa 
Is  possible.       This  suboisslon  is  made  as  a  result  of  hnCham's 
dasire  to  do  all  in  Its  power  to  assist  that  process  to  the  benefit 
not  only  of  our  aeaber  conpinles  and  the  many  South  Africans  who 
work  for  then,  but  to  South  Africans  of  all  races. 


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•i  B.  CRUTCHER 


June  7,  1985 


(:02)  955-8592 


99999-00003 


Mr.  Paul  Freedenberg 
Senate  Committee  on  Banking, 

HauBing  and  Urban  Affairs 
.  Subcommittee  on  International 

Finance  &  Monetary  Policy 
53<  Dirkaen  Senate  Office  Building 
Washington,  D.  C.  20510 

Rei  Theodore  B.  Olson's  Statement  on  S.  635 

Dear  Mr.  Fceedenberg: 

Enclosed,  please  find  ten  copies  of  the  statement 
by  Mr.  Theodore  B.  Olnon  on  S.  E3S,  a  bill  to  express  the 
opposition  of  the  United  States  to  the  system  of  apartheid 
in  South  Africa.   He  appreciate  your  assistance  in  enabling 

consideration  of  this  bill. 


If  you  h 
a i stance  to  you 
nber  listed  abov 


ROH/mor 

cc !   Theodore 


s,  or  if  I  may  be  of 
lease  contact  me  at  the 

Cordially  youra, 
Ronald  O.  Hueller 


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Stat*Ri*nt  of 
Th*  Bonorabl*  Th«odor*  B.  Olson 

Mr.  Chalman  and  H*nb«rs  of  the  Subcomnlttc*  on 
Intcmatlonal  Finance  and  Honatary  Policy  of  tha  Sanat* 
Connltta*  on  Banking,  Housing  and  Urban  Affalra: 

Thank  you  for  asking  ma  to  axprasa  ny  viawa  ragardlng 
S.  63S,  a  bill  to  "axpraaa  tha  opposition  of  the  United  Stataa 
to  the  aystem  of  apartheid  in  South  Africa  .  .  .  ."1/ 

I  hasten  to  declare  at  the  outset  that  while  I  have 
reaervatlons  regarding  'the  means  with  which  this  bill  seeks  to 
Bchieve  its  stated  goal,  I  do  not  disagree  with  its  purpose  of 
expressing  American  opposition  to  apartheid.  I  share  the  view, 
surely  held  by  all  members  of  Congress  and  the  vast  majority  of 
the  American  people,  thst  apartheid  is  an  Immoral,  unjustifi- 
able and  Intolerable  policy. 

The  practice  of  segregation  and  discrimination  on  tha 
Ittsls  of  race  or  skin  color  is  plainly  and  Incontestably 
unacceptable.   We  abhor  it  as  a  nation  and  as  individuals.   Our 
Nation's  earliest  and  most  basic  statement  of  fundanental 
principles,  the  Declaration  of  Independence,  has  as  its  central 
premise  the  self-evident  truth  "that  all  nen  are  created  equal" 
and  "that  they  are  endowed  by  their  Creator  with  certain 
inalienable  rights,  that  among  these  are  Life,  Liberty  and  the 
pursuit  of  Happiness. "2/   Thst  same  immortal  document  declares 

1/  S.  635,  99th  Cong.,  1st  Sesa.  preamble  (19B5). 

2/  Tba  Declaration  of  Independence  para.  2  (U.S.  1776). 


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OUT  b«liaf  that  governments  derive  their  powers  £rom  the 
consent  of  the  governed,  "that  whenever  any  Form  of  Government 
becomes  desti-uctlve  of  these  ends,  it  is  the  Right  of  the 
Fsople  to  alter  or  to  abolish  it"  and  that  the  systematic 
deprivation  of  liberty  invests  a  people  with  the  right  and  the 
duty  to  "throw  off  such  government  .  .  .  ."3/  We  must  never 
for  a  moment  forget  these  principles  and  we  must  never  turn  our 
backs  or  allow  our  concern  to  slacken  for  any  people  denied 
these  fundamental  rights,  whether  they  live  in  South  Africa  or 
in  any  other  nation. 

S.  635  seeks  to  express  this  Nation's  opposition  to 
apartheid  by  imposing  certain  "economic  sanctions"  upon  South 
Africa.   Section  3  of  the  bill  bars  any  United  States  person 
from  making  a  loan  or  extending  credit,  directly  or  through  a 
foreign  affiliate,  to  the  government  of  South  Africa  or  to  any 
corporation,  partnership,  or  other  organization  owned  or 
controlled  by  the  government  of  South  Africa.   A  United  States 
person  is  defined  in  section  12  to  include  "any  domestic 
concern"  including  "any  permanent  domestic  establishinent  of  any 
foreign  concern"  and  "any  bank  organized  under  the  laws  of  the 
United  States. "4/  The  term  "loan"  is  defined  by  reference  to 
section  201(h)  of  the  Credit  Control  Act. 5/  Section  3  excepts 


3/  Id. 

4/  Tha  references  in  S.  635  to 

5/   Sm  12  U.S.C.  (  1901(h)  (1976  &   Supp.  V) . 


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frOHl  its  prohibition,  howovar,  loans  or  Mctsnslons  of  crsdit 
for  nondi scrlminmtory  •ducatlonsl,  housing,  or  health 
facilities. 

Section  4  of  the  bill  prohibits  any  United  Statea 
person  from  naklng  'directly  or  through  a  foreign  affiliate" 
any  Investment,  including  bank  loans,  In  South  Africa.   The 

'investnent  in  South  Africa"  is  defined  In  section  12  to 
"establishing,  or  otherwise  investing  funds  or  other 
ssets  In,  a  business  enterprise  in  South  Africa"  or  Making  a 
oan  or  extension  of  credit  to  a  business  In  South  Africa.   A 
'businees  enterprise"  is  defined  In  section  12  as  any  venture 
'which  exists  Cor  proCltniBking  purposes  or  to  otherwise  secure 
iconomic  advantage."   Section  4  excepts  from  Its  prohibition 
re-invastaent  in  the  same  businesa  oC  earnings  derived  from  s 
lauainaas  established  in  South  Africa  prior  to  enactmant  of  the 
bill.   Also  exempted  are  purchasaa  of  aacurltles  on  a  national 
securities  exchange  of  companies  doing  bualneas  in  South  Africa 
prior  to  enactment  of  the  bill. 

Section  5  of  the  bill  prohibits  any  person.  Including 
a  bank  operating  under  the  laws  oC  the  United  States,  from 
Importing  Into  the  United  States  any  South  African  krugerrand 
or  other  gold  coin  minted  in  South  Africa  or  offered  for  sale 
by  the  Govamment  of  South  Africa. 

Pursuant  to  aaction  6  oC  the  bill,  tha  eactione  4  end 
5  prohibitions  nay  be  waived  by  the  President  if  he  datermlnea 
that  certain  conditions  are  met  by  South  Africa  and  if  both 


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Boua*s  of  Coiigr«sa  concur  in  the  detarminatlon  that  the 
conditions  have  been  met.   The  conditions,  one  or  more  of  which 
nust  have  been  determined  by  the  President  to  have  been  net 
before  he  may  propose  a  waiver  to  Congress,  include  that  the 
Government  of  South  Africa  (1)  has  eliminated  "the  system  which 
makes  it  impossible  for  black  employees"  to  find  housing  near 
their  place  of  employment;  (2)  has  eliminated  all  policies  that 
restrict  employment  opportunities  for  black  people  in  South 
Africa  and  their  freedom  to  live  wherever  they  find  employment; 
(3)  has  eliminated  "all  policies  that  make  distinctions" 
between  blacks  and  whites;e/  (4)  has  eliminated  removals  of 
black  persons  from  certain  areas;  (S)  has  eliminated  all 
residence  restrictions  based  upon  race  or  ethnicity;  (6)  has 
"entered  into  meaningful  negotiations  with  truly  representative 
leaders  of  the  black  population  for  a  new  political  system; "7/ 
(7)  has  agreed  to  an  internationally  recognized  settlement  for 
Hamibia;  and  (8)  has  "freed  all  political  prisoners." 

I  do  not  intend  to  address,  as  I  am  certain  others 
have  or  will,  the  efficacy  of  these  proposals  or  whether  -their 
provisions  should  be  applied  to  the  host  of  other  nations  of 
the  world  which  deny,  •^n   a  broad,  systematic  and  repressive 


7/  Emphasis  added.  The  underscored  terms  are  indi^ 
ambiguous  and,  taken  as  a  whole,  are  subject  to  vlr1 
unlimited  Interpretations. 


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baBls,   virtually  all   foma  of  civil   libartlas  which  wa  hold  to 
be   Inalienabla.      Hhila   it  may    aaem   Incongruoua   to  pass  thia 
bill   without   applying   similar    aanctiona   to  many  other  nations, 
I    will    leave   to   others   to   discuss   whether   the  bill,    or 
something   like   it,    should  be   addressed  even-handedly   to    all   of 
our  trading  partners.      Mor  vill   I   comment  on  the  geopolitical 
or  moral    concerns    that  inuat  play   a   significant   role    In   your 
consideration  of  this  bill.      Others   are   Inuneasurably  more 
qualified  to  address  these  very  vital   considerations.      Hy 
conunents  will   instead  be   strictly   limited  to  the  potential 
impact  of  legislation  such  aa  S.    635  on  our  Constitution's 
doctrine   of   separation  of  powers   and  the  wisdom  of   conducting 
our  nation's  delicate  foreign  policy  through  the  medium  of 
rigid  and  confining  'permanent"   legislation. 

I 

In  any  debate  regarding  the  Constitution's  allocation 
of  power  to  conduct  foreign  relations  it  is  misleading  and 
counterproductive  to  characterize  different  points  of  view  in 
terms  of  differences  between  "liberals"  and  "conservatives"  or 
Democrats  and  Republicans.   Those  Presidents  who  have  most 
forcefully  asserted  the  Executive's  power  to  conduct  foreign 
affairs  have  come  from  both  political  partiea  and  have  held 
vastly  different  political  philaaophlea.   Because  the 
underlying  lasues  —  the  allocation  of  authority  to  exercise 
and  alter  American  foreign  policy  on  a  day-to-day  basis  --  is 
so  vital,  it  would  be  unfortunate  to  obscure  it  by 


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characterizing  proponents  of  particular  approaches  in  terms  of 
partisan  labels. 

At  the  heart  of  our  Constitution  is  the  concept  of  a 
separation  of  powers  among  three  coequal  branches  of  government 
at  the  federal  level. 6/  This  separation  of  governmental  power 
has  historically  lead  to  a  certain  friction  among  the  branches 
and  efforts  by  each  of  the  branches  to  exercise  authority 
delegated  to  another.   Conflict  has  been  particularly  constant 
between  the  two  political  branches,  of  the  federal  government . 
(those  which  draw  their  authority  directly  from  the  people 
through  the  ballot  box)  --  the  Executive  Branch  and  the 
Legislative  Branch.   This  conflict  stems  in  large  part  from  the 
fact  that  while  scholars  may  speak  in  terms  of  separated 
powers,  many  of  the  powers  allocated  under  the  Constitution  are 
not  clearly  granted  to  a  single  branch. 

The  accommodations  among  the  three  branches 
of  the  government  are  not  automatic.   They 
are  undefined,  and  in  the  very  nature  of 
things  could  not  have  been  defined,  by  the 
Constitution.   To  speak  of  lines  of 
demarcation  is  to  use  an  inapt  figure. 
There  are  vast  stretches  of  ambiguous 
territory. 9/ 


B/   See  Buckley  v.  Valeo,  424  U.S.  1,  120  (1976)  (It  was  the 
"Intent  of  the  Framers  that  the  power*  of  the  three  great 
branches  of  the  National  Government  be  largely  separate  from 
one  another. ") 


Rev.  lOlC,  IDie  (1924)  (emphasis  in  original). 


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Indcttd,  our  Bch^i*  of  yovkmnftnt  a*v«r  intended  th*  Uir«* 
branches  to  ect  In  iBolatlon  of  each  other. 10/ 

One  of  the  oldest  continuing  saurces  of  thie  conflict 
between  Congress  and  the  President  ia  that  regarding  the 
formulation  end  inplenentation  under  the  Constitution  of 
Anerican  foreign  policy.   The  Constitution  itself  offers  no 
clear  delineation  of  Executive  and  Legislative  pover  with 
respect  to  foreign  affairs.   Both  Congress  and  the  President 
can  point  to  text  in  the  Constitution  in  support  of  their 
respective  clalias  to  direct  foreign  affairs. 

The  language  of  the  Constitution  does  not  provide 
particularly  helpful  guidance.   Article  II  of  the  Constitution 
vests  the  President  with  It]he  executive  "Power. "11/  The 
president  is  the  "Connander  In  Chief  of  the  Army  and  Navy  of 
the  United  States. "12/  Also,  he  has  "the  Power,  by  and  with 
the  Advice  and  Consent  of  the  Senate,  to  make  Treaties  .... 
[and  to]  appoint  Ambassadors. "13/ 

The  Conetltutlon  also  gives  Congress  a  number  of 
eJ^resa  powers  the  exercise  of  which  may  have  an  Impact  upon 
foreign  relations.   Article  I  delegates  to  Congress  the  i>ower: 


10/  See  Springer  v.  Philliplne  Islands,  277  U.S.  1B9,  209 
(1928)  (Holmes,  J.,  dissenting)  ("The  great  ordlnancea  of  the 
Constitution  do  not  establish  and  divide  fields  of  black  and 
trtilte."). 

11/  U.S.  Const.  Art.  II,  |  1- 

12/   Id.  at  §  2. 

13/  Id. 


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|t)a  rcgulat*  Conunerc*  with  foreign  Hations 
...  to  declare  War  .  .  .  [and]  lt]o  make 
all  Laws  which  shall  b«  necessary  and  proper 
for  carrying  into  Execution  the  foregoing 
Powers,'  and  all  other  Powers  vested  by  this 
Constitution  in  the  Government  of  the  United 
States,  or  In  any  Department  or  Officer 
thereof .14/ 

And  because  only  Congress  can  appropriate  funds.  Art.  I, 
sec.  9,  cl.  7,  virtually  anything  done  with  those  funds, 
including  the  implementation  of  our  relations  with  foreign 
■tates,  la  ultimately  under  the  control  of  Congress. 

Thus,  neither  branch  was  given  power  expressly  to 
"conduct"  foreign  policy.   Both  the  President  and  Congress  have 
a  role  to  play.   Because,  however,  th*  legislative  process  Is  a 
cumbersome  and  relatively  permanent  one,  the  President 
historically,  at  least  until  recently,  has  exercised  extensive 
day-to-day  authority  over  foreign  relations. 

The  Framers  of  the  Constitution  clearly  expressed 
their  belief  that  the  Constitution  vested  the  power  to  execute 
American  foreign  policy  in  the  President.   John  Jay  in  the 
Federalist  Papers  arqiued  that  the  formulation  and  implementa- 
tion of  foreign  policy  is  a  function  of  the  Executive  Branch  as 
a.  practical  necessity.   In  the  first  place,  he  observed  that 
foreign  policy  must  frequently  be  implemented  in  a  context  of 
confidential  negotiations. 


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It  ■•Idom  happens  in  th*  negotiation  of 
of  whatever  nature,  but  that 
perfect  aecracy  and  Iniaedlate  dispatch  are 
•onetimes  requisite.   There  are  cases  where 
the  most  useful  intelligence  nay  be 
obtained,  if  the  petsons  posseaslng  it  can 
be  relieved  fron  apprehensicns  of 
discovery   Those  apprehenaioiiB  will  operate 
on  those  persons  whether  they  are  actuated 
by  mercenary  or  friendly  motives;  and  there 
doubtless  are  many  of  both  degcriptlons  who 


secrecy  of  the  President, 

but  who  would  not 

confide  in  that  of  the 

Senate,  and  still 

less  in  that  of  a  larcie 

popular  asBembly- 15/ 

Our  first  Secretary  of  State  aleo  emphasleed  the 
Importance  of  flexibility  In  foreign  policy  and  the  capacity  t 
act  promptly  and  with  subtlety. 

They  who  have  turned  their  attention  to 
the  affairs  of  men  nust  have  perceived  thet 
there  are  tides  in  then:  tides  very 
irregular  In  their  duration,  strength,  and 
direction,  and  aeldon  found  to  run  twice 
exactly  in  the  Bame  manner  or  measore   To 
discern  and  to  profit  by  these  tides  in 
national  affaire  19  the  business  of  those 
who  preside  over  them;  and  they  who  have  had 
much  experience  on  this  head  inform  us  that 
there  frequently  are  occasions  when  days, 
nay,  even  when  hours,  are  precious   The 
loss  of  a  battle,  the  death  of  a  prince,  the 
removal  of  a  ninlster,  or  other  circum- 
stances intervening  to  changa  the  present 
posture  and  aspect  of  affairs  nay  turn  the 
most  favorable  tide  into  a  course  opposite 
to  our  wishes.   As  in  the  field,  so  in  the 
cabinet,  there  are  moments  to  be  seized  aa 
they  pass,  and  they  who  preside  in  either 
should  be  left  in  capacity  to  inprove  then. 


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So  often  and  so  essantially  have  we 
heretofore  suffered  from  the  want  of  secrecy 
and  dispatch  that  the  Constitution  would 
have  been  Inexcusably  defective  If  no 
attention  had  been  paid  to  those  objects. 
Those  matters  which  in  negotiations  usually 
recp^ire  the  most  secrecy  and  the  most 
dispatch  are  those  preparatory  and  auxiliary 
measures  which  am  not  otherwise  important 
in  a  national  view,  than  as  they  tend  to 
facilitate  the  attainment  of  the  objects  of 
the  negotiation.   For  these  the  President 
will  find  no  dltficulty  to  provide;  and 
should  any  circumstance  occur  which  recpjires 
the  advice  and  consent  of  the  Senate,  he  may 
at  any  time  convene  them. 16/ 

While  there  were  many  subjects  on  which  they  did  not 
agree,  two  other  important  participants  in  our  Nation's  early 
history,  Thomas  Jefferson  and  Alexander  Hamilton,  both  insisted 
that  the  grant  of  Executive  power  expressly  vests  the  President 
with  all  authority  over  foreign  affairs  except  as  specifically 
withheld.   Both  reasoned  that  while  the  Constitution  gave 
Congress  legislative  power  to  the  extent  "herein  granted"  in 
Article  I:  Article  II  simply  states  "[tjhe  executive  Power 
shall  be  vested  in  a  President."  Therefore,  they  argued,  the 
President  has  no  limitations  other  than  those  specifically 
stated  in  the  Constitution. 17/  Likewise,  John  Marshall 
expressed  the  view  before  the  House  of  Representatives  that 
"|t)he  President  is  the  sole  organ  of  the  nation  In 

16/   Id.  at  393  (emphasis  added). 


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Its  ext«m«l  ralBtiDiiB  and  its  sole  rapx-Bsentative  with  foreign 
nations. "18/ 

Similar  views  were  held  in  the  early  Congrsasas. 
Thus,  the  Senate  CoRtmlttee  on  Foreign  Relations  reported  to  the 
Senate  In  1816: 

The  President  is  the  constitutional 
representative  of  the  United  States  with 
regard  to  foreign  nations.   He  manages  our 
concerns  with  foreign  nations  and  must 
necessarily  be  most  competent  to  determine 
when,  how  and  upon  what  subjects  negotiation 
may  be  urged  with  the  greatest  prospect  of 
success.   For  his  conduct  he  is  responsible 
to  the  Constitution.   The  conmlttee 
considers  this  responsibility  the  surest 
pledge  for  the  faithful  discharge  of  his 
duty.   They  think  the  interference  of  the 
Senate  in  the  direction  of  foreign 
negotiations  calculated  to  diminish  that 
responsibility  and  thereby  to  impair  the 
bast  security  for  the  national  safety.   The 
nature  of  transactions  with  foreign  nations, 
moreover,  requires  caution  and  unity  of 
design,  and  their  success  frequently  depends 
on  secrecy  and  dispatch. 19/ 

The  United  States  Supreme  Court  has  held  that  the 
Constitution  vests  the  power  to  conduct  foreign  relations  with 
the  President.   In  United  States  v.  Curtlss-Wrlght  Export 
Corp . . 20/  the  Supreme  Court  articulated  the  proposition  that, 
with  respect  to  foreign  affaire,  unlike  internal  affairs,  the 


18/  Annals,  &thCong.,  Col.  613  (March  7,  1800). 


20/   299  U.S.  304  (1936). 


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£«d«r*l  govemnent  is  not  United  to  powers  "specifically 
enumerated  in  the  Constitution. "21/  Curtl es-Wright  concerned 
the  issue  whether  President  Franklin  D.  Roosevelt,  acting 
pursuant  to  a  Joint  resolution  of  Congress, 22/  could  punish 
those  involved  in  a  conspiracy  to  sell  machine  guns  to 
Bolivia.   The  Court  held  that  the  President  could.  The  Court 
stated: 


It  Is  important  to  bear  in  mind  that  we 
are  here  dealing  not  alone  with  an  authority 
vested  in  the  President  by  an  exertion  of 
legislative  power,  but  with  such  an 
authority  plus  the  very  delicate,  plenary 
and  exclusive  power  of  the  President  aa  the 
sole  organ  of  the  federal  government  in  the 
field  ot  international  relations  —  a  power 


Similarly,  the  Court  noted  that: 


(PJarticipation  in  the  exercise  of  the  power 
(to  conduct  foreign  relations)  is  signifi- 
cantly limited.   In  this  vast  external 

realm,  with  its  important,  complicated. 


21/   "(TJhe  investment  of  the  federal  government  with  the 
powers  of  external  sovereignty  did  not  depend  on  the 
affirmative  grants  of  the  Constitution."   Id.  at  316.   This 
conclusion  follows  because  the  Constitution  only  embodied  "the 
general  mass  of  legislative  powers  then  possessed  by  the 
states,"  while  Coraign  affairs  powers  passed  directly  from  the 
Crown  to  the  United  States  Covernment  without  ever  having  been 
possessed  by  the  states.   Id.  at  316. 

22/  H.R.J.  Res.  347,  73d  Cong..  2d  Sess.  (1934). 

23/     299  U.S.   at  319-20  (enphasls  added). 


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delickt*  and  Bknlfold  probI«iiia,   th*  Pra- 
Bldent  alon»  haa  the  power  to  ap«*)c  or 
IJBten  aa  a  repraagfttatlve  or  the  nation. 24/ 

The  Court  continued: 

It  is  quite  apparent  that  if,  in  the 
maintenance  of  our  international  relations, 
embarrassment  —  perhaps  serious 
embarrassment  ~  ia  to  be  avoided  and 
success  for  our  ains  achieved,  .congreaaional 
legislation  which  is  to  be  made  effective 
through  negotiation  and  inquiry  within  the 
international  field  muat  often  accord  to  the 
President  a  degree  of  discretion  and  freedom 
from  statutory  restriction  which  would  not 
be  admissible  were  domestic  affairs  alone 
Involved. 25/ 

In  Chicago  &   Southern  Air  Lines.  Inc.  v.  Waterman 
Steamship  Corp.. 26/  the  Supreme  Court  relied  on  an  implied 
foreign  relations  power  when  it  refused  to  review  an  Executive 
order  Involving  certain  American  air  carriers  and  foreign  air 
transportation.   The  Civil  Aeronautics  Board's  grant  of  an 
international  air  route  to  one  American  carrier  rather  than 
another  waa  expressly  approved  by  the  Preaident  pursuant  to 
Section  601  of  the  Civil  Aeronautics  Act. 27/  The  Court 
rejected  an  effort  to  seek  judicial  review  of  the  President's 
decision,  concluding  that  the  President  has  "certain  powers 

2i/  Id.  at  319  {emphasis  added}. 

25/  Id.  at  320. 

26/  333  U.S.  103  (1948). 

27/  49  U.S.C.  (  1461  (1982). 


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conferrad  by  the  Constitution  on  him  as  Conmuidar-in-Chlftf  and 
•s  th«  Nation's  organ  in  foreign  affaire. "28/ 

The  Supreme  Court  has  also  noted  in  other  contexts 
that  the  President  has  a  aubetantial  degree  of  constitutional 
control  over  America's  foreign  ralaCiona.   Thus,  the  Court  has 
hald  that  the  President  has  Independent  constitutional  power  to 
•xacute  private  claims  settlements  incident  to  the  recognition 
of  a  foreign  country .29/  The  Court  has  similarly  held  that  the 
President  has  broad  powers  during  a  national  emergency  to 
settle  private  claims  against  a  foreign  country  through 
executive  agreement. 30/ 

Thus,  ample  constitutional  authority  as  well  as  common 
sense  argues  for  strong  Executive  Branch  power  in  the  conduct 
of  American  foreign  relations.   In  addition  to  the  historical 
and  judicial  arguments  supporting  such  an  Interpretation  of  the 
Constitution,  there  is  a  pragmatic  argument  against 
Congressional  intervention  in  the  details  of  foreign  policy 
based  upon  the  general  inefficacy  of  Congressional  involvement 
in  foreign  affairs.   This  argument  has  best  been  set  forth  by 
former  Senator  John  C.  Tower,  until  a  few  months  ago  Chairman 
of  the  Senate  Armed  Services  Committee: 

28/   Id.  at  109. 

See  United  I 
:eB  V.  Belnoni 

See  Dames  &   Hoore  v.  Regan,  453  U.S.  654  (19S1). 


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To  ch*  wctcnt  thit  CongrasB  often  reprcscnta 
conpctlng  regional  and  parochial   IntcrcatB, 
it:  is   alnoGt  impossible   for   it  to   forge   ■ 
unified  national  ioteign  policy  strategy  and 
to   speak  with  one  voice   in  negotiating  with 
foreign  powers        Because  of   the   nature   of 
the   legislative  process   a   law  In^y  be  passed 
in  teSponse   to  a  certain  £et  of  evants,    y*t 
remain  in  effect  long   aft*r   the 
circumstances  have  changed.      The   great 
danger  of  Congressional   lnt«rvention  in 
foreign   affairs   Is   that   enacted   legislation 
bccomas  an  institutional   rigid  "solution"  to 
a  temporary  problem. 

The  President,    along  with  the  Vice 
President,    ia  the  only  officer  of  govamment 
who  Is  elected  by  and  raaponsible  to  the 
nation  as  a  whole.      As  such,    only  ha 
poasesBBE   a  national  nandata.      As   head  of 
the   Executive   Branch,    the  President   can 
formulate  a  unified  foreign  policy,    taking 
into   consideration  how  each  aspect   of   it 
will   fit  into  an  overall  strategy       He  and 
his   advisers  can  fomulato   their  strategy 
with  the   necessary  confidentiality  not  flnly 
among  themselves     but  between   the  United 
States   and   foreign  powers        The  President 
has   the   information     professional   personnel, 
oparational    eNperience,    and  national   mandate 
to  conduct  a  coneiatant  long-range  policy. 

The  legislative  body,    on  the  other 
hand,    iB  elected  to  represent  separata 
constituencies.      Congress  must   of  necessity 
take   a   tactical    approach  when  enacting 
legislation,    since  the  paaeage  of  laws  ia 
achieved  by  constantly   shifting  coalitions. 
This   serves   us  wall    in  the   formulation  of 
domestic  policy,   where  we  proceed  by  voting 
on  one   discrete  piece   of   legislation   at   a 
time.      Although  many  of  us  may  have   our  own 
long-term  strategies   in  mind  ae  we  vote   on 
specific   legislative  matters,    the   overall 
effect  is  a  body  of  lagielatlon  passed  piece 
by  piece   by  a   changing  majority  of 
legislators.      He  build  domestic   policy  ona 
step  at  a  time  to  the  end  that  tha  final 
product   of  domestic   legislation  is   reflected 
in  a  consensus  of  various  coalitions.      If  we 
later  find  out  wa  have  made  an  error  In  a 
specific  piece  of  domestic  laglalatlon,   we 


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can  ch»n<3«  it.   For  •xaapla.  If  we  determine 
that  we  have  underfunded  housing  aubsidisa 
we  can  incre^Ee  them  Ihe  next  year.   But  the 
process  by  vhich  qenerally  accepted  domestic 
policy  is  arrived  at  does  not  lend  itself  to 
the  fomulatlon  of  a  long-term   coherent 
foreign  policy.   Once  we  alienat*  a  friendly 
government,  perhaps  through  shortsighted 
legislation.  It  nay  take  years  for  us  to 
rebuild  that  relationship  and  recoup  the 

A  foreign  policy  should  be  an  aggregate 
strategy,  nade  up  of  separate  bilateral  and 
multilateral  relationships  that  fit  into  a 
grander  scheme  designed  to  promote  the 
long-term  national  interests    With  a 
comprehensive  desl-^  in  mmd.  those  who 
execute  foreign  policy  can  tespond  to 
changes  in  the  International  environment, 
substituting  one  tactic  for  another  as  it 
becomes  necessary,  but  retaining  the  overall 
strategy. 31/ 

Lloyd  Cutler,  former  Counsel  to  President  Carter, 
echoed  the  same  sentiments  recently  when  he  saidi 

{0]n  the  general  subject  of  micro-management 
by  Congress  of  foreign  polity  matters  .  .  . 
that  is  bound  to  be  a  failed  process  because 
the  Congress,  as  presently  structured  and 
organized,  is  not  capable  of  managing,  let 
alone  micro-managing,  anything. 32/ 

The  foregoing  should  not  be  Interpreted  to  mean  that 
Congress  has  no  role  to  play  in  foreign  affairs.   Clearly,  the 


232-33  (Winter  1981/82). 

32/  L,  Cutler,  Congress,  the  President,  and  Foreign  Policy. 
ABA  Standing  Committee  on  Law  and  National  Security,  at  1S4 
<19a4). 


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Conmtitutlon  contemplates  sone  role  for  Congress  in  the 
Connuletion  of  Anerlcen  foreign  policy.   A  boundary  ntust  be 
drawn  between  the  formulation  of  that  policy.  In  which  Congress 
should  have  a  significant  role,  and  the  execution  of  that 
policy,  in  which  the  Congress  should  have  a  very  limited  role. 
One  aspect  of  the  principle  of  separation  of  powers  as  it 
operates  in  the  realm  of  foreign  relations  is  the  distinction 
between  the  formulation  and  conduct  of  policy.   The 
Conatltution  and  our  structure  of  govarnment  envisions  a  very 
limited  role  in  the  latter  for  Congress,  while  admitting  the 
President  to  a  predominant  role. 

The  Supreme  Court  has  recognized  that  part  of  the 
reason  for  the  vital  and,  until  recently,  relatively 
unrestricted  role  of  the  Executive  Branch  in  foreign  affaire 
has  been  the  understanding  and  appreciation  by  the  Legislative 
Branch  of  the  importance  to  the  nation  that  the  President 
possess  such  powers.   Thus,  the  Court  has  cautioned  that 
although  the  Congress  has  a  role  in  the  formulation  of  American 
foreign  policy,  it  must  recognize  the  importance  of  the 
President's  need  for  freedom  of  action  to  carry  out  his 
Constitutional  duty  to  conduct  American  foreign  policy.   The 
Court  emphasized  this  point  in  Halg  v.  Agee,  stating: 
"Congress,  in  giving  the  Executive  authority  over  matters  of 
foreign  affairs,  must  of  necessity  paint  with  a  brush  broader 


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than  It  custoniBrily  wields  in  doniestic  areaa.  "33/  And  in 
Dameg  &   Moore  v-  Regan,  the  Court  advised:   "If  you  propose  any 
remedy  at  all,  you  must  vest  the  Executive  with  some 
discretion,  so  that  he  may  apply  the  remedy  to  a  case  as  it  nay 
arise. "34/ 

II 

His  1970b  sav  a  sharp  increase  in  congresslonally 
initiated  forsigti  policy  legialatlon  that  had  as  its  purpose 
the  curtailment  of  the  President's  ability  to  conduct  American 
foreign  relations.      During  this  period,   numerous  separate 
prohibitions  and  restrictions  were  enacted  to  limit  Executive 
Branch  authority  to  implement  foreign  policy. 35/     At  the  very 
least,    this  legislation  was  ill-conceived.      At  worst,    the 
legislation  raises  serious  constitutional  concerns. 

S.    635  follows  In  the  tradition  of  Congress'    1970s 
intervention   in  foreign   relations.      S.    635   seriously 
circumscribes  the  President's  ability  to  achieve  the  c 


35/     A  listing  of  many  of  these  legislative  enactments  is 
appended.      See  generally  Coogresslonal  Quarterly,    Powers  of 
Congress   (2d  ed.    1982),   Chs.    7-9;   T.    Franck,    ed..    The  Tethered 
Presidency!      Congressional  Restraints  on  Executive  Power   (1961). 


V 

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goal  of  th*  current  Congr««a  and  Pr«si<lant  R«aqan36/  —  the 
persuasion  o£  the  South  African  government  that  the  apartheid 
systen  should  be  changed  to  permit  full  participation  in  the 
political  process  and  the  enjoyment  of  fundamental  human  rights 
by  all  South  Africans.   Thue,  in  this  particular  instance  the 
Executive  and  Legislative  Branches  are  not  in  conflict  over  the 
9oals  or  purposes  of  Anerican  foreign  policy:  rather  the  two 
branches  differ  only  over  the  nethod  by  which  to  pursue 
American  foreign  policy  goals.   Constitutional  and  prudential 
considerations,  however,  argue  In  favor  of  restraint  by  the 
Legislative  Branch  in  the  conduct  of  this  nation's  foreign 
policy  toward  South  Africa. 

The  Reagan  Administration  has,  like  its  predecessors, 
sought  to  Implement  policies  which  bring  about  changes  in  South 
Africa's  policies,  but  has  also  sought  to  retain  the  ability  of 
the  President  to  respond  In  a  flexible  manner  to  any 
initiatives  by  the  South  African  government .37/  Since  the 
Truman  Administration,  the  United  States  has  recognized  that 
there  are  American  interests  regarding  South  Africa  In  addition 
to  our  interest  In  eradicating  apartheid.   Previous 
adminlBtrations  have  uniformly  recognized  that  our  capacity  to 
influence  the  Internal  affairs  of  a  foreign  sovereign  Is 


36/  See  K.  Dam,  Statement  Concerning  S.  635.  before  the  Senate 
Committee  on  Banking,  Housing  and  Urban  Affairs,  99th  Cong., 
1st  Sees.  (April  16,  1985). 


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linltftd  and  that  draconian  and  inflaxlble  measures  may  actually 
reduce  our  ability  to  bring  about  the  results  we  hope  to 
achieve  or  may  even  be  counterproductive.   We  would  not  wish  to 
be  bound  to  a  policy  which  might  impose  such  severe  economic 
conditions  that  the  people  we  wish  to  help  would  suffer  the 
most:  or  which  might  foster  an  environment  for  a  violent 
resolution  of  the  situation  which  could  lead  to  an  even  mora 
repressive  government  with  hostile  attitudes  toward  the  United 
States. 

Particular  attention  should  be  paid  to  sections  6  and 
10  of  S.  635.   Section  G  of  the  bill  would  severely  limit  the 
President's  authority  to  waive  or  gradually  lift  on  his  own 
initiative  the  substantive  prohibitions  of  the  legislation  as 
night  bo  appropriate  to  changing  circumstances.   Under  the 
bill,  the  President  may  only  waive  these  prohibitions  if 
certain  highly  subjective  standards  were  met  by  the  South 
African  government.   Aside  from  the  extreme  difficulty  of 
policing  the  details  of  policy  change  implementation  by  a 
foreign  sovereign,  even  should  the  President  determine  that  one 
or  all  of  these  conditions  is  met  by  the  South  African 
government,  he  may  not  waive  the  economic  sanctions  contained 
In  5.  635  until  a  Joint  resolution  is  passed  by  both  Houses  of 
Congress.   Given  the  relative  ease  of  blocking  affirmative 
legislative  acts  of  this  nature,  a  vigorous  and  determined 
■inority  could  well  block  vitally  necessary  "fine  tuning"  of 
foreign  policy. 


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Section  10  of  S.  63S  is  Avea  aor«  Intruslv*  thmn 
Sactlon  6  upon  th«  Prcaldttnt'a  constitutional  power  to  conduct 
Amttrican  foreign  policy.   S«ction  10  purports  to  eownand  tha 
President  to  nsgotist*  with  other  nations  to  adopt  economic 
sanctions  against  South  Africa  similar  to  those  sanctions 
imposed  by  this  legislation.   This  provision  is  both 
unenforceable  and  of  dubious  constitutionality. 

The  issue  of  apartheid  justifiably  engenders  strong 
emotions.   It  is  important,  however,  that  S.  635  not  be 
considered  In  passion  and  rashly  enacted.   It  would  be 
ill-advised  to  rush  headlong  into  a  solution  which  may  not  only 
fall  to  serve  the  immediate  goals  of  tha  proponents  of  this 
legislation,  but  put  in  place  yat  another  sarious  inpedluent  to 
the  power  of  this  and  future  Presidents  to  conduct  a  thoughtful 
and  productive  foreign  policy.   The  lasting  effect  would  be 
that  Congress  would  institutionalize  Its  foreign  policy 
differences  with  a  particular  President  by  legislating 
permanent  solutions  for  temporary  evils. 

Cyrus  Vance  said  at  the  1980  Harvard  commencement, 
"Neither  we  nor  tha  world  can  afford  an  American  foreign  policy 
which  is  hostage  to  the  emotions  of  the  moment."  Clven  the 
strong  aentiments  which  have  been  understandably  aroused 
against  apartheid,  it  may  well  require  a  considerable  act  of 
statesmanship  for  a  member  of  Congress  to  resist  the  temptation 
to  vote  for  anything  which  holds  out  the  promise  of  eradicating 
this  evil.   In  the  long  term,  however,  this  Government  is 


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V&stly  b«tt«r  m«rv«d  by  pr«B«rving  a  presidency  with  the 
authority  to  impose  both  subtle  end  strong  measures  end  the 
freedom  end  flexibility  to  increese  and  decrease  the  pressure 
as  changing  circumstances  dictate.   It  would  indeed  be 
unfortunate  if  in  Its  rush  to  legislate,  the  Congress  trampled 
the  Constitution  and  crippled  the  most  effective  means  at  the 
disposal  of  the  nation  to  combat  abhorrent  policies  of  foreign 
nations  •  a  stong  and  effective  President. 


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Appendix  to 

Stat«K«nt  of 

Th«   Honorable  Theodore  B.  Olst 


Legislation  Limiting 
th«  Power  of  the  President 
to  Conduct  Foreign  Reletlons 


1.  50  U.S.C.  SI  1541-48  War  Powers  Resolution  Enacted  1973 

Description:      Provides  for  congressional  oversight  "In  any 
case    In  which  United   States  Armed  Forces   are   introduced 
into  hostilities   or   into   situations  where   imminent 
involvement  in  hostilitleB   is  clearly  indicated  by  the 
circumetances."      The  President  Is   required  to  submit  a 
written  report   to  Congress  detailing  the   circumstances   o£ 
United  States   involvement   and  CongroEs   is   authorized  to 
order  United   States    troops  removed  by  concurrent 
resolution. .    After   60   days,    the   President  must 
autamaticallY   terminate   the  usa   of  United   States   armed 
forces  unless  Congress  has  declared  war  to  extend  the 
60-day  period. 

2.  22  U.S.C.    i  2441  note     H.R.J.    Res.    683     Enacted  1975 

Description:      Provided  that  Congress  may  adopt  concurrent 
resolution  requiring  withdrawal  of  civilian  personnel 
assigned  to  monitor  Israeli  withdrawal  from  the  Sinai. 

National  Emergencies  Act 

Description;   Establishes  procedures  for  presidential 
declaration  and  continuation  of  national  emergencies,  but 
subjects  such  national  emergencies  to  termination  by 
concurrent  resolution. 


Description;  Limits  economic  powers  previously  granted  to 
President  in  peacetime  emergencies  by  the  Trading  With  the 
Enemy  Act  of  1917.  Provides  that  the  President  may  Impose 
emergency  economic  controls  based  on  "unusual  and 
extraordinary  throat"  from  outside  the  United  States,  but 
requires  him  to  provide  Congress  with  the  reasons  for  the 
Invocation  of  national  emergency  and  SUthorizes  Congress  to 
vote  to  terainate  the  emergency  by  concurrent  resolution. 


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Description;   Required  President  to  give  advance  notice  to 
Congress  of  any  offer  to  sell  to  foreign  countrl*6  defense 
articles  and  services  valued  at  J25  million  ov   more  and 
empowered  Congress  to  disapprove  such  sales  within  20 
calendar  days  by  concurrent  resolution   Nelson-Bingham 
AmendmentE  then  required  advance  notification  of  any  sale 
of  "major*  defense  equipment  totaling  over  $7  million  and 
gave  Congress  30  days  in  which  to  exercise  its  legislative 
veto.   These  provisions  were  involved  in  recent  controversy 
over  sale  of  AHACS  (Airborne  Warning  and  Control  System) 
surveillance  aircraft  to  Saudi  Arabia.   In  1981,  the 
certification  requirement  limits  were  raised  from  $35  and 
$7  million  to  S50  and  S14  million,  and  the  calendar  periods 
for  exercising  the  legislative  veto  were  modified. 


Description:   Permits  Congress  to  disapprove  by  c 
resolution  proposed  presidential  actions  regarding  import 
relief  and  actions  concerning  certain  countries  and 
authorizes  Congress  to  disapprove  by  simple  or  concurrent 
resolution  various  presidential  proposals  for  waiver 
extensions  and  extensions  of  nondiscriminatory  treatment  to 
products  of  foreign  countries. 

Export- Import  Bank  Amendments  of  1974 

Description;   Requires  that  presidentially  proposed 
limitations  for  exports  to  the  U.S.S.R.  in  excess  of  $300 
million  must  be  approved  by  concurrent  resolution. 

I  S02B  of  the  Foreign  Assistance 

DeBcription;   Prohibits  executive  branch  approval  of 
security  assistance  to  any  country  the  government  of  which 
engages  in  a  consistent  pattern  of  gross  violations  of 
internationally  recognized  human  rights  and  authorizes 
Congress  by  Joint  resolution  to  terminate  or  restrict 
security  assistance  to  such  a  country   These  conditions 
may  only  be  circumvented  upon  presidential  certification  to 
the  Chairman  of  the  Senate  Foreign  Relations  Committee  and 
the  Speaker  of  the  House  of  Representatives  that 


joogle 


"extraordinary  clrcumatances"  exist  warranting  an 
ttxception.      f  2304(a)(2). 

22   U.5.C.    f   2370  note      Section   726  of   the   International 
Security  and  Development  Cooperation  Act  of  1981 
Enacted  1981 

Deacriptii 

required  an  executive   certification'withln   thirty  days  of 
the   statute' a   enactment   and  every   one  hundred  and  eighty 
days   thereafter,    for   the   allocation  of  funds   to  El   Salvador 
for  military  aid,    education,    and  training  under  the  Foreign 
Assietance  Act.      Pcesident  must  certify   that  government  of 
El   Salvador   Is  making  a  concerted  and   aignificent  effort  to 
comply  with   internationally  recognized  human   rights.    Is    . 
achieving   substantial  control  over  its  armed   forces   In 
order  to  halt  the   indiscriminate   torture   and  murder   of 
Salvadoran  citizens,    is   achieving   continued  progress   in 
economic,    political,    and  agrarian  reforms,    is  committed  to 
the  holding  of  free  elections  at  an  early  date,    and  has 
made  good-faith  efforts  to  Investigate  and  bring  to  Justice 
the  murderers  of  six  U.S.    citizens. 


Deacriptlon!      Provides  that  no  funds  appropriated  under  the 
authority   of   the   Foreign  Assistance  Act  nay  be   expended  by 
or   on   behalf   of  the  Central   Intelligence  Agency   for 
operatiohs   in   foreign  countries      other  than  activities 
intended   solely   for  obtaining  necessary   Intelligence, 
unless   and   until   the   President   finds   that   any   such 
operation   is   important   to  U.S.    national   security  and 
reports  about  the  -speTBtion  in  a  timely  r 
appropriate  committees  of  Congress. 


Descriptions  Continues  Hughes-Ryan  Amendment's  executive 
reporting  requirement,  but  limits  the  reporting  to  the 
Senate  and  House  Select  Committees  on  intelligence  and 
provides  that  the  Director  of  Central  Intelligence  must 
give  those  committees  prior  notice  of  "any  significant 
anticipated   intelligence   activity."      |   413(a)(1). 


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Prohibited  us«  of  funds  appropriated  in  the 


DeBcriptlorn   Prohibited  any  asBlstance  of  any  kind  to  any 
group  which  has  the  effect  or  purpoae  of  aiding  military  or 
paraniilitBry  operations  in  Angola.   Amended  in  19S0  to 
permit  such  assistance  in  the  InterestB  of  United  States 
national  security  if  the  President  submits  a  written 
certification  to  the  appropriate  canunlttees  of  Congress  and 
Congress  approves  by  a  joint  resolution. 

14.  Pub.  L.  Ho.  97-377  Boland  Anendnent  Enacted  1962 


15.  1  U.S.C.  9  112b  Case  Act  Enacted  1972  Amended  1977  &   1978 

Description:   Requires  President  to  transmit  to  Congress 
the  text  of  all  executive  agreements  within  sixty  days  of 
their  execution;  amended  in  1977  and  1978  to  provide  for 
more  effective  means  of  inducing  executive  compliance  with 
the  Act. 

16.  42  U.S.C.  5  2153(d)  Atomic  Energy  Act  Amended  1978 

Desc  r ipti  on :  Provides  that  agreements  involving 
cooperation  with  foreign  nations  with  respect  to  nuclear 
technology  shall  be  subject  to  congressional  veto  within 
sixty  days  of  submission  to  CongreEs.  This  provision  is 
currently  beinct  considered  for  amendment  by  the  so-called 
Froxmire  Amendment  to  the  Export  Administration  Act. 


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PETITION  TO  THE  CONGRESS  Of  THE  UNITED  STATES 

He,  the  unterslgnad  lJ»^«n  of  Fhitadalchla, 

Dedicated  to  justice  and  the  Intemational  Rile  of  Iaw, 
Affimtuig  cur  cmDiOEent  to  the  LhivcrMl  Declaraticn  of  Kutbii  Rights,  ■« 
iMll  a>  tlie  ttiited  Naticns'  reioliiticna  and  dBciilana  of  the  Intema- 
tional Court  of  Justice  ccxidamii^  Atartheid. 
Having  learned  the  lessens  of  the  Uolocauat  and  mindful  of  the  pncednt* 

of  Itaaahberg,   and 
Assunijiig  our  respcnsihilities  and  obllgaticna  as  a  free  pecple  in  a  tnm 

Call  J^joo  all  sastora  of  toerioan  Society,  its  gOTenraental  raiits  —  naticn- 
al,   state,  and  local  —  its  institutions,  public  and  private,   industry  and  labor,  to 
ncbilize  forcefully  and  publicly  aEsert  the  full  aoral,  eocncnic,   and  political  fccca 
□f  t2iiE  great  Nation  en  the  leaderB  and  pecple  of  the  fiepublic  o[  South  Africa  to 
abolish,  IjinediBtely  and  forever,  Che  loathsare  and  injust  syston  of  Apartheid  by 
uhich  the  blac^  majority,  ccnstituting  73  per  cent  of  the  pcpulatioi,  are  virtually 
enslaved,  being  dqirived  of  their  freedon 

K>  live  and  work  uhere  they  want, 

■SXt  rfoek  and  write  as  tli^  will, 
'-"-  1o  travel  freely  vithin  their  own  nation, 

TtJ  earn  fair  and  fqiwl  wgea, 

TO  vote,  organize  politically,  and  be  refavsented  within  their  naticnal 

no  have  fair  trials  and  the  equitable  resolution  of  their  griavances. 
nds  abhomnt  and  inhunane  syston  most  be  abolished. 
To  that  Bid,  we  urge  that: 

Ihe  process  of  American  disengagonent  f ran  the  lle{i:iblic  of  South  Africa  be 


Our  r 

Oui  tec^mology  and  military  ci^iplies  be  dsiied, 

Ihe  Uiited  States  inpise  ecmcndc  sanctims  en  the  Republic  of  Scuth 

Africa,   includii^  the  cessatioi  of  all  trade  with  that  natiui,  arel  that. 
Our  naticnal  gcvemnent  should  call  upn  the  gcverments  of  all  naticns  to 
undertake  similar  steps. 
He  take  this  positicn  mindful  of  its  harshness  and  of  the  buidai  it  will  i»- 
pose  en  curselves,  as  veil  as  the  Republic  of  South  Africa,  but  in  the  unhapfy  convic- 
tion that  the  time  for  moral  suasicn,  tcnfico'lzing,  and  infnrtuning  has  loig  sinoe 
passed.     Ihe  powerful  entreaties  of  the  past  have  oil  been  cruelly  Ignored  ty  Pretoria. 

He  acknowledge  that  these  stc^  will  not  be  quiddy  or  easily  acooiplirtied, 
but  we  are  pr^iared  to  stay  the  ccurse. 

TO  do  less  would  betray  our  ccnscience  and  condsm  the  South  African  nulti- 
tuJes  to  slavery  and  escalating  violoice. 

AS  lawyers,  dedicated  to  the  Rule  cf  Lw,  we  have  respcaided  with  ooiiiBsBian 
to  the  suffering  of  black  South  Africans  and  in  suppjrt  of  the  good  people  of  South 
Africa,  white  and  black,  who  seek  the  establiatniait  of  justice. 


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IRV  ACKEL5BERG 

3638  Hocth  Broad  Straac 

Phlladalphla,  FA   19140 

CHKIS  ADAIK 

1819  Spruea  Streac 

Phlladalpfala,  FA   191.03 

RICHARD  J.  ABERHE 
1800  JFK  Boulavard 
Phlladalphla,  PA   19103 

DOHKA  M.  ALBAHX 

2600  The  Fldallty  Bulldli 

Phlladalphla,  PA   19109 

GAETON  ALFANO 

1300  Chescnut  Straat 

Philadelphia,  PA   19107 

LEOKIDAS  A.  ALLEN 
&2  South  ISth  Street 
Philadelphia,  PA   19102 

EOCENE  V.  ALLESSANDRONI 
1300  Chestnuc  Streat 
Philadelphia,  FA   19107 

,  ,CESAR  AlVAREZ-KDRENO 
3156  Kensington  Avanua 
Philadelphia,  FA   1913& 

BARBARA  AHISKO 

2600  The  Fidelity  Bulldli 

Philadelphia,  PA   19109 

JEROHE  I 
1200  Foi 
Phllada] 

BRIAN  E.  AFFEL 

1424  Chestnut  Straac 

Philadelphia,  FA   19102 

L7NH  R.  AXELROTH 
1600  Market  Street 
Philadelphia,  FA   19103 

DONNA  E.  BAKER 
1420  Halnut  Street 
Phlladalphla,  PA   19102 

KARL  BAKER 

4905  Pulaski  Avenue 

Philadelphia,  PA   19144 

JEROHE  SALTER 
1315  Walnut  Street 
Philadelphia,  PA   19107 


FA   19103 


RICBARD  S.  BANK 

121  Horth  Broad  Streac 

Philadelphia,  FA   19107 

JILL  BARATZ 

1300  Chestnut  Street 

Philadelphia,  PA   19107 

WXLLIAH  J.  BARKER,  JR. 
1H)0  One  Franklin  Plszs 
Philadelphia,  PA   19102 

EDNARD  H.  BAROL 
Three  The  Parkway 
Philadelphia,  FA   19102 

DRSULA  B.  BARTELS 

1100  One  Franklin  Plaza 

Philadelphia,  FA   19102 

DREW  BASIH 

1300  Chestnut  Street 

Philadelphia,  FA   19107 

PADL  V.    BASKOUSKY 

2600  The  Fidelity  Bulldlnl 

Philadelphia,  FA   19109 

EDVARD  L.  BAXTER 
1600  Market  Street 
Phlladelphi 


FA   19103 


DAVID  S.  BEAVERS 


THOHAS  J.  BENDER,  JR. 
2600  The  Fldallty  Bulldli 
Philadelphia,  PA   19109 

ELIZABETH  L.  BENNETT 
llOO  One  Franklin  Plaia 
Philadelphia,  PA   19102 

L7K11  BENNETT 

1300  ChastauE  Street 

Philadelphia 

HILARI  A.  BE 
207  South  24 
Philadelphia 


PA      19107 


» Google 


SnSXH  BESGIH 

22ti   Uaat  School  Boui 

Philadelphia,  ?A 

MERIS  BERGQDIST 
3A0S  Barlni  Straat 

Phlladalphia,  PA   1< 

HAROLD  R.  BEKE 
3030  PSFS  BulldlDg 
12  South  12th  i 
Phlladalphla,  I 


JOKI  J.  BEtNES 
1200  Pour  Pana  Cac 
Philadelphia,  FA 

DIAHE  C.  BERHOFF 
160B  Walnut  Scraal 
Fhtladalphla,  PA 

LIHDA  K.  BERtrSTEII 
S06  Uaacvlrw  Scra< 
■  Philadalphla,  P^ 

HARK  I.  BEKHSTEIn 
S06  WaaCTlaw  St 
Philadelphia,  F 

BERSaAD 


AKDREV  D 
1200  Four  I 
Phlladalph: 


PA 


HORHAH    S.     BERSOH 
2421    Spruce    Straat 
Philadelphia,    PA 

PHILIP    C.     BESTOCCI 
500    SoutI 
Phlladelphli 


7  th  ! 


PA 

FRAHKLIH  L.  BEST, 
Philadelphia,  PA 

BIELE 


Street 
PA 


LAUREHCE  D. 
1S4S  Ua 
Phllade 


IVETTE  BINN-GRAHAH 
800  Lafayette  Bulldl 
Philadelphia,  E 


RICRAIH  D.  BIBNS 
1600  Market  Street 
Philadelphia,  FA   19103 

CHARLES  BLAEINGER 
1A2A  Cheetnut  Street 
Philadelphia,  FA   19102 

ARTHUR  B.  BLOCK 
8217  Marlon  Road 
Elklaa  Park,  PA   19117 


JOSEPH  T. 
1700  Lend 
Phlladelp 

BODELL, 
Title  B 
hla.  PA 

JR. 
uildlnt 
19110 

JOSEPH  S. 
1710  Spru 
Fhlladelp 

ce's 

hla 

BODOFF 
PA   19 

03 

EUCEKE  BOCGIA 
1300  Cheetnut 

Str 

aet 

ALEXANDER  D.  BOHO 

1200  Four  Pann  Canter  Flail 
Philadelphia.  PA   19103 

HARVET  S.  BOOKER,  JR. 
121  north  Broad  Street 

Philadelphia,  PA   19107 

WEKDY  E.  BOORLBR 
17th  and  The  Parkvey 
Philadelphia,  PA   19103 

HABC  BOOKMAN 

1819  Spruce  Street 

Philadelphia,  PA   19103 

BERHARD  H.  BORISH 
Packard  Bulldlog 
Philadelphia,  PA   19102 

DAHIEL  J.  BOYCE 

800  Lafayette  Building 

Phlledelphle,  FA   19106 

STEPREH  C.  BRAVERHAK 

2600  The  Fidelity  Building 

Phllsdalphls,  PA   19109 

HOHORABLB  JOHH  L.  BRAXTON 
203  One  East  Fenn  Square 
Phlledelphle,  PA   19107 


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BKADI  BKIDCE 
67Ae  Ealan  Sciaat 
Phlladalphia,  FA  19119 

ELLEH  M.  BRIGGS 
14Z4  Chascnut  Scraat 
Phlladtlphla,  PA   19102 

GWEKDOLTK  BRIGHT 

71II  MouaC  Air;  Tarraca 

Phlladalphla,  FA   19119 

DBKISE  ERINKER 

121  North  Broad  StraaE 

Philadelphia,  PA   19107 

KICBAEL  BRODIB 

SOO  Lafayatca  Building 

Phlladalphla,  PA   19106 


SDSAB  F.  SORT 

121  Horth  Broad  Straat 

Phlladalphla,  PA   19107 


ARH  H.  CALDWELL 

1600  Iha  Pldallty  Bulldlog 

Phlladalphla.  PA   19109 

TIMOTHT  V.  CALLABAN 

2600  Th«  Pldallty  Building 

Phlladalphla,  PA   19109 

DODGLAS  H.  CANDEDB 
1600  Hatkac  Scraat 
Phlladalphla.  PA   19103 

CATHERINE  CARR 
&T16  Hlndaot  Straat 
Phlladalphla,  FA   191&3 

DAMIEL  CABRIGAH 

2600  Tha  Fidelity  Building 

Phlladalphla,  FA   19109 


SDHONDS  J.  BROKANS 

2600  Tha  Fidelity  Bulldlog 

Philadelphia,  PA   19109 

BOHORABLE  CDKTI5 
S47  Pelhan  Road 
Phlladalphla,  PA 

C.  CARS08,  JR 
I9I19 

C.  BAIRD  BROWN 
1600  Market  Straei 
Phlladalphla.  PA 

19103 

JOSEPH  H.  CASEY 
121  Soith  Broad  ! 
Philadelphia,  FA 

19107 

HILLIAH  B.  BROWN, 
1600  Market  Streei 
Philadelphia,  PA 

III 

19103 

CARROLL  CATER 
612  Soieland 
Philadelphia,  FA 

19111 

HARRIET  BROMBEBG 
1300  Chestnut  Stti 
Philadelphia.  PA 

"  19107 

WILLIAM  CHADWICK 
1300  Chestnut  Sti 
Philadelphia.  PA 

19107 

BASHI  BDBA 

1300  Chaatnut  Str. 

Phlladalphla.  FA 

19107 

ANNE  CHAIRELLO 
710B,  Alden  Park 
Philadelphia,  FA 

Manor 
19144 

GLADYS  R.  BOCK 
2600  Tha  Fidelity 
Phlladalphla,  FA 

BuildlDg 
19109 

HOHABD  K.  CHAMBERS.  JR. 
127  South  18th  Street 
Philadelphia,  PA   19103 

LEONARD  J.  BUCRI 
Packard  Building 
Phlladelphie.  FA 

19102 

LAWRENCE  CHANE 
1200  Four  Faun  Ci 
Philadelphia.  FA 

inter  Flaia 
19103 

BOSORABLE  BER 

EL  CAESAR 

1311  One  East 

Fenn  Squai 

Philadelphia, 

PA   19107 

FERNANDO  CHANG-HUI 
142  ttorth  Quaan  Lane 
Philadelphia,  PA   19144 

ANDREW  A.  CHIRLS 
Packard  Building 
Philadelphia.  FA   19102 


Digitized  by  Google 


DAHM    t.    CHISM 

2600   Tha   ridallty   lulldtas 

Phtladalplita,    PA      19109 

MICHAEL  CHURCHILL 
1313  WalDuc  Straat 
Fblladalphla,    PA      19107 

EDDIE    L.     CLAKK,     III 
13A2    66th   Avanua 
Phtladalphia,   PA      19126      - 

THEODORE  CLATTEtranKG,  SB. 
SOS  Crat«baa  Vallay  Road 
Pblladalphla,    PA      19118 

MATTHEW   D.    CLATTOK 
2    Buck   Laoa 
BavacfoEd,    PA       19041 

LARRT    D.     COBB 

Municipal  Sarvlcaa  Building 

Philadalphla,  PA   19102 

lODlS  COFFET 
Packard  Bulldia| 
Phtladalphia,  PA   19102 

^DARIBL  C.  COHER 
Packard  Building 
Philadalphla,  PA   19102 

HATTBEU  C0MISE7 
1S20  Spcuca  Sttaac 
Pfailadalphia,  PA   19102 

TIKOTHT  K.  COOK 
1313  Walnut  Straat 
Philadalphla,  FA   19107 

LEONARD  J.  COOPER 
Packard  Building 
Phtladalphia,  FA   19102 

BT&OB  C.  COTTER 

121  Horth  Broad  Straat 

Philadalphla,  FA   19107 

KATBLBEH  A.  COTHE 

769  North  Judaon  Straat 

Philadalphla,  PA  19130 

HAROLD  CRAMER 
Ftdality  Building 
Philadalphla,  PA  19109 


AlOA  ROSEHFELD  CRAHE 
600  Harkat  Straat 
hlladalphla,  PA   19103 

IAMBS  D.  CRAWFORD 
.600  Markat  Straat 
lladalphla,  FA   19103 

5EFH  C.  CRAWFORD 
DO  Harkat  Straat 
lladalphia.  PA   19103 

lOSEFB  J.  CRDHtK 
16  Rochalla  Avanua 
hiladalphla,  FA   19128 

RAHCIS  Z.  CR0WLE7 

200  Four  Pann  Cantar  Flaia 

hiladalphla,  Fa   19103 


Iphia,  FA   19102 

CDHNIHGHAM 


HARLES 

39  Eaat  Allaoi 

hiladalphla,  I 

LAN  S.  DATIS 

kard  Bulldii 
'hiladalphla.  I 


HOWARD  J.  DAVIS 
SSO  Unitad  Englni 
lO  South  17th  Stri 
lladalphla,  PA   19103 

:rOHB  DAVIS 

DO  Choatnut  Straat 

Lladalphla,  PA   19107 

DAVIS 


19102 

*zt    Building 


MICHAEL 
200  Foi 
hiladalphla,  PA   19103 


Plai 


tdalphla,  PA   19107 

DREU  J.  DEDO 
300  Chaatnut  Street 
hiladalphla,  FA   19107 

MART  DeFDSCO 
21  Horth  Broad  Straat 
hlladalphla,  FA   19107 


Digitized  by  Google 


JOSEPH  W.  DELLAFBHKA 
Vlllaaova  School  of  Lav 
Vlllaoova,  PA  19083 


ANDRE  L.  DENNIS 

1100  Ona  FraokllQ  Plaza 

Fbiladalphia,  FA   19102   ~ 

A.  J.  DaFBILLIPS 
112  Hill  Crstk  Road 
ArdBOT*.  PA   19003 

.  JAMES  I.  DE7IHE 
2600  Tht  riddle;  Butldias 
Fhtladclphia,  FA   19109 

HARRIET  L.  DICHTER 
CoDBuQlt;  Lagal  SaTvlcai 
S219  Chaatnut  Scraat 
Fhlladclphla,  FA   19139 

MICHAEL  A.  DiGRECORIO 
1100  Ona  Franklla  Plaia 
Philadalpbla,  FA   19102 

"RICHAItD  H.  DiMAIO 
121  March  Broad  Straac 
Fhlladelpbla,  FA   19107 

SERENA  B.  DOBSOH 

A1T2  North  Tacoaa  Streac 

Fhlladalphla,  FA  19140 


J.  ALLEN  D0UCHERT1 
124  Jaffray  Road 
Malvarn.  PA   1935S 

JILL  A.  DODTHETT 
1424  Chaitnut  Str< 
Phlladalphla,  FA 

ELEANOR  DRUCKMAN 
1424  Chaicnuc  Stti 
Fhiladalpbta,  FA 

MARTIN  A.  DURKIH 
121  North  Broad  Si 
Phlladalphla,  FA 

DYAN  DY TIMER 

237  SouEh  10th  Sti 

Fhlladalphla,  PA 


FAKBLA  E.  EBLING 

1100  Ooa  Franklin  PlaiA 

Pblladalphla,  FA   19102 

WILLIAM  H.  EIIBBKG 
Sulta  IC-4S 
Tha  Philadalphtan 
Fhlladalphla,  PA   19130 

BRUCE  A.  EISEHBERC 

1200  Four  Pann  CcnCaT  Plata 

Fhlladalphla,  PA   19103 

MALVIH  B.  BISENBERG 

1500  Locuat  Straae 
Fhlladalphla,  FA   19102 

S.  GORDON  ELRIHS 

1100  Ona  Franklin  Flaia 

Fhlladclphla,  FA   19102 

JULES  EFSTEIH 

6414  North  Canac  Straat 

Phlladelphta,  FA   19126 

AMDY  ERBA 

1917  Spring  Cardan  Straat 

Philadalpbla,  FA   19130 

GREGOR  S.  ERDBHBERGER 
111  Hortb  Broad  Straat 
Philadelphia,  FA   19107 

ALAK  H.  ESCOTT 
743  Argrla  Boad 
Vynnevood,  FA   19096 

THOMAS  R.  E5BBLMAN 
1116  Rodman  Street 
Fhlladalphla,  FA   19147 

LEONARD  L.  ETTIKGER 

900  Tvo  Fcnn  Center  Flaia 

Phlladelpbia,  FA   19102 

HAHCY  EZOLD 

S48  Hanaall  Road 

Wynnawood,  PA  19096 

NEIL  FAGGEN 

2020  Walnut  Street 

Fhlladalphla,  FA   19103 

BILL  FAUST 

313  East  Varnon  Boad 

Philadelphia,  PA  19119 


joogle 


B.    lOBBlI    riEBACB 

ISOl   Oa«    lDd*pand*oc«    Flai 

Fblladalpbia,    FA      1910t 

FRAKC    PIHCB,     lit 
131S    Walnuc    Sccaat 
Phlladalphia,    PA      19107 

S.    DA7ID    riHEMAM 
1608    Walnut    Stiaat 
Phlladalphia,    FA      19103 

BILL    PISBEB 

1300  Chaatnut  Straat 

Phlladalphia,  FA   19107 

JABET  E.  FISHER 

1100  Ona  Fiankltn  Flaia 

Fhlladalphla,  PA   19102 

JOHN  H.  FIIZFATBICi: 

2600  Tha  FtdallCT  Buildin] 

Phlladalphia,  PA  19109 

WILLIAM  A,  FITZPATRICi: 
3030  FSPS  BulldlQi 
Phlladalphia,  PA   19107 


Phlladalphia,  PA   19103 

V.    FDCLIA 

734  South  third  Scraat 

Phlladalphia,  PA  19147 

TBOHAS  J.  FOLEY,  III 

2600  Tha  Fldaltc?  Buildloi 

Fhlladalphla,  FA   19109 

JOEL  A.  POKKOSCB 
14Z4  ChaacDut  Scraat 
Fhlladalphla,  PA   19102 

COHSTAHCE  fi.  FOSTER 

2600  Tha  Fldalicy  Building 

Fhlladalphla,  PA   19109 

JAN£  L.  FOSTER 
293  BEOOkwa? 
Katlon,  PA   19066 

BRDCE  FOX 

1156  Kanaington  Avanua 

Fhlladalphla,  FA   1913A 


ELIZABETH  V.    FOX 

:ha*tnut  Stiaat 
lalphla,  PA   19102 

B.  FOX,  LTIC 
Ihaacaut  Straat 

Lidalphla,  FA   19107 

WEHDELLA  P.  POX 

46S7  Caraantown  Avanua 

Fhlladalphla,  FA   191*4 

,  FSAHCESKI,  JR. 
I  Franklin  Plata 
Lphia,  FA   19102 

LAURENCE  EVAN  FBANKEL 
A34  Wait  Olnay  Avanua 
Philadelphia,  PA   19120 

KATHLEEN  A.  FREDERICK 
722  Harclton  Road 
BEfn  Havr,  PA  19010 

ERIC  D.  FREED 

1300  Chaatnut  Straat 

Fhlladalphla,  PA   19107 

SADL  L.  FRIEDKAN 
1404  Huntingdon  Flka 
Huntingdon  Valley,  FA   19001 

LINDA  B.  PRISCB 
1600  Market  Straat 
Fhlladalphla,  PA   19103 

TERRY  FR0H5O8 

6703  Spcingbank  Straat 

Fhlladalphla,  PA   19119 

HONORABLE  ABRAHAM  J.  GAFMI 
10-B  Five  Fenn  Center  Plata 
Philadelphia.  FA   19103 

MIRIAM  L.  CAFHI 

800  Lafayette  Building 

Philadelphia.  FA   19106 


Digitized  by  Google 


HICBAEL  F.  CALLAGBBB 

2600  Tha  PldcllCy  Buildinl 

Phlladalphta.  FA   19109 

HAZEL  GARNEB 

Poat  Office  Box  567 

Bala  Cynnyd.  FA   19004 

PHILIP  A.  GASTEIEB 
12  SouEh  12ch  Streat 
Phlladalphia,  PA   19107 

AUBRA  SPAOLDING  CASTOH 
1&20  Locuit  Straac 
Acadanr  Bauae,  9K 
Phlladalphia,  PA   19102 

TERRI  H.  GEIBERG 
Thraa  The  Parkway 
Phlladalphia,  PA   19102 

JONATHAN  A.  CBLOLA 

IZOO  Four  Fenn  Ccntar  Flai 

Phlladalphia,  FA   19103 

SOL  B.  CENADER 

1200  Four  Pans  Cancar  Flag 

Fhlladalph<.a,  PA   19103 

BARKI  GEHKI8 

1200  Four  Pann  Centar  Flai 

Fhtladalpbta,  FA   19103 

B.  ANNE  GEORGE 
1603  HlllcTcsc  Boad 
Phlladalphia,  FA   19118 

PAUL   GEORGE 

121   North   Broad    Streat 

Phlladalphia,   FA     19107 

RONALD  L.  GERH 

602  Uaahlngton  Square  Soul 

Philadelphia,  FA   19102 

ELLIOTT  GERSON 
Facfcard  Building 
Phlladalphia,  PA   19102 

DAVID  GILES 
1901  Fiac  Streac 
Philadelphia,  FA   19103 

THOMAS  K.  GILHOOL 
1315  Halnut  Street 
Phlladalphia,  PA   19119 


SANDRA  A.  GIRIPALCO 
1100  One  Ftanfclta  Plata 

Philadelphia,  FA   19102 

GLESH  S.  CITOMER 

1200  Pcui  Pann  Cancer  Flaia 

Philadelphia,  PA   19103 

KARK  A.  GITTELKAN 

1200  Pour  Penn  Center  Plaxa 

Phlladalphia,  PA   19103 

BOWAED  T.  GLASSHAN 

1200  Four  Penn  Canter  Plais 

Philadelphia,  PA   19103 

PETER  A.  GOLD 

1200  Four  Peon  Center  Plaia 

Philadelphia,  FA   19103 

STEPHEN  P.  GOLD 
131S  Ualnut  Street 
Philadelphia,  FA   19107 

DONALD  J.  GOLDBERG 

1310  Three  Mellon  Bank  Centt 

Fhiladelphla,  PA   19102 

HEAL  GOLDSTEIN 

aoo  Lafayette  Building 

Philadelphia,  PA   19106 

CHANDRA  COHES 

737  South  Sixth  Street 

Fhiladelphla,  PA  19147 


HAROLD  GOODMAN  . 
2416  LoBbard  Street 
Fhiladclphie,  PA   191&6 

JAMBS  A.  GOODMAN 
3400  Centra  Square  Ueat 
1500  Market  Street 
Philadelphia.  PA   19102 

HONORABLE  LEVAN  GORDON 
1004  One  Bast  Penn  Square 
Philadelphia,  PA   19107 

ROBERT  A.  GORMAN 
QnlvataitT  of  PannarlTanli 
3700  Chaacnut  Street 
Phlladalphia,  PA   19103 


Digitized  by  Google 


URBH  B.  GOTTEMBIKC 
1616  HalBBC  $CI«at 
Fblladclphla,    P&      19103 

GBORCE  COULD 

326  South  2Ath  Straat 

Phlladalphla,  PA   19103 

JUDITB  A.  GKAH 
131S  Halaut  Scraac 
Pblladalpbla,  PA   19107 

DIAMB  GSAHLUHD 

1300  Chaitout  Straac 

Fhlladalphla,  FA   19107 

JDHATHAH  CUHOFP 

Old  ToTk  Road  and  Rydal  Road 

JanklDtovn,  FA   19046 

JAKES  E.  CRASTY 

1100  On*  Trankltn  Plata 

Pblladalpbla,  FA   19102 

CEORSE  E.  SREATREX 
1028  Fine  Stiaat 
Fhlladalphla,  PA  19107 

'^LEHIS  P.  CXBEH 
304  South  13th  Straat 
Pbiladalphla,  PA 

AHDREU  GREEHBERG 

1300  Cfaaitnut   scraae 
Fhlladalphla.    PA      19107 

JAKES  J.  GKEEKPIELD 

2600  Tha  FidelitT  Bulldiog 

Fhlladalphla,  PA   19109 

ELLEN  T.  GREENLEE 

121  North  Broad  Stiaat 

Philadalphia,  PA   19107 

NORMAN  E.  GREEHSFAN 

1200  Four  Pano  Cantar  Flaza 

Philadalphia,  PA   19103 

LAURENCE  A.  GROSS 

1200  Pout  Pans  Cental  Flaia 

Fhlladalphla.  FA   19103 

STEPBEH  a.  GROSS 
141  Palha>  Road 
Pbiladalphla,  FA   19119 


STAHLET  B.  CROBER 

800  Lafayatta  Ruildini 

Fhlladalphla,  PA   19106 


I  GDTIH 
PSFS  Bulldins 
idalphla,  PA   19107 


Lphia,  FA   19107 

TE  H.  HALLIDAT 
laau  Road 
.phla,  FA  19151 


adelphla,  FA   19103 

lAK  I.  HANSLET 
UalnuC  Scraac 
adelphla,  PA   19102 

AS  HANNA 

Cheataut  Straat 
adelphla.  PA   19107 

LA  HARFER 

Pout   Feno   Caoler   PI) 
adelphla.    PA      19103 

VEH    J.    HARLEH 

Land  Title  Bulldiog 
adelphla.  FA   19110 

ZABETH  U.  HARPHAH 
Office  Boif23J 
charin.  DE   19710 

BARRY  HARRIS 

Walnut  Street 
adelphla,  PA   19103 

HEN  R.  HARRIS 
Dooalyo  Lana 
yn.  PA   19312 


Digitized  by  Google 


HAVILAND 


BANCROFT  D, 

HOC    Mkrkcc  Str**l 

Philadelphia,  FA 

CAHDICE  L.  H.  HEG] 
lAZA  ChaitDUt  StTi 
Philadelphia,  FA 

WILLIAM  HEIMAH 
1300  ChaatDut  Strt 
Philadelphia,  FA 

SAGAH  A.  HENRY 
Packard  Building 
Phlladtlphla,  PA 

SDSAN  K.  HERSCHEL 
1AZ4  Cheicnut  SCT< 
Philadelphia,  FA 

STEVEN  HERSHEV 
S219  Cheacnut  StTi 
Philadelphia,  FA 

"■AHT  E.  flIRSCH 
1117  Green  Street 
Philadelphia,  PA 


C.  CLARK  HODGSC 
1100  One  Frank] 
Philadelphia,  I 

VIRGINIA  LYHN  HOGBEH 


HORKAN  L. 
1200  Four 
Philsdelp! 


llcy 
ila,  ?l 

holme; 


JEFFREY  R. 
1600  Market 
Philadelphl 


LAURENCE  T.  HOTLB,  JR. 
1A14  Chestnut  Screac 
Philadelphia.  FA   19102 

GBEHAINE  INGRAM 
3400  Chestnut  Street 
Philadelphia,  PA   19104 

THOMAS  J.  INHES,  III 
121  North  Broad  Street 
Philadelphia,  PA   19107 

SAMUEL  ISSACHAROFF 
2031  Locust  Street 
Philadelphia,  PA   19103 

KAKEN  I.  JACKSON 

2006  West  Cirard  Avenue 

Philadelphia,  PA   19130 

LEE  W.  JACKSON 
1608  Ualnuc  Screet 
Philadelphia,  FA   19103 

RALPH  A.  JACOBS 
1424  Chestnut  Street 
Philadelphia,  PA   19102 


HARJORIE  JANOSKI 
6316  Ho;lsn  Street 
Philadelphia,  PA   19144 

BRENDA  J.  JOHNSON 

121  North  Broad  Street 

Philadelphia.  FA   19107 

C.  D4RNELL  JONES 

121  North  Broad  Street 

Philadelphia,  FA   19107 

UAYHE  MONROE  JORDEN 
eiOT  Jefferson  ^venue 
Philadelphia,  FA   191S1 

JAMES  R.  KAHN 

1200  Four  Penn  Canter  Plata 

Philadelphia,  PA   19103 

SARA  BETB  KALB 

2600  The  Fidelity  Building 

FhllBdelphia,  PA   19109 

MICHAEL  S.  KALICHAK 
317  Helvin  Drive 
Brookhavea,  PA   19015 


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UtROLO    I.    KALHAR 

1100  Fovr  Pans  Cancar  Plata 
Phtladalplila,    PA      19103 

JOHH    S.    KABB 

ago    Lafayatta   Bulldio| 

Fhlladalphta,    P>      19106 

STETEH   K.    EAHES 
1600   Matkat    SCraat 
Phtladalphla,   PA     19103 

STEVEK    S.    KAKIC 

1100    Oaa   FtankllD   Plaia ' 

Fblladalphla.    FA      19101 

FBILIF    J.    EATADSEAS 
1600  Karkat    Straat 

Fhtladalphla,    PA      19103 

■KDCE    3.    EATCHEE 

129   H.    Woodacock   Drtva 

Chairr    Hill,    HJ      08034 

HOOTEB    EEESIHG 
iDdapandaoca    Squata 
Phtladalphta,    FA      19172 

"-AHMB   KAXIE   P.     KELLET 

2600   Tha   FidaliCT    Building 
Phtladalphla,    FA      19109 

MICHAEL    J.    KBLLT 

126    South    19ch    Stiaat 

Fblladalphla,    FA      19103 

ULFH    J.    EELLT 

2600   Tha   Fidality    Bulldiiig 

Fblladalphla,    FA      19109 

KOBEBT    L.    EBHDALL,    JR. 

1600  Market  Straat 
Phlladalphia,  FA   19101 

ALEZAKDEB  EBBK 

lA2i  Cbaataut  Scraac 

Phlladalphia,  PA  19101 

MILTOH  F.  EIKC 
18AJ  Walnut  Straat 
Fblladalphla.  PA   19103 

BOCEE  J.  EIMG 

1100  ChaitDut  Stiaat 

Fblladalphla,  FA   19107 


BABBT  H.  KLATMAH 

Fackard  ButldtnB 
Phlladalphia,  PA   19101 

DEBBA  KLEBAHOFF 
Tha  Warwick  Botal 
ITth  and  Locust  S 
Phlladalphia,  PA 

ALAH  ELEIM 

AOi  South  Front  S 

Fblladalphla,  PA 

JOAHHE  E.  KLEIHEK 
SIO  Walnut  Straat 
Phlladalphia,  PA 

LIHDA  S.  KOEHIGSEEI 
211S  NaudatD  Straa 
Fblladalphla.  FA 

JEFFREY  EOLAHSKI 
1300  Chaatnut  Stra> 
Philadelphia,  FA 

EATHBTN  EDLBEBT 
112  South  16th  Stri 
Phlladalphia,  FA 

CLADDIA  S. 
312S  1 
Gilba 


dla 


Ille, 


THOMAS  E.  EOPIL 
1200  Four  Pann  i 
Fblladalphla,  Fj 

RICHARD  L.  KRBM8ICI 
1200  Foui  Fann  Can 
Fblladalphla.  FA 

GONCER  H.  EBESTAL 
2401  Fannsylvania 
Pblladalpbla,  FA 

JERRT  KRISTAL   . 
121  Hortb  Broad  St 
Phlladalphia,  FA 

GEORGE  J.  KRDEGER 
1200  four  Fann  Can 
Phlladalphia,  PA 

HEHBT  H.  KDLLEB 
1200  Four  Fann  Can 
Phlladalphia,  FA 


Digitized  by  Google 


3KTM0D1  KUKLAHD 
Packard  Bulldlof 
Phlladslphla,  PA   19102 

JUOAH  I.  LASOTITZ 
PSFS  Building 
Phtlsdalphla,  FA   19107 

SUSANNA  C.  LACHS 
2200  PSFS  Building 
12  South  12eh  Str««l 
Pbiladalphla.  FA   19107 

PATRICE  LANGENBACB 
170S  FtDC  SCTCat 
Philadelphia,  PA   19103 

KATBLEEH  HEBZOG  LARKIN 
1200  Four  PaoQ  Cancar  Pli 
Fhiladalphta,  FA   19103 

OWEN  U.  LARKABEE 
S22B  Baxford  Road 
Fhiladalphia,  FA   19131 

NAHCT  B.  G.  LASSEN 
1608  ValDut  Scraat 
Philadalph}.a,  PA   19103 

'  JULIO  J.  LASTRA 
4B0S  Chaatar  Avanua 
Fhiladalphta,  PA   191&3 

JDAN  J.  LAUREDA 
6725  Ridge  Avenue 
Philadelphia,  PA   19128 

STEVEN  G.  LAVER 
175  WlndBtll  Road 
Willov  Grove,  PA   19090 

J.  RANDOLPH  LAHLACE 
1A3T  Delmont  Avanue 
Bavartown,  PA   19083 

ROBERT  B.  LAULEK 
1300  Cheatnut  Street 
Philadelphia,  PA   19107 

GARY  EL.  LEADBETTER 

2600  The  Fidelity  Bulldli 

Philadelphia,  FA   19109 

BERNARD  LEB 
Packard  Building 
Philadelphia.  PA   19102 


ERIN  HILLARY  LEPP 
192  City  Hall 
Fhiladalphia,  FA   19107 

THOMAS  A.  LEONARD 

2600  The  Fldallt;  Bulldli 

Philadelphia,  FA   19109 

WILLIAM  J.  LEONARD 


BENJAHIN  LERI 
121  North  Br< 
Fhiladalphia, 


HERBERT  S.    LETIH 
2000  Malket  Street: 
Philadelphia,  PA   19103 

NED  J.  LEVIHE 
6T3S  Eslao  Street 
Fhiladalphia,  FA  19119 


Philadelphia,  PA   19118 

CHRISTOPHER  A.  LEUIS 

2600  the  Fidelity  Building 

Fhlladclphla,  PA   19109 

KATHRYN  S.  LEWIS 

ISth  and  JFK  Boulevard 

Philadelphia,  FA   19102 

alan'm.  lieberman 

1600  Market  Street 
Fhiladalphia,  FA  19103 


CRARISSE  R.  LILLIE 
VillanovB  School  of  Lav 
Villanova,  FA   19085 

LAURENCE  U.  LINDSAY 
2&6  Fulton  Street 

Fhiladalphia.  PA   19147 


Digitized  by  Google 


DAVID  M. 
800  Lafi] 
Phll*<l*lpl 

BENJAMIH 
1201  Chai 
Phlladalt 


hi*,  PA   19107 


DIAHB  A. 
6T0T  Hoi 
PhiladBll 


LOEBBLL 

ta  Blghcb  Strait 

hla.  PA   19126 


.  PA   19104 


Philadelphia,  PA   19106 

HOHOKABLE  JOSEPH  S.  LORD.  Ill 

nalo 

601  HaEkac  Street 

I.  PA   19J06 

HAKS7  LOSE 

«2  South  15th  Street 

Fhlladelpbta.  FA   1910Z 

ARLIHE  JOLIES  LOTHAH 
1608  UalDul  Straat 
Philadelphia,  FA   19103 

CHARLES  LOVE 
Lafayette  Bui Id  lag 
Philadelphia,  FA   19106 

BEVERLY  J.  LDCAS 
leoS  Ualnut  Straat 
Philadelphia,  FA   19103 

ROBERTA  LnCBAKSKT 

121  North  Broad  Street 

Philadelphia,  FA   19107 

JEFFREY  A.  LDTSKT 

1100  One  Fraoklia  Flaia 

Philadelphia.  PA   19102 


FESS7  KADDEN 

1300  Chaatnut  Straat 
Phlladalphta,  PA   1910T 

CREGORT  I.  KACARIIT 
Packard  Building 
Ptailadalphla,  PA   19102 

JEROME  B.  MALLON,  JR. 
117  FeonettoD  Road 
Faoll.  PA   19301 

DAVID  G.  HAHDELBADK 
Packard  Building 
Fhtladalphia,  FA   19102 

PATRICK  J.  MAHDBACCHIA 
2S14  Ueat  Main  Street 
Horrlatovn,  FA   19403 


JOSEPH  HANKO 
96  E.  Lewis  Ml 

Bala  Cynwyd,  P 

I  Road 
K       19004 

1424  ChealDut 

Philadelphia, 

N 
treat 

A   19102 

LIHN  A.  HARRS 
1220  SanaoB  St 
Philadelphia, 

A   19107 

UILLIAH  F.  HAR 
2600  The  Fidel 
Phlladalphia, 

[IN 

cy  Building 
A   19109 

RICHARD  J.  HAR 
121  North  Grca 
Philadelphia, 

IN 

A   19107 

JANET  W.  HASON 

1424  Cheatnut 
Philadelphia. 

A   19102 

AKHE  MATCHHLET 
1700  Land  Tltl 
Philadelphia. 

Building 
A   19110 

STEPHEN  J.  HATHES 

2600  The  Fidelity  Building 

Philadelphia.  PA   19109 

GREGORY  H.  MAT 

Threa  The  Park 
Philadelphia, 

THEWS 
*ay 
A   19102 

Digilizedb,  Google 


TBDKGOOD  M. 


KATTHEHS 
,  FA   19320 


HBXKAII  HATTIEKAN 
137  FlDC  Straat 
Phlladalphia.  FA   19106 

HART  BETH  KcCABE 
1342  Cbaitnuc  Sccaec 
Philadalphla,  PA   19107 

KATHLEEN  HcCAKTHY 
1300  Chastouc  Str«*E 
Ffalladalphla,  PA   19107 

joHH  J.  Mccarty 
1B45  Halnut  Scraac 

Philadelphia,  FA   19103 

HAUCT  J.  HcCAHLEY 
160S  Halnut  Stract 
Fhtladtlpbia,  PA   19103 

BARBARA  HcDERHOTT 
1300  ChesEnuC  Scraat 
Phlladalphla,  PA   19107 

"^THOMAS  HcGARRICLE 
1300  Cheatnut  Straat 
Fbiladalpbla,  PA   19107 

JOSEPH  HeCEITICAH 
1300  Chaatauc  Straac 
Philadelphia.  PA   19107 

T80HAS  L.  McGILL,  JR. 
1600  Robinson  Building 
Phlladalphla,  PA   19102 

MICHAEL  J.  KcGOVERN 
1300  CheaCnut  Street 
Phlladalphla,  PA   19107 

BONORASLE  THEODORE  A.  Hcl 
1516  One  Eaat  Fenn  Squati 
Philadelphia,  PA   19107 

THOHAS  H.  HcLEHABAH 
121  North  Broad  Street 
Philadelphia,  FA   19107 

JOHH  A.  HcHEHAKIN 

S73  north  Bucknell  Scraal 

Fhllsdalpbia,  PA   19130 


UTFOKD  MEANS 

1300  Chaitnuc  Screet 

Fhlladalphta.  FA   19107 

FRANK  D.  HEHELEN 
ISO  Windsor  Avenue 
WestDont,  HJ   08108 

PADL  MESSING 
7316  BtyaQ  Street 
Philadelphia,  PA   19119 

A.  NATBANIEL  METZ 
1300  Cheatnut  Street 
Philadelphia,  PA   19107 

RICHARD  S.  METER 

2600  The  Fidelity  Building 

Philadelphia,  FA   19109 

JOYCE  S.  METERS 
1600  Market  Street 
Phlladclphle,  FA   19103 

DAVID  HICBEIMAH 
1300  Cheatnut  Street 
Philadelphia,  FA   19107 

GREGORY  P.  KILLER 
1424  Cheatnut  Street 
Philadelphia,  FA   19102 


JONATHAN    W.    MILLER 

121   North   Broad   Street 
Philadelphia,    FA      19107 

JOYCE 
3400    1 
Philai 

D.    Mil 
lelphii 

,LER 
I,    PA 

19104 

ALAS-1 

Packer 
Philai 

B.    MOLOD       ■ 
td    Building 
ielphia,    FA 

19102 

JEFFREY  R.  MORGAN 

1917  Spring  Garden  Street 

Philadelphia,  FA   19130 

KARL  L.  MORGAN 

714  South  19th  Street 

Philadelphia,  PA   19146 


BEVERLY  H. 

1300  Cheatnut  Street 

Phlladalphla,  PA   19107 


Digitized  by  Google 


VALEIIE  J.  HanSOH 
1600  Karkat  Straat 
Phlladalphia,  FA  19103 

DAVID  J.  HDRFHT 
1328  KaloQ  Seraat 
Phlladalphia,  PA   19123 

JOHN  J.  HURFBT,  III 
1100  Oaa  FraokllD  Plaza 
Philadelphia,  PA   19102 

JOHN  E.  HDKKAT,  JK. 
Villaaova  School  of  Lav 
Vlllanova,  FA   1908S 

JEfFRET  E.  MYEKS 

3724  LankanBu  Avanua 
Phlladalphia,  PA   19131 

ROBEKT  E.  HYERS 
1300  ChaitDuE  Straat 
Phlladalphia,  PA   19107 

ACDRET  B.  NAGELBERC 
2601  Farkvay,  Ape.  310 
Philadelphia,  PA   19130 

STEFBEN  B. 'sarin 
\S21  Locult  Street 
Fhlladelphla,  FA   19102 

MARSHA  NEIFIELD 

121  North  Broad  Straat 

Fhlladelphla.  FA   19107 

SRELLET  ROBINS  NEW 
1300  CheatDut  Screac 
Philadelphia,  FA   19107 

HERBERT  B.  NEUBERG 
117  South  17th  Street 
Philadelphia,  FA   19103 

HARK  D.  NEWBEELGER 
ISli  Cheetnut  Street 
Philadelphia,  FA   19103 

ELSA  D.  NEWMAN 
91!  Spruce  Street 
Philadelphia,  PA   19107 

GREGORT  J.  MOtfAR 

1100  One  Franklin  Fleia 

Philadelphia.  PA   19102 


KARIL  HOUAK 

1500  Locuat  Street,  Apt.  F204 

Philadelphia,  PA   19102 

UILLIAM  V.  HOWELL 
S3&  Uaat  queen  Lane 
Philadelphia,  PA   19144 

DENNIS  OARES 
Packard  Buildlnt 
Philadelphia,  PA   19102 

ARDEM  J.  OLSON 
leoo  Market  Street 
Philadelphia,  PA   19103 

STEPHEN  M.  ORLOFSKY 

1200  Four  Penn  Center  Fleia 

Philadelphia,  PA   1910] 

JAKES  H.  ORHAN 

800  LBfa7*tta  Building 

Philadelphia,  FA   19106 

ALICE  TDOHY  O'SBEA 

602  Hashington  Squera,  South 

Philadelphia,  FA   19106 

JOHN  U.  PACKEL 
1003  69th  Avenue 
Philadelphia,  FA   19126 

ALEXAHDER  J.  PAIAMARCHUR 
2036  Delancay  Place 
Philadelphia,  FA   19103 

ANDREW  T.  PALESTINI 
211  Eaat  Beneiat  Street 
Philadelphia,  FA   19118 

HENRY  I.  PASS 
Indapandcnce  Square 
Philadelphia,  PA   19172 

BARTON  A.  FASTERHAK 
SOO  Lafayette  Buildiot 
Phlladalphia,  PA   19106 

STGAHT  PATCHEN 
600  Roaa  Street 

TeadoD,  PA   19OS0 

CLARK   PEASE 

ISOO   ChaetQut    Street 
Fhlladelphla,    PA      19102 


Digitized  by  Google 


DORIS  PE( 

1906  SanioiB  SCccac,  f33 

Philadelphia,  PA   19103 

JEFFREY  J.  PENNEIS 
121  HoTCh  Broad  Straac 
Ptalladalphla,  PA   19107 

DAVID  A.  PENNINGTON 

1700  Laad  Ttcla  Building. ._ 

Philadalphla,  PA   19110 

NORHAN  PERLBERGER 

1200  Four  Penn  Cent.t  Flaia 

Philadalphla,  FA   19103 

TBOHAS  PERRICOHB 
1300  Cheacnut  Screct 
Philadalphla,  PA   19107 

tIMDA  PEYTON 

121  North  Broad  Straat 

Philadalphla,  PA   19107 

JACQUELINE  BDLIOCK  PHILLIPS 
130  South  Broad  Straat 
Philadelphia,  FA   19102 

*  ROMAINE  PHILLIPS 
230  South  Broad  Straat 

Philadalphla.  PA   19102 

BENNETT  G.  PICKER 
Bolgar,  Flckar  i    Heloar 
IBOO  Jchn  F.  Kennedy  Bsulevj 
Philadelphia,  PA   19103 

HILLIAH  S.  FILLINC,  III 
1100  One  Franklin  Plaza 
Philadalphla,  PA   19102 

JOHN  S.  PIHSRT 

800  Lafayette  Building 

Philadalphla,  PA   19106 

NICHOLAS  V.  PINTO 

32  Heat  Ferndala  Drlva 

Runneaede,  HJ   OS078 

DAVID  B.  PITTINSKY 

2600  The  Fidelity  Building 

Philadelphia,  PA   19109 

MARK  H.  PLAFKER 

1100  One  Franklin  Flaia 

Philadalphla,  PA   19102 

DAVID  L.  POLLACK 

1401  Two  Pann  Canlar  Plaia 

Fhlladalphla.  FA   19102 


ROSLTH  G.  POLLACK 
2200  FSFS  Bulldtog 
Philadalphla,  PA   19107 

ANN  FONTERIO 

1300  Chestnut  Street 

Philadelphia,  PA   19107 

HOUARD  D.  POPPER 

121  Nocth  Broad  Street 

Philadelphia,  Pa   19107 

LESLIE  POSNOCK 

2l0l  Chestnut  Street,  flS06 

Philadelphia,  PA   19103 

BARBARA  POTTS 
123«  Market  Straat 
Philadelphia,  PA   19107 

STEPHEN  C.  FOULES 
BIO  Poudai  Hill  Lane 
Penn  Wynne,  PA   19151 

KENNETH  J.  POHELl,  JR. 
Z3S  South  17th  Street 
Philadelphia,  FA   19103 

DANIEL  PR0HI5L0 
1&04  Rene  Road 
Vlllanova,  FA   19083 

DONNA  U.  QUINN 

737  South  Sixth  Street 

Philadelphia,  PA   19147 

G.  BRADLB1  RAIHER 

717  Two  Penn  Center  Flaia 

Philadelphia,  FA   19102 

HARC's.  RASFANTI 
1300  Chestnut  Street 
Pbiladalphia.  PA   19107 

CLAIRE  RAUSCHER 

121  North  Broad' Street 

Philadalphla,  PA   19107 

HENRT  T.  REATH 
One  Ftanklln  Plaza 
Philadelphia,  PA   19110 

SDZAHHE  REILLT 

3400  Chaatnut  Straat 

Philadelpbia,  FA   19104 

ELIZABETH  REHAUD 

103  South  21ac  Street 

Philadalphla,  PA   19103 


Digitized  by  Google 


HELLIB  W.  EBTNOIDS 
2430  "0"  lorrla  Drlv* 
Phlladalphla,  FA   19121 

HEHtT  J.  RICHARDSON 

Taapla  Law  School 

1719  HoTtb  Bload  Sciaat 

Phlladalphla,  FA   19122 

HOHOKABLE  USA  A.  RICHETTB- 
294  City  Hall 
Phlladslphia,  FA   19107 

CAIl  M.  RICBKAH 

1200  Four  Pano  Cantti  Placa 

Fhlladalpbla,  FA   19103 

UTHLEEH  K.  BIDOI.;i 

224  Haac  Scboolhoua*  Lana 

Phlladalphia,  FA   19144 

CARL  G.  BOEBRTS 

2600  Tha  Fldalltr  Building 

Phlladalphia,  FA   19109 

EEHHETB  ROBINSON 
1300  ChaiCDUt  StE««t 
Fhtladalpbfa,  FA   19107 

JAMES  J.  SODGEBS 

2fi00  Tha  FidalltT  Building 

Fhiladalphla,  FA  19109 

FBTEB  F.  ROGERS 

Two  Hallon  Bank  Caocar 

Fhiladalphla,  FA   19107 

AHDREU  ROSOFF 

1300  Chaataut  Street 

Phlladalphia,  FA   19107 

RICBARD  S.  ROISHAI) 

1200  Four  Plan  Caocar  Plaza 

Philadelphia.  PA   19103 

JAY  CHRISTOPHER  EOOHET 
1300  Chestnut  Street 
Philadelphia,  FA   19107 

FETER  ROSALSET 
935  Stevatt  Avanua 
Spriagflald,  PA  I90«4 

DAVID  C.  ROSEN 

121  North  Broad  Scraac 

Philadelphia,  PA   19107 


DAVID  H.  ROSENBIUTB 
1100  One  FrankllD  Flaaa 
Fhiladalphla.  PA   19102 

BRUCE  ROSBHFIELD 
1600  Market  Street 
Philadelphia,  FA   19103 

LEE  A.  R05EHGARD 

1100  One  Ftanklln  Flaae 

Philadelphia,  FA   19101 

PETER  ROSSI 

832  North  Hoodecock 

Philadelphia,  FA  19130 

C.  RONALD  BCBLET 
Indapendenca  Square 
Philadelphia,  FA   19172 

DAVID  RUDOVSKY 

121  North  Bioad  Straat 

Philadelphia,  PA   19107 

DANIEL  F,  RYAN 

2600   The    Pldallty    Bulldioi 

Phlladalphia,    PA      19109 

WAYNE    SACBS 

121  North  Broad  Street 

Philadelphia,  PA   19107 

CAREN  LITVIH  SACKS 

1200  Four  Feno  Center  Plaia 

Philadelphia.  PA   19103 

CARL  E.  SALT! 
131S  Walnut  Street 
Philadelphia,  PA   19107 

JOAN  SALTZHAH 
1608  Walnut  Street 
Phlladalphia.  PA   19103 

ALEXANDRA  SAKDLER 

ZeOO  The  FldelttT  Building 

Philadelphia.  PA   19109 

H.  TERESA  SAEHIHA 
1329  Lonbard  Street 

Philadelphia,  PA  19147 

FELICIA  SARHER 
384  Lyceum  Avanua 
Philadelphia.  PA   1912S 


Digitized  by  Google 


mil  SPIGIL  SAX 

Llch  Floor.  Packard  Bulldlnt 
Phlladolpbla,  PA  19102 

KATBLIEH  SCARBOXOaCH 

1300  Chaicout  Sciaac 
Phlladalphta,  PA   1910T 

LBOHARD  SCHABFFBX 

Thraa  Parkway  ■ —    -- 

Phlladalphla.    PA      19102 

LB8IIX  J.  SCHAFFEX 

1100  Poor  Pans  Cantar  Plaia 

Phlladalphta,  PA   19103 

JORB  B.  SCRAP IRO 

Paekard  Building 
Philadalphla,  FA   19102 

JORH  V.  SCRKBBL 

2600  Iha  FidallCT  Building 

Fhtladalphla,  FA   19109 

AXTHOE  E.  SCBKIDT 
S062  HcKaao  Avanua 
Philadalphla,  FA   191«i 

'-'BELLA  SCHHALL 
3«00  Chaatout  SCcaet 
Philadalphla,  FA   1910& 

CARL  W,  SCRHEIDBR 
12th  Floor 
Packard  Building 
Philadalphla,  FA   19102 

PXIEK  SCHNEIDER 

1119  Brandywlna  Straac 

Philadalphla,  PA   X9123 

STUART  B.  SCBOHAH 

121  north  Broad  Straat 
Philadalphla,  PA   19107 

BA»<  F.  SCBUARTZ 
2415  Dalanear  Flaca 
Philadalphla,  FA   19103 

KARL  SCRUABTZ 

121  North  Broad  Straat 
Phlladalphta,  PA   19107 

mCHABL  SCBVARIE 

121  North  Broad  Straat 

Philadalphla,  FA  19107 


CUT  I.  SCIOLLA 
3030  Psrs  Balldlng 
Philadalphla,  FA  19107 

HARK  SCOTT-SEDLEI 
824  Raricao  Avaoua 
Ateo,  NJ   08004 

EDWIN  SBAVE 

21  South  12th  Straat 

Phlladalphta,  FA   19107 

IRVINC  R.  SEGAL 
1600  Markat  Straat 

Fhlladalpbta,  FA   19103 

TBOKAS  E.  SEHNETT 

1700  Land  Tltla  Building 

Phlladalphta,  FA   19110 

LIMDA  L.  SBAFEE 
7000  Craanhill  Road 
Philadalphla,  FA   191S1 

LAHBEHCE  F.  SEAT 

2800  Tha  Fidalicy  Building 

Phlladalphta,  FA   19109 


Halraaa  Park,  FA   19126 

MICHAEL  H.  SBBRHAN 
Packard  Building 
Philadalphla,  PA  19102 


JEROME  J.  SRESTACR 
1600  Markat  Straac 

Philadalphla,  PA   19103 

MICHAEL  SHORE 

1300  Chaatnut  Straat 

Fbiladalphia,  PA   19107 

STEPHEN  V.  SIARA 

1100  Ooa  Franklin  Flaia 

Philadalphla,  PA   19102 

HENRY  F.  SIESZIKOUSKI 
2800  Tha  Fldallty  BDlldin 
Philadalphla,  PA   19109 

MATTHEV  J.  SIEMBIEDA 
1200  Four  Pann  Cancar  PI 
Philadalphla,  PA   19103 


Digitized  by  Google 


XAKC   H.    SILBBKT 
T80Z  Aidaora   ATann* 
UymdBDor,    PA 

IVAI    SILVBKSIBia 
1300   Cbocnut    Sciaat 
Phlladalphta,    PA      19107 

AieXANDKK    SIITEKT 

121    HoTtb    Broad    Scraac 

Pfatladalphla.    PA      19107 


SIRICO,    JR. 


LOaiS    J. 

Vlllanova    School   of    Law 

VlllanovB,     FA      1908S 

LAtRT  H.  SLASS 

IZOO  Pour  Pann  Cantar  Plsia 
Phlladalphia,  PA   19103 

ABBE    SMITH 

5*41    Wayna   Avanua 

Philadelphia,    FA      191«A 


lALPH  SMITH 

3400  Chaatout 

Scraat 

Phlladalphia, 

PA   19104 

'SIDHET    J.     SMOLIISKT 
Tbraa    Baojaain   Pranklts   Faifcva? 
Pblladalphla,    PA      19103 

AHTBOHT    SODKOSKI 

2801  Bannar  Stiaat 
Phlladalphia,  PA   19149 

HENET  J.  SOKMEE 

31S6  Canilntton  Avanua 

Fhtladalpbla,  FA   19134 

lEOIAED  6.  SOSKOV 
7012  Graana  Sttaat 
Fhiladalphla,  PA   19119 

CHARLES  SOVBL 

800  Lafayatca  Bulldlnt 

Phlladalphia,  PA   19106 

JOSEPH  C.  SPAOLDINC 
1103-230  South  Broad  Street 
Phlladalphia,  PA   19102 

ROBERT  SPIHELLI 
1300  ChaatDut  Scraat 
rhtladalphia,  PA   19107 


G.  HICHABl  STASIAS 

1200  Pour  P«DD  Caotar  Plaia 

Phlladalphia,  PA   19103 

SERALD  S.  STAHSHIHB 
36  Haraarkac  Laoa 
Bryn  Maur ,  FA   19010 

IVEBRA  C.  STAPLES 
1424  Chaatnut  Scraat 
Phlladalphia,  PA   19103 

ERIC  STECEERL 

121  Sorch  Broad  SCraat 

Phlladalphia,  PA   19107 

J.  BBIC  STEDJB 

1700  Land  lida  Buildl«( 

Phlladalphia,  FA   19110 

ALEZANDER  £.  STEIN 

1200  Fouc  FaoD  Caotar  Plaia 

Phlladalphia,  PA   19103 

JONATHAN  M.  STBIH 

Sylvanla  Houaa 

Locuat  aad  SouCh  Juniper  SCti 

Phlladalphia,  PA   19107 

JOAN  H.  STEER 

1200  Four  Paan  Center  Plaaa 

Phlladalphia,  FA   19103 

MICHAEL  H.  STEB8 
Packard  Bulldins 
Phlladalphia,  FA   19103 

DOHNA  DDIN  STERNBERG 

1200  Four  FacD  Canter  Flaia 

Fhiladalphla,  PA   19103 

DAN  STEVENSON 

314  Uaataont  Drlva 

Colllngdale,  PA   19023 

UlLLIAH  P.  SIBUARI 
121  Sorth  Broad  Scraat 
Philadelphia,  PA   19107 

HELISSA  STIMELL 

409  South  Eleventh  Streec 

Pbtladalphla,  FA   19147 

JANET  T.    STOILAHD 

409  North  36tb  Street 
Philadelphia,  PA   19104 


Digitized  by  Google 


KAXIMB  STOTLAKD 

1300  Chcitoiit  Straai 
Fhtladalphla,  PA   1! 

JOBll  P.  STOflAS 
2600  Tba  Fid«llC7  Bi 
Phlladalpbla,  FA   1! 

BKIAN  STKAUSS 

1300  Chaitnut  Streai 

Phlladalphla,  FA   1< 

MINGO  STKOEBEK 

111  North  Broad  Stri 

Philadelphia,  PA   1< 

WATHB  H.  SDOJANEN 
1424  Chaatnut  Straal 
Pblladalpbta,  FA   1< 

CHARLES  SWEENE7 
1136  Wavarly  Straat 
Phtladalphia,  FA   1! 


VILIIAH  E.  TAYLOR, 
1200  Pout  Pena  Cant 
Philadelphia,  PA   ] 

HOHOaABLE  CAROLYN 
192  CIt7  Hall 

Phlladalphla,  FA 


EHGEL  TEMIH 
19107 


BASOLD  TEHHIS 

1300  Chaatnot  Stiaat 

Phlladalphla,  PA   19107 

ALLAN  M.  TEPFER 
A32  LoBbard  Scraat 
Fblladalphla,  FA   19147 

GAIL  thackera; 

1300  ChaatDuc  Straac 
Phlladalphla,  FA   19107 

WILLIAM  P.  THORN 
Packard  Bulldlot 
Phlladalphla,  PA   19102 


IRA  P.  TIGER 
1600  Harkat  S 
Phlladalphla, 


PA   19103 


EDWARD  I.  SHtCHAR 
1200  Four  Pano  Cai 
Phlladalphla,  PA 

Iter  Plaia 

19103 

MARTHA  K.  TREESE 

121  North  Broad  Street 

Philadelphia,  FA   19107 

SHERRT. A.  SWIRSK7 
1600  Harkat  Straal 
Phlladalphla,  PA 

19103 

LEON  W.  TOCKER 

42  South  ISch  Street 

Phlladalphla,  PA   19102 

AHTHONT  J.  SZOREE 
1300  Chaatnut  Str< 
Phlladalphla,  FA 

19107 

FETRESE  B.  TUCKER 
1300  Chestnut  Street 
Fhll.delphl.,  PA   19107 

310  Citj   dall 
Phlladalphla,  PA 

.  TARIFF 
1910  7 

RICHARD  C.  TUREIHGTON 
Vlllanova  School  of  Lav 
Vlllanova,  PA   190B5 

ADDREI  C.  TALLET 

1100  ona  Franklin 
Philadelphia,  PA 

Plaza 

19102 

JOBH.TnRLIK 

1  Buttonwood  Square 

Philadelphia,  PA   19130 

MELVYB  J.  TARHOFOL 

914  North  AMitcan  Streat 

Phlladalphla,  FA   19123 

BERHARD  TDRNER 

S27A  South  16th. Street 

Phlladalphla,  PA   19146 

PAUL  R.  TTNDALL 

1200  Four  Fenn  Center  Plaaa 

Philadelphia,  PA   19103 

CLAYTON  J.  DHDERCOFLER 
2600  The  Fidelity  Bulldtns 
Pblladalpbta,  PA   19109 


Digitized  by  Google 


SLLIOI  URTBSBBRGBR 
IbT«a  Tha  Parkway 
Fbtladalphla,  PA   19102 

DATID  VAISBZ 

1321  Spruea  Straat 

Fhiladalphla,  PA  19107 

DOROTHEA  J.  TALOHB 
108  Haat  Kaada  Straat 
Philadalphla,  PA   19118  - 

EOBERT  T.  VANCB,  JR. 
«73S  Hazal  Avanua 
Fhiladalphla,  PA   191&3 

TODD  C.  VAHETT 

1100   On«    Franfclin   Plaia 

Fhiladalphla,    PA      19102 

J.  TAH  BORH 

1700  Land  Title  Building 

Philadelphia,  FA   19110 

EILEEN  WEISHAN  TASS 

1200  Four  Faan  Canter  Plai 

Philadelphia,  PA   19103 

JOSEFB  VEEi5eTT 
'  800  Lafayette  Building 
Phlladelphle,  FA   19106 

VICTOR  H.  VEEBEKE 

1700  Land  Title  Building 

Philadelphia,  FA   19110 

HART  T.  VIDAS 

1200  Four  Penn  Center  Flai 

Phlledelphia,  FA   19103 

FRANCES  H.  VI5C0 

12  Souch  12th  Street 

Fhlledalphia.  PA   19107 


BETSY  WAHL 
1730  Crean  Sti 
Fhiladalphla, 

DANIEL  HALLS 
121  North  Broi 

Fhiladalphla, 


PA   19130 


GB0FFR7  HALSH 
3A0S  Beting  Street 

Philadelphia,  PA   19104 

MARGUERITE  S.  HALSB 

2600  The  Fidelity  Building 

Fhiladalphla,  PA   19109 

JONATHAN  WALTERS 

6703  Springbank  Straat 

Philadelphia.  FA   19119 

FREDERICK  K.  VALTON.  JR. 
133  Haat  Uaahlngcon  Lane 
Fhiladalphla,  FA   19144 

EDWARD  S.  HARDELL 

2600  Tha  Fidelity  Building 

Philadelphia,  FA   19109 

CORNELIUS  HBATBERS 

107  E.  Corgei  Lane,  1403 

Philadelphia,  FA   19119 

LADRA  WEBSTER 

121  South  2nd  Straat 

Philadelphia,  FA  19106 

LESTER  C.  WeiNRAUB 
191B  Wallace  Straat 
Philadelphia,  PA   19130 

HICBAEI  P.  WEINSTEIN 
2101  Walnut  Street 
Philadelphia,  PA   19103 

EDWARD  B.  HEI5 

B56  Public  Ledger  Building 

Phlladelphle,  PA   19106 

MORRIS  L.  UEISBERC 

1200  Four  Paao  Center  Flaia 

Philadelphia,  FA   19103 

RICHARD  HEISBAOFT 

Sylvanla  House  , 

Juniper  and  Locuet  SCraetl 


LAHA-LTN  HE I SHAN 
S219  Chaatnut  Straat 
Fhiladalphla,  FA   19139 


JUDITH  K.  HBISS 
1600  Market  Strei 
Philadelphia,  PA 


Digitized  by  Google 


MBBRILEt  HEISS 
1300  Walnut  Straat 
Fhtladalphta,  PA   19104 

ELLEN  HERTBEIMER 
Vlllanovi  School  of  Lav 
Vlllanova,  PA   19083 

MONICA  WIDEKLIIZ 

121  North  Broad  Straat 

Phlladalphla,  FA   19107 

B.  VILBRABAM 

1300  ChaatauC  Straat 

Phlladalphla,  PA   19107 

KABCIA  H.  HILF 

1200  Four  Fann  Caotar  Fli 

Phlladalphla,  PA   19103 

JOTCE  J.  HXLKERSON 
«G31  Ploa  Straat 
Phlladalphla,  PA   19139 

SUZA8  WILLCOZ 


"lUBSBALl  L.  VILIIAKS 
632-1313  HalDut  Straat 
Phlladalphla,  FA   19107 

BABVOLPS  WILLIAMS 
1300  Chaatauc  Straat 
Phlladalphla,  FA   19107 

ELAIHE  5.  HILSOH 
ieo8  Walnut  Straat 
Phlladalphla,  FA  19103 

MARK  WILSON 

22A  Vaat  School  Booaa  lana 

Fhll»delphl«,  PA  19144 

NIA  WILSON 

1907  Grean  Straat 

Phlladalphla, 


FA   19130 

DAVID  W.  WOLF 

B  -  10  South  Latltla  Stii 

Phlladalphla,  PA   19106 

SBEILA  WORDS-WRIGHT 
BS31  Wtlllaaa  Avanua 
Phlladalphla,  fa  19130 


BARBARA  WRIGHT 

1300  Cbaltnut  Straat 

Phlladalphla,  FA   19107 

R080RABLE  CHARLES  WRIGHT 
RooB  303,  City  Hall 
Phlladalphla,  PA   19107 

JEANNE  P.  HROBLESKI 
2400  On*  Raading  Cancar 
1101  Maifcat  Straat 

Phlladalphla,  FA   19107 

SHELL?  D.  TAHOFF 
702  CltT  Hall  Annex 
Phlladalphla,  PA   19107 


CAROL  TORE 

1300  Cheatnut  Stteat 

Fhiladalphia,  PA   19107 

RONA  SKEEH  YODHG 
Packard  Building 
Philadelphia,  FA   19102 

VICTOR  A.  TOOKC 

1200  Four  Feno  Cantar  Plaia 

Phlladalphla,  FA   19103 

MARGARET  A.  ZABO 

1200  Four  Fann  Center  Plaia 

Philadelphia,  FA   19103 

BERNARD  E,  EBRZEZNG 

2600  The  Fidelity  Bulldlnf 

Philadelphia,  FA   19109 

L7NN  C.  ZEITLIH 

1200  Four  Fann  Cantar  Plaia 

Phlladalphla,  PA   19103 

CEANNE  ZELKOWITZ 

127  Mount  Flaaaant  Avenue  (1 

Philadelphia,  FA   19119 

BERT  E.  ZIBELMAH 

BOO  Lafayatta  Bulldlni 

Philadelphia,  FA   19106 

DAVID  ZDCKERHAH 

722A  South  22nd  Street 

Philadelphia,  FA   19146 


Digitized  by  Google 


ALLEN  BECXHMI 

1339  Chaltnut  Strsat 

Fhlladalphia,  Panniylvanla  1911S 

EDHIN  S.  BOYNTOH 
104  AEcher  Drlva 
Sryn  Hawr,  Pcnnaylvania  19010 

ROBERT  A.  BRAUN 

1420  Walnut  Straat    -~  - 
Philadelphia,  Pannaylvania  19102 

.  QDENTIN  Z.  BROOKS 
.1511  Halnut  Straet 
Philadelphia,  Peitniylvania  19102 

RANDALL  J.  BROBAKER 
1521 '.Walnut  Straat 
Khlladelphla ,  Pannaylvania  19102 

PAMELA.?.  COHeH 

2013  Spring  Garden  Streat 

Philadelphia.  Pennsylvania  19130 

PAUL  A.  DANDRIDGE 
3115  Middle  Creak  Road 
GilbcEtsvlllB,  Fanntylvania  19S15 

■  JOllA  B,  FISHER 
138  Chamounix  Road 
St.  Davldi,  Pcnnaylvania  19087 

GEORGE  S.  FORD,  JR. 
S407  Seminole  Avenue 
Philadelphia,  Pennsylvania  19118 

HAR1BA  GALE 

1S19  Pine  Street 

Philadelphia,  Pennsylvania  19102 


KENNETH  G 

1314  Chestnut  Street    (Suite  llOO) 
Philadelphia,  Pennsylvania  19107 


RONDA  G. 

leOl  JFK  Boulevard 

Philadelphia,  Pennsylvania  19103 

D.  EAE  SCOTT  JOHES 
1405  North  52nd  Street 
Philadelphia  Pennsylvania  19131 

KEVIS  G.  O'DOHOVAH 
101  South  IGth  Street 
Philadelphia,  Pennsylvania  19103 


RAYHOND  R. 

1100  One  Franklin  Plata 

Philadelphia,  Pannaylvania  19102 

JESS  T.  SCHHIDDE 
Post  Office  Box  SOS 
Hontpeliac,  Varmont  OS602 

GUS  SELLITTO 

230  Oueen.  Street 

Philadelphia,  Pennsylvania  19147 

DONNA  SDHINSKI 
3137  Saloan  Street 
Philadelphia,  Pennsylvania  19134 

PAULA  WEISS 

377  Belene  Place  . 

Philadelphia,  Pennsylvania  19116 

ARTHUR  M.  KAPLAM 
1B4S  Halnut  Street 
Phtladalphla,  Pennsylvi 


HONALO    A      CLEARFIELD 

1511  Walnut  Street 
Philadelphia ,   Pennsylvi 

[.  BRESNAHAH 


BARRY  J.    FLEISHMAN 

1120  Connecticut  Avenue,    N.W. 

Washinqton      D.    C,    20036 

'JOSEPB   B.    HERANZE 
2008   Addiaan   Street 
Philadelphia,   Pennsylvania  19] 

SUSAN  L.  DeJARNATT 
29  Pennock' Terrace 
Lansdoune,    Pennsylvania  19050 

WILLIAM  D.    HOYER,    JB. 
113  North  Essex  Avenue 
Post  Office  Box    434 
Narberth,    Pennsylvania  19072 


Digitized  by  Google 


KBNNBTH  ARRIHGTW,  SR. 

4313  Brown  Streac 

Philadalphia,  Penniylvsnls  19104 

FBEDERICK  C.  BADBR 
12  Xpplatrss  Court 

PhlladBlphia,  p«nn>ylvania  191oe 

CHRISTINE  T.  BAK       --  ■■ 

1500  MSB 

Pbiladalphia,  Peanaylvanla  19102 

ANDREW  P.  BRKLOH 

Sei  North  29th  Straet 

Philadelphia,  Pennsylvania  19130 

HEHDV  FEIK  COOPER 
1521  Locust  Street 
Philadelphia,  Pennsylvania  19102 

k.  RICHARD  PELDKAN 

219  Pelham  Road 

Philadelphia,  Pennsylvania  19119 

HABOUERITE  R.  GOODHAH 
1728  Lranbard  Street 
Philadelphia,  Pennsylvania  19146 

STANLEY  N,  GRIFFITH 
3315  Maple  Park  Drive 
Kingwood,  Texas  77339 

KATHERINE  A.  HUSBHAN 
2231  Wallace  Street 
Philadelphia,  Pennsylvania  19130 

T.  BRADEH  KI5ER 
1220  Cypress  Street 
Philadelphia,  Pennsylvania  19107 

HARK  HACOUEEH 

529  North  19th  Street 

Philadelphia,  Pennsylvania  19130 

HICHAEL  H.  HALIH 
1234  Ha  rice  t  Street 
Philadelphia,  Pennsylvania  19107 

ARTmni  G.  RAVNES 
1B45  Walnut  Street 
Philadelphia,  Pennsylvania  19103 

ANTHONY  D.  SHORE 

1725  John  F.  Kennedy  Boulevard 

Philadelphia,  Pennsylvania  19103 


CAROL  E.  TRACY 

4727  Haiel  Avenue 

Philadelphia,  Pennsylvania  19143 

FREDERICK  M.  WALTON,  JR. 
133  West  Washington  Lane 
Philadelphia,  Pennsylvania  19144 

CYNTHIA  E.  WHITE 

1216  south  Melville  Street 

Philadelphia,  Pennsylvania  19143 

FLORA  BARTH  WOLF 
1744  Lombard  Street 
Philadelphia,  Pennsylvania  19146 

MICHAEL  STEPHEN  JACKSON 
3800  Centre  Square  West 
Philadelphia,  Pennsylvania  19102 

PHILIP  K.  LORD 

1600  Robinson  Building 

42  south  ISth  Street 

Philadelphia,  Pennsylvania  19102 

GEBRI  BRIDGHAM 
1911  Waver ly  Street 
Philadelphia,  Pennsylvania  19146 

BARBARA  J.  ZARSKY 
1911  Rodman  Street 
Philadelphia,  Pennsylvania  19146 

ROBERT  B.    WOLF 

Packard  Building 

Philadelphia,   Pennsylvania  19102 

STEPHEN  R.    SHER 

300  Six  Penn  Center  Plaza 

Philadelphia,   Pennsylvania  19103 

□AIE  Pa«EYS  I£VY 

1200  Four  Penn  Center  Plata 

FhilAdel(ttia,  Pennsylvania  19103 

MICHAEL  G.    DeFINO 

1717  Bittenshouse  Square 

Philadelphia,   Pennsylvania   19103 

A.    FITZPATRICK 
hn  F.   Kennedy  Boulevard 
Iphia,   Pennsylvania   19103 


Digitized  by  Google 


iiylvsnia   2006-19107 


KlfRED  V.    ALTOPIEDI 

Roblnaon  Building 

Ptalladelphla,   Pennsylvania   19102 

LOOIS   S.    ARNOLD 

1010  Two  Mellon  Bank  Centsc 

Philadelphia     Pennaylvanta  19102 

MILLltM  P      BOmND 
7029  Brentwood  Boad 
Philadelphia,   Pannaylvania  19151 

BAftfiAftA  CAPOZZI 
1326   Spruce   Street 
Philedelpt 


HICflOLAS  CASAMENTO 
Thcee  Peim  Center  Plaza 
Philadelphia      Pennsylvania   19102 

RUDOLPH  CHILLEMI 
23  01  Market  Street 
Philadelphia     P«nniylvania   19101 

F.    EmmTTT  CICCONE 


HAHY    ftOsE  fANTE  CUNNINGHAM 

1600    Locust  Street 

Philadelphia      Pennsylvania   19103 

ROHALD  DeSIHOHE 

3308   Hiverton   Boad 

C inn ami US on     Hew  Jer«ey 

RICHARD  F.    FURIA 

lin  Rittenhouse  Square 
Philadelphia      Pennsylvania    19103 


LARRY  J.    RICHETTB 
1420   Locust   Street 

Phlladalphlj 


isylvania  19102 


JOmi  H.  SALLA 

1411  Walnut  Street 
Philadalphia,  Pennsylvania  19102 

JXMes  M.  TURNEH,  JR. 
171T  Rittenhouse  Square 
Philadelphia,  Pennaylvonla  19103 


ALEXANDER  GIACOBETTI 

16O0  Architects  Building 
UT  South  17th  Street 
Philadelphia,  Pennsylvania 

JOHN   F.    HIFKA 

715  Widenec  Building 

Philadelphia,   Pennsylvania 


Digilizedb,  Google 


Office  of  Ihc  Pnaidcnl 


^  R'V/jf^ 


Wellesley  College 


The  Honoralile  BdvBid  M.  Keiuiedy 
113  Kusaell  SanaCe  Office  Building 
U.S.  Senate 
Haahlngton,  DC  20510 

Dear  Sanacor  Keonedy: 

I  have  Tcad  abouc  Derek  Bok'a  t«acljBQTiy  In  Waahiogtoa  la  Cavor  of 
the  Antl-Aparcheld  Act  which  you  sod  SeoacoT  Ualcker  have  sponaorad. 
1  vanted  to  let  you  know  of  ny  own  peTBonal  support  for  this  bill  U 
v«ll.   I  believe  It  la  very  l^ortant  for  ua  to  take  action  In  BtTonEtb- 
enlng  Amarlctn  policy  Id  South  Africa  Id  order  to  save  Bare  effectively 
agalnat  apartheid.   The  bill  that  you  have  apooaored  seeaa  to  ne  an  ex- 
cellent BCep  In  this  direction,  and  1  coHUnd  you  for  your  effort. 

I'm  eura  that  out  conpuaea  will  be  more  and  mote  Involved  In  working 
against  apartheid.  It  Is  good  to  have  a  national  platfola  for  such  activ- 
ities that  ptovldea  b  conatructlve  solution,  la  addition  to  the  Inportant 
debates  on  caiqiuB  about  our  own  lesponslbllltles  as  corporate  Investors. 

If  there  is  anything  that  I  can  do,  or  that  ■  group  of  prealdenta 
can  do  as  colleaguea  to  offer  aupport  for  thla  act,  I  hope  you'll  let  Be 
kDow.  Thaoks  again  for  taking  this  initiative. 


HOKiiBD 

cc:  Derek  Bok 

Mary  Gardiner  Jonea 

Joel  Kriager 


Digitized  by  Google 


Juna    21,    198S 

TBSIIHOWT     FOB    SDSHISSIOH    TO    TBI    SBHATE    BAHKIHG    COMMITTEE 

HBAKIHC5    OR    SODTB    AFBICA    BY 


Oa    behalf    of    I 
■T    •Ppr«ci«tioo    of 

South    African!    ace 


repreiaioD,    where    r 
buaan    righci. 

BoHcver,  «a  ac 
to  huaaa  ri(ht*  abu 
'ident  io  Friac  Mi 
ipplicatioo  of  a  bo 
alicy.  The  Fr 
irianliatioaa ,  tepr 
to  eacape  Sovi 
itj  that  there 
ioveco  aod  the  g 
JohaoQciburg 
It  ii  pi 
aubject  of  hui 
the  Aaecican 
aod  ch*  Sovte 
would  liberal 
regiaea. 


i*ca    ia    South    Afr 


ned     Chat     publi. 


uld    have    capcui 
ly    ten    year*    ai 

agaged    in    negol 


he  -ajority  of 


ae,  the 
tentioD  of 
id  Statea 

which  we  hopei 


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Co 

P« 

« 

io 

(ioel 

lid 

»B 

do 

.>. 

1 

Ka 

h 

i 

»n. 

pr 

DC 

P 

e. 

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fulflllad    -    •   r 

The    "hunun    tigli 
the    reunification 
contact   and    the    fi 
b7    Eaitern    btoc    co 
eonitructive    engaEcnei 

The    FreedoB    Fe 

groundHork    for   effe 

hunan    righta    re 
Specifically,    b. 


i(t    I,     1975,     the    Conference    on    Security    and 
in    Europe   xaa    concluded.      All    35    participating    atatea 
he    United    States    and    Che    Soviet    Union)    signed    a    final 

■dged    to    respect    international ly    Tecogniaed 
■ning    relation!    between    goveconenta    and    their 


1    European    neighbora,    a 
industrial    cooperation 
lining   Heatern    loans:       all 
I    the    Soviet    bloc. 

Lgbta    abuaca. 

Accords,   which    calls    for 
I   of    travel    and   hunan 
ion    has     largely    been    ignor< 

the    U.S.    policy    of 

Eastern    Europe. 


on  of  hai 

basket"  of  t 
amilies,  free 
low  of  infor« 
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t  baa  failed 
stion  believe 
Lugar,  Kathai 


iple 


in    the   Hela 


I    govei 


gin    to    occur   withi. 
ks   Hould    teiBinate   ne 
nts    found    to   be    in   violal 


:nki    Accords, 
broad,    substantial 


of    the   Helsinki 


joogle 


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retign 
wittadrai 
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rge     tb«t     tbt    S« 

oa    voicing    appc 

Helainki  Accords.  Durii 
encouraged  to  pledge  ol 
Cake    effect    in    1987.      Shoul< 

the  iseae  and  begin  to  legiilate  thei 
pcciod,  the  Departaent  of  State  couli 
violationa,  in  an  effort  to  gain 
goverasaot*  in  enforcing  the  codi 
alone,  would  not  be  hurt  and  the 
iapact . 

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Tcgine*     can    be     supported.       In    ou 


■  1  I 


•  violation*  \>y    the 
lie  to  verify  cowplianee. 
joint  Cougreaaional 
Voluntary  Code  of  Conduct" 


any  ni 
CoDgr. 


ation    froB    other    We 
this    wny,    U.S.    fira 

.vered     in    which     the 
ian    and    authoritari. 


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l!ii^ 


rjwMtmH  »q««t  tMt  tM  roiiHUt  ai 


ttttmitum    ts  a.  £K.     awcioa  t  gr  tu  biu,  oarciHM  ■ 
■w     ImsUHti,'     iinili]     prohibit     tnj  thlt<d  SUIu  p«i 

uoaptlac  rrnm  tbla  proCilbltlea  DBlf; 


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IM  tut  HialMH  anlwiirUai  m 


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,     «■    ar*     MUUI7  tradHi  U  othar  fra*  iic 


^ft^C^~ 


Digitized  by  Google 


AN  OPEN  LETTER 


As  South  Africans  visiting  your  great  country, 
we  are  writing  to  you  because  we  are  concerned  about  the 
campaign  for  punitive  measures  being  waged  against  our 
country  in  the  United  States. 

Like  all  Americans,  we  also  feel  that  things 
have  to  change  in  South  Africa  to  bring  about  a   situation 
of  equality  of  opportunity  for  all  who  live  in  South 
Africa,  reqardlesa  of  colour,  race  or  creed,  in  every  area 
of  endeavour  -  political,  social,  economical  and  educational. 
What  many  Americans  apparently  do  not  realise  Is  that  things 
are  changing  and  that  the  pace  of  change  is  accelerating. 

He  see  this  as  a  welcome  development  and  would  not 
like  to  see  the  pace  of  change  being  slowed  down  or  brought 
to  a  halt.  We  fear  that  the  campaign  for  disinvestment  or 
sanctions  will  do  just  that:   it  will  slow  down  the  pace  of 
change . 

It  will  do  far  more  than  that:   it  will  punish 
the  wrong  people  -  those  who  want  to  bring  about  change  and 
those  who  need  it  most  -  namely  South  Africa's  black 
population  who  will  be  hardest  hurt  in  terns  of  unemployment 
and  economic  deprivation  if  the  disinvestment  campaign 
succeeds . 

If  anyone  believes  that  the  Whites  of  South  Africa 
can  be  browbeaten  into  a  more  reasonable  frame  of  mind  by 
making  the  Blacks  suffer  more,  he  is  sorely  mistaken.  Quite 
the  opposite  will  happen.   Sanctions,  therefore,  can  only 
reduce  the  chances  of  peaceful  change  in  South  Africa. 


Digitized  by  Google 


beginning  to  change.   It  gives  the  iiqiression  that  South 
Africa  Is  being  punished  for  changing  for  the  better. 
What  South  Africa  now  needs  Is  encouragement  -  not 
punishment,  if  the  changes  that  have  started  are  to 
continue  and  accelerate. 

One  of  the  main  accusations  directed  at  South 
Africa  Is  that  It  is  governed  without  the  consent  of  the 
majority.   How  Is  it  to  be  justified  that  the  very  people 
who  make  this  accusation  are  now  acting  in  exactly  the 
same  way?  The  vast  majority  of  South  Africans  -  all  of 
the  Whites,  almost  all  of  the  Coloureds  and  Indians  and 
most  of  the  Blacks  reject  disinvestment  or  sanctions. 
A  scientific  survey  conducted  by  Professor  Laurence 
Schlemmer  of  the  University  of  Natal  shows  that  75  per 
cent  of  all  black  South  African  factory  workers  are 
totally  ^posed  to  disinvestment.   They  will  feel  it  laoat, 
after  all. 

That  being  so,  what  right  have  Aikerlcans  to 
Ignore  the  wishes  of  the  vast  majority  of  South  Africans 
and  increase  their  hardship  and  suffering  at  no  cost  or 
suffering  to  the  American^  themselves.   It  is  simply  too 
easy  to  expect  other  people  to  suffer  while  one  sits  %ack 
In  unaffected  affluence  in  the  safety  of  a  distant  land. 

If  the  pace  of  change  In  South  Africa  is  to  be 
helped  and  quickened,  South  Africa  needs  more  investment  - 
not  less,  more  job  opportunities  -  not  less,  more 
education  -  not  less ,  and  above  all ,  more  encouragement  - 
not  less.  Only  by  such  encouragement  and  constructive 
engagement  can  we  achieve  what  all  reasonable  Americans 
and  South  Africans  wish  to  see:   a  South  Africa  in  which 
all  the  people  share  equitably  in  the  government, 
decision-making  and  the  wealth  of  the  land.  He  all  want 
the  same  result,  but  we  as  South  Africans  think  the 
methods  advocated  by  the  protagonists  of  punitive  i 
now,  will  not  help  to  achieve  the  desired  result. 


F.G.  Backman  ^'j_>.^'».  cU^  w, 
Dr  W.R.  Hoodp-'''^^» '  J ^1 


Digitized  by  Google 


Ja2  WininBtr.Juw3.ms 


AN    INDEPENDENT    NEWSPAPER 


The  South  African  Sanctions 

Sondi  A&ka'a  jkce  m  die 


PKOPOSftLS  IN  CtWCatESS  to  wte  mk-  amid  detvlbem.  Aid 

OotB  tQ/uM  SuuCh  A£ria  wck  ^*gM*i  vtti  wofU  wmwy^  mkI 

WonsBiu  Am  >  fcnlt  ctf  tfan  iwitwm  UhIhi  cf  wmwir,  ii  i  priniB  ifn 
cooOTtency,  tbe  Hoiae  m;  mrarc  far  tbe  fat        Al  of  ttw  ■  uodm 

tioie.<»Th«idg,  iiwdagecieccnaMiciwtric-  «pwK«  c<  the  sancti 

tjooa  i^HHt  the  laKtitiaaKi  cf  qMftbeid.  IT  tbtt  ttiqr  hne  ifaBtly  dnai, 

lHneni,it«9beaiiHtake.  faBtoit»tedieinnBndnpact«i  bl 

TniecMe(prMncho«i»i«th«tirtteiBiMritrTriB  op|)orti»itiw  BMwwtent  wife  MwJag 


man  mhI  poBucil  ifpMBMPOt.  ^lai  tiiv  rtwitat  ivliiiw  to  llw  ^**^"  sfenaJrtnlxHi*t  poi^  cf  "co^ 

bcoc&imn  inqr  ■!•>  MAr  ta  (at  down  n  I  price  HiiHiim  iiipm i"  TM  it  muld  be.  Bu  H 

agmnwpyajtoiyy.    inddbeapoo>lr^mednfale.TlK^pecfa««e- 

ft  jgMiit  MnctioBi.  It  K  tmt  tbe  cooDtnr i  ffmrni^  ii  litt  mmmI  Jdod.  Wb^  devrws  to  be  crilh 

Bon^iiittnMMtefiKtneengmecfMicUtnnB-  dMdiatfaeidfwnhtrMinB'ipofcybutwpotatKlied 


» Google 


^^i^^TT" 


FOR  U.S.  FIRMS  IN  SOUTM  AFRICA, 
THE  THREAT  OF  COERaVE  SUUJVAN  PRINaPlfS 


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As  a  result,  30  of  the  146  signatories  were  dropped  from  the 
Sullivan  list  in  1983.  For  them,  and  for  the  signatory  companies 
that  received  failing  grades,  life  has  become  unpleasant.   Sullivan 
ratings  are  well-publicized  and  often  cited  by  investment  publica- 
tions including  Mews  for  Investors ,  published  by  the  National 
Council  of  Churches '  Investor  Responsibility  Research  Center. 
News  for  Investors  routinely  prints  Sullivan  ratings.   Companies 
receiving  "failing  .grades"  often  find  themselves  deluged  with  in- 
quiries concerning  South  African  operations  and  Sullivan  ratings. 
On  occasion,  universities,  pension  funds  and  other  institutions 
use  the  ratings  as  rationale  for  divestiture.   This  threatens  to 
depress  the  market  value  of  these  companies'  stoclcs  and  secur- 
ities and  holds  the  promise  for  negative  fiduciary  impact  for  the 
institutions.  A  rash  of  state  and  local  divestiture  legislation 
compounds  the  problem.  The  media  reflexively  brand  failing  com- 
panies racist. 


Equal  and. fair  employment  practices  for  all  employees. 


Initiation  and  development  of  training  programs  that  will 
prepare  blacks,  coloreds  and  Asians  in  substantial  numbers 
for  supervisory,   administrative,  clerical  and  technical 
jobs. 


Improving  the  equality  of  employees'  lives  outside  the  work 
environment  in  such  areas  as  housinc),  transportation,  school- 
ing, recreation,  and  health  facilities. 

While  the  substance  of  the  Principles  is  not  the  problem, 
the  compliance  system  and  machinery  are.   The  Principles'  author, 
Leon  Sullivan,  a  black  Baptist  minister  from  Philadelphia,  has 
abandoned  the  voluntary  nature  of  the  procedure  by  publicly 
.  endorsing  and  testifying  on  behalf  of  the  Solarz-Gray  amendments 
to  Title  III  of  the  Export  Administration  Act.   Solarz-Gray  would 


Jul;  25,  1984. 


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transfon  into  binding  lav  aajor  elenents  of  the  Sullivan  Princi- 
ples and  would  ban  further  iDveBtments  by  U.S.   conpanies  in  South 
Africa,     violatara  would  face  fines  up  to  SI  million  and  stiff 
jail  terns. 

Solarx-Gray  aluost  would  assure  U.S.   disinvestment  from 
South  Africa.     Faced  with  mounds  of  government  paperwork  and  a 
prohibition  on  future  capital  improvements,   American  firms  would 
quickly  beco«e  non-competitive  and  eventually  retreat  from  the 
South  African  market.     A  byproduct,    of  course,   would  be  cessation 
of  American  social  investment  on  behalf  of  South  Africa's  non- 
lAitB  population.     More  ia^ortant,    tens  of  thousands  of  non-white 
jobs  would  vanish.     Fearful  of  the  implications  of  Solarz-Cray, 
the  State  Department  has  begun  pressuring  those  U.S.    firms  that 
refuse  to  sign  the  Sullivan  Principles  and  pay  the  high  audit 
fees  to  do  so.     The  State  Department  apparently  believes  that 
universal  voluntary  coiqiliance  would  make  Solarz-Gray  unneces- 
sary.    The  potential  pool  of  Sullivan  participants  is  large.     An 
estimated  350  U.S.   companies  operate  in  South  Africa. 

Codification  of  the  Sullivan  Principles  is  gaining  popularity 
in  state  and  local  governments  where  legislators  seek  to  head  off 
cosqplete  disinveament.      Connecticut  already  has  such  a  law. 
Etecently,    24  states  and  localities  were  considerincr  66  separate 
pieces  of  disinvestment  legislation.      Such  major  cities  as  Wash- 
ington and  Philadelphia  already  have  passed  laws.     Mew  York  City 
is  considering  it.     The  implication  for  S200  billion  worth  of 
state  and  municipal  pension  funds  looms  large,    for  restrictions 
on  how  portfolio  managers  can  Invest  the  money  entrusted  to  then 
significantly  handicap  potential  performance  of  the   funds.     Those 
penalized,   of  course,   will  be  pensioners  or  taxpayers. 

The  Sullivan  Principles  regrettably  have  been  evolving  from 
well-intended  voluntary  guidelines   for  corporate  behavior  m 
South  Africa  to  a  coercive  system  in  which  the  U.S.   government 
now  is  being  asked  to  participate.      Such  coercion,    by  driving 
progressive  U.S.   firms  out  of  south  Africa,   could  harm  those  whoa 
the  Sullivan  Principles  are  supposed  to  help— South  Africa's 
non-whites . 

THE   CRUSADER 

Leon  Sullivan's  social  activism  began  during  the  1940s  in 
New  York  City,   when  he  worked  with  the  colorful  and  controver- 
sial Adam  Clayton  Powell.     He  later  moved  to  Philadelphia  to 
become  pastor  of  the  Zion  Baptist  Church.      From  its  pulpit  he 
launched  a  number  of  initiatives  that  eventually  spread  across 
America  and  Africa  and  attracted  hundreds  of  millions  of  federal, 
state,    local  and  private  sector  dollars.     Sullivan  assembled  an 
Impressive  matrix  of  supporters  from  both  major  political  parties, 
from  Wall  Street  to  Main  Street,    from  Ghana  to  Georgia. 


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In  1962,    along  with  several  hondred  other  Philadelphia 
clergymen,    Sullivan  launched  a  consumer  boycott  that  £orced  the  . 
Philadelphia  Chamber  of  Commerce  and  300  business  owners  to 
pledge  to  hire  black  unemployed  and  adopt  what  was  called  a  fair 
employment  policy.     Two  years  later  Sullivan  founded  a  privately 
funded  job  training  program  called  the  Opportunities   Industriali- 
zation Center.     Several  nooths  later,  Dr.  Maurice  Dawkina,   a 
Sullivan  associate,    opened  an  QIC  in  Los  Angeles.     Dawkins  subse- 
quently left  Los  Angeles  to  join  Lyndon  Johnson's  Administration. 
There  he  secured  SI  million  from  the  Office  of  Economic  Opportunit; 
to  open  three  more  OIC  facilities.      In  the  following  years,    a 
national  OIC  structure  took  shape  with  Sullivan  as  chairman.     The 
lion's  share  of  the  funding  came  from  OEO,    the  Labor  Department, 
and  the  Department  of  Health,   Education  and  welfare. 

Sullivan's  poli-tical  clout  subsequently  multiplied.      Amend- 
ments to  the  Manpower  Act  of  1970,    the  Comprehensive  Employment 

.  and  Training  Act  of  1973,    and  the  Job  Training  Partnership  Act 
all  contained  protective  language  specifically  inserted  for  OIC's 

-benefit.     The  code  word  for  OIC  in  this  legislation  was  "com- 
nunity-based  organization"   or  CBO.      "whenever  an  amendment  came 
up,   we  moved  to  make  suxe  we  were  protected,    so  you'll  find  a 
whole  lot  o^  CBO  amendments  along  with  the  other  amendments,"  Dr. 
Dawkins  told  The  Heritage  Foundation. 

This  protection  paid  off.     By  the  late  19708,   OIC  operated 
160  centers  in  40  states,   had  5,000  full-time  employees  and  an 
annual  budget  of  $150  million,    90  percent  coming  from  government. 
Boasts  Dawkins:      "Our  guys  would  always  get  a  fair  share  of 
whatever  was  available  at  any  level  of  government."^     OIC  went 
global  in  1969,    launching  OIC   International.      It  operates  in 
eight  African  countries  and  has  interest  groups  in  five  others , 
including  Zimbabwe,  where  a  Marxist  government  recently  rejected 
British-style  democracy.     Domestically,    OIC  claims  to  have  trained 
700,000  individuals,    placing  75  percent  in  positions  with  an  S5 
percent  on-the-job  retention  rate.      In  1981,    a  series  of  Phila- 


i  at  a  few  centers. 


The  Reagan  Administration  has  been  reducing  federal  funding 
of  OIC,  As  a  result,  the  organization's  operations  have  been  cut 
back  significantly,  reducing  its  centers  to  123  and  its  full-tine 
staff  to  about  1,000-  Nonetheless,  Sullivan  cannot  conplain 
about  U.S.  taxpayer  generosity.  Since  1970,  his  organizations 
have  received  over  one-half  billion  dollars  in  federal,  state  and 
local  grants.* 


Froe  an  InCervieH  with  Dt.Haucice  Dawkijis,  August  1,   1984. 
latctview  with  Elton  Joll?,  Executive  Director  of  OICi  of  America, 
Septeaber  6,   1984. 


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BIB3S  OF  1SE  SULLIVAN  PRINCIPLES 

Sullivan's  OIC  activities  brought  him  to  th«  attention  of 
Aaericon  coEpoc&tions .  In  1971,  be  wis  invited  to  join  the  board 
of  General  Motors.  He  accepted.  He  then  astounded  his  fellow 
directors  when  he  called  on  Qt  to  pull  up  states  in  South  Africa. 
Operating  profitably  there  since  1926,  CM  would  do  no  sucb  thing. 
After  a  dialogue  with  black  South  Africans,  Sullivan  drafted  bis 
Principles  as  an  alternative  to  business  divestment. 

Twelve  companies  signed  the  Principles  in  1977.     The  fol- 
lowing year,   Sullivan  hired  Arthur  D.   Little,   Inc.,   the  Cambridge, 
Hassachusetts  managenent  consultancy,   to  establish  a  rating 
systea  for  signatory  performance.     Executives  from  signatories 
were  recruited  to  form  an  Industry  Support  Unit,   responsible  for 
participation  in  policy  and  administrative  matters  germane  to 
tbe  Principles.     A  formal  adainstrative  arm,   the  International 
Council  for  Equality  of  ppportunity  Principles,   Inc.,   handles 
day-to-day  business  and  is  located  not-far  from  Sullivan's 
Philadelphia  church. 

Little  will  publish  its  Eighth  Report  on  the  Signatory 
Co^anies  to  the  Sullivan  Principles  next  month.     Past  reports, 
and  the  questionnaire  and  rating  system  on  which  they  are  based, 
have  become  controversial.     The  55-page  questionnaire  asks  over 
100  questions.     Eight  pages  of  accountant's  guidelines  are  also 
included,    as  answers  detailing  finanical  participation  require 
independent  audit,   sometimes  from  more  than  one  firm.     Observed 
fortune  Magazine  this  summer:     "The  red  tape  is  so  daunting  that 
William  H.   Hagruder,   head  of  Union  Carbide  in  South  Africa  and  an 
old  hand,    suggests  that  new  signatories  be  assigned  experienced 
'buddies'    in  the  manner  of  scuba  divers   facing  the  perils  of  the 
deep."'' 

As  of  last  year,   signatories  not  willino  to  pay  the  annual 
fee  to  the  Industry  Support  Unit  were  dropped.     The  fee  or  "con- 
tribution," as  S.G.   Harzullo,   manager  of  international  government 
relations  for  Hobil  and  chairman  of  the  Industry  Support  Unit, 
prefers  to  call  it,   is  based  on  a  company's  worldwide  sales  and 
not  on  the  scope  of  its  South  African  operations.      Says  Marzullo: 
"You  must  pay  and  you  must  report."'      Several  signatories   find 
this  a  curious  form  of  voluntarism.      "When  it  came  time  for  the 
Seventh  Report,    we  were  informed  that  the  fee  would  have  to  be 

!aid  before  the  report  was  graded.      We  saw  this  mandated  fee  as 
ow-grade  blackmail,"   says  Rod  Beck,   vice  president  and  general 
counsel   for  Loctite,    the  Connecticut-based  fastener  manufacturer 
and  one  of  the  signatories  ejected  from  the  1983  Sullivan  report. 
'This  was  being  imposed  by  an  outside  source,   not  by  the  people 


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who  share  ths  comnoa  ideal, "^  adds  Reck.  Loctite'a  annual  f«« 
was  assessed  by  the  Industry  Support  Unit,  the  official  bill 
collector,  at  S5,000.   Individual  fees  range  from  $1,000  to 
$7,000  annually  and  are  used  to  pay  Little  and  the  overhead  for 
Sullivan's  Philadelphia  office  and  staff  (International  Council 
for  Equality  of  Opportunity  Principles,  inc.)-  Sullivan  disnisses 
objections  to  nandatory  fees  as  "jive,"'  asserting  that  companies 
use  it  as  a  smokescreen  to  shield  poor  performance. 

However,  many  signatories  view  the  performance  ratings  as 
overly  subjective  and  unrepresentative  of  corporate  activity  in 
South  Africa.  Even  the  Little  executive  in  charge  of  the  process, 
Reid  Weedon,  admits  to  major  problems  with  the  system.  He  told 
The  Heritage  Foundation:   "I  don't  know  any  way  to  make  [the 
ratings]  foolproof.  You're  comparing  apples  and  potatoes  here.""' 
Nevertheless,  Weedon  stands  by  the  grading  system.   But  Harzullo. 
cautions,  "The  present  questionnaire  only  partially  reflects 
what  coiqianies  are  doing  [in  South  Africa].   In  effect,  it's  a 
shotgun  approach  to  'what  do  you  do  to  help  non-whites  in  South 
Africa?,'  with  each  company  trying  to  make  as  many  points  as  it 
can  to  get  a  good  grade.  We  need  a  questionnaire  that  deals 
with  how  you  address  basic  root  problems.""  Harzullo  wants  the 
grading  systeir  changed,  for  example,  to  award  paints  for  providing 
qualified. teachers,  not  just  new  classrooms.   Indeed,  the  Sullivan 
Principles  have  encouraged  construction  of  housing,  schools  and 
clinics,  but  have  not  necessarily  paid  much  attention  to  what 
goes  inside. 

Giant  multinationals  with  great  resources  at  their  disposal 
receive  better  grades.   Smaller  companies  encounter  tougher 
sledding.   "We  have  a  very  small  operation  and  the  cost  did  not 

warrant  our.  involvement,"  said  a  spokesman  for  the  Siiqilicity 
Pattern. Company,  one  of  30  companies  that  either  were  ejected  or 
withdrew  as  signatories  in  1963.^^  According  to  Weedon,  "The 
majority  of  companies  who  withdrew  [as  signatories]  have  no 
■  ownership  in  South  Africa  and  no  employees  in  South  Africa."'^ 
yet  this  contradicts  the  Seventh  Report,  which  categorized  at 
least  14  of  the  dropped  companies  as  having  10  or  more  employees, 
a  minimum  of  5  having  10  or  fewer  employees  and  none  owning  less 
than  19  percent  equity.'* 


Peon  in  totecview  July  25,  I98A. 

Hew  York  Tims,  November  6,  19S3. 

Froa  an  interviev  July  27,  1984. 

Froa  an  interviev  August  7,  1984. 

Mew  lork  Tinw!! .  Novenber  6,  1983. 

From  aa   interview  July-27,  1984. 

"Seventh  Report  an  the. Sigaacocy  Compauiei 

October  25,  1983. 


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oftMi  dictate  th*  level  of  its  social  spending  there.     "There's 
DO  way  70U  can  judge  the  success  of  a  long-tens  program  in  one  or 
two  years,"  says  Harzullo.     "A  conpany  may  fall  bacic  during  a 


And  when  Vfeedon  does  aatca  a  Mistake,    little  time  is  provided 
for  appeal  before  the  error  finds  its  way  into  prist.     Loctite 
received  a  failing  grade  in  1982,   in  part  because  it  paid  some 
e^loyeea  $10  below  the  minimum  monthly  wage   (fixed  at  30  percent 
above  the  local  prevailing  minimum  wage)  set  by  the  Sullivan 
organization.     "The  eiqiloyees  concerned  were  two  parti  ally- dis- 
abled individuals,   virtually  unemployable,   whom  we  acquired  when 
we  bougbt  our  South  African  subsidiary;  but  they're  paid  the 
acceptable  wage  level  now.     Reid  weedon  visited  our  plant  there 
and  agreed  with  our  handling  of  the  matter,  but  there  was  no 
■odification  of  the  report. "i*     After  grades  are  issued,   rt;ipi- 
ents  have  two  and  a  half  weeks  to  change  weedon's  mind;   otherwise, 
nothing  can  be  done  until  the  following  year. 

Companies  that  have  never  been  signatories  resent  the  pres- 
sure to  coi^ly  formally  with  the  Sullivan  Principles,  especially 
when  they  have  their  own  ant i •discrimination  codes.     "We  do  not 
need,   nor  do  we  wish  a  third  party  monitoring  us,"  says  Alan 
Rankoff,   chief. of  Dun  and  Bradstreet  in  South  Africa.      "We 
integrated  our  operation  long  before  Hr.   Sullivan  thought  of 
putting  it  down  in  writing.     There  are  people  who  say  that  the 
■  easy  way  out  is  to  sign,   but  we  think  that's  hypocrisy."^' 

Firms  that  have  signed  the  Principles  find  that  the  require- 
ments for  a  passing  grade  qrov.     Since  1977,  Sullivan  has  written 
three  "aiplifications"  to  che  Principles.     "The  Principles  get 
tourer  and  more  stringent  all  the  time,"  he  says.'"     "I  keep 
saying  to  the  companies,   we  must  do  more,   more,   more... we  must 
move  faster,    faster,    faster...."** 

SIGMAT0B:ES'    social  investment  in  south  AFRICA 

Since  1977,    Sullivan  signatories  have  poured  S76  million 
into  projects  designed  for  the  benefit  of  South  Africa's  non- 
white  population.     Marzullo  thinks  that  this  will  top  SlOO  million 
by  the  end  of  1984.     Two  years  ago,    reports  the  New  York  Times, 
American  companies  spent  "more  than  five  percent  oi  operating 
earnings  on  housing  developments,    training  and  education  programs, 
and  community  developments   for  their  workers    [in  South  Africa]— 
possibly  more  than  they  spend  anywhere  else   in  the  world,    includ- 
ing the  United  States."^"     According  to  the  Seventh  Sullivan 


From  aa  interview  August  7,  19Sli. 
Froa  an  interview  July  2S,  19E4. 
Mew  Yorlt  Tiaws.  Noveabec  6,   1983. 


mr- 


■  speech  to  the  Sullivaa  signatories,  Noveabec  9,   19B3,   Kew  York. 
Hew  York  Ti«s,  Noveaber  6.   19&3. 


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Report,    significant  progress  in  implementing  the  Principles  has 
been  made:      all  but  one  o£  the  reporting  signatories  is  desegre- 
.  gated;    all  have  common  medical,   pension  and  insurance  plans; 
blacks  still  receive  higher  wage  increases  than  whites;    and 
proportionate  participation  by  non-whites  in  sales  training 
programs  has  increased. 

The  cumber  of  South  Africans  enqployed  by  Sullivan  signatories 
is  down  to  approximately  66,000  from  a  high  of  82,000,      partially 
due  to  the  recession  and  the  withdrawal  of  a  few  U.S.    firms. 
Hon-Sullivan  American  firms  employ  about  33,000  South  Africans. 

Despite  the  flat  economy,    in  1983  reporting  Sullivan  signa- 
tories spent  S22.4  million  on  education  and  job  training,   entre- 
preneurial assistance,   health  and  housing  for  non-whites.     Over 
''3SiOO0  blacks  participated  in  scholarship  and  tuition  refund 
.programs,  while  50,000  took  part  in  job  advancement  training. 
I    Hore  than  200  schools  were  "adopted"  under  the  "adopt- a -school" 
.  program.     The  equivalent  of  229  full-time  employees  contributed 
57,072  employee  days   for  instruction  and  consultation.     The 
average  employer  spent  nore  than  $225,000.^'     The  irony  is  that 
this  social  investment  may  soon  halt— in  large  part  because  of 
Leon  Sullivan. 

ANOTHER  PUBLIC   SECTOR   SOLUTION  SOUGHT 

.As  with  his  Opportunity  Industrialization  center  .job  training 
.  program.    Sullivan  hastumed  to  government  for  help  when  the 
■markatplace  did-not  satisfy  him.     The  Principles  were  barely 
three  years,  old  when  Sullivan  endorsed  the  Solarz-Gray  amendments 
to  Title  in  of  the  Export  Administration  Act.     Testifying  before 
.the  House  Subcommittee  on  Africa,    Sullivan  said,    "The  Government 
.    must  require  the  adherence  to  the  principles  and  there  must  be 

measurement  and  monitoring  effectiveness [A]t  a  minimum,    I 

would  like  to  see  you  pass  legislation  malting  the  principles 
mandatory  for  JUnerican  companies ,    including  sanctions  and  penal- 
ties for  those  who  do  not  comply. .. .Companies  have  no  social 
■conscience;    they  have  balance  sheets;    they  want  to  see  profits. 

"I  strongly  support  Congressman  Solarz'   bill  which  proposes: 
One,    requiring  that  all..U.S.    companies  sign  the  equal  opportunity 
.  principles;    two,    onsite  monitoring  of  all  American  companies  in 
South  Africa  and: three,    tax  penalties  and  sanctions  imposed  on 
companies  that  refuse  to  sign  and  do  not  comply  with  the  standards 
set. 


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retooling;  and  I  urge,   is  addition,   that  there  be  no  further 
enansion  of  operations  already  in  South  Africa  until  changes  are 
nade  in  the  prevailing  conditions. "^^ 

Earlier,  Sullivan  had  issued  a  joint  statement  with  Rev. 
WilllaK  Howard,  president  of  the  National  Council  of  Churches, 
pledging  acceleration  of  a  caapaiga  aiMed  at  eadiog  U.S.' bank 
loans  to  South  Africa.^^ 

Signatories  have  greeted  Solarz-Gray  with  horror.      "What 
Solars  has  proposed  is  a  bureaucratic  monstrosity,"   says  William 
Broderick,  director  of  intergovernmental  relations  at  Ford.^* 
General  Motors,    whose  six-year  old  education  and  training  program 
for  non-whites  predates  the  Principles,  voiced  early  opposition 
to  Solarz-Gray.      "...we  firmly  believe  that  mandating  Uiese  prin- 
ciples would  act  as  a  negative— not  positive-- force .     The  Sullivan 
Principles  are  all  the  more  i^ressive  because  of  their  voluntary 
nature.... We  also  believe  that  the  South  African  government  would 
consider  mandated  principles  an  extraterritorial  application  of 
U.S.    law." 

A  prohibition  on  new  South  African  investment,    according  to 
GM,   "would  make  it  ipqjossible  for  us  to  remain  competitive.     If 
we  can't  be  co^etitive,   we  would  not  be  able  to  provide  new 
jobs,   as  we  did  this  year  and  last"  as  well  as  providing  other 
social  and  economic  assistance  to  non-wbites  in  South  Africa."^ 
CcMplains  Mobil's  Harzullo,   "The  danger  of  that  legislation  is 
that  it  is  punitive.     There's  a  lot  involved  here.      In  the  long 
run  they're  hurting  the  people  they  want  to  help."^*     Atlanta 
Hayor  Andrew  Young,    in  fact,    several  years  ago  warned  that  South 
African  blaclcs  would  suffer  most  from  reduced  economic  activity 
of  U.S.   firms. ■'" 

Analyzing  labor  provisions  o£  the  Solarz  bill.   Senator  Orrin 
Batch,   the  Utah  Republican,  concludes,   "Five  of  the  codified 
Sullivan  Principles  are  inconsistent  with  Federal  labor  law,"  as 
they  dramatically  exceed  domestic  standards   for  U.S.    companies,^* 

Title  III  to  the  Export  Administration  Act,    of  which  Solarx- 
Grajp  would  be  part,    currently  awaits  action  from  a  House-Senate 
conference  committee.     The  Senate  version  of  EAA  contains  no 
South  Africa  language.     To  keep  such  language  out  of  the  bill's 
final  version,    the  State  Department  has  begun  twisting  arms  to 
recruit  more  signatories   for  the  voluntary  Sullivan  Principles. 
Said  Secretary  of  State  George  Shultz  to  a  group  of  corporate 
executives  this  March:      "Ladies  and  gentlemen,   we  must  face  the 


Hearingi  taefore  the  House  Subcoiaittee  on  Africa,  Septe^er 

Frm  ■  joint  itatcMDt,  Harch  19,   19S1. 

Hew  York  Tit« .  Novertjet  6,   1983. 

FroB  ■  14S1  stiteaeDC . 

FtoB  an  iaceiview  Auguit  7,   1964. 

Cbiciio  Ttibuae.  Febnury  6,  1978. 

ConitrcnioinI  Becord,  Febnury  29,   1984,  p.   S1932. 


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fact  thftt  wtt  ar«  dealing  with  perception  as  well  as  reality.... 
Many  Americans  believe  some  form  of  governmental  action  is  re- 
quired to  address  the  issue  of  apartheid  and  to  punish  South 
Africa.  Tbey  seek  to  suspend  a  normal  economic  relationship,  cut 
off  investments  and  credits,  embargo  South  African  gold  coins, 
bloclc  non-sensitive  nucleai:  trade,  and  force  American  companies 
to  accept  modified  Sullivan  principles....!  strongly  urge  those 
companies  that  have  not  adopted  the  principles,  as  for  example 
those  basically  defined  by  the  Sullivan  code,  to  do  so  without 
delay."*'*  Yet  since  the  1983  Sullivan  Report,  only  five  new 
companies  have  become  signatories. 

FDTUHE  OF  THE  SULLIVAN  PRINCIPLES 

Complaining  of  the  probable  consequences  of  Solarz-Gray, 
Sullivan  Industry  Support  unit  chairman  Marzullo  says,  "If  you 
start  imposing  bureaucratic  control  over  this  thing,  you're  going 
to  ruin  it."^*^  But  the  damage  may  already  have  bean  done.  Annual 
paperwork  for  reporting  signatories,  has  mushroomed.  Much  of  the 
voluntary  spirit  of  the  endeavor  has  been  lost.  The  prime  mover, 
Leon  Sullivan,  has  not  only  disparaged  voluntarism,  but  the  moral- 
ity of  the  free  enterprise  system.  Warned  Secretary  Shultz,  "Ho 
outside  power  can  or  shouldtry  to  Impose  its  vision  on  South 
Africa. "^>  While  the  South  African  government  remains  officially 
neutral  with  regard  to  the.  Principles,  it  has  done  nothing  to 
stop  their  implementation  by  American  businesses  or  their  sub- 
sidiaries. 

Meanwhile,  signatories  and  non- signatories  alike  await 
promised  reforms  slated  for  the  ninth  questionnaire  in  198S, 
among  them  the  intention  to  make  the. procedure  less  cumbersome 
and  bureaucratic,  more  representative  and  fair.  Above  all,  the 
Principles  again  should  be  completely  voluntary — free  of  the 
implicit  coercion  of  recent  years.  Much  is  at  stake.   Says 
Gatsba  Buthelezi,  chief  minister  of  the  black  national  state  of 
Kwa  Zulu:  "Some... in  America  have  got  the  whole  issue  exactly 
upside  down.  They  seem  to  think  it  is  immoral  for  American 
companies  to  invest  here  but  irresistably  profitable.  The  truth 
is  the  opposite.   It  is  morally  imperative  that  American  firms 
remain  active  here."^^ 

Prepared  for  The  Heritage  Foundation 
Mark  Huber* 


Fron  a  speecb  at  BUir  House,  tUrch  Z9,  1934. 
FcoB  an  interview  August  7,   1984. 

Froa  a  speech  it  Blair  House,  Harch  29,  1934. 

Congressional  Record.  October  27,   1933,  p.   H8753. 

Hark  Huber  is  a  Washington,  D.C. -based  fr«e-laace  vtiter. 


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S  ISa('k£;i*<Hi  iiclei' 


AN   INVESTMENT  STRATEGY  TO  UNDERMINE 
APARTHEID  IN   SOimi  AFRICA 


Fw  Mulcuu.  If  u]r,  dafand  Soatta  Africa'!  bntaliiliig 
Eaelal  ■•puaCion  and  dlaciialnation  pollclea  that  are  called 
aparthaid,     Baiiif  for  oc  igaliut  apartb  ''  """"  *" —    "~ 

U.S.  can  foiUr  (piEttMid'a  diaappaaran 


claai  during  laaC  vaaN'i  Boua*  i 
to  pull  out  of  that  couotEi-  Tl 
would  cacognizg  Cliat  apartbeid  : 


1  DbjacCiva  of  tflli  atrataay  ia 
acoDOK]'  ( alraa<^  gxippad  by  a 

I  too  coitly  ts  auatalu  and  kov* 
■  for  tha  eppodt*  kind  of  ttcata^. 


tlie  inadaquat*  auc< 
actalave  aianifi™ 


luUen  of  apartlwid 


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■IsundaraCanding  of  Afrikanardom,  «  Bisrsading  of  the   proc«SB  of 
change  in  Souttt  Africa,  and  a  historically  unjustified  confidence 
in  the  effecCiveness  of  boycotts.   Disinvestment  would  have  at 
nost  a  marginal  impact  on  South  Africa's  economy.   It  probably 
would  prompt  Fretona  to  become  more  stubborn.   And  even  if 
disinvestment  did  begin  to  bite,  it  simply  would  slow  the  workplace 
CCfoRnB  pioneered  by  the  progressive  American  companies  in  South 
Africa  and  weaken  black  unions,  while  strengthening  the  position' 
of  reactionary  white  workers.   It  would  undercut  the  reformist 
English- speaking  business  conmunity  and  the  media  it  supports. 
Moat  important,  disinvestment  could  blunt  the  economic  forces 
that  are  slowly,  but  inexorably,  undermining  apartheid's  founda- 
tions . 

It  is  the  unstated  premise  of  disinvestment  that,  in  the 
political  context  of  South  Africa,  this  policy  will  achieve 
reform  only  if  the  country  is  polarized  further,  leading  to 
violent  and  bloody  revolution — out  of  which,  perhaps,  a  peaceful 
and  stable  democratic  state  will  emerge.   The  trouble  is,  post- 
colonial  Africa  offers  no  precedent  for  this. 

Mor  is  constructive  engagement,  albeit  much  sounder  than 
disinvestment,  a  sufficent  policy.  Rather  than  relying  only  on 
the  diplomacy  of  such  an  effort,  the  Administration  should  fashion 
a  more  activist  strategy  recognizing  that  it  is  economic  growth, 
coupled  with  the  color-blind  employment  practices  of  U.S.  com- 
panies, that  poses  the  greatest  threat  to  apartheid.   Oyer  300 
U.S.  companies  currently  have  subsidiaries  in  South  Africa, 
including  IBM.  Ford,  General  Motors,  Mobil,  and  Xerox.  The  S2 
billion  in  American  assets  in  the  country  represents  20  percent 
of  total  foreign  direct  investment.  American  investment  dominates 
such  areas  as  oil  and  computers. 

Constructive  engagement  should  be  supplemented  by  a  strategy 
of  "investment  leverage."   Instead  of  disinvestment,  increased 
American  participation  in  the  South  African  economy  should  be 
encouraged.   The  U.S.  government,  meanwhile,  should  provide 
special  assistance  through  American  companies  to  upgrade  the 
educational  and  management  skills  of  black  South  Africans  and 
help  them  form  businesses  of  their  own.  Assistance  also  should 
be  given  to  American  trade  unionists  to  train  black  union  organi- 
zers.  Finally,  technical  assistance  and  encouragement  should  be 
given  to  speed  the  recent  decision  by  the  South  African  government 
to  return  to  the  private  sector  key  segments  of  the  nationalized 
economy,  thus  taking  control  from  Afrikaner  bureaucrats. 

WHY  DISINVESTMENT  WILL  NOT  WORK 

The  disinvestment  strategy  forms  the  heart  of  recent  congres- 
sional initiatives  to  pressure  the  government  of  South  Africa. 
These  efforts  misread  the  economics  and  the  politics  of  that 
country . 


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Tha  Econoaici  of  DiiinveBtMent 

The  theory  of  disinveatjuent  is  that,  by  threatening  to  blocK 
American  inveatm«nt  in  South  Africa,  the  local  economy  would  face 
such  a  crisis  that  Pretoria  would  be  forced  to  make  major  political 
concessions  to  blacks — particularly  as  South  Africa  already 
suffers  from  a  painful  recession,  while  this  sounds  plausible  in 
theory,  there  is  little  reason  to  believe  that  disinvestment 
would  expose  a  South  African  econooiic  Achlllei  heel. 

A  recent  major  analysis  of  the  South  African  economy  by 
The  Economiat  (of  London)  concludes  that  the  econowic  effect  of 
U.S.  disinvestment  would  be  small  and  could  conceivably  boost  the 
country's  econony.'  The  journal  points  out  that  the  South  African 
recession  already  has  hit  investment  hard  for  purel"  commercial 
reasons  and  that  new  American  capital  inflows  have  rallen  by  10 
percent  in  just  the  last  year.   Total  investment  from  outside 
South  Africa  has  "slowed  to  a  trickle,"  falling  below  Sioo  million 
a  year.   Consequently,  "The  disinvestment  lobby  is  working  on  a 
tiny  Biargin  of  the  South  African  economy."   Moreover,  the  disin- 
vestment rationale  ignores  totally  the  possibility  of  South 
African  retaliation.  Three  times  greater  than  foreign  investment 
going  into  South  Africa  are  dividends  sent  abroad  by  firms  in 
south  Africa.  Disinvestment  thus  could  be  countered  by  a  dividend 
export  freeze  by  Pretoria,  which  would  improve  South  Africa's 
capital  balance  of  payisents  and  free  more  domestic  funds  for 
investment. 

Concludes  The  Economist: 

Disinvestment  would  be  once-for-all  Marshall  aid.   It 
is  hard  to  comprehend  the  widely  held  view  in  the 
anti- apartheid  lobby  that  this  would  traumatize  the 
South  African  economy:  in  the  short  term,  it  would 
probably  boost  it.* 

The  British  journal  also  points  out  that,  if  U.S.  companies 
were  forced  to  withdraw  from  South  Africa,  the  action  would 
threaten  the  employment  of  120,000  blacks,  many  of  whom  have 
learned  new  skills  and  earned  promotions  in  progressive,  desegre- 
gated American  companies.   If  these  firms  closed,  many  of  their 
black  employees  would  be  liable  for  deportation  to  the  tribal 
homelands.   More  likely,  the  South  African  government  would 
nationalize  the  companies  or  allow  local  firms  to  take  them  over. 
Notes  The  Economist.  "It  is  hard  to  see  how  replacing  an  American 
personnel  director  with  an  Afrikaner  one  is  an  advance  for  anti- 
apactheid."^ 


"Tba  All-A»ailc*a  Lev*i>te  Gibc,"  The  .EeooBMiit.  Hacch  30,  1985,  pp. 

Ibid.,  p.  32. 

Ibid. 


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The  principal  affect  of  dieinvastmcnt  .would  be  Co  erode  the 
lomic  leverage  of  blacks.   Blacic  South  Africans  compcise  about 
three-quarters  of  the  coimtry's  workforce  and  half  its  skilled 
labor.   As  the  economy  has  grown,  shortages  of  white  labor  hav« 
allowed  blacks  to  force  themselves  into  occupations  once  reserved 
for  whites.   Black  trade  unionism  also  has  grown  rapidly  with  the 
expanding  econony.  Membership  has  reached  almost  half  a  million. 
After  Pretoria  recognized  the  inevitable  and  legalized  black 
unions  in  1979,  black  wages  doubled  over  the  next  three  years, 
and  black  trade  unionists  began  to  flex  their  political  muscles. 

The  Politics  of  Pi! 


Disinvestment  may  be  favored  by  black  organizations  and 
liberals  in  the  U.S.,  but  polls  reveal  that  it  is  opposed  by 
urban  blacks  in  South  Africa  by  about  three  to  one.   It  should  be 
no  mystery  why  South  African  blacks  strongly  support  the  presence 
of  foreign  firms  that  have  done  so  much  to  improve  the  economic 
and  social  status  of  their  nonwhite  workers. 

South  Africa's  black  National  African  Chamber  of  Commerce 
and  Industry,  for  instance,  sent  a  memorandum  to  Senator  Edward 
Kennedy  during  his  recent  visit  to  South  Africa,  attacking  disin- 
vestment as  inhibiting  economic  growth,  "which  is  a  powerful 
catalyst  in  the  process  of  peaceful  social  and  political  reform 
in  the  country.'!  The  same  view  was  expressed  by  Chief  catsha 
Buthelezi  of  the  Zulu  tribe,  a  fierce  opponent  of  apartheid.   Be 
called  disinvestment  "tactical  madness"  during  a  February  visit 
to  the  United  States.  

Those  South  African  blacks  who  oppose  disinvestment  are 
denounced  by  South  Africa's  militant  black  leaders  and  their 
American  allies  for  two  reasons.  First,  to  be  successful  politi- 
cally they  must  seek  to  persuade  Congress  and  the  American  people 
that  the  choice  is  simple  and  stark — either  one  supports  "the 
blacks"  in  South  Africa,  who  are  supposedly  unanimous  in  their 
support  of  disinvestment,  or  one  supports  white  racism.   To 
recognize  the  deep  disagreement  among  South  African  blacks  regard- 
ing strategy  would  make  it  easier  for  Americans  to  oppose  disin- 
vestment. Second,  some  advocates  of  disinvestment  seem  to  favor 
revolutionary  change  in  South  Africa.   For  them,  there  is  sense 
to  the  old  revolutionary  dictum:   the  worse,  the  better.   As 
'  such,  the  fact  that  disinvestment  would  hit  blacks  harder  than 
whites  is  a  virtue,  since  it  would  drive  blacks  into  economic 
despair  and  militancy.  Thus  well-meaning  supporters  of  disinvest- 
ment must  come  to  see  that  this  policy  would  make  conditions 
worse  for  blacks,  not  better,  and  that  the  process  of  change  it 
envisions  is  based  on  confrontation  and  violence,  not  peaceful 

The  efforts  of  black  and  white  moderates  in  South  Africa 
would  be  weakened  by  disinvestment.   In  particular,  it  would 
-  reduce  the  corrosive  effects  on  apartheid  of  black  advancement 
trithin  U.S.  companies.  And  it  likely  would  reduce  the  financial 


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support  Tivm  by  the  English-spealcing  buainesi  cmnunity  to  the 
oppomltlon  »«di«.      Recently  the  Rand  Dally  Hail,    on*  of  th« 
-Strongest  critics  of  apartheid,    uaa  forced  to  close  for  economic 
reasons.      Disinvestment   threatens  other  English-speaking  opposition 
newspapers  by   forcing  a  cutback  In  their  business   support.      The 
net  effect  of  disinvestment,    therefore,   would  be  not  to  force 
Pretoria  to  the  negotiating  table,    but  to   undermine  those   in 
South  Africa  who  support  peaceful  change—leaving  violence  as  the 
only  available  option. 

The  politics  of  AfrllcanerdoB  reinforces  the   argument  that 
disinvestjnent  will    fail.      The   history  of  South  Africa  has   been 
characterised  by  Afrikaners   seeking   to   retain  their  ethnic   and 
social   identity   against   outside   threats  —  from   the   English,    from 
the  nonvhites ,    and  even   from   erosion  by   industrialization. 
Apartheid  uses   the   crude   approach   of  partition.      Within  the   white 
business  community,    extensive   regulation  and  nationalization  has 
been   used  by   the   bureaucracy — -dominated  by  Afrikaners — to   try  to 
hold  back  what   they  see   as   the    corrupting  power   and   influence  of 
the  English-dominated  business    class. 

But  the  Afrikaner  conuounity  is  not  monolithic-     There  are 
those  known  aa   "verligtes"     who  favor   sharing  power  with  the 
blacks   and  see  reform  as  both  inevitable   and   desirable      and  the 
"verkramptas"    (who  -support  the  traditional  Afrikaner  commitment 
to   apartheid  witH  no  concessions).      And  though  the   reforms  of 
South  Africa's  President  Fiet*r  W.    Botha   seem  minimal   to  many 
American  observers     they  indicate   strong   verligte   influence   and 
have   led  to   a  wrenching  split  in  Afrikaner   politics. 

To  b*   sure,    the   Botha   government  is   eKtremely   cautious   and 
as   stubborn  aa  any  Afrikaner   in   the   fac#  of  outsider  pressure. 
Yet  Pretoria   is   slowly  adapting  the   law   to   accommodate  economic 
and  social  pressures  within  the  country,      it  is  now  widely  accepted 
that  the  blacks   are  not   temporary  workers   but   permanent  urban 
residents.      The  new  constitution,    bitterly  denounced  by  verkramptes, 
'accepts   that  some  nonwhites   must   have  a  say   in  national  decisions — 
a  slide   toward  democracy  that  may  be  very  hard  to   reverse.      Host 
recently     Pretoria  made  the  dramatic  announcement — to   the   horror 
of   the  verkramptes — that   it  will   repeal   the   laws   forbidding 
interracial  marriage  and  sexual   relations.    "Like   it  or  not,"   said 
an  editorial   m  the  Cape   To«n  Argus,    "their  removal   must  of 
necessity  affect  the  entire   edifice    [of   apartheid]    in   time   to 
come   "      Days   later     Botha  announced  not  only  that  blacks   would  ba 
permitted   to  buy  houses   in  the  black  townships   of   "white"   South 
Africa,    but  that  they  would  not  rtecessarily   lose   their   South 
African  citizenship   if  their  nominal   homeland  were  granted   indepen- 
dence- -imp  lying  an  acceptance  that  blacks  are  a  permanent  part  of 
south  African  society. 

The  political   irony  of  disinvestment  is   that,    by   farcing  a 
political  confrontation  within  the  Afrikaner  community,    it  could 
Blow  down,    and  even  reverse,    the  growing  realization  in  white 
South  Africa  that  the  economic  and  social  changes  underway  should 


Eo-no  O— 86— 


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b«  codified  by  law.     The  Botha  govemncnt  is  said  by  many  Soutb 
Africans  to  ba  rafocming  by  "staaltb."     Each  legislative  cetreat 
is  shroudad  in  vague  and  evasive  statements,   so  that  the  Afrikaner 
conmunity  is  not  excessively  alarmed.     To  the  outside  observer, 
of  course,    this   seems   like   a  laclc  of  commitment,    but   it  may  be 
the  only  strategy  that  will  avoid  a  verkrampte  baclclash.      For 
Pretoria's   dilemma   is   that,    to   satisfy  the  demands   o£  the   disin- 
veabnent  lobby  in  Washington,    the  Botha  government  would  have  to 
make  its   actions   so   clear   that  Afrikaner   reaction  would  eliminate 
any  chance  of  effecting  the  intended  reforms. 

THE  MEASURES  BEFORE  CONGRESS 

To  date,  21  bills  concerning  South  Africa  have  been  intro- 
duced in  Congress.  The  majority  of  pending  bills  contain  a 
comion  theme:   legislative  sanctions  to  restrict  or  halt  private 
D.S.  economic  activity  in  south  Africa.   Examples: 

Bill  introduced  April  24  by  Senator  Richard  Luqar  (R-IM). 

This  bill  incorporates  an  earlier  bill  introduced  by  Senator 
Charles  Kathias  (R-ND)  and  approved  by  the  Foreign  Relations 
Cormiittee .   It  has  the  support  of  the  Administration. 

The  measure  would  require  the  President  to  report. by  March 
1987  on  whether  South  Africa  has  made  "significant  progress" 
towards  ending  apartheid,  including:   steps  to  end  the  pass  laws 
restricting  the  movement  of  blacks,  increasing  labor  union  rights, 
ending  the  migrant  labor  system,  and  improving  housing  for  blacks. 
If  the  President  determines  that  significant  progress  has  not 
been  made,  he  would  have  to  recommend  to  Congress  which  of  four 
sanctions  should  be  applied  against  South  Africa :   bans  on  new 
coiraarclal  investment,  bank  loans,  the  importation  of  Krugerrand 
gold  coins,  or  the  sale  o£  computers  to  the  Pretoria  government. 

In  addition,  the  bill  would  create  a  SIS  million  scholarship 
fund  for  blacks,  require  all  U.S.  companies  operating  in  South 
Africa  to  abide  by  the  Sullivan  Principles.   The  Sullivan  prin- 
ciples are  a  voluntary  code  of  business  conduct  that  commits 
signatories  to  desegregate  the  workplace,  remove  racial  distinc- 
tions in  pay  scales,  and  step  up  training  and  promotion  for 
blacks.   Coiq)anies  abiding  by  the  code  employ  approximately  70 
percent  of  all  worlcers  in  American  firms  located  in  South  Africa. 
The  bill  also  would  provide  assistance  through  American  agencies 
to  blaclc-owned  businesses  in  the  country,  and  increase  to  SI. 5 
million  the  Kassebaum  Human  Rights  Fund  for  victims  of  apartheid. 


This  bill  would  prohibit  new  U.S.  investment  in  South  Africa, 
require  compliance  with  specific  employment  practices  by  U.S. 
eims  in  South  Africa,  block  U.S.  bank  loans,  outlaw  Krugerrand 


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H.R.  H60,  introduced  by  Representative  William  Cray  (D-PA) 
and  S.  635,  introduced  by  Senator  Edward  Kennedy  (D-MA). 

This  bill  would  prohibit  U.S.  bank  loans  to  the  Pretoria 
vecmient  and  to  U.S.  fima  operating  in  South  Africa,  ban  new 
S.  inveabient  in  South  Africa,  bloc)c  Krugerrand  imporU,  and 
ock  coBputer  sales  to  the  South  African  government. 

Waivars  on  these  restrictions  could  be  obtained  for  twelve 
nths,  if  the  President  and  Congress  determined  that  adequate 
ogresB  had  been  made  in  one  or  more  of  the  following  areas: 
using  foe  black  workers,  easing  of  employnent  restrictions  on 
aclcs,  eliminating  Che  homelands  and  the  policy  of  denying  South 
rican  citizenship  to  blacks,  ending  residence  restrictions, 
gotiating  political  participation  for  all  races,  and  the  freeing 
political  prisoners. 

H.R.  1595,  introduced  by  Representative  Robert  Walker  (R-FAl. 


I  applies  to  all  countries,  not  just  South  Africa. 
«. far-reaching  provisions  «ould  prohibit  the  import  of  goods 
oduced  by  slave  labor,  direct  the  U.S.  to  oppose  International 
netary  Fund  loans  to  countries  allowing  the  trafficking  of 
legal  drugs,  deny  U.S.  most- favored-nation  status  to  countries 
.at  prevent  a  free  press,  direct  the  U.S.  to  demand  Soviet 
mpliance  with  the  Helsinki  Accords,  require  the  U.S.  to  seek  a 
.11  accounting  of  international  prisoners  of  conscience,  prohibit 
S.  economic  aid  to  states  that  vote  against  the  U.S.  In  the 
N.  more  than  85  percent  of  the  time,  stipulate  that  U.S.  foreign 
aistance  promote  private  sector  initiatives,  while  blocking 
S.  economic  and  military  assistance  to  any  state  that  denies 
ee  press  access  or  promotes  international  drug  trafficking  or 


In  the  specific  case  of  South  Africa,  the  Walker  bill  would 
ohibit  federal  contracts  or  economic  aid  to  companies  that  did 
it  implement  the  Sullivan  Principles  by  January  1987,  unless  Che 
esident  carcifies  ChaC  SouCh  Africa  has  made  significanC  steps 
I  end  apartheid.  The  Walker  bill  would  repeal  the  Clark  Amend- 
!nc,  which  prohibits  U.S.  aid  Co  naCional  liberation  forces  in 
igola.   The  measure  also  would  express  the  sense  of  Congress 
lat  a  Naniibian  settlement  rausC  include  Che  wichdrawal  of  all 
>reign  forces  from  Angola,  ChaC  Che  President  should  recognize 
[ITA  as  the  legitimate  government  of  Angola,  and  that  free 
.ecCions  in  Namibia  need  not  be  predicated  upon  Che  mandaCory 
irticipacion  of  any  specific  policical  organization. 


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ACCELESATIHC  REFORM  IK  SOUTH  AFRICA 

The  Procega  of  Change 

Apartheid  is  already  being  eroded  by  economic  grovth,  and 
this  will  continutt.   Foreign  invascmant  and  ganaral  aconomic 
axpanalon  do  not  prop  up  apartheid.  The  modem  version  of  apar- 
thaid,  craaCed  in.  1948,  has  not  been  able  to  stem  the  £low  a£ 
blacka  into  white  urban  areas,  an  influx  that  accompanied  indus- 
trialization.  This  process  of  industrialization  and  black  urbani- 
zation has  doomed  the  Afrikaner  vision  of  separate  development, 
because  it  has  aude  the  white  community  dependent  upon  nonwhites 
and  forced  whites  to  accept  that  blacks  are  a  permanent  and 
Integral  part  of  South  African  aociaty. 

South  African  industry,  boosted  by  foreign  investment  and 
the  presence  of  overseas  firms,  has  been  instrumental  in  translat- 
ing pressures  stemming  from  economic  growth  into  political  reforms 
that  have  hammered  nail  after  nail  into  apartheid's  coffin. 
After  the  urban  riots  of  1976,  for  instance,  business  groups 
formed  and  funded  the  Urban  Foundation,  which  has  acted  as  a 
vtthicle  for  physical  improvement  in  the  black  townships  and  as  a 
catalyst  for  political  reform.  The  Foundation  playad  a  key  role 
in   pressing  the  government  to  grant  99-year  leasehold  rights  in 
black  townships — an  explicit  acceptance  of  permanent  black  urbani- 
zation.  The  Fouiidation  also  can  claim  credit  for  the  government's 
recent  announcement  that  it  will  allow  blacks  to  own  freehold 
-property  in  the  townships. 

Similarly,  under  pressure  from  "investor  responsibility" 
groups  in  the  U.S.,    many  American  firms  in  South  Africa  have 
helped  to  accelerate  reform  by  adopting  the  Sullivan  Principles. 
Many  American  firms  also  have  fostered  the  creation  of  small 
black  enterprises . 

Perhaps  most  important,  the  growth  of  black  trade  unionism, 
aided  by  U.S.  companies,  has  altered  decisi.vely  the  complexion  of 
labor  power.  Rapidly  expanding  black  unions  have  improved  marked- 
ly the  economic  status  of  blacks  and  formed  a  critically  important 
new  power  base.  They  also  act  as  an  increasingly  effective 
counterforce  to  the  white  trade  unions,  which  have  been  among 
apartheid's  strongest  suppcSrters  since  they  see  black  labor  as  a 
challenge  to  their  privileged  economic  position.   Economic  growth 
and  unionization  thus  have  forced  significant  changes  in  the 
labor  laws  that  restricted  certain  jobs  to  whites. 

It  is  these  forces  arising  from  economic  growth--not  pressure 
from  outside — that  sound  a  death  knell  for  apartheid,  says  South 
Africa's  leading  industrialist  and  white  liberal  opponent  of 
apartheid.  Harry  Oppenheimer; 

The  South  African  government  is  not  going  to  surrender 
to  such  pressure  [of  disinvestment]  and  the  only  effect 
is  to  compromise  the  successes  of  the  past.... It  is  just 


edbyt^C 


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because  the  South  African  economy  has  moved  forwacd 
rapidly  that  the  original  apartheid  policy  has  had  to 
ba  scrapped  and  that  some  changes  £oc  the  better  have 
come  about.  The  fact  is  that  the  continued  domination 
of  the  blacks  by  the  whites  could  only  continue  if  the 
economy  were  Itept  small  enough  for  all,  or  anyhow  most, 
skilled  jobs  to  be  reserved  for  whites  as  they  used  to 
be  in  the  past.* 

Washington  Post  columnist  William  Raspberry  apparently  draws 
similar  conclusions.   People  of  widely  differing  vantage  points, 
writes  Raspberry,  who  is  black,  seen  to  agree  that  "no  matter 
what  happens  to  the  white  power  structure  of  South  Africa,  that 
country's  blacks  will  not  really  be  free  until  they  are  able  to 
control  their  economic  destiny;  that  economic  development  might 
even  accelerate  their  potential  enfranchisement;  and  that  hurting 
the  master  doesn't  necessarily  help  the  slave. "^ 

Adding  "Investment  Leverage"  to  Constructive  Engagement 

The  Reagan  policy  of  constructive  engagement  recognizes  that 
encircling  South  Africa  with  an  econonuc  iron  curtain  would  be 
difficult  and  counterproductive.  The  Reagan  Administration 
correctly  sees  American  investment  as  a  critical  element  in  the 
campaign  for  political  change  in  South  Africa.  Yet  constructive 
engagement  is  essentially  diplomatic  in  nature,  and  thus  its 
successes  will  be  confined  to  reforms  that  can  be  induced  by 
gentle  persuasion  or  mild  threats. 

More  is  needed.   The  Administration  and  Congress  should 
reject  the  call  for  disinvestment  and  instead  attack  apartheid's 
soft  underbelly  by  encouraging  even  more  U.S.  investment  in  South 
Africa,  thereby  speeding  up  the  corrosive  effect  of  economic 
growth  on  the  foundations  of  apartheid. 

of 


1)     Encourage  American  firms  to  abide  by  a  modified  version 
of  Sullivan  Principles. 

Drafted   seven  years   ago  by   the   Reverend   Leon   Sullivan,    a 
black  minister  and  a  director  of  General  Motors,    the  Sullivan 
Principles   commit  signatories   to   desegregating  the  workplace   and 
to  offering  equal  pay.      Critics   argue,    however,    that   the   code   is 
ill-defined.      Many   firms   complain  bitterly   that  the   system  employee 
to   rate   firm  compliance   is   unduly   subjective,    meaning  progressive 


"Apaittieid  Uadec  Fcessuie,"  speech  to  the  Foreign  Policy  Asic 

Octobec  1984. 

"Three  on  South  Africa,"  Washinntoa  Potl.  April  IS,   1985. 


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flciu  ■omatimem  ara  accused  unfairly  of  noncompli&nce.*   Others 
say  recent  reviiions  in  the  code  pushed  by  deverend  Sullivan, 
which  would  require  companies  to  take  political  actions  to  end 
apartheid  laws,  could  force  businesses  into  a  damaging  head-Co- 
haad  confrontation  with  Pretoria,  reducing  their  ability  to  chip 
away  at  the  laws. 

Whatever  the  problems,  the  Sullivan  Principles  form  a  useful 
sat  of  "rules  of  engagement"  for  a  policy  designed  to  weaken 
■partheld  by  foreign  investment.   But  it  has  been  the  economic 
forces  of  South  Africa's  labor  market  and  moral  pressure  from 
American  shareholders  that  have  made  U.S.  firms  in  South  Africa  a 
■ajor  force  against  apartheid. 

2}  Encourage  nonwhite  trade  unions. 

U.S.  assistance,  perhaps  as  grants  from  the  National  Endowment 
for  Democracy,  should  be  provided  to  U.S.  companies  and  to  American 
trade  unions  to  train  black  South  African  union  officials.   E^uids 
similarly  should  be  made  available  for  business-operated  training 
programs  to  improve  the  work  skills  of  South  African  blacks. 
Strong  black  unions  and  upgraded  worker  skill-levels,  within  a 
growing  economy,  will  speed  the  economic  erosion  of  apartheid. 

3)   Foster  the  creation  of  black  businesses. 

A  numbar  of  U.S.  companies, -including  IBM,  have  launched^' 
programs  to  train  small  business  owners.  A  strong  and  sophisti- 
cated black  business  class  will  help  the  gradual  shift  of  economic 
power  from  the  white  to  the  nonwhite  community.   The  U.S.  should 
provide  matching  grants  to  companies  willing  to  undertake  such 
business  training  programs. 

■  4)  Support  privatization  of  state-controlled  industries. 

In  his  March  17  budget  statement.  South  African  Finance 
Minister  Barsnd  du  Plessis  committed  his  government  to  a  widespread 
transfer  of  government -owned  assets  to  the  private  sector.   The 
implications  of  this  could  be  considerable.   The  South  African 
economy  is  a  version  of  state-managed  capitalism,  rather  than 
genuinely  free  enterprise.   The  government,  has  extensive  business 
holdings,  including  all  major  utilities,  the  principal  airline, 
the  telephone  system,  trucking  firms,  many  hospitals,  and  the 
qoal-oil  conversion  industry. 

The  privatization  commitment  arises  from  the  financially 
strapped  government's  need  to  raise  revenue  without  massive  tax 
increases.   Its  result  will  be  that  key  segments  of  the  economy. 


Hack  Huber.  "Foe  U.S.  Firu  in 
Prlneiplea,"  Heciuie  Found«tlo 
12,    198«. 


dbyC0( 


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now  controlled  by  Afrikanttr  bureaucrats,  uill  be.  put  in  the  hands 
'□£  private  business — furthec  eroding  Che  government ' a  power  base. 
If  privatization  is  extended  to  service  areas,  such  as  health, 
.  education,  and  transportation,  it  could  also  help  reduce  racially 
based  inequities  in  allocation,  since  competitive  pressure  would 

of.,co»jnercial  considerations,  rather  than  according  to  the  tenets 
of  racial  separation.  It  is  difficult  for  the  U.S.  to  speed  the 
privatization  process  directly.  But  in  concert  with  the  British 
government,  which  is  undertaking  a  widespread  program  of  privati- 
zation, Washington  could  help  coordinate  technical  assistance 
both  to  Pretoria  and  to  potential  buyers  of  assets  in  South 

5)   Encourage  increased  U.S.  investment. 


Through  its  public  statements,  the  Reagan  Administration 
should  make -the  case  that  U.S.  firms  in  South  Africa  are  an 
anti-apartheid  force.   The  White  House  should  create  an  opinion 
Climate  in  the  U.S.  that  applauds  rather  than  condemns  U.S.  firms 
that  set  up  plants,  offices,  and  other  worlqilaces  in  South  Africa. 

CONCLUS ION 

The  disinvestment  campaign  rests  on  a  faulty  analysis  of  the 
economics  and  politics  of  South  Africa.  The  economic  impact  of 
disinvestment  would  be  marginal  at  best.  Its  main  effects  would 
be  to  strengthen  Afrikaner  resolve,  weaken  the  growing  economic 
power  of  blacks  -and  anti-apartheid  segments  of  the  business 
community,  and  reduce  the  pace  of  change  stimulated  by  economic 
growth.  Disinvestment,  "therefore,  would  strengthen,  not  weaken, 
apartheid. 

By  contrast.,  Reagan's  constructive  engagement  is  a  sensible 
diplomatic  strategy  aimed  at  eroding  apartheid.  This  now  should 
be  bolstered  through  a  strategy  of  investment  leverage.  By 
recognizing  that  strong  economic  growth,  not  disinvestment,  will 
undermine  apartheid  and  strengthen  non-Afrikaner  economic  power 
while  weakening  Afrikaner  political  power,  the  U.S.  would  encourage 
gradual,  but  peaceful  and  irreversible,  change. 

Stuart  K. 


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€g)CONTRpLDATA 


May  30,  1985 


The  Honorable  John  Heinz 

RuBBell  Senate  Office  Building 

SH-277 

Washington,  D.C.   20510 

Dear  Senator  Heinz: 


Because  of  our  own  comini tment  to  contrJ 
Africa,  we  strongly  support  the  provisi 
provide  increased  U.S.  assistance  to  finance  scholarships  for 
black  South  AfriCEins.   Section  3  recognizes,  as  Control  Data 
has,  the  fundamental  necessity  of  improving  education  and 
training  for  South  African  blacks,  and  that  the  U.S.  government 
has  an  opportunity  to  play  a  significant  role  in  expanding 
educational  opportunities  for  black  South  Africans. 

He  also  support  the  inclusion  of  the  Sullivan  Principles  as  a 
mandate  for  U.S.  businesses  operating  in  South  Africa.   He 
fully  agree  with  Professor  Roy  Schotland  of  the  Georgetown 
University  Lau  School,  uho  testified  recently  that  Congress 
should  make  a  distinction  between  those  U.S.  companies  which 
have  exemplary  records  in  South  Africa  and  those  which  do  not. 

In  regard  to  the  proposed  ban  on  exports  of  computers  to  the 
South  African  government  and  the  etate  owned  national 
corporations,  I  believe  it  would  be  a  disservice  to  the  United 
States  as  well  as  to  black  people  in  South  Africa  because  such 
a  restriction  would  prevent  the  use  of  computers  for  commercial 
training  and  educational  purposes.   This  provision  of  S.635 
would  force  disinvestment  of  U.S.  computer  companies  from  South 
Africa  and  disregards  the  positive  role  of  the  state-owned 
national  corporations  in  the  education,  training  and  employment 
of  black  South  Africans.   Notwithstanding  Control  Data's 
exemplary  record  as  one  of  the  first  Sullivan  Signatory 
companies  and  our  policy  of  not  selling  computers  to  the  South 
African  military,  police  or  apartheid  enforcing  agencies, 
control  Data  would  be  forced  to  terminate  all  operations  in 
South  Africa  if  this  provision  became  law. 


joogle 


In  the  InteceetB  of  not  foreclosing  the  opportunity  of  0,S, 
coBputec  companies  to  continue  as  a  positive  force  for  change 
in  South  Africa  and  to  supply  ccltically  needed  education 
technology,  I  urge  you  to  delete  the  proposed  ban  on  the  export 
of  O.S.  computers.   If  Congress  concludes  that  the  practices  of 
sove  conpanles  or  the  existing  federal  regulations  governing 
the  sale  of  computers  are  not  adequate  to  prevent  their  use  in 
the  aduinlstratlon  of  apartheid,  I  would  urge  that  the  ban  be 
targeted  at  computer  exports  to  the  South  African  military, 
police  or  apartheid  enforcing  agencies. 

In  the  interest  of  contributing  to  cc 
Africa,  I  would  like  to  offer  an  altc 
described  in  the  attached  paper. 


Hilllan  C.  Norris 


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BY  WILLIAM  C.  MORRIS 

Chalivan  and  Chief  Executive  Officer 
Control  Data  Corpoiation 

As  the  Regents  of  the  Univetstty  of  Calfocnia  review  the  proposal 
for  divestment  of  companies  doing  business  In  South  Africa,  they 
have  an  opportunity  to  consider  an  alternative  course  of  action  that 
would  demonstrate  leadership  and  contribute  to  constructive  social 
change  in  South  Africa. 

While  there  can  be  no  question  about  the  ne< 

of  South  African  black  people  by  ending  the 

of  apartheid,  I  do  not  believe  that  the  policicaiiy  convenient  caij 

for  universal  divestment  is  the  best  way  of  accomplishing  that 

goal.   Divestment  might  calm  outspoken  critics  of  discrimination  ii 

the  U.S.  and  elsewhere,  but  there  is  little  evidence  that  it  would 

contribute  to  constructive  change  in  South  Africa. 

What  is  needed  to  speed  the  process  of  fundamental  change  is  not 
just  publio^^^utrage  and  emotional  appeals  for  actions  that  may  or 
nay  not  take  into  account  the  complex  realities  of  that  troubled 
country.   Indeed,  total  divestment  may  kill  the  best  hope  the 
present  generation  of  South  African  blacks  has  for  economic 
opportunity  by  removing  the  powerful  leverage  for  change  that  U.S. 
business  presence  now  exerts  on  South  Africa's  economy. 

American  companies  like  Control  Data  are  amonc 
the  struggle  for  peaceful  change  in  South  Afri 
companies  as  unworthy  of  University  investments  would  be  a  step 
backward  in  the  effort  to  build  mote  a  constructive  relationship 
between  the  University  and  the  business  community.   A  much  note 
effective  approach  Is  a  strategy  of  selective  investment:  that  is 
investing  in  those  U.S.  companies  making  the  greatest  progress 
towards  and  commitment  to  helping  blacks  attain  full  political  and 
economic  opportunity. 

A  selective  investment  strategy  is  of  critical  importance  because, 
even  If  apartheid  were  to  end  tomorrow,  the  majority  of  blacks  In 
South  Africa  have  little  or  no  education  amd  training  and  would 
continue  to  be  denied  full  access  to  economic  opportunities.  As  the 
Reverend  Leon  Sullivan,  the  originator  of  the  Sullivan  Principles, 
said  recently,  'Without  major  emphasis  on  education  for  the  black 
populatio'n,  political  apartheid  will  one  day  become  economic 

Instead  of  merely  adding  Its  voice  to  those  who  are  condemning 
apartheid,  the  University  now  has  an  opportunity  to  play  a  national 
leadership  role  in  promoting  constructive  change  in  South  Africa. 
Although  selective  investment  would  be  harder  to  accomplish  than 
universal  divestment,  It  Is  attainable.   At  the  same  time,  this 
selective  Investment  strategy  could  be  coupled  with  faculty  and 


,Goc 


lOogle 


student  etchange  pioqtame   with  leading  South  African  black  and 
■ulti-racial  educational  Inatltutiona.  The  end  result  would  be  that 
the  UnlverBity  not  only  would  be  teaching  and  learning  but  would  be 
helping  to  dlanantle  apartheid. 

Clearly,  the  inplementation  of  a  selective  investment  strategy  is 
crucial  because  if  leadership  isn't  shown  from  concerned  U.S. 
businesses  and  Institutions,  It  Isn't  likely  to  come  from  any  of  the 
other  nations  that  have  a  business  presence  In  South  Africa.   Like 
nost  European  companies,  Japanese  companies  aren't  showing  much 
concern  for  the  plight  of  black  South  Africans.   Whenever  a  U.S. 
company  is  unable,  for  any  reason,  to  export  equipment  to  South 
Africa,  Japanese  companies  snap  up  the  business.   Today  when  South 
African  customers  visit  the  U.S.,  their  next  stop  Is  usually  Tokyo. 
Because  of  pressures  for  divestment  and  ever-changing  U.S.  export 
controls,  South  African  customers  are  afraid  to  rely  entirely  on  a 
U.S.  company  and  are  seeking  alternatives.   Our  foreign  competitors 
are  eager  to  fuel  such  concerns. 

Even  though  Control  Data's  South  African  subsi 
than  1%  annually  of  Control  Data's  worldwide  i 
is  coBRiitted  to  being  at  the  forefront  of  those  American 
corporations  helping  to  Improve  education  and  training  for  blacks  in 
South  Africa.   At  the  same  time,  we  are  working  to  accelerate  the 
end  of  the  apartheid  system.   We  were  among  the  first  signatories  of 
the  Sullivan  Principles  and  assisted  Reverend  Sullivan  In  gaining 
wider  support  for  those  principles  as  the  most  effective  way  of 
bringing  economic  opportunity  and  social  justice  to  South  Africa. 

To  that  end,  1  presented,  at  Reverend  Sullivan's  request,  a  concept 
for  a  massive  education  and  job  creation  program  for  South  African 
>up  of  chief  executives  representing  European, 
:an  corporations  at  a  meeting  in  England  earlier 
this  year.   The  planning  and  overall  direction  of  such  an  effort 
would  be  provided  by  an  international  consortium  comprised  of 
corporations  doing  business  in  South  Africa  and  other  organizations, 
such  as  churches  and  foundations  concerned  about  apartheid. 

While  it  Is  too  early  to  say  whether  the  concept  will  be 
Implemented,  there  Is  no  question  that  it  can  be.   However,  It  is 
unlikely  that  British  companies  will  be  Involved  because  they  didn't 
exhibit  any  desire  to  participate.   The  main  point  is  that  it  is 
based  on  proven  methodology  and  it  provides  a  vehicle  for  those  who 
really  want  to  help  black  people  in  South  Africa.   It  is  a 
constructive  alternative  to  advocating  measures  that  will  only  force 
U.S.  companies  to  leave  South  Africa  and  thereby  deny  black  people 
help  fron  one  of  their  important  allies. 


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R«v«rend  Eulliv«n'a  own  tastinony  on  this  point  Is  cv«n  aore 
coKpelling.  As  «  result  of  co*panl«a  coMiltt«d  to  the  Sullivan 
Pclnciples,  he  cecently  wrote,  'U.S.  plants  (In  South  Africa)  are 
desegregated,  equal  pay  for  equal  work  ie  beginning  to  be  paid  to 
black  workers,  blacks   are  being  elevated  to  adnlnlstratlve  and 
supervisory  jobs,  blacks  are  supervising  whites,  blacks  are  being 
trained  with  new  technical  akills,  independent  free  black  trade 
unions  are  being  recognized,  schools  are  being  built,  housing 
developments  are  being  constructed,  health  centers  and  programs  are 
being  Initiated,  and  young  blacks  by  the  thousands  are  being 

I  an  firmly  convinced  the  presence  of  Control  Data  and  most  other 
U.S.  companies  in  South  Africa  has  been  and  continues  to  be  a 
•ignificant  force  for  improving  life  for  black  South  Africans,  which 
■ore  than  anything,  will  help  bring  about  constructive  change  and 
ultimately  the  end  of  apartheid.   Many  of  the  products  and  services 
tre  have  developed  —  particularly  computer-based  education  and 
training  —  are  targeted  specifically  at  improving  the  access  of 
black  South  Africans  to  better  education  and  economic  opportunity. 

The  complex  reality  of  South  Africa  is  difficult  to  understand  — 
and  easy  to  underestimate  —  when  viewed  from  the  vantage  point  of 
the  U.S.   Hor  can  the  most  effective  way  of  solving  that  country's 
pressing  problems,  such  as  closing  the  education  gap,  be  fully 
appreciated  from  afar.   To  advance,  encourage  and  support  the 
efforts  of  those  who  are  working  for  constructive  change  in  South 
Afri«8,  the  University  should  take  the  bold  and  visionary  step  of 
adopnlng  a  policy  of  selective  investment  in  companies  doing 
bUsin'esB  in  that  troubled  country. 


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THE  AMERICAN 
RaE 


"THE  AMERICAN  NATIONAL 
INTEREST  IN  A  STABLE  SOUTH  AFRICA' 


Herman  Nickel  is  a  former  member  ot  tie  board  of  editors  of  Fortune 
Magazine,  was  Time's  Africa  correspyxient  in  the  eorfy  sixties,  and  a  Time 
bureau  ctiief  for  20  years  This  bocl<ground  brings  to  Ns  ambassadorial  post 
an  enli^tened  experience  rarely  found  in  diplomatic  circles 


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OONTKpL 
DATA 


UXBXH 


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I  AMERICAN  COMPANIES 
IN  SOUTH  AFRICA 


By  Tony  KoerKterman 


tamvkifma     Otfm  rwtt  rlfiilU  •>  i 


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TWOTIBFACEOF 
AMBWAN  BUSMESS 


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APARTHEID 

Crima  ■gabut  HumarKy  o 
WaaWfTi  Anomaly? 


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THE  TENTH  YEAR 


D,o.z=db,Cj00gle 


'•""•    Th.  Taity  {ho.1. 


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<2I 
INDOCHINA  NEWSREEL 


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_>o 


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FLOWERS 

FROM  HELL 

Wa 

All 

Livs 

In 

A 

Valley 

Bed 

j~.",mZ~'~z',: 

".11";;. "! 

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HANOI  SUED  BEFORE 
THE  UNITED  NATIONS 


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Euwpain  Qmtnunih/ 


mm 


I  mm  afucu  trtm 


TtiB  Eurapau  Coaamlty'i  10  Baaliar  itaMi,  aloac  vltta  futura  Biabara  Spata 
and  Portugal,  hai«  wmail   chatr  Aabaiaadora  fcoa  South  Africa  for 
conaultatlodi  in  th*  daapanlug  criala  ovat  chat  comtrj'i  aparthald   ajratm. 

Tha  ForatgB  HInlawca  of  clia  12  comtrlaa  agraad  on  chat  actloo  durldg  a 
apaeUl  aaatlni  on  South  Africa  July  31  la  blalakl.     TiM  Mlalataia  l««Ml 
a  atataaant  candantug  tba  racanCl;  tapoaad   atata  of  aaalsmcT  In  South 
Africa,  and  tha  ^fuaal  of  South  African  authorltlaa  to  aaat  altb  KUck 
laadar  Blahop  DaiBond  Tutu>      They  callad  on  tha  govamBant  to  opan  a 
dialogue  with  all  rapraaantatliaa  of  tha  hlack  aajorltr,   Incladlng   tboaa  la 

Tha  Hlnlatari  alao  raafflTBd    chair  Jul?  22  declaraclan  calling  tor  tha 
laaedlata  lalaaaa  of  l^rlaoaod  black  oppoaltlon  laadar  Helaon  Maodala,  an 
and  to  datantlon  trlthout  trial,  a  halt  to  forcad  laBorala  of  hlacfca  ftoa 
cartaln  anaa  of  tha  covitr;,  and  rapeal  of  dlacrlalnatorr  lagLalatlon. 


In  addlelon,   tha  Foratgn  Mlatatara  of  It«l<r,  LmaabouTg  and   tha  Hatharlanda 
and  a  rapraaantatlva  of  the  E.G.  CoialaBloo  will  vialt  South  Afrle*  Co 
nlay  the  Canaunlty'i  concern  onr  the  datarloratlng  altnatlon  tbara. 

OTHKB  E.C.  ACTIOBS 

Tto  E.C.  CoBlaalon 
oppoaltlon  to  South 
>lnoiit7  rule. 

The  CoH^aalon  waned  In  a  Jul;  31  atataaant  that  unlaaa  tha  couttTf  aoiad 
quteklr  to  dlaaaatle  apartbald,  ecoooalc  aanctlooa  agalnat  South  Africa 
were  'Inevleable.*     It  aald  tha  CLiMwiilty  auat  ptapora  for  that 


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I  ntij  "h*ra  and  now'  to  draw  up 

Tfaa  E.C.  to  fat  haa  baao  dlrldod  on  tha  laaua  of  •codobIc  taactlona,  wicli 
aoaa  aaatair  ■tatwa  puihlnc   for  tbem,   and  otbari  oppoilng  tliea  a« 
Inaftacclwi     Two  E.C.  aaaber  acataa,  Tranca  and  Deaairk,  tiava  oo  chair  own 
Isnnad  new  lafaacaant  In  South  Africa. 

Iba  Buropaao  FaTllaaaat,  which  haa  oi«r  tha  ^ara  adopted  matij  raaolutlant 
eondaailni  apattheU,  on  April  18  uixad  tba  Cg^imltj  to  aaver  all 
•eoDoBlc,   financial,   cultural  and  allltarjr  tlaa  with  South  Africa. 

Tba  Parllaaent  coodiKied   'tha  lacalatlon  In  the  violence  and  repreaslan* 
carried   out  atalnat   the  South  African  black  population.   Including  police 
klllloia  of  unaraad  cltliana  and  arraata  of  rell(loua  and  dvlt  rtgbti 
laadara.     It  called  on  Ca^wnlty  Baahcr  atatea  to  daivlop  a  cooalatent 
policy  toward   South  Africa,  and   to  Cake   Joint  aetlona  with  the  United 
Stataa  and  Seaodlnavtan  goivmBanta  whan  poaalbla. 

CODE  OF  COHDUCT 

E.C.   Foreign  Hialat»i9  in  1)77  adopted  a  code  of  conduct  for  Co^nmlCr 
eoapanlea  with  aubaldlarlaa,  branchaa  or  repraaancatloo  In  Sooth  Africa- 
It  calla  en  tba  coapanla*  to  treat  thatr  aaplojsae  aquallr  and  to  do 
everything  poaalble  to  aupport  trade  unlooa  for  black  South  Afrtcana.     Tba 
voluntary  coda  alao  aeki  bualnaaaaa  to  provide: 

— A  ■1''<»—  wage  at  isaat  SO  percent  above  tba  aaount  laqutrad  to 

Htlafy  the  basic  naada  of  a  faally; 
— Equal  pay  for  eijual  work,  and  training  progiaaa  to  help  black 

African!    Co  move  out  of  Inferior   Joba; 
— Fringe  benefltn.   Including  houalng,  baalth  aervtcea,   pindona, 

educational  funda  and   unenployaant  Inaurance; 
— Daaagregatad  workplaces. 

n>a  Boat  recant  E.C.  analyals  of  th>  code's  Impleaen Cation,  covering  tha 
period  July  1981  to  Jime  1983,  found  that  trade  union  aeaberahlp  In  South 
Africa  had  Increaaed  rapidly  and  that  Co^nmlty  coapanlet  had  becooe  ttare 
vllllog   CO  cooperate  with  black  unlona. 

n>a  enalyila  was  beaed   on  reports  froa  22*   coapanlea  froa  all  B.C.  aeaber 
•tatea  except  Ireland  and  Luienbourg,   representing  alaost  142,000 
a^lojvaa.     Hole   than  half  of   Che   coapanlet   (139)  were   froa  Che  Unlcad 
Klngdoa,  wttb  Che  Federal  Sepubllc  of  Cenuny  bavins  the  aacood  graataat 
noabar  (Sl>. 

The  atudy  found  that  aost  eaployaaa  ware  paid  above  the  code'*  racoaaendad 
■lolaua  lavtl,  although  a  snail  percantage  received  leaa  than  povartT-Iaval 
wage*.     Alaoat  all   conpanles   reported    providing   frlaga  baoeflta  and  a 
■ajorlCy  eald   they  bad    partially  or  conpletely  daaagregatad    the  vorkplac*. 
Tbt  analyalf  found  a  need  tor  better  training  prograaa  for  blacka,  at 
mflectad  by  a  abortage  of  tkllled  workara. 


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In  ttotr  J«lT  21  itaMBnt,  CoMialty  F(iral«a  Mlnlacar*  Mtd  cbi  coda  of 
contaec  h>a  'prorcd  to  ba  ■  naaful  Inacnaant  for  Clia  •anetpatloo  ot  black 
warkara  In   loath  Africa,*  but  It  ahouU  be  icnugclHiud.     Ttaa  BDropaan 
Parllaaaat  hai  alao  called  for  >  acrooger  coda 

STATBtEirra  st  the  roaEtcw  HOiiSTBKa  or  the  tew 

OW  THE  SITUATIOH  HI  SOUTH  AFRICA  *HD  SOOTHE W  AfMC* 


Tha  MlalacaTa  of  Fotalgo  Affairs  of  tba  Buropaaa  Cn»inlty  togatfear  vlch 
Cb*  MlAlitata  of  Spain  and  FoTCnsal'nt  on  Julf  11,  IMS,  In  oidac  to 
uaalne  tha  Hrfoua  danlopaanCa  of  tba   iltuatlsn  tn  Boutb  Afrlu.     Thar 
took  note  of  tba  dabate  and  of  tba  reaolutlon  of  tba  BacatitF  (.otnell. 

Th*F  eoaflraad  thalr  eoaaan  attltoda  «a  It  t*  axpraaaad  In  thatr 
daclxratlon  of  J11I7  22,  1985,  and  in  particnlar  thalr  itroot  condannatloa 
of  tba  pToelaaatloa  of  a  atat*  of  ■■arganer  In  laportant  parta  of  that 

Thaj  alao  condeaoad  tba  nfuaal  of  tba  Soutb  African  goMmaaat  to  ba*a 
talk*  with  Blabop  Tuta>     Thar  caliad  upon  that  goranaant  to  opan  a 
dlalogna  with  all  tha  tapnaantatlna  of  tba  bUck  aajorltr,  toclndlng 
thoaa  lAo  ara  In  prlaca  and  iritaM  IlbaTatlco  tb(7  ba«a  raqoaatad  on 
July  22 • 


Tha  Mlnlacara  aakad  tba  Political  Co^ttaa  to  aatabllib  an  InvincorF  of 
thaae  ■aaautai     and  to  boU  a  full  dlacaatton  of  poltcla*  vhlcb  tba  Ian 
■Igbt  Parana  and  of  vtaauraa  to  taka  la  oidar  to  contrlbuta  to  the 
abolition  of  apartbald. 

a  tbali  Aabaaaadota  to  cona  for  eonanltatlona  to 

Tha  Klnlatara  aakad  tha  Political  COMlttaa  to  rapovt  to  than  at  thalr  aast 
Mating. 

Jnir  22.  ma 

Tba  Tan  Foral^  Htntitaia  axpraaa  thalr  psofoond  concam  o«a*  tte 
eontlnuiog  baao  mffarlng  eaoaad  In  Soatb  Africa  by  tba  apalthald  BTBtan 
Alcb  tbaj  ■tronglF  eoodana. 


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TIa  man  MC«at  aetloo  hj  th*  Sooth  Aftlcu  anthorltlas  la  dacl^rlnc  a 
Stat*  of  laargaaey  In  earula  araaa  of  thi  couDtr^  aatka  a  sharp 
datarlorattoD  In  tht  attuattoa.     It  wwt  te  brmicht  to  an  and  aad  all  choaa 
hald  UDdar  It*  pra*t«too«  ralaaaad. 

TliB  Tan  uri*  th*  GoMrnMBt  In  Pretoria  to  aabark  with  dataralaatloD  oa  a 
poller  Involving  (pacific  actloos  Uadlag  to  tha  abolition  of  th*  aparthald 
•r«t«>  and  tha  l^ilaaaotatloo  of  ch*  rlshtfnl  political  and  civil  rlihta  of 
th*  black  population.     In  tha  abaanca  of  anji  altnlflcaac  pTogtaas  wltbla  a 
taaacaablt  period  of  tlaa,  the  Tan  rasarva  the  rlfht  to  racoaildsT  th*lT 
attitude . 

In  tbalT  vlaw  th*  tlrit  raqulreaeDt  1*  the  rapid  opaalng  of  a  dlalofua 
hatiMen  tha  preaant  South  African  Covamaanc  and   ch*  gannlna 
lapreaantatlva*  of  tb*  non-vhlte  co^unltr.  rtth  the  declared  ela  Inter 
alia  of  slvtos  proper  re  pre  ten  tat  Ion  Co  the  black  en— lailtr  at  tba  natlooal 
lavel. 

dUlocue,  tha  Tan  bellaiN  ttut  the 

— laleaae  liaedlataly  and  uncoodltl anally  t(r<  Ralaon  Handel*; 

— and  datancloo  without  trial; 

— abaodon  th*  pracclc*  of  forcad  naovali; 

— reaoiB  dlBcrlnlnatory  leglalatlon  Includlnf  tba  paaa  law*  and  tba 


a)  Conpanla*  shauld  «neure  that  all  their  cnplo;«e«  tcreapectlva  of  racial 
or  other  dtsctnctlon  tte  allowed  to  chooae  traaly  and  without  any  hlndranca 
cb*   tTp*  of  otganlatlon  to  repcaaent  then. 

b)  E^ilojer*  ahould  ratularly  and  unequivocally  Infora  their  aaployaea  that 
cooaultaclona  and  eoUactlv*  bargaining  with  organlxatton*  which  am  fraaly 
alactad  and  repreaantatlve  of  e^iloyee*  aca  part  of  eompaaj  poller- 

c)  Should  black  African  enployeaa  decide  that  their  rapmaentaclva  bod; 
ahould  be  In  the  fora  of  a  trade  union,   the  coapany  ibouU  accept  thta 
daclalon.     Trsda  uolona  for  black  African*  ere  not  Illegal,  and  coapanla* 
are  fcaa  to  racognlia  thea,  and   to  negotiate  and  conclude  agrecaanta  with 
then. 

d>  Coneequently,  tba  coapenta*  ahouU  allow  collective  haTgalnlng  with 
orgenliatlona  freely  ebo*«n  by  the  workara  to  develop  In  accordance  with 
lata  nationally  accepted   prlnelplea. 


•  )  E^lo^Ci  (hould  do  everything  pesilble  to  enaure  chat  black  African 
a^lo^e*  are  frea  Co  Corm  or  to  join  s  trade  union.  SCepa  ahouM  be  t 
In  particular  to  peralt  trade  union  official!  to  explain  to  enploTeaa  t 
aiaa  of  trade  unlona  and  the  advantagea  of  ^Bberahl]),  to  dlatclbute  tt 
onion  docuBenCatlon  and  dlaplay  trade  union  notlcea  on  the  company'a 
prealaea,   to  have  raaaoaable  tlae  off  to  carry  out  their  union  dutlea 


f)  Where  uork*  or  llslaon  coaaltteea  operate,  trade  ia<Ion  official*  ahouU 
haK   re  pre  aen  tat  lie   atatua  on   Cheae  bodlea  If  eiqilo^ea  ao  wlah.      However, 
the  eilitence  of   cheae   types   of  co^Itcee   ahouU   not  praludlce   the 
davelopaent  or  autua  of  trade  unions  or  of  their  representatlvea. 


a)  TIk   ayaten  of  nlgranc  labor  ta,   la  South  Africa,  an  taacriwenc  of  tbe 
policy  of  apartheid  uhlch  haa  Che  effect  of  preventing  the  Individual  froa 
■eeklog  and   obtaining  a   Job  of  hla  choice;    It  alto  cauaee  grave   social  and 
faally  probleu. 


3.      Pay 

CoBpanle*  ahouU  aaauae  a  apeclal  reaponalblllcy  as  regarda  the  pay  and 
coadtClona  of  c^loyaanc  of   Cbelr  black  African  eaployeea.     They  ahould 
foTBulate  specific  pollclea  alaed  at  laprovlng  their  terma  of  eaployoent. 
Pay  baaed  on  the  abaoluce  nlnlaun  neceaaary  for  a  faally  to  aurrlTB  cannot 
b«    conaUered  aa  being  aufflclent.     The  nlnlmu  vage  ahould   Initially 
exceed  by  at  laaat  50  percent  the  ainlBua  level  required  to  satisfy  Che 
faaelc  needs  of  an  eisplojne  and  his  faally. 

*.      Hag*  atructure  and   black  African  advanceaent. 

a)  Tbe  principle   of  'equal  pay  for  equal  work'  aeana   that  all   jobs  ahouU 
be  open  to  any  vorker  uho  posseases  suitable  quallflcaclona,  irreapectlve 
of  racial  or  other  distinction,   and   thac  mgca  ahould    be  based   on  a 
qualitative   Job  evaluation. 

b)  The   saoe  pay  scales  should   be  applied    Co   Che   ease  work.      The  adoption  of 
the   principle  of  equal   pay  would,   however,   be  aeanlnglesa  If  black  African 
a^loyees  were  kept   In   Inferior   Jobs.      Eoployera  should   therefore  draw  up 
an  approprtac*   range  of  training  acheaea  of  a  suitable   standard    to  provide 
training  for  chelr  black  African  eaployeea,  and   ahould  reduce  their 
dependance   on  lealgrant  whlta  labor. 


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b)  For  ctal*  purpoH  coBpan;  fundi  could  b*  tt  aalde  for  vm 

— Id  Ch*  houdng  of  black  African  peraOQiwl  and    thtlT  faBlltss;    tn 
uanapoTt  troa  place  of  raaldenca  to  placa  of  work  and  back; 

— In  prorUlog  leisure  and  healtb  aervlc*   tacllltlas; 

— Id  provldtag    chair  e^lo^ca  ulth  aaalatanca   In  problaaa  thtj 
encounter  with  the  authorities  ovar  tbalr  Bovimnt  ftoa  ona  placa 
CO  anothar,    chair  chclce   of   realdenca  and    cheir  eaplo)>aBnt; 

— in  l^rovlng  aedlcal  aervlcea.  Id  adopting  pTogTaaa 
against  loduaCtlal  sccldenta  and  uneaplOTBent,  and 
■eaaurea  of  social  welfaTc. 


In  so  far  aa   IC  Ilea  wlcbln  thalt  own  co^atenca,  saploysrs  ahoald  do 
evetTthlng   poaslble    Co  ahollah  any  practice  of   aegragatton,  nocsbl;  at  Oa 
workplace  and    In  cancaens,   aporca  activities,  education  and   training.      Tbaj 
should  also  eosuT*  equal  working  condltloaa  for  all  tfaalt  ataff. 

7.      Keports  on  tba   iBpleMPtatlon  of  the   code   of  condgct. 

a)  Farent  coapaales  to  whleb  t 
}«aT  a  detailed  and  fully  docu 
applying  thla  code. 

b)  The  nmber  of  black  Afrlcana  eaplojed   In  tha  undertaking  should  ba 
Bpsclftad  in  tha  teport,  and  progreas  In  each  of  Che  alz  areaa  lodlcatad 
above   should   be    fully  covered- 

c)  The  goTeraBeata  of  the  Nine  will  review  annually  progreas  aada  In 
iBplsBsntlag  this  code.     To  this  end  a  copy  of  each  coBpeny'a  report  ahonU 
ha  auhBittad  to  their  national  govsrnBenC. 


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URBAN  FDUNDATION 

Wastarn  Capa  Regional  Nawsletler 
Soma  Project  Highlights  of  1984  and  1089 


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THE  URBAN  FOUNDATION 


StaUmenl  of  goali 

1  To  improve  the  quality  of  life  of  South  African  communities,  pai^ 
ticulariy  in  an  urban  context;  to  this  end  to  promote  peaceful  structural 
change  in  relation  to  fundamental  aspects  of  community  needs  such 
as: 

housing  and  associated  rights  and  facilities, 
employment,  career  and  business  opportunities, 
education  and  training,  and 
equal  opportunities  in  respect  of  these; 

2  to  act  through  a  participatory  process  between  the  communis  aod 
the  private  sector  (with  co-operation  from  the  public  sector); 

3  and  thereby  to  conUibute  to  the  establishment  of  a  society  founded 
upon  Justice  and  the  explicit  recognition  of  the  dignity  and  freedom 
of  individuals. 


Values  CD  wblcfa  our  efforts  are  based 

1  freedom  of  choice; 

2  individual  self-reliance  and  selT-sufRcieacy; 

3  individual  security,  based  on  an  accepted  structure  of  law  and  order 
and  equality  befdre  the  law; 

4  the  free  enterprise  economic  system;  and 

5  the  elimination  of  discrimination  on  the  basis  of  race,  and  odier 
irrational  criteria. 


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The  Fomndatton'i  objeedre  -  to  improve  the  quality  of  life  of 
South  AfHcan  communities  and  in  so  doing  to  promote  peaceful 
structural  refonn  through  development  in  the  areas  of  housing, 
education  and  training  and  access  to  work  opportunities  -  is  pur- 
sued through  two  supporting  and  complementry  strategies. 

These  are:  negotiations,  significantiy  with  the  authorities  but 
also  extensively  with  the  communities  and  the  private  sector,  and 
innovative  project  activity.  Both  strategies  are  supported  by 
research  and  the  dissemination  of  rehable  and  objective  in- 
formation. 

Through  this  approach  the  Poundalion  aims  to  achieve  reform  in 
the  legal  structures  which  govern  the  lives  of  all  communities  and 
also  reforms  in  the  provision  of  finance,  customs  and  attitudes 
which  are  necessary  to  achieve  the  goals  for  which  the  Foundation 
stands  and  support  the  values  in  which  we  believe. 

The  projects  included  in  this  Regional  Review  represent  the  vis- 
ible or  physical  side  of  our  activity.  In  most  cases  the  projects  have 

been  supportive  of  negotiation  covering  a  wide  range  of  matters 
including  inter  alia  access  to  security  of  tenure  for  Black  residents 
in  the  Western  Cape,  new  approaches  to  and  fmancial  mechanisms 
for  self-help  housing,  pre-school  standards  and  so  on.  In  all  pro- 
jects the  involvement  of  the  community  has  been  sought  so  that 
^  projects  are  appropriate  to  the  needs  of  the  people  they  serve. 


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THE  UTILITY  COMPANIES 


MALUNGA  PARK  -  A  SUCCESS  STORY 
COMPLETED 


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BELHAR  HOUSING  PROJECT 


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STEENBERG  SELF-HELP  PROJECT 


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TEACHER  DEVELOPMENT 


TEACHER  OPPORTUNITY  PROGRAMAAE 
-TOPS 


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THE  TEACHERS'  RESOURCES 
CENTRE 


SAVIO  ADULT  EDUCATION  CENTRE 


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PRE-SCHOOL  PROGRAMMES 


PRE-SCHOOL  MANAGEMENT 
TRAINING  PROGRAMME 


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FOUNDATION 
fAr  u  m 


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Crossroads  —  a  decade 
in  perspective 


^V^  mart»d  ir«  W^pnnino  o1 


DEWfAllon  and  DsvtfOpnw^I,  flUO  ni 


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Cmssroads 


Protea  North:  20  000 
will  be  accommodated 


ST^^I^^^ZT^ 

Jil   ' 

f  fl 

JKtManrm.  S*Rnrmm*«M 

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CEP  grows  with  Urban  Foundation  boost 


■^m 


Education  report  —  a  summar/ 


ilh  Atrlcana.  A  wy  ichooling  ia  tti  b^ 


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Mamgement  tmnii^  for  headmasters 


A  co-ordinated 
approach  to 
pre-school 
education 


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UF's  new 
structure  and 
constitution 


Some  major  achievements  of 
the  past  financial  year 


Pre-school  education  EmMn  cipa  k 


9dv  Dn  the  mtnvh  of  IM  ECUF's 


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OntwikkeSng  van  self-h^  nywerheidspark 


Acceptance  of  black  building  industry  —  a  key  issue 


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Sullivan  responds  to  UF 
initiatives 


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Hie  American  Chamber  of  Commerce  in  South  Africa 

Aims  and  objectives: 
1  .To  foster  and  communicate  the  broad  bcncfkial  concept  of  US  private 

enterprise. 
2.  To  promote  and  develop  trade  and  commerce  bct^'cen  South  Africa  and 
the  United  Sutes. 

To  pron'dc  a  forum  on  an  organised  continuing  basis  in  which  Members 
can  discuss  and  identil)'  common  vien-s  r^arding  their  trade  and 
commercial  interests. 

3-  To  seek  to  minimise  discriminatoo'  or  restrictive  legislation  both  in  the 
United  Slates  and  South  Africa  niiich  ^'ould  impede  the  operations  of 
these  businesses,  d>eir  people  and  the  communit>'  at  large. 

4.  To  represent  the  Members  to  government,  the  business  community',  other 
similar  organisaticms  and  the  general  public. 

5.  To  maintain  contact  n-ith  the  South  African  and  United  States  Go^'cmments 
to  ensure  that  the  Chamber  is  at  aU  times  anare  of  the  policj'  and  thinkir^ 
erf  these  Governments  on  trade  and  commercial  and  related  matters. 

6.  To  ct^ect,  exaluale  and  disseminate  among  its  Members,  statistics  and 
other  information  relating  to  any  of  its  objecti\'cs. 

7.  To  promote  measures  calculated  to  benefit  and  protect  the  interests  of 
members  in  South  Africa 

8.  To  enc(Mirage  members  to  adopt  and  maintain  the  same  high  standards  of 
busiiKSS  conduct  and  ethics  in  South  Africa  thai  ihej'  practise  elscn-here  in 
the  world. 

9.  To.efKOurage  our  Members  to  subscribe  to  recognised  Codes  of 
&nplo)'ment  Practice. 

1 0.  To  encourage  the  de\'elopment  of  efflplo)'ees  of  member  organisatiofis. 

11 .  To  fHximote  local  economic  and  social  contributiorts  for  the  benefit  of 
South  Afiica 

1 2.  To  seek  to  uphold  the  dignit}-  of  all  people  crf^South  Africa  to  enjo}-  and 
contribute  to  a  free  sodet)'. 

13.  Topromote  goodwill  and  co-operation  between  South  Africa  and  the 
United  Sutes  and  the  citizens  thereof. 


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us. 

Business  Involvement 

in 

South  Afiica 


Produced  by; 
THE  AMERICAN  CHAMBER  OF  COMMERCE  IN  SOUTH  AFRICA 


January  1984 


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IRRC ^ 

South 
Afpica 
Review  Service 


ResponnbLhty 


(20;)  833-3727 


r  ladiutrlf  Inc. 


DrcBsei  IsdustTle*  has  atCTictcd  the  •ttcacloa  of  ■haiehaldtrs  concerned  Nlch 
U.S.  cmpulai  in  South  Africa  prlurlly  for  Ita  refuaal,  until  racently,  to 
■Ign  the  Sullivan  prlndplea.   In  1980  and  1961,  ahareholder  propDneati  aaked 
the  coapany  to  coaplir  Mlth  ttie  Sullivan  prlnclplea  or  irlthdxait  froH  South  Africa. 
The  reaolutiona  were  supported  by  11.3  percent  of  the  sharti  votad  la  19B0  and 
by  8.9  percent  In  1981.  la  1983,  church  proponents  aiked  the  coapany  to  prepare 
a  report  on  the  labor  pracclcsi  of  Ics  South  African  subaldlary)  this  raiolutlon 
was  supported  by  5.1  percsot  of  the  shares  voted,   finally,  a  raaoluCloa  In  19B4 
asking  the  coapany  to  sign  the  Sullivan  principles  ms  suppoTtsd  by  11. t  percent 
of  the  shares  voted  at  the  compasy's  March  22  sonusl  asatlng. 

The  coapany  algned  the  Sullivan  principles,  ahartlr  afterwards.  In  Hay.  Id  «z- 
plainlos  the  coapany's  declsloD,  E.R.  Luter,  Dresser's  senior  vies  prssldent  for 
finance,  told  DUtC  that  BanageBeBt  felt  that  the  COBpany  la  'as  nearly  la  COB- 
pllBDce"  irith  the  Sullivan  principles  as  aany  of  the  Sullivan  slgnatorlea.  He 
alao  explained  that  "bom  people  felt  that  if  ae  ««nt  ahead  and  signed,  it  alght 
take  the  heat  off  of  soBe  of  the  crazy  dlveataent  legialatioa  that's  Iwlng  In- 
troduced." Because  Dresser  signed  the  Sulllvsn  principles  late  la  the  reporting 
year,  which  ends  Juns  30,  It  mm   not  required  to  file  a  progress  report  in  19M 
with  the  Arthur  D.  Little  consulting  flra  on  Its  iBpleBsntstion  of  the  Sullivan 
principles.  The  coBpany  is  required  to  file  Its  annual  progreaa  reports  with 
Arthur  D.  Little  bsglnnlng  vlth  the  reporting  year  that  ends  June  30,  198S. 

The  inforastlon  In  this  report  la  taken  froB  Intcrvlevs  la  July  1984  vlth 
Dceaeet's  aanageaent  In  South  Africa  and  with  shop  stewards  froB  the  Hetal  and 
Allied  Workers  Union,  uhlch  repressnta  black  hourly  workers.  This  is  IRHC's 
third  report  on  Dreeaer'a  operations  In  South  Africa.   The  first  two  reports 
were  published  in  Hsreh  1980  and  February  19B1. 

Inportant  points  to  note  shout  Dresser's  operations  In  South  Africa  are  thati 


30-720    O— 86— 


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— Drcaicr'*  wock  fore*  dccrMied  IS  parcMkt  batwaa  19H  and  1984. 


■  houalug  ■■■litanc*  prograa 


Thlt  updatad  raport  covera  the  following  topic*: 

k,     Dtaaaer'a  opatatlon*  In  Soutb  Africa 

— DeacilptloQ  of  opctatlona 

— Sdei  (Including  aalaa  to  tha  go*aln»CBt} 

— InvestBeot  and  czpaaalon 

B.  Eaployaent  ptactlcea 


— Frln(a  banaflta 
— ItainlJit 

— Verkar  rapraaaotatloa 

C.  Public  affair*  actlritlaa 

D.  IKRC  analyala 

Throui^out  thlB  riport,   IKXC  ua«a  the  t*ialnola(7  adopted  b;  tlia  South  African 
laatttuta  of  Raea  Kalatlooa  and  tha  U.S.   Stata  Dapaitaent  «faan  daacrllilnc  rarl- 
oua  racial  group* — Afrlcana,  colottda  (mlxad  raca  indlvlduala)  and  lalana  ara 
collaetlvaly  rafatred  to  aa  blaeka.     Ituia,  IBSC  uaaa  tba  tan  'black'  whara  tmt, 
Sullivan  and  othar*  uaa  tha  tars  'noo-iAlta*  and  'African'  lAaca  thaf  uaa 
'black.' 

A.      DRESSBt'S  OPEkATIOMS   IM  SOOTH  AfklCA 
Deaerlptlon  of  Oparatlona 
Itaaa  of  •ubaldtaty: 

Location  of  oparatlona: 


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Year  opcratlona  bagan:      1974 

Dcaaaer  South  Africa  (Fty.)  Ltd.  aanufactvtai  lod  lalia  Sallcm  roadbuUdlng 
aachloaiT  tii   hrdraullc  craaeai  Jaffrar  undcrfrouad  aloljis  aqulpBast,  ore  cnuh- 
CIS  aad  Batetlala  handling  equlpBeat;  Harlon  pomr  •hoveli  and  drag  liDaa; 
Drcaaer-Hayna  puBpaj  and  I«dg*-Cot trail  pollution  abacaBant  dcdcaa.   Dreaaar 
also  racBBtly  acquired  the  dlatrlbutorahlp  froa  Intamatlonal  Harvaater  of  tba 
International  Kough  line  of  ftontcnd  loadara  and  bulldoscra.  DraaaaE'i  lavolTa- 
■•nt  In  South  Africa  began  In  1974  iihaii  It  purchaaed  Jaffrer-Gallon  and  acquired 
that  coapBOT'*  BaoufactuTlng  facllltte*  outaide  Johaonaebutg . 

Salea  (Ineludim  aalaa  to  the  gorenaent) 


IS9.4  ■iUion    tS4.8  BtUioa   t47.7  alUlaa 

1  pcicest       1.6  percent    1.3  parcanc 

Draaaer  South  Africa'*  ■anageBent  told  IRKC  that  It  eipecta  the  aubaldlaiy'e 
19S4  aalae  to  be  dapreaeed,  noting  that  aalea  during  the  flret  half  of  1984  wmta 
30  percent  lower  to  Inflatlon-adjuated  teraa  tban  for  tba  aaaa  paiiod  In  19S3, 
Dreaaer,  like  Ban;  otbet  capital  equipaent  ■anufactuTeTa,  baa  baen  hart  by  Soutb 
Afrlca'a  prolonged  eeonoalc  receaelon. 

Salaa  to  goTemBant;  Tha  aubildlaTy'a  BanagBBaat  eatlnatad  that  75  pareant  of 
Ite  bualncii  la  with  tba  public  aactor,  primarily  Kith  provincial  aad  hoaeland 
gOTcmaenta,  which  purchaaa  Dieaaar'a  road-bulldlna  •qulpaanC.  The  coapeny  aay* 
Ita  aalea  to  the  South  Afrlcen  public  aectoi  are  not  taatricted  in  any  any  by 
U.S.  export  ragulatlona. 


1983  1984 

131.3  Billion   tie. 7  Billloo 

1.7  percent    0.9  paieant 

to  1984  rafleeta  prlBarily 
fluctuations  in  tba  aichanga  rata. 

Dreeaar  Soutb  Africa 'a  Banaganent  told  IRSC  that  thete  haa  bean  no  Bajor  capital 
expanaton  by  tbe  coBpany  In  the  Isat  aeraral  yaara,  nor  doui  the  aubaldlary  hare 
any  eipanalon  plana  at  praacnt .  Dreaeer  doae  not  bara  a  policy  raattlcting  fur- 
ther InveetBant  In  South  Africa. 


i3S2. 

Ket  aaaeta  of  aubetdUryi 

tl3.Z  Million 

Aaaeta  as  a  percentage  of 
Dreeaer-e  wotld>ide  aeaetsi 

1.4  percent 

The  decline  in  velue  of  Dteaeefi 

•  aaaeta  froB  1983 

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facial  Ce«po»ltlon  of  ttf  Botfc  FBrc* 
c  1980 


Afrlcanj  443  U,2  284  37.0 

Color*da/i«lau  S7  S.f  78  10.1 

VhIM»  503  SO.l  405  52.  S 


KiBtbT  of  4ftle«n  irorkT*  irithoat  urb«n  r«>ld»nc«  rl«ht»i     43,  •■  of  ald-UM. 

A  nuabar  of  ctxa*  •■ploy***  ar*  altalbl*  for  pcraaiuat  urban  r*Bldaac*  rtghU 
undar  tha  Hay  1983  *Rlkbato*  nilln).     that  ruling,  by  S«uth  Africa**  bt|b*at 
court,  daclarad  that  African  Blfrant  Motkera  aho  had  ooiked  la  an  urban  at** 
with  OB*  *aFloy*T  for  10  jtAit,  or  Hv*!*!  (Biiloy*!*  for  IS  roara,  war*  antltlad 
to  pananut  raaidnci  rlghta  within  that  araa.     Without  thaaa  rlghta,  an  Atti- 
can  vorkcT  who  loaai  hla  lob  miit  laturo  to  tb*  Tiic«l  hoaalanda,  rti*r*  th*  ania 
ployaant  tat*  la  vary  high.     In  tb*  fliat  half  of  1984,  I>r*ai*l  b«lp*d  als  ^t- 
ploy**a  to  obtain  tbalr  p*isaD«Dt  urb*n  Toildanc*  rl^t*. 

l>»**»t*«atlon  of  Faclliela* 

Draaaar  taaovad  all  dlacrlalnatory  algna  In  1977,  but  d*  facto  aagxagatlon  par- 
•taca  In  eartaln  araaa. 

MaB*8*>*nt  told  lUC  that  bacauaa  vorkara  ar*  allowed  to  aalact  thalt  can  lock- 
•la,  habit  and  pact  pTasani*  atlll  latgaly  tBaux*  that  black  and  vhlta  voilMt* 
ar*  ■*p*t*t*d.     n&C  raporttd  In  1981,  on  tha  bail*  of  Ita  obaarratlona  ''"ring  a 
1980  plant  tour,  that  'tha  fumlahingi  of  th*  black* '  lockar  toon  «*r*  tntarlor 
to  thoaa  In  tha  lockat  rooa  u**d  by  wfalt**.'      The  conpany  haa  apgtadad  all 
lockat  tooaa  to  an  equal  atandard. 

nu  eoapany  ha*  emo  cafatarla* — on*  a*r***  an  AfrtcaD-atyl*  aenu,  th*  other 
■•rr*a  a  mstcm-atyl*  aanu.     Both  *r*  opan  to  all  rae«*,  and  th*  aaatan-^tyl* 
cBttt*rla  la  In  fact  uaad  by  all  tac*  gioupa. 


■oathly  wan  at  Praaaat  (1  Hand  ■  tO.50) 

Jnlr  1980  July  1984 


NuBbar  Cp*rc*nt«g*)  of  Afrlccn, 
Aalan  and  colored  workera 
earolDg  ao  Bota  than  MELU 
plue  10  p*re*nti  100  (15  p*te*nt)  17  (5  parcaat) 


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The  MEU  am  Hall  aa  the  ■Inliia  pay  for  other  houTly  ■tad**  ac*  dacaialnad 
throu|b  collcetlva  lMr|alDln|  batwaen  ■anagaaaitt  and  tha  raptaaantatlvc*  of  the 
Hatal  and  Allied  Workera  Doloa. 

Bonuaaa;  Hourl;  voTkcca  racelve  an  annual  bonna  of  R99  to  S493,  dapaodlni  on 
thelt  par  level  and  yean  of  service   Salatlad  eaployaca — azcludlng  aalcapcople 
and  top  BBoageaent — receive  an  annual  boaua  equal  to  oiia  aoath'a  pay. 

Coaparlaon  of  Dreaaer'a  ■Inliiue  wniie  irttb  aurveya  of  ■IoIim  tncoae  requlre»eota i 
Thd  unlveralClea,  the  Unlveralty  of  South  Africa  (Unlaa)  sad  the  University  of 
Port  Elizabeth  (UFE),  conduct  aeal-ennusl  aurveya  throughout  South  Africa  and 
publish  Incoae  figures  theoretically  aufflclenc  Co  cover  the  Blnlnin  requlre- 
nents  of  an  African  faally  for  heslth,  hygiene  shelter  and  clothing.  The  tig- 
urea  Include  ■lloncces  for  food,  clothing  houalng,  trans  porta  CI  on,  taiea, 
nlaoc  isedlcal  and  education  coats  alnor  household  supplies  and  fuel  and  lltfit. 
Because  of  regional  dlffereDcea  Is  the  cost  of  gooda  and  services  these  vary 
Hithlo  the  covmtry.   DPE'b  figure  la  called  Che  Household  Subslsteoce  Laval 
(HSL);  Unlsa's  figure  la  caUed  tha  HIdImib  Llvliig  Laval  (HLL>. 

Botb  ualvHFsltlsB  also  furnish  figutaa  deslgaed  to  include  coata  for  aueh  things 
as  alnlnal  recreation  and  entertalnnent ,  personal  care,  contributions  to  pan- 
aioQ,  uneaploynent,  aajor  aedlcal  snd  burial  expanaaa,  and  additional  coata  for 
clothing,  food  and  t rons ports t Ion.  Both  are  dsacTlbsd  a*  the  aaonnt  needad  for 
a  'aodaat,  low-level  standard  of  living.'  The  thlvaralty  of  FoTt  Elizabath'a 
figure—the  Household  Effective  Level  (HCL) — ia  50  percent  higher  than  its  RSL. 
Tha  tlolverslty  of  South  Africa  a  figure — the  Suppleaentad  LlTlnf  Laval  (SIX) — la 
1J-3S  percent  higher  than  its  HLL. 

Baaed  on  periodic  aurveya  of  honaabold  aiia,  the  University  of  Pott  Bliiabath 
eatlaatea  that  the  avcraga  African  houaehold  haa  all  paople,  and  It  baaaa  its 
HSL  and  R&L  figures  on  thla  aveTsge  houaehold.  Tha  Dnlveralty  of  South  Africa 
provldaa  a  aerlea  of  HLL  and  SLL  figures  for  houaaholda  ranging  froa  two  to 
eight  or  aore  persons. 

Because  six  seaas  to  be  s  reaaonable  aatl>ate  of  African  household  alia,  IBXC 
uses  Uoiaa'a  figures  for  a  faally  of  all  wban  coaparing  a  coapany'a  alnlaua  aage 
to  the  Binlaua  Incoae  needad  by  an  African  houaehold. 


Tha  coapaay's  HELM  haa  reaained  ralatlvaly  constant  In  real  taraa.  In  19S0,  the 
coapony'a  HEIU  vsB  17  percent  above  the  NlDlaua  Living  Level,  end  32  percent 
above  the  Household  Subalatencs  Level,  than  in  effect  for  an  African  faally  of 
six. 

Equal  pay  for  equal  work!  To  help  ensure  equal  pay  for  equal  votk.  Dresser  uses 
a  foTBsl  Job  claasiflcation  syataa  for  Its  aalatlsd  aBployaas.  Job  claaalflca- 
tlona  for  hourly  aaployess  are  based  on  a  aysta*  developed  by  tha  Indostrlal 
council  for  the  Batals  Industry,  to  which  Dlaasst  belongs. 


Digilizedb,  Google 


(1  Umt  -  M.50) 


Sappl— nt«d  1OT»1 

400  (12) 

ZffactlY*  1«T«1**  419  (U) 


IIm  tollawlni  ublaa  ihow  tha  avaraia  pay,  by  raca  and  job  grada,  of  hoolly  paid 
workaia  at  tbt  Uadavllla  factory  and  of  Draaaar'i  riilta  eoUax  Mployiaa.  i» 
tba  fliat  tabi*  iDdlcAtao,  tliarc  la  only  ona  hourly  grade  In  vhlch  both  blada 
and  Hfaltaa  ara  asployad.  Howanr,  the  aTeraaa  pay  for  both  Afrleana  and  c«l- 
or*d«  la  hlfhar  than  that  for  wbltea  In  thla  (rada>  Ih«  aecond  cable  lsdteat«« 
ttwt  In  four  of  tha  Bin*  lotatrated  vfalta  collar  Job  gradaai  the  aTaraga  pay  for 
Afrteanai  Aat«na  or  colocada  la  hl|har  than  chat  for  whltaa. 


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Psutrai  Ul  hourly  aaploreai  an  Taqulrad  to  balons  to  ■  panaloa  plan  adalol*- 
t*T«d  hj  the  laduatrlal  council  In  ahlch  I>r*sa«T  aatchta  tba  eaployee'a  cotttrl- 
butloa  of  6  percent  of  hta  pay.  bploTeci  are  veated  la  the  plan  after  10  <faaTa 
of  aervlcc  with  the  coapany. 


Salaried  eBploycea  ai 
and  eaployet  each  con 
Vetting  In  thie  plan 


requliad  to  Join  a  coapany  penalon  fund  la  nMch  Baployaa 
rlbuta  an  aaount  equal  to  6  percent  of  tha  eaployea'a  pay> 
ccura  after  10  yaara  of  aerrlce. 


Medleal  Inaurancei  Ulilta  eaployeea  are  required  to  Join  the  coapanjr'i  aedlcal 
plan.   FoT  hlack  inploycaa,  aaBberaUp  In  a  aedtcal  plan  la  voluntary,  and  thay 
■ay  cbooie  to  Join  either  the  coapany  plan  or  a  aeparatc  African-only  plan.  Iha 
Afrtcan-oiily  Bedical  Inaucanca  la  able  to  char|e  lover  prenluaa  than  the  regular 
coapany  plan  becauie  Uricaoa  uaa  aedlcal  facIUtlea  leaa  often  than  whlcea  and 
becauae  thelc  hoapltalliatlon  coita  arc  lower.   In  Bld-1984,  14  percent  of 
DEaaaar'a  black  eaployeee  belonged  to  a  aedlcal  plan — 9   parcmt  had  Joined  the 
coapany  plan,  and  5  percent  had  Joined  the  African-only  plan.  Id  19S0,  leaa 
than  1  percent  of  Dreasat'a  black  esployaea  had  aadlcal  inaurance. 


HoualnjL  aaala 


■  of  IBAC'a  vlalt,  I>reaaer  did  not  have  a  houalng 
"  _  ■  _  The  coi- 
pany  hod  aurvayed  Ita  black  eaployeea  aa  to  their  houalng  needa,  end  the  peraon- 
nal  aanager  had  attanded  aeetlnBa  of  the  Sullivan  algnatortea*  taak  group  on 
houalng.  The  new  progru,  which  waa  eatabllahed  la  Auguat  19M,  la  open  to  all 
eaployeea  «ho  have  two  years  of  aervlce  and  are  earning  leaa  than  RS,OO0  a  year. 
The  prograa  la  designed  to  aaalat  eaployeea  to  purctaaae  a  hone  or  to  electrify 
I  laprove  a  hoae  they  already  own. 


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■  -raatai  rill   ioumcm  aoKiaiH  tor  •UglUa  —pipy—  br 

lapoalclai  foada  vlch  tba  l«adla(  lajtltatloa  •qulTmlaat  to  th«  aaooac  tlwt  thl 
l**<l«t  laatttueloa  would  vfin&llr  r»quln  tb*  aapXor**  to  p«r  In  ■  doan  MjMir 
>'••••'*•  ualat«nc«  will  tbua  «nabl«  isploTU*  to  obCKls  a  aortiat*  'oc  *te 
foil  nliu  of  tb«  how.  lo  addlclOB,  I>r**a«r  «1U  •ulitldli*  lO  parc(nU(« 
polata  of  th*  <zlaEtas  B«rk«t  Inttraat  istaa  for  aorttacai  Ccurmtlf  ««11  mar 


Loan  for  «l«etrlflcatloB— OrBaaar  vUl  provtda  u  lntaraa^-fr««  loan  for  t 
full  aaount  taparabla  over  cvo  raari-  ^loraaa  wlshlat  to  aaka  SM  of  thla 
lOaalataoca  auat  aubult  at  leaat  two  qnoE«a,  and  tba  auccaaatol  c 
ba  paid  dlracely  bj  th«  coapaoy. 

— I>r*iacT  vlll  provtda  as  tntaraat-tr««  1 


c  BODtha'  aalarT  repayable  over  two  yaat*'  Tha  aaployaa  aoat  aobMlt  at 
>o  quotaa,  and  the  auccaaaful  conttactot  will  ba  paid  dlraetlr  by  tte 


Literacy  tralnlna; 

la  lltaracy  tralnla 

to  road  aachanleal  drawla^a  before  they  UA  adTince  to  aklllad  Joba.  In  19S4, 

19  Utlcao  aaployaaa  were  taktoi  Uteracy  tTalolot  In  EosLUh.  harlas  altaa^ 

localTad  literacy  training  Id  their  oatlva  African  lantuafaa* 

Oparator  tralnlnai  Moat  black  hourly  workari  ata  eaployad  a*  aachlna  opaiatora 
or  aa  oparatoe/flctera,  a  aoMlrttaC  Bore  ikllled  poaltlon.  1«  of  Bld-1984,  lOS 
black  eaployaaa  had  racalved  oparator  training  at  Dtaaaer'a  ttalnlng  eantar,  and 
aany  had  bean  upgiadad  aa  a  ceault  to  operator/flttera. 

Artlaan  training!   Dreaeer  bae  five  blacka  and  five  wbltea  In  a  foraal  artltaa 
apprantlceihlp  progran.  The  apprentlcea  receive  their  thaoratlcal  tralnlnt  at 
Tarloua  local  training  centera  and  technical  collegaa   Practical  tralnlss  la 
provided  In-houae  in  the  coapany'a  training  center  and  on  tha  ahop  floor.  Aftac 
two-and-a-half  yeara  In  the  protran,  apprentlcea  Are  eligible  to  take  a  natloatl 
trade  teat  certifying  that  they  have  attaload  artlaan  atatna. 

Superviaory  training  l  In  February  19Mi  four  blacka — tha  dlapatch  and  racalTlsg 
•uparvlaori,  tha  Induatrlal  chanlat  and  tha  itoraa  chargahaad — attended  a  eonraa 
OB  Buparviaory  akllla>  Tha  eoapany  notaa  that  the  ehaalat  'la  not  a  iuparrlaer 
In  the  true  aenaa'  but  that  *ahe  now  haa  been  tranafarrad  to  tha  Induatrlal  ra- 
latlona  daparcnaat  wfaara  It  la  believed  that  tha  Intarperaonal  akllli  aeqoltad 
in  tha  couraa  will  ba  of  benefit.' 

n  of  Dreller'a  ahop  atewarda 
Barwleaaan'a  aaalatanta 


idbyGOl 


lOogle 


In  Ita  FabTuary  1981  raport  oa  DresMT'i  opcncloiu  in  South  Africa,  IRBC  ra- 
poEted  that,  aa  of  July  1980,  that*  aara  no  bUcki  in  any  aklllad,  vhlte  collar 
poaltlona,  and  no  black  eaployees  supervlicd  whltfi.  By  Bid-UBt,  thli  «««  A« 
longar  true.  The  Ugh»ac~level  black  cupla^cca  include  A  colored  eaployce  lAo 
la  tha  office  adnlaiattatOT  for  ■ialng  pcoducta,  an  Africaa  voua  trained  aa  an 
Induatrial  cbanlat  vtio  la  non  responalblc  for  ch«  coapany'*  black  cowaunlty  af- 
fair* ptograaa,  and  an  African  who  aupervlasa  the  coapany'a  coBputar  operationa 
and  baa  a  itaff  of  three — tocludlag  one  iriilte — repotting  to  his, 

Aamt  blue  collar  pasltlooa,  cbe  Ughaat  lavel  l^lacka  ata  eaployad  aa  artiaana 
and  skilled  opcratoia  in  the  aecoad  blgheat  hourly  grade.  Pair  blaeka  ata  •■- 
ployed  In  supervlaory  -poBitlona,  hatnvcE,   In  the  factory,  the  lowaaC  laval 
•uperviaory  poiitloo  la  that  of  tha  hourly  paid  chargehandi,  riio  typically  have 
had  prevloua  eip«rltnce  and  tralnlag  a>  artlsana.  Tha  nait  IcTtl  of  auperrlaion 
ars  Che  for«B*a,  vho  are  aalarted.  At  breaaeri  all  of  tha  chargahanda  and  tha 
factory  toraaaa  ara  ofaltaa.   The  coapany  doea  eaploy  tvo  black  luperrlaora  in 
It*  «*r«houac(|  both  of  ahoa  arc  aalaciad. 

Draaaer'a  top  aanageBast  aay*  It  triaa  to  ancouraga  aanagata  to  rectult  and  da- 
Talop  blaeka  foe  akilled  and  hi|har-l*T*l  Joba.  "fhe   peraaooel  requlaltt-oa  toim 
waa  recently  revlaed  ao   that  sanagers  oust  Dov  acate  wheChet  ati  African,  colorad 
or  Aaian  haa  be«a  coaaiiiered  for  the  poalclon.  As  the  perionnel  vanager  told 
IKRC,  *Wl  are  trying  to  eatahllsh  the  idea  In   the  Dlnda  of  our  line  nanagera 
that  thla  ia  aoneChing  ve  are  trying  to  accoapllsh.'  Tha  coBpany  doaa  not  eat 
nmatieal  goala  for  recniitaent  or  advanceaaat  of  blaeka. 

Worker  Bepraaentacton 


Black  hourly  paid  enployeea  at  Dreaaer  are  tepreaented  by  the  Hetal  and  Allied 
Horkera  Union  (HAWn) ,  vhlch  ia  affillaced  with  tha  Fadetatlon  of  South  African 
Trade  Unions   Dresser  recognized  lUHU  In  1982.  after  black  vorkera  vent  on  ■ 
one-and-a-half  day  strike  to  ask  for  Uglier  mtaf  and  to  deBoaatrsca  aupport  for 
HAW   White  hourly  Horkera  are  Tepreaented  through  too  other  unlona— the  South 
Afttcan  Iron,  Steel  aad  Allied  Induatriea  Dnloo  and  the  South  African  Boiler- 
■akera'  Society — but,  unltke  HU)U,  tbay  do  not  have  plant-lsTel  Tecofnltlon 
agEeaaenta  with  Dreaaer. 

All  three  antoaa  ate  tepreaented  on  the  indnatrlal  council  for  the  aatal  Indus- 
trie*, to  vhlch  Lreaaer  beloaga,  nhete  they  Beet  vlth  aaployer  representatives 
to  nsgotlaCe  ainlnua  vasea  end  baalc  vorklog  conditions  for  the  setala  Induatry. 
In  addition,  MAWU  negotiates  directly  vlth  I>reBBer  Benagcaant  to  aeek  iBprove- 
■cnts  in  vages  and  Korking  conditions  beyond  those  aac  by  the  InduaCElal  Council. 

MAHU  Baabara  elect  10  ahop  atemrdi  to  repreaent  thaa  la  negotiations  olth  bao- 
atCBent  end  in  reaolvlng  irlevancea  through  the  forBAl  (rlerenee  procedura. 
Shop  atewards  are  Allowed  to  hold  ihop  stcifards  aeetlns*  and  to  reaolve  griev- 
ance* oa  company  tlBa.  In  addition,  tb«  company  told  lUC,  'certain  ahop  *t*w- 


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In  ■  Baattai  with  lUC  (at  vfalch  ■■ti«n««Bt  wu  not  pthmc),  HUn  ahop  •tmard* 
dlicuaaad  labor  rolatlmi  at  DrcaitT.  Tiitj  aald  that  top  lucaguaat  official* 
hava  ■■narallT  bean  fair  and  Tcapooalva  to  concarna  voiced,  bf  the  unloa.  Thaj 
••Id  that  ■augeacDt  haa  abon  a  wHllognaaa  to  coaproala*  In  vaga  iugotlaclont> 
In  addltlm,  tha;  DOtad  that  during  a  lacest  aeonoBlc  dovotuto,  BanagaBent  had 
accepted  the  union  a  propoaal  that  tha  work  nek  ba  tadocad  ftoa  43  to  iO  hour* 
to  prarut  40  workara  ftoa  balng  rattaoehad. 

Shop  atoaatda  drav  a  dlatlnctlon  batvaao  top  nanagaaant,  hovavar,  and  tha  «blt« 
forcnen  iifaa  are  the  fttat  Una  luparrlaora  for  black  workara.  In  tha  paat,  tha 
ahop  atewacda  aald  black  workara  have  aipailancad  Incldanta  of  racial  hoattUtr 
b;  iriilte  aupcrvlaora,  but  thay  aald  the  altuatlon  haa  baan  laprovlat  alnca  MUn 
waa  tecogniiad  by  th*  coapany. 

Shop  atemrd*  also  voiced  aoae  dlaaatt  a  faction  with  tlM  foiaal  grtevane*  ptoca- 
dure,  which  thay  argue  aovai  too  alcwly  caualnt  wotkata  to  drop  grlcvancea 
bafore  they  are  aatlafactorlly  resolved.  i»  a  raault,  tha  ahop  stevaTda  aald, 
they  often  prefer  to  Beet  IcforBally  with  nenaseaent  to  zeaolve  grlevancea.  In 
reaponae,  the  conpany  coiuented  in  a  letter  to  IRSC  'chla  procedure  wsa  freely 
negotiated  ta  part  of  the  recognition  agraeaent  vhlch  la  due  to  be  reaegotlatcd 
In  1985.  PreauBably  at  that  tlae  HAWU  will  Initiate  renegotiation  of  Chla  pro- 
cadura  If  workera  re pre a ante Uvea  conalder  It  appropriate.  In  the  aeantlaa 
manageaent  bellevea  that  de  facto  ptactlcca  are  aatlafactorlly  reaolvlng  poten- 
tial pEoblena — Oreaaer  doea  not  conaldar  t^od  labor  relation!  to  he  confined  to 
or  by  tha  lattac  of  wrtttan  asraaMaata." 

C.   KIBLIC  ACTAIXS  ACTIVITIES 

In  19B4,  Draaaar  conttlbutad  R37,aDD  to  projecta  outalde  tha  workplace  prIaacUy 
benefiting  blacka  particularly  In  the  flald  of  education.  Sona  of  tha  najox 
pcograsa  are  aa  follovat 

— Draaaar  conCElbutaa  16,000  a  year  to  St.  inthony'a,  an  adult  adac*tlon  ant 
training  center.  In  19W,  the  coapany  alao  eontttboted  KC,0O0  to  face  High 
School,  a  eoaaetctal  hl|h  achool  In  Sawato  aacabllahad  by  the  laetlcan  Che»b«r 


— In  addition,  the  conpany  taea  adopted  two  acboola  In  tha  nalgbborlng  Afri- 
can towoahlp  of  Katlehont.  Tha  coapany  contElbntae  R3,300  a  year  to  each  •cboeli 
In  1984,  the  funda  were  need  ptlBatUy  tot  putchaelnt  lab  aqnlpaant.  booka  tor 
tha  achool'a  UbtatlaB  and  typawrltata.  Draaaar  alao  had  the  aporta  ftalda  of 
both  achoola  (raded. 

— Dreaier  contrlbutea  U.,000  a  year  to  Che  Italvaralty  of  tha  Itaatam  Cape,  a 
onlveralty  for  colored  atudenta.  In  19B4,  the  coapany  waa  alao  pcovldlnt' aehal- 
arablpa  for  four  black  unlvaralty  atudenta.  all  of  wfaoa  are  either  foraar  m^ 
ployeea  or  dcpeodenta  of  eaployeea, 

—In  1984,  tha  coapany  coatrlbutad  Ke,000  to  tba  Urban  Fotmdatloa,  which 
•aaka  to  laprova  the  quality  of  life  for  urban  blacka,  and  U,000  to  varlooa 
health  and  dvtc  projecte.  Including  an  antl-huat*r  pro(raB. 


joogle 


D.   naC  AWiLTSIS 

DnaacE  baa  Bida  a  nuBb«T  of  cbangia  and  iMprovaaanta  in  lea  labor  practlcaa 
atnci  ISRC  Tlaltad  II:  In  1980,  in  iplta  of  EicaaalonaT;  condltlona  Chat  raqulnd 
Ita  vorlc  forca  to  contract  bf  aljuat  ZS  parcent  over  thla  period.   Tha  coapanj 
racogniaed  a  black  imion  In  1962  and  Inatitutad  an  a>pl07ea  houaing  aaalatance 
pTogtaa  Is  1984;  ovat  thla  parlod,  Chara  haa  alao  bean  advanceaenc  by  black  a*- 
pl07Cea  Into  akillad  whlta  collar  joba.   Id  Btd-1984,  tha  coBpanj  alao  itsDed 
tha  Sullivan  princlplaa,  and  It  will  ba  raquired  to  raport  for  tha  fliat  ttaa  on 
It*  laplaaantation  cf  tba  prloclplaa  for  the  yaai  endiot  Juna  30,  19S5> 

Draaiir  ainageaent  intirvlawad  b;  IRXC  appaarad  anthuaiaatic  about  iapleMnting 
the  Sullivan  principles  and  vara  already  patcidpating  in  algnatory  fotuaa,  luch 
aa  the  task  group  on  houaing.  to  obtain  Ideaa  for  poaaiblc  coBpany  prograaa. 
Draaaer  appcaia  already  to  have  set  aoac  of  tha  atandarda  aipectad  of  SulUvan 
algoatorlia  In  Ita  pay  pollclea  and  eaployce  benefit  pEOgraMa.   It  laga  bahtnd 
tha  average  signatory  la  contributing  to  public  affaire  prograaa  benefiting 
black*,  but  the  eoapany  la  planning  to  laprove  Ita  recoEd  In  thle  area  by  doub- 
ling Ita  public  affairs  budget  for  1985. 

In  thla  itnalyaia,  lUC  will  dlscuaa  the  follovlag  queatlons! 

a  Uhat  are  tha  atEangcba  and  veakneaaes  of  the  coapany's  enployacnt  prac- 
cicee  end  public  affaire  actlvitieaf  How  baa  the  coapany'a  pcEforaanca 
lapEoved  over  tl>af 

e  Mhet  la  the  outlook  foE  Deeaaer'a  peEformencef 

EMployent  PEaetlcea  end  Public  Affair*  Actlvltlea 

Weiieai  Dreaeer's  ■Inlaua  wage  aa  of  July  1984  waa  caletively  law,  piecing  the 
covsjiy  Id  the  botcoa  chlEd  of  the  U  co^iaolea  visited  by  Dtgc  la  1984.  (The 
other  three  coapenles  In  Che  bottoe  third  included  two  companies  thac  have  not 
aigned  the  Sullivan  princlplce  and  a  Sullivan  lignaCory  that  opcratea  ia  a  rural 
•ree.)  However,  the  coapeny'e  alnlBua  wage  eiceede  by  at  leesc  16. percent  Che 
aaoimt  needed  for  a  subsistence  standard  of  living  for  an  African  faaily  of  alx. 
Moreover,  Che  percentege  of  bleck  workers  earning  the  ainlaua  wage  or  within  10 
percent  ebove  it  declined  froa  25  perceoC  lo  1980  Co  3  percent  in  1984. 

The  coapeny  uaea  e  forsal  Job  claaslflcaClon  scheme  Co  halp  enaure  equal  pay  for 
equel  work,  end  InforaaClon  provided  by  the  coepany  on  average  pay,  by  race, 
within  each  of  Its  factory  and  white  collar  Job  gradea  appaara  to  conflra  that 
an  equal  pey  policy  haa  been  achieved.  In  four  of  Che  nine  white  coller  Job 
grades  that  arc  Integreted,  the  everage  pay  for  Afrtcana,  Aaiaoa  or  colored*  ta 
higher  Chan  Chat  for  whites.  Only  one  of  the  fectory  job  gradea  la  IncegEacedi 
howaver,  in  Chla  grade  the  average  pay  for  blacks  exceeded  that  for  whlCaa. 

The  coapany'a  caployee  benefit  progEaaa  are  coaperable  Co  or  beccer  then  thoae 
at  other  coapanles  visited  by  mxc.  Dreaaer'*  pcnilon  plan,  with  It*  10-yeer 
veatlng  period,  Is  stsodard  aKing  U.S.  coapanlca  operating  In  South  Africa. 


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Wltb  i«|ard  to  aadlcal  taanranea,  DraaMTi  LUm  atar  Khar  U.S.  eBmt*a±mm,   hu 
pi«vld«d  n  opttoa  to  Iti  African  aaployaa*  to  Join  a  lovar  coat,  Iftlcan-coly 
■adtcal  Isaoraaea  plan  that  haa  btnatlta  eoaparabla  to  th«  rafolar  compaay  plan. 
In  thlf  «ir,  Draaaar  twlpa  to  anauia  that  Urlcana,  «fao  sanaralljr  aabalt  fawar 
•ad  lovar  aedlcal  elalaa  than  oUtaa,  ara  not  lubaldlilng  ahlta  plan  Baabara, 
Daaplta  I>raaaar'B  afforti  to  atnietura  an  aqoltabia  aadlcal  Inauranca  arraaia- 
■■nt  for  black  aaplortaa,  ralatlvaly  f«v~l4  parcant — of  ttl  black  asplojaaa  had 
Jolnad  althar  plan.  Iht  low  black  participation  tat*  naj  Indlcata  that  Draaaar 
naada  to  take  Boro  affort  to  publldia  and  explain  tha  avallabUlC)'  and  banaflta 
of  It*  Mdlcal  Inaurance  plana.  lb*  coapanjr'a  racantlj  lauoebad  btnialng  aaala- 
tanea  profraa,  gaarad  ipaelflcally  to  black  eaplojaca,  la  goneroua  In  that  It 
ptovldea  houalns  loana  Intacaat-fc**  or  at  greatly  raduced  Interaat  ratsa,  an 
laportant  banaflc  at  a  tlae  afaen  aarkat  Intarcat  cataa  In  South  Africa  ar*  veil 
DT*r  10  percent.     , 

Training  and  advanc«aent!   Dieaaer  haa  a  range  of  foraal  training  prograHa  to 
•aable  black  eaploreea  to  advance  Into  higher  level  Jobs.  Tha  coapanjr  provide! 
literacy  training,  various  levels  of  operator  training,  and  apprenticeships  to 
ansbl*  blacka  to  aove  above  the  unskilled  Itvel  and  Into  aeal-sklUed  and 
skilled  Joba.  That  black  advanceacnt  baa  occurred  on  the  shop  floor  Is  Indi- 
cated by  th*  fact,  aentloned  earlier,  that  the  percentage  of  black  eaployees 
•amlng  laaa  than  10  percent  above  the  nlnlaua  wage  decreased  Bubstantlally  froa 
USO  to  1984.  Soae  black  advanceacnt  has  alao  occurred  within  lAlt*  collar 
Joba.   In  19S0,  Dreaser  had  no  blacka  Id  skilled,  white  collar  positions,  and 
there  were  no  black  caployee*  supervising  whites.  By  ■ld-1984,  in  contrast,  ths 
hl^ieat  level  black  eaployeea  Included  the  office  adalalstrator  for  awning  prod- 
ueca,  Che  director  of  the  coapany's  coaaunlty  affaire  prograa,  and  the  data  pro- 
ceaalng  aupervlsot,  who  had  a  white  eaployee  reporting  to  hla. 

Dresser's  aanageaent  Is  also  aeeklng  to  foster  afflraatlve  action  attitudes 
aaong  Ita  lAlt*  aansgere.   Tb*  coapany  recently  revised  Its  pcreonnel  requlal- 
tlon  fora  ao  chat  aanagera  must  now  a tats  whether  a  black  has  been  conatdered 
for  the  job  under  consideration. 

Worker  representation!  Based  on  Interviews  with  both  aanageaent  and  black  abop 
Btawsrda,  Dreaser  and  the  Hetal  and  Allied  Workere  Union  appear  to  have  devel- 
oped a  sound  working  relationship.  The  black  shop  stewards  credited  Dreasar 
aanageaent  for  consulting  the  union  before  naklng  decision*  each  aa  retrenching  . 
eaploycee  and  for  being  willing  to  coaproalse  in  order  to  reach  autually  aatla- 
factor?  agrceaenta.  The  recognition  of  the  union  alao  appears  to  have  enabled 
black  eaployees  to  obtain  Bore  reepectful  treataent  froa  their  inaedlata  whit* 

Public  gffalta  actlvltleai  Dreaser'a  contributions  Co  public  affairs  ptograaa 
benefiting  blacks  Is  the  one  area  where  the  coapany  clearly  laga  behind  that  of 
the  average  Sullivan  signatory.  In  1934,  the  average  Sullivan  algner  contrib- 
uted K20D  per  eaployee  (iriiitc  and  black}  to  project*  In  the  black  co^ainity} 
Draassr's  contributions  aaounted  to  only  US  par  eaployee.  (Although  a  prefer- 
able aeasure  for  coapsring  companlee'  public  affairs  activitiea  would  be  tha 
pcrcancage  of  profits  they  spend  on  auch  activities,  thla  figure  la  not  avail- 
able alnce  noat  coapanlea  do  not  dlacloa*  profit  figures.)  However,  the  coapany 
plana  to  expend  ita  1985  public  affairs  budget  to  at  laaat  double  the  19S4  lavol, 
Aicb  will  bring  It  Bore  In  line  with  other  algnatotiea. 


Dreaoer  -  13 


by  CoO' 


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Outloofc 


A  aaior  tactoi  affactl 

froa  a  protraetad  t 
cauaad  tha  •!■•  of 


:tlst  tha  coapanr'a  parfoTsanca  In  tha  naar  future  «111  ba 
h  African  ccoacay,  uhlch  itlll  ahmra  no  atgna  of  racovarlns 
rha  Taccaalan  haa  dapraaaad  Draaaar'a  aalea  and 
rce  to  decraaia  batmaa  19S0  ud  19S4.      At  tba 
■Ittfd  CO  lapLaaantlng  tha  SuUItu  principle*, 
and  hai  racantlf  aatabllahad  ■  houalns  ■■■latance  pTOgraa  for  Iti  aaploreea  and 
pladgad  to  double  tta  public  alfalra  budget.     Ctvaa  the  ttal&lng  pcogruu  al' 
rsadf  In  place,   black  adyancewnt  Into  billed  and  iihlte  collar  Jobs  la  llkaljt 
to  continue  aa  white  turnover  occur*;   aora  rapid  black  advaaceaent  vill  probably 
a  aconoBlc  recovery. 


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PROGRESS  IN  imiEHTING  THE  SULLIVMI  PllINCIPtES 

Dresser  Industries  Inc.  signed  the  Sullivan  Principles  in  Hay  1984,  but 
previously  hed  always  subscribed  to  the  alma  end  objectives  onbodied  in 
the    Principles.  Resolutions    or    the    Dresser    Board    of    Directors 

established  a  Code  of  Corporate  Conduct  echoing  both  the  letter  end 
spirit  of  the  Sullivan  Principles.  South  Africa  operating  management 
■as  diarged  with  invlernentation  of  this  Code.  The  I.R.R.C.  report  of 
April  198^  based  on  investigations  conducted  in  situ  et  Dresser  South 
Africa  In  July  1984,  only  two  months  after  Dresser  became  a  Sullivan 
signatory,  is  a  measure  of  the  sincerity  snd  success  with  which  the 
intecnsl  Code  had  been  followed. 

Since  signing  the  Principles,  Dresser  has  been  active  in  expanding  the 
scope  of  these  programmes  both  quantitatively  and  qualitatively.  Some 
of   the  more  aignificant   developments  have   been     - 


During  Fiscsl  19S5  total  contributions  to  educational  programmes  have 
increased  from  R30  ODD  in  Fiscal  1984  to  some  RIOQ  000  in  rises!  1985. 
This  involves  continued  but   increased   financial  support   to     - 

Katlehong  and  Alafang  High  Schools    for    blacks    (Adopt-s-School 
programmes) . 

racial    (moatly 

Pace  Technical  High  School,   Soweto   (five  burserles). 
University  bursaries  (five   black  employees'   children). 

Cape      ("open"      university      but      with 


predominantly  coloured  f 
Additional  programmes   in  19B5  are     - 

St.  Anthony's  teacher  upgrade  programme. 
St.  Anthony's  Winter  School. 

-  T.O.P. 
Urban 

-  READ. 

PROTEC  -  Supplementary  Technical  Education  for  Stda.  B  -  10. 

Continuing  Education  Prograrrme. 

In  addition  to  financial  support,  management  ccmnitment  is  also 
implicit  in  organisational  contributions,  particularly  to  the 
Continuing  Education  Programne.  Dresser  has  assumed  a  leadership  role 
in  launching  this  programme  In  the  Germiston  area  with  aevan 
participating  companies  consisting  of  U.S.  (both  signatory  and 
non-aignatory)      and      South      African      companies;  the     Chairman      and 

Organising  Secretary  are  Dresser  personnel  and  the  Company's  training 
facilities  ere  made  available.  Thia  programme  ia  officially  recognised 
with  attained  grades   recognised  by  the  Departnent  of  Education. 


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CatmiTY  AFFAIRS 


Urban  Foundation 

Institute  of  Race  Relations 

Legal  Aid  Clinic  (primary  sponsor  Gillete  5. A.  Limited) 

irily  sponsored  by  Ore 
ton  Corp.) 

.  Eastern  Cape  (provlaior 

Vulindlela  Creche 
Old  Folks  Home 
Lakeside  Primary  School 


Mobile  Clinic 

In  association  with  Cutler-Mammer,  a  local  aubaidiacy  of  Eaton 
Corporation,  we  have  now  jointly  sponsored  and  raised  the 
necessary  Finance  [F)64  OOG)  Trom  American  and  South  African 
local  companies  to  purchase  a  mobile  clinic  for  Katlehong, 
which  will  operate  from  the  Katlehong  Clinic  and  visit  the 
outlying  areas  of  Katlehong.  Our  white  industrial  nurse  will 
also  be  active  in  the  planning  and  co-ordination  of  the  mobile 
clinic  on  a  regular  (weekly)  bssia. 

Amahleke  High  School 

Dresser  arranged  and  sponsored  the  levelling  of  a  sportsfield 
at  the  Amahleke  High  School  in  the  Pirie  district  of  the 
Eastern  Cape,  one  of  the  villages  that  developed  as  a  result 
of  the  Rural  Development  programme  Instigated  by  Monsanto  at 
Bishu.  During  the  coming  year  the  company  plans  further 
assistance  to  the  school. 

Creches 

One  of  our  senior  rranagement,  together  with  other  Dresser 
employees  was  involved  In  repairs  to  the  roof,  geyser  and 
cookers  at   the  Vulindlela  creche  in  Katlehong. 

Following  the  needs  Identified  by  the  in-compeny  task  Forces, 
the  white  nurse  and  a  secretary  in  the  conpany  purchased 
blankets,  stoves,  heaters,  clothes,  toys  and  wool,  hed  Jerseys 
knitted  end  then  distributed  these  to  3  creches  situated  in 
Kstlehong,   Voeloorus,    Sowoto,    Tembiss   and  Eldorado  Park. 


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Old  Folks  Homes 

In  addition,  needs  were  identified .by  the  task  forces  relating 
to    the    aged*  Accordingly,     blankets,     stoves,     heaters    and 

toiletries  were  purchased  and  distributed  to  five  old  age 
homes  in  Katlehong,  Voaloorus,  Soweto,  Temblsa  and  Eldorado 
Park   (coloured.) 

St.  ftnthony's  Rest  Centre 

Our  industrial  nurse  spends  4i  hours  per  week  at  the  Rest  Care 
Centre  for  the  coloured  aged  at  St.  Anthony's,  Reiger  Park- 
The    company    has    also    made    available    goods    and    equipment     to 


Lakeside  Primary  School 

Grease r  provided  the  equipment  and  labour  to  grade  the 
aportsfields  at  Lakeside  Primary  School,  Reiger  Park.  During 
the  coming  year  the  company  will  provide  a  punfi  to  irrigate 
the  fields.  Our  Personnel  Officer  coaches  rugby  on  Saturday 
mornings  at   this  school. 

Other  Sport  end  flecreation 

One  of  our  senior  menagefnent  employees  regularly  takes  a  group 
of  6  to  7  black  children  tenpin  bowling  on  Saturday  mornings. 
As  a  result,  one  black  girl  from  his  group  was  selected  to 
represent  Transvaal,  gaining  provincial  honours  (let). 
Furthermore,  the  group  also  participated  in  the  Junior  Tenpin 
bowling  championships  held  in  June.  This  effort  has  achieved 
a  lot  to  further  mj It 1- racial  bowling.  The  company  sponsored 
the  championship. 

Another  of  our  employees  has  been  very  involved  with  marathon 
running  and  on  four  occasions  has  involved  3,  6,  9  and  12 
blacks      together     with     whites      in     marathons.  The     company 

provided   the  necessary  kits. 


BLACK  BUSINESS  OEVELOPHENT 


Ellen's  Clothing  Msnufacturersi 

Ellen's  Clothing  Manufacturers  is  a  small  concern  providing 
employment  opportunities  For  about  30  Coloured  women  In  Reiger 
Park,      a     Coloured     area     of     high     unemployment.  If     these 

employment  opportunities  were  not  available,  tha  famlliaa 
concerned  would  experience  significant   financial  hardshipa. 

Some  time  in  February  she  was  burgled  and  loat  all  har 
finished  stock,  putting  her  in  dire  financial  straits. 
Dresser  South  Africa,  in  conjunction  with  Citibank  "adopted" 
the  business,   end  provided  assistance   in   the   following  waya;- 


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In  the  early  stages.  Dresser's  Manager  or  Industrial 
Engineering  aasisted  with  a  personal  loan  of  R80Q,  when 
the  money  was  needed  urgently  during  one  of  tils  visits* 

I   local   bank,   with 


The  company's  ir 
in     the     layout 
accomfflodation. 

The  Oreaaer  Treasurer/Secretary  helped  prepare  a  budget, 
made  arrangements  with  creditors,  appointed  and  paid  for 
the  services  or  a   bookkeeper. 

The  Dresser  representatives  on  the  teak  Torces 
contacted  local  American  and  South  African  companies  and 
obtained  orders  for  overalls  and  unifonna.  Citibank 
have  also  assisted  In  stimulating  business  development. 

Various  visits  were  paid  to  the  company  by  management  and 
staff  assisting  in  various  ways.  As  a  result,  liquidation  was 
averted  and  the  company  is  well  on  the  wsy  to  recovery. 
On-going  assistance  will  be  provided  during  the  coining  year* 

Obed  Kabe 

As  a  result  of  Hork  orders  Trom  Dresser,  Obed  Ksba  has  set  up 
in  business  as  an  independent  painter  after  being  unemployed 
and  with  no  contracts* 


John  Habuso 

DTGsaer   1 

has  alai 

□   er 

1  gaged  : 

John  h 

labjso    as   an 

outs 

ide    c 

ontractor 

to    aervi 

ce    all 

iy's 

farkl 

ift    trucks. 

The 

contract 

fees     pai 

Ld     to 

by     Di 

:eaaer     gut 

iranteei 

i     pay 

ment 

for     his 

premises 

(which 

Or 

l.A.     . 

ged    thi 

rough 

the 

Katiehong 

Smsll     Bus 

As: 

lociatii 

jn). 

Witl 

asBie 

company. 

he  Is  1 

5Kpa 

nto  a 

epaira 

E   hoping   to   be 

a    Toy  01 

leslerst 

lip. 

As 

these    1 

HCtivi 

.ties 

develop. 

Sam  African  Construction 

Similarly,  Sam  African  Construction  has  been  doing  contract 
woik  for  the  conpsny  for  the  past  5  months.  Aa  a  result,  Ssm 
now  employes  3  people,  (all  of  whom  were  unemployed  before  the 
opportunity  was  offered  by  Dresser),    after  starting  out   on  his 


Affirmative  Purchasing  Programme 

R3aO  OOD  worth  of  goods  and  servlcea  has  been  purchased  to 
date  from  black  businesses  as  part  of  an  affirmative 
action  programme  introduced  in  1985. 


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HOUSING  ASSISTAHCE 


House  purchase 

Leasehold  purchase /ex tens ion 

Electrification 

Other  iaprovements 


The  company's  Personnel  Ofricer  negotiated  with  the  East 
Rand  Administration  Board  and  the  Urban  Taundation  to  make 
10  building  lots  in  Khumalo  Valley,  Katlehong,  available  for 
company  employees.  Loans  Tor  the  purchase  of  these  lots  and 
the  erection  of  homes  are  being  negotiated  by  the  company 
with  the  S.A.  Perm  Building  Society,  whereby  Dresser 
deposits  R31  000  as  collateral  for  the  granting  of  lOOX 
loans  up  to  an  amount  of  R131  000.  In  addition,  the  company 
arranged  for  a  subsidy  of  33,  JS  for  each  tiondholder, 
irrespective  of  level  of  income,  with  the  Government. 


■e  obtained  for  40  employees  in  a 
Katlehong,    Their  rent  of  R24  per 

aed  by  the  company  to  an  amount  of  RB 
per  person,  or  35, 3S.  Preference  is  being  given  to  those 
employees  who  are  studying,  in  that  instead  of  living  14  to 
a  room,  aa  was  the  case,  they  are  now  2,  3,  4  or  a  maximum 
of  8  to  a  room.  In  addition,  the  company  has  supplied  them 
with  desks,  chairs,  cupboards  end  mats.  The  hcatel  ia  next 
to  the  station  and  electricity,  ablution  facilities  and 
eating  facilities  are  vastly  improved. 


17  99-Vear  leases  have  been  obtained  for  black  eaiployees,  46 
black,  coloured  and  aaian  employees  own  their  own  honss,  40 
live  in  hostels  and  29  live  in  rented  acconinodation. 


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EM^OYfOT  PRACTICES 

The     affirmative      character 
reinforced.         In     the     last 
clericBl/eecretarial    hires    ir 
non-nhite;     all  positiona  wer 

Workforce  Data 

Number  of  employees: 


if  our  employment  code  haa  I 
ilx  montha,  of  a  total  of  9 
Madeville  Head  Office,  7  have  I 
provioualy  held  by  whites. 


Black 
White 
Coloured 


The    percentage    movement     in    the    work    force    haa    beer 
during  the  past  year,    in  spite  of  the  economic  downtui 


Blacks 

Col^ 

i   Aaian 

Whites 

Manual 

-  4,5S 

-  1,0S 

-  16,19)! 

Clerical/Managerial 

-  3, OS 

*14,9S 

-  «,7S 

TOTAL 

-  4, OS 

-  1,7S 

-  9,2a 

Total  S  of  workforce  in  1984  44,9  55,1 

Total  S  of  workforce  in  1985  46,9  53,1 

There  haa  thus  been  a  2S  moveinent  of  the  workforce  from  Nhitea  to 
Blacka,  Coioureds  and  Asians*  Also,  it  is  significant  that  there 
was  a  14, 9S  increase  in  Coloured  and  Aaian  clerical/managerial 
personnel. 

pyHWEE  PARTICIPATION 


Task  forces  conaiating  of  white,  black,  coloured  and  aaian 
employees  have  been  established  in  order  to  identify  actual  needs 
amongst  company  employees  in  the  fields  of  Education,  Kouaing, 
Health  Care  and  Community  Development.  These  task  forces  meet  at 
least  once  a  month,  end  have  already  identified  many  needs  xtiich 
have  been  dealt  with.  Such  task  forces  have  been  established  at 
Head  Office  and 


IMIHING  PROClWtgS 

The  programmes  described  in  the  I.R.R.C.   Report  i 


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SOUTH  AFRICA  INTERNATIONAI 

Vohune  15  October  1984  Numbera 

IMPRESSIONS  OF  SOUTHERN  AFRICA 

Suzanne  Garment 

L  ZIMBABWE  TAKES  FIRST  STEP  TOWARD  ONE-PARTY  STATE 
HARARE,  Zimbabwe  -  Here  in  the  capital  of  this  country,  once  white-ruled 
Rhodesia,  we  see  in  the  papers  that  the  US  has  entered  one  of  its  sptxadic  periods  of 
visible  interest  in  the  AJrican  continent  Assistant  Secretary  of  State  Chester 
Crocker  is  on  the  road  again  tiying  to  give  current  negotiations  on  the  future  of 
Namibia  another  shove  forwanl  Secretary  of  State  George  Shuhz  has  delivered  a 
major  pobcy  address  insisting  that  African  nations  are  taken  seriously  by  America. 
The  outgoing  US  ambassador  to  Zimbabwe  has  just  announced  an  increase  in  food 
aid. 

And  Zimbabwe's  prime  minister,  Robert  Mugabe,  is  publicly  beginning  to  take 
his  country  down  the  path  toward  a  one-party  state. 

Wicn  the  Mugabe  government  came  to  power  via  the  elections  of  1980, 
pessimists  worried  that  Mr  Mugabe,  known  as  more  politically  radical  than  rival 
gueriUa  leader  Joshua  Nkomo,  would  turn  the  country  into  a  left-totalitarian 
nightmare.  This  has  not  happened  In  Zimbabwe  -  home  to  the  unchangingly 
wondrous  Victoria  Falls  -  surface  appearances  arc  calm.  Within  Zimbabwean 
organisations,  blacks  and  whites  work  side  by  side  in  a  show  of  racial  reconciliation. 
Officials  of  the  big.  new  American  investor  in  Zimbabwe,  HJ  Heinz  Co,  tell  what  a 
lovely  and  non-confiscatory  host  the  government  has  been. 

The  speaker  of  the  Zimbabwean  assembly,  Didymus  Mutasa,  is  full  of  wit  and 
charm.  He  speaks  with  the  fireedom  of  a  man  who  has  been  the  prime  minister's 
comrade  since  the  old  days  in  the  bush.  "We  are  not  heavily  influenced  hy 
communism,"  he  says  to  settle  the  question.  "I  still  go  to  the  Anglican  church  every 
Sunday,  and  1  was  in  the  bush  for  five  years." 

Then  how  come  Zimbabwe  regularly  denounces  the  US  in  the  United  Nations? 
"Our  UN  representative  has  never  been  in  the  bush,"  says  Mr  Mutasa  scomfiilly. 
"He  has  never  held  a  rifle.  And  he's  the  oik  who's  a  communisL" 

What  about  the  habit  Mr  Mugabe's  political  rivals  have  recently  acquired  of 
ending  up  in  jail?  "No  one  has  harassed  Joshua  Nkomo  personally,"  the  speaker 
insists.  As  for  Abel  Muzorewa,  currently  in  detention:  "I  told  him  it  is  not  necessary 
to  say  bad  things  about  us  outside  the  country." 

Suunne  Ginnent,  issociile  cditra  of  7h  Wall  Smtl  Journal,  in  nticb  Ihoe  four  piece)  were  Gnl 
pubtiihed.  visiied  Soutli  A&ici  >s  ■  gueit  of  Ihc  South  AfricH  Foundalioa  from20  FdxiMiy  lo4  Match 
1984.  The  inkles  uv  rcprini«d  witti  perminioti  of  TV  ff all  Strm  Journal  ConFiigbt  19M  Dow 
Jonet  and  Company  Inooiporated.  All  ri|liu  reserved 


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48  SOUTH  AFRICA  INTERNATIONAL 

Finally,  what  about  the  munnurings  that  Mr  Mugabe  intends  to  make  the  countiy 
a  one-paity  state?  "We  tallc  about  this  because  the  people  say  we  should  have  unity. 
But  we'U  honour  our  present  constitutioa" 

"I  trust  Mugabe,"  says  a  white  liberal.  We  are  sitting  at  dusk,  drinks  in  hand,  on 
the  lawn  of  a  house  m  suburban  Harare  that  rents  for  S325  a  month,  complete  with 
swimming  pool,  tennis  court  and  grounds  of  great  beauty.  Substantia]  houses  come 
cheap  these  days  in  Zimbabwe,  because  so  many  of  their  white  owners  want  out 

The  next  afternoon  is  hot  and  the  com  is  dry  from  the  worst  drought  in  living 
memory  as  we  approach  the  village  hall.  Mr  Mugabe  is  holding  a  rally  for  his  party's 
youth  league  at  the  hall,  which  is  about  50  miles  from  the  capital.  The  three  in  our 
travelling  party  are  the  only  whites  to  be  seen  anywhere.  Hundreds  of  children  in 
their  school  uniforms  or  Sunday  best  line  the  road  to  welcome  the  prime  minister. 
He  strides  into  the  hall  flanked  by  self-important,  western-suited  young  advance 
metL  A  couple  of  thousand  youths  are  packed  inside,  waiting  for  him.  They  have 
been  warmed  up  by  a  party  functionary.  ("Long  live  Muganbo  Mug^)e!  Down  with 
Nkomd") 

Mr  Mugabe  speaks.  Zimbabwean  observers  often  accuse  him  of  being  too 
academic  in  his  style.  They  must  never  have  heard  him;  his  hands  move  with 
hypnotic  grace  as  he  speaks  in  Shona  to  his  party  people:  "When  the  sons  of 
Zimbabwe  took  up  arms,  you  fought  the  enemy,  you  lost  blood  and  lives.  Some  you 
had  to  leave  in  the  bush  and  mountains,  in  their  graves. 

"Now  pec^le  are  being  murdered  because  of  the  disskients.  So  from  DOW  on,  we'll 
all  work  for  the  one-party  state.  It  is  our  party  congress  in  August  that  will  arrange 
the  structure.  The  parliament  is  just  a  debating  society.  If  Nkomo  stands  up  there, 
we  will  push  him  in  his  fat  stomach." 

Later  on,  a  white  Zimbabwean  civil  servant  comments:  "The  one-party  state  is 
coming.  The  only  question  is  when."  A  businessman  singing  the  praises  of  the 
Zimbabwean  government  suddenly  stops  in  the  middle  of  his  phone  call  and  says: 
'Td  rather  not  talk  about  the  rest  of  this  on  the  telephone."  A  white  builder  in  a  bar 
says:  "I  stay  here  because  I  still  enjoy  it"  Pause.  "And  because  I  can't  get  my 
property  out  So  I  am  sort  of  stuck."  Says  a  white  student  on  the  plane  from 
Bulawayo  in  southern  Zimbabwe  to  Joharmesburg:  "fm  on  my  way  now  to  South 
Africa,"  Are  things  good  there?  "Better  than  here." 

The  edibu'of  one  of  Zimbabwe's  still  relatively  free  newspapers  explains  that  Mr 
Mugabe's  one-party  fervour  is  meant  only  to  stave  off  attacks  from  opponents  on  the 
prime  minister's  left  within  the  party.  Not  many  people  worry  actively  about  what 
may  happen  after  the  political  c^)position  gets  totally  shut  down.  More  are  worried 
abam  the  dvil  war  that  has  broken  out  between  Mr  Mugabe's  nuyority  and  Mr 
Nkomo's  minority  tnbe.  And  everyone  worries  about  the  drou^  that  may  soon 
begin  starving  Zimbabwe's  children 

This  is  a  tartd  with  a  reasonable  daim  to  being  the  most  beaudfril  on  earth.  It  is  a 
bitter  thing  to  have  to  bet  (» the  probability  that  the  curse  of  destructive  politics 
sooner  or  later  is  going  to  fall  on  the  rain-starved  country  along  with  the  curse  of 
drought 

24  Felwuary  1984 


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IMPRESSIONS  OF  SOUTHERN  AFRICA  49 

n.  SOUTH  AFRICA  IN  POUCY  FERMENT . . .  PERMANENTLY 
CAPE  TOWN,  Somh  Afnca  -  The  country  is  politically  abuzz,  but  you  wouldrft 
know  it  to  kx)k  at  this  city  at  the  end  (rf'tfae  world.  Cape  Town  exudes  sweetness.  It 
offers  dramatic  views  of  mountains  and  sea,  the  delights  of  the  outlying  wine 
countiy,  and  the  pleasure  of  an  1 8th-century  Cape  Dutch  architecture  both  wann 
and  dignified  On  Sunday  atenxxn  I  am  walking  through  the  city's  underground 
shopping  mall,  casing  the  j(»nt  for  a  Monday  morning  assault  on  its  ivory  bracelets. 
Two  Mack  security  guards  approach.  Hiey  don't  loc^  menacing,  just  cuiious, 

"Where  do  you  come  from?"  cxie  asks. 

"The  US,"  1  smile. 

"No,  no.  What  is  your  nationality?  Greet?" 

A  pretty  good  guess,  but  not  quite:  "My  father  was  Polish,  my  mother  was 
Russian." 

A  pause.  Then,  "They  ran  away?" 

"Yes.  Someone  was  chasing  them,  and  they  ran  away."  Wc  all  laugh. 

Those  blacksecurity  guards  have  nowhere  to  run,  least  of  all  to  the  starvingblack- 
ruled  states  on  South  Africa's  borders.  The  Afrikaners  who  govern  South  Africa  are 
equally  trapped  by  its  black  majority.  But  until  you  arrive  here  you  have  no  idea  how 
unceasingly  and  energetically  all  the  varicoloured  citizens  struggle  in  their  chains. 

This  week  a  government  committee  reconunended  revising  the  country's  Groiq> 
Areas  Act,  which  regulates  where  each  ethnic  group  can  woric  and  live.  Vigorous 
argument  promptly  ensued  as  to  whether  the  changes  constituted  Uber&lisatiim  or  a 
crackdown.  The  government  also  announced  that  henceforth  nonwhites  would  be 
allowed  to  set  up  shop  in  central-city  business  districts. 

Hubbub  followed  over  the  question  of  who,  if  anyone,  would  actually  be  ^ile  to 
take  advantage  of  the  new  opportunity.  More  important,  the  government  has  just 
proposed  a  new  national  constitution.  The  plan  would  give  a  pailiamentaiy 
chamber  to  the  coloured  -  those  South  Africans  of  mixed  blood -- and  a  chamber  to 
die  Indians.  In  a  hotly  contested  referendum,  the  white  voters  accepted  the  plan  by  a 
surprisingly  large  margirL  The  vote  was  hailed  as  a  sign  of  progress.  Elections  to  the 
new  chambers  are  scheduled  for  August,  and  the  current  white  parliamem  ixiw  sits 
in  Cape  Town  assldumisly  pursuing  what  the  speaker  calls  the  "fascinating"  task  of 
writing  the  implementiDg  rules. 

But  controversy  is  not  over  on  this  one  either.  In  a  decorous  government  (^cc 
complete  with  antimacassars  on  the  stuffed  chairs  and  real  lace  doilies  under  the  lea 
cups,  one  ofthe  plan' s  major  architects  -  the  picture  of  Afrikaner  [hoIh^-  defends  it 
l^  noting  the  care  with  which  it  was  drawn: 

"This  process  began  in  the  earty  1970s  with  a  govenmient  commission,  wbatit 
determined  that  it  was  time  to  arrive  at  a  political  dispensation  for  die  Indian  md 
coloured  populaticHis.  Thus  the  cabinet  appointed  a  c<Hnmittee,  which  in  1 977  give 
tbe  govemmoit  [vt^iosals  much  like  the  current  ones.  But  disagreements  mounted 
over  the  issue,  so  the  government  ^^inted  another  conunission. 

"Because  tbe  commission  could  iK>t  reach  agreement,  the  matter  then  went  toltae 
new  president's  council  ctf  multiracial  eiqxrts,  ^iriiich  arrived  at  tbe  priocifdextf  tUs 
new  arrangement" 


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50  SOUTH  AFRICA  INTERNATIONAL 

The  process  seems  in  the  telling  to  be  admirably  dehberate,  making  progress 
while  sternly  resisting  surrender  to  the  political  impulses  of  the  momenL  But 
something  is  missing:  The  Indians  and  coloureds  were  not  given  a  referendum  to 
ratify  this  "new  dispensati(»i,'' as  everyone  here  channingly  calls  it,  that  was  crafted 
for  them.  So  in  Cape  Town,  the  coloured  still  have  not  decided  whether  they  want  iiL 

Randall  van  den  Heever  is  a  teacher*  s  son,  principal  (^  a  coloured  high  school  in 
the  Cape  and  editor  (^  the  professional  journal  of  a  o^oured  teacheis'  unicui.  He 
gives  a  good,  brisk  tour  (tf  the  area's  black  and  coloured  sections,  from  meticulously 
planned  developments  to  Crossroads,  which  has  got  to  be  the  worid's  worst  slum. 
Mr  van  den  Heever's  father  is  going  to  stand  for  parliament  in  the  summer.  The 
younger  man  is  not  yet  sure  whether  be  will  participate  in  the  vote. 

"We  should  have  had  a  referendum,"  he  explains  calmly  in  his  Afrikaans- 
Bccented  English.  "Without  a  referendum  the  legitimacy  of  the  new  scheme  remains 
in  question.  Participation  in  the  elections  will  be  low.  N4any  of  the  best  people  will 
not  stand.  We  will  be  seen  as  abandoning  the  blacks.  The  government  will  find  it 
easier  to  co-opt  coloured  members  for  its  own  purposes.  I  don't  find  it  attractive  to 
reject  a  chance  at  progress.  But  Fm  not  yet  sure." 

Tbey  are  all  pulling  and  hauling  here,  wrestling  with  each  other  and  themselves. 
Just  about  everyone  you  can  buttonhole  agrees  that  snne  of  the  plans  the 
government  claims  to  have  for  the  ultimate  political  separation  of  the  races  are  awfbl 
and  that  some  irf  the  actual  improvements  of  the  past  decade  are  large.  The  situation 
is  agonising.  But  it  is  not  static:  It  is  churning.  To  say  that  it  gives  sufficient  cause  ftn* 
despair  is  so  palpably  false  as  to  be  immoral 

Back  home,  the  House  has  passed  a  measure  to  force  substantial  American 
disinvestment  in  South  Africa.  When  you  ask  about  it  here,  almost  all  black  and 
white  anti- apartheid  activists  loc^  at  you  like  you're  crazy.  They  cannot  imagine 
why  you  would  want  to  threaten  the  economic  growth  that  has  been  the  chief  engine 
of  racial  progress  and  of  the  current  South  African  political  ferment  It's  not  easy  to 
come  up  with  an  answer. 

2  March  1984 

DL  MOZAMBIQUE  AWAITS  SOUTH  AFRICA'S  RETtmN 
MAPUTO,  Mozambique  -  Up  until  last  week.  President  Santora  Machel  of  the 
impeccMy  Marxist  Pe<^e's  Republic  of  Mozambique  had  not  granted  an 
interview  to  a  western  reporter  since  October.  At  that  time  he  was  Rating  off  an 
armed  internal  resistance  backed  by  his  neighbour  South  Africa,  and  he  asked  the 
US  to  send  him  guns.  But  today  be  is  ebullient  over  the  securi^  pact  he  has  just 
negotiated  with  those  same  South  Africans.  President  Machel  appears  to  be  bright, 
charming,  even  humane  -  and  be  presides  over  this  capital  that  under  his  ruite  has 
turned  from  an  exotic  pleasure  spot  into  a  sQently  decaying  corpse. 

When  the  Portuguese  left  their  cokiny  of  Mozanit»que  in  1 975,  the  capital  was 
still  named  Lorenzo  Marques.  Droves  of  South  Africans  owned  second  homes 
nearby  (T  were  in  the  habit  (^ just  motoring  in  for  their  seaside  vacatifHis.  The  Soudi 
Africans  still  speak  nostalgically  (tf  the  chinoiserie  they  could  onix  buy  in  "LM," 
and  of  the  ci^s  huge  and  delicious  Mozamhican  prawns. 


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IMPRESSIONS  OF  SOUTHERN  AFRICA  51 

"Just  after  the  revtdution,"  says  our  charter  pQot  as  we  descend  past  the  city's 
huge  harbour  toward  the  aiiport,  "you  could  buy  most  everything  cheap  if  you  paid 
hard  currency.  Later  on,  there  was  nothiDg  left  to  buy.  Still  later,  wheneverl  flew  in  I 
would  fill  boxes  with  bread  and  apides  and  hand  them  out  at  the  terminal;  the  people 
had  so  litde." 

The  city  is  now  called  Maputo,  and  the  only  big  commercial  craft  in  sight  at  the 
airport  BS  we  land  are  a  plane  from  Aeioflot  and  one  from  Cubana.  Loc^dng  for  an 
entrance  to  the  terminal,  we  step  inside  and  find  ourselves  in  the  bar,  filled  with 
Africans  and  Irrdians  and  Cubans  and  East  Europeans  waiting  to  get  aboard.  They 
sit  in  the  steamy  heat  as  silent  and  anxious  as  though  they  were  caught  in  purgatory. 

The  tenninal  beyond  the  bar  is  dark  and  empty  except  for  a  few  loiterers  and  a 
couple  of  immigration  bureaucrats.  Glass  is  broken,  handsome  wood  railings  have 
been  knocked  apart,  the  floors  are  littered,  tiles  are  coming  unstuck  from  the  ceiling. 
A  pilot  approaches  us.  He  is  from  Aeroflot  and  speaks  good  English.  He  asks 
vrtiether  we  are  passengers  for  his  flight  We  say  no,  puzzled  He  explains  that 
because  the  aiiporf  s  signs  and  peiKirmel  are  gone,  his  human  cargo  often  gets  lost 
and  he  has  to  round  it  up  before  flight  time. 

We  say  he  must  be  eager  to  get  home.  Yes,  he  says:  "For  me  this  is  what  you 
might  call  a  forced  landing." 

An  airport  cleaning  lady,  bom  in  Cape  Town,  South  Africa,  also  speaks  English. 
Sbe  helps  us  look  for  the  man  who  is  meeting  us,  and  we  give  her  South  African 
money.  She  turns  the  coin  over  in  her  hand  several  times  and  says  thoughtfully  to 
herself,  "I  can  buy  a  ;Hece  of  bread  with  this,  at  the  hard  currency  store." 

Walking  around  Maputo  you  soon  realise  what  a  gift  a  piece  of  hard  currency 
really  is.  The  broad  boulevards  are  deserted  except  for  small  numbers  of  African 
men  and  womea  There  are  few  can,  so  you  miss  the  characteristic  motor  hum  of  the 
modem  dty.  The  buildings  are  still  large  and  fme,  but  the  many  stixes  in  them  are 
almost  empty  of  goods.  Here  and  there  a  line  stretches  in  front  of  one  or  another 
emporium.  This  means  that  the  store  has  actually  received  a  shipment  of  something 
to  sell,  and  word  has  got  around  The  lines  are  orderly  and  very  quiet 

At^ect  as  its  poverty  is,  Mozambique  is  not  the  poorest  country  in  Africa.  Its 
particular  ghastliness  comes  instead  from  the  gulf  between  what  H  was  once  and 
what  it  is  now.  The  chasm  is  apparent  even  in  one  of  Maputo's  few  remaining 
bastions  of  international-class  luxury,  the  famous  Polana  Hotel  It  is  a  grand 
structure  by  the  sea,  and  its  magnificent  swimming  pool  is  still  immaculately 
maintained  Inside,  though,  the  air  conditioning  will  not  worL  The  ctxridors  are 
unlit  and  the  carpets  mouldy  from  the  jungle  climate.  There  are  bare  overhead  tight 
bulbs  and  the  certainty  that  something  unfriendly  is  growing  in  the  bathroom.  The 
kitchen  still  aspires  to  quality  -  but  the  famous  prawns  are  no  longer  on  the  menu. 
Rumcur  has  it  that  Soviet  trawlers  make  ofT  with  most  of  them. 

But  at  least  one  place  in  the  city  is  still  well  tended  to  resist  the  tropical  heat  the 
president's  palace,  which  b  colonial  times  served  as  the  Portuguese  officers*  duh.  If 
you  have  come  to  visit  President  Macbel.  you  are  first  asked  to  wait  in  ■  riAer 
elegant  holding  roc»n,  part  of  maybe  the  only  building  in  the  country  where  dte  air 
conditicHung  actually  fimcticms.  This  fact  affects  you  approximately  as  if  you  had 


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52  SOUTH  AFRICA  INTERNATIONAL 

been  in  stdilaiy  confinement  and  looked  up  one  evening  to  find  your  cell  door  open 
and  your  best  fiiend  beckoning  you  outside  for  tea  and  a  chat  The  feeling  (^grateful 
pleasure  grows  as  you  finally  meet  the  president  himself 

He  is  small,  beaided,  good-looking,  dressed  in  the  regulaticHi  militaiy  fatigues.  He 
wanted  to  be  a  docbM*,  we  have  been  told,  until  he  learned  that  his  ctriour  would  stc^ 
hinx  He  is  well  briefed.  To  the  joumalisfs  husband,  who  worked  in  the  Nixon  and 
Focd  administrations,  he  says:  "You  served  under  President  Nixon;  that  must  have 
been  a  hard  tour  (tf  duty.  President  F(»d  must  have  been  easier.  And  serving  with 
Henry  Kissinger  must  have  been  hardest  of  all" 

He  has  answered  some  questions  in  writing  and  says  he  will  take  two  more  in 
person.  The  first  is  obvious:  Why  has  a  black  hard-line  Marxist  like  him  decided  to 
cmne  to  terms  with  South  Afiica?  "We  had  the  right  objective  and  subjective 
conditions,"  he  says.  "All  over  the  worid  people  want  peace,  prosperity,  progress. 
South  Africa  is  a  racist  country  with  f^witheid  But  they,  too,  want  peace.  They 
want  to  draw  the  benefits  trom  the  cnonnous  potential  that  exists  in  this  region. 

"The  worid  today  is  no  longer  divided  on  the  basis  of  ideology  or  reUgious  beliefs. 
Everyone  wants  peace,  and  particulariy  economic,  scientific  and  technical  co 
operati(»L  Everyone  wants  peace  because  everyone  wants  to  live  weL  And 
Mozambique's  particular  concern  is  that  our  natural  resources  be  turned  into 
wealth."  In  his  written  answers,  the  president  has  been  quite  explicit  about  the  vast 
economic  hole  Mozambique  finds  itself  in  today  and  about  the  need  for  South 
Africa  to  help  extricate  the  country.  His  explanation  echoes  the  analysis  that  one 
Mozambican  gave  us  in  a  casual  street  conver^tion:  "South  Africa  will  ^ve  us 
everything  we  need." 

Then  the  second  question  to  the  president:  Has  the  march  of  Marxism-Leninism 
throu^  Africa  finally  halted?  "It  can't  be  stopped,"  he  says,  "because  science 
doesn'tstopv  Itkeeps  developing,  unlike  theBible  orthe  Koran,  which  can'tproduce 
anyddng  new.  Marxist  materialism  simply  means  I  have  confidence  in  my  own 
strength,  in  my  own  abih^  to  transfocm  the  worid.  You  believe  in  the  priest  to  cure 
disease;  I  believe  in  the  doctor.  Some  say  the  drought  and  floods  in  Mozambique 
were  God's  will  I  say  no:  These  events  devastated  us  because  we  are  backward,  and 
don't  have  dams  to  control  the  river." 

That  doesn't  sound  so  different  torn  plain  old  American  pragmatism,  says  the 
intrepid  reporter.  "It  can  have  many  names,"  shrugs  the  president  You  should 
exi^ain  that  to  your  Soviet  comrades,  the  reporter  comments  rashly.  The  president 
lathis.  Naturally,  his  aides  laugh  too.  But  they  seem  to  mean  it  WcHd  has  it  that  the 
(qming  to  South  Africa  and  to  the  West  in  general  reflects  not  only  Mozambique's 
rotten  ecooomy  but  a  broader  disillusicximent  with  its  Soviet  allies.  Evidently  last 
year  fisr  the  fir^t  time,  the  annual  visit  of  the  Soviet  fiect  to  Maputo  was  not 
celebrated  with  general  festivities. 

The  interview  is  over,  everyone  gets  up  and  the  president  kisses  the  reporter 
waimily  on  both  cheeks.  "That,"  he  grins,  "is  Marxism."  At  tbe  airpon  we  find  a 
goveimnent  official  waiting  to  send  us  c^with  a  huge  pareel  of  the  famous  pravms. 

Here  is  Samcwa  Machel,  this  lively  soul  and  impressive  perfbmter,  who  foesides 
over  a  i^ace  diat  verges  on  being  a  sort  ofkingdom  of  death.  He  may  contend  that  his 


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IMPRESSIONS  OF  SOUTHERN  AFRICA  53 

Marxism  has  saHed  through  his  country's  economic  catastrc^he  and  the  approach 
to  Pretoria  with  its  supeistmctuFc  uodainaged  But  if  his  deal  with  the  South 
Africans  takes  root,  it  will  bring  a  big  change  in  the  way  we  must  judge  the  probable 
directicm  of  future  AAican  politics.  It  is  not  likely  that  the  president  is  tiuly  ignonut . 
of  how  large  his  move  has  been. 

9  March  1984 

IV.  BEYOhfD  RACIAL  POLITICS  IN  SOUTH  AFRICA 
JOHANNESBURG,  South  A&ica  -  The  West  today  thinks  of  South  Africa  as  a 
bastionof  right-wing  pcditicsbondered  by  the  Marxist  states  of  black  Africa.  This 
picture  is  not  quite  accurate.  As  Kari  Marx  peei^  inquiringly  at  the  African 
continent  from  whatever  distant  space  he  now  inhabits,  be  surely  recognises  some 
la^OT  aspects  of  South  African  pobtical  development  and  whole  paragraphs  of  the 
way  Soudi  Africans  of  both  left  and  right  have  come  to  talk  about  their  future. 

Here  is  one  scene  from  that  poUtical  development  My  travelling  companion  andl 
are  sitting  in  our  hotel  room  waiting  for  our  next  appointmenL  This  one  is  not  on  our 
formal  schedule.  The  day  before,  we  visited  with  a  rich  businessman  of  seemingly 
moderate  views.  Afterward,  he  phoned  to  say  he  knew  someone  we  must  see.  The 
meeting  must  be  confidential,  he  said,  because  this  person  was  banned  by  the 
government  and  the  contaa  might  be  illegal 

Our  visitor  appeals  punctually.  It  turns  out  that  he  has  been  active  in  ai^ 
government  politics  for  neariy  50  years.  He  knows  the  black  and  Indian  and 
coloured  protest  groups,  the  communists  and  churchmen,  violent  and  nonvicrfent 
strategies,  the  insides  of  courts  aiKl  prisons.  He  is  no  self-dramatising  Jacobo 
Timmennan;  in  his  precise  way  he  wants  to  explain  why  the  South  African  securi^ 
system  operates  as  it  does. 

When  acts  of  violent  subversion  began  in  the  eariy  1960s,  he  says,  the 
government  sought  to  isolate  suspected  subversives  frtxn  their  fellows  in  order  to 
break  down  the  efriciency  and  the  secrecy  of  their  underground  otganisadcxis.  The 
authorities  began  to  use  house  arrest  and  preventive  detention,  under  which 
suspects  in  security  cases  can  be  held  incommunicado  for  long  periods  of  time.  This 
practice  eliminated  visitors  who  might  raise  a  prisoner's  morale,  shut  out 
troublesome  defence  lan-yeis,  and  made  prisoners  more  vulnerable  to  solitary 
confinement  and  torture. 

The  technique  proved,  in  sum,  to  be  a  great  device  for  stimulating  conversadoo. 

We  know  that  the  man  sitting  in  front  (^  us  has  been  tortured,  confined,  harassed. 
Yet  now  be  is  sipping  his  Coke  and  telling  us  evenhandedly  tiow  since  1980  ttie 
government  has  been  letting  up  in  its  security  campaign.  In  fact  he  says  be  really 
wants  to  talk  about  sonething  more  fundamental  than  government  abuses.  "My 
friends,"  he  says,  "don' t  understand  why  Tve  refrised  to  panic,  revised  to  leave.  But 
there  is  a  huge  engine  ot  industrialisation  here  that  has  been  forcing  tvayoot 
together  suice  the  1930s.  It  is  going  to  make  the  next  pditical  steps  around  here 
peaceful  ones." 

The  wonls  are  staitlin&  ccxning  from  such  an  individual  But  we  have  beard 
similar  ones  before,  from  a  quite  different  but  equally  impressive  source.  Fiof 


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54  SOUTH  AFRICA  INTERNATIONAL 

Lawrence  Schlemmer  teaches  political  science  at  the  University  of  NataL  He  is  an 
Afiikaner  but  a  political  Hbeial.  He  is  also  a  &iend  and  political  associate  of  Gatsba 
Buthelezi,  chief  of  the  Zulu,  an  opponent  of  the  government  whom  those  on  the  left 
nevertheless  mistnist  as  being  too  willing  to  deal  with  the  authmities. 

The  main  problem  in  the  path  of  internal  peace,  the  professor  explains,  is  not 
"cheap  racism"  -  though  there  is  plenty  <^that  around.  A&ikaneis  also  bring  to  die 
table  their  "primordial"  perception  of  themselves  as  a  Volk,  a  people  united  by 
bonds  stronger  than  the  state.  As  an  Afrikaner, 'Td  be  prepared  to  have  one-man- 
one-vote,"  Prof  Schlemmer  explains,  "but  not  to  have  my  language  obliterated. 
That's  where  Td  say,  'Where's  my  gun.  Til  fighL'" 

The  Mack  protest  movement  in  South  Africa,  he  says,  has  always  fought  die 
simple  mdsm  The  movement  has  pursued  a  strategy  of  m(»^  suasion  and 
chastisement,  with  a  wing  breaking  off  now  and  then  to  threaten  violent  retribution 
against  the  sinners.  But  threats  have  not  worked'  No  one  now  thinks  revcdution 
imminent  And  Afrikaners  refuse  to  feel  guilty  about  their  nationalism. 

Therefore,  Judges  the  professcr,  the  proper  strategy  for  ncmwhites  is  to  buQd  new 
osanisatiais  -  like  unions  or  modernised  tribal  units  -  to  bargain  for  a  proper  share 
of  the  proceeds  of  economic'developmenL 

South  African  activists  of  widely  varying  views  share  this  analysis:  Old-s^le 
concepts  of  nationhood,  and  each  peo^de's  dd-style  attachment  to  its  land,  have 
divided  South  Africa.  By  contrast,  industrialisation  is  beginning  to  integrate  the 
country. 

We  talk  one  morning  with  Andries  Treumicht,  a  legislator  who  has  formed  a  new 
par^  to  the  right  of  the  ruling  Natiooaiists  because  he  thinks  the  current  prime 
minister  has  strayed  too  far  toward  a  modem,  European,  multi-ethnic  notion  otwiat 
a  state  should  be.  We  drink  ci^ee  after  lunch  with  the  Nationalist  govemmenf  s 
Minister  of  Co-cqieration  and  Development  Piet  Koomhirf.  He  insists  the 
government  must  settle  Africans  in  their  separate  homelands  and  locale  industry 
there.  Otherwise  South  Africa  will  suffer  the  usual  messy  industrial  mixing  among 
peopk&. 

Some  observers  toward  the  centre  of  the  spectrum  chafe  at  how  slowly  the 
Afrikaners  have  been  learning  an  industrial  culture.  "Afrikaners,"  says  an  editor  of 
a  large  Afrikaans  newspaper,  "are  only  now  ccMning  to  believe  S(xne«4i8t  in  free 
markets."  "  Economic  restrictiveness,"  says  a  prcminent  judge, "  is  still  an  important 
&ctor  in  the  persistence  irf  our  racial  troubles." 

But  most  feel  that  change  is  irrevoc^ly  under  way.  FS  Bartos,  chairman  oi  a 
Barlow-Rand  si^idiaiy  near  Jtdiannesbur^  tells  <tf  20  years  of  gradually 
successful  struggle  with  government  and  unions  to  <^n  up  more  educatioa  and  jobs 
to  Donvrtiites  -  not  fnxn  altruism,  but  because  modem  industrial  jntxIuctkHi  needs 
trained  workers. 

A  young  foundation  executive  puts  the  diesis  more  comprehensively:  South 
Africa  is  not  really  so  rich,  because  it  does  not  have  enough  labourers  in  the  modem 
sector  <^  die  economy.  The  country's  Afrikaner  rulers  might  have  tiderated  this 
under-peiformance  indefinitely,  but  the  riots  c^tbe  1970s  made  it  necessary  to 
provide  more  benefits  to  die  country's  poor  nonwhites.  The  Afrikaners  now  know 


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IMPRESSIONS  OF  SOUTHERN  AFRICA  55 

they  need  more  wealth.  But  for  this  they  need  more  sktUed  labour-  more  urban 
blades,  more  educated  blacks.  The  dynamic  is  inexorable. 

Even  a  left-liberal  professor  at  the  English- speaking  University  of  the  Wit- 
watersrand,  where  as  a  protest  they  do  not  (ly  the  South  African  flag,  says  he  sees 
the  large  forces  at  work.  He  wil]  not  say  he  is  hopeful  about  the  future,  "but  my 
expectations  are  somewhat  less  certain  than  they  were." 

Not  everyone  sees  the  good  outweighing  the  bad  in  this  South  African  future. 
The  securi^  poUtics  of  preventive  detention  will  doubtless  ctmtinue.  More 
fundamentally.  Archbishop  Denis  Hurley  of  Durban  foresees  a  dual  system  of  both 
land-based  and  industrial  pcditics:  "40%  of  the  blacks  will  be  in  the  cities;  the 
govemmeat  will  upgrade  them.  The  other  60%,  even  with  econcnnic  breaks  from  the 
government,  will  contiDue  to  eke  out  a  sad  existence  in  the  homelands." 

On  the  radical  left,  people  are  even  more  disapproving  of  the  new  development 
pditics.  These  activists  want  disinvestment  by  western  capital  in  South  Africa  and 
do  not  want  to  abandon  the  politics  of  protest  They  see  that  insofar  as  a  more 
moderate  poUtics  succeeds,  it  will  kill  the  chance  for  revolutionaiy  change  and 
destroy  the  opportunity  the  current  climate  presents  for  a  pohtical  life  of  satisfying 
moral  intensity.  Once  again,  the  far  le^  and  the  far  right  conspire  against  the  matter- 
of-factness  of  modem  political  life. 

The  hopeful  economic  determinism  you  hear  in  South  Africa  no  doubt  is  too 
pptimistic  a  view  of  the  country's  political  future.  But  it  makes  a  fascinating  country 
even  more  so.  The  most  closely  held  secret  about  the  country,  kept  from  us  by  those 
vibo  tell  us  it  is  immoral  to  visit  there,  is  that  the  place  is  vastly  attractive  in  the  literal 
sense  of  the  word.  South  Africa's  spectacular  natural  beauty,  its  riches,  the  poverty 
needing  ameUoration,  the  poLtical  and  moral  drama  -  all  these  beckon  the  outsider 
to  become,  you  should  pardon  die  expression,  constructively  engaged.  But,  perhaps 
even  more  important,  a  look  at  the  nation  makes  it  oven^elmingly  clear  that  no 
good  will  be  done  there  by  the  Wesf  s  withdrawal. 

5  April  1984 


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MANAGING  THE  SECURIXy  POWER  BASE 
IN  SOUTH  AFRICA 

James  M  Rohaty 

IN  THE  first  of  two  studies  on  South  Afiica's  "total  national  strategy"  my  purpose 
was  to  underscore  "the  international  thrusts"  of  an  altogether  unique  effort  to 
su[^>0Tt  national  policy  (Roberty  1984).  This  effort,  unique  in  its  axnprehensive- 
ness  and  rationaUty,  has  nuy'or  domestic  thnists  as  well  In  the  formuJalioa  of  a 
principal  architect  of  the  "total  national  strategy,"  the  undertaking  is  one  of 
managing  "South  A&ica's  four  power  bases  (the  political,  economic,  social/ 
psychological,  and  security  bases)  oo  an  integrated  whole"  (Malan  1980).  While 
General  Malan  and  others  have  sou^t  to  lay  stress  upon  the  integral  character  of 
the  overall  national  effort,  it  is  appropriate  for  purposes  of  analysis  to  focus,  in  turn, 
on  the  respective  elements  in  the  "total  national  strategy."  ia  this  paper  I  focus 
attention  on  the  management  of  the  "security"  power  base  -  to  the  exclusion  of 
oAers. 

The  present  task  is  more  challenging  than  the  first  inasmuch  as  there  is  no  sector 
of  the  government  of  South  Afiica  as  difficult  of  access  as  "the  nadonal  security 
mianagonent  system"  (NSMS).  It  is  not  difficult  to  discern  the  reasons  for  tbis 
situation.  Whether  one  sets  the  context  initially  with  the  Boer  Wars,  the 
est^lishment  of  the  Republic,  or  with  the  more  recent  "retreat  from  Luanda" 
(1976),  the  context  in  which  Picter  W  Botha  found  himself  upon  becoming  prime 
minister(  no  less  than  his  predecessors)  was  one  of  isoiaticm,  alienation,  and  peiiiaps 
some  degree  of  introveision.  These  contextu^  factors  have  weighed  heavily  in  the 
management  of  South  Afiica's  security  system.  With  the  additional  factor  of  having 
to  put  the  security  imperative  as  the  dominating  imperative  after  Luanda  Che  context 
was  one  that  produced  a  reluctance  to  discuss  security  matters  (security  managfr- 
ment  in  particular)  that  became  a  hallmark  of  the  eaily  years  of  the  PW  Botha 
regime. 

Today,  it  must  be  conceded,  the  architects  of  "total  national  strategy"  are  less 
reticent;  indeed,  they  are  in  some  instances  anxious  to  elaborate  on  their  strategy 
and  its  supporting  structures.  The  context  has  changed.  In  its  most  salient  respect 
this  change  can  be  put  quite  simply:  "the  total  onslaughts  (die  aanslag  teen  Suid- 
Afiika)  to  which  the  Bodia  govcnmient  felt  compelled  to  respond  in  an  equally  total 
fashion  is  no  longer  "  total"  -  and,  consequently,  there  is  today  little  reference  Id  it 
The  military  [diase  of  the  struggle,  primary  in  a  sequential  sense  only,  is  now  largely 
completed.  The  present  context  is  one  of  "transitioiiing"  to  political  (constitu- 
tional), econcmiic,  and  social/psychological  priorities.  In  this  context  it  is  possible, 
and  no  doubt  desirable,  to  be  mcxt  forthcoming  about  the  largely  successful  and 

Tbi*  uticte  U  drawn  from  •  coMna  study  dcoe  \rj  FnAuor  Roter^,  of  be  DepnlmeiU  of 
GoKnuneat  Mid  IntenutioiMl  Studia  at  tm  UDhrmity  of  South  Cuoliiu,  t>r  the  US  Navd  Wir 
CoUete.  The  view*,  opiniooa  lod  Godiiip  conUioed  in  it  an  tbOKof  dKiuttnr,  md  ilmukl  not  be 
ccomueduuofEcitlUSDqaitiDentof  Eteftmepnitioa,  policy  or  dcdikia. 


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MANAGING  THE  SECURITY  POWER  BASE  57 

largely  completed  military  dimensitHi  of  the  "total  national  strategy."  The 
contention  that  the  "new  openness"  where  secunty  matteis  are  coocemed  is  the 
result  of  growing  outside  pressures  cannot  be  whoUy  dismissed.  On  tbe  other  hand, 
if  one  thing  is  clear  about  the  modus  operandi  of  Botha  it  is  a  tight  c(»itrol  over  his 
agenda.  The  regime's  success  with  regard  to  the  management  of  the  security  power 
base  is  tbe  principal  explanation  for  its  current  willingness  to  discuss  some  of  the 
details  of  that  power  base. 

In  spite  of  continuing  constraints  it  is  possible  then  at  this  juncture  to  portray  in 
some  detail  both  the  structure  and  tbe  workings  erf' tbe  NSMS,  espcially  if  <»e  has 
had  tbe  opportunity  (as  I  have,  in  August  1979  and  August  1983)  to  interview  at 
lei^th  a  number  of  "the  principals"  both  in  the  formal  system  and  the  broader 
"defense  community"  of  the  Republic  Again,  contentions  that  this  system  is 
shrouded  in  secrecy  and  that  its  mysterious  burgeoning  has  come  to  light  only 
recently,  arxl  then  only  partially  and  inadvertently,  are  less  than  accurate.  What 
they  reveal,  inter  alia,  is  that  a  significant  corpus  of  publicly  available  documenta- 
tion has  not  been  widely  or  thoroughly  assessed.  At  the  same  time  it  is  fair  to  suggest 
that  the  marmer  in  which  the  system  "functions"  (as  opposed  to  the  basic 
architecture)  is  not  well  understood  outside  South  Africa-  or  for  that  matter,  inside 
South  Africa.  How  well  one  will  be  able  to  analyse  "the  politics  of  the  system"  will 
depeitd  on  how  far  the  "new  openness"  carries,  how  ready  a  relatively  limited 
number  of  government  ofRcials  are  to  take  up  such  questions  and,  not  least,  bow 
[xxifessionally  responsible  scholars  will  be  in  their  treatment  of  tbe  subject  There  is 
more  than  a  patina  of  reasonableness  to  the  criterion  govertunentofTidals  employ  in 
determining  with  whom  they  will  display  their  new  candour,  namely,  an  open- 
mindedness  on  the  part  of  investigators.  The  present  moment  is  an  intriguing  one: 
tbe  scholarly  community  and  the  press  have  never  been  more  attentive  to  the  South 
African  scen^  South  Africans  buoyed  by  political,  economic  and  social  progress  on 
the  domestic  fiont  and  military-diplomatic  successes  in  the  region  have  a  new 
willingness  to  teU  their  story.  It  remains  to  be  seen  how  much  will  be  made  of  this 
moment 

I  intend  to  focus  on  the  "keystone"  agency  in  the  national  security  management 
system  (NSMS),  the  State  Security  Council  (SSC)  -  and  its  supporting  elements. 
My  coiKem  here  is  with  "how  the  system  functions,"  and,  fijUowing  the  statutory 
mandate  to  the  SSC,  I  shall  assess  the  "  advisory  role"  of  members  ( in  particular  the 
so-called  "political  generals")  and  the  development  of  intelligence  by  the  principal 
agendes. 

PROVIDING  ADVICE 

The  national  security  management  system  (NSMS),  indeed  the  entire  govent- 
mental/constitutional  reform  package  recently  introduced  in  South  Afiica,  has  been 
the  object  of  some  highly  viuperative  commentary.  It  must  be  stressed  that  tbe 
workings  of  any  political/bureaucratic  process  will  be  best  understood  by  the  lon^ 
time  participant  in  that  process.  South  AMcan  government  officials,  for  under- 
standable reasons,  have  been  less  inclined  to  discuss  "how  the  system  fimctioat** 
than  how  Uie  stracture  has  evolved.  Tbere  is  relatively  little  infoimalion  available 
from  the  best  source^  this  makes  all  tbe  more  remarkable  a  spate  of  oootentioas 
about  the  system  that  in  many  instances  are  source-less. 


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58  SOUTH  AFRICA  INTERNATIONAL 

CiMisdtutiona]  refoim  measures  (especially  those  in  the  security  realm)  have  been 
labelled  "dangerous"  precisely  because  of  the  efliciencies  tfaey  introduce  into  the 
systein(Grundyl983,  111)!  Another  contention  is  that  their"ultiinate  purpose  is  to 
retain  and  sustain  white  power"  (CMeara  1984,  lOS).  Professor  O'Meara,  with 
undisguised  astcHiishment,  notes  that"the  President  will  have  autocratic  pov/erand 
will  be  able  to  declare  martial  law"  (p.lOS,  italics  mine).  Evidently,  this 
presidential  prerogative  is  noteworthy  outside  its  American  setting!  Simon  Jenkins 
(Political  Editor  of  The  Economist,  London)  sees  "a  stale  and  introverted 
oligarchy"  in  the  ascendancy  in  Pretoria  consisting  altogether  too  much  of  generals 
"pacing  linoleum  conidois."  He  grants  that  "the  generals  are  by  no  means  hawks," 
ratbertheyare"pragmatic,"  "realistic"  and,  tobc  sure,  "unsophisticated"  (Jenldns 
1983).  (Jenkins  can  be  immediately  rebutted  on  one  point  the  linoleum  was  being 
replaced  with  carpeting  as  I  moved  through  the  corridors  in  August  1983!)  Grundy 
contends  that  the  authorities  have  "co-opted  experts ...  eager  to  sell  their  services  to 
the  re^me"  ("specialists  in  control,  intimidation  and  violence"),  and  that  these 
"professionals"  now  detemiine  the  agenda  not  alone  in  defence,  but  "in  areas  only 
remotely  linked  to  security."  At  the  same  time  he  echoes  the  charge  of  Jenkins  that 
the  NSMSis"milita[ised,"  that  "the  military  stands  at  the  hub"  of  that  system  and, 
additionally,  that  the  "militarisation"  of  South  African  society  is  now  considerably 
advanced(pp.  1 1  If.).  Finally,  Grundy  likens  the  State  Security  Council(SSC)  to 
the  Politburo  of  the  Soviet  Union  (cf.  Sparks  1983).  This  amounts,  in  all,  to  three 
pejorative  and  wholly  inconsistent  allegations,  namely  that  the  system  is  dominated 
( I )  by  co-opted  experts,  (2)  by  the  military,  and  (3)  by  the  most  senior  political  leveC 

Mcffe  judicious  than  some  of  his  American  counteiparts,  and  most  assuredly  a 
closer  observer,  Professor  £>eonGeklenhuys(Chaiiman,  Department  ofPolittcai 
Science,  Rand  Afrikaans  Univereity,  Johaiuiesburg)  argues  that  the  SSC  isprimus 
inter  pares  among  these  agencies  constituting  the  NSMS.  Cleariy,  it  is  the  keystone 
agency,  but  when  he  underscores  iasprimus  inter  pares  argument  by  stating  that  the 
SSC  (and  other  Cabinet  Committees)  "are  empowered. . .  to  mi^e  decisions"  be 
overshoots  the  mark  (Geldenhuys  and  Kotze  1983,  39).  General  Andre  van 
Deventer,  Chief  of  the  Secretariat  and  Secretary  to  the  SSC,  re^xjnded  to  this 
specilic  contention  on  more  than  one  occasion  during  his  statement  to  the  press  in 
Pretoria  on2l  September  1983.  He  rciteratedthatthe  SSC  Statute  "provides  only 
for  an  advisory  function,"  but  did  grant  that  "with  the  passage  of  time  adaptations 
were  made  to  the  original  concept,  and  experience  has  helped  to  shape  the  system 
which  obtains  today."  However, "  it  has  always  been  the  duty  of  the  chairman  (the 
Prime  Minister)  to  take  all  recommendations  and  advice  erf'  the  Council  to  the 
Cabinet  fbr  further  action." 

At  issue  between  Professor  GeUenfauys  and  General  van  Deventer  is  something 
nure  than  a  semantic  problem.  Knowledgeable  observers  of  South  Africa's  NSMS 
are  in  general  agreement  that  the  SSC  (and  its  su[4x>rt  structure)  has  a  considerable 
participatory  role  in  the  fimmilation  of  both  pdicy  and  strategy  decisions.  Quite  a 
different  matter,  however,  is  the  question  "Who  decides?"  What  any  partidpaot  in 
are/  governmental  decision-malting  process  readily  apinedates  (this  mi^t  be 
expected  of  close  observers  as  well)  is  that  "tqiprovaT  is  the  decision^ddng  stejK 


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MANAGING  THE  SECURTTY  POWER  BASE  59 

moreover,  die  signiTicance  of  this  step  lies  in  the  fact  that  it  is  apolitical  step  -  not 
merely  die  final  bureaucratic  step.  Because  "approval"  (decision  taking)  is 
necessarily"political,"  participants  in  the  process  likewise  are  appreciative  of  the 
&ct  that  the  best  laid  plans  often  go  astray  ( indeed,  they  are  more  often  simply  laid 
aside)!  Nothing  belies  the  notion  that  decisions  are  made  hy penultimate  levels  of 
goveniment  moie  than'this  political  fact  It  is"the  management  style"  of  PW Botha 
to  provide  for  an  elaborate  (many  would  suggest  an  "unduly"  elaborate)  planning 
process  so  that  be,  not  subordinates,  can  take  decisions  confident  in  the  process  that 
has  ended  at  his  desk.  The  "political"  (and  constitutional)  dictate  under  which  Mr 
Botha  operates  is  that  the  Cabinet  that  he  chaiis  is  the  decision-taking  body  in  South 
Africa. 

There  is  no  basis  for  obscurantism,  let  alone  vituperation,  insofar  as  the  role  of  the 
generals  (the  "political  generals,"  if  one  wants)  is  concerned.  What  must  be  said 
about  them,  first  of  all,  is  that  they  are  relatively  few  in  number  and  all  quite  visible. 
As  of  this  writing  they  are:  Magnus  Malan  (Minister  of  Defence),  Constand  L 
Vitjoen  ( Commandant-General,  SADF),  Jan  Geldenhuys  ( Senior  Array  Command 
Officer),  Pietervander  Westhuizen  (Chief  of  Military  Intelligence),  Andre  J  van 
Deventer  (Secretary  to  the  SSC),  and  Pieter  J  Coetzee  (Commissioner,  South 
African  Police).  This  half-dozen  does  constitute  an  important "  influence  gnnip"  in 
the  NSMS  but  the  role  of  these  men  -  the  nature  of  their  influence-  does  not  appear 
to  be  well  understood.  One  of  their  mmiber  recently  discussed  the  matter  with  me 
with  a  candour  that  many  of  us  associate  with  general  ofHcers.  There  was  no  attempt 
to  deny  the  ascendancy  of  the  six;  there  was  only  matter-of-fact  explanation.  (What 
follows  paraphrases  his  remaiks.)  This  is,  after  all,  a  new  situatioiL  There  is  one 
reason  for  it  we  have  a  new  PM  The  new  structure  of  things  has  been  established  to 
meet  his  requirements  (his  "management  style").  This,  incidentally,  is  one  more 
development  that  the  right  wing  does  not  like  about "  PW."  John  Vorster  did  not  like 
staSs  -  "  P  W  does.  Vorster  did  not  like  working  with  the  military  -  "  PW"  does. 
Yes,  Fm  on  all  sorts  of  committees,  delegations  and  the  like  because  that's  what 
"PW"  and  "Magnus"  want  The  notion  that  the  South  African  military  is  not 
subordinate  to  the  political  people  is  nonsense.  Before  we  were  rejected  by  them; 
today  we  are  co-opted  by  them!  Which  of  these  statuses  is  the  more  unc(xnf<xtable 
is  hard  to  say. 

Gerard  Chaliand  of  Le  Jlfo/ide  was  amoi%  die  first  of  foreign  observers  to  discern 
that  certain  geneisls  were  playing  an  "innovative  rdc"  in  South  African  politics 
with  the  advent  of  PW  Botha.  "This  role  b  itmovative,"  he  wrote,  "because  its 
vision  springs  from  a  global  analysis  and  not  purely  local  considerations"  (2,e 
■  M'on(&;  7  Novl979:7).Chaliai>dnotedtbatfirstamonglbese"politicar'(hi$tenn) 
generals  was  Magnus  MalaiL  However,  Malan  can  be  described  as  "political''  only 
in  the  sense  that  he  has  been  more  sensitive  than  most  of  his  bretivea  to  Ac 
transcendance  of  the  "politicar'  dimension  in  what  South  Africans  call  "revcdn- 
titmaiy  warfare."  He  has  sought  to  articulate  the  pheoomena  of  "revohitionaiy 
warfare"  and  to  define  within  that  multi-dimensional  realm  «"  creative  n^**  for  tbe 
army.  His  long-time  associate,  PW  Botha,  recognised  that  Malan  was  capaUe  at 
doing  this  more  eSectivdy  than  were  the  politica]  people.  It  is  Malan  w4io  more  flim 


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60  SOUTH  AFRICA  INTERNATIONAL 

anyone  else  has  defined  "the  total  onslaught^'  and  "the  total  response."  When  it 
came  to  playing  a  political  role  (a  lead  role  as  Minister  of  Defence)  in  the 
implementation  of  "the  total  national  strategy,"  Magnus  Malan  exhibited  all  of  the 
discomfiture  of  a  general  out  of  his  element  Close  friends  and  associates  convey  a 
consensus  view:  "Magnus"  is  not  right  for  the  rde  c^  Minister,  be  is  unhappy  - 
frustrated.  He  has  a  distressing  American  tendency  to  "overstafi;"  putting  burdens 
on  the  operators  now  far  removed  from  him. 

Viljoen  and  Geldenhuys  have  been  described  as  "the  right  men  in  the  ri^t  place 
at  the  right  time"  -  thus  their  influence.  Geldenhuys  while  Chief  of  Southwest 
Command  did  more  than  anyone  else  to  translate  the  new  strategic  thinking  into 
operational  doctrine.  Viljoen-  "our  soldier's  soldier"  -  made  sure  that  Geldenhuys 
received  the  logistical  and  training  support  without  which  "cross-border  opera- 
ticms"  would  have  been  nothing  more  than  a  concept  Enoimous  obstacles 
notwithstanding  ( SouA  Africa's "  security  power  base"  tends  to  be  overestimated), 
the  two  men  have  made  SADF  a  premier  counter-insurgency  force.  Reportedly, 
Vitjoen  today  would  lilce  nothing  more  than  to  return  to  his  farm-  his  key  assignment 
accomplished  The  influence  of  the  men  in  the  brown  uniforms  consists,  by  and 
large,  in  their  professional  proficiency  at  arms  and  rather  less  in  dieir  "ideas"  (the 
exception  being  Malan).  None  of  them  can  be  described  as  a"political  man"  in  the 
conventional  sense.  General  van  Deventer,  for  example,  is  the  classic  staff  officer 
whose  capacity  to  manage  a  process  (in  this  case  "the  national  strategic  planning 
IMDcess")  recommends  him  for  the  admittedly  critical  positions  of  Secretary  to  the 
SSC,  Chief  of  the  SSC  Secretariat,  and  Chairman  at  the  Work  Committee. 
Admittedly,  also,  he  will  influence  the  strategy  process,  more  by  virtue  of  strategic 
location  than  political  colouration  and  this  by  virtue  (^  the  choice  of  the  prime 
minister.  The  case  of  LTG  Pieter  van  der  Westhuizen  -  described  by  one  fully 
qualified  observer  as  "the  man  in  the  know"  -  will  be  taken  up  in  our  discussion  of 
ttw  intelligence  function;  for  a  summary  of  the  perspectives  and  concerns  of  General 
PJ  Coetzee,  Commissioner  of  the  SAP,  see  Coetzee  ( 1 983).  That  the  "advisory 
role"  of  the  SSC  is  hardly  the  preserve  of  the  military  can  be  demonstrated  by 
pointing  to  the  role  of  the  Minister  of  Foreign  Affairs  and  Information,  RF  "Pil^ 
Botha. 

A  casual  perusal  of  the  SSC  membership  will  show  that  the  Foreign  Muiister  is 
not  "the  only  representative  of  civilian  rule  (apart  &om  the  prime  minister)" 
(Jenkins,  p.20).  The  SSC  is,  in  fact,  dvilian-dominated  in  terms  of  membership  aixl, 
no  doubt,  will  become  increasingly  "civilian"  in  terms  of  agenda  as  the  transition 
firom  military  to  political-economic-social  phases  of  "the  struggle"  proceeds.  If 
diere  is  a  commanding  figure  in  the  SSC  today  ( 1 984)  -  apart  from  the  chairman, 
always  -  it  is  the  Foreign  Minister  with  the  Minister  for  Constitutional  Develop- 
ment and  the  Minister  for  Co-operation  and  Devek^roent  not  far  behind  The 
effectiveness  of  "Pil^'  Botha  within  the  PW  Botha  entourage  may  be  (Rie  (rf' South 
Africa's  best  keiA  state  secrets.  This  has  been  achieved  largely,  if  imwittin^. 
through  the  co-operation  (rf  the  press  and  other  observers  i»eoccui»ed  as  they  have 
been  with  the  military.  "Pik"  Botha's  task,  and  today  his  achievement,  has  been  the 
management  of  the  American  coDnectioa.  This  ccnmection,  always  tenuous  if  not 


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MANAGING  THE  SECURITY  POWER  BASE  61 

precarious  -  frequently  questioned  by  the  military  -  is  today  established  The 
engagement  of  the  United  Sutes  in  the  political-econoimc-soci^  issues  of  southern 
Africa  is  a  new  dimension  in  regional  affairs.  The  details  of  the  Nkomati  Accords 
make  clear  that  there  is  far  more  here  than  a  military  settlement  with  Mozambique- 
it  is  a  significant  "pohtical  opening"  to  the  frontline  states.' RF  Botha's  "African 
diplomacy"  has  brought  him  to  the  foreground  in  the  Cabinet  and  the  SSC.  While 
different  positions  are  struck  within  Qu  framewoiit  of  the  SSC  by  "representatives" 
of  various  groups,  the  underlying  rationale  of  what  is,  peiiiaps,  an  "unduly" 
elaborate  system,  namely  a  clear  policy  and  a  coherent  strategy,  has  bMn 
maintained  with  striking  consistency. 

DEVELOPING  INTELUGENCE 
General  Malan  emphasised  in  his  1 980  lecture  to  the  Institute  for  Strategic  Studies 
that  the  fiist  step  in  establishing  a"national  strategic  planning  process"  was  to  put  in 
place  "  intelligence  machinery"  that  could  "identify  and  define  the  different  facets  of 
the  total  offensive  waged  against  the  RSA."  The  "intelligence  machinery"  in  place 
throughout  the  1970s  would  not  suffice,  however.  The  dominating  agency 
throughout  the  decade  was  the  Bureau  of  State  Security  (BOSS)  under  the 
dixninating  presence  of  General  Hendrik  van  den  Bergh.  BOSS  grew  out  of  the 
1970  Potgieter  Commission  inquiry  into  "certain  intelligence  aspects  of  state 
security"  and  went  into  effect  under  the  mandate  of  the  1972  SSC  Act  BOSS  was 
the  inteUigence  instrument  of  the  Prime  Minister  of  the  Republic,  BJ  Vorster,  "Lang 
Hendiik"  van  den  Bergh  was  his  intelligence  confidant  and  counselor.'  The 
relationship  between  the  two  men  was  essentially  political  in  character  and  would 
last  only  as  long  as  John  Vorster  was  prime  minister.  "Lang  Hendrik"  retired  to  hit 
farm  in  1978  with  the  accession  of  PW  Botha.  (However,  at  this  juncture  his  close 
associate  Mike  Geldenhuys  is  made  Conunissioner  of  SAP.)  Throughout  his  tenure 
Van  den  Ber^  was  absorbed  (with  some  basis)  with  the  threat  of  Soviet 
"penetration"  of  the  Republic.  But  his  most  important  role,  little  recognised  at  the 
time,  was  serving  as  envoy  of  John  Vorster  throi^bout  Africa  devek^xng 
"networks"  across  the  continent  that  directly  served  the  prime  minister.  That  Van 
den  Bergh  was  a  man  of  no  small  influence  was  clear  to  officials  in  the  government 
The  closeness  of  the  reladonship  between  the  chief  political  officer  and  the  chief 
intelligence  officer,  and  the  powerfiil  effect  of  that  relationship,  was  not  lost  on  tbe 
then  Minister  of  Defence,  PW  Botha. 

What  followed  upon  the  election  of  Mr  Botha  to  tbe  Office  of  Prime  Minister  in 
1978  (and  the  resignation  of  Van  den  Bergh)  has  been  described  to  roe  as"tbe  batde 
for  the  intelligence  teief"  The  rationalisation  of  the  inteUigence  structure,  uKerofiK 
was  a  struggle  to  gain  the  Van  den  Bergh  mantle.  For  his  own  part,  Botha  wished  to 
refurbish  the  image  of  BOSS,  breaking  the  mould  t^  a  personal  agency  at  tte 
disposal  of  the  fvime  minister.  At  the  same  time  be  was  cognizant  of  tbe  value  of 
having  a  spedai  relatiooship  with  "the  intelligence  people."  His  first  step  wis  to 
establish  a  new  division  d"  re^xnisitxlities.  Hie  National  Intelligence  Service 
(NIS),  which  quickly  evdved  out  of  a  shcvt-lived  Department  (rf'Natiooal  SecwitT 
(DONS),  is  not  a  success^  to  tt>e  Bureau  of  State  Security  (BOSS).  It  it  i  new 
intelligence  agency  with  a  somewhat  restricted  ciiarter.  Tbe  principal  n 


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62  SOUTH  AFRICA  INTERNATIONAL 

would  appear,  is  in  the  area  of  political/economic  (and  some  would  add 
"social/psychological")  intelligence  with  possibly  a  counterintelligence  role  short 
of  the  "handsKHi"  role  of  SAP. 

Since  1982  the  NIS  and  the  SSC  Secretariat  (SSCS)  have  been  "co-located." 
The  implications  of  this  development  are  not  all  clear.  Geldenhuys  and  Kotze 
(p.  40)  indicate  that  the  SSCS  now  "resorts"  under  the  NIS  for  administrative 
pwposes  (italics  mine);  however,  SSCS  staff  are  txA.  professionally  responsible 
(italics  mine)  to  the  Director,  NIS.  There  is  some  basis  for  thinking  that  the  NIS 
may  well  "resorf'  under  the  SSCS!  The  National  Intelligence  Interpretation 
Branch  (NUB)  is  part  of  the  SSCS  and  is  the  highest  body  for  the  collation  of 
intelligence.  One  can  reasonably  conclude  that  NIS  staffis  increasingly  gjven  over 
to  the  research,  analysis  and  estimate  fiuictions  of  the  NIIB.  Then  there  is  the  matter 
of  the  Director  of  NIS. 

Professor  Lukas  (Nils)  Barnard  is  a  "political  appointee"  of  the  prime  minister, 
drawn  from  the  University  of  the  Orange  Free  State,  Botha,  ctMifronted  withpolttical 
ex^encies  in  the  OPS,  not  to  mention  the  academic  community,  found  it  suitable  to 
appoint  an  academic  to  head  the  new  intelligence  agency  with  its  fairiy  well  defined 
Eimctions.  Barnard  makes  a  point  of  his  academic  credentials  ( including  Georgetown 
Universi^)  and  has  gathered  a  scnnewhat  academic-oriented  group  around  him.  A 
newcomer  to  "trade-craft,"  Baxnard  suggests  that  part  of  his  charge  is  to  give  further 
definitiCMi  to  the  NIS  and  its  missiixi.  He  is  especially  attuned  to  what  he  calls  "front 
organisatiaas"  and  their  activities  throughout  Africa-  to  the  non-militaiy  activities 
of  the  Soviet  Union  on  the  continent  He  is  sensitive  to  US  "pressure"  on  the  RSA, 
on  the  one  hand,  and  the  "isolationist  tendencies"  of  the  South  African  right,  on  tlie 
other.  He  does  not  appear  to  have  the  Van  den  Bergh  mantle. 

"The  essentials  have  been  turned  over  to  the  Department  of  Military  Intelligence 
(DMI)."  This  succinct  siunmary  of  Bottia's  intelligence  rationalisation  was  given  to 
me  by  one  close  South  African  observer.  The  circiunstances  of  DM!  indeed  differ 
from  Itiose  of  NIS.  It,  too,  is  a  component  of  the  South  African  intelligence 
community  and,  as  such,  an  agency  of  the  SSC.  There  any  similarity  with  NIS  ends, 
DMI  staff  is  not  merged  with  that  (^  the  SSCS;  it  remains  within  the  SADF  structure 
at  the  disposal  of  LTG  Pieter  van  der  Westhuizen,  the  principal  intelligence 
professional  in  South  Africa  today.  DMI  is  not  Just  the  J-3  organisation  of  SAD  P;  it 
is  not,  for  example,  the  counterpart  of  Defense  Intelligence  Agency  (DIA)  in  the 
United  States.  What  distinguishes  it  from  conventional  militaiy  intelligence 
agencies  is  that  it  has  "the  strategic  intelligence  fimction"  noimally  located  with 
"national  agencies"  such  as  Central  Intelligence  Agency  (CIA)  in  the  United 
States.  DMI,  not  NIS,  provides  "strategic  intelligence  input"  into  "the  nationai 
strategic  planning  process"  in  South  Africa.  According  to  Geldenhuys  and  Kotze 
"it  can  justifiably  be  asked  whether  these . . .  bodies  (DMI  and  NIS)  in  [wactice 
readily  convey  tlnir  sometimes  painfiilly  gathered  inframadon  to  the  SSCS" 
(p.  40).  Tliere  is  little  point  to  this  question  insofar  as  NIS  is  ctmcemed;  there  may 
be  some  point  where  DMI  is  coocemed.  The  fimdamental  question  that  is  posed,  of 
course,  is  whether  General  van  der  Westhuizen  "has  captured  the  intelligence 
bri^' and  has  his  own  channel  to  the  prime  minister  in  addition  to  lines  throuf^  the 


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MANAGING  ITIE  SECURITY  POWER  BASE  63 

"unduly"  el^x>rate  SSC  stnicture.  Tbe  answer  may  w«II  be  both  yes  and  na 

It  is  not  a  map  of  Africa  but  a  map  of  the  woild  that  takes  up  an  entire  wall  of  die 
ofBce  of  the  Chief,  Department  of  MQitary  Intelligence  (DMI).  A  confident,  fran^ 
engaging  soldier,  Pieter  van  der  Westhuizen's  horizons  -  intellectual  and  geo- 
pditical  -  are  far-ranging.  He  is  tbe  embodiment  of  "strategic  thinking"  that  marks 
tbe  Botha  regime  and  cleaily  relishes  having  tbe  "essentials"  (strategjt^nulitaiy 
intelligence)  in  his  jurisdiction.  But  unlike  Van  den  Bergh,  Van  der  Westhiiizen  is 
not  a  "political"  man;  he  is  in  every  respect  the  soldier.  His  "bosses"  are  Generals 
Viljoen  and  Malan;  there  is  tbe  Euggesti<Mi  that  where  "strategic  intelligence"  is 
concerned  fliere  is  an  open  line  to  "  Magnus,"  and  where  other  intelligence  matters 
are  concerned  to  Wjoea  Botha's  purpose  of  incorporating  the  "strategic  thinking" 
of  the  military  in  tbe  "national  strategic  Inarming  process"  has  been  accomplished 
through  maintaining  the  co-architect  of  "total  national  strategy"  in  flie  Minister  of 
Defence  portfolio  and  by  his  division  of  responsibilities  between  Nl  S  and  DMI.  The 
arrangement  is  satisfactory  to  tbe  latter  if  not  the  former.  From  the  soldier's 
perspective  tbe  controlling  point  is  that  this  is  what  the  PM  wants.  Access  to  the 
prime  minister  is  not  an  issue  for  DMI. 

General  van  der  Westhuizen  displays  the  "wider  Africa"  perspective  of  Smuts: 
the  role  of  "extenia]  powers,"  friendly  and  otherwise,  on  the  ctHitinent  is  tbe  fixal 
point  of  his  attentioiL  His  knowledge  of  African  militaries  and  African  political 
leaders(shadesofVandenBe[^)isimpressive.  He  travels  widely(not just throu^ 
Africa),  often  with  the  prime  minister,  knitting  together  political,  eccxiomic  and 
military  data  under  the  rubric  of  "strategic  intelligence."  Today,  be  emphasises  fte 
failures  of  the  Soviet  Union  in  Afiica,  the  transformation  of  the  "threat"  in  terms  of 
the  loommg  collapse  of  African  states,  and  tbe  necessity  of  a  stepped  up  American 
role  particularly  in  southern  Africa.  Shortly,  African  militaries  may  be  the  onky 
viable  institutions  on  the  continent  (except,  perhaps,  in  less  than  a  half  dcnen 
countries).  The  relationships  between  African  militaries  and"eittemal  powers'*  win 
be  a  cmcial  dimension  of  the  strategic  future.  Nigeria  looms  on  Van  der 
Westhuizen's  horizon  rather  differenfly  than  it  does  on  "Pik"  Botha's.  Very  much 
oa  tbe  mind  of  the  intelligence  chief,  as  well,  is  the  horizontal  axis  reaching  across 
the  Atiantic  to  the"ccHie  countries"  of  Latin  America  in  one  direction,  and  ttuxx^ 
the  "western  islands"  into  the  Indian  Ocean  m  the  other  directi<».  If  strategic 
common  ground  is  to  be  found  with  the  United  States- and  this  soldier  suggests  that 
he  values  this  more  highly  than  some  of  his  brethren  -  it  will  be  found  here.  The 
course  upon  which  he  wouki  put  South  Africa  is  "outward"  -  not  "inward." 

The  security  power  base  is  one  of  four  jnWais  underiying  South  Africa's  "total 
national  strategy."  The  management  of  that  power  base  is  the  focal  point  (^  this 
study.  But  South  Africa's  "total  natioiuil  strategy"  enteiprlse  is  not  a  process 
confined  within  formal  (governmental)  structures.  It  is  an  interactive  process  aloag 
frirmal  and  infoimal  axes  engaging  governmental  and  ncm-govemmental  sectors 
alike.  Insofar  as  tbe  security  power  base  is  concerned  (the  defence  sector),  its 
definition,  direction,  and  management  is  a  shared  imdertaldng  among  dwse  making 
up  die  South  African  "Defence  Ctmununity"  (see  Roheity  1 980). 


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64  SOUTH  AFRICA  INTERNATIONAL 

Needless  to  say,  government  agencies  other  than  those  already  mentioned  are 
important  "actors"  in  the  South  AMcan  defence  community,  e.g..  Armaments 
Corporation  of  South  Africa,  Ltd  (ARMSCOR),  Atomic  Energy  Corporation 
(AEC)  including  its  subordinate  agencies  (Uranium  EiuichriKnt  Corporation  and 
Nuclear  Development  Corporation),  South  African  Transport  Services  (SATS), 
and  the  Council  for  Scientific  and  Industrial  Research  (CSIR).  Outside  the  public 
sector  the  list  of  participants  in  the  defence  community  grows  steadily,  without 
detailing  this  list  two  broad  developments  need  to  be  underlined.  The  prime 
minister's  interactions  with  the  business  sector  (especially  the  uj^r  reaches  of  the 
corporate  structure)  are  extensive  and  are  designed  inter  alia  to  make  that  sector 
part  of  the  defence  COirununity.  Something  more  of  a  departure  from  the  practice  of 
his  predecessors  is  Botha's  enlistment  of  elements  of  the  academic  community  in 
government  Lacking  a  tradition  of  moving  in  and  out  of  government,  a  number  of 
South  African  scholars  are  today  making  signifrcant  contributions  to  the  "total 
national  strategy"  effort  (see  Roherty  1983). 

Tliere  are  mixed  views  within  both  government  and  the  business  sector 
concerning  the  contnbution  South  Africa's  "free  enterprise  system"  is  prepared(or 
able)  to  make  to  the  "total  national  strategy"  ofPW  Botha.  The  historic  fissure  that 
has  divided  "Brit"  and  "Boer"  runs  through  the  business  commimity.  There  are 
si^is  that  this  divide  is  narrowing  and  that  it  may  be  less  of  a  problem  today  than  the 
gap  between  prominent  corporate  leaders  (both  Brit  and  Boer)  at  the  lop  of  the 
business  structure  and  the  larger  middle  and  lower  ecbeloos  of  South  African 
businessmea  The  latter  are  notoriously  "all- business"  (apolitical),  or,  where 
political  colouration  surfaces,  inclined  to  the  far  right  There  is  marked  political 
sensitivity,  however,  on  the  part  of  the  major  corporate  leadership.  It  is  this  cadre  of 
men  that  is  crucial  to  the  prime  minister's  "total  national  strategy."  These  men  must 
not  only  provide  business  acumen  and  managerial  talent  if  Botha  is  to  be  successful, 
they  must,  in  a  word,  steer  the  business  community  in  accord  with  both  the  domestic 
and  international  thrusts  of  the  current  strategy. 

The  academic  community  in  South  Africa  is  not  large  in  number  by  western 
standards  but  it  does  exhibit  a  sensitiveness  if  not  polarisation  that  goes  well  beyond 
what  one  finds  in  the  West  generally.  Some  of  this  stems  from  the  fact  that 
increasing  numbers  of  South  African  academics,  at  first  more  among  the  physical 
and  engineering  sciences  and  more  recently  among  the  social  sciences  and 
professional  school  faculties,  have  developed  both  formal  and  informal  ties  with  the 
Botha  regime.  Today  one  can  point  to  a  signifrcant  body  of  scholars  in  South  Africa 
whose  major  concern  is  with  "strategy"  in  its  many  intellectual  and  practical 
dimensions.  They  do  not,  together,  constitute  a  single  schod;  not  all  of  them  have 
ties  (f<xmal  or  informal)  with  the  Botha  regime.  However,  it  is  poss9>le  to  identify 
the  outlines  of  a  "Contemporary  School"  of  strategic  analysis  in  South  Africa, 
prominent  exponents  (^  which  are  engaged  in  the  "total  national  strategy" 
enterprise  of  PW  Botha. 

A  study  in  depth  of  the  South  African  defence  community  would  show  an 
extensive  interactive  network  linking  government,  industry  and  the  academy.  The 
development,  explication,  and  implementation  of  Botha's  "total  national  strategy" 


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MANAGING  THE  SECURITY  POWER  BASE  63 

goes  well  beyond  its  ardiitects  and  the  fonnil  stnicture  that  has  the  State  Security 
CouiKil  ( SSC)  at  the  apex.  The  prime  minister's  success  to  date  is,  in  no  smafl  pait, 
due  to  the  fact  that  he  has  made  this  enterprise  a  Dati<xud  ooe. 


1.  TlitwBca 

r'lbnoidyal 
w  font  Tlma,  13  MBck  1984: 1).  Ai  Itt  u  July  19S3  Si 

2.  Amiii«  -outBikn'  Cud  Biilby  isrtiais  kww  Gcncnl  vn  dcs  Bsib  boc  tec  BMby  mS.  BMbf  DOtct  k 

[iMiiiililii  ii|iiifii  1 fil Ii  iin'iiii1iiil1inh'i"lii|Hj  riiiififliiiiiiriiii  iimj.flimii  ili  Iiipii.  tit  iiiiiiUlii 

only  otaener  of  flu  Soudi  Aincai  tecuriQF  (jiium  ■>  oil  in 

REFERENCES 

CiRl  Bntby.  1971  "Tliii  Ddi  qiy-calcher  dc 
PJCo««Bt.l9gJ-r 

t>n  CddBiibayt  Md  Hauic  Kotu.  1913.  "Aipecs  of  poUtnl  de 

3J-4i 

KenabWCniiMlT.  19B3. -S<MhA£ic*'i<k>BeUK>CnKiy''CiunRi»iBarr.  «1  110-14 
SiDwa  JcnUB.  1983.  "Dmrialiiiaiici  b  mutbcni  Afric«."  TV  ftonomin.  16-22  Jiilr  19-21 
MwM  A  de  M  Malm  1980.  "TlK  oBiliufIX  OD  Sculh  A&iCL- JUfrin  n  IiMtaae  l<v  Strntiic  StBfio,  l)^ 

Hy.SS^lOS-U 
n  iiiilytii."  la  PqtiMfpiilieyjfcniialiwf 
ei  M  Robcrty.  Ehnfaun,  CddIdu  Aodemic  Pmc  3-lf 
— .19E3.'BcyondLsiipopo>idZarabe&:  South  Afhca'i«ntctk:Iurizo«.'5«id4;HalMcra^^ 
— .  19M.  "TV  iDtenuiioulilnioof  South  Africi'i'toulnunwltmcty'."  Sady  (uteiaed  lo  die  C«Mn br 

Nival  Warfuc  Sudio.  NaviJ  War  Colkfe.  Ncwpoit  Ri.  Fehuwy 
ABbter  Spaila.  19E3.  "Soiidi  Aliica  nvc^  lcf>»aBity-milhaiy  rok."  yartjuwn  Pen,  2S  StfMMtur.  I. 


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THE  IhTOIAN  AND  COLOURED  ELECTIONS: 
CO-OPTATION  REJECTED? 

Anlhony  Lemon 

THE  FIRST  elecdcms  for  South  Africa's  new  tricameral  parliament  took  place  on 
22  Auguss  for  the  House  of  Representatives  (coloured)  and  28  August  for  the 
House  of  Delegates  (Indian).  Thelifeof  the  existing  House  of  Assembly  (white), 
elected  in  1981,  has  been  extended  to  eight  years  instead  of  five,  so  that  the  next 
General  Election  for  all  three  Houses  need  not  be  held  until  1989. 

The  Labour  Party  of  the  Rev  Allan  Hendricltse  won  an  overwhelming  majority  of 
76  of  the  80  elected  seats  in  the  House  of  Representatives.  The  Indian  elections, 
however,  produced  an  indecisive  result  with  the  National  People's  Party  of 
AmichandRajbansi  wiiming  1 8  seats  and  the  Solidarity  Party  c^Dr  JN  Reddy  1 7,  a 
situation  that  ted  to  much  negotiation  and  several  changes  of  alle^ance  as  each 
party  tried  to  construct  a  working  majority  (see  below).  These  results  were 
oveishadowed  by  low  percentage  polls  of  30%  of  registered  electors  for  coloureds 
and  20%  amongst  Vidians.  The  new  constitution  had  been  approved  by  a  66% 
majority  in  a  referendum  amongst  whites  in  November  1 983,  but  in  the  absence  of 
similar  referendums  amongst  Indians  and  coloureds  themselves,  the  elections 
ine^dtably  became  a  test  of  the  acceptability  of  the  new  dispensation,  or  at  least  the 
merits  of  participatioa  The  ensuing  debate  between  boycotter?  and  f)articipants 
tended  to  eclipse  all  other  campaign  issues. 

To  understand  the  nature  of  this  debate,  it  is  necessary  to  oi^ine  the  major 
provisions  of  the  new  constitution.  Two  aspects  of  the  electoral  machinery,  the 
delimitation  of  constituencies  and  the  registration  of  voters,  will  then  be  considered 
Attention  will  then  be  focussed  on  the  competing  political  parties  and  the 
composition  of  the  boycott  movement,  as  a  background  to  the  analysis  of  national 
and  re^onal  voting  patterns  that  follows.  Finally,  some  implications  of  the  election 
results  for  the  operation  of  the  tricameral  parliament  will  be  discussed 
PROVISIONS  OF  THE  NEW  CONSTITUTION 

According  to  the  Constitution  Act  No  1 10  of  1 983,  representation  in  the  three 
chambers  of  parliament  is  broadly  proportionate  to  existing  population  numbers 
(see  Table  1).  No  mention  is  made  of  an  adjustment  of  these  ratios  to  reflect 
differential  growth  rates,  which  would  be  to  the  disadvantage  of  the  almost  static 
white  population. 

Dr  Lemon  is  Fellow  oTMuuEeld  College  and  Lecturer  in  Geogrii^  at  the  Univenity  oTOxIoTd. 


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THE  INDIAN  AND  COLOURED  ELECTIONS:       85 

TABLE  I:  COMPOSITION  OF  THE  TRICAMERAL  PARUAMEKT 


Housed 

House  of 

House  of 

Assembly 

Deleg^ 

Directly  eleci«d 

166 

SO 

40 

Noniinaud  by  the  PresidenI 

4 

2 

2 

Elected  by  directly  elected  mcmbeni, 

S 

3 

3 

TOTAL 

ITS 

is 

4S 

A  similar 4: 2: 1  ratio  applies  to  the  electoral  college  that  elects  the  State  Presideot 
,  it  consists  of  SO  members  of  the  House  of  Assembly,  25  from  the  House  of 
Representatives,  and  13  from  the  House  of  Delegates.  In  each  case  these  members 
arc  designated  by  resolution,  which  effectively  means  that  all  will  be  members  of  the 
minority  party  in  the  House  concerned  The  majority  party  in  the  House  of 
Assembly  therefore  controls  the  election  of  the  President  and  PW  Botha,  the 
National  Party  candidate,  was  duly  elected  as  the  firet  executive  Sute  President  and 
installed  on  14  September  1984. 

The  constitution  makes  a  cracial  distinction  between  the  "own  affairs"  of  each 
population  group  and  "general  affairs."  The  former  include,  with  qualifications, 
social  welfare,  education,  ait,  culture,  recreation,  health,  housing,  community 
development,  local  government,  agriculture  and  water  affairs.  Each  House  will 
control  these  matters  for  its  own  people,  with  the  major  constraint  that  budgetary 
allocations  fall  outside  its  sphere  of  responsibility,  since  finance  is  classified  as  a 
"general  affair."  Questions  of  interpretation  over  what  constitutes  "own  affaiis" 
will  be  decided  by  the  State  President,  whose  decision  will  be  finaL 

There  will  be  a  Ministers'  Council  for  each  population  group  and  a  cabinet 
consisting  of  the  State  President  and  Ministers  appointed  by  him  to  administer 
departments  of  state,  or  otherwise  designated  by  hira  The  spirit  of  the  constitution 
arguably  demands  a  multiracial  cabinet  drawn  from  all  three  Houses,  but  no  quotas 
are  specified.  During  the  1 984  election  campaign  it  was  widely  assimied  in  the  press 
that  at  least  one  and  possibly  two  coloureds,  and  one  Indian,  would  be  a^^inted  in 
the  firet  instance  (see  below).  Execudve  authority  for  "own  affairs"  is  vested  in  tt»e 
State  President  acdng  on  the  advice  of  the  Ministers'  Council  in  question.  For 
"general  affaire,"  executive  authority  is  vested  in  the  State  President  acting  in 
consultation  with  the  cabinet 

The  constitution  also  provides  for  a  Presidents  Council  of  60  members.  The 
Houses  of  Assembly.  Representatives  and  Delegates  designate  20,  lO  and  5 
members  respectively.  The  State  President  nominates  the  remainder,  including  10 
persons  nominated  by  the  three  Houses  (6, 3  and  1  respectively)  who  are  supporten 
of  oi^sition  parties  in  each  House.  In  the  event  of  unresolved  disagreement 
between  the  Houses  over  a  bill  ctmceming  "general  affaiis,"  the  State  Preadent 
may  refer  the  bill  (or  different  versions  of  it  that  have  been  passed)  to  the  Prefldenfs 
Council  for  decision.  If  the  Presidents  Council  f^)[Ht)ves  such  a  bill,  it  will  be 
deemed  to  have  been  passed  by  parliament 


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86  SOUTH  AFRICA  INTERNATIONAL 

To  aid  the  three  Houses  in  reaching  consensus,  joint  standing  committees  will 
meet  to  discuss  "general  afTairs"  prior  to  the  second  reading  debates  in  the 
respective  Houses.  Joint  rules  and  orders  for  these  committees,  which  will  be  vital  to 
the  functioning  of  the  new  system,  are  not  laid  down  in  the  Constitution  Act,  but 
were  approved  by  the  white  parliament  in  the  final  hours  of  its  existence.  Opposition 
parties  in  each  House  may  be  represented  on  joint  standing  committees,  but  Rule  1 2 
states  that  resolutions  of  such  committees  must  enjoy  majority  suppwt  fh>m 
standing  committee  membersofthe  majority  party  in  each  House  (Cd^rrmes,  11 
Aug  1984). 

Joint  sittings  of  the  three  Houses  may  be  called  by  the  State  President,  but  no 
resolutions  may  be  passed  on  such  occasions,  which  are  likely  to  be  largely 
ceremonial  iit  character. 

The  Constitution  makes  provision  for  the  absence  of  members  of  a  given  House, 
or  failure  to  perform  the  functions  of  their  ofTice.  In  this  eventuality,  parliament 
would  simply  consist  of  the  remaining  House  or  Houses. 

IMPUCATIONS  OF  THE  CONSTlTimON 

Two  aspects  ofthe  new  constitution  are  perhaps  most  fundamental.  The  first  is  of 
course  the  exclusionofblacks,  who  constitute  73%  of  South  Afiica's  population. 
The  extension  of  votii^  and  other  rights  to  blacks  was  not  precluded  by  the  old 
constitution  per  ;«.  Second,  the  Population  Registration  Act,  which  is  the  basis  for 
group  differentiation  ( and  therefore  the  keystone  of  apartheid),  enjoys  constitutional 
entrenchment  for  the  first  time,  whilst  the  practicality  of  the  "own  affairs"  concept 
rests  on  the  Group  Areas  Act,  which  provides  for  residential  segregation.  In  these 
respects  the  constitution  has  been  attacked  as  a  major  reinforcement  of  apartheid, 
and  those  urging  a  boycott  ofthe  elections  were  at  pains  to  dismiss  the  view  that  it 
was  "a  step  forward." 

The  tricameral  arTangement  and  the  preclusion  of  voting  at  joint  sittings  are 
clearly  designed  to  prevent  a  liberally  inclined  white  minority,  such  as  the 
Progressive  Federal  Party,  combining  with  Indian  and  coloured  MPs  to  outvote  a 
National  Party  government  The  voting  conditions  to  be  applied  to  the  Joint 
Standing  Committees  will  have  the  same  effect  In  this  sense  the  constitution  is 
apparentiy  designed  to  avoid  consensus  of  a  kind  deemed  undesirable  by  its 
architects. 

Although  ostensibly  giving  equal  representation  to  individuals  of  the  three 
recognised  population  groups,  the  constiuition  is  so  structiu-ed  that  tbe  Stale 
President  will  inevitably  be  the  nominee  of  the  majority  party  in  tbe  House  of 
Assembly.  His  ability  to  decide  what  ccmstitute  "own"  and  "general"  affiiirs,  and 
which  measures  should  be  passed  to  the  Presidentfs  Council  in  the  event  of 
disagreement  between  the  Houses,  gives  the  President  a  degree  of  power  that  is 
inccHnpatible  with  a  truly  consociational  democratic  system  (on  the  theory  of 
consociational  democracy,  see  lijphart  1977;  on  the  South  African  background, 
see  Vosloo  1977).  In  eEfect  measures  ctmceming  "general  affairs"  could  become 
law  with  the  assent  crf'one  House,  the  President's  Council  and  the  President  himself 
thus  tbe  Houses  of  Representatives  and  Delegates  couU  be  overruled.  Padiament 
could  also  continue  to  <^rate  in  the  event  of  a  boycott  of  both  Aese  Houses.  The 


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THE  INDIAN  AND  COLOURED  ELECTIONS  87 

fiioctions  of  the  latter  do  include  a  substantial  measure  of  autonomy  over  "own 
affairs,"  but  within  critical  financial  constraints  and  a  framework  of  group 
differentiation  imposed  by  whites. 

Given  these  and  other  limitations,  those  campaigning  for  a  boycott  of  dw 
elections  argued  that  the  pjowera  granted  to  the  Indian  and  coloured  Houses  were 
worthless,  and  that  those  elected  to  the  tricameral  parliament  would  merely  became 
partners  in  the  enforcement  of  apartheid. 

THE  DELIMITATION  OF  CONSTITUENCIES 

The  distribution  patterns  of  coloured  and  Indian  population  are  quite  different 
from  those  of  whites,  and  this,  together  with  the  smaller  numbers  of  MPs  to  be 
elected,  necessitated  a  new  delimitabon  of  constituencies.  Tbe  Delimitatioa 
Commission  was  appointed  on  I  March  1984  and  its  report  was  published  direc 
months  later  (Covcmmew  Gazcae  vol  228  no  925  3  of  I  IJune  1 984: 1-220).  Two 
nuyor  sources  of  representational  inequality  are  apparent  one  deriving  from  the 
constitutional  provisions  relating  to  provincial  allocation  of  seats,  the  other  from  the 
inaccurate  population  register  on  which  the  Conunission  was  obliged  to  base  its 
delimitatioa 

The  Constitution  Act(sections  42  and  43)  embodies  a  fixed  i»ovincial  allocation 
of  directly  elected  members.  The  effect  of  this  is  to  give  considerably  greater  wei^ 
to  the  votes  of  coloured  and  Indian  minorities  living  outside  the  Cape  and  Natal 
respectively.  Thus  Cape  constituencies  for  the  House  of  Representatives  had,  in  the 
Commission's  reckoning,  a  provincial  quota  (average  electorate)  more  than  four 
times  as  large  as  that  cf  the  Orange  Free  State  seats.  Other  inequalities,  whilst 
smaller  than  this,  remained  substanliaL 

TABLE  2:  PROVINCL\L  QUOTAS 

House  Province  Voters       Coostitueacies        Quota 

House  of  Representitives               Cipe                              853  ITS  60  14219 

Nil£l                                43029  i  860S 

DPS                                 17364  5  3472 

Transvul                        107 153  10  10715 

House  oTDelegues                        Cipe                                 12311  3  4103 

Nalal                              261573  29  9019 

Transvaal                         56086  S  7010 

Source:  Govemmeni  Galeae  vol  22S  ao' 9253  d  \\  June  1984:5 

These  inequalities  repeat  patterns  established  earlier  in  the  allocation  of  seals  for 
the  Coloured  Representative  Council  (CRC)  and  South  AMcan  ItKlian  Coimcil 
(S  AIC).  ProviiK:ial  quotas  for  the  former  were  even  more  unbalanced  than  those  for 
the  House  of  Representatives  (C^>e  16  116,  Natal  5  858,  OFS  2  615,  Transvul 
6  705:  Argus  and  Cape  Times,  8  May  1969;  corresponding  figures  fijr  tbe  1979 
delimitation  of  Indian  constituences  for  the  SAIC  were  Natal  8  3S2,  Transvaal 
3  615,  Cape  2  1 76:  Government  Gazette  vd  1 69  no  6593  of  20  July  1979).  No 
justification  for  the  present  imbalance  is  offered  in  the  0»istitutic^  Act,  but  the 
motives  are  not  difficult  to  guess.  If  the  same  quotas  had  been  applied  tfaiDU^Kxit  the 
country,  vast  coostimencies  would  have  been  necessary  outside  the  Cqie 
(coloureds)  and  Natal  (Indians).  They  would  have  included  widely  separated  urban 


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88  SOUTH  AFRICA  INTERNATIONAL 

communities  as  well  as  scattered,  largely  colcxired,  nira]  pi^xilatirai,  and  it  would  be 
difficult  for  a  single  MP  to  represent  such  a  constituency  efTectivety.  Such  problems 
affect  any  delimitation  of  constituencies,  but  they  are  Inevitably  aggravated  when 
three  delimitations  are  required  for  a  population  living  in  the  same  geographical 
tenitmy. 

Political  considerations  may  also  have  contributed  to  the  provincial  allocation  of 
seats,  insofar  as  the  smaller  and  more  dispersed  pockets  of  Indians,  and  more 
especially  coloureds,  were  likely  on  past  perfonnance  to  {Mvve  more  subservient 
and  conservative  in  their  voting  behaviour.  This  will  be  further  discussed  in  relation 
to  ttK  election  results. 

The  population  register  on  trtiich  the  delimitation  was  based  was  deficient  in  two 
respects.  First,  it  greatly  underestimated  the  number  of  eligible  voters.  The 
Commission'sfigures(Table2)giveCotalsof  1  020721  eligible  coloured  voters  and 
329  920  Indians,  whereas  the  government's  own  estimates  of  eligible  voters 
towaids  the  end  of  the  registration  period,  only  six  months  later,  were  1  500  558 
coloureds  {Cape  Times,  2  Aug  1984)  and  5 19  471  Indians  (Oaify  News,  3  July 
1984).  UnofGcial  figures  calculated  by  Stellenbosch  University's  Unit  for  Futures 
Reseaich  suggest  an  even  higher  number  of  eligible  coloured  voters:  1  578  77 1  in 
June  1984  (Cape  Times,  2  Aug  1984). 

Such  underestimation  of  numbers  would  not  in  itself  affect  the  delimitation  had 
the  shortfall  been  evenly  spread,  but  this  was  far  from  the  case.  In  addition,  the 
Commission  notes  that 

At  its  public  sessions  it  was  repeatedly  brought  to  the  Commission's  attention 
that  the  population  register  did  not  reflect  the  true  sute  of  affairs  relating  to 
sparsiQ' or  density  of  pi^lation  inany  given  area;  from  areas  in  which  there  are, 
according  to  the  register,  reasonably  large  numbers  of  voters,  the  peculation  in 
question  has  in  many  cases  totally  or  largely  withdrawn;  in  other  cases  the 
opposite  has  taken  place  and  areas  in  which,  according  to  the  renter,  there  are 
no  or  only  small  numbers  of  persons  entitled  to  vote,  have  become  densely 
populated.  [Government  Gazette  vol  228  no  9253  of  1 1  June  1984:  6) 
Technically,  as  the  Commission  is  at  pains  to  point  out, "  this  state  of  affaiis  ...  is 
entirely  asctibable  to  failure  on  the  part  of  those  whose  names  aj^aron  the  register 
to  ^e  notice  of  their  change  of  address"  (ibid).  It  nonetheless  produced  some 
glaring  representatiCHial  inequalities.  In  Durban,  the  Indian  population  of  Chats- 
worth  is  known  to  be  declining,  as  many  people  leave  this  area  \o  settle  in  the  rapidly 
growing  new  residential  area  of  Phoraix,  The  result  is  that  the  Chatsworth  area, 
with  a  population  of  about  300  000,  of  whom  rather  more  than  half  are  pnabaWy 
eli^ble  to  vote,  is  divided  into  eight  constituencies,  whereas  Phoenix,  with  1 25  000 
people  and  an  estimated  60  000  eligible  voters,  is  a  single  constituency  (estimates 
by  Dixcni  Peiumal,  Electoral  Officer  for  Natal).  Likewise,  the  number  of  eligible 
voters  in  the  Cape  Peninsula  (506  442:  Ca;w  rimef,  24  Aug  1984,  based  on  the 
work  cX  E  Patel  of  the  Southern  AMcan  L^>our  and  Development  Research  Unit, 
Univ  of  Cape  Town)  was  more  than  double  the  number  on  which  the  delimitation 
was  based  (224431).  This  led  to  die  Peninsula  receiving  only  33%  of  the  Cape 
seats  BvailaUe,  whereas  it  had  38,3%  of  eligft>le  voters.  Given  Uw  unequal 


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THE  INDIAN  AND  COLOURED  ELECTIONS  89 

provincial  quotas  already  noted,  this  coloured  "heartland"  was  thus  doubly 
disadvantaged. 

THE  REGISTRATION  OF  VOTERS 

The  electiims  were  bedevilled  by  problems  of  re^stration  and  inaccurate  voters' 
lists.  For  coloureds,  the  cmly  lists  available  to  the  Delimitation  Conunission  were 
those  used  for  the  last  CRC  elections  in  1 975 ,  which  were  hopelessly  out  of  date.  Of 
the  907  106  coloureds  officially  registered  for  the  House  of  Representatives 
election,  only  26%  had  actually  registered  during  1 984  (Cope  Times,  2  Aug  1 984). 
Of  the  rest,  large  numbers  had  moved  to  a  different  area  or  died,  whilst  some  would 
undoubtedly  have  chosen  not  to  renter  anew  in  1984  had  the  votere'  rolls  been 
compiled  afresh.  Despite  this,  those  officially  re^stered  constituted  only  57,5%  of 
eligible  voteis  (figures  based  on  the  Stellenbosch  population  estimate).  Indians, 
perhaps  more  conscious  of  the  legal  requirement  to  register,  did  so  to  the  extent  of 
79,2%  of  those  eUgible.  The  number  of  registered  Indian  voters  increased  from 
299  898  on  30  April  1984  to  425  966  (Daily  News,  3  July  1984),  but  this  figure 
was  officially  revised  to  41 1  654  shortly  afterwands  owing  to  the  removal  of  at  least 
s<xne  duplicate  registrations  (Cape  Times,  13  July  1984). 

Numerous  complaints  about  the  inaccuracy  of  the  voters'  rolls  were  made  by 
both  candidates  and  boycotting  organisations,  particularly  in  relation  to  the  House 
of  Representatives  elections.  In  the  Eersterus  (Pretoria)  constituency  it  was 
reported  that  75%  of  the  names  on  the  roU  could  not  be  traced  (5ror,  9  Aug  1 984). 
In  the  Witwatererand  constituency  of  Reiger  Park,  the  United  Democratic  Front 
described  the  voters'  roll  as  "fake,"  claiming  duplicate  and  even  triplicate 
registrations  and  the  inclusion  of  peof^e  who  died  up  to  five  years  before;  the 
electoral  officer  for  the  constituency  admitted  that  the  roll  contained  many  errors 
(Cape  Herald,  1 8  Aug  1 984).  The  voters'  roll  for  Table  Mountain  constituency 
included  1  000  "ghost  voters"  from  District  Six  who  were  removed  more  than 
fifteen  years  previously  when  this  part  of  Cape  Town  was  zoned  for  white 
occupation  {Cape  Times,  11  Aug  1984).  An  Independent  candidate  for  Central 
Rand  likewise  said  that  500  voters  on  the  roll  had  moved  from  Pageview  when 
this  Indian  area  had  been  declared  white  {Star,  10  Aug  1984).  Candidates  for 
Duiban  Suburbs  and  Wentworth  claimed  to  have  found  600  names  of  people 
known  to  have  registered  missing  from  their  voters'  rolls  {Natal  Post,  1-S  Aug 
1 984).  The  Solidarity  candidate  for  the  House  of  Delegates  constituency  of  Stsnger 
made  a  similar  claim  in  respect  of  1 00  voter  registration  fonns  that  he  had  handed  in 
(ibid). 

The  leader  ofthe  (coloured)  People's  Congress  Party,  Peter  Marais,  called  on  the 
government  to  "scr^  the  elections"  until  an  accurate  votere'roU  for  the  House  (rf 
Representatives  could  be  provided  (Cape  Times,  8  Aug  1984).  The  United 
Democratic  Front  sought  legal  advice  on  chalienpng  the  Reiger  Park  voters'  roll, 
whilst  another  anti-election  organisatitMi,  Azapo  (the  Azanian  People's  Orgsni- 
sation),  threatened  to  folktw  suit  in  other  constituencies  (Cape  Herald,  18  Aug 
1984).  Such  challenges  were  nullified,  however,  by  the  Electoral  Amendment  Act 
of  March  1984,  in  terms  of  which  not  even  the  Supreme  Court  can  declare  voters* 
rolls  invalid. 


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90  SOUTH  AFRICA  INTERNATIONAL 

Siuprisingly,  it  appeara  that  until  the  end  of  May  the  government  did  little  to 
increase  voter  registration,  apparently  expecting  the  parties  to  do  this,  until  presstire 
from  the  latter  (and  from  Solidari^  in  particular  on  the  Indian  side)  encouraged  the 
government  to  make  use  of  the  media  to  encourage  registration.  Professor  Willem 
Kleynhans  described  the  voters'  rolls  as  "  a  political  crime,"  pointing  out  that  many 
candidates  received  the  roll  only  four  or  five  weeks  before  polling  day  and  most  had 
neither  fiinds  nor  machinery  to  trace  missing  voten  {Star,  9  Aug  1 984).  The  whole 
process  of  delimitation  and  registration  does  appear  to  have  been  unduly  rushed, 
aod  it  is  difficult  to  disagree  with  Kleynhans's  view  that  the  Delimitation 
Commission  should  have  been  allowed  to  sit  for  a  longer  period,  during  which  all  the 
voters'  rolls  could  have  been  updated  and  new  lists  could  have  been  made  available 
to  competing  parties  three  months  before  the  electioa 
THE  PARTICIPATING  PARTIES 

Of  the  nine  political  parties  that  contested  the  elections  (five  Indian  and  four 
coloured),  cmly  the  Labour  Party  (LP)  and  the  tiny  National  Federal  Party  (NFP- 
Indian)  had  fought  an  election  before.  The  National  People's  Party  (NPP)  had 
controlled  the  South  African  Indian  Council  since  the  tirst  elections  for  that  body  in 
1981,  but  the  party  itself  was  fanned  ^fter  the  election  by  Amichand  Rajbansi, 
chairman  of  the  previous  ( nominated)  Indian  Council,  who  drew  together  a  number 
of  Independents  and  two  members  of  the  NFP.  The  LP,  in  contrast,  had  won 
convincing  majorities  of  elected  seats  m  the  CRC  in  both  1969  and  1975,  and  had 
controlled  the  CRC  &om  1975  until  its  dissolution  in  April  1980.  The  pai^ 
therefore  included  a  number  of  veteran  politicians  including  its  leader,  Rev  Allan 
Hendrickse,  its  former  chairman  and  the  chairman  of  the  Association  of  Coloured 
Management  Committees,  David  Cuny,  and  the  Transvaal  leader,  Jac  Rabie.  In 
the  1984  campaign,  the  LP  posed  a  challenge  to  the  government  by  opening  its 
ranks  to  Indian  members,  contrary  to  the  Prc^bition  of  Political  Interference  Act, 
and  putting  up  candidates  in  several  Indian  seats  (officially  labelled  "Indepen- 
dents"), mainly  in  the  Transvaal  Altogether  206  candidates  contested  seats  in  the 
House  of  Representatives,  including  32  Independents.  The  167  candidates 
nominated  for  the  H<Hise  of  Delegates  included  76  Independents,  who  by  virtue  of 
their  number  became  a  potentially  significant  but  uncertain  element  in  the 
campaign. 

The  Labour  Party  contested  all  80  elected  seats  for  the  House  of  Representa- 
tives, and  was  unopposed  in  four  of  them.  Its  strength  lay  in  its  long  existence  and  its 
histoiy  as  an  intractable  opponent  of  apartheid.  It  had  forced  the  coUapse  of  the 
CRC  by  means  of  mass  resignation  in  February  1980,  and  its  refusal  to  co-operate 
in  a  prc^xjsed  ntxninaied  Coloured  Persons  Council  led  PW  Botha  to  abarxlon  this 
idea  later  the  same  year.  At  its  January  1983  congress  the  Labour  Party  decided 
dverwhelmin^y  to  participate  in  the  new  dispensation,  despite  being  urged  not  to  do 
so  by  Chief  Gatsha  Buthelezi,  chairman  of  the  South  African  Black  Alliance 
(SABA),  &om  which  the  party  was  suspended  and  subsequentiy  resigned.  The 
decision  to  participate  was  consistent  with  Allan  Hendrickse's  long-held  stance  of 
using  any  device  or  structure  created  by  the  government  to  dismantle  apartheid.  It 
was,  however,  strongly  opposed  by  the  Cape  Housing  Action  Committee, 


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THE  INDIAN  AND  COLOURED  ELECTIONS  91 

representing  22  dvic  a5sociatk)ris  in  the  western  Cape,  and  by  trade  unioos  wtio saw 
it  as  undermining  the  unity  built  up  between  workers  of  different  races  (Cooper 
1 984, 30-1 ).  A  nationwide  campaign  to  explain  the  decision  was  cut  short  in  April 
1 983  afier  strong  opposition  and  some  violence.  Allegations  that  the  LP  had  shed 
niuch  of  its  support,  especially  in  the  western  Cape,  were  given  some  substance  by 
the  extremely  low  polls  reconded  in  subsequent  management  committee  etections 
where  LP  members  stood  for  electioa 

Labour's  awareness  of  such  a  loss  of  support  may  well  have  influenced  its  critical 
decisicH)  not  to  demand  a  coloured  referendum  on  the  constitutioa  This,  and  the 
party's  initial  decision  to  participate,  were  crucial  to  the  launching  of  the  new 
dispensation;  without  the  paiticipatjon  of  the  LP,  it  is  difficult  to  see  how  the 
government  could  have  proceeded  with  any  credibility.  This  being  so,  the  pai^ 
could  arguably  have  demanded  concessions  as  a  condition  for  its  participatim,  but, 
with  the  exception  of  a  compromise  that  effectively  allowed  it  to  flout  die 
Prohibition  of  Political  Interference  Act,  it  failed  to  do  so,  at  least  in  public. 

I>e$pite  this  background,  the  party's  experience  enabled  it  to  Sght  much  the 
strongest  campaign  for  the  House  of  Representatives.  The  powerfiil  speakers 
available  to  the  LP  enabled  it  to  stage  major  public  rallies.  The  pditical  experience 
of  its  leaders  enabled  the  LP  to  devote  attention  to  matters  outside  the  ambit  of 
education  and  housing,  the  major  "own  affairs,"  which  were  the  main  concerns 
expressed  by  most  rank-and-file  candidates  in  all  parties,  coloured  and  Indian  alike. 
More  clearly  than  any  other  coloured  party.  Labour  stressed  its  intention  of  fighting 
for  i\ill  citizenship  rights  for  all  South  Africans.  Its  manifesto  demanded  the  freeing 
of  the  economy  from  legal  constraints  and  regulation,  and  the  repeal  of  all 
segregation  laws,  arguing  that  social  relationships  were  best  regulated  by  social 
convendons  and  individual  attitudes.  The  manifesto  attacked  the  new  constitution 
for  its  exclusion  of  blacks  and  entrenchment  of  ethnicity,  stressing  Labour's  demand 
for  and  belief  m  a  one- man- one- vote,  unitary  system,  although  the  unitary  aspect 
was  "negotiable."  The  LP's  participation  in  the  new  dispensation  was  conditional: 
Allan  Hendrickse  declared  that  he  would  give  the  new  c(»istitution  five  years  to 
produce  sufUcient  progress,  failing  which  his  party  would  withdraw. 

The  main  opposition  to  the  LP  came  from  the  People 's  Congress  Party  (PCP)  of 
Peter  Marais,  a  member  of  the  Prime  Minister's  Economic  Advisory  Council  The 
party  had  grown  out  of  the  Congress  of  the  People  formed  in  September  1980, 
which  became  a  political  party  m  1 981  and  was  renamed  thePCP  in  Janiuuy  1983, 
when  Marais  was  elected  Cape  leader.  InDecember  1983  hecalledf<:H'"aggre5sive 
participation"  in  the  constitution  in  OTder  to  improve  living  standards  in  the  coloured 
commtmity  (Star,  16  Nov  1983),  and  this  became  the  main  thnist  of  his  campaign 
message,  stressing  bread  and  butter  issues  and  seeking  to  imleash  the  fi:H^:es  al 
coloured  nationalism  He  reAised  to  be  part  of  any  movement  that  would  lead  to 
Africans  gaining  power,  and  attacked  the  United  DenKXratic  Front  as"the  biggest 
destroyer  of  coloured  youth.  They  lead  them  up  the  garden  path  and  show  than 
paradises  which  do  not  exist"  (fPHeraJil  20  Aug  1984).  Marais  addressed  85 
meetings  across  the  cotmtry  during  the  election  campaign  and  proved  to  have  a 
folksy  s^le  of  politicking  with  considerable  appeal,  but  his  party  bad  few  other 


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92  SOUTH  AFRICA  INTERNATIONAL 

prominent  or  experienced  figures,  and  limited  organisation.  Largely  a  Cape-based 
par^,  with  close  links  to  the  Criqua  people,  it  experienced  difficulty  in  finding 
suitaUe  candidates  in  many  areas,  especially  the  Orange  Free  State,  but  managed 
to  Held  59  candidates  overall. 

The  Freedom  Party  (FP)  had  grown  out  of  the  old  Federal  Party,  which  had 
appealed  to  more  conservative  voleis,  particularly  in  rural  areas,  in  the  1969  and 
1 975  CRC  electitms  (see  Wlusson  197 1, 48-9).  The  FP  was  led  by  Charles  Julies 
until  early  1984,  but  when  the  latter  was  ousted  by  Arthur  Booysen,  the  present 
leader,  he  broke  away  and  founded  the  Reformed  Freedom  Party  (RFP).  The  FP 
fought  all  ten  seats  in  the  Transvaal,  its  regional  base,  but  only  1 4  elsewhere;  these 
were  largely  the  more  niral  consdtuencies  and  included  only  two  in  the  Cape 
Peninsula.  The  RFP  fielded  only  1 1  candidates  ail  told,  and  probably  dashed  any 
chances  it  might  have  had  by  advocating  military  conscripdon  for  coloureds, 
something  to  which  the  LP  and  PCP  were  vehemently  opposed.  Both  the  FP  and 
RFP  were  weak  in  organisation  and  resources,  and  conducted  a  low-pn>GIe 
campaign. 

The  election  campaign  for  the  Hotise  of  Delegates  was  largely  a  battle  between 
the  National  People's  Party,  seasoned  by  its  control  of  the  Indian  Council,  and 
.  Solidarity,  led  by  Dr  JN  Reddy.  Despite  its  formation  only  a  few  months  before  the 
election.  Solidarity  was  able  to  contest  all  40  seats,  whilst  the  NPP  contested  38. 
The  Transvaal-based  Progressive  Independent  Party  (PIP)  contested  eight  seats, 
including  all  three  in  Lenasia  (Johannesburg),  the  National  Federal  Party  (NFP) 
three  and  the  Democratic  Party  two.  The  SAIC  became  an  elective  body  only  in 
1981,  thus  party  politics  are  relatively  unfamiliar  to  the  Indian  community.  This 
was  reflected  in  the  ease  with  which  candidates  defected  to  other  parties  after  the 
promise  of  a  seemingly  more  hopeful  seat  (a  phenomenon  by  no  means  absent, 
however,  amongst  coloureds).  Such  disafTections  might  be  seen  as  typical  of  a 
"village  politics"  mentality  pervasive  in  the  Indian  community,  or  they  could  be 
viewed  as  evidence  that  attractive  paiiiamentary  salaries  were  the  prime  motivation. 
The  large  number  of  Independent  candidates  could  be  interpreted  in  similar  terms. 
They  included  many  with  some  claim,  however  slight,  to  community  service  or 
group  leadership,  who  were  encouraged  to  try  their  luck  at  the  polls.  Some  stood  as 
Independents  after  failing  to  secure  ncnnination  for  a  registered  party.  A  number 
were  fomier  NPP  members  who  had  differed  with  Rajbansi,  usually  on  small  issues. 
Stiil  others  were  wholly  new  to  politics,  some  of  them  undoubtedly  attracted  by  the 
R43  000  annual  salary.  The  large  number  of  Independents  was  thought  likely  to 
boost  the  percentage  poll,  and  resulted  in  up  to  nine  candidates  standing  in  certain 
constituencies,  some  of  them  doing  litde  or  no  campaigning. 

The  National  People's  Party 's  longer  experience  was  a  double-edged  sword.  The 
SAIC  lacked  legitimacy  after  its  election  in  1 98 1  on  a  10,5%  poll,  which  included  a 
large  number  of  spoiled  papers.  The  NPP's  record  on  the  SAIC  was  far  more 
ambivalent  than  thatof  Labcnir  on  the  CRC,  and  with  the  delegaticai  to  the  SAIC  of 
powers  over  Indian  education  and  social  welfare  the  NPP  had  been  strongly 
criticised  for  its  handling  of  these  matters.  The  Teachers'  Association,  for  instance, 
had  rejected  any  collaboration  with  the  SAIC  on  the  pounds  that  it  was  a 


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THE  INDIAN  AND  COLOURED  ELECTIGNS  93 

govemment-contiolled  body  with  no  professional  skills  (Cooper  1984,  39). 
Rtybansi  was  personally  distrusted  by  many  for  his  handling  of  education  in 
particular.  His  stance,  and  that  of  the  SAIC,  on  the  need  for  an  Indian  referendum 
on  the  constitution  had  been  unclear  and  inccmsisteni;  later  R^ybansi  blamed 
Solidarity  for  having  "convinced  the  government  that  a  referendum  would  be  a 
waste  of  time  and  money"  (Star,  16  July  1984).  but  this  ignored  the  negotiating 
strength  of  the  NPP  ^d  the  SAIC  in  the  months  before  Solidarity  even  existed. 

Despite  these  shortctMnings,  the  NPP  entered  the  election  campaign  as  the 
established  Indian  party  with  superior  grass-roots  organisation,  and  soon 
demonstrated  the  effectiveness  of  its  special  vote  machinery.  (A  special  vote  may  be 
cast  in  advance  of  an  election  by  an  elector  who  through  illness,  old  age,  absence 
from  home  on  polling  day  or  other  genuine  cause  is  unable  to  reach  the  polling 
booth.)  It  fought  a  less  open  campaign  than  Solidarity,  holding  far  fewer  public 
meetings,  and  thus  tended  largely  to  escape  open  confrontation  with  boycott 
supporters. 

Personahties  were  more  important  than  parties  and  policies  in  the  Indian 
elections.  Both  the  NPP  and  Solidarity  produced  maiufestos  which,  given  the 
known  needs  of  the  Indian  community,  were  similar  in  their  material  aspirations.  In 
education,  the  NPP  stressed  equal,  compulsory  education  for  all  and  the 
elimination  of  separate  schools  and  universities,  whereas  Solidarity,  cleariy  with  the 
SAIC's  record  in  mind,  demanded  "  no  political  interference  m  the  administration  of 
professional  matters,  e.g.  education  and  social  welfare"  (Reddy  19S4).  The  NPP 
demanded  the  repeal  of  the  Group  Areas  Act,  although  in  a  speech  R^bansi 
referred  to  the  more  limited  aim  of  creating  "grey  areas"  open  U)  all  races  (Z?ai7)> 
News,  20  Aug  1 984).  Solidarity  ccMitented  itself  with  the  perhaps  more  attainable 
aim  of  more  land  and  houses  at  reasonable  prices.  The  NPP  mentioned  individual 
rights  to  the  protection  of  life,  liberty  and  property,  and  access  to  the  judiciary  in 
defence  of  these  rights,  as  well  as  freedom  of  the  media  and  freedom  of  expression. 
Solidarity's  manifesto  had  a  more  economic  emphasis,  reflecting  the  concerns  <£ 
Dr  JN  Reddy,  its  leader  (see  below),  and  advocated  the  encouragement  of 
economic  growth  through  foreign  investment  and  "the  removal  of  all  racial 
constraints  in  the  free  enterprise  system"  (Reddy  1984). 

On  one  crucial  point  the  approaches  of  the  two  parties  were  very  similar.  The 
NPP  demanded  "the  elimination  of  discrimination  and  the  sharing  of  power  by  all 
citizens,  but  with  safeguards  against  domination  and  oppression"  {Star,  24  Aug 
1 984),  whilst  Solidarity  advocated  "peaceful  change  towards  a  just  and  deniocratic 
society  with  safeguanls  for  minorities"  (Reddy  1984).  That  both  m^  Indian 
parties  should  mention  safeguanls  has  an  obvious  s^nificance,  coming  from  a  2,8% 
minority  group  in  the  population. 

For  a  party  so  recentiy  formed.  Solidarity's  sutus  as  a  serious  contender  in  the 
election  was  remari:able.  lu  strength  depended  upon  the  calibre  of  its  leadership  and 
of  many  of  its  candidates.  Unlike  the  NPP,  Solidarity  attracted  a  small  group  of flie 
Indian  intelligentsia,  n4iich  was  otherwise  more  associated  with  the  anti-«lectk>n 
Natal  Indian  Congress.  For  a  new  party.  Solidarity's  finances  were  also  less 
problematic  than  might  be  expected,  owing  to  the  affluence  <^  some  of  its 


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94  SOUTH  AFRICA  INTERNATIONAL 

supporters.  Its  organisation  was  efTective  in  Natal,  but  far  less  so  in  the  Transvaal, 
where  its  leadership  was  poor,  however,  the  NPP  was  weakly  established  there  as 
welL  Solidarity  also  had  problems  in  the  Cape,  with  only  a  handful  of  spare-time 
wodcers  and  widely  scattered  Indian  communities  in  three  large  constituencies.  In 
Natal,  the  party  was  helped  by  control  of  one  of  the  three  weekly  Indian 
aev/spapcTS,  The  Graphic,  byttschairman,  Pat  Poovalingam.  The  latterhad  gained 
credibility  as  a  leaderby  keeping  a  promise  to  resign  fixim  the  President's  Council  if 
blacks  were  not  included  on  it  within  a  year.  During  the  1984  election  campaign  he 
promised,  like  Allan  Hendrickse,  to  give  the  new  constitution  a  five- year  trial  (Daily 
News,  10  Aug  1984). 

Unfortunately,  Poovalbgam  was  considered  somewhat  aloof  and  remote  from 
the  people,  an  important  failing  given  the  personal  nature  of  Indian  politics.  This 
was  certainly  not  tme,  however,  of  Dr  JN  Reddy,  whose  stature  and  econtMnic 
abilities  were  admitted  to  the  author  even  by  his  opponents.  He  had  founded  the 
New  Republic  Bank  and  chaired  it  for  seven  years;  was  on  the  Natal  board  of  the 
Standard  Bank;  a  member  of  the  Prime  Minister's  Economic  Advisory  Council; 
and  a  director  of  many  companies.  He  relinquished  many  of  these  business  interests 
to  lead  Solidarity.  His  speeches  were  such  as  to  establish  him  as  a  potential  natiimal 
leader,  beyond  the  confines  of  "own  affairs."  Thus  he  outlined  plans  for  industrial 
di versification,  concentrating  on  export  industries  and  more  processing  of  South 
Africa's  raw  materials;  he  stressed  the  development  of  the  infomial  sector;  he 
emphasised  the  role  Indian  businessmen  could  play  in  the  Tugela  Basin;  and  he 
stressed  the  need  for  peaceful  change  and  economic  strength  in  South  Africa  in 
order  to  provide  the  employment  opportunities  needed  by  Indians,  coloureds  and 
blacks  (Graphic,  10  and  17  Aug  1984).  An  articulate  advocate  of  constructive 
participation  in  the  new  dispensation,  Reddy  was  urKloubtedly  an  indispensible 
asset  to  Solidarity. 

THE  BOYCOTT  CAMPAIGN 

The  boycott  movement  was  speartieaded  by  the  United  Democratic  Front 
(UDF),  a  nonracial  body  launched  in  July  1983  in  response  to  acallfromDr  Allan 
Boesak,  President  of  the  World  Alliance  of  Reformed  Churches,  when  addressing 
the  Transvaal  Anti-SAIC  Committee  {TASC)  six  months  earlier.  By  late  1 983  the 
UDF  had  some  100  afSliated  bodies,  most  of  them  in  coloured  areas,  but  it  grew 
dramatically  during  1984  and  claimed  600  affiliates  during  the  election  campaign. 
As  a  front  rather  than  a  formal  organisation,  it  does  not  make  policy  for  its  affiliates, 
which  take  up  UDF  campaigns  in  ways  suited  to  their  own  activities  and 
constituencies.  Aifiliates  that  played  a  leading  role  in  the  anti-election  campaign 
included  the  Natal  Indian  Congress  (NIC),  Transvaal  Indian  Congress  (TIC), 
Cape  Action  League  (CAL),  and  to  a  lesser  extent  the  United  Committee  of 
CoDCem,  based  In  Natal,  and  the  Johannesburg  E>emocratic  Action  Committee. 
The  NIC  had  been  effectively  silenced  by  a  spate  of  bannings  in  die  1970s,  but  was 
revived  from  1 978  onwards  and  was  active  in  the  school  boycotts  of  1 980  and  the 
anti-SAICelectioncampaigninl98].TheTIC  was  revived  at  the  January  1983 
meeting  of  the  TASC.  Both  the  NIC  and  TIC  share  the  same  principles  and  had 
been  federally  imited  in  the  South  African  Indian  Coi^ress,  butthis  body  has  not  yet 


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THE  INDIAN  AND  COLX>URED  ELECTIONS  95 

been  resucitated.  The  CAL,  which  played  a  crucial  role  in  the  Cape  Peninsula,  was 
originally  founded  to  oi^se  the  Orderly  Movement  and  Settlement  of  Black 
Persons  Bill,  but  was  renamed  in  August  1983. 

The  UDF  and  its  affiliates  organised  many  anti-election  rallies  during  the 
campaign,  most  of  them  far  better  attended  than  the  meetings  of  political  parties. 
The  major  events  included  a  Cape  Town  rally  in  early  August  attended  by  over 
4  000  people;  rallies  later  the  same  month  in  Cape  Town  and  Johannesburg  to 
celebrate  the  first  anniversary  of  the  UDF,  attended  by  over  6  000  and  3  000 
respectively;  the  NIC  90th  anniversary  celebrations  attended  by  8  000  people;  and 
a  Port  Elizabeth  rally  of  "several  thousand"  people  at  which  Allan  Boesak  said  he 
would  "pray  for  the  downfall  of  the  govenmient"  as  it  proceeded  to  implement  a 
constitution  that"undermined  the  essence  ofhuman  dignity"  (£i'Hera/ii  21  Aug 
1984).  Such  public  occasions  were  complemented  by  house-to-house  visiting, 
especially  in  Natal,  where  the  NIC  attempted  to  visit  every  Indian  home  to  tuge 
people  not  to  vote,  and  the  United  Committee  of  Concern  managed  to  visit  23  000 
coloured  homes  (Leader,  24  Aug  1984).  Whilst  rejecting  the  use  of  "boycott" 
candidates  who  would  refuse  to  take  up  their  seats,  the  NIC  did  employ  "counter 
candidates"  to  spearhead  its  campaign  in  each  constituency;  all,  it  claimed,  had 
records  of  community  service  which  outstripped  those  of  the  candidates  standing 
[Daily  News,  2  Aug  1984). 

Given  so  many  meedngs  and  such  a  diversity  of  organisations,  it  is  impossible 
here  to  give  more  than  a  generalised  idea  of  the  arguments  advanced  The 
constitution  was  attacked  above  all  for  its  exclusion  of  Afiicans  and  its  entrench- 
ment of  ethnicity.  The  danger  of  participation  leading  to  increasing  racial  bitterness, 
and  therefore  violence,  was  stressed.  George  Sewpersadh,  the  NIC  president, 
argued  that  "the  people  going  in. ..  have  no  history  in  the  political  struggle  outside 
the  government  institutions.  They  have  no  mass  support  They  have  not  worked 
with  the  pet^le,  and  by  going  in,  they  are  making  it  easier  for  the  govenmient  to 
entrench  apartheid"  (Natal  Post,  1-5  Aug  1984).  The  constitution  was  seen  as 
another  version  of  "divide  and  rule,"  which  the  National  Party  had  practised  so 
successfully  in  the  past  It  was  attacked  for  the  absence  of  real  powers  it  conferred 
on  Indians  and  coloureds,  who  were  being  offered  a  "second  class  vote"  {"Terror" 
Lekota,  UDF  publicity  secretary  quoted  in  Srar,  19  July  1984)  and  "a  room  next 
door"  rather  than  genuine  seats  in  parliament  (Cassim  Saloojee,  TIC  publicity 
secretary,  ibid).  The  participants  were  attacked  as  primarily  self-seeking,  and  for 
making  promises  to  the  electorate  that  they  would  have  no  means  of  fulfilling;  in 
practice,  coloureds  and  Indians  would  receive  only  "crumbs,"  in  return  for  helping 
the  National  Party  to  entrench  white  domination.  Or  Fatima  Meer,  a  prominent 
NIC  intellectual,  said  that  despite  the  Labour  role  in  the  CRC,  the  living  conditions 
of  coloured  people  had  deteriorated  (Daily  News,  1 3  Aug  1 984).  Denis  Hurley,  tbe 
Roman  Catholic  Archbishop  of  Durban,  described  the  constitution  as  "a  consoli- 
dation of  apartheid  under  a  camouflage  of  power  sharing";  there  was  no  evidence 
"  of  a  serious  intention  to  begin  power  sharing,  to  offer  even  a  significant  beginning  of 
real  political  participation"  {Star,  15  Aug  1984).  Black  organisations  repeatedly 
attacked  the  participants'  claim  to  ^>eak  for  them  in  parliament  as  patemalistic  and 


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96  SOUTH  AFRICA  INTERNATIONAL 

insulting,  ignoring  the  expressed  intention  of  the  LP,  NPP  and  Solidarity  to  Bght 
within  the  system  for  black  political  rights. 

The  long-term  alternative  offered  by  the  UDF  and  the  Indian  Congresses  was 
seldom  cleariy  spett  out  in  public,  apait  from  references  to  the  Freedom  Charter.  In 
practice,  the  strategy  appears  to  be  to  follow  up  a  successful  boycott  of  the  elections 
with  continued  pressure  at  both  local  and  national  levels,  using  every  opportunity, 
until  the  government  is  forced  to  accept  genuine  negotiation  in  the  forum  of  a 
National  Convention.  The  participating  parties  regarded  this  as  unrealistic,  arguing 
diat  boycotts  had  achieved  little  in  the  past 

A  number  of  other  anti-election  organisations  must  be  mentioned.  The  first 
National  Forwn  was  held  in  June  1983.  This  organisation  is  based  on  the  black 
consciousness  principles  of  Azapo  and  excludes  wtiites,  whose  participation  in  the 
UDF  it  opposes.  It  also  rejects  the  concepts  of  "Indian"  and  "coloured"  people, 
regarding  them  as  blacks.  At  the  second  National  Fomm  in  Lenasta  in  July  1 984, 
delegates  from  some  200  organisations  met  to  plan  strategies  for  the  wrecking  of  the 
elections.  The  direction  of  the  NF  is  more  radical  than  that  of  the  UDF,  although 
some  of  the  tatter's  affiliates  are  also  prominent  in  the  NF,  especially  the  Cape 
Action  League. 

At  the  other  end  of  the  political  spectrum  of  boycott  were  Inkaika  and  the  Indian 
R^orm  Party  of  YS  Chinsaamy,  the  leading  members  of  the  South  A^can  Black 
Alliance  after  the  departure  of  the  Labour  Party.  (The  only  othermnnber  of  SAB  A  is 
the  governing  party  of  the  KaNgwane  homeland,  the  Inyandza  National  Movement) 
Chinsaamy  had  ddscussions  with  Dr  Reddy  [  a  former  vice-chairman  of  the  Reform 
Party)  ^XHit  joint  participation  in  the  elections.  Chinsaamy  was  deterred,  however, 
by  Chief  Buthelezi's  tiostility  to  participation,  and  put  his  party's  membership  of  the 
Black  Alliance  first;  Reddy  subsequenUy  became  leader  of  Solidarity.  The  Reform 
Party  had  limited  formal  organisation,  but  might  have  done  well  had  it  chosen  to 
participate.  Chief  Buthelezi  himself  was  a  powerful  opponent  of  the  new  dispensa- 
tion, attacking  it  as  an  insult  to  AJricans  and  warning  Indians  not  to  vote. 

A  host  of  other  organisations  and  mdividuals  lent  strength  to  the  boycott 
movement  Trade  union  organisations  such  as  CUSA  (the  Council  of  Unions  in 
South  AMca)  and  individual  unions,  whilst  not  usually  affiliated  to  the  UDF  given 
the  danger  of  dividing  their  members,  supported  its  stand,  and  leading  unionists 
p»ticipated  in  its  rallies.  SACOS  ( the  South  African  Council  on  Sport)  expressed 
fisars  that  sport  would  be  seriously  threatened  by  the  new  dispensation  and  actively 
campaigned  for  a  boycott  Many  student  and  youth  organisations  did  the  same,  and 
then*  members  boycotted  lectures  and  classes  on  election  days  or  for  more  extended 
periods.  The  many  religious  bodies  opposing  participaticxi  included  not  only 
Christian  organisations  such  as  Diakonia(  the  Durban  Ecumenical  Agency)  and  the 
Alliance  of  Black  Reformed  Churches,  but  also  the  Islamic  Council  of  Soudi  Africa 
and  the  Moslem  Youth  League.  However,  the  Jamlatul  Ulema  Natal,  a  body  of 
Muslim  theoto^ans,  left  the  matter  to  Individual  conscience.  The  major  Hindu 
oiganiSBtions  took  no  stand,  artd  both  the  president  and  secretary  of  the  South 
African  Hindu  Maha  Sabha  contested  seats  in  the  House  of  Delegates  {Leader,  24 
Aug  1984). 


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THE  INDIAN  AND  COLOURED  ELECTIONS  97 

THE  ELECTION  RESULTS:  NATIONAL  AND  REGIONAL  PATTERNS 
The  election  gave  almost  unchallenged  control  of  the  House  of  Representatives  to 
the  Labour  Party,  with  76  of  the  80  seats;  the  PCP  managed  to  win  cmly  a  single 
seat,  whilst  Independents  took  two  and  in  the  final  seat  there  was  a  tie  between  the 
LP  candidate  and  Arthur  Booysen,  the  Freedom  Party  leader.  Laboui's  victory  in 
tenns  of  votes  was  also  convincing:  it  received73,2%  of  the  total  poll  In  the  House 
of  Delegates,  however,  the  NPP  and  Solidarity  received  virtually  the  same  niimbn 
of  votes  (36,6%  and  36,5%  respectively).  The  NPP,  with  18  seats  to  Solidarity's 
1 7,  subsequendy  managed  to  construct  an  overall  majority  by  winningover  three  of 
the  four  Independents  (one  of  them  the  only  LP-backed  Independent  to  succeed). 
The  PIP,  with  one  seat,  was  the  only  other  party  to  gain  representation.  No  clear 
regional  division  of  support  between  the  NPP  and  Solidarity  emerged;  given  the 
very  low  voting  figures  most  of  the  majorities  were  anyway  very  smalL  Even  in  those 
seats  contested  by  party  leaders  the  turnout  was  low:  22,3%  in  Glenview(Reddy), 
14,1%  in  Arena  Park  (Rajbansi),  and  13.2%  in  Reservoir  Hills  (Poolvalingam). 

TABLE  3;  NATIONAL  AND  PROVINCIAL  VOTING  PATTERNS 
House 

House  (^  Represenutives 


Province 

Registeied 

Voles 

Eleclora 

Polled 

Cape 

lis  673 

222  S69 

Naul 

33  649 

SS9S 

OFS 

U  139 

6193 

TnmsvMd 

81523 

3S197 

S81  9G4 

272  854 

30,9 

11014 
341383 

59  504 

2649 
67046 

1391S 

24,1 
19,6 
23,4 

411901 

83  613 

20,3 

Cape 

Naul 
Transvaal 


Tlie  national  and  provincial  voting  figures  are  summarised  in  Table  3.  If 
participation  is  measured  in  relation  to  all  eligiUe  voters  rather  than  those  who 
actually  registered,  the  overall  percentage  polls  are  reduced  to  1 7,8  for  the  House  of 
Representatives  and  a  mere  14,25  for  the  House  of  Delegates,  and  the  percentage 
poll  of  coloureds  in  the  C^je  Province  to  16,85.  The  UDF  claimed  even  lower 
figures,  allowing  for  double  voting  and  other  electoral  abuses,  especially  in  the 
Transvaal  where  its  estimate  of  the  coloured  poU  was  only  19,9%.  In  other 
provinces  the  discrepancy  was  smaller^  the  UDF  estimate  for  the  Cape  Province 
was  15,3%  (Star,  23  Aug  1984). 

OfHcial  voting  figures  may  also  be  inflated  by  abuses  of  the  qiedal  vote 
procedure,  intended  for  those  genuinely  unable  to  vote  on  polling  day.  Move  than 
one-third  of  all  Uie  votes  cast  for  the  House  of  Delegates  were  special  votes,  and  in 
several  constituencies  they  outnumbered  voles  polled  on  electicm  day  itself (Z.eailer, 


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98  SOUTH  AFRICA  INTERNATIONAL 

3 1  Aug  1984).  There  was  a  last-minute  flood  of  special  votes  for  Solidarity,  and  in 
one  constitumcy  the  NPP  claimed  that  election  officials  had  been  visiting  homes 
with  Solidarity  workers;  Solidarity  replied  by  suggesting  that  the  NPP's  special  vote 
lead  liad  been  obtained  illegally  in  many  cases  {Daily  News,  27  Aug  1984).  The 
TIC  and  NIC  collected  a  large  number  of  affidavits  to  support  allegaiions  of  abuse, 
including  70  from  a  single  constituency,  Actonville  on  the  East  Rand,  where  59,3% 
t^aU  votes  were  special  votes.  The  Indian  Congresses  declared  their  intention  of 
asking  the  Supreme  Court  to  declare  the  House  of  Delegates  elections  invalid  on  the 
basis  of  such  evidence  (Cape  Herald,  8  Sept  1984). 

Whilst  the  explanation  of  low  polls  mvolves  more  than  just  the  strength  of  the 
boycott  movements,  the  level  of  participation,  even  in  ofificial  terms,  means  that  the 
two  new  Houses  of  Parliament  will  begin  life  with  a  credibility  problem,  as  Dr  F  van 
Zyl  Slabbeit,  the  Leader  of  the  Opposition  in  the  House  of  Assembly,  was  quick  to 
point  out  {Cape  Times,  24  Aug  1984). 

Omiparisons  with  previous  elections  for  the  CRC  and  SAIC  are  interesting  In 
the  fonner,  48,7%  of  registered  electors  voted  in  1 969  and47,3%  in  1975;  altowing 
lor  unregistered  but  eligible  voters,  these  figures  represent  polls  of  38,7%  and 
27,4%  respectively.  Thus  it  appears  that  the  trend  of  declining  acceptance  of 
ethnically  based  institutions  between  tliese  elections  has  continued  to  produce  the 
even  lower  1984  turnout,  notwithstanding  the  offer  on  this  occasion  of  parliament- 
ary representation.  Amongst  Indians,  however,  the  1 984  poll  is  an  improvement  on 
the  10,5%of  registered  electors  (nearer  8%  ifthe  many  spoilt  papers  are  ignored) 
who  voted  in  the  SAIC  elections  of  1 98 1 .  The  difference  in  trend  probably  reflects 
the  much  more  recent  date  of  the  SAIC  elections;  had  elections  for  the  CRC  been 
held  as  late  as  1981,  it  is  likely  that  a  similar  poll  would  have  been  recorded. 

Nationwide  figures  tend  to  disguise  significant  regional  variations.  The  elecUxal 
regioDS  used  in  Tables  4  and  5  have  been  constructed  so  as  to  discover  the  extent  of 
variation  between  major  urban  areas,  and  between  urban  and  "country"  areas.  The 
latter  term,  which  is  used  by  electoral  officers  in  South  Africa,  is  preferred  to  "  rural" 
because  in  many  areas  the  voters  are  resident  in  towns,  some  of  them  in  quite  large 
towns,  but  outside  the  country's  major  conuriaations:  thus  the  Border  and  Diaz 
constitiiencies  include  East  London  and  Klmberley  respectively. 

Coloureds  polled  relatively  well  in  "country"  areas  (38,9%  overall).  Natal 
coloureds  registered  the  lowest  provincial  turnout  (25 ,5%),  which  may  reflect  some 
diflusion  of  opinion  from  their  more  numerous  Indian  neighbours,  as  well  as  the 
success  of  the  campaign  waged  by  the  United  Committee  of  Concern.  Another 
important  factor  was  probably  the  anti-election  stance  of  Archbisht^  Denis  Hurley 
and  the  Roman  Catholic  Church,  to  which  many  Natal  coloureds  belong;  tliis  was 
particularly  ai^arent  in  the  Wentworth  constituency.  The  high  polls  in  the  Orange 
Free  Sute  and  northern  Transvaal,  which  are  based  on  very  small  dectorates, 
accord  with  the  more  conservative  voting  behaviour  of  these  areas  in  CRC 
elections.  Even  the  seven  constituencies  of  the  Witwatersrand  and  environs 
produced  an  above  average  poll  of  37,1%. 

The  four  constituencies  of  Port  Elizabeth- Uitenhage,  Allan  Hendtickse's  home 
area,  pnxhiced  a  36,1%  poU.  The  LP  won  82,1%  of  the  votes  and  Hendtickse's 


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THE  INDIAN  AND  COLOURED  ELECnONS  ! 

TABLE  *:  REGIONAL  VOTING  PATTERNS;  HOUSE  OF  REPRESENTATIVES 


Cape  Peninsuli 
PonEUzBbeih 
Western  Cape  "counuy" 

Easteni  Cape  "countiy" 


RegUimd 

Vow* 

Percenlaae 

eleeton 

pdled 

POD 

226706 

25  154 

11.1 

81S49 

29455 

36,1 

342090 

122644 

35v4 

(365  170') 

105  328 

45616 

43,3     ' 

61976 

22  985 

37,1 

19S47 

12  212 

62,5 

7  229 

3  872 

53,6 

3  910 

2321 

59,4 

(12  584') 

21909 

5060 

23,1 

11740 

3  535 

30,1 

All  "cDuiury"  conslituendes 


»  wliei«  Ac  Labour  Paity  candidate  wu  elected  unoppoied. 


COMPOSmON  OF  REGIONS  (BY  CONSTITUENCIES) 


CAPE  PENINSULA 


PORT  ELIZABETH 

WESTERN  CAPE 

"COUNTRY" 


EASTERN  CAPE 
"COUNTRY" 
WmVATERSRAND 

PRETORLV 

NORTHERN  TRANSVAAL 

BLOEMFONTEIN 

OFSRURAL 


Belhar,  Bishop  Lavis,  Bonteheuwel,  Elsies  River,  Grassy  Pait, 

Hanover  PaA,  Heideveld,  Kasselsvlei,  Liesbeek,  Manenbeis, 

Matroosfonlem,  Mitchells  Plain,  Onery,  Raveosmead.  Retrtat, 

Rietvlei,  South  Cape.  Silvertoo,  Stntndfbntein,  TaNe  Mountain. 

Bithelsdorp,  Gelvandalc,  Schuiderville,  Swaitkops. 

Berg  River.  Bokkeveld,  Britslown.  DianunI,  Dial,  Diyosajdut, 

Esselen    Park.   GensdendaBl   (unopposed).   GriquoUnd   West, 

Hantam.  Hawxlon.  Kalahari.  Karoc,  Macassar,  Mamie,  Mid- 

Karnx).  NoUhcm  C^ie.  Nuweveld,  PnicI  (unopposed),  RawioD- 

ville.  Riversdale.  Robertson.  Springlx^  SleinkopC,  Swaitland, 

Suurhraak.  Upinglon.  Vredendal,  WuppenaL 

Addo.  Border,  Dysselsdorp,  Fish  River,  Haarlem,  Nonb-easteni 

Cape,  Outeniqua. 

Ah^  Park,  Bosmont,  Eldorado  Park,  KliFspniii  West,  Newdire, 

Reiger  Park,  Toekomsnis. 

Eeisienis,  Northern  Transvaal,  Rust  Tw  VmL 

Heidedal,  Opkonis. 

Westeni   OFS,   Eastern   OFS   (anappostd),   Soulbm  OFS 

(unopposed). 

Durban  Suburbs,  Greenwood  Part.  Wentwodh. 

Natal  Interior,  Natal  Mid-easL 


own  vote  (8  020)  was  the  laigest  for  any  candidate  in  the  electioa  Much  erf"  Us 
support  is  thought  to  come  froni  members  of  his  United  Congregaticmal  Church.  His 
standing  in  Uitenhage,  his  home  town,  has  clearly  bad  a  locally  diffusive  effect  Id  the 
Port  Eliz^xth  constituencies.  One  wondeis  whether,  had  the  LP  bad  an  equally 


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100  SOUTH  AFRICA  INTERNATIONAL 

established  leader  based  instead  in  the  Cape  Peninsula,  it  might  have  increased  the 
poll  there.  Hendrickse's  influence  may  also  be  reflected  in  the  relatively  high  poll  in 
the  seven  "country"  constituencies  of  the  eastern  Cape,  one  of  which  (Addo)  was 
won  by  his  son  Peter. 

By  far  the  lowest  turnout  was  in  the  20  Cape  Peninsula  seats  (11, 1%).  where 
fewer  votes  were  cast  in  total  than  in  the  four  Port  Elizabeth  constituencies.  Political 
awareness  and  the  tradition  of  boycott  have  always  been  stiong  here,  in  the 
urbanised  heartland  of  the  coloured  community,  where  over  one- third  of  coloureds 
live.  But  whereas  51  129  people  (25,3%)  voted  in  the  1969  CRC  elections  and 
43  668  (24,7%)  in  1975. 25  154  did  so  in  1984.  In  terms  of  those  eligible  to  vote, 
this  represents  a  mere  5%.  The  significance  of  this  outcome  in  the  C^>e  Peninsula, 
which  represents  the  greatest  single  blow  delivered  in  the  elections  to  the 
government's  hopes  for  the  new  dispensation,  will  be  discussed  below. 

Indian  voters  also  turned  out  in  greater  numbers  in  less  highly  urbanised  areas, 
but  not  to  the  same  extent  as  coloureds  (Table  5).  Their  lowest  percentage  polls 
were  recorded  in  the  three  Lenasia  (Johannesburg)  constituencies,  of  which  one, 
Lenasia  West,  was  the  scene  of  some  of  the  worst  election  day  violence,  and  in 
Pietermaritzburg,  where  the  SAIC  poll  in  1 981  was  only  6%  and  NIC  organisation 
is  strong.  In  the  16  constituencies  of  Durban,  the  Indian  heartland,  the  overall  poll 
was  17,8%. 

A  number  of  factors  help  to  explain  why  the  Indian  poll  was  even  lower  than  that 
of  coloureds.  One  is  the  excepdonally  high  rate  of  Indian  urbanisation,  E^roxi- 
mately  90%,  which  is  even  higher  than  that  of  whites.  Second,  the  memory  of  the 
derisory  poll  in  the  1 98 1  SAIC  elections  was  still  fresh,  and  deterred  most  Indian 
leaders  from  partjcipadon  in  "estabUshment"  poUtics.  The  proximity  of  Indians  to 
the  Zulu,  and  their  awareness  of  the  racial  bitterness  that  Indian  participation  would 
cause,  was  a  third  factor.  This  was  emphasised  by  Chief  Buthelezi's  fierce  hostility 
to  the  elections,  underlined  by  his  reminder  of  the  1949  Zulu-Indian  riots  and  his 
threat  of  a  consumer  boycott  of  Indian  shops  {Natal  Post,  22-25  Aug  1984). 
Fourth,  it  must  be  remembered  that  die  NIC,  unUke  the  UDF,  has  a  long  history 
behind  it  and  a  tradidonally  central  place  in  Indian  pohdcs.  Its  leaders  are  men  of 
standing  in  the  community,  many  of  them  "graduates"  of  banning  or  house  arrest 
Its  prominent  use  ofGandhi's  name  in  the  campaign,  claiming  that  he  would  have 
boycotted  the  new  dispensadon,  was  probably  effecdve,  although  the  historicity  of 
the  claim  was  fiercely  contested  by  Solidarity  in  the  columns  of  TTie  Graphic  (see, 
for  instance,  17  Aug  1984). 

The  NIC  campaign  was  given  a  minor  boost  in  its  closing  stages  by  the  decision  of 
the  Rector  of  the  University  of  Durban- Westville,  Professor  JaapGreyling,  to  close 
the  universiQ'  in  view  of  the  prospect  of  student  unrest  during  the  election  period 
{Natal  Post,  22-25  Aug  and  Graphic,  31  Aug  1984).  This  had  the  effect  of 
strengtbening  the  manpower  resources  of  the  boycotters  immediately  before  and  on 
election  day. 

Of  vasdy  greater  import,  however,  was  the  government's  own  action  in  detaining 
1 8  UDF,  NIC  and  TIC  leaders,  including  die  president  and  vice-president  of  the 
NIC,  under  secticxi  28  of  the  Internal  Securi^  Act  The  detentions  were  ordered  on 


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THE  INDIAN  AND  COLOURED  ELECTIONS 


101 


21  August,  which  was  ^H'obably  too  late  to  have  a  m^r  influence  on  the  coloured 
elections  the  following  day.  There  can  be  little  doubt,  however,  that  it  was  a  major 
boost  to  the  boycott  campaign  in  the  Indian  elections.  It  seemed  to  show,  as  nothing 
else  could,  that  the  new  dispensation  was  simply  old  wine  in  new  bottles.  In  reducing 
the  percentage  poll,  the  detentions  also  served,  in  all  pnsbability,  to  help  the  NPP, 
which  could  rely  on  the  support  of  those  who  had  voted  in  1981,  and  to  deprive 
Solidarity  of  victory.  This  was  somewhat  ironic,  given  indications  (such  as  the 
frequency  of  mention  on  radio  and  television)  of  govermnent  preference  for  a 
Solidarity  victory,  and  for  Dr  Reddy  as  a  cabinet  member. 

TABLE  5:  REGIONAL  VOTING  PATTERNS;  HOUSE  OF  DELEGATES 


Chauwonh 
Ren  oT  Durban 

SU&-TOTAL 
Pielcrmaritzburg 
North  and  Soulh  Coasls 
Naul  "country" 


eleciors 

poUed 

89015 

16  404 

98488 

16906 

187  S03 

33  310 

26  941 

2  61S 

81699 

19500 

45  240 

11617 

8432 

2139 

2582 

510 

16  994 

1836 

25gSS 

7423 

16  652 

4  659 

COMPOSITION  OF  REGIONS  (BY  CONSTITUENCIES) 


CHATSWORTH 

REST  OF  DURBAN 

PIETERMARITZBURG 
NORTH  AND  SOUTH 

COASTS 
NATAL  "COUNTKy" 
CAPE  URBAN 
CAPE  "COUNTRY" 
LENASIA 

OTHER  TRANSVAAL  TOWNS  ■ 
TRANSVAAL  "COUNTTi.y" 


Arena  PariL,  Bayview.  Cavendish.  Chatsworth  Central,  Glenview, 

Havcnside,  Montford,  Moorcross. 

Brickfield,  Clare  Eslalc,  Durttan  Bay,  Marianhill,  Phoenix,  Red 

Hill,  Reservoir  Hills,  SpringfiehL 

Allandale,  Newholme. 

Isi[»ngo,  Merebank,  North  Coast,  Stanger,  Tongaat,  Vervlam, 

Umiinto. 

Campeidown,  Natal  Midlands,  Nordiern  Natal,  Southein  Natal 

MBlabai,  RylarKU. 

Nonh-«e*t  Ci5)e, 

Lenasia  East,  Lenasia  Central,  Lenasia  West 

Central  RaiKt.  LaudJum,  Actonville. 

North-west  Trarisvaal,  Eastern  Transvaal 


THE  LOW  POLL  AND  THE  CO-OPTATION  STRATEGY 
It  is  inherently  impossible  to  quantify  the  facU^s  explaining  a  low  poll,  ■ 
circumstance  that  allows  both  sides  in  any  situation  to  give  full  vent  to  subjective 
ejq^lanation.  The  Indian  and  coloured  elections  of  1984  were  no  excqitiaa.  The 
participating  parties  and  the  government  stressed  intimidation,  whilst  Botha  and 
other  government  ^xtkesmen  also  blamed  political  ignorance  and  inexpeiieiKe. 


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102  SOUTH  AFRICA  INTERNATIONAL 

Leaders  of  boycott  organisations  naturally  claimed  the  low  poll  as  a  spectacular 
success  for  their  campaign.  The  weight  of  evidence  points  strongly  towards  the  laOer 
view,  but  a  number  of  other  factors  must  also  be  mentioned 

A  degree  of  apathy,  periiaps  equal  to  30%  in  an  average  electorate,  must  be 
allowed  for  in  any  election.  In  the  elections  in  question,  allowance  must  also  be 
made  for  the  newness  and  inexperience  of  most  of  the  participating  parties,  and  for 
their  limited  o^anisadon  and  resources,  both  human  and  financial  Coloured  and 
Indian  workers  tend  to  get  home  later  in  the  evening  Chan  whites,  having  less  time  for 
canvassing;  car  ownership  is  much  lower,  and  the  number  of  volunteer?  available  to 
most  parties  was  small. 

There  was  undoubtedly  a  degree  of  intimidation  on  the  partof  UDF  supporters, 
although  this  was  not  si^iported  by  the  organisation  itself.  Roving  bands  of  UDF  or 
Indian  Congress  supporters  regularly  disrupted  party  meetings,  forcing  Stdidarity, 
forinstance,  to  abaiKlon  public  meetings  in  the  Transvaal  (5(ar,  13  July  1984).  On 
the  other  hand,  the  poUce  appeared  only  too  willing  to  disperse  such  boycotters  with 
a  considerable  display  of  force  on  several  occasions:  the  Labour  Party  campaign  in 
the  Cape  Peninsula  was  launched  in  July  at  a  Bishop  Lavis  meeting  that  ended  with 
violent  police  action  against  anti-election  hecUers  that  was  widely  regarded  as  ill- 
conceived  Fears  of  the  consequences  of  voting  could  be  a  significant  factor  only 
where  the  level  of  anti-election  feeling  was  anyway  strong.  It  should  also  be  noted 
that  large  numbers  of  people  who  attended  anti-election  meetings  were  clearly  not 
intimidated  There  was,  on  the  other  hand  intimidation  &om  the  other  side,  from 
unscrupulous  candidates  who  took  advantage  erf'  older  people  in  particular, 
threatening  that  they  would  be  fmed  or  would  lose  their  pension  books  if  they  failed 
to  vote,  and  taking  advantage  of  their  ignorance  of  the  distinction  between 
regisiration  and  voting  (see,  for  examjide,  Slar,  26  July  and  1  Aug  I9S4). 

Beyond  such  explanations  for  the  low  polls  is  the  faa  that  the  turnout  was  lowest 
in  urban  areas  where  voters  were  more  easily  reached  transport  to  the  polling 
booths  posed  fewer  problems,  the  proportions  of  middle-class  voters  were  highest, 
and  political  awareness  generally  accepted  to  be  the  greatest  Thus  to  blame  the  low 
poll  on  a  lack  of  political  understanding  is  to  ignore  the  geographical  characteristics 
of  the  boycott 

This  may  be  illustrated  with  reference  to  the  Cape  Peninsula  where  the  level  of 
rejection  was  hi^iest  The  developed  political  awareness  of  this  region  is  rooted  in 
its  poUtical  history.  Its  coloured  people  enjoyed  a  limited  parliamentary  fianchise 
on  the  common  roll  and  Bfter  this  was  removed  in  1956,  they  were  able  for  a  few 
more  years  to  vote  on  a  communal  roll  and  elect  four(  white)  MPs  to  represent  them 
in  parliament  They  were  also  able  to  elect  their  own  people  K)  the  Cape  Provincial 
Council  and  the  Cape  Town  City  Council  The  Peninsula  coloured  people  are 
therefore  conscious  of  ri^ts  removed  whereas  those  in  the  Orange  Free  State  and 
the  Transvaal  were  voting  for  the  first  time  in  a  parliamentary  election,  and  were 
more  likely  to  view  the  new  constitution  as  a  meaningful  political  advance. 

At  another  level,  the  new  dispensatbn  may  be  viewed  as  an  element  in  the 
government's  strategy  of  political  incorporation.  In  effect  this  strategy  aims  to 
incorporate  diose  who  cannot  be  given  political  rights  in  sepaiate  geographical 


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THE  INDIAN  AND  COLOURED  ELECTIONS  103 

territories.  The  reason  that  they  cannot  is  essentially  because  they  are  urbanised, 
and  they  are  urbanised  because  they  are,  in  most  cases,  irrevocably  integrated  into 
South  AMca's  modem  economy.  Both  Indians  and  coloureds  fall  cleaHy  into  this 
category,  and  the  new  constitution  represents  an  attempt  to  incorporate  them. 
Logically,  the  second  stage  will  be  to  make  some  form  of  accommodation  for  urban 
Africans  -  the  "urban  insiders"  who  are  needed  by  the  economy  and  who  are 
therefore  given  pemianent  rights  of  luban  residence.  In  the  fust  instance,  however, 
the  government  clearly  aims  to  attempt  such  accommodation  outside  the  constitulioQ 
and  parliamenL 

Such  a  strategy  depends  on  those  concerned  identifying  their  interests  with  those 
of  the  government  The  evidence  of  the  elections  is  that  this  has  not  happened,  and 
especially  not  among  the  middle  class  who  might  appear  the  most  obvious 
candidates  for  co-c^tatiorL  In  the  Peninsula  constituency  of  Liesbeek,  for  instance, 
the  electorate  coiuists  largely  of  owner-occupiers,  most  of  whom  have  at  least  two 
years  of  high  school  education,  and  are  either  qualified  artisans  or  professional 
people  (TDoman,"Intimidation  not  to  blame  for  low  poll,"  Cap^ifero/4  1  Sept 
1 984.  Among  such  voters,  an  official  percentage  poll  of  5 ,24  ( the  second  lowest  in 
the  country)  must  be  interpreted  as  a  considered  rejection  of  what  is  on  offer.  Young 
people  too  have  evidendy  rejected  the  new  dispensation,  as  their  absence  (except  as 
hecklers)  at  party  meetings  and  their  disproportionate  [»-esence  at  meetings  of  the 
UDF  and  the  Cape  Action  League  made  clear.  In  a  population  with  a  strongly 
youthful  age  structure,  their  opposition  was  in  itself  sufficient  to  produce  a  low  poll, 
whilst  the  infuence  of  young  people  on  their  parents  should  not  be  disregarded.  It 
seems  clear  that  the  coloured  people  of  the  Cape  Peninsula  do  not  see  influx  control, 
the  Coloured  Labour  Preference  Area  in  the  western  Cape,  and  the  repeated  razing 
of  squatter  camps  in  the  Cape  metropolitan  region  as  action  on  their  behalf,  they 
have  come  to  identify  with  the  victims  rather  than  the  authorities.  If  the  Labour 
Party  is  to  have  any  hope  of  improving  its  image  in  the  Peninsula,  one  of  the  prime 
requirements  will  be  for  the  government  to  relinquish  its  increasingly  unsuccessfiil 
attempts  at  influx  control  and  instead  develop  an  urbanisation  policy,  as  both  Dr 
Slabbert  and  one  of  its  own  MPs,  Wynand  Malan,  have  advised  (see  Hermann 
Giliomee  in  EP  Herald,  31  Aug  and  Cape  Times,  1  Sept  1984).  The  political 
concomitant  of  such  a  policy  must  be  an  acceptable  degree  of  poUtical  incorporation 
for  all  in  urban  areas,  regardless  of  colour.  The  new  constitution,  with  its 
entrenchment  of  apartheid  and  exclusion  of  the  African  majority,  arguaUy  moves  in 
the  opposite  direction,  and  as  such  it  has  been  rejected 

THE  NEW  DISPENSATION  ON  TTUAL 

The  new  constitution  has  fallen  badly  at  its  first  fence,  but  it  remains  on  trial  So 
too  do  the  government,  the  new  Indian  and  coloured  MPs,  and  also  the  Progressive 
Federal  Party  (PFP]  opposition  in  the  House  of  Assembly,  which  was  stnmgly 
criticised  by  UDF  speakeis  for  participating  in  the  new  dispensation  after  having 
urged  a  "no"  vote  in  the  vidte  referendum  of  November  1 983. 

In  the  eariy  weeks  after  the  election,  the  Indian  and  coloured  parties,  starting  with 
limited  credibility,  imdermined  it  further  in  a  number  of  ways  that  tended  to  coniiiin 
the  boycotteis'  criticisms  of  their  motives  for  participatiDg.  The  indecisive  result  in 


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104  SOUTH  AFRICA  INTERNATIONAL 

the  House  of  Delegates  election,  althou^  pronusing  a  vigorous  opposition,  was 
un£>rtunate  in  that  it  produced  the  unseemly  spectacle  of  "wheeling  and  dealing"  by 
the  NPP  and  Solidarity,  each  trying  to  woo  the  support  of  Independents  and  even,  in 
the  case  of  Solidarity,  members  of  the  other  paity.  At  one  stage,  when  the  President 
had  aheady  appointed  NPP  members  to  the  Indian  Ministers'  Council,  it  appeared 
that  enou^  MPs  were  prepared  to  cross  the  floor  to  give  Solidarity  a  majority,  but 
they  subsequently  changed  their  minds.  Meanwhile  the  NPP  image  was  hardly 
improved  by  R^gbansi's  request  to  the  President  for  more  ministries,  apparently  on 
no  better  ground  than  the  need  to  reward  a  large  number  of  his  own  supporters.  This 
request  was  not  surprisingly  refused,  but  Rajbansi  managed  to  construct  a  m^ority 
with  the  backing  of  three  Independents,  including  the  Labour-backed  AE  Lambat, 
MP  for  Actonville.  The  price  of  the  tatter's  support  was  the  nomination  of  another 
Indian  member  of  the  Transvaal  LP,  Mr  Abram-Mayet,  as  one  of  the  three 
indirectly  elected  members  of  the  House  of  Delegates.  The  LP  thus  effectively  holds 
the  balance  of  power  in  a  House  to  which,  in  terms  of  the  Prohibition  of  Political 
Interference  Act,  it  has  no  right  to  belong  The  modification  or  abolidon  of  this  Act 
will  be  one  of  the  first  challenges  facing  the  government  in  the  new  parliament 

The  House  of  Representatives  also  got  off  to  a  bad  start,  with  reports  of  an 
"organised  splii^'  in  the  LP,  involving  the  breakaway  of  a  small  group  of  MPs  led  by 
Peter  Mopp,  MP  for  Border.  The  ob>ect  was  to  prevent  the  PCP,  with  only  one 
elected  MP,  claiming  its  right  as  (^cial  opposition  to  nominate  three  members  of 
the  President's  Council.  Instead,  this  would  be  done  l^  a  "Reformed  Labour 
Party,"  whose  members  would  subsequently  rejoin  Labour  {EP  Herald,  1 1  Sept 
1984). 

Even  before  this  plan  bad  been  abandoned,  there  were  rumours  of  a  genuine  split 
when  Allan  Hendrickse  surprisingly  failed  to  include  Jac  Rabie,  the  Transvaal 
leader  of  the  LP,  in  the  Ministers'  Council.  It  was  reported  that  Rabie  planned  to 
cross  the  floor  with  several  Transvaal  MPs,  and  a  document  was  circulated  (in 
which  Rabie  subsequently  denied  involvement)  accusing  Hendrickse  of  favouring 
members  of  the  United  Congregational  Church  and  giving  preference  to  LP 
members  from  the  eastern  Cape  in  his  ministerial  appointments  {£P  Herald,  17 
Sept  1984).  These  allegations  appeared  to  have  some  substance,  but  the  split  did 
not  take  place.  In  the  absence  (tfaserious  (qiposition  in  the  House  of  Representatives, 
however,  it  is  likely  that  internal  tensions  in  the  LP  will  surface  more  easily,  these 
may  weU  include  a  move  to  shift  the  power  base  of  the  party  From  the  eastern  to  the 
western  Cape  {Sunday  Times,  26  Aug  1984). 

An  angry  exchange  between  Hendrickse  and  Van  Zyl  Sl^bert,  the  PFP  leader, 
boded  ill  for  the  future  co-operation  d  their  parties.  Slabbeit  questioned  Labour's 
mandate,  given  the  low  poll,  but  said  that  the  PFP  might  form  an  alliance  with  the 
LP,  depending  on  its  "actions  and  attitudes  . . .  once  the  tricameral  Pariiament 
ctHnes  into  (^ration"  {Sunday  Times,  2  Sept  1984).  Hendridtse  responded  by 
questiming  the  PEP'S  track  record  in  terms  of  support  from  its  own  constituency  in 
die  1 983  referendum;  claiming  that  his  party  was  now  "Qic  only  real  opposition  to 
the  National  Party,"  he  said  the  LP,  not  the  PFP,  would  decide  whether  to  form 
suchan  alliance.  Slabber^s  uncompromising  reply  included  a  warning  that  he  would 


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THE  INDIAN  AND  COLOURED  ELECHGNS  105 

"not  be  the  doonnat  of  any  politician . . .  who  seeks  to  v/ipe  his  feetonme  inorderto 
ingratiaie  himself  with  whatever  constituency"  (Sunday  Times.  9  Sept  1984). 

The  government  also  contributed  to  the  unhappy  start  made  by  the  new 
dispensation,  when  Botha  appointed  Hendrickse  and  Rajbansi  to  the  cabinet  as 
ministers  without  portfolio,  making  them  in  effect  representatives  of  their  Ministers' 
Councils  and  links  between  their  House  and  tlie  cabinet  This  move  reflects  some  of 
the  fundamental  pnsblems  facing  the  new  dispensation.  To  give  portfolios  to  Indian 
and  coloured  cabinet  ministers  would  have  been  too  sensitive  in  terms  of  CP  and 
right-wing  NP  opinion,  given  the  control  over  whites  that  it  would  im^riy.  Such  an 
af^intment  would  also,  however,  be  likely  to  embarrass  the  minister  himself,  as 
almost  every  portfolio  would  involve  the  administration  of  policies  unacceptable  to 
him. 

CONCLUSIONS 

It  may  well  be  true,  as  Willie  Esterhuyse  has  written,  that  "the  National  Pai^ 
could  not  afford  to  move  in  a  more  dramatic  way  on  the  constimtional  issue" 
(Esterhuyse  1983,  68).  But  this  is  only  one  side  of  the  coin;  the  other  is,  quite 
simply,  whether  it  will  work.  It  poses  major  problems  for  both  the  NP  and  the 
coloured  and  Indian  participants.  E>espite  the  provision  enabling  government  to 
continue  in  the  absence  of  one  or  two  Houses,  the  governments  credibility  at  home 
and  abroad  would  be  critically  damaged  by  the  withdrawal  of  coloureds  or  Indians 
irom  parliament  They  must  therefore  be  given  at  least  enough  evidence  of 
achievement  to  present  to  their  constituents  in  justification  of  their  continued 
participation.  For  the  government  this  will  not  be  easy. 

The  possibilities  are  essentially  of  two  kinds:  legislative  reforms  and  economic 
advancement  Under  the  former  heading  enough  has  been  said  publicly  already, 
perhaps,  for  the  Mixed  Marriages  Act  and  Section  16  of  the  Immorality  Act  to 
disappear  from  the  statute  book  without  major  loss  of  support  for  the  NP.  The 
Prohibition  of  Political  Interference  Act  will  at  least  have  to  be  modified.  Beyond 
this,  however,  it  is  diflicult  to  see  more  fundamental  changes  taking  place  without 
serious  consequences  for  the  NP.  What  is  perhaps  likely  to  htqipen  in  practice  is  an 
administrative  relaxation  in  the  way  that  such  laws  are  applied,  whilst  they  remain 
on  the  statute  book.  In  this  way  improvements  could  be  experienced  by  coloureds 
and  Indians  in  the  areas  concerned,  but  the  government  could  claim  to  its 
"platteland"  (rural)  constituency  that  nothing  has  changed  In  oider  not  to  alienate 
many  of  its  urban  supporters,  however,  the  government  would  still  need  to  be  very 
selective  of  the  areas  in  which  such  changes  were  permitted 

Tile  economic  advancement  of  coloureds  and  Indians  would,  in  the  conditi<M)Sof 
the  1960s,  have  been  an  easier  path  to  follow  and  one  with  obvious  grass-iools 
appeal.  It  is  difficult,  however,  to  see  bow  significant  improvements  to  coloured  and 
Indian  housing  and  education,  for  instance,  could  be  made  during  the  life  of  the  new 
parliament,  given  the  serious  economic  recession  in  wtuch  South  Africa  finds 
herself.  Such  changes  could,  at  the  present  time,  be  made  only  at  the  expense  of 
whites,  which  would  have  clear  poUtical  dangers  for  the  NP. 

Another  problem  for  the  NP  is  inherent  in  the  constitution.  In  the  past,  Soudi 
Africa  has  had  what  Kleynhans  describes  as  a"responsiUe  paity  system,"  in  «4iich 


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106  SOUTH  AFRICA  INTERNATIONAL 

members  of  the  NF  could  send  resolutions  to  party  congresses,  become  delegates  to 
them  and  vote  on  policies  Chat  would  be  binding  on  the  government  (personal 
ctHnmunJcation;  see  further  KJeynhans  1982,  ch  8).  Under  the  new  dispensation, 
such  assurance  is  no  bnger  possible,  if  genuine  negotiation  is  to  occur  within 
parliament  This  is  likely  to  reduce  the  incentive  to  become  a  NP  member  and  to 
wofk  for  the  party  at  election  tim^  the  effect  may  further  weaken  NP  organisation 
and  reduce  membership,  whirfi  has  already  decreased  considerably  outside  the 
Cape,  where  Botha's  provincial  leadership  has  maintained  it 

For  the  participants,  there  is  the  danger  that  they  will  have  "responsibility  without 
authority"  (Kaii  Magyar  quoted  in  Star,  23  Aug  1984):  responsibility  for  the 
actwns  of  the  government,  but  little  real  ability  to  change  them.  Given  right-wing 
pressures  on  the  government,  it  is  highly  likely  that  they  will  obtain  little  of  what  they 
have  claimed  to  be  seeking  during  the  election  campaign.  This  will  pose  a  serious 
dilemma;  whilst  the  withdrawal  option  exists,  it  can  be  used  only  once  with 
maximum  effect,  and  it  is  in  any  case  likely  to  be  resisted  out  of  self-interest  by  a 
number  of  MPs. 

Adam  Small,  the  coloured  writer  and  poet,  wnste  at  the  time  of  the  1969  CRC 
elections  that  "It  does  seem  better  to  let  our  voice  be  heard,  even  in  'impossible' 
places,  than  to  keep  quiet  in  Irustration"  {Post.  1 1  May  1969).  In  1984,  the 
fiiistration  is  far  greater,  but  it  will  not  keep  quiet  Small  was  critical  of  the  boycott 
coition  in  1969,  arguing  that  "boycott  as  a  political  stance,  like  every  other  political 
stance,  must  be  o/yflniredifit  is  to  make  its  point"  (Cope  T/mej,  19  Sept  1969). 
In  1 984,  however,  the  boycotters  were  nothing  if  not  organised,  and  their  activities 
will  not  cease  now  that  the  elections  are  over.  IndC'ed,  extra- parliamentary  pressures 
are  complementary  to  the  efforts  of  the  Indian  aiKl  coloured  parties  in  parUament, 
just  as,  paradoxically,  the  success  of  the  boycott  campaign  maximises  the  pressure 
on  the  government  to  make  meaningful  concessions  to  those  elected. 

Whereas  he  had  supported  participation  before,  Adam  Small  advocated  boycott 
in  1984,  inthefollowing  terms:  "If  previously  apartheid  has  been  the  philosophy 
and  conglomerate  of  policies  of  a  goverrunent,  now  it  is  the  explicit  groundwork  of 
the  country's  constitution . . .  There  is  nothing  in  it  for  my  children"  (Cape  Times, 
18  Aug  1984).  The  Rector  of  the  (coloured)  University  of  the  Western  Cape, 
Professor  R£  van  der  Ross  argued  simply  that "  the  great  value  of  the  constitutional 
proposals  now  before  the  country  is  that  they  cannot  work"  (Van  der  Ross  1983, 
117).  P  W  Botha  himself  said  on  his  inauguration  as  President  diat  "No  constitution 
can  succeed  unless  the  people  whom  it  serves  wish  it  to  succeed."  The  Indian  and 
coloured  elections  suggest  strongly  that  they  do  not  wish  this.  Ifthere  is  any  cause 
for  optimism,  it  is  the  hope  that  the  breakdown  of  the  new  dispensation  will  lead 
peacefully  to  something  better,  now  that  it  has  been  admitted  that  the  government  of 
South  Africa  cannot  be  in  white  hands  alone.  In  the  words  of  Van  der  Ross,  "In  this 
failure  lies  our  hope." 


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THE  INDIAN  AND  COLOUKED  ELECTIONS  107 

ACKNOWLEDOEMENTS 

Mod  of  Ok  Rscvcb  In  [fail  pcpcr  wb  ooaducud  durint  two  moidii  ipciil  u  Uninnky  FeUow  u  Ihc  InsdtnK  of 
Sodil  nd  EcBooRiic  Rnarch,  Rhodct  Uninraii)!. 

Amboi  tbc  miny  pcopli  who  helped  in  i  vuicty  ofwiyi.  I  ibouM  pmicuUriy  like  to  (but  Cecil  Seedul,  Wflkni 
KkynhuB,  Chrii  dc  Wei.  Miduet  WhiBon.  AS  Cheny.  CD  Moodley.  Nonnu  MUdeui^  YS  ChiiBumy.  DS 
imih.  Trevor  WUb.  Riynund  Pocnumy.  C  IHud  Coot,  die  CUefElcctonl  Officer  eod  the  refiaiul  elecnnl  officezt 
is  NauL  Ok  euurn  Cape  uid  the  wencn  Cepe. 

REFERENCES 

CmleCailicicliL  }9ii.Siir<ityit/'iaanlalioiuiiiS<mliJtfiieal9l3.  JahmDeibii^ Sauh AMcm InnitBte of 

Rkc  Relukn 
WOJe  Ewttauyie.  1983.  "Tlie  ciuh-ZI  iMicting  while  polhio."  Ja  Britltt  or  banicodif  Thr  airaiiaaiaK  afint 

^pnisat,  ed  Fleur  de  \^llien,  pfi.  67-72.  JohuuKibur^  Joouhui  B>U  in  ■uociebon  whli  the  Sundaj  Tina 
Arend  Lw>h«n.  1977.  Dtmoency  iit  plural  loeiuis  a  compartuitit  aj^naioiL  New  Heven.  YileUnrv.  Preii 
JNReddy.  1984.  MtaOf  lo  Ilit  ptopic  Soliiianiy  Jar  patefiil  dtaigt.  Duibu.  Solidvity 
RE  vin  dcr  Ron.  1983.  "In  this  fiihin  liei  out  hope."  In  Brulte  or  barricadt?  id  Flsu  de  VDlien,  yp.  1 17-21 
WB  VoikB.  1977.  'Comodntiond  demoocy  u  ■  mens  to  Ksomplish  pncefU]  dunge  m  South  A&icE  m 

evihution  oT  the  oinilitiitioDil  chvifc  fxvfosta  by  [he  Nitjoiul  Pirty  in  1977."  PoUdkiMi  b:  13-28 
MG  Whiuoa  1971.  "The  coIouihI  pcofde."  In  Sotilh  Afiica'i  maaritia.  ed.  Peter  RandilL  Johuineibuit, 

SPROCAS. 


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INSTITUTE    OF    NATURAL    RESOURCES 


ADDRESS  BY   :      hahgOSUTHu  G.    BUTHELEZI 

CHIEF   MINISTER    OF    KWAZULU    ir 
PHESIDENT   OF    I NKATHA/KGAPE 


FRIDAY,      19  JULY,   198 S  PIETERMARITIBURG 


Hr  Haitar  of  Car«nonIu,   tha  Principal  and  Ule«-Chanc*llor  of  Ch«  Unlv«r*lty 
of  Natal   ProfMMr  •ooyMn,   th«  VIca-Prlnclpal  Profaiaor  Schratnar,  the 
DIractor  of  tl>a   Inatituta  of  Natural   Naaourca*  Profe*ier  Hankt,  Hr  Clarkai ' 
Managing  DIractor  o'   IBM,  th«  HonourabU  HItiUtar  of  Agrlcultura  and  Forestry, 
Princa  Langalathu  Olanlnl,  Chief  P.   BIyela  and  Chief  H.   BIyeU,   Prince 
Gideon,  Secretary  of  the  Oepartnent  of  Education  and  Culture  Mr  Zlow,  other 
diettngulshad  gueiti,    ladlaa  end  gantlenan. 

I   have  baan  looking  forward  to  chli  day  avara'Inca  an   Inforaat    Invitation  wa* 
•xtandad  to  n«  to  ba  here  today  to  perform  the  official  gnvalling  of  the 
IMtSIHOLELA   Initltuta  of  Natural  Heiowrca*  (nforaatlon  tyetea  or  Geographic 
Infomatlon  eyitaai  for  one  of  the  Inatltuta  of  Natural  Rasourcet'  danonttra- 
tlon  farina  and  other  project!. 

Ua  have  heard  what  nottvatet    IBM  to  be  involved  In  the  kind  of  projecti  which 
Mr  Clarke  hee  epokan  to  m  ebout.     They  are  believer*  In  Corporate  Social 
Heaponelblllty.     UHen   I  was   Invited  to  the  White  Houee  by  President  Jliniry 
Carter  In  1979,  he  had  In  hi*  hand  a  piece  of  paper  on  Mhleh  the  Sblllvan 
Principle*  were  *pelled  out.     Thete  principles  had  then  Just  been  authored. 
Proddant  Carter  aaked  ae  that  day  Mhat   I   thought  of  the  Sullivan  principles. 
I  at  once  told  him  that    I   fully  supportad  constructive   Inveetmant  by  Aoarlcan 
Corporation*  In  South  Africa.     Pre*(dent  Certer  mb*  a  Democratic  Perty 


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-I- 

Praddant.      Stnca  than,    I   hava  alwayi  lupportad  tha  Sullivan  Princlplai. 
t  hava  dona  lO  also  at  tavaral  oaetlngi  of  tha  Inkatha  Cantral  Comlttaa, 
and  «lio  •t  our  Annual   fianeral   Conferance*.      isn    I*  one  of  thf  fouixlar 
•ISrMtorle*  of  tha  SullTvan  Principla*.      I  have  alwayt     had  great  reipact 
for  tha  thingt  wlileh   tBH  ha*  dona  and  cwicTnuat  to  do  for  and  Hlth  Blacki    In 
South  Africa.      I  am  extranuly  dal  Ightad.wlth  tha  announcaaanci  t4itch  Mr  Clarka 
hai  Juit  nada  concerning  project*  that    iSH  I*  funding   In  this  part  of  South 
Africa.      1  an  not  baing  patty  alien   1    *ay  that   In  that  great  city  and  al*o   In 
Che  United  State*.      Sowato'  In  Black  South  Africa.     Mtlla   I  admit  that  tha- 
Reaf   I*  tha  heartland  of   Industrlallted  South  Africa.    I   have  found   It  quite 
extraordinary  that  lona  people  both  here  and    In  the  IMItad  Statai,    Ignore  tha 
•xl*tance  of  iwMllon*  of  black  naopla  outiida  of  Soweto.     One  of  the  reaaon* 
■Ay  SOHato  t*  coMparativaly  quiet    In  tha  ntdit  of  current  unreat,  e*  conparod 
■Ich  the  Ea*t  Rand  for  axaaipla.    Is  bacauia  Hhlla  our  paopla  are  a*  deprived 
In  Soweto  el  eltaiitiere,  all  effo.rU.  >■•■'•  put  Into  Soweto  In  an  effort  to 
Improve  tha  quality    of  life  of  our  people  tn  Soweto,  after  the  1976/1978 
nwsiacrat  and  tha  unraat  which  tn«*e  naaaacras  triggered  off  at  tha  tliw. 
I  went  firat  of  all   to  pay  tribute  to  IBM  for  alwayi  being  epongtt  the  flr*t. 
In  doing  whet    It  right.       The  recognition  that  there  era'Black  people  eutalde 
of  Johannesburg  or  Soweto  I*  something  which  danonst rates  the  broad  vision 
which  I*  so  character i*t I c  of  ISH    when  It  exercises  Its  Corporate  social- 
responsibility  a*  far  a*  South  Africa's  deprived  cammunittes-ara  concerned. 
This  has  been  done  by  toaw  of  the  other  Ceaipanlas  lAlch  are  signatories  to  tha 
Sullivan  Code  a*  well,  but   I   think  the  significance  of  the  project*  wtiich 
Mr  Clarke  has  announced   Is  that  they  focu*     strongly  on  Black  Rural  Oevelepaent, 
which  has  been   Ignored  for  qi(lte  a  long  tiae. 

There   li  nothing  as  demeaning  as  poverty  to  a  person's  dignity.     Mille 
apartheid   Is  recognised  everywhere  as  tha  scourge  on  the  very  face  of  the 
earth  that  it   Is,  the  worst  part  of  it  Ii  that  It  has  confined  our  people 


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to~ca**pool«  af  povarty  through  danying  thou  fr«c  mw«annt  to  th*  axcant 
th«t  It  has  coapoundad  tha  problant  which  track  pa^la  faca  H  a  raault 
of  povarty..  . 

Wa,  all  know  that  thara  ara  two  ttratagla*  that  hsva  baan  choian  by  organl- 
MClpn*  Wilch  ara  In  tha  forafront  of  tha  black  Itbaratlon  ttru^gl*.  Tha 
•xtarnal  Hltaton  of  AMC  has  optad  for  viotanca  a*  a  *tratagy  for  bringing 
'  abogt  fundanental  ehanga  in  South  Africa.     Othari  do  not  go  ao  far  a*  to 

Opanly  advocate  violanca,  but  thay' bal lava   In  tha  stracagy  of  protaat  polities, 
.  aliwd  at  naking  tha  Country  "ungovarnabla".    In  thair  omi  Horda.     Attaehad 
'    to  tha  atratagy  of  violanca  a*  a  packaga  deal  ara  aanctlon*  or  DIatnvaatwnt 
and  tha  boycott  atratagy. 

Although  ■•  tn  Inkatha  acknooladga  tha  rola  of  protaiit  polltici    wa  do  not 
.ragard  protatt  polU.ea  a«  our  prlaary  atratagy  for  bringing  about  ehanga  In 
South  Africa.     M  fellaw  tha  atratagy  of  non-vlolanca   In  tha  old  tradition 
of  tha  founding  fathart  of  tha  now  bannad  African  National   Congras*  aa-'pro- 
pogndad-by  thaai  tn.Bloa>fentarn  In  1912  whan  tha  African  Rational  Congraaa 
aaa  launchad.     Wa  aecapt  that  prasauraa  on  South  Africa  ara  •  non-vlelont 
*«y  of  trying  to  bring  about  ehanga.     Ua  hoHavar  do  not  ballaM  fh  following 
.  Juat. about  any  atratagy  ragardlaa*  of  how  it  affaett  ttia  vary  vtetl**  ^ 
■fMrthald,  Mho  ara  all  I  Ion*  of  blaek  paopta.      I   ft*r  hara   In  particular  to 
ordinary  black  paopla  in  the  itraat.  '  Wa  man  ordinary  black  workara  and 
paaaanta.     Tt»«*a  ara  tha  paopla  frooi  which  wa  gat  our  eua,  whan  It  coataa  to 
Isaua*  auch  aa  tha  Oiilnvaatnant   liiua  and  tha  boycott  atratagy.     Thay  ara 
tha  ona'a  who  In  tha  final  anal'yili  baar  tha  worat  brunt  of  blaek  oppraaaton 
In  South  Africa. 

I  find  that   It    la  aoat  unfortunata  that  tiM  ordinary  black  paopla  ara  daaplaad 
not.dnly  by  theaa  kho  opprasa  u*,  but  that  thay  ara  alio  daaplaad  by  toma  of 
thaIr  own  paopla.      I  aa  rafarring  hara  to  thoaa  who  taka  doelaiona  for  tha 
■waaai  of  black  paopla  caring  vary  littla  hoH  advaraaly  tha  ordinary  paopla 
ara  affactad  by  thaIr  daclalona.       Thara  ara  blaek  laadari  who  ballava  that 


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thay  hiv*  to  do  all   th*  thinking  for  tb«  mu»n  of  our  poopl*. 

IIH  figi  loaathlns  In  COMon  with  tha.  Institute  of  Natural  itowwrca*.    In  that 
th«y  car*  for  th«  ordinary  paopla  Mho  ar«   ignorad  and  daapltad  particularly 
In  Intallaetual   circlai.      I   find  that  illta*   In     butlnaa*  or  Unlvenltla* 
cara  very  llttia  for  ch«  dignity  of  tha  ordinary  paopta.      I  am  grataful  for 
tha  opp-.-rtutlty  to  axpraa*  ay  thanka  and  tha  thanks  Of  tha  paopla  of  »«Zulu 
to  the  VI:i-Chanca1lor  of  tha.Unlvarilty  of  Natal,  and  the  Univaratty  of 
Natal,  for  allowing  Profaiaor     John  Hank*  Ui  a  stab  I  lab  thi*   Imtltuta  of 
Natural  Itoiourcaa.     Hany  paopla   In  our  Unlvaraltia*  Hka  to  Intallactuatlaa 

'  end  thaorlsa  about  ordinary  black  paopla,  without  caring  xhathar  thay  than- 
aalvaa  hcva  any  faaljnga  on  tha  Iiauai. confronting  tha  black  coaaiunlty  of 
South  Africa.  I  an  certain  that  Chay  alght  protaat  whan- I  say  that.  In 
■any  ways  thay  ara  tcrso  than  tha  National  Party  )tagl«a.  which  pratandi  to 
ba  a  kind  of  God. to  Blacks  by  pratanding  to  know  thair  want*  and  Mishaa. 
Tha  Intallaetual*  ><h9  thaorlaa  about  ay  paopla  ara  worsa  In  that  thay  do 
praclsaly  what  Pratorla  doa*  under  falsa  pratancas  of  being  aora  anllghtcnad 
and  liberal  than  the  Dictator*  who  control  our  destinies   lii  Pfecbrla.      t 

.  value  the  t^rk  that   I*  dona  by  acadarales  of  this  University  for  ordinary 
black  paopla  such  as  the  Vlc*-Prlnclpal  Professor  5chra)ner  tha  Chalman  of 
the  Buthaleil  Comatsslon,  Profasser  Lawrence  Schlanaar,  ProfaisorJIII   - 
Hattrass.  Professor  John  Hanks,  and  a  faw  ethers,     i  know  that  by  refusing 
to  theorise  about  us  «t.d  cur  plight  frcn   Ivory  Towers,  and  eaalng  doMI   tO' 
terra  flraa  where  wa  are,  to  get    Involved   In  the  nitty-gritty  of  black 
davelopawit.    In  order  to  do.scnething  practical   about  our  plight  that  they 
draw  a  lot  of  flak  for  thamselve*.     Thay  ara  often  luipad  together  tilth  Ma,' 
the  Kt«Zulu  Governnant  aqd   Inkatha  and  called  all  sort*  of  aanas. 

These  of  ua  nho  accept  that  our  stmggl*  for  »elf-rea)l*atlon  and  *alf- 
fulfllaant   I*  a  long  and  hard  one.  are  oftan  accused  of'-delayfng  the  sti^iflgla 
for  trying  to  rainaln  rational  and  raslUtlc  about  our  suffer Ings  as  blacks. 
Wa  do  not  do' so  because. ■•  abhor  apartha[dr<any  las*  than  all  decent  paopla 
avarytihere  do.    Apartheid  create*  a*  lauch  revulsion  la  u*  a*  It  dees  In  all 


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otfr  daetnt  hua«n  balngt.      It  crwt«*  th<  mm  angar  within  our  brcaiti  ai 

It  crMtM   In  th«  brMiti  of  all  ochar  d«c«nt  huwn  b«lng*  throughout  th« 


Wt  hoMtvar  do  not  batlovo  chat  our  Job  U  oolji  to  axpraa*  anjar  and  our 
ravulaJon  far  aparthald.     Ua  ballava  that  ihara  li  a  lot  that  «m  can  attll 
da  about   It.     That   I*  ahy  I  w  *o  ancouragad  by  IIM't  abroach  trttlch   i* 
ecwiaonant  with  Inkatha'a  phila*ophy  of  lalf-halp  and  talf-rallanca.     Thaaa 
ara  tha  turn-plltar*  within  ahlch  wa  of  Inkatha  ballava  m  hava  to  xMffa  our 
•trtiggla  for  Itbaratlon.     Aparthald   ti  an  abomtnable   tdaolegy  and   It     can 
navar  ba  avar  palatabia  to  u*. 

The  btg  problaa  that  s'v**  aparthald  a  chance  to  lurvlva  for  to  Iooq   li  that 
■aongit   Iti  opponanti  ara  mm  peopla  Mho  ballava  that  only  what  they  do  tn  tiia 
atruggla  ■■  a  atratejy  ordalnad  for  Black*  by  Cod  for  black  liberation. 
OlalnvaattMnt  froa  our  potnt  of  view  li  merely  a  tacctc.      It   la  not  a  natter 
sf  principle.     But  «a«M  people  elevate  tactlei  to  th*  level, of  principle. 
And   If  you  do  not  ballava  In  their  partlcutar  atrateglea  they  then  attanpt 
to  diacradtt  you  by  pouring  all   kind*  of  vitriol  on  your  head.    If  they 
obaarva  that  you  do  not  think  ai  thoy  do  or  act  a*  thay  do. 

ttiat  we  hava  *aan  dona  by  Hulti-Natlonal  Coapanlei  luch  ai    IBH,  ttobll.  Ford, 
Saneral  Hotori,  Fluor  Corporation,  and  other  ilgnatorlai  to  tha  Sullivan  Coda, 
since  tha  Sullivan  principle*  vnara  authored   In   I979i  ha*  ba«n  quite  reaarkabla. 
Thay  hava  contrlbutad  ■ub*tantlally  toward*   laprovlng  the  quality  of  Ufa  of 
thair  aaployaa*.     But  thay  hava  gone     nuch  further  than  Juit   looking  after 
thair  Mployee*.  by  doing  the  kind  of  thing*  Hhlch  IBM   Ii  doing  with  our 
Dapertnant  of  Education  pni  Culture,  and  aUo  thair  funding  thit  retourca 
centra,  and  thair  donation  of  a  cooputer  and  their  funding  of  the  three 
poet*  needed  to  run  tha  centre. 

He  are  all  aware  that  our  black  population  growth   Is  too  high  for  tha  reaourca* 
at  our  di*po*al   to  enable  every  young  parion  thet  li  catapulted   Into  tha 


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labour  aarkat  to  hawa  an  Induatrtal  Job.  Wa  aceapt  tKat  at  praMnt  tha 
South  African  aconoaty  1*  In  troubta  baeauia  of  It*  doMn-iwtng.  But  Ma 
ara  axara  that  awan  tf  our  aconaalc  growth  tni  ral*ad  to  5  par  cant  or 
■ora,  at  tha  rata  of  our  population  growth  wa  would  atlll  not  ba  abla  to 
giva  •  Job  to  tvtry  young  paraon  that  naadi  a  Job.  Sy  tha  turn  of  tha 
eantury  tha  poalclon  will  ba  auch  weria  than  it  It  today.  Ua  hove  to  look 
•t  our  problMa  not  Juat  on  shert-tann,  but  alio  In  Cba  long  tan'. 

Soaa  paopla  hava  said  that  wa  ahoujd  tupport  dlilnvaataant  bacauta  of  this 
fact  that  avan  «ora  Invaatoant  tn  South  Africa  will  not  gIva  avary  black 
young  paraon  a  Job.    To  me  this  It  cock-ayad  thinking.     Wa  naad  ■  luatalnad 
aconoMic  growth  avan  bacauM  of  thoaa  problana  of  population  growth.      IBH 
by  halping  thata  projaeta  with  tha  Inatltuta  of  National  Ratoureai  la  In 
fact  proving  that  wa  can  craata  Infra* tructura  to  anabia  paopla  to  halp 
thwaalvaa  only     If  ihara  U  a  continuous  and  a  luatalnad  aconoMic  growth, 
and  aora  and  Mora  tnduacrlaa  attabllthad  'In  our  country.     If  wa  allow 
•conoailc  growth  to  coaia  to  a  ttandatlll    through  Olalnvaataant,  tm  can  navar 
avar  eateh  up  with  tha  provtalon  of  facllltia*  for  tha  vait  naad*  of  such 
an   Ineraaalng  populbtlan.     Tha  plight  of  our  paopla  can  only  Morian. 

It  l(  gratifying  that  tha  bualnaat  conaunlty  of  South  Africa  hai  also  atappad 
up  afforta  to   Improva  tha  quality  of  Ufa  of  blacka  avan  through  orgonlta- 
tlont  auch  aa  tha  Urban  Foundation.     It  la  alfo  gratifying  to  raalfaa  that 
the  thinking  of  tha  South  African  Govarnnant   I*  changing  on  black  urbanlaa- 
tlon.     Evan  thougt)  tha  South  African  Govarmenc       only  occapti  black  urba- 
nisation grudgingly, ,ti   la  a  break- through  that  thay  have  got  round  to 
accepting  It  at  all.  .   I  an  alanaed  by  tha  population  uhldt   t*  nush-rooating 
around  our  cttlai  auph  aa  Durban  and  Pletennarltiburg.     Tha  ntmbr  of 
iquattari  around  these  Ciclas   Is  growing  every  day,  and  thaaa  ara  people  who 
need  to  have  their  children  educated,  and  who  need  to  ba  housed  with  thair 
faMlllea  and  who  need  to  be  fad.     They  al)  need  Jobs  and  security. 


joogle 


-  7  -    ' 

J   thTflk  I  nMdacf  to  givr  thi*  back-grdgiid  to  analiU  ybu  ca  *••  tH«   Inportane* 
of  th«  proJ«c;f  Wild)  h«v«  brought  u*  togittlWf  her*  todiy.     lni»«ZutuW 
tMva  a^DapartMOt  of  Agrlcultura  and  Forxtry  aM'«k  hav*  tha  Hlnrstar 
holding  that  portfolio  Kara  with  ui  today. '^  Ue  Oplarata  wlthlri  larrtbia 
financial  conttraintt.  '  KhsZulu   it  on*  of  tha  noafdanMly  populated  region* 
of  South  Africa.     Wa  ara 'land  hungry.'      Tlrlf  ha*  baan  Moraanad  by  law*  Mhich 
h«va  pravcntad  black  urbanlMcion  taking  place  naturally.     Ua  have  oparated 
'   within  budgetary  conatrafntt  naitch  hvfa'nade  'It  Inpoatibia  for  our  Oepartaant 
of  Agriculture  and  Foraatry  to  carry  out  ch*  aany  agricultural   projactt  Hhtch 
Ma  have  had  on  paper  each  financial   year.     Th)i  iltuatlon  hai  been  Morianed 
by  perenial  droughts  In  the  pait  few  yeara  Mhlch  have  forced  ui  to  uia  mney 
MC  atlde  for  agricultural  project*  Jiiit'to  create  Job*  for  thowiend*  of  un- 
anployad  people.     ThI*  hat  bean  going  on  for  quita'a  few  yaari  nOw. 

AlV'theae  thing*  unoericora  the   importance  of  Rural' Bavalopnant  and  food 
prodCictton   In  the  black  rural   araai  of  South  Africa  auch  a*  (OneZulu.     Tht* 
'■ake*   It  cryttar clear'  that  It    ti  extre«aly 'tMportant  fbr  tndmtry,  gove'rn- 
■wnr  end  tfnivertitle*  to  taekia''thtt  protttaM,  which  la  a  probleai  of  tuch 
fiorrendde*  propo'rt ran*.  ihaC^hbC  orta'*rngla  body-,  Mhethar  it  I*  tha  South 
African     Covarrment,  of'our  (japafunnj  of Agrrculturvand  Forattry,  or  the 
Unlvarilty,  can  tolv* Tf' li   trltt  tb'do-io  tlngle^haAdedly.     Thut  the   lapor- 
tanc*  of  tha  projectt  which  IBM,  and  tha  Unlverilcy  of  Itatal   are  tackling 
Jointly  with  tin  full  cooperation  of  tha  Kh«ZuIu  Govarraaant'*  Oapartnant  of 
Educatlcjn  end  Culture  and  tha'Oapartntenc  of  Agriculture  and  Foraitry. 

Tha  probleaa  of  KuaZulu  and  Matal  are  not  divlatbia  bacauaa  the  two  region* 
are   In  fact  ana  region  and  not  two  teparate  regions.      Thit   It  Wiat  tha 
duthelazl  Coaaiatloh  itaport  trie*  to  cOnVey  to  all  of  u*.     DnI***  wa  MUbla 
black  people  In  the  rural  area a  to  ttap  up  food  production  and  to  use  Modern 
agrTcillturaT  iaethodt'M  are  aFI    H  troubia,  whiithar 'wa  are  In  Natal,  or   In 
Wilft't*  called  nMZULU.    ^Thaf 'liwhytia  ar«  to"jrataf  ill' ^to  the 'institute  of 
Natural 'Hasourca*' for  what  they  have  dona  within  such  a  short  tiMa.     What 
haartan*  la*  and  ay  collaaguas   It  (hat  this  rural  dtVtlOpMant  project   it 
coaAlned  with  the  work  of  tha  Water  Research  CeMal*sion.     it  I*  quite  clear 


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to  «M    that  an  Intaraccton  b«n««<i  th*  Initltuta  of  natural  RaMurcM,  tha 
Vatar  ItMMrch  CoHlaalen,  and  othar  bodlat   la  sxtranaly  important  for  tho 
upgrading  of  Kural   atructuraa  and  atto  In  Job  craaclon.     Any  craatlon  of 
aconealc  Infraatructura   In  cbaaa  dira  (traits   In  Mhlch  My  paopla  find  thaa- 
••Ivea   I*  axtraMly   iaportant  to  tha  futura  and  walfara,  not  only  of  juat 
black  pbopta,  but  of  avary  population  group  In  South  Africa.     Hordaa  of 
daatltuts  and  hungry  paopla  are  a  thraat  to  paaca  and  any  proapocc*  of 
'    avaryono'i  futura  ualfara  and  proapority. 

Tha  projactt   In  tha  BIyala  araa   In  tha  Kaalant  araa  of  AmZuIu  tihlch  tha 
Innituta  of  Natural  Roaourcaa  has   Inltiatad  hay*  givan  nwny  paopla  hopa, 
and  thay  ara  an  Indication  of  Hhat  can  ba  achlavad  If  thara  la  cooparatlon 
batwaan  authorltlaa,  tha  Unlwartlty  and  tha  paopta.      I  aant  to  ttrat*  that 
daaplta  our  powarty,  Ma  do  not  oant  our  dignity  daaaanad  through  anything 
that  NBka*  ua  objactt  of  charity.      I  a«  not  aaying  that  thara  !■  anything 
wrong  with  aoup-klcehant  and  alMllar  act*  of  charity.     AM   1  aai  saying  la 
that  HO  do  not  aant  to  eultlvata  a  aoup*kltchan  nantallty  anongit  our  paopla, 
daaplta  thair  povarty.     Thia   la  tahy  I  appraclata  to  nich  Hr  Clarke'*  Morda 
tdtan  ha  itatad  on  bahalf  of    IBH  that  hie  canpany'*  Corporate  Social  Raepon- 
Blblllty  ProgravM   Is  not   Intended  to  create  a  batter  standard  of  living 
•  for  our  undarprlvMagad  people,  but  that  It  I*  Intandad  to  craate  a  batcar 
Hay  of   life  for  th«a. 

Whan  Hr  Darke  itressad  tha  need  for  education  and  training,  ha  underscored 
tha  nasiage   I   have  triad  to  convey  to  the  Aaerlcan*  and  Canadian*  during  ny 
tMO    vlalts   to  North  Pnerica  this  year.      I   told  than  that  fron  sty  childhood 
days  to  My  adult  Ufa,  black  people  wera  told  bluntly  not  to  cast  thaIr  eya* 
In  tha  direction  of  what  Or.  UarWoard  called  "green  paatura*"  reaarvad  for 
Uhltas.        In  other  words  thara  ware  certain  Job*  to  which  Blacks  Just  had  no 
right  to  aspire  because  thay  Just  happened  to  ba  black.      But  econoMic  raalltle 
have  forced  tht*  country  to  shad  those  Middle  Ages'   vlaws  about  Mist  tha 
black  man  Is  capable  of.     Today  It   Is  accepted  by  both   Industry  and 
govarn«ant  that  nora  and  nnre  black*  <Mi*t  be  trained   In  order  to  sarvlca 


:i^. 


Digilizedt,  Google 


-  9  - 

tlw  South  African  •coftony.      I   *tr««t«d  thi*  »t  ona  of  th«  r«a*ont  tiif  Hultl- 
Kiclonal  Corporation*  na«d  to  contlnua  to  b«  Involvad   In  South  Africa.     Th« 
backlog!  Wilch  wa  blackt  auffar  from  In  aducat(on.    In  training,  homing, 
MBlfara  ate  are  m  anoroou*  that   It   I*   Inpatstbla  for  GovarroNnt  alona  to 
wtpa  than  off.     Tha   'WHITINC-TO-KEAO'   progranna   Initiated  by   IBM  al  the 
coat  of  H20, Mill  Ion,  altted  at  Improving  lltaracy  •spaclally  amongst  young 
chlldran  aora  than  aayly  juattfUa  my  itond  agalnit  Dlilnvaitmant. 

ThI*  bringt  ma  to  the  ilgntflcanca  of  tha  conputar  facility  which  IBH   ti 
donating  to  thli  projact  and  ocheri  which   IBM  hai  donatad   coward*  the 
*MtlTING-Ta-lt£AO'   projact  by  maana  of  cooputer  aialited  tyaten*.     Uhanevar 
I  vlilt  th«  Unltad  States   I   wn  icverely  questioned  about  the  need  to 
prevent   IBM  froia  selling  computers  to  South  Africa.     The  srguMtnt  against 
thia  Is  that  conputers  are  used  by  tha  ar«y  and  police  and  security  to 
control  th«  aoveaant  of  blacks  and  to  strengthen  tha  oppraislve  Machinery 
i>f  the  Racist  RaglMa   In  Pratorls.      I  have  responded  each  tina  by  saying 
'  that  Gonputers  are  also  used  by  us  for  our  Health  and  Welfare,  for  pensions, 
.    for  education  «tc.     ami  thet  for  this  rwson  t  could  not  poiilbty  support. 
any  prevention  of  any  sale  of  conputar*  to  this  country  by   IBH,  or  any 
other  empany.     Tha  extant     to  which   IW   I*  using  camputer  aiilstad. system* 
for  these  projacts  again  mora  then  smply    Justifies  ny  stand   In  Aaerlcs  on 
the     Issue  of  cosputar  sales  to  this  Country. 

On  behalf  of  Slack  South  Africa   I   thank  IBM  far  tha  RIO  nlMlon  which  Hr 
Clarke  Inforas  u*  will  be  lat  aside  for  fostering  black  enterprlta  and   1«ga) 
reform.     Amongst  black  organisation*   involved   In  the  liberation  atruggle, 
there  are  those  which  *ee  a  social i*t  future  for  us   In  this  Country  on  tha 
basis  that  the  free  enterprise  capitalist  system  has  bean  exploitative  of 
black  people  and   1*  not  free  for  blacks.      I  think  many  black  people  are 
Influenced  to  think  that  the  best  way  to  establish  an  Et  Dorado  here,    li 
through  a  Socialist  future,         by  tha  fact  that  black*  are  still   outsiders 
a*  far  a>  tha  free  enterprise  systan  Is  concerned.      I   have  myself  coaie  to 
the  conclusion  that  daiplte  It*  faults  the  free  enterprise  capitalist 
system  1*  the  best  economic  lystaai  which  man  ha*  ever  devl*ad  which  Is 


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-  10  - 

•wch  a  pocMC  fore*  for  davalopnwit.     1  hava  addad  that  ir  Na  howavar  want 
to  anwra  chat    it  ha*  any  futura  In  a  I  Ibaratad  South  Africa,  hb  Muat  craata 
Many  polnti  of  antry  for  black*  to  enter  the  free  antarprlaa  lyacaM.      I   a« 
therefore  quita  haartanad  by  thi*  generou*  donation  Mhlch   IW   l>  netting   In 
order  to  fgater  black  enCerprl*e  and  legal   refora.      I   (aa  the  ASOO  000 
aanarkad  for  a  pilot  project  to  develop  opportunltiat  for  black*  to  enter 
the  building   tndu*try  In  the  aana  light.      It   I*  clear  to  aa  that  vlch  the 
huge  population  bulge  we  have   in  the  black  coanunlty  that  we  need  nora  and 
aore  Job*.      It   I*  aiw  clear  to  ae  that  Ghltae  elona  cannot  craata  cha  Job* 
wa  need  for  a  growing  black  population.     After  all  khita  birth*  era  today 
balanced  by  their  death*.     On  the  other  hand  50  per  cant  of  the  black  popu- 
lation In  Kwalulg   li  15  year*  of  aga  end  under,     thus  the   laportanca  of  Black* 
creating  Job*  for  black*,  and  black*  providing  the  aueh  needed  houting  for 
thair  own  people.     The  Milte  population  end  the   Indian  population  cannot  be 
expected  to  cope  by  tha*Malves  with  the  housing  backlog!  wa  face  tn  thI* 
Country  and  to  continue  alone  to. craata  Job*  for  Slacks  and  other  population 

With'  the  parennlel  drought*  we     Face  alaoat  every  year   In  IteaZulU'  lately,    I 
cant  *tre(*  atrongly  anough  the  laporcance  of  the  project  which  I*  a.)«Md  at 
the  atudy  of  water  and  other     geographic  and  denographic  raiourca*   In  the 
area  of  KwaZulu.     Without  water   it   I*  clear  that  wa  cannot  be  able  to  up- 
grade the  rural    Infraatrueiure   In  rural  areas  *uch  a*  IbeZulu.     Uk  cannot 
step  up  food  production  without  Hater.     Wa  are  grateful    for  the  4331 
Halnfrana  Coaputer  which   tlH  ha*  donated  for  uta  by  the  University  of  Metal 
and  the  Institute  for  Natural  Resource*.    . <  agree  with  Hr  Clarke  that   It   t* 
only  vAen  the  aconoay   is  sound  xhan  peopla  have  xork,  Hhen  they  go  on  to 
address  the  problanw   In  the  social   and  political  iranas.     The  people  who  are 
advocating  the  application  of  sanctions  on  South  Africa,  hope  that  the 
poverty  that  will    ensue    will  ensure  that  a  classical   revolution  can  take 
place  and  bring  about  the  change  which  h«  all   desire  to  see   In  this     Country, 
Quite  apart  from  ay  rejection  of  vlolanca   I  do  not. even  think  that  iuch  a 
classical    revolution  will    take  place   In  South  Africa.      It  has  not  happanad 


joogle 


-  n  - 

In  th«  Isat.lS  yMr*,«nd   It  ]*  not  poMlbl*  In  tha  n«xc  20  ytart.     ThI*   I 
■•Y  pursly  fr<m  tha  point  of  vI«h  of  loglitlc*.      I   think  It   Is  axtrwwly 
tboughtlaii  to  My  that  our  davalopwnt  imiBt  (tand-ttll)  until   tha  day  of 
Hbaratlon  by  danying  u*  tha  uaa  of  conputart  naraly  bacauaa  tha  govarn«Mflt 
a)«o  utaa  thi*  to  atrangthan  Ita  oppraislva  Machlnary  a*  It  I*  allagad. 

Wa  hava  laarnt  tba  hard  way  that  otian  paopla  achlava  political    rraadna, 
thair  backlog*  do  not  vanlth.     Ua  hava  laarnt  through  tha  ai^rlanca  of 
SoMtham  Africa  that  political  aAanctpatlon  doa*  not  autooatlcally  cauaa 
povarty  to    vanlth.     Thui  tha  tnportanea  of  doing  avaything  that     can  ba 
don*  to  linprova  tha  plight  of  black  paopla,  Mtilla  at' tha  •ame  tin*  ttruggling 
to  ach lava  our  political    fraadom.     U«  hava     laan  tha  povarty  In  tana  part*  of 
'    Southarn  Afrt^  ^'y  ^'*  ovarMttalnad  scaia   Indapendant  Nattoni   In  Sowtharn 
Africa  whara  our  paopla  hava  to  qu«ua  up  for  itMny  chtngi  Mhtch  wa  taka  for 
grantad  hara  luch  ai  loap,  cooking  otl,  paraffin  ate. 

I  an  aaddanad  by  tha  daclilona  that  hava  bwan  takan  by  both  tha  Houm  of 
ItaPraiantatlvat  and  tha  Sanata  In  th«  Unttad  Stata*  concaming  Congr«s«nin 
tha  Bill  firay'  Roth  laglalatton  concarning  Invaatmant*  and  aeonoMic  pra*- 
■urai  on  South  Africa.  I  hava  natad  tn  tha  Unltad  Stata*  that  A««rlean* 
hav«  of  court*  a  right  to  do  lAatavar  thay  think  la  In  tha  tntarast*  of 
Aaerlca  concerning  thaIr  lnv*«ta*nti.  But  if  thay  adopt  cartaln  pollcl** 
baeaut*  thay  ara  concarnad  about  tha  aparthald  pollcia*  In  tht*  country,  I 
ballav*  that   It  |i  qulta  a(»*ntla1   for  than  to  taka  Into  account 

th*  vl*w*  of  th*  vtetlrni'of  aparthald.      I  •■  r*f*rrlng  h*r*  to  th*  ordinary 
black  Horkar*  and  p*a*ant*  mho  b**r  th*  Horit  brunt  of  th*i*  aparthald 
pol-lcia*.      I  an  not  r*f«rrlng  to  p*opl*  xho  hav*  thaIr  *alarl«*  guarant**d 
and  t4ta  ara  not  avan  laekabta  Jn  th*  Job*  thay  doi  and  who  hava  thaIr  p*n*lon 
Mil   laid  out  for  th«n. 


Bafora  altting  doari  I  wlih  to  conqratulata   IBM  for  taking  a  daelslon  not  to 
dlalnwaat  from  South  Africa  daapit*  >o  nuch  praitura  that  haa  ba*n  brought 
to  baar  on   IBH.      I   know  of     Mny  projactt  that   IBM  ha*  Inltlatad   tn  th* 
black    Connunlty.of  South  Africa  apart  from  tha  on**  I  hav*  ai*ntlon*d 


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Htiteh  fMva  browghc  ui  togathar  Cod«v.      I  know  that   IBK  tnltratad  MCC 
Callaga  In  SotMto.     I  kiton  that  IW  ha*  aitablUhad  High  School*  In  Cap« 
Town,  Durban  and  Rart  Cllzabath.     I  a*i  ttaara  of  tha    6  Taachar  training 
faellltiaa  Oildi   IBM     ha*  a*tabll*had.      t  ga  «Mr«  of  mor*  than  100  vldao- 
tapad  lasion*  for  black  chlldran  to  a**l*t  black  chtldran  In  NathaMtle*. 
Setanea  and  Biology.     I  am  Miara  of  the  njNCA  Library  In  SoMato  tahleh  ha« 
75  000  book*  xhlch  was  fully  iponwrad  by  I8n. 

I  m  awara  of  tha  "BEFItlENO-A-SCHOOI."  prejacc  Mhteh  IBH  tnltlatad  which 
othar  eoMpanta*  hava  new  tupportad.      1  an  awara  of  tha  typing  rooa*  IdH  has 
aatibllthad   in  «uch   Inslltulton*  •«  tha  HAttGOSUTHU  TECHHIKCN  and   IHANOA 
SEniHARY.      I  an  «Mra  of  tha  a*iUtanca  IBH  has     ;)van  through   Its  E«ployM 
Housing  plai  for  aMployaas  of  tha  c<Mp«ny.      I   ballava  that   In  tana*  of   it* 
own   IBM  batlafi  that   JBH   Is  a  good  Corporata  Cttlian  and  w*  ara  gratafu) 
for  thair  contlnuad  tnvaslnant   In  South  Africa.     Ithatorlc  larvas  tana  purpose 
In  tha  libaration  struggla,  but   It   is  practical    Invascnsnt  of  t^l*  kind  which 
t*  wurthWilla   a*  a    contribution  for  a  paopla  t*ta  ara  struggling  as  wa 
blacks  do,  as  tha  nost  teonoftlcally  and  politically  dapr Ivad  suction  of  tha 
South  African  population,     t  an    unashamed  of  ny  support  for  tha  contlnuad 
Invastnant  of  Anarlcan  Conpantas  which  ara  signatorlas  to  tha  Sullivan  Coda. 
At)   thasa  acts  of  csrporata  loclal    rasponsIbHity  mora  than  justify  ny 
stand  on  dislnvastnant. 

I  an  grataful   to  you  all   for  having  Itttanad  to  na  for  to  long. 


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HBHORAUDUH    PHESEHTBD  tQ 
HOHOURkSLB   R0BB8T   RUHCIE, 
CAHTBRBURX  AND  PRIHATE 


TBB   HOST   REVBRBHO   AND    RtQBT 
PC,    MC,   OD.   102H0   ARCBSI3B0P   OF 
IF  ALL  ENOLAHO  AHO  HETROPOLITAH 


liraan  at  Th*  S 


LAHBETa   PALACE 


30IH  JULl   1 


(or  th*  opporCuni 
longad  to  itiar*  ay  hop< 
Sr«c*i  and  I  nav*  lanq 
uiadoa  ia  Cor  cha  kind  t 
aa  a  Black  laadar   ii 


daprlvaCion.  Ttiay      c 

suftacLng,  and  cda  ane 
dabata  among  Blacks. 
dcanatisaa  thaaa  dlffai 
in     South  Africa  wno  at 


if   doinq   ao    Coday. 
>   and    faac*    foe   my   i: 

hopad  foe  an  oppoeti 
f  circumacaneaa  in  > 
Soueti   Afcican  accu; 


political, 
idaracand      ( 

»ns      diffai 


:acnativa  objaetl 


I  asaac  for  dabaci 


raa,  and  avary  diap 
.ncanaiflad.  Also 
liaad     ac  bringing  about 


.  polit 


1  of    I 


Hot     only     ara      thara   atark  isauaa  to  b< 

■taCa  continually  diacupta  tna  danoccai 
salacc  thair  laadara  and  aiareiaa  en< 
jailing      and      dacantion      of    laadara   and    thi 


ina  pol. 
opinion 


teal 
and 


I  doaa     E 


daath 


pact  of    tha 

bicti     paopla 

ipclona.        Ttia 


Digilizedb,  Google 


banning  oC 

9cga 

laatlona  daatroya  tba  whc 

la  procaai 

by  which  paopla 

•vanCually 

gat 

togathar  in  poaitlona  In 

which 

thara  la  a  aultltuda 

at   cholcaa. 

Action  by 

aucc 

aalva  National 

Party  gavarnaenta  o 

ar  Cha  laac  37 

ao  d 

aruptad  tha  daaocratlc  proeaaa 

for 

so  long  in  South 

faar  for  tha  f 

tura.  This  faar  ha 

lne«naaly 

caClc   in  ay  own  approach,   and  haa  lad   aa   Co   do 

•vaeythin9 

in  ■ 

t   pouar  to  m»k» 

Inkatha  a 

daaoeratl 

organlaaelon. 

Attar  th»  b 

annl 

ng  ol  tha  AHC  and  PAC  in 

961, 

hara  waa  wldaly  fait 

daspair   in 

Sou 

h  Africa  about 

tha  aarit 

of  e 

cuancy  polltiea 

and   cri*   u 

till 

y  of  aiaabarahlp-baaad 

rganlaati 

na.    Mimr     tha 

ickdoun   and  tha  ja 

ling  of  hundrad 

Black   Isadara, 

pad  cha  nac  a 

thar  uant 

d  ot  flad  tha 

country  to 

aa  laadars  in 

Ilia.   And  it  uaa 

nly  in  tha  aid- 

1970* a   tha 

iaadarahtp  and 

laadatahlp 

ila  lad  ordinary  aiaek  South  Africana  to  oaca  again 

political  organ 

tha  yaara  of  tha 

claa 

ha  and  th 

BXac 

Pac 

pla'a  Convanclon 

anargad  to 

fl 

I  tha  vaeuu- 

which  had 

baan 

ccaatad  by  pollea 

brutality. 

I  aatabliah 

ad  I 

katha  to  puraua  tha  hallouad  a 

ma  t 

nd  objactlvaa  ot 

tna   old   AHC  w 

ich  was  foundad  in  1912, 

Black   Paopli-a 

aatabliahad  a 

poll 

movamant   which 

waa  not  a 

iBba 

ahlp-baaad  and 

this  dual 

ty  in 

a  lac 

k  polltiea  haa 

today 

ttia 

only  .a.b.r.hip- 

baaad  Black 

pol 

tical  novamant 

In  tha  country. 

mat        Blac 

K   S 

uth   Africana 

faal   tha 

naad 

to 

a    daaoctatie 

naobarinip- 

Oaaa 

organisation 

ia  ahown 

by  tha  fac 

t  Chat  in   tha 

an  yaara,  Inlta 

ha  haa  gr 

a  card-carrying 

oaobarahlp 

or 

o«ae  ona  mil 

ion   paopla. 

a.   your  Sraca, 

aigniricant 

t   whan  you  look  at  tha 

arn  of   inkatha, 

you   find 

that 

gaa  fcrua 

of   tlna   attar 

pcoEaal   po 

and 

vlolanea   uhlch 

d  by  tha  pollc 

paopla  counting 

tha  coat  in 

a  of  iivaa  and 

proparty, 

and 

aaaa  thaaa  colta 

againat  gai 

>da.   During  th 

1976-77 

atiod 

ot  vlolant  uncaat  In 

south  Aftlc 

>  9 

•at  many  frlanda 

warnad  ma  C 

lat 

should  abando 

ba 

an   angry  Sout 

Afcica 

danandad  imoadiaca 

political 

gain. 

gai 

and  again  told 

that  if  I 

political 

laada 

would  hava  to 

rallnquiah 

By 

joaition  aa  Chi 

t   Kiniata 

ot  K 

izu 

u  and  would  hava 

h  othar  laadar 

during  1977 

-78 

hat  Inkatha  do 

blad  its 

hip 

and  chia  patCam 

of  upward 

has 

baan  avidanead 

avar  ainca 

ftar  vlol.nt  confrontationa  wh 

ch  did  not  aehlava 

,  Google 


Black     p«opl«     yai 

Cha      oppoccunity  of    ■■an. 
pcoc«afl   in    ch»ir  country 

novanwnE  t     Annual   Ganaci 


ba  organlaad  polictcally.        Thay  yaarn     for 

leaa  within  which   to  act  and   thay  yaarn     [or 

lalon-Baklng 

ICa    tactlca 

lad      upon      by      Cha 

■  aupeaaa  body     of 


Conlacanco 


traah     nandaca 

:    homa   ac    abroad. 

Not:   only   do  I 


Ho  policy  daci) 


Black  south  Afcieana  aca  awaca  ot  t 

-in-Exila  haa  baan  puraulng  an  aFM 
without  any  tanqibla  avidanca  that  thay  m 


oomnlttad  c 


an  daaply  convinead  that  whlla 
nay   ba  fought,   although  I  myat 

Qbjacclvaa   through   violanc*. 
■anOarshlp-baaad   damoccatlc   ci 


Tha      tact 


Digitized  by  Google 


•  a 

•uCC* 

Ing    alack 

aaaaaa. 

y 

i»*Er*  oC  Black     ■ 

efariD9 

ly 

of    cm   anq 

r   vhieh 

a 

a*   anybody 

•laa   in 

fi  ae» 

ganataclnq 

=  lalB 

hac   cha  church  haa 

pc 

caaa  of     Brinqin?     attouC 

y 

Cha     vlolanca     h 

Iclt     ia 

Mhlla   tttmcm     la 

Ctl 

It   chaca  la  aa 

yac  ooa 

objacttvaa  throu9h  non-«lolant  taettca  and  aCraMglaa. 

I  aa  in  dally  contact  ulth  South  Afi 
■vary  day  I  aa  aada  intlaacaly  dnd  di 
and    tna    angutah    ic    producas  I   am   i 

haa    baan   iganacatad  by    this    auffarlng 
tha      couatryi       I    undacscand    cha   iCorci 
raacciona   Co  apacthald      ?or  aa   you  c. 
tailad      Co  ba  corcacciy  involvad  In 
Changa      and      in      tha      aana    bcaatA   ju, 

ona   Clilnq   aa    yat    laft    undona   Oy    tna   h 
aeaa     in  whlcti    tria  Cihurcn  has  undaf-achlavad.      ana 
ona     thing      en*     church      has     laft     undonai      thara 
thaoloqtcal   ]u«tif icatlon   for  violanca. 

thara     can  ba  no  juat  war  aa  an  aaay  out  Cor 

ictlona  CO  involva  thaaaalva*  in  violanca. 
wicn  Cha  opptaaaad  and  in  an  unjuat  war 
on  both  aidaa  of  tha  ficlng  linaa  Thoaa 
calnad  to  aupport  vlolanca  In  Soucn  Africa 
chair  csnvlctiona  and  eroaa  cha  linaa  Co 
aoalniaCar  Co  paopia  in  Inaurgant  eaapa.  Thay  should  vancure  out 
•uada   incarnaclonal   Chriacandon    Co      auppocc 

u^iataCad  conuiCiiants  Co  violanca  -and  about  confarring  and 
nagotiating  with  aganta  of  vlolacica  bayond  Cha  a  ght  and  haaring  of 
OEdlnacy  congragatlona.  Iha  Chutch'*  wicnaaa  oust  bm  an  opaci 
ultnaaa  and  it  thara  ia  a  partnarBhip  baCwaan  soma  of  our  churchaan 
and/  for  aiaapla  tha  AHC'a  niasion-in-Enila  Chan  Chat  parCnacahlp 
nuat  ba  an  span  and  pcaclainad  parcnarahip  which  ia  atclppad  of  tha 
hypoeriay  which  tallcB  in  CarmB  of  diacingulahlng  batwaan  tha 
apiritual  naad*  of  inaurganta  and  tha  Intant  to  kill  for  political 
purpoaaa   which  dleaeca   than. 

Tha  Anglican  Church  in  a  particular  sansa  haa  an  historic  rola  to 
play  in  South  Ateiea.  Mhila  cha  Church  of  Cha  Provinca  of  South 
Africa  is  guldad  by  God  AimighCy  ai  a  aaparata  antityi  it  la 
navarthalaaa  crua  that  ic  haa  historic  linAa  with  tha  Brittab  which 
in  Cha  Act  of  Union  aacabliahad  aparchaid  SouCh  Africa  aftar  having 
Eulad  haca  aa  a  colonial  pouar.  I  Chink  of  aueh  graat  hiaCorle 
figuraa  as 'our  Biahop  Colanao.  I  Chink  of  ochar  laadlng  ChriaCiana 
auch  as  Arctibiahop  Clayton.  Archbiahop  Jooat  da  Slank>  iJaan 
iff  ranch -Bay  cah,  Canon  Collina,  Biahop  Zravor  Huddlaaton  and  Biahop 
Colin   Hincar,     Co    illuacraca    cha   poinc    I   an   making. 

I  am  not  aaylng  that  Anglicana  hava  privllagad  aeeaaa  -  to  tha 
raconciling  powaca  of  Sod.  but  I  do  aay  that  all  danoainaciona  haira 
a     living  hlacoey  of   chair  coBaicmanc  Co  juacica  and  paaea  and      tha 


Digilizedb,  Google 


Anglican 

coaaltiMnt  to  juattea  and  paaea  Haa  lor  aa  a  particular 

Violane* 

La  apiralling  upwarda  and  In  tna  currant  apiralling 

violanca. 

wa  ara  wttnaaaing  avil  Cacaa  at     violanca  which  wara 

htddan  bafcca-   Thara  hava  baan  pravioua  upaucgaa  of 

violanca 

in   South  Africa  and    God  (orBid    I  think   wa   ouat   b« 

'caaliaclc 

and  aay  that  tha  currant  upawiflq  o!  violanca  will  not  ba 

Cha   laat 

Violanca  will  continua  aacalatinq  until  Blacka  and 

Hhitaa   ara  raconcllad  ona  co  tha  othar    and  Blacks  and  Black*  ar« 

caconclla 

d   to.aaeh  othar  about  fllack/Htuca  ralationahlpa  In   South 

Africa. 

Thia   raconeillacion   -ill   only   taka   placa   within   a 

political 

fraaawock   whicn   movaa  Chia   country   ataadiiy   towards 

bacoiaing 

a  Juat  aoclaty. 

Ma  had 

an  outburst  of  violanca  in  tha  lata  fiftiaa  and  wa  had 

anothac  o 

utburat  at  .violanca  attar  Juna  16  197«.  Wa  ata  now  living 

chcouqh  a 

third  aiploaion  of  BlacX  violanca.   Uhan  ona  looks  at  tha 

natuca  a 

'.      thaau   vialant  axploaiona  ona  can  dlacarn  a  daapaning 

uglinaaa 

wiolanca 

of  tha  lata  fiftiaa.    Tha  violanca  wa  saa  now  howavar. 

whacnar  1 

t  ba  violanca  in  Black/Black  confrontations  or  whathar   it 

ba  viola 

nca   in  Black/Hhita  confrontations    ia  a  graac  daal   wira 

tona   uqliat   tnan  tna   violanca   of   1976.    As   violanca 

tha  horror  of  ic  daapana    ic  ts  as  though  tha  balls  of 

warning 

Africa  na 

ad  to  haar  thaaa  wacnings  and  to  racogntaa  Chat  tha  Church 

la  to  play  in  bringing  to  an  and  tha  uaa  of  violanca  for 

political 

pucposas. 

t  aa  aa 

awara  aa  noat  that  tha  quaation  of  violanca  haa  glvan  rlaa 

thaological  and  moral  dabata .    I  do  not  ballava  that  ona 

undaratand  t 

COHDittad     C 


)  longar   hava   cha  c 
ibout     changa     and 


Cheiatandoa  which  . 
Inattuaant  of  God 
gevarnnanta.        Tha 


I     is  a     body     of     thaological     opinion     in 
linning    Co   look  at   violanca    aa   a      naeaasary 
bringing    .about      tha      downfall      of      unjust 
racanc     Call  by   Cha  Hastacn  Capa   cagion  of     tha 
icil  of  .churchaa   for  Christians   to   pray     for     cha 
Sovarnoant     on  Juna   16th  baara     aa     out.        As     a 


Digilizedb,  Google 


Chrlatian.  liowav*r>  I  casaln  cacally  eonvincad  chac  If  avar 
vlolanc*  In  ctila  country  i.a  to  b>  judgad  aa  juac  cacributlva 
vlol*nca>  tnaC  judganant  could  only  ba  aadla  aCCac  avacy  acona  Of 
non-Ttolant  action   haa  baan  turnad  ovar.      and  aftac  avary  Chriaclan 

act    of    caconciliation   haa   failad. 

Ha  cairtalnly  cannot  aay  at  tliia  point  in  tina  that  tti*  Cbureli  ha« 
(ailad  daapite  naving  turnad  ovac  avary  aCona.  Tliata  aca  a  graaC 
■any  atonaa  yat  to  ba  turnad  ovar.  Thaca  ia  attll  pcoCound  hopa, 
boen  out  of  cnriatian  cooaltMant  In  ay  haarCi  that  wtiila  wa  aay  ba 
falling>  ua  bava  not  yat  finally  failad.  Thara  aca  thinga  to  do 
uhicD  ua  auat  do.   ubich  ua  and  othara  bafora  ua  bava  failad   to  ds. 


It  !••  lour  Craca,  in  tha  contaxt  of  thia  thinking  tht 
BO  diaaayad  to  find  that  tha  faeces  uorking 
confrontation  In  South  Africa,  ara  aa  ottan  cauacdad  i 
aeclaia  in  tha  HaaCarn  world/  uhila  ttios*  of  ua  stem 
ground  to  aalvaga  out  country  fcoo  i  -conaunirt^  fira 
~~'        ~-    -  -      -    ;auir)g   aiaa  and  objactivas  by  popular  } 


I  hava 


iall-( 


aaploynant  of  violan 

ca  and 

othar  tact 

ca  and 

atrataqiaa 

*i  eh  which 

thay  ara  associatad 

Katna  haa  racalvad 

tha  British  Counc 

1   of 

tha  cola  It   haa 

pHyad  111 

fighting   aparthald 

hac  aia 

ck  organta. 

iona   hava 

not  dacad  v«ntuta- 

political  diffaraneaa 

batwaan   choaa  who  c 

any  an 

'  posaiOility  that 

politics 

actanpcing   Co  pans 

rata  e 

onal  li 

Africa  la 

anything    othar   t 

-particlpat 

prlnclpla  laada  to 

ontcon 

ting  aparthaid  aocl 

aty  fro«  wl 

ia   tha  domain  of  t 

o  amploy  vi= 

I  ballava 

that  thara 

is  an  ucgant  naad  nc 

tian  agancias  to   look 

carafully   at   tha 

iKplie 

ationa  Of  nc 

n-parel 

cipation  and   Co   naka 

a  Churc 

h  m  any  ao 

laey  ausc 

nacaaaarily  ba  a  partleipa 

nt  in  tha  in 

aociacy  If 

tha  apiric  of  chria 

o  ba  apraad 

acroaa 

Cha  fabric  of  soclaCy 

to  -OCR  witnin  it. 

Thara  nay  ba   tina 

a  in  a 

nation- a 

iatory 

whan    danomina clonal 

churehas  will  acand 

asida 

for  a  confa 

I  ballava  it  is  danq 

thinking  to 

talk  of 

a  confaaaional  church 

In  South  Africa 

oday. 

y  whan 

haa  dona 

avarythlng   tha  Chu 

uld  and  aHo 

Id  do  t 

lat  wa   can 

think  in 

king  fcon  w 

aaka  tha 

Church  ralavant  to  tha  pro 

eaaa  of  lib* 

ration. 

Kour  Gtaca,   I  aha 

ra  tha 

aa  faw  thou? 

hta  wit 

h  you  aa  a 

Chrlatlan 

paeplanad  by  HaBtatn 

Chria 

tandoip,   but 

yaarnlng  for  tha 

tallowahlp 

gi:izedtyd< 


lOogle 


^a.SGSz  arriL  EELrr:ai3 


HBHORAHDUM      rOR      PRESENTKTIOIt      TO      SIR      GBOrFRGIf      BOWS, 

rOHilCN   AHD   COnnOStlEALTH  SECRETARY 

BY  HMCOaUTHU  a.    BUTHSLEII.    CHtSf  MltJIStEH  OF   RWAZULU,    PReStDEHT  Of 

IHKATHA   AND  CBAIRHAN,    THE  50UTU  AFRlCAH   BLACK  ALLIAHCe 

LONDON.  2nd    august    1935. 


«  b*«n  don*  ac 
pads*      U*at«rn 


«nd      violBnea 

opprasaion  whai 
an  witnaaalng   1 


laapraad     daaci 


loploymanl 
isanclals 
id      in   Bli 


PovacCy  pcaducaa  tha  clrcunacanei 


political  {lurpoaas. 
laac     pa  chaps 


rd  aptcalling  c 
■  ;a   spraad 


lothinij 


:y  and  tha  facC  that 
uarnnanc  parealvad  • 
na  indication  of  tha 
llKa.  He.  Sacratary 
■  Black  South  African 
en  thaea  naa  baan   thia 


opla  who  auffac  ■«•• 
found.  (n  par';.  tlM 
today,      la   Cho  kind     «C 


In  alack  Bcaaa  la  an 
□na  of  tha  undarlylnq 
aainq.         Violant      mob 


olanca  la  aor*  pcona 
r  witnaaalnq  in  South 
inqar  and   paopla   balng 


CO  which  tha  uaa  by 
■  concoBitant  of  South 
Parliaoant  uhlch     haa 


Digilizedb,  Google 


conatttuelon«l     axpc*) 


pcavi 


polic 


and      It*  ■ioBt 


:ion'llaad   13  alll 
1  thaEafoc* 


Hou,  houavar.  BldcKs 
conaclcutlon  and  tha  pan« 
eavolutionary  apciona. 

Whan        tha     Soutn     African 

Haatain      obaarvaci    aau-chia 

of     -a    naw   pclnclpla  whicn    CI 


lan   paopli 


hi    t 

m»    i 

n  «h 

ch  to  Baka 

the    k 

ind   0 

adjiia 

nanc 

that 

It 

•d 

In  actual 

fact 

r.ttodu 

on 

iugh 

tlM     toe 

nq    to« 

ha 

vio 

of 

Oova 

enMKt  and 

y  ahoE 

anad 

Iw 

l«a 

eha 

Sou 

h   African   G 

o«tn 

»nt 

o     ocin, 

doubt  at 

alL 

Chat    tha    Ha 

tion. 

1   Pae 

ya  Oraak  w 

th 

many  of 

CtOJ 

■aecoj 

policy:,  pr 

rteipl 

a>   Is 

highly 

aiqn 

(: 

cant 

(Of 

•   at 

tha 

cy.      Thaca 

ia    no 

^oub 

ha  Stata 

apt* 

for    [ 

afoeai 

and  aa 

A     a 

ac 

n     s 

oth 

itocm*     hava 


..daAieabla . 


rafonii. 
Ironically. 


.a   that    Blaeka 
ica   not      onl 
oedtnary  Bl 

coamatca  and 

pacpt 

iaty 


eaform     chat 
tha  gtoas  dispj 


1  policy.  Undar 
;Ks  could  aapira  to 
>  tha  ca-wrtting  of 


inouncad      tha 

tha  riqht     dlrac 
I  aa  junior     pan 

I  aa  tha    inccoduc 


'Oducad     aca 


nomaland   policy 


:  South   Afcj 


I  hird  con 
rnita  racial 
I   tha  naad   foi 


,  Google 


in  peaoElcal  taraa  danatlonallaad  22  BllJ 
canatleuclonal  axpraaaian  eo  Hhlca  claiaa 
aurlaca  araa  of  3outn  ACrica  and  cnacafora 
fiaeal  policy  and  Its  domaatic  and  forali 
pravioua  Haatoina'Cai-cypa    conac   tucLon>       Slacka 

canaGlcution     and     ctia     panduluii  has     t 
ravelotionacy  opciona. 


tha 


AtcJ 


Cha  South  Afri 
nad  bougriti  ciR 
waa  prapacad   tc 


Govacnaant      tic 


:  and  deaaaEl 


paopla     and     9 

policy.        Undae 
could  aaplra   to 
ha   ca-writlng   of 
n9      (ucthar      tow 

It* 

tha 
rda 

raaoanC   tor    it. 

tna  right  dlrac 
as  junloc  part 
a*  tha   Inlroduc 

■any 
cion 

eion 

doubt  at  all  that  tha  National  Paccy'a  bci 

;eo  aaecoaancc  policy  pelnciplaa  la  highly 

I  of  tha  countty.   Thara  la  no  doubt  at  ali 

has  aeeaptad  tha  naad  Cor  raforn  and  aa 


Chat  Hhlta 
doubt  that 


.lliona  at 
ihold  tit] 
'  at    Blac)i 


I  who  qualify  to 

cnat  Biacka  In  1 
ao-callad  Hhlta  urban  »t»-ii  ata  not  only  naca 
dasleabla>  >ea  all  naaninqful  to  ordinary  Black  Sou 

Tha  voica  of  b>nkit)g.  mining/  connarca  and  indua 
talking  of  tn*  naad  for  rafora  and  whila  thara  can 
of  Uhita  rlght-wingars  saaklng  to  paEpatuata 
doainatton.  opinion  foroaca  In  Hhlta  aoclaty  cacogn 


Ironically,   it  ia  thJ 
aipaetaciona  and  dtanatJ 


>  aiBc 


^aivad  t 


adini 


9  diapacity  batw) 


k  «ltn  ur.y  of 
igniflcanc  Cor 
-'■at  tha  Stata 

Black  South 

I      pacaanally 

homaland  policy 
a  numbars  In 
iry  but  alao 
Africana. 


htanad       Black 


Digilizedb,  Google 


1  cvcclbly  cragic  that  cha  fluid 


Intacdapandanca . 


Council  uhlch  would  I 
I  raCusad  to  hava  an; 
paceiclpation   in  fae 


J   wock  or 
»  patey  t 


advantag*  by  th*  Seaca 
ana  that  ha  will  continue 
niaad    Etia      world      ha      will 


inc   la  scandinq 
South      Afcicana 


scablish  a   E 
tituCional 


ack      Advisory 


I   eafuaad   t 


lility. 


iccion   o£   SoucH   A 


1  uhaca  [  aCood  politisally ■  ACcar  h: 
:a  aa  a  singla  atai;*.  I  aald  publicly  Chat 
icuaa  wtch   eha  scat*  Prealdant.        An   irapaai 


Digilizedb,  Google 


of  war  which   laadi    Co  BCOrchad  ■arth   [ 
hlch    Ch*r«   will  b*   no  uLnnara.         If    It 
laad   CO  a  dlfftculc   coad  ahaad   In  which  that 
;  Blacka  and  Hhitaa  will  ba  abl*   to   find 

lava  aald  that   t  aa  praparad  taapoeartly 
tdaal      of      ona-nan-ona-vota      tn   a      unitary 
raparad      to  aiC  ijoun  wlcti  Slaeka  and   look  at 
■anina   tna   narita  of   fadaral  or  ochar  aoluclo 
nount   Of   Black  qoodwlll    whicn  could  atl 
eoaprontaa      aolotlon*  and    Chaca    la    Cha   a' 


aidaa, 
iC  will 


illlaad   to     aupporC 
C  qocdwill     asonijat 


tha 


acy  ( 


1   South  Afcl 

Party.        Evar-lneraaslngly     tna     pc 
thraatanad  by   Black  political  grouc 

a   bloody   and   violant    »nowdoun    in   Sc 
:    fluidity    in    ttia   country; 


tcogni 


'    tha 


■ad    CoE 


Dtaconla 

daclarad 

violanca 

1 

oppoa 

accaptab 

la 

to  bot 

Tha  fact 

t 

(lat  tha 

■anclnan 

auppo 

tha  politica  of 
:anad  by  tha  National 
I  nagotiacion  Bra  balng 
'    tha   AHC's   niaaion~in- 


working  naaning 

ully  towacda  than,   tha  oora 

o  attamptirg  to 

dastroy  tha  proapacca   of   a 

anpting  to  cpposa   aparChaid 

urnad  to  killing  Blacka   for 

a  in  the  hopa  o 

daatroying  tna   nagotiating 

a  who  ara  capab 

a  o(  oobillaing  tha  kind   of 

Whitaa  to  tha  nagctlaelnq 

al  aanaa  tha  fi 

at  pnaaaa  of  civil  war  hava 

m  in  statas  of 

narchy  and  thara  can  ba  no 

nt  raliaa  on  tha   horrandoua 

ipportad      by      mlllioc 


ipward  apiralling  of  iriolanca 
d  spiralling  of  Oovarnaant 
ork   to  nagata    avarytning 


King   today.      Sir.   ara 


Digilizedb,  Google 


up      n»b< 
country. 


tn*  pol 
nothing 
Africa  > 


by  th*  fact  that  Inlcatha  has  now  ov*e  a  ■llllon  paid- 
Tlila  nakas  It  by  tac  tha  largaat  Slaclt  political 
•var  to  hava  baan  Coemd  In  tha  history  at  tha 
xy  political  aciantlat  knowa  tOat  a  political  party 
ca  ttian  anrol  but  a  proportion  at  pota 
or   avaey   card-caetyln<j   nanbar   ot   a 


nagol 


luppoi 


■ympat 


and 


That 
thaJC« 


itn      baaa      of 
luth   ot    ttia      ( 


loekad  by  histoe; 
South      Africa      i: 


1   Oal 

do    to 
of      n< 


Pachapa  Britain  could  hava  dons  oora.   and  partia 

icc  raoains  cltat  it  la  to  tb*  eradlt  of  Graat  Britain  tbat 
lat  aha  tnought  aba  could  do  to  asalst  nawly  Indapandant 
tap  Dota  than  policioal  banafita  from  thair  indepandanca* 


=db,Go' 


lOogle 


en*  •xanpla  ot 
aclBulatad  tha  l 
tn*  ua>e.      meo 


1   Eha    intarfac 


•uppoce   cona 
la:     u*   daatc 


disin\ 


Man  d: 
puraly 
dcpandi 


in  SoutM   hfE 
idlng   tha    fi 


lucn  Africa  wtiicn  I  baliava  haa 
la   laadlnq   Induacrlal   country  In 

casponaiblllcy  to  do  aoBaching 
.Clan  aid   la  daaparataly     naadad 

tidnd  al  chosa  vho  work  Cowaeda 
ia  dLplonaCLc   ptowaa*      Of      Gcaac 

a-ded  (>f\  chs  Incarfaea  bacuaan 
IE  avan  noca   daaparataly     naadad 


lighly  appraelaca  cha 
Ras  «*e  by  giving  a 
>uEh  ACeiea.      I   praiaa 


in  axaapla.      lor    It   is  only   In     4 

«a      I      nava     suggaatad.      that 

I   peoeaaa  of  enanqa    in  South  ACrl 


lusa  I  ballaua 


Tha    axpoaa    uhicti  uaa    publlaliad 

s     aiplcitatior.        prlelcBd        Eha 

including    Ehasa  of  captains  of 

:g      ot    Enploymant      Codaa      ua9      a  ■ 


ono 

nic  mua 

cla 

da 

i/alopad 

u 

Ich 

I  bal 

got 

( 

fiOOE. 

nagoE 

aca 

wi 

Eh  Slat 

k 

South     Af 

lea  sacwaan  Blacks  and  Hhlcaa  la  Inccaasing  ract 
I  baliava  that  a  nagotiaEad  fuEura  la  poaslt 
•t  Ehia  InEardapandanea  aa  wall  as  tha  inccsaai 
aconomy  en  Slaclca .  ThaE  la  why  I  appraciatad 
la  which  Scaat  arltain  adoptad  in  tha  Saeuej 
la   pEOpoaad    sancclona    on   Souch   Afri 


laid  \, 


'jld   1 


luth     Africa 


Digitized  by  Google 


Ot    0 

( 

k*pcielaB 

Tha  Bh 

•la 

, 

paelan 

a,   wha 

„ 

BO 

nuch 

ch* 

clng 

a  aon*  by 

ttia  NasC  an 

1  (on  c 

c<»a)  1 

ill 

viv 

d  in 

Binas. 

Th.  South 

cic 

conony 

with  th 

a  Baaau 

a  of 

Hhod 

y   did. 

do 

Bind 

aurr.ri 

for 

thB   MOD 

Chat 

ch* 

Eo  auEEac 

r 

foe  no 

Tha 

why 

«• 

Pl 

ca  ao  aucP 

(altn  m 

B 

aiplOBa 

i=   prow 

in 

tha 

and  Hh 

in  South 

fcfc 

ea. 

igilizedbyt^* 


lOogle 


•THB  RIAL  CHALLBHCES  BLACK  S 


i   ATRICAHS  FACE- 


BV   PRINCE   HAKGOSUTUU  OATSilA  BUTilELBZI. 

PRESIDENT  OF  IHRATHA  MD   CHAIRHAH,  THE  SC 

TEL  AVIV.   AUGUST  1 


>v*l 


ind  t 


prapaclnq  foe   \ 
ban  nod 

■oaatninq  t 


Th* 
cha 


IB  id 


DLi-South  Afr 


>      and      Afcicai 


■■u«a  and  you  ar* 
itary  training   cai 

iVplutii 


caqscdad  aa  aubhuaan 
laa  you  baar  tha  ac 
huntad  doun  By  jac 


Foe   thaaa  p*o( 

:ha  cradanciala     oc     tiavinq     oaaa 
having  baan  forcad  inca  axllai 


ind  ara  nara   t 


I    tha   noaC   rud 
.fa.         Hllliona  of 


by     povarey 


of   cooorrou  balng  diffarant 
far   tha    indignity    of  aparthaid 
I  doungradad  and  onaiiughcs  aca  nad< 

'  God.        For  aa>      tha   raal  eballangi 


ipla  apacthald   i 


iLad      avary      yaar 

ara  nilllona     of 

by  aparthaid  which 


id  lawa  and 


Digitized  by  Google 


Ihlm     eliallan^*     of 


Jail*.  Hhan  ctiaci 
■onuaanca  to  thaaa 
vill    liava   aanuaanta 

South      Africana      aal 
■acCyrdoa  la   that  vhlch  you  dai 
of  your  country. 


it 


[talltical  fact  Chat  daatn  , 
c'ontlnuad  affactiva  pacticlp. 
Chanqa  la  aoaathlng  Black  Si 
Thara  will  ba  no  victory  lor 
laadara  nalca  cannon  foddat;  o 
laadara  thruat  paaaanta  and  ^ 
whara  thay  aiaply  cannot  aurv. 

Nhara  would  laraal  today  ba 
country  to  fight  atx  day  wara  i 
would  laraal  today  ba  ' '  ~ 
cannon  (oddarT  Mhara 
waa  mar*  inportant  I 
wnich  thara  uara  raal  proapar 
today  ba  If  Incarnal  politica: 
laraall  to  ba  killad  by  Ian 
•nouid  do 7 


thaaa  paopl 
ninqful 


:tad  to 
Each 


ill  South  Afrlcana. 
1  cavagad  by  pollea 
i   in  South  African 

Lea  wa  Hill  hava 
lia  namad    kfl6      wa 

AUtaida  world  but 
ins     Ha  aa   BlacX 


litical  fi 
a  at   tha  a 
ind  jailing 


seaaa  of  bringing  about 
rlcana  aiaply  cannot  afford, 
in  South  Africa  if  wa  aa  Black 

a-c   ehildcan  and  It  ua  aa  Black 
into  tha  frontlina  of  battlaa 


t  past  laadara  had  parnittad  tha 
ieh  aiaply  could  not  ba  uon?  Hhara 
i  laadara  turnad  ita  ehildran  into 
raal  today  ba  If  canoniaad  oartyrdOM 
tactica  and  atrataglaa  In 
aaa?  whaca  would  Israal 
fauding  and  idaological,  diaputaa  lad 
dlaputaa  about  what  laraal 


I  warrior  atock.  I  traca  ay  ancaatry  back  through  ay 
IS  founding  Klnga  of  KuaZulu.  and  through  ay  fathac  I 
icaatry  back  to  auccaaaiva  priBa  ainiataca  and  aray 
rho  aarvad  aa  laadaca  in  KuaZulu  fros  tha  aarly 
ntury  uhan  tha  Zulua  uara  forgad  into  a  nation  by  tha 
■Ighty  King  Shaka.  Thara  throbs  in  ay  vaina  tha  blood  of  a  warrior 
nation  which  forgad  a  vaat  African  aaplra  and  which  in  tha  and 
eould  only  ba  baatan  by  tha  full  aight  of  cha  Britiah  ai 


joogle 


It  anjoyad  a  vast  aupaclorlty  in  Cha  i 
niatory  et   ay  paopla  and  avarythlng  I 

haa  tauqhc  a*  to  ba  praqaatlc  in  that 


hi*  ovn  aiatar.  Prine«a  Haqogo  h 

Dinuiulu,   CO   ca-ampnaslaa   Cha   hi 
faailiaa  and  ulth  tha  Intant  of  craa 
ua   CogaCtiar.    So  I   aCand  bafoca  you  aa  a  d 
Catahwayo  and  of  tha  Prlna  Hinlatae.  Hnyanani 


.oloqy  of  war.  Tha  whola 
'  laacnt  froB  ny  aothar'a 
aa  political  Bhowmanahip  and 
which  can  and  cannot  ba  dona. 

I  Dinuiulu.  I  traca  ay  daacant 
nq  Dinuiulu  ka  Catahwayo.  It 
jno  qava  to  ay  Cathac,  Chiaf 
c  of  tha  Xing  and  of  XwaZulu> 


I  I  ( 


:  foi 


I  Cla< 


axchangad  thouqhl 
Robart  Sobukwa,   Halaon  Handala  and  i 
of   ua   could  than  saa  inCo  tha  futura 
awaaona  ^owar  of  tha  National  Party  and  It 
all  undar-aaClBaCad  tha  davaatation  that  k 
tha  ANC  and  tha  PkC.    In  tha  1' 


juat 


jnd   tha  c 

innlnant  and  ut 
By  banning 
1950  a  cc 


aparthald  ■ 
AHC  and  I 
auphorla  ( 
dacada  Bit 
■till   aa  I 


bordaca.  only  a  fat 
Extacnal  Niaaion  of  tb 
tha  organ iaationa  c« 
dona  all  thaaa  yaars. 


.d,  with  Chiat  Albart 
.awa  with  paopla  lika 
irlng  tha  ISSO's,  nona 
waca  all  awara  of  tha 
nlica  and  amy,  but  wa 

vaa  a  falsa  sans*  oC 


than  and 
aslt«d  looking  Ol 


tiling  Chair  .' 
>  tha  I960' a. 

lir  ahouldar  foi 


I  apatthaid  aa  i 


Aftar   long  v 

.  into  a  dacac 
tha  raaliaat 
would      hava 


atcuggla 


Lon   would 


Eoqathar      tha      products   of    th 
thaa      togaChar   in  a   canawad   com 
Black      South   Africa.  Hy   polil 

UIC      waa   aaaahad  up  by  govarnBai 


and  tha  yaars  turned 
.coking  around  thaB  in 
itry  on  tha  ground  who 
tion.  Black  South 
3C  cona  fron  acroaa 
'•rad  on  our  haada 
ouc  atruggla  and  ua 
inda  if  nacasaary. 
(  political  strings. 

>  ba  forsad  in  1973 
InkaCha  gatharad 
I  atruggla  and  waldad 
I  traditional  idaala  of 
I  davaatatad  whan  tha 
brutality  in   1961     and 


Digitized  by  Google 


and     ateataqit 


■Inccaaalng  daaanda  w 
I  CO  mount  a  naw 
I  vary  claacly  about 

^h'ei<^  which  would  b*  do 
;□  maka  noral  pcocaaca 
>iiE    providing   a   pcograni 


Onalaught  against 
that  options  Black 
1  and  atcataqlas  ua 


ictlon     of     laadarshlp  ull 


popula 
paopla 


10S*  yaara  of  daap  thought  about  how  I  should  raspond 
inand  Co  laad  I  eana  to  eoneluda  that  thoaa  who  abandon 
^sy  policies  and  thoaa  who  abandonad  tha  moblliaatlon  ol 
1  ■aabsfSblp-baaad  organisation,  and  thoaa  who  abandonac 
daBoecatic  opposition  to  apartha  d  bacausa  thay  had  basn  trii 
Into  subaiaaion  by  brutality,  uara  gciavously  wrong  In 
jud^aaant  that  wa  had  to  abandon  aasa  Dobilisation  and  constituancy 
politics  in  (avouc  of  undacqround  policies.  Thua>  uhan  I  t' 
caspondad  to  the  pcopla  a  call  and  foundad  Inkatha  In  1975, 
'  ao  with  a  bloodyoinded  dacarminacion  to  organtss  paopls  into 
political  forca  uhleh  would  ^avoid.  Cha  hacoic  and  aaak  to  fc 
■asfiingful  to  tha  paopla  on  tha  ground  in  tha  ciccuaatanci 
Hhich      Chsy   found   Ehaaaalvaa.  Rathar   Chan  abandoning   Che      i 

cherlshad  Black  South  Afr  can  political  idaala  which  had  »• 
tcoD  tha  aacly  twantlafh  canturyi  I  aouqht  a  caturn  to  thoaa  idaala 
which  had  baan  abandonad  whan  tha  AHC  and  PAC  want  undarground 
aftar    19fil. 


I  aatabllahad  Inkath* 
oc  swin  in  tscms  of  1 
a     Baabarahip-basad 


organisation  which  would  sink 
>llisa  paopla  and  to  aatabliah 
Ha  tonnulacaa  Inkatha's 
tha  idaala  which     Black     2ouCh 


■  ad 

Black  Sou 

•y 

aasuiDE 

y  B 

ack 

octly  CO 

baan 

demo 

tad 

•vary  ya 

t   a: 

>aa  gr 

foe 

a  it 

w  a.  m 

tha 

ahort  a 

haa 

ace 

jBUla 

ad  a 

sea 

Ilia 

n  card- 

carrying 

maaba 

•■•rgsd  into 

tha 

So 

uCh  Afctc 

n  political 

arana  o 

n  tha  «< 

davaacata  South 
■  langch  and  btaadch  of 
(lea  of   this     axplosion 


I  1976  axploaion  in  Sowacc 
Africa  for  Cwo  yaars  as  t  Spread  t 
tha     country.        Inkatha  waa  baptlsac 

and  iC  was  In  thaaa  vary  circuBatances  utiara  aaaociatas  ana  avan 
cloaa  frianda  and  thosa  who  triad  to  adviaa  aa  froa  a  dlacsncsi 
wars  tailing  oa  that  I  had  aisconceivad  Black  South  African 
politics,     and     that   I  waa  arronsoua   in  ay  ]udga»anC>      that   Inkacha 


,  Google 


baqan  «  ycowCh  patcarn  whlcl 
:h*  world.  During  thoaa  Cli 
Inkatha  vletually  <Se\' 
tha     vlgocoua  gcowth  j 


lulatlng  banafit 


a*.        Svaeythinq 
Soutn     Atrlca     caUa     aa  tnai 


>   Eln 


1  objac 


:iva 


Caka  Ica  full  and  rightfu: 
Soutt)  ktrlca  haa  alwaya  I 
laty   wlcriouC   daaCroylnq 
hallanga  avary  Black  south 


Up 


)   1960,      thata  uaa  unil 
I  dlaagraaaaot  that  thi 


I  aaCoundad  South  Africa 
:  atrlfa-Corn  yaara  of   1976,    1977  ant 
I   ita  Baabarahlp  aach  and  avary  yaar< 
>Tti   of    InkaCha   avary  yaar      alnca      ha< 

lopla  yaarnad     co     b«     ocganiaad 

cha     pollelca     In     which     thay 

ivoluclon  of  bargaining  pouars. 


bbla-roualj 
1  niatory 


alour  taachaa 
■acaudlng     aob 
Chat  it  la     oofc 
and  tcua     patrlotiaa     au 
~        11  atand  tha   taat 
■uggla 


that    it 


dam 


flaxlbla 


Tha  «trug9la 
ng      to      rators 

luld  ba  facing. 

r    in   tha   struggla  and     cbara 

.cy   ayatas  wa   l)ad>      and      tha 

loE    hava    to     ba      ehangad.         Ha 

In         tha        HaatDinatar-ty|>a 

Itrugglad  for  Inclusion   in   tha 

-  -     AMC     gathacad 

ta     that     tha 


of    tha 
ling!/  t 


ilwayi  scrugglad  for  and  aaauBod  t 
Africa      what    It  ahould  and   i 
to     laad     Black     South     Afcj 

itlon  ralying  a 


Tha  old  Anc  was  top  haavy 
waa  paid  to  graas  coot  m 
Evar    Increasingly   chi 


old     IMC,      it  had  ■ 


Iliaat 
■ought   tha  draai 

loinda  of  paoplt 
>1  >  polica  and 
Lon  laft  Black  i 
la.        Prior 


I  polltlca,    and  avoidad 


paopla 
govarnnant 


hay   had     failad 

utalicy     Hhich 

a     political 


Digitized  by  Google 


Th«lc  inability  to  saka  tiaadway  in  clia  Haatarn  induat 
tbalr  inability  to  solicit .raally  aaaningful  aappart 
thaa  to  abandon  ttialr  objactivaa  and  lad  thaa  to  aaak 
for  tha  araad  atcuggla  uhich  ttiay  Jinilacatally  daclac 
not  sant  into  tha  world  to  raiaa  an  aray;  tnay  war* 
world  to  aobtlisa  diplanatle  aupport  Eor.tbat  which 
baan  atruggling  for. 

In  tha  aarly  aavanciaa  it  baeaaa  appatanC  to  am  and  t 
Othar  BlacX  South  Afcicans  that  thara  would  ba  no 
aarctiing  amias  Croa 
and   to  ailliona  oC  c 

tha/  found  in  tha  Kc« 
who  deaplaad  c 


long 


ting 


illanqa  of  e 

ignoainy.    1 


•  ilii 


lia  downward  spiral 

this  challanga  by  aatabliahtng 

had  aluaya  uphald  in  aiit   atrugq: 

ind  nobla  idaala  and  thousands  upc 

I'   nany  at   uhoB  had  baan  staunch 


I   South  AZcl 
:  and  PAC,   joinad  Inkatha.   It 
i     it  vas  Inkachs's  coaaicaaat 
la  aanaa  to  tha  paopla. 
ttua  comnitBant  t 
■aaaiva  growth  of  Inkatha 
ACcieans  with  tha  oppoctunii  _ 
othac  in  ongoing  pragnstic  policici 

I  aa  a  vary  proud  South  African  and  av* 

tall   in   tha   luiowladga   that  i 

worthwhlla.   and  whan  I  ctanal 

and   I   maat   paopla   who  look  aakanca  at  b< 

coamittad  political  aulclda  or  ^ 

bacauaa   they   alBply   do  not  unt 

African   atruggla     Oura   is  th< 

opan   damocracy   in  South  Africa, 

pursua  tha  politica  of  nagotiat: 

and  stcatagias  wh  ch  whtla  thay  i 

which  uhila  thay  strangthan  Blac) 

thay   oppoa*   apatthsid   fiatcal; 

raconclliatocy.    Inkatha   doas 

political  party.   inkatha  saa) 

■aaka  only  thosa  changaa  which  si 

in  tha  and  ba  abla  to  support. 

faca   is   not   aisply  tha  challai 

tha  challanga  oC  asking  it  poi 
asarga.  Bloody  Hariiat  ra 
govacnnants  with  worss  gowscnns 
a  vlolant  tavolutionary  taka-c 


carnal  daooceaey  vhich  lad 
latha  providaa  •      "    "    


ilbl 


Mastarn  world 


aiila. 
id  tha  natura 
of   aatablish; 


langa   for   South 
raea  group 

cha Liangs   I 


for 


;  of   ths  South  A 


t  which  a 
polit'lcal 


iolant  tactics 
1  powar  and 
and  which  vhila 
poaaibla  raaaln 
tsslt     as     a 


iplaca  ~     bad 
Govarnaant 


Digilizedb,  Google 


i  •■ployMnC  ol  vlolanc*  by   ( 


thraablng  in  aiqht  <■ 
^ti*nt;  It  ia  lonq-< 
aac-backa  and  loae  akli 
of  Inkatha  anablaa  mm  I 
it  anablaa  ■•  Co  avc 
proapacta  of   toaorcow. 


lay  all   I   t 
I.         But   for  aa    tti 
bloody  e 


ktt 


fCaclnq      bacau 


Iliad   ttia  polnl 


Should 

daaonatratad/   but  it  haa  not  coaai   and  wa  ara  a 

yaar  by  yaac  daaonatrating  that 

prasaturaly  abandonad  Black  South  African  Idaala. 

Chat  what  thay  aaid  could  not  ba  donai  can  ba  dona. 


Inkatba-a 


lahy  a 


In  k 


acroaa   Eha   land> 

clceiuaataneaa  charaetariaad  by  violanca  xt 

lavala  balng  aaployad  tor   political  purpoaaa. 

atand  up  to  ba  countad  In  Hack  townahipa  i 

Blacka   (or   political  raaaena.    Ih*   AHC' a 

daclarad  war  on  Inkattia  ai 

Africa  avacy  nighti   Blacl 

puraua  tha  kind  of  politlca 

baing  brutally  alain  »n3 

ground.   Ha  liv*  in  a  vloti 

violanc*!   and  not  only  aui 

la  intuaad  with  a  bloody-nl 
in  tha  atCmpt  to  do  ao. 
in  what  ia  In  fact  tha  fit 
gird  our  lolna  aa  wacrioca 

eouUttad  to  non-vlolant  ti 
politica  of  nagotiation  baeau 
can  only  achiava  oue  objactis 


ica  of  raconcil 

aliaa.   Inkatlia  auahi 


,n  radio  bcoadcaata 
ica  bainq  urgad  to 

:Btba  pucauaa.   Ir 


»Jin*daaF 


unpracad 
tnkatha'a  aa 
■laeka 
■in-l 
baaaad  Co 
lurdar  paopl* 
itha  Baabari 


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MBHORAMDOM  KtH   PRESBMTATION  tO  Mt.  SBIHOH  PBRBS 
THE  PRIHE  NINiSTER  Or  ISRAEL 
BV  HAHOOSUTHU  OATSHh  aUTKGLEZI    CHIEF  MINISTER  KHAZULO. 

or  IHKkTEA  AND  CHAIRMAN   THE  SOUTH   ArRICAH  BLACK  ALLIANCE 
lEL  AVIV    aOgOST  1985 


south  Africa  Is  t 

IB  tragady  Cold  in  t«cB«   Of 

on«  which  Black  po 

itical  laadara  ha*«  had   Co 

ha  last  thraa  quar 

ara  of  a  eantury.   Htian  tha 

d  Bodarn  south   Afr 

ca  in  1410  and  Blacks   Mara 

tllanantairy  pfOCAS 

bacauaa  thay   wera   daniad 

ting  at    avan  limic 

d  political  pacciclpaclon 

txcludad   ftoi 


In  tha  aarly  dacadaa  o: 
laadaea  could  work  lor  qualifiad 
couchad  in  tibaral  tsrsa  and  Chay 
without  thara  bainq  talk  of  non-nagoCiablaa. 

Batwaan  1910  and  194S  Blacka  aa 
parliaoancary  ayscaa  and   In   it 

.  atcongaat  Black  oppoaitlon  aecaptad  tha  «ounCry'a 
ayataa   and  sccaptad  tha  Haatarn  industriallaad  uay  < 
uaa   aaaeglng,   uhacaaa   today  Black  laadacs  rajact 
conatltutlon   and   no  laadar  ulth  any  raal  folloulng 
coaproBiaa  aolucton  to  anabla  Blacks  to  parcieipats 


th  Africa,  Black 

!     dsaands  war* 

Ira  9ona  to  any  Confaranc* 


Tricai 


cal   ParliaM 


Black       polieleal        laadara       ai 

Eaaponalbillty     of     laadlnq   In  auch  a  Hay   that  ni 

gain  BCcaaa  CO  ttia'pacltaaancary  procaaai  but  tt 
accapcabla  to  tha  majatlty  of  all  raca  groupa. 
eontait  that  I  yant  to  maka  a  faw  ramarka  aboi 
South  Afcican  atruggla   for   l^lbaratlon. 


:   that  procaaa   la 


I  an  tha  Chiaf  Niniatar  of  nvi 
•lacCad  laadar  of  InSuCha.  J 
■spondad  to   populai 


ulu  by  popular  alacclon  and   I  aa   th* 
hold  offica  b«cauaa   t   aa  a      daaoccat 

.    _....    , daaand  to   laad  ulthin  dasocratically 

inaciCution^L    Ufa   in  KwaZulu.        I   hava  alao     raapondad     co 
popular     daaand  in    Inkacha  and  accaptad  noainaclon  aa   Praaidant     of 

1  I   praaida  aa  Chlaf  Miniatsr   la     a 

ictad  by  popular  vota.        Thara  hav* 

mZuIo  alacCiona   in  which  avacy  KwaZulu  adult  citiian  waa 

>  votai      and   in  which  InkaCha  won  *v*ry  singis     aaac-        I 

1     Chiaf  Hiniatar  afcac  both  chaa*  landalida  victoriaa. 


^y  Google 


Ink-t 

a     Is     a 

•noe 

catlc  orqanl 

Annua 

Ganaeal 

Conf 

aranea 

whic 

atcaEaqlu      in   w 

•lac tad 

laad 

of    Inkatha   and    t 

in   oJti 

ca    ba 

tor   a 

parlod  o£ 

•  liaC 

tias 

baan 

Pcaaidancy-        Kw 

Inkat 

a'«      pai^a-jp  m* 

1  naa 

Hka 

tha     point 

that 

I  aa  I 

which 

anul 

na  daaoctaU 

Kada 

ship     opar 

taa. 

tma 

ted  aqa 

Lagiaj 

ac   v«     Asaaably 

Conta 

y.ac         Hhac   I 

hava 

■andata   team  o 

tdlnary 

paop 

Hy  po 

Itieal  ana 

laa 

aeeuaa 

m  m 

eh*lt 

and  daaerlbe 

■•  body 

la      tha 

1     who     a 

hall      ba 

nd      tact 

ca      and 

Tha  Praaldant 

nc'a    tan 

^aaca  at 

euppoet 

tot     ay 

llion  paopla  and 

Llion      >ark.         I 

nacltuen 

claa     In 

r>   which 

nca      at 

in      tha 

KuaZulu 

Annual 

Ganaeal 

oaa   tha 

country 

I  caralnology  of  thalr  craation  and 
I  a  puppat  and  a  atooga  and 
thay  daaerlba  aa  aa  working  wtchin  GavaenBant-eraatad  platCorma 
But  it  la  peaciaaly  bacauaa  I  hava  a  harediCary  laadarahip  rola 
which  daCaa  back  tO  KuaZulu  antlqultyi  and  it  la  pracisaly  bacauaa 
I  hava  oppoaad  aparthald  vahamanCly  all  ay  Ufa  that  I  hava  baan 
alactad  by  allllona  of  ordinary  Black  South  Africans  to  laad  thaa. 
I  naka  sancion  o£  thia  not  bacauaa  I  faal  tha  naad  to  parsuada  youi 
Mr  Priaa  Hlniatar/  that  l  aa  a  ganuin*  Black  laadar  in  tha  South 
African  atruqgla   (OC    libacation  Vou  ara   infornad        Sir.      and   you 

know  what  ay  paaition   la.  i   oalta  nancion   of    thaaa   things  bacauaa 

I  want  to  aay  to  you  that  Black  South  kfr  ca  support!  ay  balng 
har*i  and  I  want  to  gtva  you  tha  aaauranca  that  whan  tha  African 
National  Conqrasa'  Hlsalon-in-Exl la  daclaraa  laraal  to  ba  tha  anamy 
of  tha  paopla  of  South  Afriea>  thay  do  ao  for  tha  conauaptlcn  of 
Kasaar  Arafat  and  othara,  and  thay  do  not  raClact  Black  public 
opinion      in      South   Africa  I    would   not  ba   hara    if      popular      Black 

opinion  wara  hoatila  tc  ny  vlait  to  Israal.  Thara  will  nc  doubt  ba 
a  hua  and  ccy  «hd  accuaations  will  ba  flung  at  aa  afraah  that  I  aa 
eonaorting  with  tha  noctal  anaataa  of  South  Africa.  Thaaa  crlas 
will  rlaa  bacauaa  ny  laadarahlpi  which  la  right  at  tha  eantra  of 
gravity  of  tha  South  African  political  situation,  la  affactlva  and 
bacauaa  '  tha     doalnant     cola     of     inkatha     la     bacoalng     avar     aora 


In     ay  Intacnational  dlploaacyi      I   raaain  non-allgnad.        I   aaak 
aasociata  with  thoaa  countrias  and   loadars   in  tha  outaida  world  v 
hava  soaathing  poaitiva   to  oftar  in  tha  davalopeant  of  South  Afri 
aa  a  country  atriving   for  a  raca'-^Traa,    daaocratlc   tutura. 

Inkatha     is  doainatad  by  conearna  ^out  what   la   In     South     Afrlei 
nd   I  would  Ilka   to  dlscusa  aa  briafly  aa   I 


60-720    0-85 2S 


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natur*     at     tha   copic   p«cnlt 


Intaraata. 
Inkacti 


dataraini 


Llavaa  tnat  thoaa  who  ara  Inuol 
tha  struggLa  tar  libaeacion  hava  te 
--'-■•    i   bcaalia  tha 


:  bondaqa  Hill  dataraln 


Idaologl 

to  taplaHanC.      ara  abl) 

llbaratad  tca»  HnUa  i 
lanqar  titan  tna  auCIai 
of   laarnlng   tzom  Afrlci 


t   Souch   Atri 


'    to   do.       Black  Soutr 
'aciat  control.        Out 


1    to   p«l 
ibataclon   on   aoda] 


It  ia  quit*  claai  Co  ma  that  polltl< 
thair  aftaroath  naaa  (>ovart]r  and  uhlcti  hava  di 
production,  raault  in  posC-vtctory  qovarnmanl 
what  la  ulElmataly  unqovarnabla.  Hhachar  Gi 
baaad,  aociallat  baaad  or  capitalist  baaad 
affacclvaly  If  thara  la  naaa  aCarvatlon  and 
•vacy  laval  In  poat-libaration  parloda.  II 
Intaraata  ao  to  conduct  our  atruqgla  for  llbart 
daatroy  tha   proapacta  of  govatnablllty. 

south     Africa      in     untqua  on 
caally     aoptilaticatad  cantral 
that      tha      foundattona      foe    fi 
Africa  ara   ineonparably  batta: 
It      is   rank   fooliahnass    to    iqi 
and  atrataqloa   In  our  atrugqli 
auccaaafully     lad     to     tha  ovarcnrou  oi     coior 
Africa.        I     dany     amphatlcally   that  South  Afi 
aonaa    that    tha   South   African   GonarnmanC   claina 
South  African   Govarnaanc  clalua  our  country   to 
of      thair     rafuaal     to   laplaaant   tha  viadoB  thi 
canturlas     In   Haatarn   Industrial  daaoeraclaa. 
why      a      ana-nan-ona'VOta   ayatam   of   govarniiani 
cannot  succaad    in   South   Africa.      Thara   ara   n( 
•Olutlon,      which      la   colour-blind,      cannot   si 
Tha      point      I    maica   about   South   Africa's   unlqi 
altogathar  .  diffarant      plain.         Thara    is   no  ] 
■nyona     can     aaa     into     tha   futura  of     an     ai 
struqgla       agalnat       aparthald     auccaadlnq     i 
aatabllahatant     of  a  cavoluttonary  govarnmant 
Ha     cannot   rapaat  Prasldant  naehal'a  auccaaa 
cannot   rapaat    Prlaa  Hlniatar  Hugaba'a  auccasi 
tactics     and  atratagiaa  wa  avolva  lauat  ba  SoutI 
•tratoqiaa  uhlch  ulll   aarva  South  Afc. 


■    thay  attaapt 


istroyad  tha  aaana  at 
ttamptlnq  to  qovarn 
naants  ara  Hatklat- 
thay  cannot  qovarn 
owing  daprlvation  at 
South     Alrlea'a 


alaauhara     In 

,s  unlquot  Tha 
ml  qua  in  dafanca 
IS     avolvad     ovar 

I  unitary  stata 
ma  why  a  fadaral 
in  South  Africa. 


South  Africa.  Ha 
I  South  Africa.     Tha 

African  tactic*  and 
liaa. 


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bacuaan     Black  and  « 


:  thii 


.Ca  South  Africa  and  tha 
>ly  taad  Co  a  Black/Hhita 
all     adopt     scotchad     aarth 

I  Baan  craatad  by  apaethald 
I     naada   Co  ba     beldgad     and 


Tha  polltlca 
la  worklaq 
Btru9gla      aa 

furchae     pola 

llbaeatlon     s 


Saving     aaan 
kfclca  ducln9   tha 
unlaaa  Blai  ' 


dasparaCa  povarty 
Tha     Black  South 

davaloping  Thi 

containad  as  far  a 
'  Ilia  aca  conc«rna<! 
riddao  Blsc/i 
South  Africa.  T^ 
avaryChlng  wa  can 
froii  now  onxarda 
norch/aouth  global 


itaclon  and  vlolanca  Inalda  tha  country  which 
B  with  choaa  coaalccad  Co  using  cha  araad 
naans  of  libaratlng  South  Afclcai  can  only 
■Cy  and  raduca  tha  pcoapacCa  of  any  kind  of 
Taecica  and  acracagiaa  in  our  acruggL*  for 
<ov«n  around  tha  caality  of  Incacdapendanca 
>f   South  Africa. 

happanad  acroaa   tha  langth     and     braadch     of 
20  yaara,       it    la   abaolutaly  claar   to  aa    that 
south  Afclcaoa  accapt  tha   tact   chat   hlacory   haa   lockad 
global    north/aouth  aiia,       and   unlaaa   Chay   aGcapt 
poaltlon    in    Cha    intarnational      co^uniCy      ia      a 
which      wa      are   allied   to      global      Haatacn      Induatrial 
no     proapacta     of     political        viccorlaa 
>ut     a  vaac  Ineraaaa   in     what      la     alraady 
and  auffarlng. 


;an  population  conacicucaa  soaaching  like  71 
L  populacion  Roughly  half  of  Cha  eounccy's 
■      already   urbaniaed.         Thara      ia      a      draMaCic 


Thar  a 


1  of  food  and  oChar  nacaat 


>   banafit  froa  South  * 


rlea'a  locaCion 


Thoaa  who  aca 
inCarnaCional  ' 
Africa  la  allani 


allanaca   Souch   Africa   froa   Cha 

'avaly  niacakan.   Tha  Bora  South 

'  1  daaoccaclaa  of  tha 

of  praaauraa  which  ua 

Bcruggj.a.    Tna  total  aconoslc   and   policical 

of  South  Africa  la  aoughc  by  thoaa  who  hava  daelarad 

lalCBant  to  Cha  acnad  atcuggla.   and  by  choaa  who  aaak  to 

counC.ryi  ungovacnabla  through  cha  aaployaanc  of  vlolanca. 


it  will  ba   to   Cha  k 


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Hhlta  South  AErleana  cannot  M  puniahad  into  aubalaalon  and  etia 
intarnaclonal  eoaaunlty  auat  caaliaa  thac  ttia  naad  ia  not  eo  punlah 
Hhita  Soutn  Attium,  but  to  atrangthan  Black  South  Africa  in  ita 
danocraclci  non-vlolant  daaanda  for  changa. 

Aparthaid  haa  axeludad  tna  aajority  of  Blacka  froa  any  aaanlngEul 

pact iclpat ion  in  tlia  country's  Craa  antacpcisa  aystaa.  Tha  naaalva 

induacrial  davalopnant  that  haa  takan  place  in  tha  couatey  haa 

primarily  banafttad  Hhitaai   and  it  is  thia  face  which  sakaa  paopla 

blind  to  tha  reality  that  Black  South  Afrlcana  do  not  want   tha 

wealth  now  ■onopoliaad  by  HhlCea  to  be  daatroyad> 

to  ahaca  tha  banafita  of  the  wealth  that  ia 

country.   All  those  who  lobby  to  aupport  dislnveata* 

and  atcategy  ignore  the  E 

foe  their  portion  of  wha 

redistribution  of  tha  total  wealth  of  South  Afric 

destroy  any  pcospaeta  of  pcograaa.   Ha  naad  t 


opportunity  to  create  wealthi   and  we  need  tha  redli 


opportunity  to  benefit  froii  wealth,  but  to  cake 
bread  which  Whitea  are  claialng  as  their  own  beeau 
ahara  iti  la  to  taSta  away  froa  both  Black  and  Hhlt 

Black  south  AEricana  are  entitled  to  a  fair  share 
the  country  because  they  contribute  their  ahare  i 
oC  that  uaalth.   But  to  daatroy  the  prospacta 


'oduced  by   the 
are  fighting 


lid   onl 
idiatrlbution  c 


ray  tha  alica  oE 
they  reEu««  to 

the  wealth  oE 

:he  production 

iting  wealth  ia 

destroy  all  proapecta  of  over  having  tha  future  we  are  striving 

Tha  South  African  aconoay  ia  indlvlaibla.  Xou  cannot  daaage  On* 
portion  of  it  without  it  having  reparcuaslona  throughout  tha  whole 
econoey.  Oialnvaatnenti  whether  it  be  aelectlva  disinvaateent  or 
blanket  dlalnveatnenti  will  danaga  the  pcoapects  of  the  growth  of 
the  econoay.  Every  GovarnDant  of  Western  indue trial lead  countries 
knows  tha  extant  to  which  econoaiea  are  only  iiinleally 
controllable.  They  cannot  be  awltched  on  or  off  at  will.  Tha  pace 
oC  econoelc  davelopaent  cannot  be  regulated  at  will,  Econoaie 
growth  is  accunulatlve  and  Hastarn  obaervers  should  underatand  that 
while  there  aay  be  e  United  utility  In  tha  threat  of  econoic 
aanctions  againat  South  Africa,  the  actual  iapleaentation  of  tha 
disinvestment  caepaign  would  be  uaelasa  unleaa  it  hurt  tha  econoay, 
and  if  it  hurt  tha  econoay.  Blacks  now  would  suEEer  Ear  eore  than 
Whites. 

The  divide  between  Black  South  African  leaders  who  chaapion  the 
diainveatment  cauae  and  who  reject  it  ia  a  Eundaaental  divide 
between  protest  politicians  and  pollttciana  urging  tha  uae  oE 
violence  tor  political  purposes,  and  politicians  working  for  non- 
violent oeana  for  bringing  about  radical  change.  I  know  oE  no  aaea 
aoetiog  of  Black  South  Africans  which  haa  given  any  Black  leader  a 
aandata  to  work  for  the  econoaie  downfall  of   the  country.    No 


joogle 


grasa  root  organisation  ol  any  Bagnicud*   haa  avac     aupportad 

■tMRl     aa     a      atcataqy  Slack  South     Afclca     vould     andoraa. 
la     of      thousands  of   BlaOts  wait  outalds   Cactocy     qatas      far 

IS      thsy    hops    to   (111.  Blacka   alesady    in   anploynant   do    not 

chstc     anployoant      to  support     ttia     dlalnvastaant      lobby. 

LonaDly>       disinvaatnant  will    laad   to   avar-hslqhtanlnq    l*val« 
(   unaaploynant. 


Africans 
unqovarnabl 


jntry  ungovaenabla   for 


uocking     to 


Ouita     apart  Croa  chasa 

raallaas   that  wa   cannot 

acBad   atcugqla  and    that   wa   will    hava    to 

iliSAna   at    bclnijing    about    radical    cbangs. 

vall-niqh      inposaibla    to   Bobilisa   Blacli 

opposition      foe      tha     politics   oC  nagot 

damoialised      by      nass      povarty      and      tl: 


and     dlssasB 


Thacs     ia     now  ■   tota 

intscdapandanca  batwaan   Black  and      Hhlts      in 

South     kCries  and  thi 

cirouastsncaa     in     wh 

ch    the    politico  of    n»qoti*tiOft      is      favoured 

Tha     stlaulation  of  t 

•   South   kCrican   aconomy    into  naiimuB  poasibla 

gcowth  rstas  is  urgan 

in  a  situation   in  whi 

h   trivy  basoma   avar-i/icraaaingly  indinpansibla 

for        tha     production 

at     waalch.          This      is     not       use     a     vaqua 

^•nacallaation.        It 

a  a  pairtinant  political   stataawnt  of   tha   fact 

tieai   mobiiity      among      llick      South      Africans 

^anaratas   tha  kind  of 

forcas  which  accumulata    to  broaden  bargaining 

bssas.         Tha  graacar 

ha    BCak«   Blacks   haua    In  tha  aconomy/    tha   mora 

bar(|aining      powar      en 

y      wi^l    hBV«           Bconoalc   axpanaion      froa      now 

onwards     auat     nacass 

cily   svec-lncieasingly      hava      vital      spin-off 

banafita      for   Blacks 

Tha   •conomy   has  raachad   tha  point  Hhan      any 

futura      aipanslon      au 

t     nacaaaariiy  draw     substantial     nunbara     of 

akillad     uorkars     out 

sklllod     Horkara,      an 

incraaaing  upward  war 

ioal    BObility  of   Blacks  will   walgh    tha   acalM 

in   favour  of   tha  poll 

Ics  of  nagotlation. 

rhara     ars     ailatlng 

backlogs     which     avan     tha     Boat     •nligheanad 

Sovarnnant   could   not 

llninata  uithln   tha   (orasaaabla  futura   unlass 

aeonoBle     anpansion 

okas  placa  at     an     unpracadantad     rata.        Any 

daaaqa      to  tha  raal   potantlal  qcowth   rata  of   tha  aconoay  will     push 

Digilizedb,  Google 


Thar* 


Sou  t  ham 


:iD9   tnaaa  huqa  iMckloqa 


ndlgnation  by  applying  aeonoBie 
ly  act  In  calloua  dlaraqacd  of 
ordinary  Black  paaaanCa  ^nd 


gaaacallaad  povarty  acroai 
^as  at»cvi 


African  aconoay, 
Kaatarn  induatrial  , 
handmaidan  to  idaolog: 


:  tha  5ouch 


at     utopia4 
d      on      fra< 

al  daaigna. 


foe    dis. 


I  wnola   of   Southarn      ACrJ 
n    In   tha    (oraaaaabla   Cuti 

aucvtval     on     tha     apln- 

but  ultmataly  dacrlnai 
ol*  oC  tha  sub-concin< 
univarsa  in  uhlch  Ini 
da spa rata ly      dapand      on 


I    Indulg*      in      pipa-draana      OC 

ragacd     tha     praaant     South 

.arprlaa  and     Intagratad     with 

i«athing  which  can  ba     aada     a 


uhan  I  aay  chat  th* 
Meo«a  a  party  political 
tha  Rapublican/Dmiracrat 
ilch     h&a       draggad        tha 


Tha     abova 
libaratlon 

South  Africa  and  munt  n<in-viol< 
capabla  of  bringlnt)  about  raal 
will  daatroy  tha  Coundatlona  (< 
'  >  vacy  aubstantial 


t  going   to  b*   forthcoalng   froB  t 


lonal   support  Cor  vie 


I  Hast.     Tha  pollt 


joogle 


LancB       nacMueily        Involvaa        laadaca        in 
trnatlonal  eoaaunlat  and  aoclaliat  (orcaa.        Or 
-vlolant     Cacclc*     and     acracaqiaa  aupportlnq 


:ha  oChac     hand, 

la     pollclca     of 

baekloq        tram 


■  asanacing   fznm 


Haatarn     Induatclaliaad 


Intarnatlonallaa 
co^uniat  and 
vieLanca.  Ic 
Black  30utn  ht 
accaCaqlaa  vtiii: 
•Uppoct  (roB  tria 
Black  3 


I  South  Afrlcana  on  tha 
dean  atrugqla  la  alraady 
.a  airaady  a  aaaalva  In-put  fro*  tn* 
Ld  unieh  auppoeu  tha  policlca  oE 
:  CA  B  Intacaata  that  laadara  In  tha 
I  toe  llbaration  adopc  cbcCIcb  and 
.•  cha  w>blllBStlon  at  avacy  poaaibla 
:[lal  HOCld.  I  do  not  ballava  Chat 
I  Cha  luxury  of  ctiooalng  batiiaan  ona 


or  anochar   Idaolo^lcal   parauaalon. 

t  •■  corract  in  iihat  I  hava  aaid  abova  and  tnia  nacaaaltataa  tha 
raeoqnltlon  chat  laadara  in  cha  South  Afcican  atcuqgla  Cor 
llbaeacton  naad  to  work  coward*  Inccaaaiiig  alack  South  Afelca'a 
bargaining  acrangth  in  th*  politlca  of  non-violanca.  All  too   (aw 

racognlaa        that      tha      politlca      of      nagoci 
moblliBBtlon      of      public   opinion  and   tha   « 

in  aaploying  danoceatlc  prlnciplaa    In  cont 
action       vhich      ia     naadad     Co     -ganarata 
prapaeatocy     action     which  will  auataln  th 
agraananta      coachad      around   bargaining   tat 
prapacatlon      for      th*      politic*      of      na^qot: 


I  tha  taplaaantatic 
et   tha  politlca  of  c 


and 


n  poaC-nago elating  i 
ring  en  South  Afrj 


il*v*d  poUeieal 

ly  will   not   only  ba    (atling  avacy  Soul 
Of  pao-pl*  accoaa  a  wh 
a  daap  iraapaci: 
•luaya  raapactad   tha  noc«mblc«n  ch 
r*foT*atlan  of    thalr  atat* 

SCataa>      but      unlass  thara    is  a    ly 

I*   Stataa  of    SouChacn  African,    th 

vary  auatar*  futura.      to  aay  th 

capacity  of   South  Africa  naad*   to 


ipandl 

ng   o(   nagotlBtlng 

olva  Black 

laadara 

tituancy  toraatlo 

iona  la 

a  aCfc 

ct  naadad 

to  put 

CO   practla 

■    Tha 

tha   procaaa  of 

daala,  la 

111  part 

xhlch  Muac 

•aatg* 

tlo«. 

nco  It*  owr 

1  during 

ch  hav 

■  aCrugglad 

for  and 

y-aeri 

ckan  and  if 

ndatlo 

na  of   Ch* 

tucura, 

Africa 

n   but  Chay 

will  ba 

Digilizedb,  Google 


that  b< 
clrciuati 


today .      I 
in  South 


Laclonatilp  botwaan  Southarn  » 


ound   ua.         Tna   pal. 

nlqhc   laap   Into  a  Utopian 
uphill   eoad  Bhaad  ol  uar   i 


at   I 


.lly  c 


I    tna   chari 


lead  t 


lal   of  < 

which   ia  alrasdy 
.acaata    ot    3auth 


I  conpronlat 
If    Blacks    tt 


leica   for  Blaeka     and 
rically  naeaaaary     in 

forld.      and  tha      ftra 

1  tha  world  know*  tha 
>  tha  fcaa  antarpciaa 
'  I  South  Afclca  ao 
Lao  vacaad  in   tha 


I   that 
I   of 


dial 


icka 


:tlva 


intry. 


populatioi 
population 


tlona  of   tha 

15  "yi 


I  South  Africa  haa  nada  ita 
:ha  davalopaane  of  South 
:h  potantiali  and  thay  auat 
>ution  towarda  tha  rapid 
itocpriaa  aconony     and     in     tha 


I  tha 


c  of  ] 


1  growth  rata  of 
t  ot  tha  total  Black  South 
A  nuqa  population 
tha  proapacea  Of 
pcoapacta  of  thara 
lonal,   haalth  and 


:  backlog  in  avarytti 
That  Oackloq  ^ '  " 
hunanly  poaaibla 
country 'a  Int 


I   lift 


laparataly   urgar 

davalop  avary 
Ciaa  who  will  ba 
r  any  govaronant 


„  Google 


fill  tM   Incapabl*  of     doing 


Til*  stat«  Peas  id! 


Th*      Trie 


•-ary      procaaa    in    pc. 

whara     tha     Covarnoi 
■anca   la   not  only  ni 


:apEa   tha   naad  (or  powar-al 

ina.  Ha      talka  about   Bli 

about  tha  abolition  of   hk 


■va  gona  aa   (i 

laa  and  nagotii 


I,  Ilka  •illiana 
pcaaldanc   chat 


sriBlva  t 


National  PaEty 

tha  Hhlta  South  African  lOaal. 
eontrol  in  87  par  cant  at  tha  cr 
bold  atap  focwacd.  Tna  Stata  l 
know  chat  I  can  sail  a  comprom: 
if  that  aolution  racogniaaa  thi 
Ona  paopla^  whoa  htaCory  hai 
daaciny.  Tha  Staca  Praaidant 
dlvida  pouar.  Ha  auat  taka  ch< 
poaaibla  naqotlaciona  alaad 
ovarnl^ht  cha  vaac  Black  euj 
(raqaaneation  of  South  Ale; 
ScaCa  Praaidanc.  Tha  poliCi< 
Black  and  HhlCa  laadara  elaatly 
n*90tiaca  abouc. 


3   bring  avary  poaaibla  praai 


.d  and  cull 


nq  batuaan 
il  and  d 


ncy  auppoi 


lOluCl' 

South  Afe; 
>ady  dl. 


virtually  all 
ind  foraign  poll 


ah  tha  idaal  of  ona- 
■aid  CO  tha  SCata 
wa  nagoClaCa  to  aaa 
I  ua.  Tha  ruling 
and  to  aoaw  axtanC 
ixcluatva  political 
cakan  cha  nacaaaary 
to  do  tha  aaaa.  I 
Hack  south  Africa, 
■  ana  country  vlth 

IrOB  wanting  only  to 

:ap  Cower da  naking 

I  would  ahad 


only   coi 
lay  ara     praparad 


tha 

tha 


immanca    if 


aa  aaylng.      I  plaad 
>  CO  baae     on     tha     South 


Digilizedb,  Google 


South   Afclca    ur 


CODBittad  .  CO  n»qat 
Govaciuiant '  ■  coniEii 
Black  South  Afclca  li 
flat  up  wleiiin  tlia  fi 
Cha  South  African  po| 

Tha     Stata     Praaldani 


and  ha  would  ba 

almad      at      undarm. 

dacLaratlon  ol    inta] 
aganda      within   whlcl 


sidant 


agotli 


antltlad 


frlcan  laadac      I 


naw  Prina  ninlacac 


Idan 

of     tha     National 

pollt 

leal    dlapanaatlon 

tal      powar.         Tha 

viaor 

y  council   and      it 

icat   full   aaaaloD 

•    Par 

a   dant'a      opaninf 

Spacial      Cablnat 

ion    foru-     within 

plac 

a.      I  had  alraady 

lal   Cabiiiic     Coomlttaa 

awock  of  tha  peaaane 
otlata  on  tha  pact  of 
agendas  and  which  aca 
on  which    72   par  cant  of 


■ct  any     aqanda 


la  ao  badly  naadadi  I  thought  it  poll 
I  kind  of  atatanant  which  I  ballava  wou 
lack/Hhica  political   log]a«.      I   dcaftad 


:ally  prudant  to 
braak  tha  South 
1   raluctantly  and 


Digitized  by  Google 


talking  about. 


Iha  history  at  Bankind  ahowa  tna  noad  (or  a<,  aptiva  ctiang* 
aaong  all  paoplaa  and  all  natlona. 

Nations  uhtch  hava  nanagad  to  avoid  tha  uaa  o(  vlolanca 
In  tha  achlavaaant  ot  national  objactlvaa  aea  tha  natlona 
which  hava  grown  in  wiadon. 

B«th  niatakaa  and  iaaaona  not  yat  laarnad  lad  to  arcora 

ot  ]udq*eanc  In  tha  Bainatcaan  politlca  in  both  tha  Black 
■nd  HhiCa  aactlona  at  ouc  aocLaty. 

Tha  South  African  paapia  aca  a  faally  of  oankindi  aaaking 
to  liva  in  hataony  In  tha  African  eoHiunlty  of  natlona 
and  aaaking  to  do  ao  by  axpraaalng  civlliaod  idoala  in 
tha  practical  aoelal>  aeonoalc  and  political  affalca  of 
our  count cy> 

Tha  South  African  constitution  aa  It  ia  now  urittan  la  by 
fores  of  history  and  raallty  a  ficst  stap  In 
conaticutlonsl  rsCoem  uhich  utgantly  naada  tba  aaeond 
atap  to  ba  takan  of  anrlehlng  tha  constitution  to  aaka  It 
aa  accsptabls  to  tha  broad  Baas  ot  African  opinion  as  It 
haa  baan  aada  accaptabla  to  tha  broad  aasa  of  Hhlto 
opinion. 

c  ordainad  by 


Na  tharaforo  accapti 


Tha  naad  to  aaka  tha  pcaaabla  to  tha  South  African 
constitution  ot  oqusl  vslua  to  all  tha  group*  and  paoplaa 
ot  tha  countcy  by  anrlehlng  tha  clauaa;  'To  raap«ct>  to 
turthsr  and  to  protact  tha  salf-datarainatlon  of 
population  groupa  and  paoplas*  to  includ*  tha  notion  that 
this  can  boat  bs  dona  by  aharlng  pouar.  tM  naad  to  ahara 
powar     In  auch  a  uay  that  no  ono  group  can  dictata  to  any 


Digilizedb,  Google 


othar  group  how 
anil  V*  alaa  n*ad  I 
tha  hallowad  « 
eoapEoalaad. 

adapt Iva  damoecatl 


t  ita  own  •alC-dacarainacian, 
>war  In  a  fsnaula  within  vliich 


ttltutlonallty  of  tha 
Lch  wa  will  jointly  ealy 
t  will  (or  our  countcy. 


1  tharafora  toqathar  aaak: 

To  nagotlata  aa  laadara 
conatltuClon  to  aaka  It  «Cc< 


.  ayatan  to  that  whlct 

^ha  word   'aparthald' 

,tlcal  ayatan  In  (■ 

ixpeasaad  in  conatltutJ 

of  South  Africa. 


>  giva  •■praaaion  to  Cha  c< 
[clca's  pasplaa  without 
IClsanahlp  tor  any  group. 


Caahlon  national  unity 
procaaa.  and  to  ua« 
axploraclona  o(  what  na* 
to  lagltlalaa  tha  ioatruaanta  of  gi 


of  alt  South 


ad  In  practical  politics 
lavala  oC  govarnsant  to 
lapaning  tha  daaocratlc 


I  tha  paopla 


Ma  tharaCora  pladga  ouraalvaa: 

To  axpcass  national  prlda  and  patclotiaa  by  inalt 
that  South  Africana  ulll  daelda  South  Afeica'a  futuca 
tha  accaptanca  of  aach  othar  aa  Indlvlduala  and  gi 
and  tna  accaptanca  of  aach  ochar'a  cultural  rlghta  cc 
who  thay  ara. 


■  find  ouraalvaa  in  hiatory  and  to  Bova 
croB  thara  to  build  on  all  that  la  poaitiva  and  valuabla 
and  CO  changa  Chat  which  la  nagatlva  and  undaelrabla. 

Bach  to  work  In  our  own  conatltuanelaa  to  davalop  a  South 
ACtican  prida  In  aanaging  our  own  South  African  aftalra 
in  harnony  with  Intarnationally  accaptad  standacda  of 
civlliaad  daeancy  ulthout  baing  dlctatad  to  fcoa  without. 


Digitized  by  Google 


Having  chua  daclarad 


«  atand  cogath* 
I  ttim   sea  pa  and  I 

ly  oC  nations. 


lalauqhti 
lich  thi 


bahind  Its  drafting. 

I  capastadly  aay  that 
■uac  ba  wagad  by  S 
iDdustrialiaad  countrl 
la  a  daaparaca  naad  loi 
Inslda   South  Alriea  whf 


South  Africa 


Chay  find  thaai 

For  tha  aaka  of  tha  futura, 
halp   davalopnanc  schamaa' 
to  Baka  a  nasaiva  andaavouE 
work.    Ha   naad   daaparaCaJ 
■dueaClonal   progcaBnaa-    > 


grokipB  of  tha 
■ant  of  InCant 

t  wording  of  Cha  ■■ 

La  for  libaraclon  1 


>k  a  nagotlaCad  aattlamant  a 
itrollad   vlolanca .     Black 
waga  attugglaa  for  futura 
1  In  tha  atruggla  j 
■  dally  llvaa  and  < 


of  choaa 
]  Co  avoid 

political 


1  Afrl 


aid  ( 


Tha  Hast  cannot 
support  for  tha  things  wa  do  on 
doing  both  ouC  of  humanitarian  concarns  a 
Africa  to  oaat  tha  rlgoura  of  cha  futura 
abollshad-'Cov-'Cha  acourga  chat  It  la. 


projacta 
appla  with 


M-T30    0-8B ze 


Digitized  by  Google 


HXHOuuisim  roB  pnusaTATioa  to  hb.  iitzhu  sajuin. 

TBI  POBEIOM  mniSTBB  OP  ISBAEL 
r  HAHOOSUTHU  CATSHA  BUTBBLBZI,   CBIBP  HIHISTBR  KHAZULU.   PRESIDENT 
or  [NKATHA  AHD  CBAIRHAtI,  TUB  30UTB  AFRICAN  BLACK  ALLIAHCE 
TSL  AVIV.   AUOUSI  1935 


t  BLACK  SOUTH  AFRICAM  VIEW  OP  i 


i   AFRICA  TODAy 


Slack  South  Africans 
aparChaid   haa  baan  coi 
hava  alvaya  ualcoBad 
Covacnaant   to  aeeap  aparl 
Praaaura  from  tha  i. 
Chair  atrtiggla  for 
callad   on   tha   In 

P*rtr   and   on  Nhlta  Soutl 
bacauaa  South  Africa  faJ 
Intaraacs  and  should 
•a  pare  of  tha  Iroo  i 


liCad  Nal 


Duclnq  tha  37  yaara  of 
•*ar-lncraaalng  alabori 
Party  durinq  thla  parioc 
of  tha  vaatlga  of 
I910t   tha   rl^dll 
•var  Bors  all-parvi 
not  dacar  tha  slaborai 
Btaady  growth  of  Dri 
to  aaploy 


ilia  tha 
prohibition  of  Cm 
uavaa  through  Uhlti 
baing   pcocaaaad 
partlnanE  to  ask  wl 
is   going   Co   ba  posl 
DaJoriCy  of  Black  South  Af: 
Invaatnant  and  tha  eomp] 

country.     i   nava  arguaa  i 
Soucn  Africa  and  abroad  and 


'a  always  appraclatad  tha  oxCanC 

praasura  on  tha  South 
haid  and  to  lucroduca  aaanlngfui 
ional  cOBBuniCy  haa  ancouragad  Blaeki 
-'  -   -  -  uth  Africa  I   and  1  hav« 

unity  >    and  on  tha 
ral  anting  praaaura  on  cha  ml  log 
~'  '      I  aay  tha  Host  in  partle 
into  tha  Haatarn  haBlaphai 
in  tha  intsrnational  cobbu 
t  industrialiaad  wocld.    Ha  hava 
:anea  aaong  Waacarn  powars  v 
lors  Chan  protascing   i 


a  National  PacCy'B 
ion  of  aparchsid  ■ 
ti»»   purgod  tha  coun 

aparthaid  has  atrans 

.ding  philosophy.    Intarnational  prassuras 
'  aparthaid  and  it  did  not   datar 
I  and  ragulaclona  which  tha  StaC* 
parehaid. 


Intarnational  eoaaunityi  and 
atap  up  ica  diploaacic  prassurs  on  PraCocia 
iwal  by  Fcaoca  of  ita  Ambassador  and   its 

invastaant  in  South  Africa   has  aant   shock 
cha  Aaarlcan  Bill  now 


atfac 

>f  rising  Hastarn 
In.    I  and  a 

lolation  of  South 
iruggla  for  libari 

<  raltaraca  what  ] 


joogle 


houaBhol 


Ktrueturing   ot    I 


:    Eh*  South   Aid' 


(Ind  ot   aociaty 
Apaethaid      ia. 

iho  cluaur  ( 
1  dlploaaclc 


ka  to  tal 

about  aoM 

of  tha  political 

th  Alclca 

od«y  in  ord 

r  to  Coeua  on  a 

ic.l  optlo 

d  accttagta 

pursuad  by  Blacka 

1  St  bast  b 

unproductiva   and 

selva  Int 

rtaranca   I 

that  which  now 

icoma  inta 

nationally 

nown  and  In  aany 

B,   it   ia  now  a 

ir  nagatlva 

This  la  good. 

ugly  cone 

a  indignation   tha 

dl  laada  to 

■isotiva   daciaiona 

Th.  world 

uanely   no 

hat  thla   raally 

parthaid   i 

a      who   Donopoliaa 

of  aparth 

id  can  only 

ba  achiavad   by   a 

African  -at 

clal,   aconomie  and   poAitleal 

cuqgla  aga 

d  tnvolsaa  tha  ra- 

=an  conati 

utlon  and  tha  raatroctueing  of 

llsad  lifa 

at  all  lava 

a.    HOW  we   being 

racaiva  In  thaic 

lonal  comB 

nlty,   all 

ct  aa  datarninanta 

raplaca   apacthald 

not   a   po 

icy;   it  la 

not  a  political 

tuelonalla 

d  and  corat 

tutionaliaad  whlta 

quantly  loat  alght 

c  dtainvaa 

■ant  ot  tha 

tatul   tot  ma   t 


Bonopoly   o£    tinal 

>   flouaa    of    Dalegat 
It,       play   a    role    i 


I'lnalitng      powac 


bcutal      daC 


Aaaanbly 
coBprahend 


intacnal    policy,    whan    J 


Digilizedb,  Google 


L  policy,  whan  It  coovs  to  for*l9n  policy,  wh*n  1 
itrol  ol  th*  amy  and  cha  pollca  Corea,  or  whan  i 
Lng  with  Slack  Soutn  Africans,  Cha  Vinita  Housa  i: 
Cotal  nonopoly  □!  pollclcal  pawat. 

the  conaticutlon  only  qlua  Indians  and  Colourads 


idad  In  prlncipla  from  any 
lite  monopoly  of  pouar 


batuaan  Black  ana  Hh 
callad  Hhlta  South  AIi 
Black  opinion  fait. 


danand  on  the  Govacnraani 
Tha  and  product  of  i 

machaniains.    Homeland; 


Lly  by  Slacks. 


itional  davalopmanta  Cor  Blacka,  comnlta 
'hoo  It  plaaaes  and  thara  is  no  statutory 
a   consult  ulth  any  Black  political  party. 

<rn  which  tha  South  AEeican  constitution 
ihic*  state  anjoying  a   nonopoly   of   raal 


Slac 


nelands  t. 
IVOlvad  If 
1   Slacks   V 

>  Blac 


Icaady  alacced  Black  local  authoci 

lis  is  the  South  African  status  quo,  and  wT 
Id   tha   National  Party  la  attatopting  to  d< 
civaly  open  agenda   toe  Cui 


envlSi 


Black       politicaJ 


in     South  ACri< 

,ny   and  ha   trejacts  a   united  Si 
;a     patterned     on     ona-oian-om 


President   in  a     broadcast     tal« 
irltain   stated  emphatically      Chi 
with   one   people    wil 


Digitized  by  Google 


developsienc  o£  a  cevoluCianarj'  cli.nate  in  t^e  country  in  which  the 
acmed  struggle  they  pcoposa  would  be  alli«ii  to  rsvolucionacy 
inaucraction  malting  triB  country  ungowecnaflla.  Their  war  is  not 
against      apactheid;       it    is   against    the   South   African   Gouerni^ieri t   and 

struggle      ideals      and      the   employment   oC    violencs      to      bring      abouc 


politics  ol  negotiation  and  the  employment 
ind  strategies  leading  to  the  politics  of 
.ation.  This  group  includoa  such  organisations  as  tha  United 
■atic  Front,  the  Azanian  People's  Organiaacion,  the  Congress 
lUtn  AErican  Students  end  the  Azanian  Students'  Otnganisation. 
organisations  have  different  political  agendas  and  have 
[Singly      in      recent      times   come    into   open   conf: 


Digilizedb,  Google 


nalghbourhood* 

Shading  nait 
tha  n**d  lac   u 
of  aaall.i;  gco 
■uppoct   to  thi 
tUty      at   Lha  . 

tha  pollCical 
•■orphouai  am 
Thar*  ara  ra: 
world   chat  vi< 


itona  paopla 


OC    Bl. 


aniat  polltice  which  now     accapta 

lit  chanqa<    thara  ara  a  wida  ranga 

I  Indlvldoala  of  aoBa  influanca  who  giva     moral 

'olvad  tn  tha  polities  at  eonCcontatlon.  whila 
ma  cinre  ara  avowadly  oppoaad  to  tha  employmanC  Of 
thoaa  uti-oji  chey  support  Indulqa  in.  This  area  of 
■pacCrum      in  oppoaic   on   to      aparthald      la      sonawhat 


I, 

cough   non-violant   maan 

Thia    ac 

aptaace   of   the   ina 

itablllty  of 

i 

olanca 

In  which   thay 

inaaaalvaa 

iclpata 

a 

acdanlnq   of    at 

tha   radlcallaatlon 

of   atti 

udaa 

warda 

outh      Africa    i 

ny    plac 

a    in    tha      outBlda 

world. 

Tha 

rid     Council      of     Ctiur 

cha 

has   now   eallad   for      pray 

1   auppor 

foe 

h 

s  and  atcatagl 

by   tha   Unitad   Daao 

ratic   r 

ont. 

by  Chucch  agancias  and     aaol-govac 

aant 

9 

anclaa 

n   Buropa  and  H 

ort 

haaric 

h 

la     aha 

3a  of  South  *ft 

lea 

ri   pollti 

al  activiata  which 

pa tha pa 

can 

lut  ortan 

as    in    tucn   challan 

tagocy 

f  paopla  and  o 

rga 

niaatlon 

in    tha   South   Afci 

can  poll 

leal 

P 

to   Btap   up  the 

ppositl 

n    to     apacthald. 

rada 

lona      - 

opt 

and    confrontation 

at  poU 

a   undac 

pcaaaura    to    ra 

iliaa    thaie   activltiaa.         C 

urch      g 

a      undar      pcaasura  to 

do 

tha   aana 

tiacdanlng      of 

t 

tttudaa 

In      a      vary   w 

ida 

of      civic.       labour 

rallg 

Itucal  and  aporta  ocganlaatlona   i 

South   dfclca.      Th 

la  calat 

valy 

Digilizedb,  Google 


•itcana  and  of  Cti*  politi 
I  right-wing  c«dlcal  accli 
>nc  action  and  ih  tha  r 
Iht-Hin-g      actlvlat   organii 


which 


■eanople     and  pollt 


poaaibla   amecgan 


I  ba  dona.        Tnasa 
jacjon  of   tha     kind 


.-cvfltiva   pollt: 
lonaocvBtiva     Part; 
LS      tcanda      m      th< 
appl  ng      with 
luo  aa  a     polli 
two     parti  aa     worJ 

of      HhlCa      II  

I   complata      aocial 
~    nant    In      th< 


traval     abroad     I   find  all 


political    apacti 

■hading  in  from  choaa  axtrai 
of  policies  wnich  cagaa 
•parthald.  Xha  nainatraBii  i 
Black  political  grappla  w 
Black  tai  Hhita  andaavoura 
forcaa  In  the  statu*  iiuo  i 
contain  tfia  only  foccas  < 
Thara  ulll  be  no  Utopian  1. 
dcaans  of>  and  thai;*  will  : 
that     tha     right     dcaana  of 

Hill  in  fact  navai^  caturn 
and  right  do  not  comnand  tl 
Bstiaating     tha  forcaa  thay 


iBprahandlng   South  Afrlc 


md    unl.j 
'ill   ba   al 


and   t 


AHC't 


that     Hastarn 

South     African 

politlca. 

I  right,      and  th< 


VarwoardiaJ 

llssion-in-Bxll< 


if  changa. 
coomand.        Thay  do 
s   naantngtul   changi 
d  and   tha  politics  qanaratad  by     thi 
ght.       could   wall   one  day   t~  ~ 
ich  will  b«   all-consjiiing 


ma    [ 
aay     auccaad     In  producing  * 
■uccaad      in  bringing   about  raform   laadlng    to 
political     atabllity  and  prograaa.        Forcaa  r 


.11 


I  balng  ganaratad 


Digilizedb,  Google 


doMlnaclsn  en. 
r«c*B  which 
eranalat*  into 


•bandonad. 


>u9h      Elqld  aparthaid   ■ 
larliAC     National     Pact 


Indignation  ovat  api 

1   African   pol: 

1  tha     total 
govacnnanta 


callad  H 
aconomy      dapandi 
and     Banagara 
•ntltlad  to    t\ 
■    hava     cha     rii 
davalopaant 


hlthecl 
aaparat 

Tbaaa 


Tha  National  I 
JtCrlkanac  aa: 
Cha  ataCa  witi 
Praatdant  now 
South   Atclcai 


>Blitlaa 


ilad 


riaa  pub 


.cly 


Black  Hoeki 

Lold  ptispatty  In  ao~c 
C  nobllJ 

hava  to  go  bayond  the  cof 
-callad  homaland  govat:n[ 
o  the  flcrappinq  of  job  n 
n  rights  Co  Black  woi 
u  41*o  demand  hg  a  r< 

tical   ■BchanlsBS   of   ai 

la  caalltiaa  aca  worklnq  : 
of   govarnnant   Chinkln9. 


IB  a  South  African  Praaidai 
lelf'lntcceaC. 

'a  baan  an  Afcikanar  party 

t  ic  haa  alwaya  aquatad  whi 


>auC  naanlngful  caf: 

laaitnant  would  danand.    Bank^ 
^a]act  apacthaid  and  tha  <}raam 


of  Afrlkani 
ading 


loccing   raca 

Pacty  by 

[ocably  to 

Tha  Stata 

in  fact  can 

unnacaaaarily 

major  atap 
and  not   an 


a  good  for 
I  tha  Stata 


^y  Google 


haa  adopted  «  c«pore  th«y  coaplsalonad 

rofaaaoc  Loabard  to  coapila 

aparthaid      ia   rajactad   and   a 

unlc«d     Soutn  Afclea  whicn  tn*  ir*port  anvlaagaa  4*     possibly     baing 

producad 

b»      a      t.daral   solution.         Th 

Eluaan      3ciancaa      Raaaarch 

caunctl. 

which      is   a   aami-govacnoant   agancy    (un<Jad   ancir»ly   by    Cha 

.liovacni» 

It        haa      produead   a   aajor    rapo 

coenaeat 

nas  of  elaaaicai  apacthaid  and 

which  haa  provldad  a  broad- 

baaad  ca 

tonala    for   tafom. 

Thaea     t 

(o     caporta  auat  ba  aaon  aa  par 

of  an  ongoing      procoas      in 

which     c 

fora     ia     baina  foraulatad. 

n   19S0     I      cailad      Cor      tha 

aacabllahaant     of   tha  ButhalaiJ.  Coninisa 

<in  which  wad  conatltutad   in 

Hluch   pcoducad   Cha   Buthal«ii 

oDiDisBion  Baport      in      1982. 

Tha      But 

alaii   Coam   as  on   capraaantad   a 

ccosa-aaccion   of      political 

opinion 

and      waa      fapraaantativa      of   a 

1    tha  raca     groups      in      tha 

I      mandacad      it    to   aianina    t 

a  futuca     of      Kwalulu/Natal 

within 

ha   concait   of   th*    country    as   a 

whola.          Aftac      Intanalva 

work     In 

rtieipation,      and    in      which 

banking, 

■ining.      coaaacca   and    induatry   partlclpatad      activaly.      a 

Claarly      docuaantad        tba 

unworkab 

licy       of      apaEthaid     and  apal 

ial    andaauour   to  aiaka   daaocrac 

a''i:aality"'n' South   fcfrlcB. 

tnJtacha 

and      tha      KuaZulu      Qovarnaant 

tlndlnqa 

In      prlncipla      and      thaaa      ra 

oonandatlons      play      a      vacy 

iaportan 

rola   In  tha  politlca  of  nagot 

ation  wa  ara  purauing. 

Opinion-. 

lakara     thcoughout      erta   country 

in  all   raca  gcoupa     support 

Cha  kind 

of    thinkinq    in    tnasa   two   rapor 

a.        I  hava  no  doubt   In     ay 

owa     Bind  that  atapa     of    caaUy  bold  ra 

ora  can  now  ba  aada.        Thay 

n«r     a   aaaaiva    (orca   around   th 

Stata     Pcaaidant     and      tha 

Govacnaa 

t  wftlch  ia  capabla  of  withatan 

Ing  vlolant  onalaughta   froa 

tha   axtc 

■a   right   and   tha   aitcaoa   laft. 

Inkatha 

takaa      ita      placa      in      tha     aa 

natraaa     of      South     African 

politlca 

or   tan  yaaca  and  now  haa     a 

card- ear 

ying   Baabacahip   of   ovar   ona  ai 

lion  aaabara.        It   ta      thus 

by      far 

tha      lacgaat     Black  pollcical  organlaation     avac     to     hava 

aaargad 

in      tha      hlatocy   of      tha      coun 

ry           Inkatha' a      aaabarahlp 

a   a   croBB-aacelon   of   Black  Sou 

h  African  aoclaty.        It      la 

aancativ*      ot   cucal   slack  Sout 

Afcica   aa    it   ia      of      urban 

Slack     s 

uth      Africa,      and      whila    its    a 

abarshlp      is      doalnatad      by 

p«aaanta 

and      workers,       it    ia   rapraaan 

•eonoaic 

claaa            Inkatha      la      ataapad      in     Black     Soutn      African 

polltii. 

damoccBcy;       its   Annual   Ganar 

1  Confacanca   ta    tha  aupraaa 

dac  talon 

d   of   alactad      aaabara      Croa 

d   throughout      tha      country. 

tatad  by   tha  Annual  Sanaral 

Confaranca      uhich      alaccs   ita    laadara   w 

0  hava   to  work     within      tha 

at      ita  conatitution  and  tha 

tacticB  and  atrataglaa     and 

L  Sanaral  Confaranca. 


Digilizedb,  Google 


d*t« mining  rol* 
Inkatha      occ 


I   kvarythinq   that    1 


.shaping    of   S 

•id  placaa  upon  i 
Jill  laguira  to  i 
jtn  Africa. 


IT-  til*  political  cant 

political   BovaBant 

>n  infuaion  o(  Black 


t  ■•■bacahlp  plays  a 

gravitir  of 

ittad    CO 


>  idaological  t 


uasivanass  of  Inkatha'a  support  suit  ba  nvaaucad  not  only  in 
of  actual  paid-up  D*>bat8i  but  it  Buat  ba  BaaBurad  in  Caraa 
CB  continuing  vigorous  gtouch  pactacna  and  th*  •var-lnceaaslng 
it  is  playing  In  th«  councty. 

posalbly  uln  an  arasd  steuggla  uhlla  it  oppoaas  Inkatha  and 
wt  aaak  Inkatha'a  auppocc>  aa  it  is  foe  tha  stata  Ptaaidant 
cha  National  Party  to  think  that  tha  nau  conaciCutlon  could  b* 
a   paraanant   working  conatltutlon   o(   tha   country   vithout 


I.   Inkath 


of  Blac 


r  around  sli  mi; 
in  anything  that  is 
by  opposition  partii 
fall.  Sad  Kwazulu 
GovacniMnt  has  baai 

South  Africa  would 


ingla 

aacad  in   two 

la  tha 

party  «n 

ich  doBinataa 

In   KwaZulu 

dBlnlB 

achanlBB  into 

a   fronClina 

radical  changa 

tical 

trangth 

in  oppoaltlon 

to  apacthald 

t  poll 

nituda.    Tha 

Zulu  paopla 

and  w 

lilB  Kwaz 

ulu  rafuaas  to  partlcipata 

atad, 

uhathar 

it  ba  by  tha 

typa 


KwaZulu  dona  so  thaca  would  today  alraady  hava  baan  a  confadat 
of  Southarn  African  statas  and  tha  final  fragsantatlon  of  South 
Africa  would  alraady  have  baan  a  fact.  Tha  KwaZulu  Laglalativa 
' f  and  Inkatha  ara  adaaantly  connittad  to  ana  South  Africa 
aa  aystan  of  govarnaanti  and  wa  ara  adawintly  opposad  to  tha 
rtty  of  total  Mhlta  powsr  in  87  par  cant  of  our  country. 
'  "  "  ■  'aga  tha  struggle  against  apartheid  In  any 
a  posaibla  to  uaa  non-vlolant  tactlca  and 
IB.  It  ia  powerful  enough  to  oppoaa  tha  CovarnBant  within 
:itutional  fabric  of  South  Africa.   It  is  a  Barkac  place 


„  Google 


1  danonscrsclng   chac 
fvaslblB/      and      bacauaa    ic    ia   danon 

tactica      and  aCcatagLaa  to  oppoa*  a 
policical      wcach  of  all   choga  who   a 
thay    aay  that  yoki  cannot   da  what    In 
naa      tner«toT«  becom*   tns   tacgat   oC   atti 
cn*      lae      eigne   bacajsa      t    la  aoarging 
forca  ot   appoaition    to  aparthald> 


I  a«  abaolutaly  clear  In  ay  oun 
bring  about  th«  libaraClon  ol  Sout 
wa      *rBdicaca  aparchald.      will    dat 

th*      arsdicatlon      o(      aparChald      t 
Btracaglvaf      aaplo/ad      by     ^graaa 
aicluaiv*  unita  political   powar, 


danaga  tfia  aconoalc  growl 
faundatlona  tot  tha  piodui 
Africa  will  ona  day  ao  daa^ 


Inability  oC  poat-ilbacatioi 
davalopaant  of  cha  nagnicgda 
thalr     poac-llbaracion      pcogci 

wa  atiould  not  danaga  tha  coiini 
whatavar  optiona  ara  opan  to 
tha      fraa     antarprlaa     ayataa 


Ind 


f'»  aconoay. 


:  radlc 


raCora  a 


xatlc  spp; 
tha  foundaciona  C<sc  a 
Irlca.  If  wa  aaploy 
.  way  chac  w«  do  noc 
«  will  lay  tha 
ibaratad     South 


in  try 


uhora  tha  atruggla     Cot 


lava  raqulrad  to  aiacuta 
I  totally  eonvlnead  that 
I   foe    llbaratlon. 


•conoay     and 


iff  Iciant      ayatan      Chat 

Lo  ganerac-a      aconOBic      davalopaant.         Inkatha 

join    foreaa  with    thoaa   who  njaaira    to      daatroy 

naka    tha   country      ungavarnabla      through      tha 

t   in  an  arnad   atruggla.      or   to  anploy  vlolanca 

pollclca     aload     at     uklng        tha       country 

I  aconoBlc   Intardapandanca  batuaan     Black     and 

ThlB   la  now  a   racognlaad  and  accapcad     facti 

ic  and  by   thoaa  who  oppoaa  apacthald.        It      la 


Digilizedb,  Google 


■conoBle  lnt«rdap*ndanca  li 

Africa,   not  only  ■•  a 
induatry.   Out   alao   a   p 

Blacka  ara  avolving  bargainii 
bafoca.  Thaaa  bargaining  b«i 
davalapaant   and   thay  could 


tlci 


ahould  do  whatavac  thay  can  I 
SouLh  Afeica.   Thay  should,  hi 
tit*  ■inlHuiD  of  thair  obllgal 
taking   placa.   Thay  naad  to  i 
•xiating  unanployaant  and  tha 
haalch   and  walCaca  aarvLcaa, 
Tbaca  ia  InauIIicianc  waaltti  : 
it  and  givB  avatybody  a  dacani 
whola   ganacationi   if  noC  longai 
raault  in  aquallty  of  atandarda 
of  our  country.   Th*  Hast  and 
Cha   daaparata   naad  that  asiata 
and  to  auatain  whatavac  aalf-ha. 
aaong  Black  South  Africans.   Pi 
deaaatic  thay  may  ba  for  ua>  uil 


(or 


■  prograa* 


I  for  c 

'Ithir 


about  in  South  Africa.    7)1*  Maal 
thrash  Whlta  South  Africa;  thay 
th*  forc«a  of  oppoaition  to  api 
uorking  for  radical  raforn  ai 
capabl*  of  austalnlng  th*  valui 


Hast« 


Industrii 


induatry  and  politics  for 


._  which  thay  ..... 
LI  b«  atc«ngtti*n*d 
dastroyad  by  ~  '~ 


.ata  aconoaic  d) 
tha  Btruggla 
;)clogs  in  housi 


undaratand 
■al  aconoBy 
r*  *a*rglng 


iparthaid  an 

ignora  conplax  sati 

tical  changa  aust  b*  brought 

'      '  ahould  not  attanpt   to 

rathar  attaapt  to  strangthan 

id*  th*  country  which  ac* 

istructuring  of  a  aoci*ty 

'  tutionalisad  praeticas 


Lnatlllad 


of 


Dig,lized*by  Google 


1985   RBCIOHAL   CONGRESS   OF  THE  CHMtBEIlS  OF  COHHERCE   IH   HATAI. 

SYMPOSIUM:    ■HATAL/KHAZam   -    2000' 


Addraaa   by   nangosuthu   O.    BuChBlazi 

Chi«f  ninlat«r  KwaZulu,    Praaidanc  ot   Inkatha   ar 

Chairman,   Tha  SouEli  Afrlesn  Blsck  Allianea 

Raad  on  hia  bahalt  by  De.   O.D.    Ohlono 
Hinlatar   of    Education   and  Cultura,    KwaZulu 
Sacratary-Ganacal 


BLAHGEHI   HOTEL 


17TH    AUGUST   19aS 


At  tha  outaat 

oC   ay  diaeuaaliin  about   Nacal/KwaZulu   2000   -  an 

ovarvlaw,   I  u> 

nt  to  tabla  a  dilliculty  of  which  I  aa   baing   mad* 

y   awara.    Mhan   xa  talk  about  bridging  tha   chaaa 

batman  Black 

nd  Hhita,   and  whan  wa  talk  about  tha   polltica   of 

naqotlatlon  and 

anvlaaga  Black  and  Whita  coming  togathat  Jointly  to 

d  batcar  South  Africa;  and  whan  wa  talk  about  tha 

maka  Natal  and  KvaZulu  Inaitrlcably   intactwinad. 

ttia   quaatlon  o 

who  talka  to  whom  comaa  up,   and  that  quaation   is 

90ln3  to  baooaa 

council  Btcuctu 

•  aa  wa  know  it  will  hava  baan  tatBlnatad.   Mtiita 

Natallana  vill 

no   longar  hava  alactad  laadara  in  aaeond  tlac 

qovacnaant   an<: 

I  anviaa9a  thia  to  hava  a  taatrainlnq   and 

co»pHc«tlng  In 

luanca  on  tha  naqotiatlon  procaaa. 

Aa  Chiaf  Hlnia 

ar  of  KwaZulu  and  aa  Praaidant  of  Inkatha  I  hava  a 

lagitlDlaad  las 

arahlp  rola  which  anablea  ma  to  nagotlata  on  bahalf 

o£  tha  Black  pac 

pla  of  KwaZulu/Notal-    Thcough  my  mothar,  Princaaa 

xulu,   I  traca  my  daacant  to  Uia   Hajaaty'a   qcaat- 

qjrandfatnac,   K 

ng   Dinuiulu  ka  Catahwayo.    It  waa  ny   uncla   Ring 

Solomon  ka  Oinu 

ulu  who  qava  to  my  (aehac.  Chlaf  Mathola  BuChalatl, 

than   Prima   Mi 

iatar  of  tha  Kinq  and  of  KwaZulu,   hia  own   aiatar, 

Prlncaa  flagogo 

Hantithi  Sibllila  Conatanca  ka  Dinuiulu,   to  ra- 

daacandant   of 

both   Klnq   Catahuayo  and  of   tha   Prima   Hinlatar, 

Mnyamana  BuCtial* 

li. 

Digilizedb,  Google 


laZulu  La^ialatlva  Aa««bly  all 
loainant  Black  political  organlai 
ly   vocilacous  Individuals  proclai 

:  Soutn  Alcica.   Hhanavar  I  apai 


liCa  Nacaliana  Jhould  caica  a  hard 
illl   rapcasanE  than  in  any  naqoc 
I  la  CO  ba  Black/Whlta  dialoqua, 
ina  conclualona  about  tha  total 
I  In  KuaZalu/liatal,   than  Hhltaa 
ropraaant  thaic  viawa  and  nagoti 


Thara  ia  a  vary  widaapcaad  tacogn: 
KwaZulu/Hatal   that  htacory  haa  thi 
raconclliatocy  politics  la  an  urqant 
lalt  ballaf  that  wa  ara  bo  placai' 

this  taqlon.  Thaca  ia  alao .  hoW' 
Hhitaa  In  this  cagion  canno 
raconeillatory  pollClca  unlasa 
praaidant,  or  unlaas  Hr.  chria  Hi 


Hhita  Hatallana  aca  tharafora  [Indinq  thaaaalvaa  i 
which  thay  cannot  addrasa  thalr  own  ragional  i~~ — 
■arcy   gf   political  dactslon 
Govarnmant  laval  and  which  1b 


itional   Davalopnant 
Chambar    of   Conm* 


wida- 


to  ralatad   to  each  ottiac   C 
.Cory   poXitica 
I  widaapraad  ra 


tha     Stata 


the  Hatal     Provir 


1  all   ttia  paopl*  of   i 


Digiiizedb,  Google 


by-product  o 
ialiaad  daaoeracy 
ind   ttiifd   ci*r  qou 


Th»  pcoc«sa  c 

■Ctsna   to  r»qi 
of    Eh«      NacIc 


GovarnMnt 

pol 

cy 

Kwazulu/Ha 

ta 

f« 

t   na« 

Th«   South 

ȣ 

loan  SovaE 

Co«rnn«nt 

ol  Ch 

but      In      n 

ul    Haatam 

policy      ia 

agl 

Africa      all 

aai 

■ciaty. 
I  laval 


La  a  lagltl 
all  dasoci 
C  policy   U 


•quatad   cri«  good  of  tha  Stat*  u  zf 
and  Hhlta  Nataiians  hava    tiaa  jr\6 
playla9     according   to  rulaa  ol  tha 
up     by     Tranavaalf     Orang*     Fra* 
Intaraata. 

paraonally      convln: 


I  Influanca  of  ^ovarnnant 
lit  ffanchlaa.  In  South 
Santa  aval  alnca  1948  hava 
lal     Party. 


looking 
could  ba   I 
Bharlng. 


I  that  in  Natal  EXCO  la  now  aarlously 
itics  of  roconc illation  In  KwaZulu/Natal 
of  elaarly  daflnad  aovaa  towarda  powac- 
La  about  tha  abolition  of  tha  Provincial 
:ara  not  ramarka  in  which  I  aipraaa 
tha     rola     of     tha     Natal        Pcovtnelal 


focaaaoabla     tuEi 


iabalanea     in     tha 


by   an    appointed    Exac 
Hhica  population  I 


:al  authocitlaa,  uhich  t 
I  of  party  politica,  a 
1  appoincod  Adniniatcatc 


Natal   through 


Digilizedb,  Google 


Haunia. 

Tti*  National  Party  has  alwaya  anjoyad  alnisal  auppoct 

Hktal  SB 

a  Hhsla  and  avan  I*aa  cnan  aln  Ml  aupporc  In  placas   1 

iMceopoll 

amDacs  ot  induatry  and  chaobaca  of  coaaarea  and  tna   So 

Alrii:an  S 

ugac  Aaaociation  flava  Long  aaan  Cha  naad  to  nova  away  fr 

aaXlnq  bodiaa 

Hhita   Nataliana  ara  not  o 

Hacional  Party 

a   praaiding  rola  ovar  chair  1 

POllCica  ta  an 

ongoing  thing,  and  politics 

tha   National 

Pacty's  lagislatlon   bahind. 

pracCica   long   bafora   it   v 

N«90tiaciona  b 

tuaan  Black  uorkara  and  nanag 

full   nagotiat 

ng  rigncs  waca  grantad  to  Bla 

mrad  with   Cha 


Itlux 


alwaya  baan  wltnaaa  to  tha  challangaa 
aociai,  aeonoBic  ana  political  raallty  hava  sada  to  narrow 
aparthaid  Idaologlaa.  In  broad  Cama.  tha  aana  thing  la  happening 
on  tha  constitutional  laval.  KwaZulu  haa  rajaccad  ao-callad 
Indapandanca  Cron  tha  word  go  and  it  has  dona  BO  in  tha  faca  of 
vary  strong  pcasauraa  Indaad  ftam  Govarnmant  to  to*  tha  Una. 


I   hia  addesai 


3  tha  t 


,11  ragards  tha  ; 


BccoDBodatad  poll 


lcally"i 


itate   does   not   a 


„  Google 


MtwHi      bov*var> 


1  thoi 


:ica  o(  n*90CiaCion  mamt  b< 
3  find  tn*  Stat*  Pr*ald«nt' 
/t\Q   atand  baJttnd   him. 


urganCly  naad  t 


BlBcka     aod  Hhitaa  in  t 

naqotiation  batwaan    Black  and  Hhiit*. 
ia      having    ongoing  nagoCiatlona   with   Km 
nave    raacnad   the   stag*  at  which  w*    hava 
[  acatutory  bodlaa  with  budgati 


d*f^ 


Id     Haiti 


Ttils 


paopli 

paant  of  South  Africa 

Stata      Pcaaidant    calkar 

in    tha  raform  proces 

turaa  aaai^^iiig  as  the  4 


Natal, 


both  Black  and 

.ce  CO  tha  full  M 
contcibution  to 


Lnad  a  position 
■Ct  daclacatlon 

I  politica  aboui 


taka  avary 


KwaZulu/Hacal . 


[  hava   no  doubt 


LaoiataattAiy  kodyalatcqivi 
aay/BBpangani  ataa  ar*  chi 
ID.     who     la   Char*  with  uhi 


I  thav  ><^*  vary  partln 
la  Blacka  arid  whitaa  t 
9  abolition  of   the  Vet 


:  Banbars  of  tha  Na 
tart  and  thay  ganuln 
It     ba     jattiaonad 

and  wili  prinacily 
Lne  And  gluan  t 
leatbkty  NacatcaBd   Ckad 

;hieC   Hlniatac      and 


I  obaacvatlona 


t  Council  ayatt 


icila  wlil  hava  tor  ua.  By  tf 
pertinent  thay  ar*.  By  than  ii 
hawing  alcaady  by   196S  loat   tti 


Digilizedb,  Google 


baan   •xanlnln9   tha 

utility 

an  ^»   ^i 

lll-aquippad  wa  war* 

in   1985 

Hagional    Sarvicas   Council   po 

PCovincial   council   at 

ill-aquippad  wa      waca 

vlolanea   in  Itit   GeaaCa 

thinqa  claacly,   ua  « 

11  aitha 

looking  ovar  our  ahouldar  hoping 

Hatal  and  all  iCa  paopl 

failad  to  do  wnat  could 

in  (act 

va  doodla  aur    ragraca  i 

M  alcaady  hava  in  alia 

anca  a  K* 

In   which   KwaZulu   and 

and  incr 

Kvazulu 

Planning  alt   togacnar 

vich  no 

Provincial  Admin^atoti 

industc 

right   nov  to  bagln  loo 

ing  at  t 

Council  atruoturaa  hold 

lot  tna 

lahaa  lying  around  ua- 
looklng  for  waya 
of   Constitutional 


lad  stoppad 
yaar  2000  aaa  that  wa 


■olicy  Group 
Thara  la 


Aa  tha  procasa  of  raCorm  gi 
aaa  how  elgld  Idaologlca.' 
will  aaa  how  costly  It 
laplamanted  becauaa  of  bad 
this  country  of  not  only  pi 
ordaci  but  of  having  to  < 
aconoBlc  davalopnent  whlcl 


fcanaworlc  of  which  Dr.  I 


^ord  t 


:il  1 


1  hoped-for 


>Olnta   and   tha  davalopnani 
rlthout  talcing  tha  wldar  aoi 
iceount.   Bvaryona  invar 
IwaZulu/Hatal    optlona 
iovarnaant  plans  hava  (or 


dsvelDpinanta  points-  Ha  naad 
implications  that  tha  peopoaad 
Id  tha  propoaad  n»w  Provii 
inlng  work  baing  dona  in  an< 


ao  badly  naadad  to 


i/Hatai   Planning   Council   within 
Bive  Is  looking  at  what  our  prlocit 
>piiiant3  and  connunity   davalopmant 
lefit  also  has  a  Planning  Conaittaa   and 
^h  we  addresa  tha  saaa  quaations. 
ie  unapeciflad  futura  tlaa  In  which 
South  African  Oovarnnant.   Ho  planni 
:akB  the  planning  of  industrial   geov 

.o.  aeonoaic  and  political  factors  ir 
I  in  planning  should  ba   looking 
1  sxaBlning  tha  lapllcatlona   whl 


lOogle 


Tha  Stat*  Praaldant 


waaknaaa.    I  «■  quita  > 
ay   uillingnaaa   I 

Sulu/Natal   pollticaJ 


latha. 


sCsta  that 
)C  Indicata 
I  also  undacBtanda 
and  aacond  Clar 


>  ground  In  chia  pact  of  South  Africa,  will  ba  dona  aa  paEt  of 
r  contribution  towarda  eha  politics  o(  raconc illation  at  th* 
clonal  laval.   Ha  can  prova  that  tha  polltlca  ot  nagotlation  work 

In  thia  pact  ot  tha  eountry  and  ue  should  ba  allowad  to  gat  on 
tha  job  ot  doing  ao.    IC  la  In  tha  national  Intacaat  that  wa 


:caad. 


IC 


:Blda 


raliabla  vahicla  Cor  tha  davolutlon  of  powa 
ona-vota  aolutiona  and  winnac-takaa-all  pt 
to  ba  aaanlngful  davolutlon  of  powar  what* 
into  balng  which  Intagcataa  South  Afclc 
n*90tlat*  haca  in  thia  part  of  tha  country 
not  abdlcata  froa  thaic  widat  South  Afrlcu 

Coaaaccai  industry  and  ocganlaad  faralng 
incraaaingly   to   play   thaic   vital  rola 

davalopaanta  in  thair  bualnaaa  and  Invaatsanc  paj,icy.  hb  arm 
■ttaapting  to  nagotiata  tha  circuaatancaa  of  pcoaparity  in  which 
thara  will  ba  tha  corracc  dlatrlbution  of  banaCits  to  Invsatora,  to 
wockacai  and  to  tha  coaaunity  at  larga.  I  appaal  to  coaaiarea  and 
industry  to  aharpan  thatr  focua  on  what  naada  to  ba  dona  to 
undarpin  now  that  which  will  ba  saan  by  tba  yaar  JOOO  to  hava  baan 


ll>. 


Digilizedb,  Google 


BRIBFINGS  C 


IHB  CURRBHI  SOUTH  AFRICAN  SITUATION 


in  South  Africa. 

in  1975  and  nc 
dlatrlbucad  ouai; 
Ptovine*  oC  NaCa 
thia  Pcovinca. 

cultural  group  i 


tha 


a  tha  lacgaat  Bl 
I  riistory  of  en* 
I  naarly  on*  ai 


paople  lorn  the  largest  aingla 
jntry  and  Zulu-apaaking  nattbeca  farm  the 
,1  TDembera  fron  every  Black  cultural  group 
have  joined  the  Hovamant.  Not  only  is  it  the  lacgast  Blaclc 
political  eonatiCuancy  in  ttia  country,  but  Inkatha  haa  also  tM 
lacgaat  youth  novaoanc  and  uonan's  bcigada  the  country  haa  aver 
a««n.  Aa  a  daaoccatic  organiaatlon  Inkatha  rapcaaants  maas  opinion 
aa  it  ia  foundad  on  the  uidaly  accaptad  Black  poll' ' 
and  prlnciplvs  flcat  enunciated  by  the  founding  fathers  of 
African  Hatlonal  Congreaa  In  1912  and  aa  thay  have  baan  updated 
' Black  political  exparlanea  alnea  than. 


■  aaEabliahed 


Inltatha'a  poaitlon  on  c 
1.    tt  rejects  aparthe 


i   conatltutic 


'.   the  Governsant 


around  accapl 


nctiona  againat  South  Afcica,   both 
lada  to  the  politics  of  eapty  chatoric  and  baceuaa 
ly  pactlally  succaasfuli   lead  to  Incraasad 
and  tha  undaenlning  of  Eha  Black  will  to 


>lanca  of  tcagic 


about  tha  need  foe  a  «ulti-atcatagy  approach  in 
ca  and  aeaks  Blaclc  unity  aaongat  those  who  are 
co-opacat*  with  aach  othaci  avan  on  tha  Oasia  of 
enauB  on  tactlca  and  sccatagiaa  provided.  .  it  is 
that  Blacka  atrive  tor  an  open.  raea-frae 
It  aeaa  ttaalf  aa  a  major  political  force  in   the 


» Google 


councry>  but  It  hsa  n*v«c  scroqat'd  to  icsall 
rvsponalbiltty  for  brlnqlnq  about  chanqai  nor  h< 
inlty     on   th*  baaia  of     otliar     organisatJ 


6.  It  la  coaalttad  to  axploitlng  Hhtta  political  vulnarablllty  by 
capltaltalng  on  tha  leradicabla  pcaaanca  of  Blacks  In  avary 
Hhlta  controllad  aphara  of  Incaraat.  It  therafora  doaa  not 
rajaet  participatory  oppoaitlon  to  aparthaid  and  it  baliavaa 
that  aa  an  inatitutionaliaad  focca,  it  will  ba  battar  abia  to 
•obillaa  paopla  to  utillae  thale  consuaar  powac  and  thair 
powar  aa  uorkera  than  it  uould  ba  if  it  adoptad  a  non- 
patClcipatory  protaat  eonfrontatlonlat  poaitlon. 

Inkatha  la  a  daMoccatlc  orqaniaatlon  with  fcaaly  alactad  laadara 
and  avacy  tank  and  Ella  aambat  Of  Inkatha  la  aliglbla  foe 
laadacahlp  poaitlona  In  the  HOTaaanc.  It  la  a  vary  wall  aCcuctucad 
and  tightly  discLplinad  Movamant  with  branch,  rational  and  national 
Btcuctucas.  Tha  suprama  body  of  tha  Hovaaant  la  th«  Annual  Oanaral 
Confatanca  uhlch  dacarainaa  policy  and  provldaa  Isadarahlp  with 
■andaCaa  wichln  which  thay  act. 

CBIBF  HAMCOauTiP  G^  BUTBBLgZI 

Chlaf  Buthalaai  ia  tha  Praaidant  of  Inkatha  and  tha  Chiaf  niniatar 
of  tha  KuaZulu  Laqlalatlva  Aaaaably.  Ha  tracaa  hia  ancaatry  back 
CO  tha  founduiij  tatriair*  of  tha  Zulu  nation  and  through  hla  Bothar 
la    daacandad   Ctom  a    lonq   Una   of   illuatrloua   Zulu  Klnga  Tha  aala 

Xinm  of  auccasaion  In  tha  ButhaUzi  clan  tcadicionally  pcovldad 
auccaaalva   Zulu  Kinga  to    Prima   nlniatata       Whan   thacafoca    the   South 

■achinery  on  the  Zulu  paopla,  cnay  turned  to  Cniat  Buthelail  to 
lead  thaa  in  oppoaitlon  to  it.  Ba  rallied  auppoet  foe  tha 
rajaction  of  so-callad'hoaeland  gOTarniBent  ao  auccaaafully  that 
Pratocla  had  evantualiy  to  Cell  the  Zulu  people  that  tha  South 
African  law  did  not  make  the  acceptance  oe  rejection  of  Tribal  and 
Regional  Authorltlaa  a  n«ct«r  at  negotiation,  and  want  ahead  with 
tna  Impoaltion  of  Tribal  and  Regional  AuChoritiea  on  tha  Zulu 
paople.  People  then  turned  to  Chlaf  Buthelail  and  danandad  that  ha 
continue  to  lead  oppoaitlon  to  tha  sO'Callad  hoaeland  policy  within 

After  conaultlng  tha  laadarahip  of  the  African  National  Congrasa, 
which  waa  at  that  tiae  s  legal  organiaation,  he  bowed  to  populac 
danand  to  continue  hla  leadership.  Chiaf  Buthelail  has  ever  alne* 
baan     by     far     tha  aost  effective  opponent  of     apartheid     In     South 


Digitized  by  Google 


•anlpulata  KwaZulu 
>  accapting  a 


•atablli 


Inkatna  aa  cha  largaat  political  OEqanlaation 
I  tiaan  totmad    In  South  hfclca. 


I  KwaZulu  Laglalaciva  Asaambly,   daaignad  by 
I  a  cog  in  ICa   apacthald   aactilna.   Into   a 

:  of  libaraCion; 


Cablnat  Hinlatar  on  bahalf  of  chs  paopla: 


racalvad  racognicion  lor  vhat  ha  la  doing  for  tha  paopla  of 
South  Africa  by  bolng  racalvad  By  King  noahoaahoa  II  of 
Uaotho;  King  Sobhuia  II  of  Suaillandt  Baparor  Balla 
Sellaala  in  Ecniopia;  Praaidant  Hyaraca ;  Praaidant  Kaunda: 
Pcaaldant  Kanyatta.  Praaidant  Haatings  Banda,  tha  lata 
Praaidant  Tolbart;  Chlaf  Laabua  Jonattion.  Priaa  ninlscar  of 
Laaotho:.  Prina  Hinlatar  Mugaba  focaign  Hiniataca  CD. 
Molapo  and  Mr.  £.  ^akhonyana  of  LesoLho  Major  Ganaral 
Josaph  Garbaf  ComiDiaaionar  Cor  Poraign  Affalra^  Nigaria: 
Psraign  F4iniatars  of  Kanya  Oc  Hjoroga  Hungai  and  Dr. 
Hunyua  Walyakl  and  Dr.  Pater  Onu  Daputy  SacraCaryi  OAU. 
Ha  haa  alao  racaivad  racognicion  for  hia  uor)c  by  balng 
racalvad  by  Praaidant  Nixon  Pcasidanc  aaagan  tha  Dutch 
Prina  Jliniatar  Dr  Hanry  Kiaaingar-  tha  Poraign  Hiniatara 
of  Canada,  Swadan  and  Garnany,  and  uaa  alao  cacaivad  by  cha 

gainad  accapEanca  aa  an  important  laadac  By  balng  tha 
raciplant  of  two  honorary  doctorataa ;  ha  uaa  aada  an 
ApOBCla  of  Paaca  (Raatciya  Pita)  By  cha  Pandit  SaCyapal 
Shacma  of  India,  racaivad  tha  Caorga  Haany  Huaan  Bighta 
Award  in  tha  unltad  Stataa,  tha  Pranch  National  Ordar  of 
Hartt:  ha  waa  aada  Knight  Cofflmandac  of  cha  Star  of  Africa, 
In  Llbarla,   and  waa  awardad  cha  Paul  Haccia  Paaca  Award. 


joogle 


haa  also  baan  propoaad  aa  a  eandldaca  foe  Cba  Hobal 


lad   Black  oppoaiclon 
ianaclonallaaa  73  par  c< 
ica  BlaeX: 


callad  tha  Buthalazl 
raporc  la  a  algnlCicant  contribut 
political  approachaa  which  could  aaka 
Eowacda  powar-aharlng  in  South  Africa; 


1   ica  final 
altaciMClva 


oppoaad   I 

Council 
oppoaltli 
tha  poll 

vlolflDt  aaani 


ijoc  off  tha  ground  > 
attaapca  that  ara  ti 
1  of  Blacka   J 


,cant  conttibutlon  i 
:a  CO  bring  about  ei 
and  through  nagotlatlt 


iirad  tha  Black  kdvtaory 
1  ha  la  adaaant  in  hla 
'  baing  aada  to  divlda 
urban  araaa  and  Blaeka 


oppoaad  tha  caaalon  o(  tha  IngiiavuMi  and  KaHgwana  araaa  to 
Swatlland  through  a  auccaaaful  lagal  tnttla  uhich  want  aa 
tar  aa  tha  Appallata  Division. 


CORRMT   ISSUES 


tha     tiafaranduB     caapaign     and     aubaaqut 


claiain   in  aany  placaa   li 

'  bacoolng   inpaclanc  t 

■idpaCad   ia  not      natt 

Lva  prals*  whara  pralaa   I 


but  it  cai 
laad     to  I 

raconci  nation 
country. 


aora        than 


a  dleeatad     by 


;laahlng     Black     and 


Digilizedb,  Google 


>d  tha  right  to  t 

raahold  proparty  in  urban 

arua,  11  in  Eana  of  a 

;>arthald  laglslat 

on  thay  ara  an 

titled  to 

ba 

>n  glfan  graatar 

ure  in  urban 

acaaa  If  In  taraa  of  a 

parChaid  lagielat 

ion  they  ara  an 

ba 

thaca.   Blacks  hava 

aaan  qivan  graata 

c  nobility  in 

urban  ar 

•gain  If  in  carna  of  a 

itlad  to 

ba 

Ehara.   Tha  Hiiad  narri 

bean  acrappai3  a 

nd  it  ia 

S  the   colour 

Tha 

lapcopac  Intsrfaranca  A 

t  haa  now  baan  s 

ccappad  and  it 
■clal   politics 

.a  no  longer 

to  hava  nultl-r 

1   parti 

Lagislation   qovarnlng 

ndad  and 

la  no  lon9ar  an  offanc 

>  for  Blacks  to  ba  unagara  and 

auparvis 

of  Hhltas. 

Nona  of  chasa  [aforms 

can  ba  ragacded 

la  coamatic  and 

they  do 

in 

(ace  hava  maaning  for  ■ 

llions  of  Blacka 

Of  ctiaaa  ctiaevia   addcas 

inantal  iaauaS 

ada  to  face  up  t 

3   They  do  not 

vamant  in  the  la 

nd  of   one  a   b 

irth     P 

lava,   InClui   control. 

ragulationa  and 

the  -Scoop  Areas 

Act   at 

ill 

rigidly   aaparaCa  cac« 

roupa  in  avacy  w 

Nilliona 

of 

Blacka  c»fl  only  work  o 

c  sattla  In  uhat 

Amounts  CO  'bT 

par  cane 

thair  counEry'a  aurfac 

araa  with  parml 

Tha   relorms   giving   g 

of  tenure  and 

fraadoa 

of 

apply  to  a  mino 

rity  of  tha  cou 

ntry'a  Bi 

aek 

population   No  ratOrKi 

lias  yat  baan  introducad  vhlch  av 

an  bagina 

ng  batwaan  Black 

and  Hhita. 

Tha  Stata  Pcaaldant  eon 

inuas  to  rafusa 

to  accept  that 

South  Afr 

lea 

la  ona  country  with  ona 

paopla.  whom  hla 

tory  haa  joined 

together 

ahara  ona  dastiny.   and 

bacauaa  ha  rafus 

a  inpaaaa 

in 

BlacK/wnitB  political  r 

lallonahips  tana 

ns  uncaaolvad. 

Tha  Scata  Praaidant  In 

is  apaach  at  tha 

opatiing  of  Par 

lianant  t 

his 

yaac  aald:   "It  ramain 

9  point  of  dapa 

rtura   th 

ty  of  Sodth  Afrlc 

an  society.   It 

io  nait 

lar 

daalrabla  nor  pcactic 

les   In 

aaaa  way.   Diffarant  at 

ana  inply  that 

the  right 

of 

part   In  damocratlc  proeaaaaa   is 

cacogniaad.   Nor  will  tha  atcucturaa  aat 

up  for  than  ba 

inferior 

laaa  affaeclva.- 

Tha    Govarnmant   la   committad   to   taking   South   »fr 

iea   into 

, 

conCadaeal  luture.   with  Whltaa,   Indian 

■  and  Colouceda 

aharing 

Stata  and  Blocks  balng 

ivldad  aaong  tan 

ao-callad  home 

landa   wh 

tha   GovacnmBtit   Baaa  a 

■  Stataa  in  thair 

own  eight.    Thaaa  ale 

van 

nq  be  aovaraig 

n,   and  w 

ill 

„  Google 


poaalbllity       of 
appropriatas      87      f 
w«altn   foE  flva  nil 


iclat   aparthaid    La 


:ludaa   tna 

Lta      toEal 
if      naacly 


Staca.         Un 
bloodanad    i 


n   South  Atrlci 


:al   peoeasa  on  tha  consc 

:aapta     by     tna     Soueti 

living    pacmanantly    in 

ring   than  rlghCa   In   etia  n« 

irthar  actaapc  Eo  Iragaant   I 

living   Blaeka   In  ao-callad  k 


Hhlla 


la  a  National   Party 
iliClcal   Bachinary    ir 


I  Sovatnaant  andaan 


Ldaoloqlcal  coapronlaa. 
naittad  to  aatabllahing 
>-callad  hoaalanda  to 
mnlttad  to  aatabllahing 
•o-callad  Hhlta  South 
Lad  honaland  policy  ia 
Idaologlcal  uaaknaaa. 
I  naarly  50  par  cant  of 
I   ao-callad  Hhlca  South 


Duclng     tht 
proapacta 

laadara     ar 
Praaident 

nagotiatini 


ling   Black  co-op 

I     aicludaa     22 

ilta   pcoblaa  which  i 

[  of  this  yaar  Bla< 
rafon  balng  forthcoBl 
}n>  art  talcing  plaea  t 
lingful  nagotiationa  ai 
to  catuaa  to  maka  a   at 

1  ba  put  on  tha  tabla. 
7unCad  which  will  I 
■  ultnaaalng  In  Soutti  A 


ng     haa     daapanad. 


purpoaaa  baing  aapl 


yad  by  Blaeka. 


Digilizedb,  Google 


■■  .  >     '..I*  rsctaliy      iiti.ai.rm      eonac^:uc-=i:^ 
kK   :«aa   jcriiti.iqiy    luccaaaCul    in    =r«j:-.i^ 

-^   :M.l:.:ta   aacwaan   AZAPO   and   JOP      Ilati 

t^  :ui.i:i,:ai  acruccucaa,  3iacxa  nsa::  aac= 
.  ;s_  )^i-:sa  lad  jolaaa  alicK  joux.i  .v^;.:i,-3 
iv^^.-A^raca^y   ippcaacn,      and     striia     tat 


ca  at      ao'CalLad 

:=ad  CO   ita  tui<l«ctakinga  unaa 

~;tiav  Buac  acap  aaite  troa 

3f    cncusanda      =£      acdinacy 

■Si.   Aa**   in  Souaco  and  athar 

i.  ^*m  ca^acdin^   itaalf  aa 

iCaclvaa  of   cita     paepla. 

tha  eiccuBaCaneaa  uQieli 


Digilizedb,  Google 


Black  South  Afr 

eana  w 

11 

groups  auch  ••  kZkPO  an 

t 

uaney  polillca 

judg*  pollci**  a 

d  appo 

nt 

laada 

aupport  to  fu«l 

ha  CiE 

a  of  Bla 

Tha   lavala   o 

Blac 

/Black 

proporCiono   whl 

h  .nti 

la 

CO  Mka  politic* 

viola 

andaa 

■iolanca  la  no 

balng 

di 

balng  diractad  by  Blac 

Inkatna  daplora 

thia 

latlo 

it   continuaa  to      «ork 

to 

unit 

:a  loE  than  to   raturn.        Laadara     in 

turn   to   tha   hard,      grinding 

tha  paopla     thaaaalvaa     can 

ica  and  diract  couraaa  of     political 

eaasa  touting    for  Haatarn  partiaan 

ick/Black  confrontation. 


Digilizedb,  Google 


^^oop 


Digilizedb,  Google 


C/3 


M 


§(M  g  u)  e  ^  E  ^ 


BS  I 


■S-S  g'«  15  S'S 

B  -c  'a  1 "  I  s 

:  o g  a  (3  ♦"  5-a 


§. 


fiKiiJi'lfiJliliMl!] 


mi 


Elllfillll 


III  i*il*^l 


„  Google 


>i  !>  H I 


m  m 

m4%\ 


"hi 

i 

f 


n 


i! 


m 


IP 


! 


I 

Pi 
iijl 


i 


m 


mm 


tiljiiil. 


m 


iiiiii 


ii 
I! 


iijii  i| 


iiii 


Digilizedb,  Google 


'■ml 
Mm 


t  III  !l  H !{ |ii  .'I 

i  111  iu'}!'!  'il  " 
IIH  idkll'!! 


I! 


111!  I 


'IP  I 

i! 

.ill 

}  isi  i'l !»!  HI  mm 

liiiili  i|| 

i  i'T;[«iiF!lHilMii!i! 

Jill'!. 


i;fpi{iipip,if:ij||{ij 

iJtlHi'fiSfiMBil'illlili 


DjczedtyGoOgle 


'I  I'f!    I'f |i 

f! '  i  I'i '  I  k 

wMMm 


Digilizedb,  Google 


igilizedbyt^* 


lOogle 


Digilizedb,  Google 


igilizedb/VaC 


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