Sanctions and Disinvestment
Build links between workers!
by L Reed
Originally published in Inqaba No. 18-19 (February 1986).
Disinvestment and sanctions against South Africa have been hotly debated—in the bosses’ press at home and overseas, as well as inside the workers’ movement.
Can economic sanctions contribute to forcing change in SA? Should the trade unions support a campaign to get foreign companies to disinvest? Won’t this merely increase black unemployment and harden the resistance of the right-wing racists?
Big business has all along opposed sanctions, hypocritically arguing that they will hurt black workers. Effective economic sanctions or large-scale disinvestment, they point out, would lead to more jobs being lost in South Africa and more hardship for the people in the surrounding countries.
Such arguments are used by the capitalists at their convenience. When the multi-national corporations in SA introduce new technology and then mercilessly throw thousands of workers out of jobs, they don’t speak of “black workers suffering”.
Both when the capitalists invest and when they ‘disinvest’, the experience of workers is that they are made to bear the burdens of the capitalist system.
The question for workers is whether sanctions and disinvestment, whatever additional suffering they may entail, would lead to the apartheid regime collapsing or being over-thrown sooner – for that is the only route towards ending the workers’ suffering.
Few black people now believe the story of the businessmen and the press that capitalism is a “force for good” contributing to higher living standards for the workers, expanded job opportunities and the removal of apartheid.
The survey by Mark Orkin of CASE (in conjunction with the IBR) found that three-quarters of all blacks in SA support socialism! 73% favoured some form of disinvestment. A Markinor poll found 77% of urban blacks supported sanctions to get rid of apartheid. Nevertheless, opinion surveys reflect the thinking of people in only a superficial way. While the revolutionary mass movement over the past eighteen months has undoubtedly radicalised black working-class opinion on the issues, it would be wrong to imagine that all the complicated questions involved in sanctions and disinvestment are resolved.
At the end of 1984, Prof. Schlemmer (an avowed supporter of capitalism and foreign investment) claimed to find that only 26% of production workers in SA thought disinvestment a good thing. He got his result by implying in the survey that the choice was between getting more jobs through foreign investment or merely frightening the government through disinvestment.
In fact, a central issue as far as workers are concerned is: Can sanctions and disinvestment be an effective weapon against the regime? Also: Who should we be relying on overseas to support our struggle? These questions need much more discussion in our movement, so that there can be clarity and unity of approach among workers.
Over the past two years, the leaders of the independent unions in SA have come out more fully in favour of international pressure for sanctions and disinvestment, reflecting the view of most of the advanced, organised workers. In an in policy statement in June 1984, FOSATU declared that it “fully supports international pressure on South Africa to bring about social justice and a truly democratic society.” Despite the Federation’s concern with the jobs and livelihoods of its members, “it is FOSATU’s considered view that the pressure for disinvestment has had a positive effect and should therefore not be lessened.”
At its founding congress late last year, COSATU resolved “that all forms or international pressure on the South African government – including disinvestment or the threat of disinvestment – is an essential and effective form of pressure on the South African regime and we support it.” Furthermore, “if this government remains intransigent in its racist, anti-democratic and anti-worker practices, then this pressure will have to increase as an act of solidarity with our struggle for liberation from exploitation and oppression.”
COSATU committed itself “to the principle of international working class solidarity as the most powerful form of solidarity action with our struggle.”
As an Immediate practical policy, both the FOSATU statement and the COSATU resolution put forward a correct line. However, both also reveal elements or ambiguity in the policy which could lead to confusion in future if they are not clarified.
On the issue of sanctions and disinvestment as on all issues that we have to grapple with, the key thing is to proceed from clear and firm principles, class analysis and perspectives – and then, from that foundation, apply, tactics in a flexible way.
First of all, “pressure” – whether national or international – cannot “bring about social justice and a truly democratic society” in South Africa. That can be done only by revolution – specifically by working-class revolution leading to workers’ democratic rule.
Nevertheless, in preparing and building for revolution, we can and should use a whole variety of pressures which may hamstring or weaken the enemy and limit the scope for its blows and manoeuvres against our movement.
Secondly, because it is upon revolution, and nothing less, that workers ought to put their faith, we must at all times draw the clearest distinction between our class enemy, the capitalists at home and overseas (who are mortally terrified of revolution), and our class brothers and sisters in all countries (who have nothing to lose and much to gain from a victory of the working class in South Africa).
The COSATU resolution supplies the key in committing itself “to the principle of international working class solidarity action as the most powerful form” – we would add: and the only reliable basis – “of solidarity action with our struggles”.
If this idea is followed consistently it would lead to a sharp distinction of attitude in our movement towards, on the one hand, the foreign capitalists who (under pressure) may disinvest or through their governments impose some sanctions against South Africa, and, on the other hand, those forces (primarily of the working class) who can mount effective pressure for disinvestment and themselves enforce sanctions against the apartheid regime.
There should never be even an implication of support or sympathy on the part of our movement for any section of the capitalist class in whatever it may do. Our policy must be not to appeal to the bosses and their governments for assistance (that can only mislead workers to put trust in treacherous liberals), but to mobilise a working-class based movement everywhere against capitalism.
If foreign capitalists themselves impose sanctions against SA, it is not out of sympathy for workers, black or white. If they act in this way, it is as a by-product of and response to our revolutionary movement – a result of their fear of revolution and their hope to find an alternative which they think may pacify us.
Thirdly, the ‘effectiveness” of sanctions, disinvestment and other external pressures on the SA regime, will not remain the same, or necessarily increase, under all conditions in the future.
Insofar as sanctions are imposed by the capitalists and their governments, we must combat all illusions among workers that these can be relied on.
While the naïve belief prevails in ruling-class circles inside SA (including within the regime) and overseas, that the apartheid system can be ‘reformed’ from above to the point where revolution can be averted through compromise – so long can partial economic measures ‘against’ South Africa, undertaken by SA’s capitalist allies, have a certain effect in restraining state reaction or inducing the apartheid regime to make partial concessions (to the unions, for instance) which it might otherwise have resisted longer.
But when the revolutionary challenge of the black working class in SA rises to much greater heights than yet achieved – when the fate of capitalism itself is plainly at stake – there will be immense, though more or less secret and underhand, efforts undertaken (including by elements among the imperialists who have previously gone along with limited sanctions as ‘pressure’ on the SA regime) then to prop the regime up and stave off a workers’ victory at all costs.
It is revolution, not apartheid, that the bourgeoisie internationally hates. They want reforms today to avert revolution. Tomorrow (although constrained by political pressures in their own countries and world-wide), they will just as determinedly favour the triumph of reaction. For the organised workers to see the ‘support’ of even the most liberal capitalists as inherently conditional, unreliable and treacherous is the most important thing in working out a policy on sanctions, etc.
We are certainly pleased to see anything which weakens the ability of the SA regime to repress our movement; any pressure which causes it, however partially, to retreat; any divisions among the capitalists which undermine their morale and give the workers confidence in future victory.
But it is only upon the strength of our own class – and only upon sanctions imposed and implemented by the organised force of the international workers’ movement – that we can ultimately rely. This should be made clear in all calls for sanctions and other “pressure” against South Africa.
Disinvestment itself has resulted from economic self-interest on the part of foreign capitalists, combined with political opportunism when faced by revolutionary unrest in SA and vigorous mass pressure from unions and anti-apartheid groups abroad.
SA is integrally linked with the world economy. The world capitalist economy is controlled by banks and multi-nationals on the basis of profit. Profit is their essential concern.
All the wealth or the capitalists – all the machinery and plant – is created by the international working class and comes into the hands of the capitalists as capital which they just push around the world as they think fit. If it suits them they quite happily close plants and put millions of jobs at risk.
When we look at the movement of capital in or out of SA, foreign companies (there are 1,200 British and 300 US companies alone in this country) have over £31.5 billion invested. This is based on what is profitable to each company, whether it is short- or long-term investment.
How attractive is it to invest in SA? At the end of 1984, Frost Sullivan, New York ‘political risk consultants’, dropped South Africa from one of the safest countries for investment to a par with some of the higher risk ‘third world’ countries.
In the last four years, economic growth has been negative. The country now has a $24 billion debt, equivalent to Chile’s debt. 66% is short-term, although most of this has recently been rescheduled.
At a recent ‘Investment in 1986’ conference, Chris Ball, Barclays managing director, said: “SA has been stagnating economically, not for two years nor four years but for 15 years, with the constraint still tightening.”
Inflation is around 20% – four to six times that of SA’s major trading partners, making its products less competitive. 9 companies go bankrupt daily. Massive retrenchments occur.
Black unemployment has rocketed to an estimated 25-30% nationally and 56% (with youth unemployment as high as 80%) in some areas like Port Elizabeth-Uitenhage, which has been so de-industrialised that the motor industry is a ghost industry.
In 1980 the average return on foreign investment was 20%; now it is only 5%. In 1984, investment in manufacturing was 40% lower than in 1980. 67,000 jobs were lost between the third quarter of 1984 and March 1985, 32,000 of them in manufacturing.
Over the last 9 years there has been no net rise in black employment. With unemployment already at 3 million or more, 250,000 black youth enter the labour market annually with no prospect of a job. With this bleak future it is not surprising that youth have boycotted schools and not written exams. Even whites are beginning to be hard hit, with unemployment officially triple that of 1984.
With the economy in such a mess, and investment no longer giving above average returns, many foreign companies have been selling off their assets in SA and getting out.
Since 1980, 30 US companies have left. Many British companies have also withdrawn or reduced their majority stake.
Thousands of textile workers have been laid off. The only new textile investment is from multi-nationals moving out of the Philippines to the new ‘free trade zone’ of the Ciskei, where trade unionists are banned or murdered. Already some international companies and retail stores are refusing to place new orders with South African textile manufacturers on account of protectionist pressure in their own countries linked with calls to boycott SA goods.
For many foreign capitalists, Botha’s speech to the Natal N.P. congress last August marked a turning point. Fearing to show weakness in the face of the growing mass movement, he refused to announce further ‘reforms’ and so raised renewed fears among investors that revolution was inevitable.
When Botha warned, “Don’t push us too far”, the rand fell to an all-time low – 38.5 cents to the U.S dollar; some countries imposed limited sanctions and recalled their ambassadors for ‘consultation’; capital seemed to be flying out of the country; and international banks demanded repayment of their debts.
Apparently, one speech by Botha had brought about what the sanctions campaign had been unable to achieve over 25 years!
The reason for this public flight of capital from SA was “that no businessman wants to be caught propping up a government whose social policy leads to the sjambokking and shooting of people on television – so, eventually to money-losing revolution.” (Economist, 7/9/85. Our emphasis.)
A new situation has arisen. What seemed crucial factors six months ago, such as SA’s strategic situation in respect of minerals and geographical situation, have for the present been overtaken by other concerns. Even factors such as British capitalists’ investment of over £11 billion in SA as well as the £1.2 billion of exports to SA are no longer determining factors for sustaining foreign investment.
The sheer tenacity of the revolutionary movement in South Africa over more than a year; the horrifying brutality of the apartheid regime in the constant massacres reported and witnessed night by night on television screens in Europe, America and worldwide – these produced a sea-change in attitudes among the mass of people towards SA.
In turn, that has compelled sections of the capitalist class internationally, as well as imperialist governments, to proclaim more open ‘opposition’ to the Pretoria regime.
In September 1985 Reagan suddenly signed a presidential order banning the export of US computers to SA agencies that enforce apartheid; prohibiting most transfers of nuclear technology; ending the importation of Krugerrands; and restricting some loans to the SA government. Reagan, the most reactionary US President for decades and a close ally of Pretoria, is certainly not doing this for humanitarian reasons.
Instead the limited sanctions (most of them simple enough for SA to get round) were aimed to avoid stricter sanctions demanded by many Americans outraged over the misery, violence and injustice of apartheid. Pressure through the unions and though public demonstrations had led to legislative moves in Congress which Reagan was anxious to prevent.
He could no longer hide behind “codes of conduct” and talk of “constructive engagement” when the oppression of black people in SA was obviously going from bad to worse. But this does not mean that really effective or crippling sanctions will be imposed either by the US or other imperialist powers acting together.
Such sanctions as have been imposed have a certain damaging effect on the SA economy and on business confidence and do cause the Botha regime to worry – especially when negotiating over its foreign debts – that overseas pressures might be stepped up. But the imperialists always leave enough loopholes in their measures to ensure that the SA regime and ruling class can get round them with the aid of their trading partners and financiers abroad.
The intentional toothlessness of the so-called ‘United Nations’ and its impotent resolutions have long made this body a joke. In 1963 the UN Security Council imposed a mandatory arms embargo, which has not stopped the movement of arms to SA or the development by SA of its own arms industry – which now exports arms.
The oil embargo imposed by OPEC countries was first circumvented through Iran under the Shah. Today South Africa still receives oil from sources in the Gulf. The Salem scandal showed a glimpse of various measures used to beat the embargo. With the present oil glut and desperate efforts of oil-producing countries to sell it, South Africa can find many sources of supply – at a price.
There is no effective international machinery to enforce an embargo – and such machinery cannot and will not be created by the ruling classes internationally, who in any case have no desire to make sanctions against SA effective enough to actually contribute to the overthrow of the regime.
Meanwhile the SA government has been developing SASOL, to manufacture oil from coal as an extra insurance, and oil has been stored in sizeable quantities in disused mine shafts. This has been at some cost.
The Amsterdam Shipping Research Bureau showed that the oil embargo costs the SA government R5 billion per year – R3 billion on crude oil and R1 billion on circumventing the embargo by using false destinations, and keeping secret all calls by oil tankers to South African ports.
In addition, costs of importing oil have jumped dramatically as the value of the rand has plummeted, outstripping the recent fall in the crude oil price. To meet rising fuel costs, the government has continually forced the price of petrol up – bringing the overall price increase to 60% in 1985.
Thus oil sanctions impose a certain ‘cost’ to the SA ruling class – but a is a ‘manageable’ cost; these limited measures do not and will not cripple the economy.
A similar situation holds in respect of bans or restrictions on investment or loans. A report by Sutcliffe and Wellings of the University of Natal points out: “The proportion of new capital formation financed from foreign investment has fallen from 35% over the period 1946-55, to 17% over 1966-77, to about 10% in the last 10 years.” (Star, 4/7/85) ITV’s Weekend World programme in Britain recently reported that foreign investment now makes up only 1.5% of new investment in SA.
Foreign investment is likely to continue to stagnate, or decline – because of falling profit rates and the political risks. But most of the disinvestment consists in off-loading foreign shares rather than withdrawing plant. And most of these shares are bought up by SA companies out of the considerable amounts of uninvested capital available in the country.
With the fall-off in direct investment, SA capitalism has built up increasing debt to the big imperialist banks in the form of loans – about $24 billion at the present, much of it short-term debt.
Much publicity has been given to the “leverage” this gives to the bankers over Botha – by refusing to issue new loans or “roll over” old ones. Indeed, last year the regime had to suspended most interest repayments and seek a rescheduling of loans – because the falling rand had increased the expense of repayments. But, despite all the talk, this rescheduling is being successfully negotiated.
In reality, the banks are dependent for their profits on securing repayment, just as much as SA capitalism is dependent on the loans. To get repayment, the banks will also have to extend new loans. Neither the regime nor private SA capitalists will be deprived of access to the vast quantities of finance capital floating around the world – even though the terms may be more costly, the loans more short-term, and the deals increasingly secret.
Thus it is obvious that sanctions against SA by the capitalist powers – invariably imposed as half-measures or gestures to ‘public opinion’ – do have some effect in worsening the crisis of the SA economy and thus weakening the base of the regime. But it would be wrong to cultivate any illusion among workers that these can be relied on to bring about real change.
On the contrary, the limitations and ineffectiveness of sanctions ‘imposed’ by the ruling class should be fully exposed – and contrasted with the necessity and possibility of bringing about effective sanctions and other solidarity action through building the international unity of the working class.
If this is not brought out clearly, then the regime may be able later on to sow doubts with its propaganda even among workers who now are prepared to support the idea of ‘sanctions’ – by the UN, by the EEC, by the USA, etc – in the belief that whatever additional economic hardship workers have to bear will prove worthwhile as contributing to liberation.
In the anti-apartheid solidarity campaigns overseas, a wide variety of approaches, often involving superficially attractive but confused ideas, are put forward on the issue of sanctions. These range from individuals boycotting South African fruit, to naive moral appeals to capitalist governments for far-reaching measures aimed at the total banning by law of trade and other links with SA.
In the past period in South Africa, consumer boycotts have been developed as an effective means of exerting pressure by working-class communities. But the key to success has been total mass solidarity plus collective enforcement against boycott-breakers.
Overseas, boycotting SA fruit is aimed at the individual consumer’s conscience. Buying, instead of an Outspan orange, an orange from Zionist Israel or perhaps Pinochet’s Chile, the person feels he or she has ‘done something’ against apartheid – without being drawn into collective action in a way which can raise consciousness and make a specific impact that can be seen and felt.
In contrast, the action which was taken by the Irish Dunnes’ super-market workers against handling SA goods and their attempts to build Links with CCAWUSA and the Food and Canning Workers’ Union, shows the willingness of workers to take firm action and sacrifice even their jobs in support of the struggle of oppressed and exploited people in other countries.
Bui the Dunnes’ strike also brought out the central problem which workers face. These courageous shop workers took action and sustained it for more than seventeen months in response to policy of their union not to handle SA goods. But when it came to the crunch, the leadership totally failed to back the strike by mobilising solidarity action, and shamefully ended up calling it off officially without even allowing the Dunnes’ strikers a say!
The reformist leadership of the labour movement abroad has spent its time in the past simply passing pious resolutions and has not tried to organise a campaign to put muscle behind their words. Many officials merely endorse decisions of the United Nations rather than taking independent class action and seriously building links with South African workers, which the non-racial trade unions have asked for.
However, there have been some actions, usually prompted by pressure from the rank and file, which show the potential for a tremendous campaign of action by unions worldwide – both to support SA workers in specific disputes, and to fight generally to cut off all imperialist aid and links to the SA bosses and regime.
Transport unions in Australia, Finland, Norway, Sweden and Denmark have refused at different times to handle SA imports and exports. Postal workers in Australia and Finland have taken temporary action against handling SA mail.
In July 1985, the action of British dockworkers, belonging to the Transport and General Workers’ Union, in Southampton, prevented the loading of a container with computer equipment for South Africa’s military manufacturer, Atlas.
Workers overseas have also seen how effective was the strike by 3,500 Volkswagen workers in SA; which tipped the scales against the New Zealand rugby tour when the workers refused to allow the company to supply minibuses for it. The strikers declared their opposition to “international links which do not further the interests of the oppressed in South Africa.” The tour was cancelled.
However, trade unionists must demand that union leaders overseas now back up their solidarity resolutions with action. For example, despite the 1985 resolution by the British National Union of Seamen at the conference of Maritime Unions Against Apartheid, backed by the UN, which called for unions to take direct action to ensure that no oil reaches South Africa, little, if any action has been taken amongst dockworkers to try and ensure its success.
Pension funds of universities, local government, unions, etc., are under a lot of pressure to sell SA shares or remove accounts from Barclays Bank. But this simply involves shifting finance around, often to a more profitable area.
While we would generally give support to such campaigns, they can become a soft option for students who should be actively working in and through the labour movement – taking up strike support funds for SA workers, solidarity actions against multi-nationals engaged in labour disputes in SA, and mobilising workers in protests against detentions and killings by the apartheid regime.
There should be a campaign of mass education by the unions overseas to mobilise support for COSATU and build direct links at all levels with the COSATU unions.
Visits should be organised from South African trade union activists to meet rank and file workers to discuss common experiences and struggles, and to prepare for harder struggles ahead.
Education campaigns in every workplace on the struggles in South Africa would mean maximum support and action, not simply resolutions, when South African workers go on strike. Shop steward combines covering workers in different trade unions but in one multi-national should be set up.
In Britain 250,000 jobs are said to depend on trade with South Africa. In fighting against economic ties with South Africa, trade unions must insist on no redundancies as a result. The capitalists, not the workers, must be made to pay. There must be an active campaign throughout the labour movement on this, so that no worker fears losing his or her job through joining the fight against apartheid.
The ineffectiveness of the sanctions campaign against Rhodesia should be explained in the Labour movement as partly the result of the role of the British Labour Party leaders in government.
When a Labour government is returned to power (or in Europe, if there is a Socialist Party government), a mass campaign should be launched by youth and trade unionists explaining that what is needed for effective sanctions is to nationalise the companies and banks involved in South Africa and bring them under workers’ control and management.
This would link up with the resolution of COSATU on disinvestment, which committed the unions ”to ensure that the social wealth of South Africa remains the property of the people of South Africa for the benefit of all.”
The word “remains” is inappropriate here since the wealth of SA is today the property not of the people of SA but of a rich few. But the idea is clear.
While fighting to isolate the SA regime and cut off its lines of foreign economic support, we do not accept the ‘right’ of the capitalists to do what they please with the wealth created by the workers’ labour. It must belong to the people as a whole.
More and more workers see capitalism and apartheid as two sides of the same bloody coin. The only guarantee of basic democratic rights, a job, a house, and decent education will be through the working class taking power and nationalising the mines, big businesses and farms. Then workers will control investment and production, and jobs will be guaranteed for all.
Only by basing the organising of sanctions on workers’ unity internationally, and on a common struggle for workers’ power and socialism, can the long-term interests and needs of the people be assured.
Workers’ unity and solidarity action is also the only way to defend the people of the Southern African countries against the threats to them by the SA regime if effective sanctions were to be imposed.
On 11 November the Minister of Manpower, du Plessis, said the repatriation of migrant workers was essential ”as part of the government’s overall long and short-term strategy for relieving unemployment in the face of disinvestment, sanctions and boycotts.”
At present the regime is using this and other pressures both to try and divide the working class, and to bargain over sanctions. An estimated two million migrant workers from other countries are in SA, most of them ‘illegally’. 104,000 migrant workers are from Lesotho, with their remittances totalling 51% of that country’s GNP. Repatriation would have a devastating effect on all the Southern African countries, including Lesotho.
The NUM has warned that “threats to repatriate migrant workers will not be taken lightly by the union.” In defence of their members and of all mineworkers they would call a national strike. The Chemical Workers’ Industrial Union, which represents 8,700 coal mine workers at Secunda, has already given this strike call their backing and all COSATU unions should be prepared to take solidarity action.
The NUM has also threatened strike action if jobs are cut as a result of coal boycotts. This lead to fight every redundancy or plant closure must be taken up by COSATU and used as an opportunity to educate, win more members among migrant workers, and prepare for future struggles.
The only protection of the whole working class, both in South Africa and Southern Africa, will be through building a mass fighting COSATU and building links between workers in the region and internationally.
The NUM’s initiative for a Southern African mine workers’ federation is a good example, provided links are not confined to the officials of unions in the neighbouring countries (many of whom are conservative and corrupt bureaucrats), but carried to the membership.
The regime’s threat to punish workers if sanctions are imposed shows that there is no painless way of fighting for our liberation.
In fact, it would be quite mistaken to imagine (as is put forward by the ANC leadership at the present time) that sanctions can provide some kind of alternative to revolution or civil war in South Africa. Comrade Oliver Tambo, in his interview with Anthony Heard (Cape Times, 4/1 1/85), said – “the way we look at it is this: the more effective the sanctions are, the less the scope and scale of conflict.”
The assumption is that, by totally isolating South Africa and removing international economic and other support, the racist regime can he forced to concede power through negotiations to the black majority. There are, in fact, no grounds for believing that even a crippling economic crisis would lead to the capitulation of the SA stale.
What is most likely to happen as the crisis (political and economic) in SA becomes really acute – something that will develop ultimately with or without sanctions – is that a more right-wing regime, possibly a direct military-police dictatorship, would come to power. This would be accompanied by even more virulent white racist reaction. The “scope and scale of conflict” would not be reduced.
Capitalists openly opposed to sanctions point to such a ‘scenario’ in their argument against them. In reality this is not an argument against sanctions.
The route to the overthrow of apartheid will inevitably involve grappling head-on with vicious racist reaction, centred on the state and prepared to use methods of outright civil war against our movement. It is essential that the leaders of the movement should make this reality clear and not disguise it from the people.
The task for the black working class, however, is to arm itself politically, organisationally, and finally with weapons, to meet that challenge. In so doing, let us organise the most effective possible sanctions and other solidarity action by our class brothers and sisters internationally to weaken our class enemy at home and abroad and prepare the ground for revolution.