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The Controversy Over US Companies in South Africa Two Decades of Debate: the controversy over U.S. companies in South Africa http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.bmdv2 Use of the Aluka digital library is subject to Aluka’s Terms and Conditions, available at http://www.aluka.org/page/about/termsConditions.jsp. By using Aluka, you agree that you have read and will abide by the Terms and Conditions. Among other things, the Terms and Conditions provide that the content in the Aluka digital library is only for personal, non-commercial use by authorized users of Aluka in connection with research, scholarship, and education. The content in the Aluka digital library is subject to copyright, with the exception of certain governmental works and very old materials that may be in the public domain under applicable law. Permission must be sought from Aluka and/or the applicable copyright holder in connection with any duplication or distribution of these materials where required by applicable law. Aluka is a not-for-profit initiative dedicated to creating and preserving a digital archive of materials about and from the developing world. For more information about Aluka, please see http://www.aluka.org Two Decades of Debate: the controversy over U.S. companies in South Africa Author/Creator Hauck, David; Voorhes, Meg; Goldberg, Glenn Publisher Investor Responsibility Research Center, Inc Date 1983-00-00 Resource type Books Language English Subject Coverage (spatial) United States, South Africa Coverage (temporal) 1960-1982 Rights By kind permission of the Investor Responsibility Research Center, and with thanks to Glenn S. Goldberg. Description This review of the debate on U.S. economic invovlement in South Africa is a survey from an organization with the objective of providing impartial information to institutional investors. It summarizes actions by students, churches, universities, and other institutional investors, including shareholder resolutions, divestment of stock, and protests. Appendices include the Sullivan Principles initiated in 1977 and the list of companies signing or endorsing the principles by 1982. Format extent 172 page(s) (length/size) http://www.aluka.org/action/showMetadata?doi=10.5555/AL.SFF.DOCUMENT.bmdv2 http://www.aluka.org 0' 0' IoI TWO DECADES OF DEBATE: THE CONTROVERSY OVER U.S. COMPANIES IN SOUTH AFRICA David Hauck Meg Voorhes Glenn Goldberg Investor Responsibility Research Center Washington, D.C. The Investor Responsibility Research Center was founded in 1972 as an independent, not-for-profit corporation to conduct research and publish impartial reports on contemporary social and public policy issues and the impact of those issues on major corporations and institutional investors. IRRC's work is financed primarily by annual subscription fees paid by more than 170 investing institutions. IRRC is governed by a 21-member board of directors, most of whom represent subscribing institutions. Executive Director: Margaret Carroll. Deputy Director: James E. Heard. Editor: Carolyn Mathiasen. This book is one of a series published by IRRC's South Africa Review Service. Copyright 1983, Investor Responsibility Research Center Inc. 1319 F Street, N.W., Washington, D.C. 20004 CONTENTS INTRODUCTION THE ACTIVISTS' ROLE IN THE DEBATE 7 The Evolution of Activists' Interest in South Africa 8 The Post-Soweto Era I I Anti-Apartheid Activists' Goals and Tactics 16 Anti-Apartheid Activism in the 1980s 22 GOVERNMENT INVOLVEMENT IN THE DEBATE 29 II The Executive Branch and Economic Relations with South Africa 30 The Debate in Congress 41 State Action in the South Africa Debate 47 Municipal Action 58 Outlook 59 SHAREHOLDER ACTIVISM AND THE ROLE OF INSTITUTIONAL INVESTORS 61 The Shareholder Resolutions 62 Responses of Institutional Investors 65 Future Trends 90 THE CORPORATIONS' RESPONSE Early Responses 95 Post-Soweto Responses 97 The Sullivan Principles 97 Other Responses by Business 1 Future Pressures 126 THE CAMPAIGN AGAINST LOANS TO SOUTH AFRICA 127 V EarlyPressures128 Actions After Soweto 131 Shareholder Activism 133 New Voices in the Debate 136 The Banks' Responses 136 Outlook 000 CONCLUSIONS 14 5 '1k' The Effects of the Debate 146 The Future of the Debate 150 APPENDICES 155 Appendix A: Statement of Principles of U.S. Firms with Affiliates in the Republic of South Africa 155 Appendix B: Signers and Endorsers of the Sullivan Principles 159 Appendix C: The Study Commission on U.S. Policy Toward Southern Africa 163 IV INTRODUCTION Beginning in 1976, a series of events in South Africa heightened, as never before, American awareness of apartheid, the political system through which South Africa maintains white minority rule over 24 million blacks. In June 1976, black students in Soweto, a segregated black township outside Johannesburg, gathered to protest South Africa's racially segregated education system. Without warning, police fired on the crowd of 20,000, mortally wounding several youths. In the next 18 months, blacks throughout the country, catalyzed by the Soweto tragedy, organized demonstrations against apartheid. South African police reacted to the demonstrations by opening fire on several occasions, killing hundreds of demonstrators. Finally, Pretoria in late 1977 moved to still the civil unrest by detaining many of the leaders of the newly born black consciousness movement and banning several anti-apartheid organizations. One of the detainees, black consciousness leader Steve Biko, died several weeks later at the hands of his police interrogators. The reports of these events shocked and angered many Americans and rekindled an ongoing debate over U.S. corporate involvement in South Africa. This debate has been one of the dominant corporate social responsibility issues in this country for nearly two decades, attracting a varied range of participants, including groups with a longstanding commitment to African liberation, churches, civil rights activists, students, trade unions and politicians from all levels of government. These activists have compelled investors, legislatures and corporations to examine the issue and, at times, have gained their cooperation in efforts to reduce the level of U.S. investment in and business dealings with South Africa. The debate: Why has South Africa been singled out for such attention? At the heart of the debate over the presence of American companies in South Africa is concern about the South African government's apartheid policies and the extent to which U.S. trade and investment affect those policies. Apartheid splits South Africa along racial lines, dividing 14 percent of the land into 10 homelands for the country's 20 million Africans--nearly three-quarters of the total population--and declaring the remainder of the country white. The rights of Africans to live, work, conduct business, obtain training or education and engage in political activity are constrained or non-existent in "white" areas; the rights of coloreds and Asians living in these areas, although greater than those of Africans, are also limited. Opponents of U.S. investment in South Africa say that the presence of American companies there gives a moral legitimacy to the white minority regime, and that it creates a vested American interest in the status quo and the stability of the current political system. They argue that the supply of capital by American banks and businesses eases South Africa's foreign exchange problems and makes the country less vulnerable to international pressures that would stimulate reform. They are also concerned that sales of certain products contribute directly to South Africa's military and security forces. In their view, the withdrawal of investment, an end to strategic sales and a moratorium on loans would deal a severe psychological blow to the morale of the white regime in South Africa and would constrict the historically high rate of economic growth that many analysts consider crucial to its stability. They contend that these pressures, coupled with increasing international isolation of South Africa, could force the government to abandon its discriminatory practices and work out a system for sharing power with blacks. Critics admit that sanctions of this sort could hurt blacks in the short term, but they argue that temporary hardships would be offset by eventual economic and political gains. Supporters of continued business involvement in South Africa say that they too oppose apartheid, but they believe that American companies are, or can become if pressed, a force for progressive change in South Africa, and they urge companies to use their influence to promote reforms both within and outside the workplace. Advocates of continued investment assert that corporations--by liberalizing employment practices in their South African operations--set a positive example for other employers and contribute to the well-being of all races in South Africa. They believe that by increasing economic opportunities for blacks--thus elevating their standard of living and importance to the South African economy--companies are contributing to a process that will lead eventually to the full integration of blacks into society on all levels. In their view, economic disengagement would only aggravate unemployment of blacks and strengthen the resolve of whites to resist external pressures, and would lead to increased repression of internal critics of apartheid because the government would feel, in its growing isolation, less constrained by world opinion in dealing harshly with dissent. Those calling for an end to American investment
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