The Case For Restoring Rhodesian Sanctions

On December l8t~, 1973, the Senate voted 2. U.S. security does not require breaking sanctions. by 54 to,37 in favor of S.1868 to re-instate The national stockpile contains more than 5 million full United States compliance with United Nations tons of chrome ore, greatly in excess of military economic sanctions against , by ex­ needs. Deputy Secretary of Defense, Clements, empting sanctions from the operation of Section has written that only 2.3% of the stockpiled high­ 10 of the Strategic and Critical Materials grade chrome ore is necessary for the Defense Stock Piling Act. This section (the so-called Department's requirements in the fir$t year of a Byrd Amendment) provides that ,the President may war. The President proposed in 1973 to release not prohibit or regulate the importation of excess chrome and ferrochrome from the stockpile "strategic and critical materials" from non­ for public sale. The stockpile excess is enough'to Communist countries as long as importation of replace 1973 imports from Rhodesia for 22 years. such materials from Communist countries is not Furthermore, if the Byrd Amendment was intended to barred by law. eliminate dependence ,on a potential enemy, the , it has not done so. Soviet imports of We urge members of the House of Represen­ chrome ore in 1972 and 1973 continued to be more tatives ~o support S.1868 for the following than 50% of total U.S. imports, as they had been reasons: before the legislation took effect.

1. In an era of minerals shortage, sound econ­ 3. Other competitively-priced sources of chrome omic policy demands sensitivity to the views of besides Rhodesia can meet U.S. needs. The Soviet independent African states, who are united in Union is the larges't producer and exporter of chrom~ opposing U.S. support for Rhodesia's regime. ore in the world. The great bulk of production is The independent countries of Africa are becoming sold as exports, 90% of which goes to non-Communist important suppliers of many of these minerals. countries. Soviet deliveries of chrome ore to The U.S. now has over $3 billion in private the U.S. were not interrupted by political tensions investment in these nations, far more than the generated by the Cuban missile crisis or the Vietnam $56 million invested in Rhodesia. Secretary of war. Soviet ore has the highest chrome-to-iron State recently wrote: ratio and chromic oxide content of any ore in the world. In .1973, Soviet ore sold for 20% less than •.. the Byrd provision has impaired our comparable Rhodesian ore. Turkey, Brazil"Pakistan, ability to obtain the understanding and the Phillipines and South Africa are also chrome support of many countries including such ore exporters and often at cheaper prices than important African nations as Nigeria, a Rhodesia. significant source of petroleum and a country where we have investments of 'nearly $1 billion.

-v'\Tas,hingt,'bn Orfice on A:frlca 1.10 ~arylancl .A.ve.~ N. E ... D.C.~ a0008 4. The Soviet Union is not buying Rhodesian chrome million it has predicted. The stainless steel producers have not passed on to consumers any ore and either transshipping it to the united States cost savings that may have come from breaking or stockpiling it. The transshipment allegation was tested by the U.S. Geological Survey, which sanctions. In fact, -stainless steel producers found that the contention that Soviet materials have recently upped prices by 2 to 4% on top of were Rhodesian did not hold up under examination. previous price hikes _of as much as 6% in 1973. Other allegations that the Soviets are purchasing More increases are planned; Allegheny Ludlum, the leading producer, says it is going to raise prices Rhodesian ore for their own use are unsubstantiated and have never been submitted to the U.N. Sanctions 18% by July 31st. Committee, which offers rewards for such information. 7. Sanctions are a legitimate form of international 5. Sanctions-breaking imports-of ferrochrome made pressure for justice in Rhodesia. Sanctions are not meddling in the internal affairs of a country. more cheaply in Rhodesia threaten the jobs of It is difficulb to understand how u.S. compliance American workers in the u.S. fe~rochrome industry. Since the passage of the Byrd Amendment, !mports with U.N. Sanctions constitutes meddling in internal affairs while our current violation of of ferrochrome (a chrome-iron alloy used in sanctions does not, since either action by an making stainless steel) from Rhodesia have important world power has important effects in doubled, 'claiming·46% of the high-carbon ferrochrome Rhodesia. The United States supported sanctions in import market in 1973. Rhodesian ferrochrome the U.N. Security Council in the belief, now borne can be exported cheaply because African miners in out, that the oppression of so many by a tiny Rhodesia, who are prohibited from organizing to illegitimate regime in Rhodesia is a threat to gain a decent wage, earn less than half of the international peace. minimum required for subsistence. Also, the Rhodesian regime subsidizes freight and power rates and allows industry to avoid the high costs 8. Renewed U.S. compliance with sanctions could of environmental protection. The threat to U.S. bring decisive pressure on the Rhodesian regime. jobs has been temporarily lessened by a recent Sanctions have denied Rhodesia much of the capital boom in the steel industry, but when the boom ends, American workers may lose jobs because of needed for industrial and transportation equipment, unfair Rhodesian competition. oil and armaments. This economic pressure, and the growing opposition of Rhodesian Africans, may force the regime to negotiate seriously with Africans f~r a peaceful transition to majority ~. Res~oration of sanctions will not lead to rule. U.S. violation of sanctions weakened these precipitous increases in the cost of stainless pressures by gi~ing the regime $43 million of pre­ steel. If sanctions are restored, replacement cious foreign exchange and invaluable political of Rhodesian ferrochrome by purchases of ferro­ backing. Renewed U.S. compliance with sanctions chrome from other foreign producers or from the will incr~ase the economic pressure and place stockpile, costing at most an additional $100 per the weight of the United States behind the African ton, will cost the stainless steel industry only people in their demand for majority rule. slightly over $3 million annually, not the $96 22

u. S. P 20 E IM- R u. s. 18 IM- e POR TS E N 19.9 'Y. T 16

0 F 14

W 0 R 12 L 0 10 p R 0 0 8 U u.s. C T IM- I 6 PORTS .0 8.4% N 4 u. S. 1M - PO RTS

2 5.3%

*1973 from Census African Countries which support sanctions are major producers of minerals Bureau

Sources: U. S. Bureau of Mines, needed by U.S. Economy 1971 Minerals Yearbook 1972 preprint (Cobalt) 1973 Estimated by petroleum expert Declined? The Year the StainIe 55 Lobby

Didn't Talk about: 1973

300

400 200'" C ..o ...o 350 "u. S. fer-roehrorne production has almost consistently declined since 1967, the first year of the Rhodesian sanc­ 1 00 ~ tions ... " trom Rhodesian Chromium and Specialty Steel: 1 Basic Considerations. ..a :lo 300 -: 67 68 69 70 71 12 73 u.S. Ferrochrome Production 250

~ 200 If Rhodesian ferrochrome and chrome c 2 were embargoed, excess material in '0 the U.S. stockpile could replace the ~ 150 "U C quantities now imported from Rho· a :: desia for a period of 2 2 yea rs ! 0 ~ .. 100 u.S. ferrochrome plants if adequatel 1973 RHODESIAN IMPORTS supported can meet most of U.S. 50 1973 RHODESIAN requirements. IMPORTS

FERRO FERRO- SANCTIONS WIL·L NOT

STOCKPILE COMPARED TO *Equivalency ratio: CUT U. S. OFF FROM 2112 ore = 1 ferrochrome RHODES IAN IMPORTS Data from FERROCHROME, Bureau of Mines & State Dept. ·World Chrome Produ ction

soo Thou sands

100 3 0.9 Ot hers Turkey: Chrome Production

. ~ted) _- ---- tpro\e:... _-- 2000 --- Sources: Minerals Yearbooks Thousands of Tons 1967-71

1000

1963 1965 1970 1975 U.S.S.R. Chrome Production Chrome ore output by 1975 is e",peded to be about 18 per,ent higher than in 1970. - Minerals Yearbook 1970 yol. 3 p.782 1200

110

100,+-__~

900 Stainless Steel Sheet Type 304 price

800

700

600 Ferrochrome cost is $112 or only 10.8 %, of price of a ton of

500 Stainless Sheet Type 304, $1040. Chrome Ore, a component

400 of ferrochrome, represents less than 4 % of total Type 304 price.

300 Source: Ferroalloy Industry : ..'" Petition to Cost of living Coundl c for Exemption, 1 9 73 0 Q 200

100

Chrome ore price (Turkis

19 e:o 1965 1910 1973 FERROCHROME IS SMALL PART OF STAINLESS PRICE 4 Stainless Companies ,6

Sources: Standard & Poor. Corporate Records Allegheny Ludlum 15 Industry Surveys CyClOps

American Iron and Steel InstItute, Carpenter Technology

1972 Annual Stat i cal Report Washington Steel 14

13 P E R

C E 12 N T

11

E 10 V E N

I N w o R

S f:Ai~less profits tend to parallel the pro:its of the ') ]:lrqc,st l. $. coroorations, although the pro""its swir:g up and T ::o'.·~ !"'o~e .....·id"'l·[, ,15 is tynicil] ""or .::l. cyclical industry. A rP.3in .),~u'r C"or.trib'lli:HJ to the ""311 in the early 1970's was i?enctra­ '"-.L0n '" tile L. S. r'l"lrkct Ly ir.ports [rom Jap.n. HC'lin ~actors in >- ~ rlS' in 1072 ..... ere \'ol~ntar\- rcstrRi~t ~qree~ents with Japan .1:1:1 the '1C''fallation of the doll..:n. ChroITc- Or'2 ,nd cerrachrome V ric 5 ]a/ a relatively small role in jct('rr'ining profit outcoMe. E

A 60 61 62 (3 64 65 66 67 68 69 70 71 72 73 R S Stainless Profit on Equity···· higher than Steel Industry DISPARITY Sources: Ministry of Finance, Economic Survey of Rhodesia, April 1973 7 IN WAGES Central Statistical Office, , Economic Report, 1971 Monthly Digest of Statistics, vol. IX, 4 BETWEEN AFRICANS 1971 Dollar equivalent: Kwacha = $1.40 AND OTHERS- Rh. Dollar ~ 6 SHRINKING IN ZAMBIA---NOT

~ IN RHODESIA c Real Wages of African Miners In Zambia 5 Ql C .~ ::) -Z'.. 2000 ~

"0 III Q c lS00 .t:. vi 3 u C :) ~ ~ tI III ~ ..c ~ 1000 2 o )( U 01 "D I 0 I .. I Q. c Real Wages Of African Miners in Southern Rhodesia C Q. I

1964 65 66 67 68 6~ 70 71 72 1971 1971 Majority rule and a free Labor movement will 6 to 1 13 to 1 Zambia Rhodesia benefit Rhodesia's African workers