Sanctions against South Africa

Literature › Works

Miller, Charles S. (2004). Sanctions against South Africa. The York Scholar, v. 1 (Spring 2004).

Type	journal article
Scope	Wider apartheid literature
Method	synthesis review
Period studied	1652–1993
Regions	South Africa, United States, Southern Africa region, Britain
Themes	sanctions divestment, origins segregation, resistance social movements, macro fiscal finance debt, business and state
Citation key	miller2004

Argument

The paper asks how far external economic pressure, as opposed to internal resistance, caused the South African government to end apartheid. After a brief history of segregation and apartheid, it surveys disinvestment (private and governmental), the Sullivan Principles, US constructive engagement, and the 1985 bank loan withdrawals. It notes two obstacles to sanctions: regional dependence on South Africa and easy circumvention through third countries. It concludes that sanctions were effective to some degree but that internal strikes, boycotts and violence mattered more, and that the exact weight of sanctions cannot be determined.

Evidence and method

Entirely secondary and journalistic: Thompson's History of South Africa, journal articles (Becker 1987, Kaempfer et al. 1987, Levy 1999, Mangaliso 1997, Rodman 1994), magazine and newspaper pieces (Industry Week, U.S. News & World Report, Washington Post), an encyclopedia entry, and Mandela and Marx. No original data or archives.

Place in the debates

• Effectiveness of sanctions and disinvestment in ending apartheid (see Sanctions, disinvestment and the anti-apartheid movement). Holds that sanctions had some effect, with bank loan withdrawals in 1985 the strongest weapon, but that internal resistance was more significant. It says a precise attribution is impossible.
• Constructive engagement (Sullivan Principles, Reagan) vs. disinvestment (see Sanctions, disinvestment and the anti-apartheid movement). Treats the Sullivan Principles as inadequate because they addressed only workplace treatment and not political rights. It notes Sullivan himself called for full withdrawal by 1987.
• Private vs. government-imposed sanctions (see Sanctions, disinvestment and the anti-apartheid movement). Following Rodman, argues that voluntary private pressure worked better than government mandates, which firms evaded.

Findings

• Foreign investors earned higher manufacturing profits in South Africa than elsewhere, which the paper links to a non-unionised, cheap labour force. (p. 2)

  Manufacturing companies in South Africa were making 18% profits on their investment in 1983, while in other countries they averaged only 12%.

• The Sullivan Principles were limited because they covered only workplace conduct and not black political and economic rights. (p. 3)

  One of the major shortcomings of the original Sullivan principles was that they did not directly address the fact that blacks had no economic or political rights in South Africa; they only dealt with their workplace treatment

• The 1985 refusal by Chase Manhattan to roll over short-term loans began a wider bank exodus. (p. 3)

  Chase Manhattan Bank also took a leading role in 1985 by refusing to continue their short-term loans, partly in response to the uncertainty of the stability of the South African government

• US government sanctions were weak because they lacked international backing and could be bypassed through subsidiaries. (p. 3)

  The U.S. sanctions had no international authority, making them easy for companies to bypass, by using their subsidiaries in independent countries

• Regional dependence on South Africa's economy was a barrier to sanctions. (p. 3)

  The first obstacle was that South Africa had the most stable economy in the region, causing the surrounding nations to be dependent on them.

• The direct GNP loss from trade sanctions is reported as small (citing Levy). (p. 3)

  Statistically the loss of GNP, as a result of the trade sanctions, was only 0.5 percent (Levy 418).

• Rodman is cited as seeing the 1985 bank loan calls as the most powerful external weapon. (p. 4)

  He believes the most powerful weapon was the multinational banks calling in their loans in 1985, causing chaos in the South African economy (314).

• The author ranks internal resistance above sanctions as the cause of apartheid's end. (p. 4)

  I believe the internal events, such as the boycotts, strikes, demonstrations and violence played a more significant role then sanctions did.

• The author concludes that sanctions' exact influence cannot be measured. (p. 4)

  to determine an exact level of influence the sanctions had on ending apartheid does not appear to be possible.

Evidence ledger

Sources used

Source	Kind	Period	How used
"Did Sanctions Work?", Industry Week, 4 Nov. 1991	newspapers periodicals	1985-1990	Supplies the figures for the number of US companies that withdrew and for the value of investment withdrawn, and the claim that trade sanctions were evaded.
"South Africa", Funk & Wagnalls New Encyclopedia (1979)	other	1979 edition, covering history to 1979	Used for the definition of apartheid, the discovery of diamonds and gold, and the date of the first UN Security Council study of sanctions (1964).
"Is There Life after Andy? Robinson Chairs Debate on Blacks, Foreign Policy", The Washington Post, 16 Sept. 1979	newspapers periodicals	1979	Cited for the TransAfrica claim that American corporations profited from near-slave conditions in South Africa.
"No Color Bar in South Africa's Trade", U.S. News & World Report, 10 April 1978	newspapers periodicals	1978	Source for regional dependence on the South African economy (migrant workers, share of Africa's manufacturing output).
David Gergen, "Apartheid's Challenge", U.S. News & World Report, 15 June 1987	newspapers periodicals	1987	Gives the count of companies voluntarily adhering to the Sullivan principles; the text dates it 'August 1995', which is inconsistent with the 1987 article.
Robert A. Manning, "Constructive Engagement; South Africa: Why Leon Sullivan gave up his 'Principles'", U.S. News & World Report, 15 June 1987	newspapers periodicals	1987	Establishes that Sullivan called for complete withdrawal of US companies in 1987.
Phillip I. Levy, "Sanctions on South Africa: What Did They Do?", American Economic Review 89.2 (1999)	secondary literature compilation	1974-1990s	Supplies the macro estimates of GNP loss from trade sanctions and the growth slowdown, plus Chase Manhattan's 1985 loan withdrawal and Mandela's view.
Mzamo P. Mangaliso, "South Africa: Corporate Social Responsibility and the Sullivan Principles", Journal of Black Studies 28.2 (1997)	secondary literature compilation	1977-1983	Source for the profit-rate comparison (18% vs 12% in 1983) and for the content and shortcomings of the Sullivan Principles.
Kaempfer, Lehman and Lowenberg, "Divestment, Investment Sanctions, and Divestment", International Organization 41.3 (1987)	secondary literature compilation	1980s	Supplies the typology of divestment, evidence of sanctions evasion through re-exporters, and British job dependence on South Africa.
Kenneth A. Rodman, "Public and Private Sanctions against South Africa", Political Science Quarterly 109.2 (1994)	secondary literature compilation	1980s-early 1990s	Source for the claim that bank loan calls in 1985 were the most powerful pressure, that government sanctions were easy to bypass, and for the IMF stance.
Leonard Thompson, A History of South Africa (Yale UP, 2001)	secondary literature compilation	1652-1980s	Used for historical narrative and for the inflation figures (11% in 1983 to 18.6% in 1986) and the US/UK investment dependence figures.
Nelson Mandela, No Easy Walk to Freedom (Heinemann, 1990)	other	1961	Cited for the 1961 three-day stay-at-home protest.

Inference

Quantification: Illustrative figures.

Literature-review essay. It synthesizes secondary scholarship and periodical articles on sanctions, disinvestment and the Sullivan Principles. It quotes a few aggregate figures (GNP loss, capital withdrawn, inflation) and reaches a qualitative judgement by weighing the authors' opinions, with no original data or causal test.

Key claims

Claim	Basis	Strength
Trade sanctions caused only a small macroeconomic loss, about 0.5 percent of GNP. (p. 6)	Levy (1999), a secondary estimate quoted without method or discussion.	Partial data
Financial pressure was the most powerful external lever: multinational banks withdrew loans in 1985, and about $11 billion in investment left between 1985 and 1990. (p. 5)	Rodman, Levy and Industry Week, 'Did Sanctions Work?' (1991), all secondary or press accounts.	Partial data
Government-ordered trade sanctions were easily circumvented through subsidiaries and third-country re-exporters. (p. 6)	Kaempfer et al. (1987) and Rodman, reported without data of the author's own.	Illustrative or anecdotal
Apartheid-era labour repression made South Africa attractive to foreign investors through higher profit rates. (p. 3)	A single comparison of 18% against 12% profit rates in 1983, taken from Mangaliso.	Partial data
Internal resistance mattered more than external sanctions in ending apartheid. (p. 7)	The author's judgement after reviewing the sources, with no data on the relative weights.	Asserted
The exact influence of sanctions on the end of apartheid cannot be determined. (p. 7)	Conclusion drawn from conflicting secondary views, including Mandela's judgement via Levy.	Asserted

The author's caveats

The author does not discuss data quality. The only caveats are that sanctions' effectiveness is 'very difficult' to determine and that it 'has not been proven' that private stock sales alone cause companies to pull out.

Gaps in the evidence

The argument needs time-series data on capital flows, loan rollovers, trade volumes and exchange rates, such as South African Reserve Bank and IMF statistics, to assess financial and trade sanctions directly. It also needs government and National Party records, cabinet minutes and negotiation archives, which now exist, to test what drove the decision to negotiate. Comparative evidence on strikes, unrest and sanctions timing would be needed to weigh internal against external pressure.

Replicability: Data poorly documented.