At the core of the divestiture debate lies a fundamental question: What is the impact of U.S, corporate involvement in South Africa and what would be the effects of withdrawal?
In 1977, the Rockefeller Foundation formed a commission to study U.S, policy towards the country. Comprised of industrialists, academies and a labor unionist, the commission was chaired by Ford Foundation president Franklin Thomas its principle advisors included G.A. Coastanzo vice chairman of the board of Citibank: William Sneath, chairman of the board of Union Carbide Corporation: former secretaries of State Henry Kissinger and Cyrus Vancez and Donald McHenry, former United States Ambassador in the United Nations.
In 1981, the commission published its findings in a report entitled: Time Running Out: The Report of the Study Commission on U.S. Policy Toward Southern Africa. The Report eventually recommended against U.S. corporate withdrawal, instead urging a policy of nonexpansion, increased corporate philanthropy for Block South Africa, and more effective monitoring of the Sullivan Principles. On the way to teaching this conclusion, however, the commission provided substantial information on U.S, corporate involvement from which the following is drawn.
More than one-third of American investment in the African continent is concentrated in South Africa alone. American corporations pay taxes to the government, and foreign loans help finance South Africa's purchases abroad. In addition although U.S, investments account for a relatively small proportion of total foreign capital in the country, it is concentrated in a number of key industries oil (constituting about 44 percent of the petroleum industry), automobiles and trucks (33 percent), and computers (roughly 70 percent). All of these industries, advocates of divestiture argue, are critically important to the South Africa government's capacity to maintain control and develop its economic and military strength.
On a different level, U.S, corporate involvement may provide important moral and political support for the apartheid regime. The presence of foreign capital, divestiture proponents argue, protects South Africa against international economic sanctions. In addition, the argument continues, the South Africa government's aggressive foreign borrowing, despite record foreign-exchange earnings from gold, allows it to maintain a high profile in Western credit markets.
The imact of U.S, corporate involvement on Black South Africa is a subject of fierce debate Opponents of divestiture argue that foreign capital is beneficial to South African Blacks and that withdrawal would harm them more than whites in the country. There is these people emphasize, a considerable trick when effect from foreign involvement that benefits at least think member's of the block further force who working the modern sectors of the economy. Economic growth and prosperity will open up new and more skilled jobs for Blacks, produce letter wages, and narrow the Black-white income gap. In addition, it is argued. U.S terms can set an example be following good labor practices and affirmative-action policies.
Those favoring divestiture contend that the flow of foreign capital has not improved condition for Blacks in the country the gap between white and Black wages was not significantly altered during the years in which economic growth was fueled by foreign investment. Moreoever, few Black have been accepted in managerial positions in commerce and industry In come cases increased American investment has made industry more capital intensive and actually reduced the number of Black employees And, during the period of great economic growth. Black political rights have, if anything, been reduced by the growth of discriminatory and repressive legislation and the implementation of the homelands policy.
Opponents of divestiture argue--and the Ray kefeller commission concludes that, for divestiture to have any change of being effective, it would have to be supported by the other major foreign investors in South Africa. Britain, whose withdrawal would be particularly important, simply cannot afford divestiture And government and business leader of other European countries although not ecnomicaly constrained told the Rocheteller commission umn that divestiture was out of the question. If the United State, were to pull out on its own the vacuum would probably be tilled by foreign and South African firms eager to expand their market shares.
(Editor's note: Others disagree with this assessment pointing to the concentration of American capital in Key South African industries and at stone in addition that American withdrawal would have a profound psychological at effect from the apartheid state.)