Table of Contents
- Introduction: Turning Off the Money Tap
- The Moral and the Economic: The Dual Arguments for DivestmentDivestment Full Description: A grassroots strategy aimed at pressuring corporations, universities, and governments to withdraw their financial assets from companies doing business in South Africa. It turned the fight against Apartheid into a global moral crusade.Divestment was a strategy of economic shaming. Student activists and religious groups targeted the flow of capital, arguing that anyone investing in South Africa was complicit in the regime’s crimes. This led to major multinationals pulling out of the country, causing a capital flight that panicked the South African government. Critical Perspective:This movement challenged the neoliberal idea that capital is “neutral.” It successfully politicized the stock market, forcing shareholders to acknowledge the moral dimension of their profits. It demonstrated that even without government support, civil society could effectively disrupt the economic lifelines of an authoritarian state.
- The Moral Imperative: Making ApartheidApartheid Full Description: An Afrikaans word meaning “apartness.” It refers to the system of institutionalized racial segregation and discrimination that governed South Africa. It was a totalizing legal framework that dictated where people could live, work, and travel based on their racial classification. Apartheid was not merely social prejudice; it was a sophisticated economic and legal machine designed to maintain white minority rule. It involved the complete spatial separation of the races, the banning of mixed marriages, and the denial of voting rights to the black majority. Critical Perspective:Critically, Apartheid was a system of racial capitalism. Its primary function was to secure a steady supply of cheap, compliant labor for the white-owned mines and farms. By keeping the black population uneducated, disenfranchised, and restricted to specific areas, the state ensured that the immense wealth generated by the country’s resources flowed exclusively to the white minority and international investors. a Pariah
- The Economic Squeeze: The Cold Calculus of Capital
- The Sullivan Principles: A Contested Corporate Compromise
- The Principles and Their Promise
- The Criticisms: Reform Versus Liberation
- The Battlefronts of Divestment: Campuses, Cities, and Pensions
- Campus Crucibles: Student Activism and Institutional Clout
- Municipal and State Action: Sanctions at the Grassroots
- Turning the Tide: When Big Business Abandoned Apartheid
- The Chase Manhattan Moment
- The Business Community’s Reckoning
- The Counter-Argument: Did Sanctions Hurt Black South Africans Most?
- Conclusion: The Cumulative Weight of Economic Isolation
Introduction: Turning Off the Money Tap
While the sports boycott struck at the heart of white South Africa’s cultural identity, another, arguably more potent, form of international pressure was targeting its wallet. The divestment movement was a strategic, global campaign to economically isolate the apartheid regime by pressuring institutions to withdraw their investments from companies doing business in South Africa. It was a complex, multifaceted weapon that operated on both a moral and a financial plane. This movement, which grew from university campuses and city halls to the boardrooms of multinational corporations, did not merely aim to inflict economic damage. Its ultimate goal was to drive a wedge between the apartheid state and the powerful business community that had historically propped it up, convincing them that the system was no longer economically sustainable.
This article dissects the economic campaign against apartheid. It explores the arguments for and against divestment, the controversial role of corporate codes of conduct like the Sullivan Principles, and how the relentless pressure from activists, pension funds, and local governments ultimately convinced the South African business elite that apartheid was bad for business.
The Moral and the Economic: The Dual Arguments for Divestment
The call for divestment was powered by two distinct but interconnected lines of reasoning: one rooted in morality and the other in cold, hard economics.
The Moral Imperative: Making Apartheid a Pariah
At its core, the moral argument was simple: it was ethically indefensible to profit from a system of institutionalized racism and oppression. To invest in a company operating in South Africa was to be complicit in apartheid. The movement, led by groups like the American Committee on Africa (ACOA) and TransAfrica, argued that Western capital was a critical lifeline for the regime, funding the police state and lending international legitimacy to an illegitimate government. Divestment, therefore, was a moral duty—a way for individuals, universities, and cities to cleanse their portfolios of “blood money” and take a unambiguous stand against injustice.
This argument was incredibly effective at mobilizing public opinion. It transformed apartheid from a distant foreign policy issue into a matter of personal and institutional conscience. It asked a piercing question: “Is your dividend check worth the price of supporting a racist state?”
Alongside the moral case was a pragmatic, economic one. The goal was to trigger a capital flight that would cripple the South African economy. By severing access to foreign loans, technology, and investment, the movement aimed to:
· Cause a Credit Crunch: Make it difficult and expensive for the South African government and businesses to borrow money.
· Stifle Growth: Halt the modernization of industry by cutting off access to new technologies and capital goods.
· Devalue the Currency: Create economic instability that would weaken the South African Rand, driving up inflation and the cost of imports.
The economic argument was designed to appeal not just to activists, but to financial analysts and risk-averse investors. It framed apartheid not just as a moral evil, but as a profound financial risk.
The Sullivan Principles: A Contested Corporate Compromise
As the divestment movement gained momentum in the 1970s, many American corporations sought a middle ground. They wanted to maintain their profitable operations in South Africa while appearing to be a force for positive change. The result was the Sullivan Principles, formulated by Reverend Leon Sullivan, a civil rights leader and board member of General Motors.
The Principles and Their Promise
Introduced in 1977, the Sullivan Principles were a voluntary code of conduct for U.S. firms. They called for:
- Non-segregation in all work areas.
- Fair and equal employment practices.
- Equal pay for equal work.
- Training programs to prepare non-whites for supervisory roles.
- Increasing the number of non-white managers and supervisors.
- Improving the quality of life for employees outside of work (e.g., housing, transportation, education).
For a time, the Principles provided corporate America with a shield against divestment pressures. Companies could point to their “Sullivan rating” as proof of their progressive role in South Africa.
The Criticisms: Reform Versus Liberation
However, the Sullivan Principles were fiercely criticized by the liberation movements and anti-apartheid activists. Their fundamental flaw, critics argued, was that they sought to reform apartheid, not dismantle it. By improving conditions within the racist framework, they were inadvertently propping it up and lending it a veneer of respectability.
Archbishop Desmond Tutu famously articulated this criticism, stating that the Principles were “trying to make apartheid more comfortable… like putting lipstick on a pig.” The African National Congress (ANC) and others insisted that the only acceptable moral position was total and immediate withdrawal. The debate over the Sullivan Principles highlighted a central tension within the international response to apartheid: was incremental reform from within a pragmatic solution, or was it a betrayal of the liberation struggle?
The Battlefronts of Divestment: Campuses, Cities, and Pensions
The divestment campaign was won not in a single decisive battle, but through a thousand smaller conflicts waged across the United States and Europe.
Campus Crucibles: Student Protest
University campuses became epicenters of the movement. Students, recognizing the immense financial clout of their institutions’ endowment funds, organized sit-ins, built shantytowns on university quads, and relentlessly petitioned administrators. The demand was simple: divest all endowment funds from companies doing business in South Africa. These protests were often protracted and deeply polarizing, but they were remarkably successful. Prestigious universities like Harvard, Columbia, and the University of California system eventually capitulated, divesting billions of dollars in holdings. These victories were not just financially significant; they were massive propaganda coups that legitimized the movement and galvanized further action.
Municipal and State Action: Sanctions at the Grassroots
Following the lead of students, city and state governments began to use their own financial muscle. Starting with Philadelphia in 1982, over 100 cities and 26 states passed selective purchasing laws or divested their pension funds. This meant that cities would not do business with companies that were, in turn, doing business with apartheid South Africa. For large corporations, losing lucrative municipal contracts in the U.S. became a serious financial consideration, often outweighing the profits from their South African operations.
Turning the Tide: When Big Business Abandoned Apartheid
By the mid-1980s, the cumulative pressure of the divestment movement, compounded by a worsening political crisis within South Africa, began to trigger a decisive shift.
The Chase Manhattan Moment
A pivotal event occurred in 1985. Following a wave of unrest and the declaration of a state of emergency, Chase Manhattan Bank announced it would not renew its short-term loans to South Africa. Other international banks quickly followed suit, triggering a full-blown financial crisis. The South African government was forced to declare a moratorium on its foreign debt repayments. This “credit crunch” was a direct result of the perceived political and financial risk that the divestment movement had so successfully cultivated. It was a stark demonstration that the international financial community had lost confidence in the apartheid state.
The Business Community’s Reckoning
This external pressure finally catalyzed a dramatic change of heart within the white South African business community. For decades, big business had largely accommodated itself to apartheid, benefiting from cheap black labor and a protected market. Now, they were facing a perfect storm: international capital was fleeing, consumer boycotts were biting, and the townships were becoming ungovernable.
Leading business figures, like Gavin Relly of the Anglo American Corporation, began to openly break with the government. They traveled to meet with the exiled ANC in Zambia, signaling that they saw the liberation movement as the future. Their message to the National Party was clear: the system of apartheid, with its instability and international isolation, was destroying the economy and their profits. The historic pact between apartheid’s architects and its primary economic beneficiaries had been broken.
The Counter-Argument: Did Sanctions Hurt Black South Africans Most?
The apartheid government and its allies consistently argued that economic sanctions were a blunt instrument that harmed the very people they were meant to help. They contended that disinvestment would lead to factory closures, job losses, and economic hardship for black South Africans first and foremost.
While it is true that the sanctions caused economic pain that was felt across society, the anti-apartheid movement rejected this argument. The ANC and community leaders inside South Africa, including figures like Desmond Tutu and Albertina Sisulu, consistently called for more pressure, not less. They argued that the short-term economic suffering was a necessary price to pay for long-term freedom. The struggle was not for a slightly larger slice of the pie within the apartheid system, but for the right to own the bakery itself.
Conclusion: The Cumulative Weight of Economic Isolation
The divestment movement was not a silver bullet, but it was an indispensable component of apartheid’s downfall. Its success lay in its ability to operate on multiple levels. Morally, it turned South Africa into a global pariah and gave ordinary people in the West a tangible way to participate in the struggle. Economically, it triggered a capital flight and credit crisis that strangled the regime’s capacity to function.
Most importantly, it successfully altered the calculus of the most powerful domestic constituency: white business. When the economic elite concluded that apartheid was no longer profitable, the regime’s foundation crumbled. The divestment campaign demonstrated that in the modern world, economic power could be harnessed as a potent tool for human rights, proving that the cost of oppression could, indeed, be made too high to bear.
Leave a Reply