The World

Loosening The Pretoria Connection

JULIANNE LABRECHE,JEFFREY BLYTH January 9 1978
The World

Loosening The Pretoria Connection

JULIANNE LABRECHE,JEFFREY BLYTH January 9 1978

Loosening The Pretoria Connection

The World

The content of the South African response was part anger, part sorrow and a large part propaganda. Canada’s decision to phase out government-sponsored commercial relations, introduce a code of conduct for Canadian companies or subsidiaries operating in South Africa and, if it can, break the preferential trade agreement between the two countries was based on “flagrantly false premises” according to the state-run radio which went on to compare (inaccurately) Pretoria’s treatment of its black majority with Ottawa’s dealings with its minority Indian and Eskimo peoples.

A leading South African businessman, Association of Chambers of Commerce president Koos van Eeden, described the steps as a “warning... that the time for reforms is running out,” but went on to repeat the hoary old canard that “trade restrictions can only reduce South Africa’s capacity to improve ... conditions for the rapidly growing black population which is suffering increasing unemployment.” This ignored the country’s racial restrictions on the advancement of blacks, only marginally mitigated by a new labor code; and the fact that, even in boom times, the number of black unemployed hardly falls below one million in a population of 18.5 million, due to the apartheid, “Bantustan” policy.

There was also a dispute about who enjoys the edge in Canada’s trading relations with South Africa. While the South African radio was claiming that “trade between the two countries has expanded nearly threefold since 1970, with the balance strongly in Canada’s favor,” figures released in Ottawa showed that in 1976 Canada had a $57-million deficit.

It is difficult to pin down precisely what would be the effect of the Canadian proposals. Less than a tenth of Canada’s $98million exports to South Africa last year received export development support in the form of credits or loan insurance, which are to be phased out. But the yelp from South Africa indicates that the slap had some weight behind it.

For the truth is that if South Africa is becoming á less attractive prospect for Canadian exporters, as the 1976 figures seem to show, it is now an even poorer bet for investors. For several companies, such as Massey-Ferguson (South Africa), 1977 has been a poor financial year. Alcan Aluminium spokesman Duncan Campbell’s view that business is not good and investment opportunities are not encouraging reflects a general view. None of half a dozen or so Canadian companies interviewed, includ-

ing Falconbridge Nickel Mines, whose South African subsidiary. Western Platinum, also reports a loss for 1977, plan to expand their investments. Most companies felt they could live with a code of ethics governing their relations with black employees. David Scott, spokesman for the Ford Motor Company of Canada, hoped that they would “match the Sullivan principles,” a U.S. code inaugurated by President Ford, while Alcan’s Campbell thought “we could accept any reasonable code” as long as it conformed with South African laws.

But that attitude does not cut much ice with such root-and-branch opponents of the South African government’s racist policies as the Task Force on the Churches and Corporate Responsibility, which maintains that “foreign investment has not had a liberalizing influence” and would really like to see Canada’s stake in South Africa’s white dominated economy ended, though at present it is limiting its campaign to a freeze.

For the fact is that the big corporations and the banks—who have a big share in the Canadian stake in South Africa (latest figures, for 1975, show that in that year alone

investment totaled $119 million)—combine reticence about their activities with the habit of obeying the dictates of the market rather than the so-called advice of governments.

Nowhere is this better illustrated than in the United States—in spite of its code. Andrew Young, U.S. ambassador to the United Nations, recently complained that American companies were dragging their feet in response to the official call to them to reduce their investments in South Africa. It might be truer to say that they are digging in their heels.

While Polaroid, embarrassed by the fondness of South Africa’s police for its cameras and film, has said it is severing all ties, the Caltex Petroleum Corporation, owned 50:50 by Texaco and Standard Oil of California, is planning to spend $134 million expanding its South African refining capacity. And although Chase Manhattan Bank chairman David Rockefeller told a public luncheon in New York that it would no longer make loans to South Africa that might be used to prop up apartheid, the bank has not, so far, cut its business there. In fact a spokesman for Chase Manhattan in South Africa has said the

bank plans to move to bigger premises. While Chrysler, which said it was severing its ties with South Africa, merged its subsidiary there with a local company—but retained 25% of the voting stock.

If the Canadian government does decide to impose similar restrictions that sort of logic will not be lost on this side of the border. As the Canadian Imperial Bank of Commerce’s Brian Beauchamp admitted, if his bank pulls out it will be because of conditions inside South Africa.

“We’re damn good risk managers,” he Said.

JULIANNE LABRECHE

JEFFREY BLYTH