Under Threat of Sanctions, S. Africa Prepares for Siege

JOHANNESBURG, South Africa —  With international economic sanctions now virtually certain, South Africa’s white leaders are preparing the strife-torn country for a full siege.

President Pieter W. Botha’s government, more determined than ever not to give in to international pressure, has developed a strategy to turn the sanctions into what one confident official calls “an opportunity, a challenge for the country.”

“We do not desire sanctions,” the 70-year-old president says, “but, if we have to suffer sanctions for the sake of maintaining freedom, justice and order, we will survive them. Not only will we survive, we will emerge stronger on the other side!”

Using the threat of foreign interference, Botha is trying to broaden white support for his step-by-step reforms, which offer the country’s black majority an eventual share of political power but not the ability to dominate the white minority.

By threatening counter-sanctions against South Africa’s neighboring countries, Botha is reminding them, and their friends in Western Europe and America, how economically dependent they are. He is hoping that as a result, they will accept a political settlement here that falls short of majority rule.

And, in putting South Africa’s economy on a siege footing, Botha is also trying to pull it out of a prolonged recession so that it can resume the fast-paced, money-spinning growth that it enjoyed in the early 1980s.

If Botha’s efforts succeed, strategists in his ruling National Party believe, the government will have freed itself from international pressure to give in to black demands for a new political system based on one man, one vote. At the same time, they say, it will have strengthened its own bargaining position in favor of a “power-sharing” compromise based on the equality of the country’s four “racial groups”--blacks, whites, Asians and Colored, the latter South Africa’s term for persons of mixed race.

“If we can prove international pressure, such as sanctions, will not force concessions from us, then we are significantly closer to negotiations and, I believe, to a realistic settlement,” said a political scientist who advises the government and asked not to be quoted by name.

“Sanctions are not the way I would choose to do it, but . . . they will strengthen our resolve, and they will make the others see the need for compromise,” he added.

The impact of sanctions on the South African economy depends on the scope of the measures eventually adopted and on how well they are followed and enforced.

A bill passed Friday by the U.S. House of Representatives on a 308-77 vote includes many of the most-discussed measures. Among other things, it would bar all new U.S. investment and bank loans in South Africa; ban imports of uranium, coal, iron, steel, textiles, arms and agricultural products from South Africa; ban U.S. exports to South Africa of petroleum products and computers; withdraw landing rights for South African airliners in the United States, and bar U.S. airlines from providing air transportation to South Africa.

10 Days to Act

The bill, which has already been passed by the Senate, faces a possible veto by President Reagan, who, together with British Prime Minister Margaret Thatcher, remains strongly opposed to sanctions as a way to promote political change here.

Reagan has 10 days from Friday to act on the bill.

More than 60 of South Africa’s trading partners are expected to have imposed some form of economic sanctions before the end of this year, according to Western diplomats.

The European Communities, a group of 12 nations, is expected to reach a decision this week. Most of the 49 member-nations of the Commonwealth appear almost certain to act later this month, and Japan will decide in October.

Still, none of South Africa’s major trading partners--the United States is No. 1, followed by Japan, West Germany and Britain--is likely to cut all economic ties, as urged by Pretoria’s harshest critics.

The government’s early strategy was to fight imposition of any sanctions, warning that they would hit blacks here much harder than whites and that they would inevitably hurt South Africa’s black-ruled neighbors as well.

That remains Pretoria’s formal position, but the Botha government now accepts that sanctions are inevitable and is fashioning its response accordingly.

Customs Slowdown

The warnings to the West about the likely impact of sanctions on neighboring countries have thus been replaced with blunt reminders to the neighbors themselves that South Africa remains the economic engine of the whole region. Often the reminder comes in the form of threatened counter-sanctions.

Road and rail traffic to Zambia and Zimbabwe, both heavily dependent on South Africa’s transport system, was slowed to a crawl for three weeks last month as South Africa customs officials conducted crate-by-crate examinations of all cargoes. Importers in both countries also must now post expensive customs deposits on goods coming through South Africa.

If South Africa closes its ports, the two landlocked countries would have great difficulty exporting their agricultural products and minerals, and importing the equipment they need.

Botswana, Lesotho and Swaziland are even more dependent on the government-run South African transport system, which also carries goods to and from Malawi and Zaire.

South Africa supplies most of the electricity for Botswana, Lesotho, Mozambique and Swaziland. The Botswana, Lesotho and Swaziland governments get much of their revenues from the Southern Africa Customs Union, an arrangement under which the South African government imposes and collects customs duties for the member countries.

And tens of thousands of workers from Botswana, Lesotho, Malawi, Mozambique, Swaziland and Zimbabwe are employed in South Africa, sending home much of their pay.

“A South African economic blockade would bring Zambia and Zimbabwe to a halt within six weeks,” Prof. Carl Noffke of Rand Afrikaans University in Johannesburg said in an interview. “South Africa could hold Zambia, Zimbabwe and perhaps other so-called front-line (neighboring) countries to ransom if we needed leverage with the West and had no other option.”

Loss of Markets

Such retaliatory tactics could prove costly. The economic relationship is one of mutual need. Black African countries buy more and more here. South Africa’s elaborate transport system needs the heavy volume of goods that it carries for its neighbors to pay operating and development costs. And South African gold and coal mines could not operate without their foreign workers.

“Why should one hurt one’s friends?” asks Harry Schwarz, a member of the white opposition Progressive Federal Party. “There are friends to be lost, and the country has not got that many.”

Schwarz argues that any counter-sanctions could lead the neighboring countries to provide sanctuaries for black nationalist guerrillas on South Africa’s borders and to the loss of small but growing markets for the country’s exports.

However, the Botha government feels that an important point must be made: “We must show that we are not going to capitulate to sanctions or other such pressure,” said a senior National Party member of Parliament, “and the people who need this lesson are not only in Washington and London but next door in Harare and Lusaka, where this call for sanctions has been the loudest.”

At home, Botha increasingly is using what he calls “this hysterical clamor” for sanctions and the threat of “foreign interference” to rally whites to his National Party, which earlier this year appeared to be losing support to the far right and seemed unable to offset those defections with gains from among moderates and liberals.

Now Botha is cheered wildly when he tells whites, as he did again this month at a party convention in Bloemfontein, that foreigners are trying to take their country from them but that he will never allow it.

“We are not a nation of weaklings!” Botha says. “We are not jellyfish! We will not be broken so easily; in fact, we will not be broken at all!”

The tougher his stand, the more they cheer.

Gains in Polls

His fellow Dutch-descended Afrikaners, troubled by the racial unrest and by the government’s repeal of many apartheid laws, had begun to desert the National Party but are now returning. English-speaking whites, highly critical of Botha earlier this year as they demanded broader reforms, appear to be backing him now in significantly larger numbers.

Sixty-seven percent of urban whites say they approve of the way that Botha is handling the presidency, according to the latest opinion surveys. The polls credit both Botha’s tough action to deal with the country’s civil strife--the three-month-old state of emergency--and his refusal to bow to foreign pressure for faster and deeper changes.

Many Nationalists believe that the government’s position has been so strengthened by these two factors that Botha will call early parliamentary elections to win a new mandate from white voters for further reforms, including a “power-sharing” constitution.

“From a purely partisan point of view, we are in much better shape than we were six months ago,” said Stoffel van der Merwe, a National Party member of Parliament and one of the party’s most prominent liberals. “While we strongly oppose sanctions as counterproductive and even criminal . . . sanctions are proving to be a tremendously unifying force within the party and the nation.”

The Nationalists seem almost to be welcoming a foreign withdrawal from South Africa. Many say, quite seriously, that they can see economic benefits from sanctions over the long run.

A program of “inward industrialization” already is winning broad support as a way not only to counter sanctions but to spur South Africa’s economic development after several years of limited growth or reduced output.

Local products would be substituted for imports, South African industries would be developed to replace foreign companies that leave, new investment would be financed through the savings that come from a reduced standard of living and the government would direct the country’s economic planning.

Higher Costs Seen

Mike Brown, an economist for a Johannesburg stock brokerage, has calculated that 40% of South Africa’s present imports could be manufactured locally without difficulty. Costs would probably be higher because of the smaller market and start-up costs, Brown said, but could be regarded as an essential investment.

“Sanctions would assure new domestic industries the protection they need to get started, and after three years of negative economic growth, this would be welcome if rather costly growth,” Petrus Joubert, a local bank economist, added. “We are making a virtue out of a necessity, I realize, but there are arguments, too, for conserving our foreign exchange and enforcing a higher rate of savings than we have now, to increase domestic investment and spending on research and development.”

South Africa’s development of the world’s most advanced oil-from-coal plants, which now produce about 40% of the country’s petroleum, and the establishment of its own arms industry are often cited here as proof that the country can survive even severe trade embargoes.

Many South Africans, including top government officials, are also confident that they can get around virtually any sanctions that the international community imposes. They cite both their own success at buying the additional arms and oil they need on the international market despite mandatory embargoes, and the past failure of international trade sanctions to bring down the minority white regime in neighboring Rhodesia (which later became Zimbabwe).

Still, the government is trying to keep South Africa’s existing markets open as wide and for as long as possible while finding replacements for those that it expects to lose. Foreign Minister Roelof F. (Pik) Botha went to Tokyo last week to see if he could persuade Japan to continue buying coal, iron and steel. He then visited Taiwan and Hong Kong to see if South Africa could increase its trade with them.

Easing of Rules

The trip was “part of a decision of South African government to diversify trade with the Far East,” Botha said. “The East is open to us, and we should take advantage of it.”

The government is also actively encouraging such “sanctions busting” by establishing a special department for “unconventional trade,” permitting companies to withhold sensitive data from their financial reports and indicating that it will not enforce those international trade practices, such as requiring “Made in South Africa” labels and certificates of origin, that aid enforcement of sanctions.

“Almost everything is for sale somewhere if the price is right,” said Gilbert Stevens, a self-described “sanctions buster with lots of Rhodesian experience.” He said he already has set up dummy companies and lined up suppliers in Europe and Asia for high-technology products that might be affected by sanctions. “We pay the middleman a premium, sure, but it is not going to bankrupt South Africa. . . .”

At the forefront of sanction-busting plans are South Africa’s shipping agents. Lillian Boyle of Renfreight, a major shipping agent, said planning began about a year and a half ago on ways to get goods through the expected embargoes and boycotts.

“We have made a number of contingency plans,” she said. “Alternative trade routes and networks have been established. . . . If we have to break foreign laws to move (clients’) goods, we almost certainly would do so.”

The government has also stockpiled some vital imports, mostly oil and arms components, and a 57% rise in unspecified imports in recent months indicates that the effort may have been broadened.

Economist Mike Brown has calculated that, taken together, a package of the most-discussed sanctions might cut South Africa’s exports of $18 billion last year by roughly $1 billion. That would reduce its still very substantial trade surplus and seriously affect some segments of industry, such as coal mining and steel production, but would not greatly damage the economy as a whole.

No Impact on Gold Sales

However, estimates by a European economist here indicate that South Africa could lose as much as 20% of its $10 billion annual exports to the European Communities if purchases of coal, iron, steel and gold coins are banned. New investment would also be barred. But the European Communities’ exports to South Africa, now about $6.5 billion a year, would not be directly affected.

Gold sales, South Africa’s biggest export, would remain virtually untouched despite bans on the importation of Krugerrand gold coins in many countries, including the United States.

Gold prices, further, are at their highest level in several years, and Gerhard de Kock, governor of South Africa’s Reserve Bank, said last week that increased earnings from gold sales will more than offset losses caused by sanctions.

Some business leaders are warning, however, that the government has seriously misread the country’s vulnerability to sanctions.

“Whatever the political dynamics, there should be no doubt that sanctions can only result over the long term in a reduction in overall living standards of potentially marked severity,” Rob Lee, chief economist at one of the country’s largest insurance companies, warned earlier this month.

And Johannesburg economist Henry Kenny said the government is promoting the belief that “the only thing we have to fear is the fear of sanctions, not sanctions themselves.” But that argument is specious, he added.

Productivity May Drop

Markets lost will not be easily regained, Kenny, Lee and other economists here argue, and South Africa will become increasingly dependent on its gold, platinum and other mineral sales. Established export industries, many of which are heavily dependent on manpower, will shrink faster than new ones--probably more dependent on capital and technology--are developed.

Economic inefficiency will grow through lack of competition, according to these critics of the “siege economy.” Industrial productivity, already low by Western standards, will probably decline further, they say.

Except in a few industries, such as mining, where South Africa is a leader, the country will probably fall further and further behind in introducing new technology, they add. And the government’s control of the economy will grow as it increasingly makes crucial business decisions on new investments, resource allocation and trade development.

“What is disturbing is the do-or-die attitude expressed in certain circles and the feeling that, if it came to the worst, South Africa would survive intact a total embargo of its imports and exports,” Gerald Prosalendis, economics editor of the Johannesburg newspaper Business Day, wrote recently. “In the short term, South Africa could get by, but in the long term, no one is an island.”

SOUTHERN AFRICA’S ECONOMIC DEPENDENCE

% of imports % of exports Number to or via to or via of workers in South Africa South Africa South Africa Lesotho 99 None 139,000 Swaziland 90 None 16,000 Botswana 87 None 26,000 Zimbabwe 80 80 7,600 Mozambique NA NA 60,000 Zambia 70 40 1,000 Malawi 60 50 19,800 Zaire 60 45 NA

NA= not available

Source: Government of South Africa