U.S. Corporations in Southern AfricaWhite Wealth and Black Poverty: American Investments in Southern Africa by BarbaraRogersReview by: Mohamed A. El-KhawasAfrica Today, Vol. 24, No. 2, White Rule under Pressure in Southern Africa (Apr. - Jun.,1977), pp. 65-69Published by: Indiana University PressStable URL: http://www.jstor.org/stable/4185681 .

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U.S. Corporations in Southern Africa Barbara Rogers WHITE WEALTH AND BLACK POVERTY: American Investments in Southern Africa, (Westport, Connecticut, Greenwood Press, 1976) xvi + 331 pp., $14.95. (studies in Human Rights, No. 2, prepared under the auspices of the Center for International Race Relations, University of Denver.)

The end of Portuguese colonialism in Africa has brought about important geopolitical changes in southern Africa and, subsequently, in Africa's relation- ship with the world powers. The stepped up pace of events in Angola, Rhodesia (Zimbabwe) and South Africa has focused particular attention on U.S. economic involvement in the white-ruled areas in the region. Barbara Rogers' book, White Wealth and Black Poverty, is a timely and carefully substantiated study of the complex but controversial role of American investment in southern Africa. It documents the growing volume of U.S. investment during the past decade and its crucial role in supporting the minority regimes in the region. In its totality, the study provides an important critical analysis of the close inter-

Mohamed A. EI-Khawas, Professor of History at the University of the District of Columbia, Washington, D.C., co-edited Amiierican-SouthIerin African, Relationis: Bibliograplici Essays (Greenwood, 1975) and The Kissiniger Study of Soutihernit Africa (Hill, 1976), which was reviewed in the previous issue of Africa Today, (Vol. 24, No. 1, Jan.-Mar. 1977), pp. 83-84.

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play between U.S. business interests and the white power structures of southern Africa. This is a stimulating and interesting book and a valuable addition to the literature on southern Africa.

The book is well organized. Its format follows a logical sequence and its broad coverage of facts offers a persuasive account. Rogers has brought together a wide range of sources, even providing important but not widely available evidence on the extent of U.S. investment in Namibia, Rhodesia, and the former Portuguese colonies. While coverage of these areas is necessarily spotty, the book provides an important baseline of facts on which further research efforts can profitably build.

South Africa is given the most comprehensive treatment. The first four chapters provide a candid and erudite account of the development of the apartheid system (including the current policy of Bantustan) and its implications for the internal racial system, the distribution of wealth, and employment opportunities within South Africa. Rogers takes the view that apartheid, as "a product of urbanization and industrialization," functions to optimize economic growth by ensuring that any economic surplus is channelled in the direction of the dominant white interests, including the government, the unions, the employers and the foreign investors. The side effect is the extreme poverty of blacks and the tremendous wealth among whites.

Regarding the controversial role played by foreign investment in South Africa, Rogers offers thorough documentation that the U.S. provides the fastest growing foreign investment there and that it is heavily responsible for the prosperity of its mining and industrial economy. This section is based on valuable statistical information and sound interpretive statements. Rogers argues that economic growth and the opening of new sectors in South Africa .. . could have never been launched without the capital, and even more, the

expertise of overseas investors" (p. 93). This has been true with respect to gold, uranium, platinum and nuclear power, and in manufacturing, defense, and auto industries, all of which are areas in which U.S. investment has been predominant. In Rogers' judgment, the U.S. has been an important investor not only because of its size - which quadrupled between 1960 and 1970 - but also because it has had "a qualitative impact on South Africa far out of proportion to its financial value" (p. 124). As she explains, the timing of U.S. investment and loans has been crucial for South Africa, particularly in the lean years following the Sharpeville massacre; between 1960 and 1964, South Africa actually suffered a net outflow of capital. Rogers argues further that continued investment by U.S. multinational corporations has not only reestablished confidence in the shaky South African economy but also helped to attract other foreign investment and loan capital (p. 125).

Rogers carefully assesses the consequences of the increasing U.S. investment on the South African economic boom and its impact on the African population. She accepts Herbert Blumer's thesis that "if an alteration or abolition of traditional racial discrimination were to come about, it would not be economic requirements. . . but external political factors that would have to be invoked" (p. 75). In this respect, her analysis is somewhat similar to that of Ruth First, Jonathan Steele and Christabel Gurney, who conclude in their book on The South African Connection that foreign investment helps to uphold the apartheid system and, in turn, contributes to the overall poverty of the African population.

Rogers provides a brief but useful review of the implications of American investment on the African labor force. She contends that, whatever the public 66

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Mohamed A. El-Khawas

relations arguments, American investors undoubtedly benefit from the low- wages and other aspects of apartheid and, indeed, typically become "identified with the general economic interests of the South African white community" (p. 125). As she notes, "they take full advantage of the powers given them by the government" (p. 269) and have played "a major significant role in the reduced employment of African labor" through automation, mechanization and hiring practices. For the most part, U.S. business is "extremely capital-intensive - in some cases actually replacing labor with capital and in many cases employing an almost exclusively white work force" (p. 147). She discounts American interests in the "homeland" investment, considering them mainly to be efforts conducted "for public relations purposes;" she maintains that, in fact, "conditions for Africans there are even worse than in the urban areas" (p. 268), particularly since the South African government has suspended "all minimum wages for Africans" in the Bantustan areas as a measure to attract American, foreign and national investment (p. 17).

On the whole, the analysis regarding South Africa represents a thorough marshalling of evidence and arguments against the "Oppenheimer thesis," that economic growth would eventually destroy the apartheid system. She concludes that the power structure in South Africa has not yielded to such economic pressures as a white labor shortage, rising African unemployment or inflation by altering its racial policies. On the contrary, Rogers believes that the South African government has become more oppressive as economic growth has continued and, thus, that "industrialization ... is reinforcing the system of racial discrimination" (p. 76).

Other countries in southern Africa are discussed at varying length in chapters 5, 6 and 7. The analysis is similar, in part because South Africa is the major power in the region and both Namibia and Rhodesia (Zimbabwe) stand largely as 'economic subordinates. Rogers provides considerable documentation for analysis of Namibia, particularly noteworthy in view of South Africa's refusal to release separate statistical data on the territory.

The distinction made by the U.S. between investment in Namibia and investment in South Africa serves as her point of departure. The U.S. has officially discouraged new investment in Namibia since 1970, on the grounds that South Africa's presence in the territory is illegal. Despite this policy stance, Rogers presents evidence that some American firms have invested in Namibia since that date and, further, that U.S. companies in South Africa have also operated to some extent in Namibia ". . . since the two are administered largely as one territory" (p. 170). As Rogers notes, "the products of the major investors such as GM, Ford and Chrysler are certainly sold in Namibia" (p. 202). In fact, U.S. investment in Namibia, which is valued at $45-$50 million, may be the second largest foreign investment, after South Africa. Her analysis points out, however, that recent pressures from church groups and stockholders of U.S. multinational corporations to withdraw these investments have resulted in a sharp drop in the flow of foreign capital to Namibia as well as the total withdrawal of some U.S. investment.

The book's account on Rhodesia (Zimbabwe) is brief, undoubtedly because of the relative secrecy surrounding foreign economic activities there ever since the U.S. imposed sanctions against the Smith regime. Despite this handicap, Rogers has been able to bring together the available information and to document the fact that there is more U.S. investment than South African

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investment in Rhodesia and that the U.S. investment, which is valued at $57 million, is the second largest foreign investment, after Britain. Even though investment in Rhodesia (Zimbabwe) has been expressly forbidden by U.S. law, evidence is given that a number of American companies have managed to operate there. Rogers also notes that some U.S. corporations operating in South Africa openly trade, franchise or invest in Rhodesia. By Rogers' estimate, 20 to 30 percent of American investment in Rhodesia is a byproduct of South African operations. For Union Carbide alone, its investment in Rhodesia is estimated to be $40 to $45 million. Rogers also argues that the U.S. imports of chrome under the Byrd Amendment were "a major boost for the Rhodesian regime at a difficult time" (p. 219).

Coverage of U.S. involvement in the former Portuguese colonies is illuminating and interesting, partly because it is done in retrospect. The analysis amply documents the fact that, up until the Lisbon coup in 1974, U.S. investment was growing rapidly in Angola and to a lesser extent in Mozambique. As Rogers notes, American business mistakenly felt that "there was no serious threat from the liberation movements; ... that the Portuguese had the situation well in hand; and that the prospects political and economic stability ... were excellent" (p. 231). The account shows that the colonial administration benefited financially from American investment by receiving taxes, royalties and preferential access to production opportunities. Special attention is given to the Gulf Oil operations in Cabinda, the largest U.S. investment in Angola, which alone gave Portugal revenue that was "equivalent to 60 percent of the total war in Angola" (p. 234). Rogers concludes that U.S. investment "proved to be a serious hazard to the African people there and to their attempt to achieve self-determination and independence" (p. 234). As a result, close identification of U.S. business with the colonial regime might, in the changed situation of independence, "prove to be a threat to the interest of the U.S. companies involved" and could be damaging for future investment in the long run (p. 234).

Chapter 8 provides valuable information on international efforts to bring pressure against corporations doing business with minority regimes in southern Africa. Recent actions and policies in a variety of countries are cited as evidence of a "new trend" of opposition to economic linkages with southern Africa. As Rogers notes, a "substantial and increasing number of Western countries are experiencing challenge to investment in southern Africa, either by their governments or bodies such as churches or other pressure groups" (p. 255). In her view, these new development have had a substantial effect on the operations of corporations investing in southern Africa and, consequently, exposes the weakness of a U.S. policy of communication which "in practice involves extending government subsidies and facilities to U.S. traders and investors" (p. 258).

In the U.S., several nongovernmental organizations have been active in pressuring the U.S. corporations that operate in southern Africa. The World Council of Churches has sold off its stocks in these companies, for instance, while the National Council of Churches has mounted the most constant pressure on firms doing business there. Furthermore, U.S. labor and trade unions have recently joined in this effort. Rogers thinks that "legal action seems to offer the most serious prospects" for imposing boycotts in the U.S. (p. 250).

In order to assess the impact of international boycotts and embargoes, Rogers selected the 1973 Arab oil embargo against Southern Africa as a case study. Her analysis reveals the complete vulnerability of the South African

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Mohamed A. El-Khawas

economy to oil embargo despite concerted efforts that took place by Iran and the Oil companies to help South Africa overcome the fuel shortage. The energy crisis resulted in the transfer of scarce capital resources - away from defense, enforcement of apartheid policies and other priorities - and in to oil exploration and other emergency measures such as "the construction of refineries, pipelines, special offshore terminals, and extensive oil reserves in tank farms and disused coal mines" (p. 260). The oil shortage seriously affected the auto industry and petrochemicals in South Africa - sectors where U.S. and foreign investment is concentrated. This situation led a GM executive to comment that "if the oil embargo reached a certain level of effectiveness, they would make a loss; and that in that case they would close down their operations in South Africa immediately" (p. 263). In the final analysis, Rogers contends that international boycotts and embargoes are important tactical pressure on minority regimes and indirectly help the liberation struggle "by restricting the access of minority regimes to arms, equipment and financial support" (p. 264).

The book also includes a summary and conclusion as well as three useful appendices that identify U.S. corporations in South Africa, Namibia and Rhodesia (Zimbabwe).

Rogers concludes her book by a note of warning. She feels that a lesson should be learned from the American experience in Portuguese-speaking Africa, where the U.S. made a serious blunder by identifying with the colonial administration and by intervening in the Angolan civil war on the side of South Africa. Unless there is a fundamental change in attitude toward businesses in southern Africa, Rogers believes that U.S. investment will suffer a series of major setbacks with the coming of African majority rule or with the escalation of the racial confrontation in the region. As Bishop Colin Winter put it, "when freedom comes to Namibia, as it surely will, what of the future of American investment in my land [ ? I " (p. 211).

This book provides a timely review and an important reminder of the often indirect but highly significant ramifications of foreign investment on the social, political and economic circumstances of the affected countries. Rogers has put together an immense amount of useful information for everyone interested in the current debate on U.S. investment in southern Africa. She has blended valuable documentation with interpretive analysis in order to highlight the significant role of American investments in supporting the white regimes in southern Africa.

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