unitex@rubbs.fidonet.org (unitex) (09/12/89)
event, South Africa would default on its debt. That was not a
viable option, and most particularly so for South Africa.
Historically, no country had successfully defaulted on its
international debts. That was true in the l930s, and was even
more so in the l980s. The consequence to a defaulting country
would be a wild scramble to attach assets and trade proceeds, and
legal questions would be considered later. It was ludicrous to
believe that even the South African Government would risk
seizure of trade proceeds by defaulting on the debt. The
cash-flow implications for the economy would be immediate, and a
thoroughly chastened Government would soon be on its knees.
The cause of South Africa's debt problems was political.
Apartheid amounted to economic madness which was totally
incompatible with sound banking practice. Given the
mismanagement of the economy, the longer the delay the greater
the risks to the banks and the more difficult it would be to
overcome the legacies of apartheid.
In reply to a question, Mr. Crawford-Browne indicated that South
African banks were attempting to reschedule the South African
debt in secret and then to present the world with a fait
accompli well before the June deadline.
He was asked if the banks -- another class of transnational
companies -- would go along with international pressure to
pursue a hard line in rescheduling South Africa's debt. He
replied that it was costly for most banks to be identified as
supporting the apartheid regime. Hence, it would not be in
their interest for them to be too lenient with South Africa.
JOHN LIND, a research analyst on banking from San Francisco, said
most banking ties to South Africa were located in the United
States, the United Kingdom, the Federal Republic of Germany,
Switzerland and Japan. The United Kingdom and Switzerland
constituted the central points of business with South Africa.
The Union Bank of Switzerland was key in supporting South
Africa's balance of payments problems.
He said the pressure must be put on the banks to get as much of
their money back as possible by l99l. He hoped the banks would
remain united and continue to negotiate with South Africa as a
group. European Governments should cease providing insurance
for South African trade credits.
KEITH OVENDEN, of Australia, author of Apartheid and
International Finance: a Programme for Change, said South
Africa's exclusion since l985 from world capital markets had
been the chief reason for political and constitutional changes
being contemplated in South Africa.
The pressure exerted by the financial sanctions was both
cumulative and continuous. This showed no signs of abating.
Thus the financial sanction should be encouraged and, if
possible, tightened.
He said there was a general lowering of living standards among
the white population as a result of the financial sanctions.
Also, a sharp restriction on the creation of new jobs was
imposed, in the face of a sharp increase in the size of the
labour force.
He said financial sanctions would not greatly hurt the black
population. Fifty per cent of this population lived in a state
of rural poverty, more or less completely isolated from the
formal economy, deriving no benefits from it and enduring the
penalties imposed by apartheid. The other half had not
benefitted much by way of job creation from the capital
investment that had taken place in the last 20 years.
DONNA KATZIN, of the Interfaith Centre on Corporate
Responsibility, New York, said targetted sanctions could be
valuable within the broader campaign for comprehensive mandatory
sanctions.
The international community, now had a unique opportunity to
deprive South Africa of badly needed foreign capital as a result
of next June's debt rescheduling, she said. South Africa's
creditors were well positioned to call in their South African
loans.
South Africa was unlikely to default on its loans as it could all
afford to antagonize its creditors, she said. Decisive
prohibitions on trade with South Africa by a handful of
Governments would have a significant impact.
* Origin: UNITEX --> Toward a United Species (1:107/501)
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Patt Haring | UNITEX : United Nations
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