Clashing with Margaret Thatcher on South Africa

Published: Sunday | April 21, 2013 Comments 0
In this July 18, 1987 Gleaner photograph, then British Prime Minister Margaret Thatcher unveils a plaque attached to a mural at the Police Academy in Twickenham Park, St Catherine. Among the onlookers is Police Commissioner Herman Ricketts, as well as west Kingston artists who painted the mural. - File
In this July 18, 1987 Gleaner photograph, then British Prime Minister Margaret Thatcher unveils a plaque attached to a mural at the Police Academy in Twickenham Park, St Catherine. Among the onlookers is Police Commissioner Herman Ricketts, as well as west Kingston artists who painted the mural. - File
In this July 4, 1990 photo, then British Prime Minister Margaret Thatcher (left) shakes hands with then ANC Deputy Leader Nelson Mandela outside 10 Downing Street, London, prior to talks and a luncheon. Thatcher has been criticised for her labelling of the ANC as a
In this July 4, 1990 photo, then British Prime Minister Margaret Thatcher (left) shakes hands with then ANC Deputy Leader Nelson Mandela outside 10 Downing Street, London, prior to talks and a luncheon. Thatcher has been criticised for her labelling of the ANC as a

Edward Seaga, Contributor

The voluntary embargo on arms imposed by the United Nations against apartheid in South Africa was made mandatory and, by an International Declaration, was adopted against apartheid in sports. But the real focus was on trade, particularly oil, coal and arms.

The UN established a Centre on Transnational Corporations in South Africa and Namibia. The necessity for this step arose out of the surreptitious circumvention of embargo regimes by transnational corporations, despite sanctions. This need became even more apparent when it was realised that trade embargos were not as effective as expected in pressuring the South African economy into abandoning apartheid.

By the mid-1980s, it was realised that there was a need to embargo investment transactions and to require corporations doing business in South Africa to divest their ownership.

In 1986, the US Congress passed a Comprehensive Anti-Apartheid Act banning:

  • New investments and loans to private entities or the government;
  • Exports of computers and oil;
  • Imports of uranium, oil, steel and agricultural products;
  • Direct air links between South Africa and the US.

An even more damaging sanction was the decision in 1987 to withdraw tax credits that US firms receive for taxes paid by their subsidiaries in South Africa. This meant that the tax would have to be paid twice, at home and abroad.

The loopholes that existed (in sanctions against South Africa for its apartheid policy) led Prime Minister Margaret Thatcher at the 1987 Commonwealth Heads of Governments meeting in Vancouver, British Columbia, Canada, to proclaim in a strong, articulate presentation that sanctions were not producing the required effect and that by hurting the economy they were by hurting the poor.

This was a make-or-break conference on the future of sanctions by the Commonwealth. African leaders like Kenneth Kaunda, president of Zambia, and others were visibly set back by the presentation, as it appeared that a proposal for no further renewal of sanctions might be approved.

Fortunately, I had prepared myself for this discussion. I had amassed a database on how the South African economy was performing. Mrs Thatcher had a point in that the trade embargo on arms, coal and oil, the main items, were subject to loopholes and not showing as much impact as desired in the trade figures.

SQUEEZING FRAME

But the ban on investments and loans to the South African government or private sector, and the demand for urgent payment of debt, put a squeeze on the regime for payments which it could hardly make from declining reserves. Finance, and not trade, was the right area for effective sanctions.

But Mrs Thatcher did not take into account the psychological factor in big business was causing the captains of industry to come to their own conclusions on the future. From studies commissioned by them, they were looking at a depressing future of negative or stagnant growth.

The picture showed excessive inflation (18%), prohibitive lending rates of (20%), dwindling reserves down to 3.7 billion rand, less than neighbouring Botswana; cessation of new foreign investment; dwindling pool of savings to pay the high cost of apartheid; external debt as a percentage of GDP, jumping above 400 per cent in four years to 27.3 per cent; and unemployment at 37 per cent.

These figures, extracted from the records of the UN Centre for Transnational Corporations, the International Labour Organisation and private studies commissioned by big business in South Africa, were painting a demoralising picture, I told the conference. The white business class was watching the value of their assets depreciate rapidly and it was distressing. Businessmen were calling for reconsideration of the apartheid system, and had even formed a Democratic Party of their own to press their cause.

An eclipse was in the process of occurring, which was not reflected so much in trade figures or even in the financial losses which were beginning to emerge from recent legislative action throughout the world. The business community had a far more sensitive nose and could smell problems beyond the horizon where politicians and bureaucrats could not.

TARGETING THE RAND

In drawing a conclusion to my presentation, I reverted to my address to the United Nations in 1985, at the 40th anniversary session, in which I targeted the South African currency, the rand:

"Already, the prospects of diminished foreign participation in the South African economy are creating imbalances in the economy which are weakening the value of the rand. If the will exists to isolate South Africa in the world of international finance and trade, the rand becomes the barometer of the powerful forces of internal dislocations which will follow the collapsing currency. It is these powerful internal economic forces which respect the value of the rand, more so than the anguished voices of domestic or international cries for human and political rights.

This will eventually be the undoing of apartheid. The concern of South Africa has never been with the value of rights, only with the value of rands. Apartheid is structured to defend the rand, not rights. To dismantle this, we must go much further than limited sanctions. We must destroy the value of the rand."

The message must be clear: South Africa is not a good place to do business; if you are in - try to get out; if you are out - don't get in.

At a formal gathering of Heads of Government who are normally reserved and composed, applause is not usual. This time it was pronounced. The African leaders heard what they wanted to hear - the right words at the right time. The lunch break was taken soon after.

President Kaunda, who always carried a handkerchief stuffed up the sleeve of his African shirt-jacket, came across the room to me. He hugged me and pulled his handkerchief from his sleeve to wipe his tears. Others warmly pressed my hands, hugged me or gave me a nod which said, "Thanks." They knew now that sanctions would remain. Margaret Thatcher walked by. She nodded stiffly.

President Kaunda sent me a personal hand-written note before we left Vancouver:

"I have listened to you contribute to the discussions at our summits. Each time you have left me impressed - very much impressed indeed. Your contribution on sanctions against South Africa was simply superb ... . Jamaica should be proud to have you as its prime minister."

Despite these confrontations, Margaret Thatcher, in her brief visit to Jamaica in the late 1980s, readily agreed to meet our request to stock our many school libraries with thousands of British textbooks prescribed for use by Jamaican secondary-school students to create school libraries for lending to students, saving them from purchasing copies.

I had the honour to be joined with herself and President Ronald Reagan on the cover of the Fortune Magazine, in 1981, as three leaders who succeeded in pioneering the global shift, signalling the eventual end of socialism as a powerful world ideology.

Edward Seaga is a former prime minister. He is now chancellor of UTech and a distinguished fellow at the UWI. Email feedback to columns@gleanerjm.com and odf@uwimona.edu.jm.

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