Attacking Apartheid at Home

New York, N.Y. -American investment in South Africa could drop sharply because of legislation passed by the New York City Council. The Council, with support from New York's Mayor Ed Koch and other high-ranking officials, is moving to withdraw city funds from banks that invest in or lend to South Africa, and to stop doing business with companies that sell goods or services to the apartheid regime.

The effect of the legislation was evident immediately. Motorola Corporation, an electronics firm that has been a major supplier of communications equipment to the South African law enforcement agencies, agreed to halt all sales to the South African police.

New York's new policy, along with the sanctions approved by the U.S. House of Representatives, represents one of the most important actions against South Africa since the Carter administration halted arms shipments to South Africa in 1977.

The House proposal, passing by a two-thirds majority, would prohibit bank loans and computer sales to South Africa while halting all new U.S. investments in South Africa and all sales of the Krugerrand in the United States. Sen. Edward Kennedy, D-Mass., has proposed a similar measure in the Senate, but a Republican bill that would allow continued investments and Krugerrand sales will probably garner more support in the Republican-controlled Senate.

The New York City Council action caps several years of study and debate that revealed deep divisions between New York's white, hispanic and black communities. It took a joint statement from the mayor, the City Council president and the city comptroller to insure passage of the new legislation, known in the city as Intro 900. Public officials declared that divestment was necessary because, "It is clear to all of us that the South African government will not act without pressure to eliminate apartheid."

City Councilmember Ruth Messinger, a long-time advocate of divestment, welcomed the legislation. "We're going to cut off all loan monies for South Africa from New York Banks," she said. "The city has finally begun to realize the extraordinary leverage it has with its funds. It's only a beginning."

New York's role as an international banking center puts it in a unique position to put pressure on South Africa. According to the United Nations Centre Against Apartheid, the United States is the second largest investor in South Africa (Britain holds the top spot); 350 American companies and 125 banks have $14 billion invested in South Africa. Over half of that dollar total is controlled by companies and banks based in New York City.

The new divestment legislation affects six of the top 10 American banks active in South Africa including Chase Manhattan, Citibank, Chemical Bank, Morgan Guaranty and Manufacturers Hanover. These banks are under pressure to obey the divestiture law because many of them depend upon business with city agencies for a substantial part of their incomes.

In addition to its banking provisions, New York City's divestment legislation enacts tough restrictions on public purchases from companies that maintain economic relations with South Africa or Namibia. As with banks, companies have an economic incentive to comply: New York's annual budget of $ 18.3 billion includes $5 billion for the purchase of equipment. The new law is likely to have a substantial impact on automotive, office machine and police equipment companies bidding for city contracts. As one city official put it: "There will be changes in the patterns of city purchasing as a result of this legislation. We have already seen some corporate policies change to comply with the new regulations."

According to figures compiled by the American Committee on Africa, New York City's divestment program involves more money than all other American divestment programs combined. But, City officials and representatives of the business community believe New York's actions will have even more widespread ramifications, triggering politically ordered divestments in other cities and states.

This is not the first time New York City has used the economic clout of its bank deposits to voice its opposition to apartheid. In August 1984, the $8 billion New York City Employees' Retirement System (NYCERS) forced Citibank, the single largest American lender to South Africa, to agree to partial divestment or face the withdrawal of pension funds exceeding $300 million. The city had more than money - the pensions system also held 223,000 shares of Citibank stock, giving it an important say in the bank's management.

The NYCERS policy resolution singled out Citibank, but it also affected a wide range of pension investments. The new resolution provides for a 5-year divestment of over $665 million of South Africa-related securities. The more recent City Council legislation is greater in scope, affecting another $2 billion invested in South Africa.

For the South African regime, the actions taking place in New York City are only part of a string of economic and political setbacks in the United States. Some of the nation's largest universities and religious funds have passed strict anti-apartheid investment regulations. Harvard University, whose S 1.8 billion stock portfolio makes it the nation's wealthiest university, has taken the unprecedented step of selling stock in companies that do not adhere "to reasonable ethical standards" in South Africa. In a similar move. Stanford University sold its holdings in Motorola. Inc.

Churches and universities have been coordinating their anti-apartheid economic activities in a national drive that began in late 1984. The National Council of Churches has announced that member religious groups, whose agencies have investments totaling $10 billion, have filed 75 resolutions with 69 companies active in South Africa Earlier, a loose coalition of 16 colleges and universities-including Columbia, Yale and Dartmouth -publicly urged American companies in South Africa to actively seek an end to the legal framework of apartheid.

New York City's action is part of a trend in local governments. So far, 29 cities have adopted anti-apartheid economic legislation, including Boston, Philadelphia, Washington, D.C., Pittsburgh, Oakland and Newark. The only city in the deep South to take legislative action was Atlanta, which has merely passed a non-binding resolution.

Seven states and one territory have adopted binding legislation opposing apartheid. The legislation varies from divestment of pension funds in the U.S. Virgin Islands to divestment from corporations that sell strategic products or services to the South African government, military or police as well as divestment of pension funds in Massachusetts, Nebraska, Iowa and Connecticut. Both Michigan and Maryland prohibit the investment of state funds in banks that make loans to the South African government or national corporations, while Wisconsin has withdrawn state education funds from corporations doing business with South Africa.

In New Jersey and Oregon anti-apartheid legislation has passed both houses and is now before the governor and in New York such legislation has passed the Assembly and awaits Senate approval. In all, 40 states have introduced bills calling for some type of divestment from banks or corporations doing business in South Africa.

South Africa has tried to lobby against American divestment and even threatened to retaliate, but the economic boycott has spread, with strong support from union pension funds and from black voters flexing political muscle.

As New York City Councilmember Messinger bluntly pointed out, "1985 is an election year," and politicians in cities like New York, with large black populations, could not afford to ignore the calls for anti-apartheid legislation from a substantial part of the voting public. This clearly was what happened in New York, where Mayor Koch, who earlier had balked at the idea of any anti-apartheid measure, did an about-face as the number of black voter registrations grew.

Josh Martin is the Multinational Monitor's U.N. correspondent.