The Cost of Doing Business In South Africa

0n January 13, six leaders of the Free South Africa Movement (FSAM) occupied Shell Oil corporation's offices in downtown Washington, D.C. and called on the company's parent, Royal Dutch/Shell, to halt its operations in South Africa. Failing to obtain a commitment to divestment, the protestors emerged the next morning to kick off a nationwide boycott of Shell products.

Endorsed by scores of national organizations including the AFL-CIO, the National Organization of Women (NOW), and the anti-apartheid lobby, TransAfrica, the Shell boycott is the first phase of what the Washington-based FSAM has dubbed an "Economic Education Campaign" to publicize the vital contribution which multinationals make to the apartheid state.

With pickets and boycotts of Shell service stations and products already underway in 11 major cities from Oakland to Boston, the campaign is causing a considerable stir within the executive ranks of the $24 billion corporation.

Only days before the boycott was to begin in Detroit, Shell Oil Vice-President J.W. Shutzenhofer flew from the oil giant's headquarters in Houston to discuss the boycotters' demands with Michigan State Representative Nelson Saunders, a long-time anti-apartheid activist.

In the February 28 meeting, Saunders said he would work to persuade Michigan organizers to postpone their boycott if executives of the world's largest multinational corporation would "review their policy with respect to the United Nations international oil embargo against South Africa as well as their operations in South Africa-occupied Namibia."

Several days after that meeting, Saunders received a four-page letter from Shell's Vice-President for Public Affairs, Gordon Goodier, denying that Shell violated the U.N. embargo by importing oil into South Africa. At the same time, however, Goodier dismissed the U.N.'s nine-year ban on imports of oil to the white minority-ruled republic as "non-binding."

When Saunders informed the company that he had shipping records to prove Shell crude oil had entered South Africa, and warned that Goodier's response was not sufficient to warrant delaying the boycott any longer, Shell officials tried to stall. The last communication boycott organizers received was from Vice-President for Administration, Jack Little, who urged Saunders to be patient as his request was at a "sensitive stage."

After several days of waiting for an elaboration, the organizers lost patience. Finally, on March 18, 1986 the Detroit Shell boycott was launched.

"We would love to talk from the standpoint of consciousness and morality," Rep. Saunders told the Multinational Monitor. "But failing that, we're going after their profits."

Although it is difficult to judge the impact of the boycott after only three months, organizers say it is beginning to take its toll on the multinational company.

Richard Hansen, a chief spokesperson for Shell Oil-USA, agrees. "Certainly we are concerned," he says. "The boycott isn't doing us any good."

In an attempt to offset negative publicity caused by the boycott, several of the 11,000 Shell stations nationwide have reportedly dropped gas prices below their competitors. In addition, the corporation is trying to convince consumers that its U.S. operation, and, in turn, the hundreds of independent station owners that lease their businesses from Shell, are an inappropriate target for protesters.

"The campaign is totally misguided and unfair," says Hansen. "Shell-USA has autonomous operations and therefore cannot affect government policy there [in Pretoria], nor the policy of Shell in South Africa."

Hansen's argument is based on the claim that Shell-USA and Shell-SA are unrelated. In fact, these operations are among three hundred Shell subsidiaries worldwide that are wholly-owned by a partnership of the Royal Dutch Petroleum Company, based in the Netherlands, and the British Shell Transport and Trading Company.

Boycott organizers view Shell's subsidiaries worldwide as limbs of a single entity, and argue that pressure against one company will be felt throughout the entire corporate body. Since Shell-USA produces a quarter of the multinational corporation's total profit, they say it is an excellent place to begin pressuring the parent company to cut ties with South Africa.

"If the campaign can reduce Shell profits here [in the United States] by 10 percent, that will be more than their total profit in South Africa," said Joe Jurczak, an official with the United Mine Workers of America, the union that is spearheading the boycott. "It will no longer be economically prudent for them to operate there," he added.

Royal Dutch Petroleum chairman L.C. Van Wachem confirmed this logic in an interview in the company newsmagazine, Venster, on March 6, 1986, when he said that "a massive boycott of Shell products could lead to the withdrawal of Royal Dutch/Shell from South Africa."

If Royal Dutch/Shell does divest, it would be a significant blow to the South African regime. The multinational's subsidiary provides an essential service to the white minority-ruled republic since the country has almost no domestic source of oil. The government, through the state owned South African Coal Oil and Gas Corporation Ltd. (SASOL), has developed three coal-to-oil conversion plants to reduce shortages, but these facilities currently fulfill less than a quarter of the countrys liquid fuel needs. The estimated cost for one barrel of coal-based oil is $75. Crude oil is currently selling for less than $15 a barrel. Pretoria thus relies heavily on seven major multinationals, including Exxon, Mobil, Chevron, and Texaco, that violate the U.N. oil embargo to meet its demand for crude.

South Africa's Minister of Internal Affairs articulated the regime's dependence on foreign oil before parliament on March 9, 1983. "The struggle against boycotts is by no means over," he said. "U.N. attempts to prevent crude oil deliveries to South Africa continue. Any relaxation in respect to secrecy can help to spotlight the target and enable our enemies to identify our friends and partners who deliver to us."

Under South Africa's Protection of Information Act, oil is classified as a"munition of war." Publishing information regarding "the source, manufacture, transportation, destination, or quantity of any stock level of any petroleum product" can result in a seven year prison sentence.

Records, however, of a Dutch anti-apartheid group, the Holland Committee on Southern Africa, show the extent of Shell's involvement in South Africa. According to the committee's Shipping Research Bureau, "Shell-owned, managed, or chartered tankers delivered at least 23 cargoes of crude oil to South Africa between 1979 and 1982," a total of roughly 4.5. million tons. This amount is just under a third of South Africa's annual demand for unrefined oil.

When challenged with this data, Royal Dutch/Shell disclaims responsibility for how its South African subsidiary acquires crude oil. "We could ask Shell-South Africa how they get their crude," Van Wachem told the Dutch newsweekly El Seviers Weekvlad on October 19, 1985, "but we cannot ask them to break South African law."

In addition to the nominal independence of Shell-SA, company spokesmen are playing up the distance between the corporation and the people that run its gas stations throughout the United States.

"If anyone gets hurt" by the boycott, said Hansen, "it will be the individual businessmen and women who operate the corner Shell stations."

Independent owners claim that they too oppose the apartheid system, but say they don't want to suffer economically because they lease their stations from Shell.

"I don't think we should be the sacrificial lambs to help end an obviously evil system," said Al Edwards, a black independent owner in Detroit. "They [the boycotters] are attaching a moral responsibility to this thing, but we're just selling gasoline."

Ironically, Edwards was the part-owner of an oil storage and distribution plant in South Africa until is was bombed in July, 1985 by the South African liberation movement-the African National Congress (ANC).

Coordinators of the boycott in Michigan have so far spared individual owners, deliberately limiting pickets to the two out of 72 Shell stations in Detroit that are company-owned. But spokespeople on both sides of the conflict agree that the campaign will be felt by independent station owners in the United States before it has any significant impact on the Shell corporation in this country or elsewhere.

When the boycott does spread to independently-owned stations, the responsibility will lie with Royal Dutch/Shell for having failed to respond to organizers' demands, argues State Rep. Saunders. "We cannot continue to let Shell use the independent dealers to their advantage," he said.

If the U.S. campaign is unable to persuade the company to divest, Shell could face an international boycott. On March 21, anti-apartheid groups in Britain and Holland announced simultaneously that if Royal Dutch/Shell has not committed itself to disinvestment from South Africa by the company's annual general meeting on May 15, they will initiate parallel boycotts of their own.

But, regardless, the "Economic Education Campaign" will not end with Shell. Organizers plan to pressure a range of multinationals that supply strategic goods to the South African government.

It took a year of protests outside the South African embassy and a groundswell of anti-apartheid sentiment in the U.S. Congress to spur President Reagan's limited sanctions against South Africa. It will take at least as much to budge the multinationals. But, as Randall Robinson, leader of the Free South Africa Movement, said on January 14, when he emerged from Shell Oil's Washington headquarters, "We will be back again, and again, and again." 0

Matthew Walker is a freelance writer based in Washington, D.C.

Mineworkers United to Take on Shell Shell's role as South Africa's "friend and partner" is not the only reason the corporation was chosen for a boycott by the U.S. labor movement and other Free South Africa affiliates. The decision was also made in response to a call from South African mineworkers at the Rietspruit Opencast Services coal mine, where Shell-SA holds a 50 percent interest. Although Royal Dutch/Shell claims it recognizes "the right of employees to join a trade union of their choice," the miners' experience suggests that a different policy guides the multinational's South African subsidiary. In February 1985, a black mineworker was killed in a mine accident at Rietspruit. Workers, through their National Union of Mineworkers (NUM), organized a memorial service which took up two hours of one shift. In response, the mine management suspended four NUM shop stewards. When 800 coal miners struck to get their fellow workers reinstated, the management met them with rubber bullets and tear gas. Eighty-six workers were dismissed and evicted from their homes after the incident; the remaining men were forced back to work at gunpoint. A South African trade union publication quoted one Rietspruit manager as saying that the fired workers were "hard core trade unionist Turks-people whose hearts and minds we could never win." NUM sources claim that since the incident, the management at the mine has forbidden union meetings and refused to allow shop stewards access to union members. The union has called for international action against Royal Dutch/Shell and its subsidiaries to protest these union-busting tactics. For the United Mine Workers of America (UMW), the U.S. boycott of Shell Oil constitutes an act of international solidarity with the Rietspruit miners. In addition to linking with the NUM, the Mineworkers in the United States have grievances with Shell's U.S. subsidiary that parallel the experience of their counterparts in South Africa. Since July 1984, the UMW, representing some 1,000 miners throughout Western Virginia and Kentucky, has been involved in a contract dispute with the A.T. Massey Company, in which Shell-USA has a 50 percent interest. After the 15-month strike at a number of Massey pits finally ended in December 1985, UMW President Richard Trumka charged the company with conducting "the most vicious reign of terror against working people seen in this country since the 1930s." Moreover, Royal Dutch/Shell's contribution to the South African coal industry has been felt directly in U.S. pits. Rietspruit, with an annual production output of 6 million tons, exports heavily overseas. Boosted by apartheid's low labor cost, the South African operation effectively undercuts U.S. competitiveness in the international coal market. In Birmingham, Alabama, alone, about 1500 coal workers have been laid off in the last three months, according to UMW organizer Sidney Hill, who is working full time on the boycott. "Coal miners are responding real well to the call [for a boycott]," he said. "We are having no trouble making the link-up with the South African coal industry." - Matthew Walker