This began when the Senate and House of Representatives presented Ronald Reagan with the Comprehensive Anti-Apartheid Act of 1986 which had been introduced by Congressman Ronald Dellums, supported by the members of the Congressional Black Caucus in the House, and piloted through the House by Congressman Howard Wolpe, chairman of the House Africa Subcommittee. Ronald Reagan responded by using his veto, but surprisingly and, in testament to the strength of the anti-Apartheid movement, the Republican controlled Senate overrode his veto. Knight gives this description the act:
The Act banned new U.S. investment in South Africa, sales to the police and military, and new bank loans, except for the purpose of trade. Specific measures against trade included the prohibition of the import of agricultural goods, textiles, shellfish, steel, iron, uranium and the products of state-owned corporations.
The results of the act were mixed in economic terms according to Knight: Between 1985 and 1987, U.S. imports from South Africa declined 35%, although the trend reverses in 1988 when imports increased by 15%. Between 1985 and 1998, U.S. exports to South Africa increased by 40%.
Knight attributes some of the increase in imports in 1988 to lax enforcement of the 1986 Act citing a 1989 study by the "General Accounting Office. Knight writes that a "major weakness of the Act is that it does little to prohibit exports to South Africa, even in such areas as computers and other capital goods."
Budget Reconciliation Act
A second federal measure introduced by Representative "Charles Rangel in 1987 as an amendment to the Budget Reconciliation Act halted the ability of U.S. corporations from attaining tax reimbursements for taxes paid in South Africa. The result was that U.S. corporations operating in South Africa were subject to double taxation. According to Knight:
The sums of money involved are large. According to the Internal Revenue Service, taxes involved in 1982 were $211,593,000 on taxable income of $440,780,000. The U.S. Chamber of Commerce in South Africa has estimated that the measure increases the tax bill for U.S. companies from 57.5% to 72% of profits in South Africa.
Further legislative efforts
An additionally and much harsher sanctions bill was passed by the House of Representatives (Congress) in August 1988. This bill mandated "the withdrawal of all U.S. companies from South Africa, the sale by U.S. residents of all investments in South African companies and an end to most trade, except for the import of certain strategic minerals." In the end, the bill didn't become law as wasn't able to pass the Senate. (In the United States legislative system a bill must be passed by both the Senate and the House of Representatives before it can be signed into law by the President.) Even so, the fact that such a harsh bill made any progress at all though the legislature "alerted both the South African government and U.S. business that significant further sanctions were likely to be forthcoming" if the political situation in South Africa remained unchanged.
Effects on South Africa
While post-colonial African countries had already imposed sanctions on South Africa in solidarity with the "Defiance Campaign, these measures had little effect because of the relatively small economies of those involved. The disinvestment campaign only impacted South Africa after the major Western nations, including the United States, got involved beginning in mid-1984. From 1984 onwards, according to Knight, because of the disinvestment campaign and the repayment of foreign loans, South Africa experienced considerable "capital flight. The net capital movement out of South Africa was:
- "R9.2 billion in 1985"
- "R6.1 billion in 1986"
- "R3.1 billion in 1987"
- "R5.5 billion in 1988."
The capital flight triggered a dramatic decline in the international exchange rate of the South African currency, the rand. The currency decline made imports more expensive which in turn caused inflation in South Africa to rise at a very steep 12-15% per year.
The South African government did attempt to restrict the damaging outflow of capital. Knight writes that "in September 1985 it imposed a system of exchange control and a debt repayments standstill. Under exchange control, South African residents are generally prohibited from removing capital from the country and foreign investors can only remove investments via the "financial rand, which is traded at a 20% to 40% discount compared to the commercial rand. This means companies that disinvest get significantly fewer dollars for the capital they withdraw."
While disinvestment, boycotts and sanctions aimed at the removal of the apartheid system, there was also considerable opposition from within the anti-apartheid movement within South Africa coming from both black and white leaders. "Mangosuthu Buthelezi, Chief Minister of KwaZulu and leading black figure slammed sanctions, stating that "They can only harm all the people of Southern Africa. They can only lead to more hardships, particularly for the blacks". Well known anti-apartheid opposition MPs "Helen Suzman and "Harry Schwarz also strongly opposed moves to disinvest from South Africa. Both politicians of the Progressive Federal Party, they argued that disinvestment would cause further economic hardships for black people, which would ultimately worsen the political climate for negotiations. Suzman described them as "self defeating, wrecking the economy and do not assist anybody irrespective of race". Schwarz also argued that "Morality is cheap when someone else is paying".
Many criticised disinvestment because of its economic impact on ordinary black South Africans, such as "British "Prime Minister "Margaret Thatcher, who described sanctions and disinvestment as "the way of poverty, starvation and destroying the hopes of the very people — all of them—whom you wish to help." "John Major, then her "Foreign Secretary, said disinvestment would "feed white consciences outside South Africa, not black bellies within it", although in 2013, he said that the Conservative Government led by Margaret Thatcher was wrong to oppose tougher sanctions against South Africa during the apartheid era.
Many "conservatives opposed the disinvestment campaign, accusing its advocates of hypocrisy for not also proposing that the same sanctions be leveled on either the "Soviet Union or the "People's Republic of China.
"Libertarian "Murray Rothbard also opposed this policy, asserting that the most-direct adverse impact of the boycott would actually be felt by the black workers in that country, and the best way to remedy the problem of apartheid was by promoting trade and the growth of "free market capitalism in South Africa.
"Ronald Reagan, who was the "President of the United States during the time the disinvestment movement was at its peak, also opposed it, instead favoring a policy of ""constructive engagement" with the "Pretoria government.
- For U.S. Firms in South Africa, The Threat of Coercive Sullivan Principles. "Heritage Foundation. 12 November 1984.
- On "Constructive Engagement" in South Africa. The MIT Tech. 105(47). 5 November 1985.
- The Choice for U.S. Policy in South Africa: Reform or Vengeance. "Heritage Foundation. 25 July 1986.
- Misconceptions about U.S. policy toward South Africa. US Department of State Bulletin. September 1986.
- Chapter: Sanctions, Disinvestment, and U.S. Corporations in South Africa. Richard Knight. Sanctioning Apartheid (Africa World Press). 1990.
- Disinvestment from South Africa: They Did Well by Doing Good. "Contemporary Economic Policy. XV(1):76-86. January 1997.
Loosing the Bonds, The United States and South Africa in the Apartheid Years, Robert Kinloch Massie, Doubleday, New York, 1997
- "Anti-Apartheid Movement
- "Academic boycotts of South Africa
- "Economic history of South Africa
- "Socially responsible investing
- "Disinvestment from Iran
- "Disinvestment from Israel
- The Fergusson Years: Vassar, 1986-2006 Archived 28 March 2007 at the "Wayback Machine., Vassar College Libraries Archives & Special Collections. Poughkeepsie, NY. 2006.
- See the debate in "Nature": "Boycott of Israel? It worked for South Africa", Steven Rose and Hilary Rose, "Nature", volume 417, p. 221 (2002) and the response "Did an academic boycott help to end apartheid?", George Fink, Nature, Volume 417, Issue 6890, p. 690 (2002).
- The Anti-Apartheid Movement, Britain and South Africa: Anti-Apartheid Protest vs Real Politik Archived 7 June 2007 at the "Wayback Machine., Arianna Lisson, PhD Dissertation, 15 September 2000
- "Policies of apartheid of the Government of South Africa & International solidarity with the liberation struggle in South Africa". United Nations General Assembly. 1987-11-20. Retrieved 2015-07-29.
- Chapter: Sanctions, Disinvestment, and U.S. Corporations in South Africa. Richard Knight. Sanctioning Apartheid (Africa World Press), 1990
- "AROUND THE NATION; 61 ARRESTED AT BERKELEY IN PROTEST OF APARTHEID". AP. 1986-04-02.
- Schutt, Randy. "A Powerful and Inspiring Campaign: A Short History of SCRIP’s Efforts to End Stanford University’s Support of South African Apartheid in 1977". Vernal Education Project. 1998-02-03.
- D. (pseudonym), Bob. "Students Organize Against Stanford’s Investment Policy". Grapevine. Volume 5, Number 6. Palo Alto, CA. June 1977.
- U.S. Senate Committee on Banking, Housing, and Urban Affairs. (1985). The Anti-Apartheid Act of 1985. Washington: U.S. Government Printing Office. p. 213.
- "Columbia Senate Supports Selling South African Stocks Selectively". N.Y. Times. 1978-05-07.
- "Trustees vote for divestiture from backers of S. African government". Columbia Spectator. 1978-06-08.
- "400 sign petition against offering Kissinger faculty post". Columbia Spectator. 1977-03-03.
- "Demonstration at Columbia". New York Daily News. 1978-05-02.
- "Student Sit-in at Columbia". New York Post. 1978-05-02.
- "Clark, Smith Decide to Divest". The Harvard Crimson. Retrieved 12 April 2016.
- Smith College Archives. "College Hall Occupation Oral History Project". 5 College Archives and Manuscript Collections. Smith College Archives. Retrieved 12 April 2016.
- "AROUND THE NATION; Smith College to End South Africa Investments". New York Times. New York Times. Retrieved 12 April 2016.
- A CONFLICTED RELATIONSHIP: Harvard supported South Africa through investments, but partially divested under protest Archived 7 September 2007 at the "Wayback Machine. in Harvard Honors Nelson Mandela Archived 13 June 2007 at the "Wayback Machine.. Adam A. Sofen and Alan E. Wirzbicki.
- "Milk, Harvey (2012). The Harvey Milk Interviews: In His Own Words. Vince Emery Productions. "ISBN "978-0-9725898-8-8., p. 328.
- Press Conference ending visit to Zimbabwe, 30 March 1989
- British Foreign Secretaries Since 1974, Kevin Theakston Routledge, 2004, page 190
- Sir John Major: Margaret Thatcher's government was wrong to oppose South Africa sanctions, "The Independent, 10 December 2013
- Rothbard, Murray. "The Crusade Against South Africa." Making Economic Sense. Chapter 90. Auburn, AL: Mises Institute, 1995. Online Edition, Accessed 19 November 2009.
- African Activist Archive  More than 7,000 documents, posters, T-shirts, buttons, photos, video, and memories of activism in the U.S.to support the struggles of African peoples against apartheid, colonialism, and social injustice, 1950s-1990s. Also includes a directory of African activist organizations across the U.S.
- Documenting the U.S. Solidarity Movement: With reflections on the sanctions and divestment campaigns
- U.S. Economic Involvement with Apartheid South Africa
- An Analysis of U.S. Disinvestment from South Africa: Unity, Rights, and Justice
- Black South African Opinion on Disinvestment
- The Crusade Against South Africa
- Inkatha Freedom Party - Inkatha and the disinvestment campaign