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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".[5] 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 through 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

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,[5] 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.[5]

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."[5]

Anti-apartheid opposition

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 president of the [5]

The South African government did attempt to restrict the damaging outflow of capital. Knight writes that "in September 1985 it

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."[5]

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 president of the Inkatha Freedom Party 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."[28] 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."[29]

Outside criticism

Many criticised disin

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."[30] John Major, then her Foreign Secretary, said disinvestment would "feed white consciences outside South Africa, not black bellies within it",[31] 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.[32]

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 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.[33]

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. He opposed pressure from Congress and his own party for tougher sanctions until his veto was overridden.[34]