Fixing the Legacy of Apartheid

It’s still there nestled in a box as a painful keepsake: the “none blacks” placard I stole as a toddler from the door of a café in Durban, where my mother — who easily passes for a European — met a white friend for coffee. “My four-year-old daughter did that for fun,” the café owner explained. “They know not to come here,” That wasn’t strictly true: the flapping kitchen door revealed a black woman wearing a hairnet, gloves, and an apron: less a human being than a human resource.

Of course, that world of apartheid — of racial domination via political and military subjugation — is long gone. Yet after more than 15 years, several democratic elections, and countless celebrations of political legends such as Nelson Mandela, Oliver Tambo, and Steve Biko, the economic system that underpinned the apartheid regime has yet to be acknowledged — or fully laid to rest.

But with a recent ruling that opens the way for suits against the transnational corporations that supported apartheid, the South African government must now confront the economic skeletons in its closet.

Economic Compromises

Soon after the 1985 crash of the South African stock market and the government-imposed moratorium on repaying $14 billion in outstanding debt, former president Thabo Mbeki negotiated several “historic compromises” on the part of the African National Congress (ANC). In this way, the new South African government obtained political freedom but at a price: economic capitulation. This was, according to noted academic and commentator Ali Mazrui, “Black people assuming the crown of political power and white people retaining the jewels of economic prosperity.”

These compromises included a blanket corporate amnesty and the ratification of the General Agreement on Tariffs and Trade (the precursor to the World Trade Organization). The new government also honored all apartheid-era debt (estimated at $24 billion in 1994). Finally, South Africa accepted the structural adjustment-like policies of international financial institutions such as the International Monetary Fund’s 1993 “Christmas gift” of $850 million with its built-in economic austerity and the Growth, Employment, and Redistribution Program, formulated under the eye of the World Bank that endorsed the inherited policies of the apartheid regime.

The apartheid regime, falsely packaged as a pure pigmentocracy, relied overwhelmingly on corporations anxious to access South Africa’s vast stores of natural resources. There was gold and diamonds. There were deliberately cheapened sources of labor. And there was a huge market for banking, oil, automotive, technology, and other products and services. This corporate lifeline financed, facilitated, and sustained a regime that the UN declared a crime against humanity. Apartheid-era Prime Minister John Vorster identified this corporate support as the “bricks in the walls” of the regime’s “continued existence.”

This regime and its rand lords have receded into the annals of history. Yet the global apartheid enforced by dollar lords via the Washington consensus has never really left.

But this may soon change.

Let the Lawsuits Begin

Several weeks ago, U.S. Judge Shira Scheindlin gave the green light to plaintiffs litigating multinationals charged with aiding and abetting the apartheid regime. Though Scheindlin pared down the reparation lawsuits, she found that automotive, technology, and defense corporations such as Daimler, IBM, Fujitsu, Ford, General Motors, and Rheinmetall did indeed knowingly aid and abet a regime that engaged in torture and extrajudicial killings.

This should not come as a surprise: Prime Minister P.W. Botha’s Defense Advisory Board, for example, composed of top business leaders from Barclays, Anglo-American, and other corporations, advised him from the inside on the apartheid regime’s security policies that were integral to industry.

The U.S. and South African governments blocked the initial lawsuits filed in 2002 by South African writers and activists such as Lungisile Ntsebeza and Dennis Brutus as well as Jubilee South Africa and the Khulumani Support Group. Initially, the South African government under former Minister of Justice Dullah Omar had vowed to remain neutral. That would change after Colin Powell, on behalf of the Bush administration approached Omar’s successor, Penuell Maduna, in 2003. Prodded by Washington, Pretoria ultimately invoked national sovereignty in opposing the lawsuits.

The South African government claimed that such legal actions would discourage foreign investment. It also argued that the Truth and Reconciliation Committee (TRC) had already addressed reparation issues. Finally, it suggested that the case — to be prosecuted via the Alien Tort Claims Act — amounted to judicial imperialism. In this way, the South African government undermined the constitutional rights of its citizens to seek redress through legal means. This stance was a key component of the defendants’ joint motion to dismiss.

The government’s objections don’t hold water. In her decision, Scheindlin quoted former World Bank economist Joseph Stiglitz’s argument that “suits seeking to hold foreign companies accountable for their unlawful collaboration with a prior regime will not discourage foreign investors from investing in that country in the future.”

Moreover, the TRC has a different perspective than the government on this matter. Though mandated to investigate individual wrongs, the TRC submitted an amicus brief in August 2005 arguing that multinationals never applied for amnesty; that lawsuits on the part of private citizens neither undermine nor conflict with the constitution, courts, or government or with the processes of the TRC; and that private corporations may be held legally and legitimately accountable as a matter of civil law.

“To the contrary,” wrote Scheindlin quoting from the TRC’s report, “such litigation is entirely consistent with these policies and the findings of the TRC.”

Sadly, on narrowing claims, Scheindlin dismissed the accountability of the banking sector, although foreign banks repeatedly financed and rescheduled outstanding debt. As late as 1989, foreign banks collaborated to reschedule $8 billion in outstanding loans on very lenient terms. They provided no such leeway for the liberation government.

Civil Society Triumph

That Scheindlin is willing to hear the case signals a triumph for civil society. It represents a global victory for human and environmental rights activists and for the many victims of the apartheid regime.

Tens of thousands of South African plaintiffs now hope for a settlement. In addition to Judge Scheindlin’s decision, there has been political change in Washington and Pretoria: President Barack Obama once lobbied for corporate divestment from apartheid South Africa and apartheid foe Jacob Zuma will be taking office as South Africa’s president on May 9.

While the ANC’s basic economic structure remains largely intact, Zuma has stressed that by setting priorities such as a strong safety net and investing in job creation, the ANC can make a difference. There’s no indication as yet regarding Zuma’s position on the reparation lawsuits.

And yet, regardless of the government positions, this landmark decision sets a global precedent for corporate accountability and transparency. By finally laying to rest the ghosts of apartheid, the lawsuit may well usher in similar moves targeting the economic systems of global apartheid.

It’s time for South Africa to be the compass of the world — again.

Foreign Policy In Focus guest columnist Khadija Sharife is a journalist and visiting scholar at the Center for Civil Society (CCS). She’s based in South Africa.