Did Economic Sanctions Help End Apartheid in South Africa?

Nelson Mandela was one of Reason’s “35
Heroes of Freedom” back in 2003. Among other things, we cited
his “remarkable forbearance and amity in overseeing South Africa’s
post-apartheid transition, creating a model for how the world might
finally push past centuries-old racial strife.”

With the death Mandela – whose signal role in the battle against
apartheid is only outmatched by his role in promoting peaceful
transition to a post-racist regime – it’s worth reflecting on the
various things that helped end authoritarian rule in South Africa.
Nothing, of course, was more important than the struggles fought by
the people in that country.

I went to college in the 1980s, when the “disinvestment”
movement was huge. The idea was that moral people should get rid of
any investments or economic ties to companies either in South
Africa or otherwise benefiting off the apartheid system.
Disinvestment – especially by large, instutitional investers such
as pension funds and universities – would send a clear message to
South African leaders that they would suffer sanctions for
oppressing people the way they did.

On campus, the disinvestment movement was largely a
function of the left, which meant that demonstrations and teach-ins
often included larger discussions of America’s other actions
against despotic regimes. I remember getting into arguments with
people asking why was disinvestment morally right against South
Africa but boycotting trade with Cuba was repugnant? Disinvestment
proponents would explain that the Cuba embargo hurt poor people in
Castro’s autocracy; it didn’t hurt the ruling class, which actually
used the action to consolidate power and legitimate crackdowns. To
which I would respond: Exactly. The fact is that by
most empirical accounts, U.S. economic sanctions against South
Africa might have felt good but they weren’t particularly effective
in destabilizing the racist regime there.

In a 1998 piece
for Reason, Thomas W. Hazlett, now at George Mason University,
explained what happened after the U.S. pulled out of the South
African economy:

Eventually, the Reagan administration levied economic sanctions
against South Africa in September 1985 (with Congress following
suit a year later). The result was nothing–at best. In the wake of
sanctions, the South African stock market soared as local investors
picked up “fire sale” bargains. The pro-apartheid National Party
gained political momentum it had lost years before, largely due to
the intense “rally ’round the flag” boost that all sanctioned
pariah governments–from South Africa to Iraq–tend to enjoy.

Reform in South Africa had to wait out a sanctions-era political
retrenchment, including the imposition of martial law in 1985 and a
1987 increase in electoral power for the National Party.
Liberalization was ultimately ushered in not by sanctions but by
the collapse of communism, which eliminated the possibility of a
radical left in South Africa.

More
here. Hazlett notes elsewhere that sanctions
failed to “lower South African trade flows from their previous
levels, but GNP growth actually accelerated after the European
Community and the United States imposed sanctions (in September and
October 1986, respectively). Perversely, South African businesses
reaped at least $5 billion to $10 billion in windfalls as Western
firms disinvested at fire sale prices between 1984 and 1989.”
That’s worth noting every time that sanctions are brought up as a
way of undermining a regime or policy that somebody doesn’t like.
They rarely work as intended, if they even work at all.

As a number of observers have noted (including Reason’s
own
Matt Welch), there’s a real problem with viewing everything in
the world through an American lens, especially when it comes to the
Cold War era, when just about everything from chess matches to
trade laws were deemed to be part of the twilight struggle between
the Commies and the Free World.

However, it is accurate to note that Cold War politics infused
domestic South African politics, as Hazlett suggests above. Whites
who wanted to end apartheid balanced that against the likelihood
that South Africa would become a Soviet satellite under the rule of
Mandela’s African National Congress (ANC), which
had major ties with Soviet and other communists. The 1989
collapse of the Berlin Wall showed that Soviet style communism was
in fact in its last days (the USSR would dissolve two years later),
and that drag against reform disappeared.

It’s negative effect on South Africa is one more way the
US-Soviet relations affected other countries, typically in a
negative way. As Hazlett explains in a different piece, this one for
EconLib, Cold War alliances also allowed for the apartheid
regime to be misunderstood as capitalistic and free-market-oriented
when it was in fact nothing of the sort:

The conventional view is that apartheid was devised by affluent
whites to suppress poor blacks. In fact, the system sprang from
class warfare and was largely the creation of white workers
struggling against both the black majority and white capitalists.
Apartheid was born in the political victory of radical white trade
unions over both of their rivals. In short, this cruelly oppressive
economic system was socialism with
a racist face.

Apartheid as a system did not spring fully formed from the brow
of racist Dutch and English descended colonists. Rather its final
stages only appeared gradually and over time, as changes in
technology and economic status of marginalized groups kept
disrupting the status quo. Hazlett notes:

Postwar economic growth in South Africa so deeply integrated the
nonwhite population within the “white” society that the very idea
of “separate development” became ridiculous as a practical
proposition, quite apart from its odious moral implications.
Without skilled black labor, white living standards would fall
precipitously. The inevitable economic synergy between the races
drew people physically and socially closer together. Whereas the
median white voter of the 1920s insecurely viewed black workers as
substitutes, the majority of whites in the 1980s saw racial
cooperation as increasingly beneficial. At the same time, the
dramatic growth of an educated, urban African population, including
a sizable black middle class, served to enormously raise the cost
of enforcing apartheid. Indeed, the old African tribal system,
which was cynically manipulated by apartheid policymakers under the
notorious homelands policy, was eclipsed by the rise of urban
townships closely tied to industrial job centers.

Between 1970 and 1980, he writes, the white share of GDP fell
from 70 percent to 60 percent, both showing the power of market
forces to disrupt the status quo and inspiring a backlash by the
power elite.

Read
his whole article for an excellent history of race, politics,
and economics.