337. Memorandum From Tom Thornton of the National Security Council Staff to the President’s Assistant for National Security Affairs (Brzezinski)1
SUBJECT
- Study on Economic Pressures on South Africa
The SCC last October 24 directed, inter alia, that the “United States should immediately undertake a review of its commercial and economic relations with South Africa.” (See para. 5 of Tab B.)2 The result of this is the long document at Tab A,3 prepared by the State Department with inputs from other concerned agencies.
This study reflects general agreement among all concerned agencies, probably because it makes no recommendations. It is, indeed, a “review” and a very competent one. It indicates various kinds of actions that we could take, ranging from jawboning through executive orders to new legislation (or binding UN resolutions.) Functionally, the most interesting possibilities explored involve improving employment practises of US firms operating in South Africa; discouragement of investment; curtailment of credits; and termination of all export promotion activities and imposing other barriers to trade. A recurring theme is the need for multilateral support if any sanctions are to be effective.
The study also contains sections on the impact of various actions on US interests (notably loss of South Africa as a source of supply for some important minerals) and on public and congressional opinion (a mixed picture).
I suggest that you look at the table of contents which shows the range of matters discussed, the Summary (Section I) and, if you feel so inclined, the Conclusions (Section VII).
The study appears at an opportune time if, indeed, we are willing to impose economic sanctions in order to press the South Africans on Namibia. It unfortunately does not differentiate according to pressures that would be particularly appropriate to that issue, but that approach could be easily developed if we need to.
[Page 1031]A meeting was held in Washington two weeks ago among the US, UK, FRG, France and Canada to discuss economic relations with South Africa.4 Aside from a determination not to go to a total embargo, there was a wide diversity of opinion among the group as to possible steps. It was pretty clear that the collective action needed to make economic sanctions effective (and shield us from unilateral economic losses) is going to be hard to achieve, except perhaps under strong UN sanctions.
Another recent item of interest in this area is a CIA study5 that estimates Soviet gains from disruptions in South Africa’s trade. (The two countries have very similar exports.) A ten percent cut in South African trade with world markets would yield $400 million in foreign exchange gains for the Soviets—a 50% cut would yield about $2 billion. The Soviet hard currency deficit in 1977 was $1.5 billion. (Query: If we should have to move to sanctions, how can we prevent the Soviets from taking a windfall?? Calling on them to contribute a portion of their excess profits to some worthy African cause would be a neat propaganda move but would probably result at best in increased Soviet scholarships for African students and sending of snow plows to Namibia.)
What Next?
1. For the time being, I recommend that we put this document on the shelf to be drawn on when the occasion arises. There is no reason to move forward on any of these fronts right now, especially when we may need all the ammunition that we can muster in the next few months.6
2. In the interim, however, I propose to ask State to put together some illustrative packages of economic measures that might be used in certain contingencies—e.g. Chapter VII sanctions re Namibia; pressure to get Smith to abandon the internal settlement; low-level and medium level signals of US displeasure about South African failure to improve its domestic practice.7
3. Our current posture on investment (based on a 1964 Policy Planning Paper by Red Duggan) is to neither discourage nor encourage. It is inconceivable to me that we should still be neutral on this. If you agree, I will ask State how we should go about shifting our posture to one of discouragement and what that would involve. This would be implemented as part of any other sanctions actions that we might take; [Page 1032] if there is no decision to apply any sanctions, we should do at least this by about June 30.8
4. As a result of the SCC meeting, it was also directed that Commerce should meet with US corporations doing business in South Africa to solicit their views on our economic relationships and future prospects. This was to be done only after NSC had given its approval. (See para. 5 of Tab B.) The meeting has never taken place; I think we should move ahead with it now, both as a means of ensuring that we have a full picture in hand before we actually do anything and as a low-key signal that we are pursuing the matter. If you approve, I will get State and Commerce moving.9
Attachment B being forwarded separately because it is an XX item.
- Source: Carter Library, National Security Affairs, Staff Material, Office, Institutional File, Box 32, #1900s–2200s: 4–5/78. Secret. Sent for action. Aaron initialed the memorandum.↩
- Not attached, but see Document 314.↩
- Not attached. Reference is possibly to the attachment to Document 334.↩
- See Document 335.↩
- Not found.↩
- Aaron approved the recommendation.↩
- Aaron disapproved the proposal.↩
- Aaron disapproved the proposal.↩
- Aaron approved the action.↩