In the mid-1980s, several foreign companies and banks began divesting and recalling loans due to pressure by the public and political and economic instability of South Africa. At the time the county had around $27.5 million worth of foreign debt. However, according to a South African banker, the country was able to reduce its foreign debt to 21.5 billion three years later. Furthermore, the real growth rate continued to grow at 3% in 1989 (Wren, 1989). Thus, one could argue that financial sanctions failed to significantly halt the economy or cause change in policies.
Yet, financial sanctions did result in a decline in living standards, particularly among the black population. The inflation and unemployment rate was also high. At the same time, political unrest was at its peak and the government declared a State of Emergency in 1985 and then again in 1987. Dissatisfaction amongst the non-whites was no doubt intensified under the influence of international support and poor living standards, which is supported by a poll that showed that the oppressed majority believed sanctions worked (Crawford and Klotz). In this regard, financial sanctions created a “psychological impact” which continued to spark protests, causing a shift in South Africa’s socio-political state (Levy, 1999).
When a cluster of countries began halting oil-exports to South Africa, the government took several measures to evade the oil embargo. For example, they paid $2 billion in premium annually to circumvent the ban by the OPEC. The size of their oil storage facilities also increased significantly. Additionally, they invested heavily in technology and research to discover oil and natural gas reserves, and erected coal-to-oil production plants (Sanctions and the South African Economy, 1986, p. 4.). Likewise, in response to the 1973 mandatory arms embargo against South Africa, the government took a similar approach and invested in nuclear armament programmes. (Crawford and Klotz, 1999)
While the country seemed to successfully avoid the embargoes and became more self-sufficient in energy and ammunition, the cost was significant. In a statement by P.W. Botha in 1986, oil premiums cost South Africa 22 billion rand between 1974 and 1984. (Davis, 1993, p. 5.). Despite this, the direct impacts of trading sanctions on the economy were insignificant. The country continued to export goods and between 1985 to 1989, the export volume increased by 26%. The estimated cost of trading sanctions during the mid-1980s was $354 million annually, or 0.5%, of an accelerating GNP (Levy, 1999, p. 8.). So, solely based on economic statistics, one could argue that trading sanctions did not have any impact at all as GNP continued to grow (Hazlett, 2008).
However, the indirect impacts of trading sanctions had much more of a long-term effect on the economy and politics of the country. The resulting growing manufacturing industries meant that there was an urgent need for a larger labour force. Thus, due to the shortage in skilled white workers, skilled black workers were employed in cities and apartheid policies, which previously banned black urban influx, were either relaxed or removed altogether. (Crawford and Klotz, 1999). With this information, sanctions seemed to indirectly but gradually dissolve separatist apartheid policies. Furthermore, while F.W. de Klerk discounts that sanctions worked as it failed to accomplish its intended goals in “2 to 3 years”, he also states that South Africa spent billions of rand into their import-substitution programmes, finance which could have been used for further economic development (Legatum Institute, 2012). However, through analysis, F.W. de Klerk creates a counter-argument in his own statement by dismissing the efficiency of sanctions, as he implies that the lost finance could have continued to finance the apartheid system.
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Although it is generally argued by scholars that the success of economic sanctions would mean immediate “adverse effects” on the country’s “economic performance”, through analysing the research topic, it is clear that this is not always the case (Sanctions and the South African Economy, 1986, p. 5.). In South Africa, sanctions indefinitely caused a structural economic shift which dwindled the economy in the long-run. Though the government successfully applied strategies to circumvent issues imposed by sanctions, the exorbitant expenditures, coupled with restricted terms of trade, certainly delayed economic development (Legatum Institute, 2012). High unemployment and international pressure, both a cause and effect of sanctions, also shook the country’s socio-political sphere and fuelled the already severe political unrest. More importantly, South Africa’s economy could not develop in isolationism from the rest of the world nor could it continue with the policy of separate development as sanctions indirectly integrated black and white workers. It thus became apparent that the regime was no longer economically and politically sustainable. Therefore, this indicates that economic sanctions and embargoes indeed played a reasonable role in the downfall of apartheid.
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This research project has allowed me to gain valuable knowledge on the process of historical investigations as well as the challenges of collecting reliable sources to formulate an analysis and reach a conclusion. To complete this research, a number of sources have been used such as journals written by scholars, books written by historians and experts in the topic, encyclopaedias and an interview with F.W. de Klerk in a program arranged by the Legatum Institute. However, the challenges I faced when investigating this topic included the issue of selecting which facts and data to use, especially given that there is very limited information available on the calculable financial impact of economic sanctions on South Africa. Additionally, the large amount of conflicting perspectives and complex nature due to the inter-relationships of factors that contributed to apartheid’s failure, made it challenging to reach a conclusion. Yet, by reading and comparing sources I was able to formulate a stance. Furthermore, since South Africa is generally used as a model example to support the use of economic sanctions as a replacement to military intervention in prompting reform in targeted regimes; I have thus become more aware of the significance of understanding the workings of sanctions in general and the impacts it had on South African apartheid in particular.
Word Count: 214
Total word count of research project: 1,976