S.A. delighted with Thatcher victory

Press, 14 July 1987, Page 32

S.A. delighted with Thatcher victory

By

ROBERT RICCI

of Reuter (through NZPA) Johannesburg Within minutes of her election victory the British Prime Minister, Mrs Thatcher, received a near-exultant congratulatory message from South Africa’s President, Mr Pieter Botha. Its wording left no doubt of Pretoria’s relief at the result. South Africa has no closer economic friend than Britain. While the republic is pounded by sanctions and disinvestment by scores of companies, the British seem committed to retain business links with South Africa. Britain is the main foreign investor in South Africa and its fourth biggest trading partner. “The involvement of British business is extensive and we see no political benefits derived from reducing that economic stake,” said a British diplomat, who asked not to be identified. British investments total between SUS3.I2 and 5U53.75 billion, according to estimates by business sources in both countries. This compares with SUSI.7S billion dollars in 1981, the last year for which official figures are available.

In 1986 Britain went along with a voluntary ban on new investment in South Africa drawn up by the Commonwealth countries. But British companies “can choose and still do continue new investments with impunity,” said a British business source. Mrs Thatcher’s election victory reassured the white business community which feared that her defeat would have led to deep cuts in trade and an exodus among the estimated 200 British firms established in South Africa. Any other result would have been bad news for South Africa, said the “Financial Mail” magazine. With United States firms pulling out, South Africa relies more than ever on the British link. “I am sure as our economy picks up the British will be very interested in expanding trade with us,” said a Government official. “We’ll surely begin importing more capital from Britain which can only be to their benefit.” The worst British disinvestment shock to South Africa was last November’s pull-out by Barclays Bank. There were fears that unany more firms woultf disengage.

Predictions abounded that companies such as the Royal Dutch/Shell group, Consolidated Gold Fields, the Standard Chartered banking group and British Petroleum would consider withdrawal under pressure from anti-apartheid groups. This has not happened. Business experts said British companies working in the republic were usually larger and far more profitable than departing American firms and did not have the luxury of returning to a big domestic market. British business involvement in South Africa was a "totally different chess board than the United States,” said Evonne Roux, executive manager of the South Africa-Britain Trade Association which promotes two-way trade links. “There are many English living here (about 800,000 British passport holders),” Ms Roux said. “South Africa is an excolony so the emotional implications are enormous and I don’t think it would be easy for Britain to sever relations.” The official British Government position is that up to 120,000 jobs in Britain still depend on trade with South Africa. A South African-wised

British businessman sounded a warning, however, that British companies with growing ties to the United States might be pressured by American anti-apartheid activists to cut commitments to South Africa. “It’s the American connection that some British firms have that is causing some of us to look at our position in South Africa,” he said. Britain’s Trade and Industry Department, in a background briefing note to British businessmen in May, said South Africa “continues to be an important and traditional United Kingdom export market, with a good payments record, where British goods are well regarded.” Britain once ran a hefty trade surplus with South Africa — as high as SUS3O9 million in 1984. But the surplus dropped to SUSI2 million in 1985 and improved only slightly to SUSI 4 million last year. Analysts attribute the decline to South Africa’s weak economy, the fall in the value of the rand and limited economic sanctions by Britain. British exports to South Africa last year totalled SUSS2S million against imports valued at SUSSII million of South African goods to Britain.