JOHANNESBURG, South Africa — After months of bravado about how it could beat any economic sanctions that the world might impose on it, South Africa's white-minority regime now knows how vulnerable it is. International banks have begun cutting off its credit.
Citing worsening civil unrest here and political pressures on them at home, the banks last week refused to extend South Africa's short-term loans. The potential impact of international economic sanctions was felt here for the first time, and both the government and the business community were shaken to the core.
South Africa, which had minimized the impact of likely sanctions, is now threatened with measures that could shatter its whole economy, ending the prosperity whites have enjoyed for decades, if apartheid is not dismantled.
Short-Term Debts Due
Faced with the prospect of having to repay in the next year most of $12 billion in short-term debts-- much more money than it has in foreign reserves, gold bullion and this year's trade surplus put together--Pretoria on Sunday suspended repayment of most of its $16.5-billion total foreign debt. And it introduced exchange-control regulations that will heavily penalize foreign investors who withdraw their money.
Last week, it was forced to suspend foreign currency dealings and trading on the Johannesburg Stock Exchange while plans were made to rescue the rand, South Africa's greatly devalued currency.
Although bankers and government economists are confident that most of the debts can be rescheduled, that tighter exchange controls can slow the outflow of capital and that the rand can recover some of its lost value, there is now grave concern about what will happen if the United States, the European Community and others adopt meaningful sanctions this month.
"We came close enough to the brink (last week) to see how far down we can fall, and now we know how easily we can be pushed," a veteran economic consultant commented, asking that he not be quoted by name because of his role as a government adviser. "Those here who said that economic sanctions can never work, that we don't need to fear them and that we should ignore these attempts to 'bully' us will have to think again. . . . We are a lot more vulnerable than we thought."
Until last week, many in the government had been laughing up their sleeves at sanctions that the United States and West European countries were in the process of imposing, including bans on the sale of its Krugerrand gold coins, restrictions on computer sales and the closing of trade offices. They were confident that the world needs South Africa's gold, platinum, manganese and chrome, and in return wants its business far too much to take such severe action as a trade boycott.
South Africa need not worry about sanctions, President Pieter W. Botha assured a National Party rally in Pretoria last month, because its economy, though weakened by a three-year recession, is fundamentally strong and because international sanctions are rarely effective.
Sanctions 'Don't Work'
"History proves they don't work," Botha declared, "and South Africa's own experience of the oil embargo and the arms embargo proves that they don't."
Two of the proudest boasts of South Africans are the country's success at developing its own armaments industry after the U.N. Security Council imposed a mandatory embargo on arms sales to Pretoria in 1977 and its success at turning coal into oil to get around an oil embargo.
Much of this was done with South African talent and massive state allocations of resources, and some of it was accomplished through industrial spies, foreign agents and middlemen looking for a quick profit on what were legally contraband sales.
If faced with tough economic sanctions, South Africans have told each other, they would cope again in the same way.
According to E.J. du Plessis, a bank economist who has studied possible sanctions and South Africa's ability to survive them, the countries considering such restrictions are asking, in effect, "How can we hurt (South Africa) enough to end apartheid but not destroy Africa's strongest economy?"
"The answer," he said, "is several paradoxes and that makes policy choices, for them and for us, quite difficult. The first paradox is that despite our government's angry objections to sanctions, those imposed so far by Canada, Australia, Sweden and other countries, and those under consideration by the United States and the European Community, are probably not going to have much impact economically in the short run.