APPENDIX 13

EXCHANGE OF CORRESPONDENCE BETWEEN THE DEPARTMENT OF STATE, SECURITIES AND EXCHANGE COMMISSION, AND GEMSTONE MINERS, LTD. CONCERNING U.S. POLICY WITH RESPECT TO INVESTMENT IN NAMIBIA

MR. WILLIAM TAFT LESH,

Foreign Liaison Office,

Securities and Exchange Commission,

Washington, D.C.

DEPARTMENT OF STATE, Washington, D.C., Apr. 14, 1972.

DEAR MR. LESH: With reference to your telephone conversations with Mr. Haught of this office, I am pleased to furnish you with a statement of the United States' position on American investment in South West Africa (Namibia).

On May 20, 1970, the United States announced the following policy:

(1) The United States will officially discourage investment by U.S. nationals in South West Africa;

(2) U.S. nationals who invest in South West Africa on the basis of rights acquired through the South African Government since adoption of UN General Assembly Resolution 2145 (October 27, 1966) will not receive United States Government assistance in protection of such investment against claims of a future lawful government of South West Africa;

(3) Export-Import Bank credit guarantees and other facilities will not be made available for trade with South West Africa.

These actions apply solely to South West Africa. The second of the three points does not apply to investments made prior to announcement of the policy nor to subsequent investments based on rights acquired through the South African Government prior to October 27, 1966.

I hope this information will be useful to you. Please do not hesitate to call if I can be of further assistance.

Sincerely yours,

OLIVER S. CROSBY,

Director, Southern African Affairs.

DEPARTMENT OF STATE, Washington, D.C., May 2, 1972.

Mr. AARON A. KNOPF,

President, Gemstone Miners, Ltd.,

West Hempstead, N.Y.

DEAR MR. KNOPF: The United States on February 4, 1972, supported UN Security Council resolution 310. Operative paragraph 5 of the resolution "calls upon all states whose nationals and corporations are operating in Namibia to use all available means to ensure that such nationals and corporations conform in their policies of hiring Namibian workers to the basic provisions of the Universal Declaration of Human Rights". A copy of the Declaration is enclosed.

I am writing to you because we understand that your firm has begun mining operations on a limited scale in the international territory of South West Africa (Namibia). I am sure you share our concern with regard to the human rights of the people of the territory, and I hope we can count on your cooperation in taking such steps as may be necessary to ensure that any operations there in which your corporation has an interest are fully consonant with the Declaration. While Articles 23, 24, and 25, dealing with rights respecting employment and adequate standards of living are especially pertinent, many others, such as Articles 1, 2, 4, 13, 16, 18, 19, and 20, are also relevant to the situation in the territory.

In the United States the employee enjoys such rights under the Constitution and federal and state laws. To protect these rights, he has open to him such avenues of recourse as labor organizations, freely elected representatives in legislative bodies, and the courts. In the international territory, under South African administration, many of these rights are routinely denied. The employer there thus incurs a special and heavy burden of responsibility, for frequently he will be the only party with the knowledge, bargaining power, and independence effectively to support his employees' rights. The well-being of his workers and the long-term viability of his enterprise depend very much on his ability to interpret, present, and protect their needs and rights vis-a-vis the South African Government and the local authorities under its control.

We realize, of course, that it is not within the power of foreign business enterprises in the territory of South West Africa to cause the provisions of the Declaration of Human Rights to be implemented fully with respect to their employees. The United States nonetheless gives its support to paragraph 5 of SC Res 310 (1972) in the belief that what foreign businesses do in this respect makes a significant difference to their employees.

I believe, moreover, that with the growth of popular interest in, and concern over, social issues, the practices of American industry in this area will become of increasing importance to the regard in which it is held by the public at large. We would very much appreciate hearing from you regarding your activities in the territory and your plans in connection with the problem of conforming employment policies there to the basic provisions of the Universal Declaration of Human Rights. The Department stands ready to assist you in any appropriate way in dealing with the problem.

Sincerely,

WILLIS C. ARMSTRONG, Assistant Secretary for Economic Affairs.

APPENDIX 14

THE CONTROL OF WAGES IN SOUTH AFRICA

(By Stanley Siebert and Adrian Guelke)

PREFACE

October 1973

The purpose of this paper is to provide an analysis of the impact of apartheid policies on the South African labour market. It is based on statistical evidence of changes in white and African earnings in private manufacturing and construction. The system of controls over African labour that has been established in South Africa is unique, although the same objectives underlie the pattern of controls over African labour in Namibia (South West Africa).

Much has been written about the evils of the migrant labour system, which the South African Government defends as a cornerstone of the apartheid aim of granting selfdetermination on a ‘multi-national' basis. Our purpose is not to add to this literature. Rather it is to ascertain questions of fact; the effect of this policy on the voluntary mobility of African labour and the extent to which fields of work have been delineated for white and black.

We have chosen these questions because they throw light on the current debate on whether foreign investment can be used as a lever to change South Africa's labour policies. In this context, the Study Project on External Investment in South Africa and Namibia set up to undertake research into the role of foreign investment should be mentioned. Also indicative of the current interest in the West's economic stake in South Africa is the inquiry being conducted into the wages paid by British firms in South Africa by a House of Commons sub-committee.

The most striking implication of our findings is that foreign firms can do little to bring about any substantial improvement in African wages or employment opportunities as they have to operate within the institutional framework of apartheid. A second implication is that economic expansion is unlikely to overturn the 'temporary sojourner' policy. Expansion will not cause the unrestricted training and promotion of Africans nor will it place them in a strategic position within the economy. We therefore cannot look to economic expansion alone to bring about political change in South Africa.

Finally, our findings demonstrate that apartheid itself is dependent upon the continued extension of government intervention in the labour market.

(229)

IS STATE CONTROL OF LABOUR IN SOUTH AFRICA EFFECTIVE?

Ever since the Nationalist Party came to power in South Africa in 1948, there has been speculation that economic forces will overturn the institutions of apartheid. Recently, considerable interest has been focused on the possibility of Western countries using the 'economic lever' to bring about political change in South Africa. However, little research has yet been carried out on a key question, how are wages in South Africa determined? An answer to this question requires a detailed study of the South African labour market.

The present structure of the labour market has a logic that can best be approached by looking at its historical evolution. For convenience we have divided this into four major periods:

1)

2)

1924 to 1938, the 'civilised labour' policy:

1938 to 1945, the growth of African trade unions and the relaxation of controls in wartime conditions;

4)

1949 on, the co-ordination of economic and 'native' policy under apartheid.

The course of relative wages since the 1920's is shown in Chart 1. A steady increase in the differential between white and African earnings in mining since 1925 can be seen, with a brief fall during the war years. In private manufacturing and construction the wage gap has been much narrower than in mining, and the impact of minimum wage setting and upgrading of Africans during the war far more striking. Also remarkable is the narrowing of the wage gap between 1959 and 1963. What the graphs clearly show is that the labour market in mining operates quite differently from that in private manufacturing. At the same time private manufacturing itself has been subject to quite different forces at different times.

An analysis of white and African earnings in private manufacturing and construction throws light on the impact of apartheid policies on the urban labour market. It shows that the principal factor to which the African labour market has responded has been government intervention. Comparing the post-1949 period with the period before the Nationalists came to power, there have been marked differences in the behaviour of white and African wage rates in response to the demand for labour. These differences can be used to measure the effect of apartheid policies which restrict the voluntary mobility of African workers and prevent the substitution of white labour by black.

Prior to the second world war the main pre-occupation of government was finding employment for whites at 'civilised' rates of pay. In the prolonged expansion after the war government intervention was extended to the control of African labour in all its aspects. Measures to control African trade unions, to direct labour, and to set wages weakened African bargaining power and prevented the upgrading of African workers to a strategic position within the economy. African wages today are low because they lack bargaining power and because they have been largely confined to semi skilled and unskilled work.

1924-1938: The 'Civilised Labour' Policy

The first co-ordinated intervention in the South African labour market took place in the 1920's. Its principal purpose was the protection of white living standards in what were mainly conditions of recession, exacerbated by the movement of Afrikaner 'poor whites' into the urban areas. A series of measures under the general heading of the 'civilised labour' policy was enacted. The problem the government faced was how to guarantee the payment