WI No Sanctions Against Apartheid-Era South Africa

Thanks for your post, I didn't realise the extent of the debt incurred by South Africa at the time.

I was actually thinking of starting a thread with the opposite ATL, ie where the West took a much harder line against South Africa than in OTL (where lots of sanctions were quite easily broken with the implicit support of the US/UK). Of course Cold War reasons would prevent this without a significant POD, perhaps having the major black anti-apartheid groups (ANC,etc) being non-socialist or at the very least not backed by the Soviets.

Your point about the debt is interesting, as I would assume that if the West wanted to take a harder line against SA, then not being willing to loan money either directly or via the IMF would be the most effective way. Of course the SA Govt could still have monetised the deficit (printed money), but most govts are loath to do this and it would still effect their exchange rate.

By the way, were there any anti-apartheid black organisations that were also non-socialist and/or pro-Western? Did they have any significant support among the black population?

The fact was that during this time, South Africa had very high interest rates in order to attract foreign capital to the country. However, this made it very hard for people living there to get a loans & credit, hurting the economy. My father and mother couldn't buy a house when they lived there because the interest rate was something around 20%, and even a modest mortgage was unaffordable.

I imagine that if the sanctions were even stricter, the South African reserve bank would raise rates even further, stagnating the economy, rather than try to print their way out of debt.
 
The fact was that during this time, South Africa had very high interest rates in order to attract foreign capital to the country. However, this made it very hard for people living there to get a loans & credit, hurting the economy. My father and mother couldn't buy a house when they lived there because the interest rate was something around 20%, and even a modest mortgage was unaffordable.

I imagine that if the sanctions were even stricter, the South African reserve bank would raise rates even further, stagnating the economy, rather than try to print their way out of debt.

It happened in '98 as well, when interests rates were 25%, and interest rates were raised to 15.5% last week.

This is not a ploy to attract foreign capital, but to curb inflation, which is running at about 10% at the moment.
 
It happened in '98 as well, when interests rates were 25%, and interest rates were raised to 15.5% last week.

This is not a ploy to attract foreign capital, but to curb inflation, which is running at about 10% at the moment.

I know this is totally off-topic, but I was wondering the reason for South Africa having such a high inflation rate when it has something like a 40% approx unemployment rate (yes I am aware of the notion of stagflation, but the two don't usually go together).

Bearing in mind I have very little knowledge of the South African economy etc. However, I was reading an article about the reasons why Ireland was the Celtic Tiger from the 70s-present, and (even taking into account the massive) differences, it struck me that lots of the same advantages are there: 'overeducated' workforce vis-a-vis wage rates (I assume that most poor Black S Africans are well-educated by world standards for their income level) English language, political stability, access to major markets. Why then hasn't South Africa boomed in such a way as even many Asian nations have? It certainly has a lot better prospects than the rest of Africa? Are investors still very wary of investing in any African nations, even the stable ones?

For instance, in Australia (where I am) most of our call centres are off-shore in India or other Asian nations. I've often thought South Africa or any other relatively stable African nations (Botswana springs to mind) would be ideal, due to lack of language barrier.

Of course that was all off-topic, but just something of interest to me.
 
I know this is totally off-topic, but I was wondering the reason for South Africa having such a high inflation rate when it has something like a 40% approx unemployment rate (yes I am aware of the notion of stagflation, but the two don't usually go together).

Bearing in mind I have very little knowledge of the South African economy etc. However, I was reading an article about the reasons why Ireland was the Celtic Tiger from the 70s-present, and (even taking into account the massive) differences, it struck me that lots of the same advantages are there: 'overeducated' workforce vis-a-vis wage rates (I assume that most poor Black S Africans are well-educated by world standards for their income level) English language, political stability, access to major markets. Why then hasn't South Africa boomed in such a way as even many Asian nations have? It certainly has a lot better prospects than the rest of Africa? Are investors still very wary of investing in any African nations, even the stable ones?

For instance, in Australia (where I am) most of our call centres are off-shore in India or other Asian nations. I've often thought South Africa or any other relatively stable African nations (Botswana springs to mind) would be ideal, due to lack of language barrier.

Of course that was all off-topic, but just something of interest to me.

You raise some interesting points there MTG. The reasons behind our rates of unemployment are a relatively low-skilled workforce, while South Africa's "first" more formal economy, is rather sophisticated, and to enter it, one needs to be relatively skilled, IT literate etc. Although black Saffas are literate etc. they lack behind in having these kind of skills, and this is why the informal, "second" economy is growing. Also, labour intensive sectors such as agriculture and mining are shrinking (with the exception of construction), meaning low-skilled people have less options.

South Africa's rigid labour laws are also a problem, a relatively high minimum wage (by developing world standards) and high levels of worker protection mean people are often reluctant to hire, preferring to take on temporary or contract workers.

The relative strength of the rand may also be a factor (but I am still sceptical of how a weak currency can benefit a country).

The country's employment equity and black economic empowerment laws also frighten off investors to a large degree.
 
It happened in '98 as well, when interests rates were 25%, and interest rates were raised to 15.5% last week.

This is not a ploy to attract foreign capital, but to curb inflation, which is running at about 10% at the moment.

You can use high interest rates to do both. Besides curbing inflation (by decreasing the money supply), high interest rates cause foreign investors to move more capital to banks in the country with high interest rates in order to get a higher return on their money.

Do you know for a fact that the high interest rates in the 80's were due to runaway inflation in South Africa at the time? This could be the case, but I'm willing to bet it was to increase foreign investment at a time when investment in South Africa was dropping.
 
You can use high interest rates to do both. Besides curbing inflation (by decreasing the money supply), high interest rates cause foreign investors to move more capital to banks in the country with high interest rates in order to get a higher return on their money.

Do you know for a fact that the high interest rates in the 80's were due to runaway inflation in South Africa at the time? This could be the case, but I'm willing to bet it was to increase foreign investment at a time when investment in South Africa was dropping.

I wasn't referring to the interest rates being raised in the '80s, I was referring to the current increase in rates.

I don't know enough about South African macro-economics in the '80s to say with any certainty why interest rates were raised in that decade.
 
The reason apartheid was able to work economically was a few reasons. The expensive wars and the psychological effects of them were the ones you guys pointed out, but I think there was more to it than that.

South Africa's economy grew very rapidly in the 1950s and 1960s, and the first half of the 1970s. But most of this economic growth was confined to the whites, because the apartheid government still believed in grand apartheid during that time, the idea of moving the blacks out of "White South Africa" into the homelands, which were marginal terrain (at best) and usually were violence-ridden hellholes. Hence, the whites were at first world standards by the mid-70s, and growth was impossible without making the blacks do better, which flew in the face of grand apartheid.

South Africa was also reliant upon oil from Angola until the wars started there. The 1973 oil crisis had named South Africa and Rhodesia as two places to be embargoed, which left SA trying to rely on Angola. When the Portuguese pulled out, then SA had a serious problem with oil. When they went to using more synthetic crude, they were forced to import coal from the mines at Wankie in northwestern Rhodesia, which also went to hell as the Bush War escalated in 1978.

Keeping South Africa afloat required either major growth in the homelands to keep the grand apartheid dream alive, or the death of grand apartheid. They wanted to keep blacks and whites separate and the blacks as a lower class, but that wasn't possible any more.

IMO, the only way to keep apartheid alive much longer than in OTL is to have the West actively support it. But that will not go down well in the US or the EEC, because neither's population will want to actively support an explicitly racist state.
 
Top