Some of the world’s biggest banks propped up the apartheid regime in its dying days, lending it billions of dollars. Now the new government is saddled with the debts.
Major European and American banks poured billions of dollars into the apartheid government which had a foreign debt of R50bn for 1993.
Now the new government is having to carry the debt of those Swiss, German, American and British banks that colluded with apartheid, with 20% of our national spending being diverted to servicing debts.
These were the findings of a Jubilee 2000 report released yesterday, entitled Apartheid-Caused Debt: The Role of German and Swiss Finance.
Speaking at the launch, Archbishop Njongonkulu Ndungane, Jubilee 2000’s patron, said these financial institutions should now make reparations through “a massive capital injection plan, some form of Marshall Plan, that will go towards education and job creation”.
He was delighted that the Swiss parliament, as a result of pressure from the International Campaign for the Cancellation of the Apartheid Debt, will discuss today whether or not to set up a “truth commission” to further investigate Swiss banks’ supped for apartheid.
“The government is being hamstrung by deals between the apartheid regime and those who supported them by providing foreign finance. These supporters are to be considered accomplices,” he said.
In 1995, South Africa needed almost half of its gold export income to pay external interests and dividends whereas only one-fifth of this income was used for this purpose in 1980.
About 90% of the long-term debt in 1993 was owed to four creditor countries: The US, Germany, Switzerland and the United Kingdom.
The report says 30 major banks and 230 small creditor banks accepted a proposal in 1986 to reschedule the foreign debt of the apartheid government, which prolonged the rule of apartheid in its dying days.
A technical committee was formed in 1986 representing the major creditor banks. These included:
Three German banks: Deutsche, Dresdner and Commerzbank. Three Swiss banks: Credit Suisse, Union Bank of Switzerland and Swiss Bank Corporation. Three UK banks: Barclays, NatWest and Standard Chartered. Three US banks: Citibank, Manufacturers Hanover and Morgan Guaranty. Two French banks: Banque Indo-Suez and Credit Lyonnais.
These banks will be targeted by Jubilee 2000 with demands for debt cancellation and compensation.
German capital was the most important financier of the public sector in the apartheid era, with claims against South Africa amounting to DM7,4bn in 1993. Gains made by the businesses came to about DM8,4bn for the period between 1971 and 1993. This exdudes trade.
The Swiss were the second most important financiers of apartheid’s public authorities. But, the report says, the “investment zeal” of the Swiss business centre has been reduced to the level of the 1970s since the new democratic government was elected.
The right to debt cancellation should be regulated internationally and no longer left to arbitrary acts of individual settlements, the report stated.
“If there is ever to be any hope of a successful international sanctions campaign again, those financial institutions which profited from supporting apartheid repression cannot continue to be rewarded now for their odious profiteering,” the report said.
Ndungane said sniffing file responsibility of the debt to the new democratic government was creating enormous difficulties in its attempt to redress the imbalances of the past.
Melanie Gosung, The Cape Times, March 3, 1999
Categories: Africa, Odious Debts, South Africa
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