IV. THE POLITICAL ENVIRONMENT Nature of the Bilateral U.S./South African Relationship Just as South Africa itself has undergone a historic transformation in 1994, from white minority rule to democratic non-racial government, so has its bilateral relationship with the United States. Throughout the apartheid era, the U.S. Government maintained full diplomatic relations with South AFrica, despite its opposition to the country's racist policies. On the economic front, however, the U.S. participated fully in the sanctions regime imposed on South Africa by the United Nations. Indeed, under the Comprehensive Anti-Apartheid Act (CAAA) of 1986, the U.S. Congress, encated some of the most stringent economic sanctions imposed on South Africa during the apartheid years. Along with an increasing number of other countries, the United States began gradually but systematically to lift these sanctions, soon after the February, 1990, unbanning of South Africa's national liberation movement and the subsequent start of multi-party constitutional negotiations. Most CAAA economic and trade sanctions were lifted by Executive Order in July 1991. The removal of sanctions and reestablishment of trading links were given a substantial boost with the November, 1993, visit to South Africa by U.S. Commerce Secretary Ron Brown. The last remaining sanction, on the export and import of arms by South Africa, was lifted by the United Nations Security Council on Africa Day, May 25, 1994. The only U.S. export restriction that remains in place prohibits sales of U.S. defense articles and services to the South African government's armaments manufacturing and sales enterprises Denel and Armscor. With the birth of democratic, non-racial government in South Africa following the April 26-29, 1994 election, the international community, including the United States, has normalized both its diplomatic and economic relations with this country. While the U.S. and South Africa agree fully on many foreign policy issues, such as the maintenance of world peace, nonproliferation of nuclear weapons and compliance with basic human rights norms and standards, we naturally have our disagreements. For example, whereas the U.S. has asked the international community to distance itself from such undemocratic and terrorism-sponsoring regimes as those in Cuba and Libya, the African National Congress received much material and moral support from them during its years as a liberation movement. Not surprisingly, therefore, President Mandela and the new South African government have been eager to establish a full spectrum of relations with these pariah states. Major Political Issues Affecting the Business Climate South Africa's apartheid-era government while preaching free market economics was essentially statist. African National Congress, on the other hand, many of whom were exiled for years in the Soviet Union and its satellite states, returned to South Africa firmly believing in centralized economic planning and nationalization of the means of production. However, as South Africa's Interim Constitution took shape at the multi-party negotiations, the African National Congress began to see the merits of open and unfettered competition. Some observers believe that those ANC leaders who were or are still members of the South African Communist Party will influence the government's policies and practices in the direction of a command rather than a free-market economy. We note the RDP contains statist elements. Another major factor which will potentially affect the business climate in South Africa is the extent of politically- and criminally-motivated violence prevailing in the country. According to the Human Rights Committee of South Africa, political violence alone claimed 4,364 lives in 1993. Most of these deaths occurred in certain areas of Natal and in a number of townships around Johannesburg. As soon as the Inkatha Freedom Party decided to participate in the April election, however, the intensity of political violence in the country diminished drastically and has remained at a relatively low level since the election. The potential for continuing political violence is, nonetheless, still present in KwaZulu/Natal, the only province where the Inkatha Freedom Party (narrowly) won the election, and where the results were bitterly disputed by the African National Congress. A festering residue of ill-feeling remains in this area, and the potential for political and personal retaliation for past violence remains high. It is our belief, however, that, throughout the rest of the country, political violence will remain at a low ebb. This trend will be further boosted, as the nation applies itself to the task of implementing the government's ambitious Reconstruction and Development Program to improve housing, education, health care and other social services. The Political System As stipulated in South Africa's Interim Constitution, the country's parliament has two chambers: the National Assembly and the Senate. The 400 seats in the National Assembly are allocated to political parties on the basis of proportional representation. In accordance with their share of the national vote. As a result of the April, 1994, election, the African National Congress which won 62.6 percent of the vote now holds 252 Assembly seats. The National Party holds 82 seats, the Inkatha Freedom Party holds 43 seats, and the remaining 23 seats are held by four smaller parties. The 90- member Senate consists of ten Senators elected from each of South Africa's nine provinces, selected by the provincial legislatures. The parties in the provincial legislature are awarded a number of Senate seats based on their share of the provincial vote. The African National Congress holds 60 Senate seats, the National Party holds 17, the Inkatha Freedom Party and conservative Freedom Front hold five each, and the Democratic Party holds three. The 490 members of the National Assembly and Senate sitting in joint session also make up the Constitutional Assembly, a body whose principal responsibility is to formulate a permanent constitution for South Africa. Once elected, the members of the National Assembly elect the President who is vested with broad executive powers, including the power to appoint a 27-member cabinet. All parties which receive at least twenty percent of the national vote are guaranteed representation by a Deputy President, while all parties which receive at least five percent of the national vote are entitled to representation in the Cabinet proportional to their electoral strength. Under South Africa's current Government of National Unity, State President Nelson Mandela has two Deputy Presidents, Thabo Mbeki, representing the African National Congress, and F.W. De Klerk representing the National Party. Of the 27 Ministers in the Cabinet, 18 belong to the African National Congress, 6 to the National Party, and 3 to the Inkatha Freedom Party. South Africa's highest judicial court is the Appellate Division which hears and decides on appeals from a system of provincial Supreme Courts. In addition, there exists a network of locally- based Magistrates Courts. The Interim Constitution has created a new Constitutional Court which will hand down decisions exclusively related to the Constitution and Bill of Rights. The Constitutional Court has the power to invalidate laws and executive actions found to violate the Constitution. South Africa's First Democratic Election Some 22 million voters participated in South Africa's first democratic, non-racial election. When they went to the polls, they had 19 parties to choose from in the election for the National Assembly. An additional seven parties participated in one or more of the provincial elections only. The African National Congress won 62.6 percent of the national vote, the National Party won 20.44 percent, and the Inkatha Freedom Party won 10.5 percent. In addition, the African National Congress won controlling majorities in seven out of the nine provincial legislatures. The National Party won control of Western Cape province, and the Inkatha Freedom Party won control of Natal province. The election was officially monitored by thousands of both South African and international observers. Although administrative problems were noted, particularly in the ballot distribution and counting processes, both the Independent Electoral Commission and the many domestic and international observer groups declared the election to have been "substantially free and fair." Orientation of the Major Political Parties Seven parties are represented in the National Assembly. By far the largest, the African National Congress, has a broadly based, predominantly black membership, although it enjoys growing support within the liberal white community. Representing the pre-election national liberation movement, the African National Congress is now overwhelmingly preoccupied with the critical need to provide adequate health care, housing, education and employment to the millions of black and colored South Africans whose standard of living was so depressed under the old racist regime. Second in size, the National Party ruled South Africa for 46 years prior to the recent election. It was responsible for creating the apartheid policy, but later, under F.W. de Klerk's leadership, abandoned it and entered negotiations with the African National Congress. It has a right-of-center, still largely white membership, although it enjoys majority support within the colored and Asian communities. In preparation for the election the National Party worked hard to attract middle-class black voters, though with only limited success. The third largest party is the mainly Zulu Inkatha-Freedom Party whose support is heavily concentrated in KwaZulu/Natal province. (though, even there, the party won only 50.3% of the vote). Inkatha made a strong appeal to Zulu ethnic pride, which proved effective especially in rural areas of the province. The party's policies have long favored federalism as a check on the powers of the central government; its economic policy is generally characterized as free-market oriented. There are four other numerically smaller parties in the National Assembly. The Freedom Front (with 2.15% of the national vote) represents the right-wing Afrikaner community which still dream of establishing their own geographically separate homeland, or "volkstaat." The Democratic Party (1.72% of the vote) draws its support largely from middle-class, liberal whites who had always opposed the apartheid regime. The Pan Africanist Congress of Azania (1.23%) has a left-wing, mostly black membership whose "South Africa for the Africans" slogan is often understood, with some justification, to be anti-white. The smallest of the parties represented in the National Assembly (with 0.44% of the vote) is the African Christian Democratic Party which, as its name suggests, has a religious bent and views politics from a moral standpoint.