Sanctioning Apartheid - KORA

African foreign debt. This extraction was permitted by the
mcy distribution of the South African debt since 80% of the
Sauth African imports are in mmdes other than U.S. doflars.
That isr the payment of South Ahican imports is usually in the
currency of the exporting country. In contrast* 80% of South
&can exports are denominated in U.S. doW, but these
exports require only a rehtively small oubtanding amount of
trade fuwm. This holedge plus two further assumptions
permit a rather far reachmg analysis of trade finance. These
assumptions are: (1) that South African government guarantees
for foreig~l debt primarily cover the debt of the government and
pamsktd corporations, and (2) that the guarantees of a foreign
country are primarily for debt denomhated in the currency of
that foreign country.
Finally, after knowing the amount of trade finance needed
to h c e South Africa's foreign bade, the question is: could
South Africa easily cover this amount by its present mm-ves a .
other foreign assets? At best, the sum of all these assets would
be roughly eqd to the lower estimates of the neoessarJr bade
hame. Thus if all the major trading parhers of South Africa,
q W y the U.K, US., Gemany, and Japan, were to cut off
trade &is together at one time, South Africa would face a
major Uquhfy &is comparable to the September 1985 banlcltlg
crisis, but one much mom ciiffidt to circumvent. in 1985 the
amount of debt was greater, but within a few days, trade d t s
were exempt from the moratorium, permitting trade to proceed
but at a lower volume. Thus it was the trade d t s that
meliorated the 1985 crisis and permitted trade to continue.
Part L Trade Finance: The Volume Required
What Trade Fimmm Is und How It Works
Trade aedits are used to finance hast all international
sales of goods. Bulky pods are shipped over long distances,
taking horn a week to over a month to arrive in the port of
detion. Raw materials and semifinished materials such as
steel are further manufactured, and imported hished goods
must be distributed. The cost of the goods during the bansport