Sanctioning Apartheid - KORA

Samfiom and Financing South Africa's Foreign Trade 235
Hearsay evidence suggests that Swiss and/or German banks
lent about $400 million in early 1986 to the public authorities for
oil pufihases to resW their reserves at a time when the price of
oil started dropping rapidly. Since oil is sold in US doM, these
1 m were presumably in do-. When we look at the
Bundesbank statistics, an assumption must be made about the
currencies in which the South Afrim lending is made in order
to permit the calculation of the money flows. Only the figure for
banks in the UK is available, and it show that 80% of British
bank exposure $ in US dollars. Using this same percentage for
the Gennan barb, a flow from German banks to South A$ica of
about $130 million can be seen in the h t half of 1986 and this
is primatiIy in the first quarter. This inflow to the South African
public sector is against the background of a much larger outflow
from South African banks to the German banks. While this
calculation is not very accsurate, it suggests that the larger portion
of these oil loans may be Swiss.
ESKOM, a public corporation, reported $164 million (R3n
million) in foreign loans in 1986, and projected a total of $465
nillion (R929 don) for 1987. The Reserve Bank already
reports a net inflow of $340 d o n to public corporations in the
first half of 1987. Where is this money coming from, and can
these flows be seen from the side of the supplying b& and
other institutions?
First, some of it is generated intedy within South Afria
When a South African debtor pays off its foreign currency debt
which is under the standstill agreement, the money is deposited
with the Public Investment Commission (HC). If these funds are
not needed at that time for payments under the agreement, they
wiU be lent out (reinvested) with South Africa in the public
&r. Some of these funds are also being directly aqujred by
ESKOM. Thus the standstill agreement is providing a pool of
foreign funds for the government.
Secondly, export credits are still available from all the major
trading partners. Only the US has cut off gov-ent guarantees
and lending but private sector trade credits are permitted. As
Larry Harper, ESKOM's general manager of finance, stated, "If we
place orders overseas using credit lines with overseas institutions
we can still fund at least 85% of our import requirements . . . .