What Are the Americans Doing?

By Barbara Rudolph

One floor below the negotiators hammering out a pact on South Africa's transition council at the Johannesburg World Trade Center, businessmen from 150 U.S. companies and 10 U.S. states were gathered last week for a landmark trade show. Corporations large and small displayed everything from shampoo and ball bearings to portable toilets and pinball machines. All manner of blue- chip names were in attendance: Johnson & Johnson, Coca-Cola, Timken and Kellogg. "The potential is there," says Jan Pieterse, an executive at Upjohn, the Michigan-based pharmaceutical firm. "With South Africa able to $ play an important role, this is no longer the lost continent."

The sheer size of the gathering was testimony to the continuing American interest in South Africa, seven years after the U.S. Congress enacted its economic boycott of the country. Nearly 170 firms, including Pan Am, Uniroyal and IBM, sold or closed their South African operations between 1985 and 1990. Since the Bush Administration repealed the bulk of those sanctions in 1991, many have gradually filtered back. During the past year Lotus, Microsoft, Tambrands and 24 other U.S. firms have opened offices, established subsidiaries or placed representatives in South Africa. "We get calls every day from companies that are thinking about going back in," reports William Moses, an analyst at the Investor Responsibility Research Center in Washington. Coca-Cola is said to be close to announcing a deal to set up manufacturing operations in the country.

Risking serious money has been another matter. Since 1991, only 28 American companies have made new, direct capital investments in South Africa. More have joined the total of 419 firms that have set up low-risk, nonequity deals, which give them a presence in the marketplace but no substantial stake in the economy. Among them are information-technology companies such as Advanced Logic Research.

Many of the companies might be interested in moving faster, but they are restrained by a complex network of sanctions back home below the federal level. States, cities, pension funds, universities and sundry other public and semi-public bodies have economic prohibitions against dealing with South Africa that remain in effect even though the federal sanctions are lifted. They have often added penalties for any corporations that they deal with, or hold stock in, that break the ban. "If you're Xerox and you want to sell machines to the California government, you're not going to risk that for what might be marginal business in South Africa," says Gay McDougall, a member of the Washington-based Lawyers' Committee for Civil Rights Under Law.

It may be even longer before the billions of dollars in U.S. pension and mutual funds start to move. Jarrod Wilcox, an executive at Boston-based Batterymarch, a money-management firm with $5 billion in assets, says his company will wait a year or so before making substantial investments in the country. "Even though South Africa's long-term future could be bright," Wilcox says, "there might be three or four years of turbulence before a new ; order takes hold."

Not everyone is so cautious. Some jurisdictions are expected to ante up quickly to show their support for a new multiracial government. New York City, for one. Once organizations like the A.N.C. give the nod, says Leland Jones, a spokesman for Mayor David Dinkins, the Big Apple could scuttle its prohibitions within 30 to 60 days. That would put managers of $50 billion in New York City pension funds on notice that they can give Nelson Mandela some of the help he is asking for.

With reporting by Peter Hawthorne/Cape Town and Sylvester Monroe/Los Angeles