In an unexpected move hailed as having "tremendous significance" for national antiapartheid movements, California Gov. George Deukmejian has reversed his policy and proposed total divestment of state funds from companies doing business in South Africa.
Deukemejian's four-year divestment proposal, if adopted by the state legislature and the University of California regents, would affect almost $9 billion in state investments, approximately doubling the financial impact of a national divestment campaign that has reached 19 states and 65 cities.
Leaders of antiapartheid groups said today that the sudden support for divestment from Deukmejian, a conservative Republican, who last year vetoed a major divestiture bill, signals a major turn in a political tide toward efforts to put economic pressure on the South African government.
"People are now getting on the bandwagon," said Damu Smith, executive director of the Washington Office on Africa, a church and union sponsored group. "This has tremendous significance."
In a letter to university regents announcing his changed policy, Deukmejian said that his earlier support for a case-by-case consideration of South African investments was intended to warn that nation's white-ruled government to end discrimination against blacks and Asians. "Regrettably," the letter said, "the leaders of that country have ignored our warning, as well as the cries of virtually the entire Free World, to end apartheid and guarantee basic human rights to the South African majority.
"California cannot ignore the deteriorating situation in that country," the letter said. "We must not turn our backs on black South Africans at this moment of great crisis."
Deukmejian's letter was made public two days before a planned Friday appearance by Los Angeles Mayor Tom Bradley before the regents. Bradley, a Democrat, is opposing Deukmejian in the November gubernatorial election and is a strong supporter of divestment.
A Bradley spokeswoman called the letter politically motivated. Bradley said that the governor was "no leader on this issue" and that the letter said nothing about continued state contracting with companies that do business with South Africa.
Jim Cason, a researcher with the New York-based American Committee on Africa, estimated that $6 billion has so far been divested by local and state governments, including Maryland and the District of Columbia, in actions protesting apartheid. He said that the Deukmejian proposal had "enormous importance" because it reveals how high the "level of disgust" with policies of the white minority South African government has grown.
Deukmejian proposed that the state and university immediately sell all stock and bonds "in any business enterprise or bank that increases its operations or facilities, or makes any new investments in South Africa." Other businesses would be told they would have one year to break South African connections, or the state and university would begin selling their holdings. He said the process should take no more than three years after the one-year warning period.
Under the case-by-case review process of dealing with South African investments, the university regents have so far divested themselves of $12.3 million in bonds issued by the Eaton Corp. of Cleveland. The university has a total of $2.4 billion in investments connected with South Africa. Teacher and state employe retirement systems hold an estimated $6.5 billion in such investments.
Promoters of divestment say that the proposal would persuade large companies to pressure the South African government to reform. However opponents say other investors would make up the losses from divestment, and even if divestment forces an economic downturn in South Africa, poor blacks would be hurt the most.