The Case For Restoring Rhodesian Sanctions

On December l8t~, 1973, the Senate votedby 54 to,37 in favor of S.1868 to re-instatefull United States compliance with United Nationseconomic sanctions against Rhodesia, by ex­empting sanctions from the operation of Section10 of the Strategic and Critical MaterialsStock Piling Act. This section (the so-calledByrd Amendment) provides that ,the President maynot prohibit or regulate the importation of"strategic and critical materials" from non­Communist countries as long as importation ofsuch materials from Communist countries is notbarred by law.

We urge members of the House of Represen­tatives ~o support S.1868 for the followingreasons:

1. In an era of minerals shortage, sound econ­omic policy demands sensitivity to the views ofindependent African states, who are united inopposing U.S. support for Rhodesia's regime.The independent countries of Africa are becomingimportant suppliers of many of these minerals.The U.S. now has over $3 billion in privateinvestment in these nations, far more than the$56 million invested in Rhodesia. Secretary ofState Henry Kissinger recently wrote:

•.. the Byrd provision has impaired ourability to obtain the understanding andsupport of many countries including suchimportant African nations as Nigeria, asignificant source of petroleum and acountry where we have investments of'nearly $1 billion.

2. U.S. security does not require breaking sanctions.The national stockpile contains more than 5 milliontons of chrome ore, greatly in excess of militaryneeds. Deputy Secretary of Defense, Clements,has written that only 2.3% of the stockpiled high­grade chrome ore is necessary for the DefenseDepartment's requirements in the fir$t year of awar. The President proposed in 1973 to releaseexcess chrome and ferrochrome from the stockpilefor public sale. The stockpile excess is enough'toreplace 1973 imports from Rhodesia for 22 years.Furthermore, if the Byrd Amendment was intended toeliminate dependence ,on a potential enemy, theSoviet Union, it has not done so. Soviet imports ofchrome ore in 1972 and 1973 continued to be morethan 50% of total U.S. imports, as they had beenbefore the legislation took effect.

3. Other competitively-priced sources of chromebesides Rhodesia can meet U.S. needs. The SovietUnion is the larges't producer and exporter of chrom~

ore in the world. The great bulk of production issold as exports, 90% of which goes to non-Communistcountries. Soviet deliveries of chrome ore tothe U.S. were not interrupted by political tensionsgenerated by the Cuban missile crisis or the Vietnamwar. Soviet ore has the highest chrome-to-ironratio and chromic oxide content of any ore in theworld. In .1973, Soviet ore sold for 20% less thancomparable Rhodesian ore. Turkey, Brazil"Pakistan,the Phillipines and South Africa are also chromeore exporters and often at cheaper prices thanRhodesia.

-v'\Tas,hingt,'bn Orfice on A:frlca1.10 ~arylancl .A.ve.~ N. E ... D.C.~ a0008

4. The Soviet Union is not buying Rhodesian chromeore and either transshipping it to the united Statesor stockpiling it. The transshipment allegationwas tested by the U.S. Geological Survey, whichfound that the contention that Soviet materialswere Rhodesian did not hold up under examination.Other allegations that the Soviets are purchasingRhodesian ore for their own use are unsubstantiatedand have never been submitted to the U.N. SanctionsCommittee, which offers rewards for such information.

5. Sanctions-breaking imports-of ferrochrome mademore cheaply in Rhodesia threaten the jobs ofAmerican workers in the u.S. fe~rochrome industry.Since the passage of the Byrd Amendment, !mportsof ferrochrome (a chrome-iron alloy used inmaking stainless steel) from Rhodesia havedoubled, 'claiming·46% of the high-carbon ferrochromeimport market in 1973. Rhodesian ferrochromecan be exported cheaply because African miners inRhodesia, who are prohibited from organizing togain a decent wage, earn less than half of theminimum required for subsistence. Also, theRhodesian regime subsidizes freight and powerrates and allows industry to avoid the high costsof environmental protection. The threat to U.S.jobs has been temporarily lessened by a recentboom in the steel industry, but when the boomends, American workers may lose jobs because ofunfair Rhodesian competition.

~. Res~oration of sanctions will not lead toprecipitous increases in the cost of stainlesssteel. If sanctions are restored, replacementof Rhodesian ferrochrome by purchases of ferro­chrome from other foreign producers or from thestockpile, costing at most an additional $100 perton, will cost the stainless steel industry onlyslightly over $3 million annually, not the $96

million it has predicted. The stainless steelproducers have not passed on to consumers anycost savings that may have come from breakingsanctions. In fact, -stainless steel producershave recently upped prices by 2 to 4% on top ofprevious price hikes _of as much as 6% in 1973.More increases are planned; Allegheny Ludlum, theleading producer, says it is going to raise prices18% by July 31st.

7. Sanctions are a legitimate form of internationalpressure for justice in Rhodesia. Sanctions arenot meddling in the internal affairs of a country.It is difficulb to understand how u.S. compliancewith U.N. Sanctions constitutes meddling ininternal affairs while our current violation ofsanctions does not, since either action by animportant world power has important effects inRhodesia. The United States supported sanctions inthe U.N. Security Council in the belief, now borneout, that the oppression of so many by a tinyillegitimate regime in Rhodesia is a threat tointernational peace.

8. Renewed U.S. compliance with sanctions couldbring decisive pressure on the Rhodesian regime.Sanctions have denied Rhodesia much of the capitalneeded for industrial and transportation equipment,oil and armaments. This economic pressure, andthe growing opposition of Rhodesian Africans, mayforce the regime to negotiate seriously withAfricans f~r a peaceful transition to majorityrule. U.S. violation of sanctions weakened thesepressures by gi~ing the regime $43 million of pre­cious foreign exchange and invaluable politicalbacking. Renewed U.S. compliance with sanctionswill incr~ase the economic pressure and placethe weight of the United States behind the Africanpeople in their demand for majority rule.

22

u. S.P 20E IM-

R u. s.

18 IM-

e POR TS

EN 19.9 'Y.

T 16

0F 14

W0R 12L0

10p

R00 8UC

u.s.

T IM-

I 6 PORTS

.0 8.4%

N

4 u. S.

1M -

PO RTS

2 5.3%

African Countries which support sanctions are major producers of minerals

*1973from CensusBureau

Sources: U. S. Bureau of Mines,1971 Minerals Yearbook1972 preprint (Cobalt)1973 Estimated by petroleum expert

needed by U.S. Economy

300

200'"Co.....o

1 00 ~

1a..:lo-:

731271706968

"u. S. fer-roehrorne production has almost consistentlydeclined since 1967, the first year of the Rhodesian sanc­tions ... " trom Rhodesian Chromium and Specialty Steel:Basic Considerations.

67

Declined?The Year the Stain Ie 55 Lobby

Didn't Talk about: 1973

u.S. Ferrochrome Production

u.S. ferrochrome plants if adequatel

supported can meet most of U.S.requirements.

If Rhodesian ferrochrome and chromewere embargoed, excess material inthe U.S. stockpile could replace thequantities now imported from Rho·desia for a period of 2 2 yea rs !

SANCTIONS WIL·L NOTCUT U. S. OFF FROMFERROCHROME,

& State Dept.

*Equivalency ratio:2112 ore = 1 ferrochrome

1973RHODESIAN

IMPORTS1973

RHODESIAN

IMPORTS

FERRO FERRO-

50

Bureau of Mines

300

350

400

STOCKPILE COMPARED TORHODES IAN IMPORTS Data from

250

~ 200c2

'0~ 150

"UCa::0~..

100

Chrome Produ ction

3 0.9

Ot hers

·World

Turkey: Chrome Production

sooThousands

100

2000

Thousands

of Tons

1000

1963 1965

U.S.S.R. Chrome1970

Production

--. ~ted) _ - --tpro\e:... _ - ---- Sources:

Minerals Yearbooks

1967-71

1975

Chrome ore output by 1975 is e",peded to be about 18 per,ent higher than in 1970. - Minerals Yearbook 1970 yol. 3 p.782

1200

110

100,+-__~

900

800

700

Stainless Steel Sheet

Type 304 price

600 Ferrochrome cost is $112 or only 10.8 %, of price of a ton of

500 Stainless Sheet Type 304, $1040. Chrome Ore, a component

400 of ferrochrome, represents less than 4 % of total Type 304 price.

300

'"..c0

Q200

Source: Ferroalloy Industry :

Petition to Cost of living Coundl

for Exemption, 1 9 73

100

Chrome ore price (Turkis

19 e:o 1965 1910 1973

FERROCHROME IS SMALL PART OF STAINLESS PRICE

4 Stainless

f:Ai~less profits tend to parallel the pro:its of the') ]:lrqc,st l. $. coroorations, although the pro""its swir:g up and

::o'.·~ !"'o~e .....·id"'l·[, ,15 is tynicil] ""or .::l. cyclical industry. A rP.3in.),~u'r C"or.trib'lli:HJ to the ""311 in the early 1970's was i?enctra­

'"-.L0n '" tile L. S. r'l"lrkct Ly ir.ports [rom Jap.n. HC'lin ~actors in>- ~ rlS' in 1072 ..... ere \'ol~ntar\- rcstrRi~t ~qree~ents with Japan.1:1:1 the '1C''fallation of the doll..:n. ChroITc- Or'2 ,nd cerrachromeric 5 ]a/ a relatively small role in jct('rr'ining profit outcoMe.

Industry Surveys

10

7372

Industry

71

,6

Allegheny Ludlum 15

CyClOps

Carpenter Technology

Washington Steel14

13 P

ER

CE

12 N

T

11

7069686766

Companies

65

Equity···· higher than Steelon

64(3

Profit

6261

Stainless

60

American Iron and Steel InstItute,

Sources: Standard & Poor. Corporate Records

1972 Annual Stat i cal Report

woRST

IN

EVEN

VEARS

cCIIIQl

"Do

.t:.CII::

III..co

"D

SHRINKING IN

ZAMBIA---NOT

IN RHODESIA

DISPARITY

IN WAGES

BETWEEN AFRICANSAND OTHERS-

7

6

Sources: Ministry of Finance, Economic Survey of Rhodesia, April 1973

Central Statistical Office, Zambia, Economic Report, 1971Monthly Digest of Statistics, vol. IX, 4

1971 Dollar equivalent: Kwacha = $1.40Rh. Dollar ~

~ Real Wages of African Miners In Zambia 5cQl

C.~

::)

-Z' 2000..~"0 IIIQ cvi lS00 3 .t:.

uC

:) ~~

tI~

~ 1000 2)( U 010 I

I.. IQ. Real Wages Of African Miners in Southern RhodesiaQ.

<II( 500II 1000

1964 65 66 67 68 6~ 70 71

Majority rule and a free Labor movement willbenefit Rhodesia's African workers

72 1971

6 to 1Zambia

1971

13 to 1Rhodesia